<PAGE>   1
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the quarterly period ended OCTOBER 31, 1998

[ ]  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 0-21053


                             PROCOM TECHNOLOGY, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          California                                          33-0268063
-------------------------------                            -------------------
(State or other jurisdiction of                              (IRS Employer
incorporation or organization)                             Identification No.)


    2181 Dupont Drive, Irvine, CA                                92612
 --------------------------------------                        ----------
(Address of principal executive office)                        (Zip Code)


                                 (714) 852-1000
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)


         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 in 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
                                               ---      ---

         The number of shares of Common Stock, $.01 par value, outstanding on
November 30, 1998, was 11,167,242.

<PAGE>   2

                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.  Financial Statements.

                     PROCOM TECHNOLOGY, INC. AND SUBSIDIARY

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                     OCTOBER 31,        JULY 31,
                                                         1998            1998
                                                     -----------      -----------
                                                     (UNAUDITED)       (AUDITED)
<S>                                                  <C>              <C>        
Current assets:
  Cash                                               $ 1,229,000      $   577,000
  Short-term marketable securities, held to
      maturity                                        23,196,000       22,785,000
  Accounts receivable, less allowance
    for doubtful accounts and sales returns 
    of $1,945,000 and $1,329,000, respectively        14,200,000       15,050,000
  Inventories, net                                     8,675,000        9,147,000
  Deferred income taxes                                1,853,000        1,852,000
  Prepaid expenses                                       652,000          748,000
  Other current assets                                   236,000          223,000
                                                     -----------      -----------
          Total current assets                        50,041,000       50,382,000
Property and equipment, net                            2,070,000        2,211,000
Other assets                                           1,747,000        1,846,000
                                                     -----------      -----------
          Total assets                               $53,858,000      $54,439,000
                                                     ===========      ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Line of credit                                     $   318,000      $   210,000
  Accounts payable                                    10,220,000       11,540,000
  Accrued expenses and other current
      liabilities                                      2,619,000        2,949,000
  Accrued compensation                                   783,000        1,321,000
  Deferred service revenues                            1,104,000          931,000
  Income taxes payable                                   695,000          756,000
                                                     -----------      -----------
          Total current liabilities                   15,739,000       17,707,000
                                                     -----------      -----------
          Total liabilities                           15,739,000       17,707,000
                                                     -----------      -----------

Commitments and contingencies
Shareholders' equity:
  Preferred stock, $.01 par value;
    10,000,000 shares authorized, no
    shares issued and outstanding                             --               --
  Common stock, $.01 par value;
    65,000,000 shares authorized,
    11,178,742 and 11,167,242 shares
    issued and outstanding, respectively                 112,000          112,000
  Additional paid in capital                          17,677,000       17,751,000
  Retained earnings                                   20,301,000       18,866,000
  Foreign currency translation                            29,000            3,000
                                                     -----------      -----------
          Total shareholders' equity                  38,119,000       36,732,000
                                                     -----------      -----------
     Total liabilities and shareholders' equity      $53,858,000      $54,439,000
                                                     ===========      ===========
</TABLE>

                 The accompanying notes are an integral part of
                       these consolidated balance sheets.

                                       2

<PAGE>   3

                     PROCOM TECHNOLOGY, INC. AND SUBSIDIARY

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED
                                                  ----------------------------
                                                  OCTOBER 31,      OCTOBER 31,
                                                     1998              1997
                                                  -----------      -----------
                                                  (UNAUDITED)      (UNAUDITED)
<S>                                               <C>              <C>        
Net sales                                         $30,401,000      $31,291,000
Cost of sales                                      20,701,000       20,607,000
                                                  -----------      -----------
    Gross profit                                    9,700,000       10,684,000

Selling, general and administrative expenses        6,452,000        5,663,000
Research and development expenses                   1,286,000        1,280,000
                                                  -----------      -----------
    Operating income                                1,962,000        3,741,000

Other (income) expense
  Interest income                                     325,000          287,000
  Interest (expense)                                    5,000               --
                                                  -----------      -----------
Income before income taxes                          2,282,000        4,028,000
Provision for income taxes                            847,000        1,555,000
                                                  -----------      -----------
     Net income                                   $ 1,435,000      $ 2,473,000
                                                  ===========      ===========
Net income per common share:
  Basic                                           $      0.13      $      0.22
                                                  ===========      ===========
  Diluted                                         $      0.13      $      0.22
                                                  ===========      ===========
Weighted average number of common shares:
  Basic                                            11,167,000       11,038,000
                                                  ===========      ===========
  Diluted                                          11,308,000       11,210,000
                                                  ===========      ===========
</TABLE>

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

                                       3

<PAGE>   4

                     PROCOM TECHNOLOGY, INC. AND SUBSIDIARY

            CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                            COMMON STOCK
                                       ----------------------      PAID IN        RETAINED    CURRENCY
                                         SHARES       AMOUNT       CAPITAL        EARNINGS    ADJUSTMENT    TOTAL
                                       ----------    --------    -----------    -----------   ----------  ----------
<S>                                     <C>          <C>         <C>            <C>            <C>        <C>       
Balance at July 26, 1996                9,000,000    $  3,000    $        --    $ 5,133,000    $    --    $5,136,000
  Change in par value to
    $.01 per share                             --      87,000          3,000        (90,000)        --            --
  Public offering of
    2,000,000 shares                    2,000,000      20,000     16,166,000             --         --    16,186,000
  Compensatory stock options                   --          --         35,000             --         --        35,000
  Exercise of employee stock options       24,562          --         62,000             --         --        62,000
  Tax benefit from exercise of
    stock options                              --          --        201,000             --         --       201,000
  Net income                                   --          --             --      8,447,000         --     8,447,000
                                       ----------    --------    -----------    -----------    -------   -----------
Balance at July 31, 1997               11,024,562     110,000     16,467,000     13,490,000         --    30,067,000
  Exercise of employee stock 
    options and related
    tax benefit                            50,036       1,000        143,000             --         --       144,000
  Tax benefit from exercise of
    stock options                              --          --        242,000             --         --       242,000
  Acquisition of Megabyte                 104,144       1,000        899,000             --         --       900,000
  Foreign currency translation
    adjustment                                 --          --             --             --      3,000         3,000
  Net income                                   --          --             --      5,376,000         --     5,376,000
                                       ----------    --------    -----------    -----------    -------   -----------
Balance at July 31, 1998               11,178,742    $112,000    $17,751,000    $18,866,000    $ 3,000   $36,732,000
  Exercise of employee stock 
    options and related 
    tax benefit                             7,300          --         18,000             --         --        18,000
  Foreign currency translation
    adjustment                                 --          --             --             --     26,000        26,000
  Repurchase of shares                    (18,800)    (92,000)            --             --         --       (92,000)
  Net income                                   --          --             --      1,435,000         --     1,435,000
                                       ----------    --------    -----------    -----------    -------   -----------
Balance at October 31, 1998            11,167,242    $112,000    $17,677,000    $20,301,000    $29,000   $38,119,000
                                       ==========    ========    ===========    ===========    =======   ============
</TABLE>

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

                                       4

<PAGE>   5

                    PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
                                      
               CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED
                                                            --------------------------------
                                                             OCTOBER 31,         OCTOBER 31,
                                                                1998                1997
                                                            ------------        ------------
                                                             (UNAUDITED)        (UNAUDITED)
<S>                                                         <C>                 <C>         
Cash flows from operating activities:
  Net income                                                $  1,435,000        $  2,473,000
    Adjustments to reconcile net income to net 
      cash provided by operating activities:
    Depreciation and amortization                                286,000             104,000
    Changes in assets and liabilities:
         Accounts receivable                                     850,000          (2,411,000)
         Inventories                                             472,000          (1,565,000)
         Deferred income taxes                                        --                  --
         Prepaid expenses                                         96,000              97,000
         Other current assets                                    (13,000)             33,000
         Other assets                                             59,000              (2,000)
         Accounts payable                                     (1,320,000)          1,882,000
         Accrued expenses                                       (330,000)            113,000
         Accrued compensation                                   (538,000)           (240,000)
         Deferred service revenue                                173,000                  --
         Income taxes payable                                    (61,000)            782,000
                                                            ------------        ------------
            Net cash provided by operating activities          1,109,000           1,266,000

Cash flows from investing activities:
  Purchase of property and equipment                            (106,000)           (225,000)
                                                            ------------        ------------
            Net cash used in investing activities               (106,000)           (225,000)

Cash flows from financing activities:
  Principal payments for capital lease obligations                    --                  --
  Borrowings on line of credit                                   108,000                  --
  Payments made on line of credit                                     --                  --
  Repurchases of common stock                                    (92,000)                 --
  Stock options, exercises, and related tax benefits              18,000             104,000
                                                            ------------        ------------
            Net cash provided by financing activities             34,000             104,000
    Effect of exchange rate changes                               26,000                  --
                                                            ------------        ------------
    Increase (decrease) in cash                                1,063,000           1,145,000
Cash at beginning of period                                   23,362,000          18,777,000
                                                            ------------        ------------
Cash at end of period                                       $ 24,425,000        $ 19,922,000
                                                            ============        ============
   Supplemental disclosures of cash flow information:
   Cash paid during the periods for:
     Interest                                               $         --        $         --
     Income taxes                                           $    900,000        $    775,000
</TABLE>

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

                                       5

<PAGE>   6

                     PROCOM TECHNOLOGY, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           FOR THE THREE MONTHS ENDED
                      OCTOBER 31, 1998 AND OCTOBER 31, 1997


NOTE 1. GENERAL

        The accompanying financial information is unaudited, but in the opinion
of management, reflects all adjustments (which include only normally recurring
adjustments) necessary to present fairly the financial position of Procom
Technology, Inc. and its consolidated subsidiary (the "Company") as of the dates
indicated and the results of operations for the periods then ended. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. While the Company believes that the disclosures are
adequate to make the information presented not misleading, the financial
information should be read in conjunction with the audited financial statements,
and notes thereto for the three years ended July 31, 1998 included in the
Company's Report on Form 10-K for fiscal 1998. Results for the interim period
are not necessarily indicative of the results for the entire year.

NOTE 2. EARNINGS PER SHARE.

        Net income (loss) per share has been computed using the weighted average
number of shares outstanding during the periods presented. In February 1997, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128 replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options and convertible securities.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. The adoption of SFAS 128 did not have a material
impact on the Company's earnings per share. For the periods presented, basic net
income per share was based on the weighted average number of shares of common
stock outstanding during the period. For the same periods, diluted net income
per share further included the effect of stock options outstanding during the
period.

        In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. SFAS 130 will be adopted by the Company for its
fiscal 1999. Adoption of this pronouncement is not expected to have a material
impact on the Company's financial statements. During this quarter, the only
difference between reported net income and comprehensive net income is a $26,000
foreign currency translation adjustment which would have had an immaterial
effect on comprehensive net income.

        Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131 replaces Statement of Financial Accounting
Standards No. 14 and changes the way public companies report segment
information. SFAS 131 is effective for fiscal years beginning after December 15,
1997 and will be adopted by the Company for its fiscal 1999 which commenced July
4, 1998. Adoption of this pronouncement is not expected to have a material
impact on the Company's financial statements.


                                       6


<PAGE>   7

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

General

OVERVIEW

        This Report on Form 10-Q contains 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. Such forward-looking statements include, but
are not limited to, comments regarding the Company's revenue, revenue mix,
product pricing, gross margins, increased promotional, advertising, research and
development spending, and the expanded marketing efforts of the Company. Actual
results could differ materially from those projected in the forward-looking
statements as a result of important factors including, without limitation,
competitive product introductions, price competition, any failure or delay in
the Company's ability to develop and introduce new products, the failure of any
significant customer, adverse economic conditions generally and other factors
set forth in the Company's filings with the Securities and Exchange Commission.

        The Company was formed in 1987. The Company is a manufacturer and
reseller of various CD-ROM and disk drive storage products and distributes its
products through a world-wide network of distributors, VARs and computer stores.
The Company has recently begun to develop and ship network attached storage
products ("NAS"), which provide for higher storage access and security with
lower storage costs for end-users. During the year ended July 31, 1998, the
Company acquired two entities who had distributed or sold storage application
products: Megabyte Computerhandels AG, a Munich Germany based distributor of
high end computer storage products ("Megabyte"), and Invincible Technologies
Corp., a Massachusetts reseller of high end storage application products
("Invincible").

        The Company generally records sales upon product shipment. The Company
presently maintains agreements with many of its computer resellers, VARs and
distributors that allow limited returns (including stock balancing) and price
protection privileges. The Company has in the past experienced high return
rates. The Company maintains reserves for anticipated returns (including stock
balancing) and price protection privileges. These reserves are adjusted at each
financial reporting date to state fairly the anticipated returns (including
stock balancing) and price protection claims relating to each reporting period.
Generally, the reserves will increase as sales and corresponding returns
increase. In addition, under a product evaluation program established by the
Company, computer resellers, VARs, distributors and end users generally are able
to purchase products on a trial basis and return the products within a specified
period if they are not satisfied. Evaluation units are not recorded as sales
until the customer has paid for such units.

        All of the Company's sales are denominated in U.S. dollars, and
accordingly, the Company does not believe that fluctuations in foreign exchange
rates have had or will have a material adverse effect on the Company's results
of operations or financial condition, except to the extent that such
fluctuations could cause the Company's products to become relatively more
expensive to end users in a particular country, leading to a reduction of sales
in that country.

        Historically, the Company's gross margins have experienced significant
volatility. The Company's gross margins vary significantly by product line, and,
therefore, the Company's overall gross margin varies with the mix of products
sold by the Company. The Company's markets are also characterized by intense
competition and declining average unit selling prices as products mature over
the course of the relatively short life cycle of individual products, which have
often ranged from six to twelve months. In addition, the Company's gross margins
may be adversely affected by availability and price increases associated with
key products and components from the Company's suppliers, some of which have
been in short supply, and inventory obsolescence resulting from older generation
products or the unexpected discontinuance of third party components. Finally,
the Company's margins vary with the mix of its distribution channels and with
general economic conditions.


                                       7


<PAGE>   8

RESULTS OF OPERATIONS

        The following table sets forth the Company's statement of operations
data as a percentage of net sales for the periods indicated.

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED
                                                 --------------------------
                                                 OCTOBER 31,    OCTOBER 31,
                                                    1998           1997
                                                 -----------    ----------
                                                  (UNAUDITED)   (UNAUDITED)
<S>                                                  <C>          <C>   
Net sales                                            100.0%       100.0%
Cost of sales                                         68.1         65.9
                                                     -----        -----
  Gross profit                                        31.9         34.1
Selling, general and administrative expenses          21.2         18.1
Research and development expenses                      4.2          4.0
                                                     -----        -----
  Operating income (loss)                              6.5         12.0
Interest income and (expense), net                     1.0          0.9
                                                     -----        -----
  Income (loss) before income taxes                    7.5         12.9
Provision (benefit) for income taxes                   2.8          5.0
                                                     -----        -----
  Net income (loss)                                    4.7%         7.9%
                                                     =====        =====
</TABLE>

QUARTER ENDED OCTOBER 31, 1998 COMPARED TO QUARTER ENDED OCTOBER 31, 1997

    Net Sales

        Net sales decreased 2.8% from $31.3 million for the quarter ended
October 31, 1997 to $30.4 million for the quarter ended October 31, 1998. This
decrease was primarily due to decreases in sales of CD servers and arrays and
sales of disk drive upgrade subsystems for desktop and notebook computers which
declines were offset somewhat by additional net sales generated by the Company's
subsidiaries, Megabyte and Invincible. For the quarter ended October 31, 1998,
sales of the Company's "Intelligent Network Storage Products", which comprise CD
servers and arrays and RAID storage systems, comprised approximately 61%, with
sales of disk drive storage upgrade products also comprising approximately 39%
of net sales. This increase is due primarily to the inclusion of Megabyte and
Invincible sales. International sales increased from $1.7 million, or
approximately 5.4% of net sales, in the quarter ended October 31, 1997 to $7.9
million, or approximately 26.2% of net sales, in the quarter ended October 31,
1998 due to the inclusion of approximately $6.7 million of net sales of
Megabyte.

        The Company's fiscal second quarter sales have historically remained
relatively flat due primarily to heavy reseller participation in trade shows
that detract from reseller sales efforts, end user budget constraints that
restrict end user purchases and a higher than average number of holidays during
the fiscal second quarter which reduce the number of selling days during the
quarter by nine. In addition, the Company will be relocating its primary
facilities during the second quarter of fiscal 1999, and will lose an additional
two to three selling days, together with any reduced sales that may result if
problems should arise during the relocation.

    Gross Profit

        The Company's gross margins decreased from 34.1% of net sales for the
quarter ended October 31, 1997 to 31.9% of net sales for the quarter ended
October 31, 1998. This decrease was primarily the result of reduced sales of
higher margin CD servers and arrays combined the inclusion of the net sales of
Megabyte and Invincible, both of which have earned gross margins significantly
lower than the Company has historically generated. The Company maintained
margins earned on its CD servers and arrays and its sales of disk drive upgrade
products for notebook computers and RAID storage products, but such margins were
more than offset by the lower margins on the net sales of Megaybyte and
Invincible.


                                       8

<PAGE>   9

    Selling, General and Administrative Expenses

        Selling, general and administrative expenses increased from $5.7 million
for the quarter ended October 31, 1997 to $6.5 million for the quarter ended
October 31, 1998. These expenses represented 18.1% and 21.2% of net sales in the
quarters ended October 31, 1997 and October 31, 1998, respectively. The dollar
increase in selling, general and administrative expenses for the first quarter
of fiscal 1999 was primarily a result of increased marketing and promotional
costs and increased personnel and related costs necessary to support the
Company's net sales and the operations of Megabyte and Invincible. The Company
also realized significant expenses as it moved to integrate the operations of
Invincible with its own, and the Company incurred various severance and other
costs which may not occur in the future. The Company anticipates that the dollar
amount of its selling, general and administrative expenses will increase as the
Company continues to expand its efforts to penetrate certain sales channels and
regions and continues to strengthen and upgrade its existing management
information and telecommunications systems.

        In addition, the Company has executed a short-term lease for its
headquarter facilities, and will be relocating its primary facilities during the
second quarter of fiscal 1999. The relocation expenses will be booked in the
second quarter, along with the higher rental expense that will take effect
during the second quarter. Total selling, general and administrative expenses
for the second quarter will be impacted as a result of the relocation costs and
the higher rental expenses.

    Research and Development

        Research and development expenses remained relatively constant at
approximately $1.3 million for each of the quarters ended October 31, 1997 and
1998. These expenses represented 4.1% and 4.2% of net sales for the each of the
quarters ended October 31, 1997 and October 31, 1998, respectively. These
increases were primarily due to continued efforts by the Company to not only
enhance existing product features, but to emphasize the development of network
attached storage products. The Company anticipates that the dollar amount of its
research and development expenses will continue to increase, and also may
increase as a percentage of net sales, with the expected addition of dedicated
engineering resources to develop new network attached storage products, to
increase the likelihood that the Company's products will be compatible with a
wide range of hardware platforms and network topologies and to further develop
CD-FORCE, the Company's proprietary client/server management storage
architecture. In addition, the Company intends to continue to update software
drivers to ensure that the Company's CD servers and arrays function with a
variety of hardware platforms and network operating systems. To date, all of the
Company's software development costs have been expensed as incurred, as the
impact of capitalizing software costs under Financial Accounting Standard No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed" would have been immaterial to the Company's financial
statements.

    Income Taxes

        The Company's effective tax rates for the quarters ended October 31,
1997 and October 31, 1998 were approximately 38.6% and 37.1% of pretax income,
respectively, which approximate the federal and state statutory rates with
modest reductions for benefits resulting from the Company's use of its foreign
sales corporation ("FSC"), benefits accruing from the increases in research and
development activity, causing an increased research and development credit, and
reduced state taxes as the Company's operations shift away from states with
higher state income tax rates.


                                       9


<PAGE>   10

     Interest Income and Expense

        The Company generated approximately $325,000 of interest income in the
quarter ended October 31, 1998 as it invested its increasing cash balances in
low-risk commercial paper, compared to approximately $287,000 in interest income
in the quarter ended October 31, 1997. A small amount of interest expense of
approximately $6,000 related to Megabyte's operating overdraft credit line was
incurred in the quarter ended October 31, 1998. The Company believes that
interest income will be reduced in the future as it uses its cash to purchase
land for, and develop, its future corporate headquarters in Irvine, California.
In addition, the Company may complete additional acquisitions, some which may
require the use of substantial cash resources. In such event, interest income
would be further reduced.

General Comments

        The Company's results of operations have in the past varied
significantly and are likely in the future to vary significantly as a result of
a number of factors, including the mix of products sold, the volume and timing
of orders received during the period, the timing of new product introductions by
the Company and its competitors, product line maturation, the impact of price
competition on the Company's average selling prices, the availability and
pricing of components for the Company's products, changes in distribution
channel mix and product returns or price protection charges from customers. Many
of these factors are beyond the Company's control. Although the Company has
experienced growth in sales in recent periods, there can be no assurance that
the Company will experience growth in the future or be profitable on an
operating basis in any future period. In addition, due to the short product life
cycles that characterize the Company's markets, a significant percentage of the
Company's sales each quarter may result from new products or product
enhancements introduced in that quarter. Since the Company relies on new
products and product enhancements for a significant percentage of sales, failure
to continue to develop and introduce new products and product enhancements or
failure of these products or product enhancements to achieve market acceptance
could have a material adverse effect on the Company's business, financial
condition and results of operations. Historically, as the Company has planned
and implemented new products, it has experienced unexpected reductions in sales
and gross profit of older generation products as customers have anticipated new
products. These reductions have in the past given and could continue to give
rise to charges for obsolete or excess inventory, returns of older generation
products by computer resellers, VARs and distributors or substantial price
protection charges. From time to time, the Company has experienced and may in
the future experience inventory obsolescence resulting from the unexpected
discontinuance of third party components, such as disk drives, included in the
Company's products. To the extent the Company is unsuccessful in managing
product transitions, it may have a material adverse effect on the Company's
business, financial condition and results of operations.

        The Company also has historically capitalized on short-term market
opportunities for volume purchases of certain components at favorable prices.
For example, the Company has capitalized on several opportunities to sell a
significant volume of high capacity disk drive upgrade products purchased at
below market prices, which have resulted in price advantages to the Company that
enhanced the Company's sales and results of operations for the corresponding
fiscal quarter. There can be no assurance that the Company will be able to
capitalize on such opportunities in the future. In addition, the Company's
fiscal second quarter sales, compared to sales in the Company's fiscal first
quarter, have historically remained relatively flat due primarily to heavy
reseller participation in trade shows that detract from reseller selling
efforts, end user budget constraints that restrict end user purchases, and a
higher than average number of holidays during that quarter which reduce the
available selling and shipping days during the quarter.

LIQUIDITY AND CAPITAL RESOURCES

        In November 1994, the Company instituted a revolving line of credit with
Finova Capital ("Finova"). The facility was amended in November 1996 to provide
the Company with up to $20.0 million in working capital loans, based upon the
Company's accounts receivable and inventory levels. The line of credit accrues
certain commitment fees, unused facility fees and interest on outstanding
amounts at the lender's prime rate (8.0% at October 31, 1998) plus 1.5%. Finova
also makes available to the Company various flooring commitments


                                       10

<PAGE>   11

pursuant to which the Company may finance the purchase of up to $13.0 million in
inventory (less any amounts outstanding in working capital loans) from certain
of the Company's vendors who have credit arrangements with Finova. As of October
31, 1998, there was no balance outstanding under the credit facility, and $ 3.8
million outstanding under the flooring arrangements. The agreement governing the
credit facility requires the Company to maintain certain financial covenants
(including the maintenance of working capital of at least $500,000), minimum
levels of tangible net worth and minimum levels of liquidity. As of October 31,
1998, the Company was in material compliance with the covenants of the Finova
line of credit. The initial term of the line of credit expires on November 29,
1998, but automatically renews for successive one year periods unless terminated
by either party within a specified period in advance of the automatic renewal
date.

        As of October 31, 1998, the Company had cash balances of $24.4 million
and $16.2 million of availability under its line of credit. The Company believes
that these cash balances and available credit under its existing line of credit,
will be sufficient to meet anticipated cash requirements for at least the next
twelve months.

        Subsequent to July 31, 1998, the Company's Board of Directors approved a
stock open market repurchase program. Pursuant to the program, the Company is
authorized to effect repurchases of up to $2 million in shares of its common
stock. The Company expects that it will make such repurchases from time to time,
when it determines that such repurchases are the best available use of the
Company's available cash, given the price of the Company's stock and the
interest income the Company would otherwise earn on the Company's available
cash. The Company intends to make any repurchases subject to an ongoing buyback
program, and currently does not intend to repurchase more shares than the number
of shares which are issued pursuant to employee stock option exercises or other
employee stock purchase programs. During the quarter ended October 31, 1998, the
Company repurchased approximately 19,000 shares at a total cost of approximately
$92,000.

        The Company has recently signed a letter of intent with a third party to
purchase an 8.5 acre parcel of land in Irvine, California, where it will develop
a corporate headquarters facility, which the Company expects will be ready for
occupancy in the year 2000. The cost of the land, together with the currently
estimated cost to construct the facility, would approximate $14-15 million. The
Company is considering various development and financing options, and believes
that it will have the capital resources available to it to finance and complete
the building during the next two years.

        At July 31, 1998, the Company had cash and marketable securities
totalling $23.3 million and additional availability under its unused line of
credit. The Company believes that its existing cash balances and available
credit under its existing line of credit will be sufficient to meet anticipated
cash requirements for at least the next twelve months. The Company will continue
to acquire fixed assets and make expenditures to support its growth. In
addition, in fiscal 1998, the Company completed two acquisitions utilizing its
own cash and common stock. The Company has made cash advances to continue the
operations of the entities acquired during fiscal 1998 of approximately $3.5
million. The Company has had discussions concerning potential acquisitions with
various businesses which have or offer products and technologies that are
complementary to those of the Company. The Company may acquire additional
businesses in the future. There can be no assurance that any such potential
acquisitions could or will be completed. In the event the Company's plans,
including the development of the corporate headquarters or the funds expended in
the stock buyback program, require more capital than is presently anticipated,
the Company's remaining cash balances may be consumed and additional sources of
liquidity such as debt or equity financings may be required to meet working
capital needs. There can be no assurance that additional capital beyond the
amounts currently forecasted by the Company will not be required nor that any
such required additional capital will be available on reasonable terms, if at
all, at such time or times as required by the Company.


                                       11


<PAGE>   12

YEAR 2000 PREPAREDNESS INFORMATION

        The Year 2000 issue is the result of computer programs, microprocessors,
and embedded date reliant systems using two digits rather than four to define
the applicable year. If such programs are not corrected, date data concerning
the Year 2000 could cause many systems to fail, lock up or generate erroneous
results. The Company considers a product to be "Year 2000 compliant" if the
product's performance and functionality are unaffected by processing of dates
prior to, during and after the Year 2000, but only if all products (for example
hardware, software and firmware) used with the product properly exchange
accurate date data with it. The Company believes that as data storage devices,
its hard drive products are transparent to Year 2000 requirements, and rely
primarily on software found in operating systems and applications to function
properly. After significant testing, the Company believes its current hard drive
and CD-ROM products are Year 2000 compliant, although other products previously
sold by the Company may not be Year 2000 compliant. In September 1998, the
Company began to offer a limited Year 2000 warranty on products sold by the
Company after that date. Previous to September 1998, the Company did not offer
any such warranty on any of its products. The Company anticipates that
litigation may be brought against vendors, including the Company, of all
component products of systems that are unable to properly manage data related to
the Year 2000. The Company's agreements with customers and end users, both for
products sold before and after September 1998, typically contain provisions
designed to limit the Company's liability for such claims. It is possible,
however, that these measures will not provide protection from liability claims,
as a result of existing or future federal, state or local laws or ordinances or
unfavorable judicial decisions. Any such claims, with or without merit, could
result in a material adverse effect on the Company's business, financial
condition and results of operations, customer satisfaction issues and potential
lawsuits.

        The Company is identifying Year 2000 dependencies in its primary
accounting software, and other systems, equipment, and processes and is
implementing changes to such systems, updating or replacing such equipment, and
modifying such processes to make them Year 2000 compliant. The Company is now
assessing its internal Year 2000 issues and is in the process of remediation of
the critical systems. While the Company's current accounting software systems
appear to be Year 2000 compliant, the Company intends to upgrade those systems
during fiscal 1999, and will insure that Year 2000 compliance is a major factor
in the selection of the appropriate accounting software package. The Company has
also initiated formal communications with many of its significant suppliers and,
in the near future, financial institutions to evaluate their Year 2000
compliance plans and state of readiness and to determine whether any Year 2000
issues will impede the ability of such suppliers to continue to provide goods
and services to the Company. As a general matter, the Company is vulnerable to
any failure by its key suppliers to remedy their own Year 2000 issues, which
could delay shipments of essential components, thereby disrupting or halting the
Company's manufacturing operations. Further, the Company also relies, both
domestically and internationally, upon governmental agencies, utility companies,
telecommunication service companies and other service providers outside of the
Company's control. There is no assurance that such suppliers, governmental
agencies, financial institutions, or other third parties will not suffer
business disruption caused by a Year 2000 issue, and there is little practical
opportunity for the Company to test or require Year 2000 compliance from many of
those large agencies, companies or providers. Such failures could have a
material adverse effect on the Company's business, financial condition and
results of operations. Additionally, the Company is in the process of
communicating with its large customers to determine the extent to which the
Company is vulnerable to those third parties' failure to remedy their own Year
2000 issues.

        The Company anticipates that its internal systems, equipment and
processes will be substantially Year 2000 compliant by the end of June 1999. A
formal budget has not been established, and the cost to the Company of achieving
Year 2000 compliance is evolving; however, it is not currently expected to have
a material effect on the Company's financial condition or results of operations.
While the Company currently expects that the Year 2000 issue will not pose
significant internal operational problems, delays in the Company's remediation
efforts, or a failure to fully identify all Year 2000 dependencies in the
systems, equipment or processes of the Company or its vendors, customers or
financial institutions could have material adverse consequences, including
delays in the manufacture, delivery or sale of products. Therefore, the Company
is considering the development of contingency plans along with its remediation
efforts for continuing operations in the event such problems arise.


                                       12


<PAGE>   13

                                     PART II

                                OTHER INFORMATION

Item 1. Legal Proceedings.

        As previously reported in the Company's filings with the Securities and
Exchange Commission, the Company is a defendant in an action filed in Orange
County Superior Court by Miradco International Corporation, a private company
based in Newport Beach, California, consisting of two principals ("Miradco"),
which alleges that the Company breached an alleged oral contract with Miradco.
In its complaint, Miradco has asserted that it is entitled to receive 280,000
shares of the Company's Common Stock, which Miradco contends have a value in
excess of $5.6 million, as payment for financial advisory services allegedly
rendered to the Company by Miradco. During discovery in the legal action,
Miradco has claimed that it is entitled to receive up to 7% of the Company's
Common Stock, with a minimum of 280,000 shares. The Company vigorously denies
the existence of any oral contract with Miradco, and believes any oral contract
claim of Miradco and the suit are entirely without merit. The Company intends to
defend itself vigorously in this action. The Company has expended approximately
$100,000 for legal costs for this action in the fiscal year ended July 31, 1998,
and approximately $100,000 more during the quarter ended October 31, 1998. The
Company expects that it will incur significant additional legal expenses
relating to this claim in the quarter ended January 31, 1999 and for the rest of
fiscal 1999. Trial has been set initially for January 1999. While the Company
believes that Miradco's claims are without merit, there can be no assurance
about the outcome of this case, nor the effect it may have on the financial
condition or results of operations of the Company. If the claims of Miradco were
held to be valid, a judgment for a significant amount could be entered against
the Company, and such judgment could have a material adverse effect on the
Company's results of operations and financial condition.

        The Company previously disclosed in its Report on Form 10-K for the year
ended July 31, 1998 that it had been sued by its landlord, AEW/LBA Acquisition
Corp., a California corporation ("LBA"), in an action filed in August 1998 in
Orange County Superior Court. The Company and LBA have agreed to settle the
action, with LBA extending the lease on the Company's primary facility in
Irvine, California through January 31, 1999, with an increase in the monthly
rent and an agreement by the Company to vacate the facility on or before that
date. The Company has executed a lease for office and warehouse space in Santa
Ana, California, and expects to relocate its facilities on or before January 31,
1999.

        The Company is from time to time involved in other litigation related to
its ordinary operations, such as collection actions and vendor disputes. The
Company does not believe that the resolution of any such other existing claim or
lawsuit will have a material adverse affect on the Company's business, results
of operations or financial condition.

Item 2. Changes in Securities and Use of Proceeds.

        Not applicable.

Item 3. Defaults Upon Senior Securities.

        Not applicable.

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

        Not applicable.

Item 5. Other Information.

        Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

        (a)  See Exhibit Index. No Statement re Computation of Per Share
             Earnings is included, because the computation can be clearly
             determined from material contained in this Report. See the
             Consolidated Statements of Operations, and the Notes thereto. 

        (b)  A Report on Form 8-K was filed by the Company on October 29, 1998
             to reflect the Company's acquisition of most of the assets of
             Invincible Technologies Corporation.




                                       13


<PAGE>   14

                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Irvine, County of
Orange, State of California, on the 14th day of December, 1998.


                                         PROCOM TECHNOLOGY, INC.


                                         By: /s/ ALEX RAZMJOO
                                             -----------------------------------
                                             Alex Razmjoo
                                             Chairman, President and
                                             Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report on Form 10-Q has been signed below by the following persons
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

         SIGNATURE                             TITLE                               DATE
         ---------                             -----                               ----
<S>                              <C>                                         <C>
   /s/ Alex Razmjoo               Chairman of the Board, President and       December 14, 1998
--------------------------------  Chief Executive Officer (Principal
       Alex Razmjoo               Executive Officer)


   /s/ Alex Aydin                 Executive Vice President, Finance          December 14, 1998
--------------------------------  and Administration (Principal
       Alex Aydin                 Financial Officer)


   /s/ Frederick Judd             Vice President, Finance and General        December 14, 1998
--------------------------------  Counsel (Principal Accounting Officer)
       Frederick Judd             
</TABLE>


                                       14

<PAGE>   15

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                                 SEQUENTIALLY
       EXHIBIT                                                                     NUMBER
       NUMBER                          DESCRIPTION                                  PAGE
      --------                         -----------                               -------------
      <S>      <C>                                                               <C>
         3.1+  Amended and Restated Articles of Incorporation of the Company

         3.2+  Amended and Restated Bylaws of the Company

        10.1+  Form of Indemnity Agreement between the Company and each of its 
               executive officers and directors

        10.2+  Form of Amended and Restated Procom Technology, Inc. 1995 Stock 
               Option Plan

        10.3+  Amended and Restated Executive Employment Agreement, dated as of 
               October 28, 1996, between the Company and Alex Razmjoo

        10.4+  Amended and Restated Executive Employment Agreement, dated as of
               October 28, 1996, between the Company and Frank Alaghband

        10.5+  Amended and Restated Executive Employment Agreement, dated as of
               October 28, 1996, between the Company and Alex Aydin

        10.6+  Amended and Restated Executive Employment Agreement, dated as of
               October 28, 1996, between the Company and Nick Shahrestany

        10.7+  Form of Registration Rights Agreement

        10.8+  Lease, dated February 10, 1992, between 2181 Dupont Associates
               and the Company, as amended

        10.9+  Loan and Security Agreement, dated November 18, 1994, by and 
               between the Company and FINOVA Capital Corporation, as amended

        10.10+ Asset Purchase Agrement, dated June 24, 1998 among Invincible
               Technologies Corporation, Invincible Technologies Acquisition 
               Corporation, and certain stockholders of Invincible 
               Technologies Corporation name therein

        10.11  Lease, dated November 9, 1998, between Arden Realty Limited
               Partnership and the Company, as amended

        11.1+  Statement re: Computation of Earnings Per Share

        21.1+  List of Subsidiaries

        27.1   Financial Data Schedule
</TABLE>

----------
+ Previously filed