<PAGE>   1

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

          For the quarterly period ended APRIL 30, 1999

          [ ]          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.)


            1821 East Dyer Road, Santa Ana, CA            92705
          (Address of principal executive office)       (Zip Code)

                                 (949) 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 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
May 31, 1999, was 11,227,880.

<PAGE>   2

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  Financial Statements.

              PROCOM TECHNOLOGY, INC. AND CONSOLIDATED SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                APRIL 30,         JULY 31,
                                                                  1999              1998
                                                              ------------      ------------
                                                               (UNAUDITED)      (RESTATED)(3)
<S>                                                           <C>               <C>
Current assets:
  Cash ..................................................     $    696,000      $    660,000
  Short-term marketable securities, held to maturity,
    including restricted securities .....................       22,971,000        22,785,000
  Accounts receivable, less allowance
    for doubtful accounts and sales
    returns of $2,959,000 and
    $1,329,000, respectively ............................       11,192,000        17,115,000
  Inventories, net ......................................        8,604,000         9,528,000
  Deferred income taxes .................................        3,056,000         1,852,000
  Prepaid expenses ......................................          585,000           748,000
  Other current assets ..................................          216,000           261,000
                                                              ------------      ------------
          Total current assets ..........................       47,320,000        52,949,000
Property and equipment, net .............................        9,155,000         2,279,000
Other assets ............................................          937,000         1,846,000
                                                              ------------      ------------
          Total assets ..................................     $ 57,412,000      $ 57,074,000
                                                              ============      ============

                     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Line of credit ........................................     $    263,000      $  1,583,000
  Accounts payable ......................................       10,837,000        12,501,000
  Accrued expenses and other current liabilities ........        2,562,000         3,093,000
  Accrued compensation ..................................          875,000         1,321,000
  Deferred service revenues .............................        1,179,000           931,000
  Income taxes payable ..................................         (862,000)          756,000
                                                              ------------      ------------
          Total current liabilities .....................       14,854,000        20,185,000
                                                              ------------      ------------
  Loan payable ..........................................        7,500,000                --
                                                              ------------      ------------
          Total liabilities .............................       22,354,000        20,185,000
                                                              ------------      ------------

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,
    11,227,880 and 11,178,742, shares
    issued and outstanding,
    respectively ........................................          112,000           112,000
  Additional paid in capital ............................       17,582,000        17,659,000
  Retained earnings .....................................       17,342,000        19,109,000
  Foreign currency translation ..........................           22,000             9,000
                                                              ------------      ------------
          Total shareholders' equity ....................       35,058,000        36,889,000
                                                              ------------      ------------
      Total liabilities and shareholders' equity.........     $ 57,412,000      $ 57,074,000
                                                              ============      ============
</TABLE>


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

(a) See Note 4 for an explanation of the restated July 31, 1998 balances.


                                       2
<PAGE>   3

              PROCOM TECHNOLOGY, INC. AND CONSOLIDATED SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                        QUARTERS ENDED                   NINE MONTHS ENDED
                               ------------------------------      ------------------------------
                                 APRIL 30,         APRIL 30,         APRIL 30,        APRIL 30,
                                   1999              1998              1999              1998
                               ------------      ------------      ------------      ------------
                               (UNAUDITED)       (UNAUDITED &      (UNAUDITED)       (UNAUDITED &
                                                 RESTATED)(A)                        RESTATED)(A)
<S>                            <C>               <C>               <C>               <C>
Net sales ................     $ 22,726,000      $ 29,622,000      $ 80,167,000      $ 85,806,000
Cost of sales ............       17,183,000        20,559,000        56,833,000        57,192,000
                               ------------      ------------      ------------      ------------
     Gross profit ........        5,543,000         9,063,000        23,334,000        28,614,000

Selling, general and
  administrative
  expenses ...............        6,861,000         5,963,000        20,364,000        17,253,000
Research and development
  expenses ...............        1,441,000         1,207,000         4,006,000         3,585,000
Impairment and
  restructuring charge ...        1,627,000                --         1,627,000                --
                               ------------      ------------      ------------      ------------

     Operating income ....       (4,386,000)        1,893,000        (2,663,000)        7,776,000

Other (income) expense
 Interest income .........          288,000           316,000           954,000           894,000
 Interest (expense) ......           (9,000)          (30,000)          (65,000)          (77,000)
                               ------------      ------------      ------------      ------------

Income before income taxes       (4,107,000)        2,179,000        (1,774,000)        8,593,000
                               ------------                        ------------
Provision for income taxes       (1,117,000)          865,000          (264,000)        3,360,000
                               ------------      ------------      ------------      ------------
     Net income ..........     $ (2,990,000)     $  1,314,000      $ (1,510,000)     $  5,233,000
                               ------------      ============      ------------      ============

Net income per share:
 Basic ...................     $      (0.27)     $       0.12      $      (0.13)     $       0.47
                               ============      ============      ============      ============
 Diluted .................     $      (0.26)     $       0.12      $      (0.13)     $       0.46
                               ============      ============      ============      ============

Shares used in per share
computation:
 Basic ...................       11,254,000        11,225,000        11,247,000        11,144,000
                               ============      ============      ============      ============
 Diluted .................       11,449,000        11,306,000        11,529,000        11,285,000
                               ============      ============      ============      ============
</TABLE>


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

(a) See Note 4 for an explanation of the restated Fiscal 1998 balances.


                                       3
<PAGE>   4

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

<TABLE>
<CAPTION>
                                                              NINE MONTHS ENDED
                                                        ------------------------------
                                                          APRIL 30,         APRIL 30,
                                                            1999              1998
                                                        ------------      ------------
                                                        (UNAUDITED)        (UNAUDITED
                                                                           & RESTATED)
                                                                               (A)
<S>                                                     <C>               <C>
Cash flows from operating activities:
  Net income                                            $ (1,510,000)     $  5,233,000
    Adjustments to reconcile net
      income to net cash
      provided by operating activities:
    Depreciation and amortization                          1,659,000           417,000
    Changes in assets and
      liabilities:
         Accounts receivable                               5,923,000          (582,000)
         Inventories                                         924,000        (1,357,000)
         Deferred income taxes                            (1,204,000)               --
         Prepaid expenses                                    163,000           175,000
         Other current assets                                 45,000          (186,000)
         Other assets                                         62,000           (28,000)
         Accounts payable                                 (1,664,000)          (58,000)
         Accrued expenses                                   (530,000)          823,000
         Accrued compensation                               (446,000)          (68,000)
         Deferred service revenue                         (1,618,000)               --
         Income taxes payable                                248,000           622,000
                                                        ------------      ------------
            Net cash provided (used)
             by operating activities                       2,052,000         4,991,000
                                                        ------------      ------------
Cash flows from investing activities:
  Acquisitions, net of cash acquired                        (113,000)          120,000
  Purchase of property and
    equipment                                             (7,689,000)         (559,000)
                                                        ------------      ------------
             Net cash provided by
               investing activities                       (7,802,000)         (439,000)
                                                        ------------      ------------
Cash flows from financing activities:
  Long-term loan                                           7,500,000                --
  Borrowings on line of credit                            (1,320,000)               --
  Payments made on line of credit                                 --           187,000
  Repurchases of common stock                               (366,000)               --
  Stock options, exercises, and
    related tax benefits                                     145,000           139,000
                                                        ------------      ------------
            Net cash provided by
              (used in) financing
              activities                                   5,959,000           326,000
                                                        ------------      ------------
    Effect of exchange rate changes                           13,000             6,000
                                                        ------------      ------------
    Increase (decrease) in cash                              222,000         4,884,000
Cash and marketable commercial paper at beginning
   of period                                              23,445,000        18,895,000
                                                        ------------      ------------
Cash and marketable commercial paper at end of
   period                                               $ 23,667,000      $ 23,779,000
                                                        ============      ============
 Supplemental disclosures of cash flow information:
  Cash paid during the periods for:
    Interest                                            $     65,000      $     77,000
    Income taxes                                        $  2,425,000      $  1,928,000
</TABLE>


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

(a) See Note 4 for an explanation of the restated Fiscal balances.


                                       4
<PAGE>   5

                     PROCOM TECHNOLOGY, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                            FOR THE NINE MONTHS ENDED
                        APRIL 30, 1999 AND APRIL 30, 1998

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 periods
presented are not necessarily indicative of the results for the entire year.

NOTE 2.   EARNINGS PER SHARE.

         Net income (loss) per share has been computed in accordance with
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. 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 dilutive stock
options outstanding during the period using the treasury stock method.

NOTE 3.  RECENT ACCOUNTING PROUNOUNCEMENTS.

         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 $22,000
foreign currency translation adjustment.

     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
August 1, 1998.

NOTE 4.   ACQUISITION OF PERA AG AND GIGATEK SRL.

         In November 1998, the Company acquired the outstanding stock of Pera
AG, a Swiss distributor/reseller of high end storage solutions. The Company paid
$22,000 and issued 28,500 shares in exchange for 100% of the outstanding stock
of Pera. The acquisition of Pera will be treated as a purchase for accounting
purposes, and Pera's financial statements and results of operations will be
consolidated with those of the Company for periods beginning after November 6,


                                       5
<PAGE>   6

1998. Pera's contribution to consolidated revenues and results of operations is
negligible.

         In January 1999, the Company acquired 100% of the outstanding common
stock of Gigatek, Srl, an Italian distributor of high end networking solutions,
in exchange for the issuance of 51,100 shares of the Company' common stock. The
acquisition of Gigatek is treated as a pooling of interests for accounting
purposes, and the revenues and results of operations of Gigatek are combined
with those of the Company for each of the quarters and six months presented
herein. The Company expects that periods prior to July 31, 1997 will not be
restated as a result of the Gigatek acquisition because the impact on such
periods is, in the opinion of the Company, immaterial, except that an adjustment
to reflect the acquisition of Gigatek's net worth will be made to the retained
earnings balance on July 31, 1997. The Company believes that the acquisition
qualifies in all respects as a pooling of interests for accounting purposes.

         A schedule of the contribution by Gigatek to consolidated net sales,
operating income, net income, and intercompany transactions follows.

<TABLE>
<CAPTION>
                             QUARTERS ENDED              NINE MONTHS ENDED
                       -------------------------     -------------------------
                         APRIL 30,     APRIL 30,      APRIL 30,      APRIL 30,
                           1999          1998           1999           1998
                       ----------     ----------     ----------     ----------
<S>                    <C>            <C>            <C>            <C>
Net sales (US$)        $  442,000     $1,147,000     $3,553,000     $2,728,000
Operating income           16,000        206,000        158,000         39,000
Net income                  5,000        117,000         41,000         32,000
Intercompany sales         31,000         82,000         95,000        245,000
</TABLE>




                                       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,
including the Company's Report on Form 10-K for the year ended July 31, 1998.

    The Company was formed in 1987. The Company began producing aftermarket disk
drive upgrade products for computer products sold by other manufacturers, and
such upgrade products continue to be an important area of focus of the Company's
business. In fiscal 1994, the Company introduced its CD server and array product
line while continuing to provide a broad line of disk drive upgrade products. In
addition, during fiscal 1994, the Company began utilizing computer resellers and
VARs as its primary sales channel instead of mass merchants and national
distributors and commenced shipment of its first RAID arrays and fault tolerant,
high performance storage servers.

    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.

    A majority of the Company's sales are denominated in U.S. dollars. With the
acquisitions of companies in Germany, Switzerland and Italy, the Company
believes that adverse fluctuations in foreign exchange rates could, in the
future, have a material adverse effect on the Company's results of operations or
financial condition. Among other things, fluctuations in exchange rates 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, and
foreign exchange rate fluctuations may cause the Company's assets, sales and
results of operations to be adversely impacted in the future.

    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 the past, and may in the future be in short supply, and inventory
obsolescence resulting from older generation products or the unexpected
discontinuance of third party components.


                                       7
<PAGE>   8

Finally, the Company's margins vary with the mix of its distribution channels
and with general economic conditions.

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           NINE MONTHS ENDED
                                          --------------------------   --------------------------
                                           APRIL 30,      APRIL 30,     APRIL 30,      APRIL 30,
                                             1999           1998          1999           1998
                                          -----------    -----------   -----------    -----------
                                          (UNAUDITED)    (UNAUDITED)   (UNAUDITED)    (UNAUDITED)
<S>                                       <C>            <C>           <C>            <C>
Net sales .........................          100.0%         100.0%        100.0%         100.0%
Cost of sales .....................           75.6           69.4          70.9           66.7
                                             -----          -----         -----          -----
  Gross profit ....................           24.4           30.6          29.1           33.3
Selling, general and administrative
 expenses..........................           30.2           20.1          25.4           20.0
Research and development expenses..            6.3            4.1           5.0            4.2
Impairment and restructuring charge            7.2            0.0           2.0            0.0
                                             -----          -----         -----          -----
  Operating income (loss) .........          (19.3)           6.4          (3.3)           9.1
Interest income and (expense), net             1.2            1.0           1.1            0.9
                                             -----          -----         -----          -----
  Income (loss) before income
    taxes .........................          (18.1)           7.4          (2.2)          10.0
Provision (benefit) for income
  taxes ...........................           (4.9)           3.0          (0.3)           3.9
                                             -----          -----         -----          -----
  Net income (loss) ...............          (13.2%)          4.4%         (1.9%)          6.1%
                                             =====          =====         =====          =====
</TABLE>

QUARTER AND NINE MONTHS ENDED APRIL 30, 1999 COMPARED TO QUARTER AND NINE MONTHS
ENDED APRIL 30, 1998

GENERAL COMMENTS

   RESULTS OF OPERATIONS FOR THE QUARTERS ENDED OCTOBER 31, 1997, AND 1998,
JANUARY 31, 1998 AND APRIL 30, 1998 HAVE BEEN RESTATED TO GIVE EFFECT TO THE
GIGATEK ACQUISITION ACCOUNTED FOR AS A POOLING OF INTERESTS. SEE NOTE 4 TO THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR APRIL 30, 1999.

    Net Sales

    Net sales decreased 23.3% from $29.6 million for the quarter ended April 30,
1998 to $22.7 million for the quarter ended April 30, 1999, and declined 13.9%
compared to net sales of $26.4 million for the most recent quarter ended January
31, 1999. The decrease in sales for the same quarter one year ago was due
primarily to the inclusion of revenues from the acquisitions of Megabyte,
Invincible, Gigatek and Pera completed by the Company during the past year
offset, however, by a more significant decrease in sales of CD servers and
arrays during the quarter ended April 30, 1999. The reduction from sales for the
third quarter was primarily due to a significant decrease in sales of CD servers
and arrays as well as reduced industry wide demand for the Company's disk drive
upgrade subsystems for desktop computers, combined with the effect of
significant price erosion which occurred during the quarter. The Company expects
to see a continued weakness in the demand for its upgrade disk drive storage
products and CD-ROM Network Storage Solutions throughout the balance of fiscal
1999. For the quarter ended April 30, 1999, sales of the Company's "Intelligent
Network Storage Products", which comprise CD servers and arrays and RAID storage
systems,


                                       8
<PAGE>   9

comprised approximately 56% of net sales, and sales of disk drive storage
upgrade products comprised approximately 44% of net sales. International sales
increased significantly as the Company saw a larger portion of its net sales
come from Europe, where its recent acquisitions are headquartered. International
sales decreased from $8.5 million, or approximately 28.8% of net sales, in the
quarter ended April 30, 1998 to $8.1 million, or approximately 35.5% of net
sales, for the quarter ended April 30, 1999 due primarily to the inclusion of
the revenues of Megabyte, Pera and Gigatek and the reduced US sales of Procom's
CD servers and arrays. Net sales for the nine months ended April 30, 1999
decreased 6.6% to $80.2 million from $85.8 million for the nine months ended
April 30, 1998. The reduced growth in sales for the nine month period was caused
by and affected by the factors set forth above.

    Gross Profit

    The Company's gross margins decreased from 30.6% of net sales for the
quarter ended April 30, 1998 to 24.4% of net sales for the quarter ended April
30, 1999, while gross margins decreased from 33.3% of net sales for the nine
months ended April 30, 1998 to 29.1% of net sales for the nine months ended
April 30, 1999. These decreases were primarily the result of the inclusion of
the revenues of Megabyte and Gigatek, which have historically experienced lower
margins, and to a lesser extent, reductions in sales of CD servers and arrays.
In addition, in connection with a one-time write down of assets related to the
Invincible acquisition, see below, the Company recorded additional reserves for
Invincible inventories of approximately $700,000. In addition, the Company
realized declining margins on increased sales of disk drive upgrade products for
notebook computers and RAID storage products.

    Selling, General and Administrative Expenses

    Selling, general and administrative expenses increased from $6.0 million, or
20.1% of net sales for the quarter ended April 30, 1998 to $6.9 million, or
30.2% of net sales for the quarter ended April 30, 1999. Selling, general and
administrative expenses increased from $17.3 million, or 20.1% of net sales for
the nine months ended April 30, 1998 to $20.4 million, or 25.4% of net sales for
the nine months ended April 30, 1999. The dollar increase in selling, general
and administrative expenses for the second quarter of fiscal 1999 compared to
the same quarter in fiscal 1998 was primarily due to increased marketing and
co-operative advertising costs, increased personnel and related costs necessary
to support the Company's operating plans, and the administrative costs of the
Company's recent acquisitions, offset by reductions in advertising costs and
sales commissions, due to the reduction in net sales. The dollar increase for
the nine month period in fiscal 1999 was primarily the result of increased
co-operative advertising costs, and increased personnel and related costs
necessary to support the Company's growth plans, and higher than anticipated
marketing and personnel expenses incurred by the Company's foreign subsidiaries.
The Company anticipates that the dollar amount of its selling, general and
administrative expenses will increase as the Company expands its efforts to
penetrate certain sales channels and regions, makes strategic acquisitions, and
continues to strengthen and upgrade its existing management information and
telecommunications systems.

    Research and Development

    Research and development expenses increased from $1.2 million, or 4.1% of
net sales for the quarter ended April 30, 1998, to $1.4 million, or 6.3% of net
sales for the quarter ended April 30, 1999. Research and development expenses
increased from $3.6 million, or 4.2% of net sales for the nine months ended
April 30, 1998 to $4.0 million, or 5.0% of net sales for the nine months ended
April 30, 1999. The increases were primarily due to continued increases in
additional hardware developers and software programmers to develop additional
products and enhance existing product features. 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 product categories.
These additions are being made 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 NetFORCE


                                       9
<PAGE>   10

products, 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.

    Impairment and Restructuring Charge

    During the quarter ending April 30, 1999, the Company concluded that,
following the principles in Statement of Financial Accounting Standard No. 121,
due to various changes in the Company's product and marketing strategies related
to the Invincible product line, as well as several external factors which
heavily affected those strategies, the values of the assets acquired in the
Invincible acquisition had been impaired significantly. The Company reached the
conclusion after comparing the remaining asset values to the prospects of
discounted cash flows from the businesses utilizing the assets. The assets so
affected included goodwill, fixed assets and inventories. As a result, goodwill
of approximately $800,000 and net fixed assets of about $600,000 were written
off, while an additional reserve of approximately $700,000 was added to cost of
sales during the quarter. In addition, approximately $200,000 in costs relating
to a lease cancellation and future product support costs were recorded during
this quarter, for a total write-off or write-down of approximately $2,400,000,
net of any tax benefit.

    Interest Income and Expense

    During each of the quarters and nine month periods ending April 30, 1998 and
April 30, 1999, the Company invested its available cash in investment grade
commercial paper with maturities of less than 180 days. Because the Company's
investable cash position increased somewhat in the current quarter and six month
period compared to the same periods one year ago, even though interest rates
softened in those same periods. As a result, net interest income for the third
quarter and nine months of fiscal 1999 was $288,000 and $954,000, respectively,
compared to $316,000 and $894,000 for the same periods in fiscal 1998. Interest
expense in fiscal 1999 includes relatively small amounts of interest paid on
lines of credits maintained by the Company's foreign subsidiaries.

    Income Taxes

    The Company's effective tax rates for the first two quarters of fiscal 1999
and the first three quarters of fiscal 1998 ranged between 38.5% and 39.1% of
pretax income, 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") and benefits accruing from the increases in research
and development activity, causing increased research and development credits.
For the quarter ended April 30, 1999, the tax benefit rate was approximately 15%
due to a lower anticipated benefit from the one-time impairment and
restructuring cost as well as the net operating losses of the Company's foreign
subsidiaries for which no immediate tax benefit has been accrued.

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 some 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


                                       10
<PAGE>   11

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, the Company may experience a material adverse effect on the
Company's business, financial condition and results of operations.

    The Company also has seen significant reduced demand and revenues for its CD
servers and some notebook upgrade disk drive products during the quarter ended
April 30, 1999, and is currently analyzing the market demands and opportunities
for those products in the future while transitioning existing users to more
complex information access solutions such as CD-FORCE and NetFORCE where
possible.

    The Company has embarked on a strategy to acquire other entities that it
believes are complementary to the Company's products, markets or services. The
Company does not have significant experience in managing the acquisition process
or the operations of newly acquired acquisition targets. While the Company
believes that its recent acquisitions have helped position the Company for
long-term growth, especially in Europe, each of the acquisitions brings unique
and sometimes costly challenges to resolve or overcome. For example, in the
quarter ended April 30, 1999, the Company wrote off approximately $2.4 million
in costs related to the acquisition of Invincible in June 1998. There can be no
assurance that the Company's acquisition strategy will be successful, or that
the Company will be successful in managing the acquisition target after the
acquisition is completed. To the extent the Company is unsuccessful in either
the acquisition process or in managing the acquisition target, there could be a
material adverse effect on the Company's business, financial condition and
results of operations.

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 April 30, 1998) plus 1.5%. Finova
also makes available to the Company various flooring commitments 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 April 30,
1999, there was no balance outstanding under the credit facility, and $1.4
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 April 30,
1999, the Company was in compliance with the covenants of the Finova line of
credit. The initial term of the line of credit expired on November 29, 1997, but
automatically renews for successive one year periods unless terminated by either
party within a specified period in advance of the automatic renewal date.

    During the quarter ended April 30, 1999, the Company closed a collateralized
line of credit to finance the acquisition of land intended for the Company's
long term corporate headquarters in Irvine, California. The line is for a total
of $7,500,000, for 18 months, and accrues interest at 6.5%. Approximately
$10,000,000 of the Company's short term cash is pledged as security for
repayment of the line of credit. In addition, the Company


                                       11
<PAGE>   12

maintains a small line of credit for Megabyte's and Gigatek's cash management
needs.

    Subsequent to July 31, 1998, the Company's Board of Directors approved an
open market stock 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 nine months ended April 30, 1998,
the Company repurchased approximately 70,000 shares at a total cost of
approximately $366,000. The Company intends to continue to make repurchases
under the plan as long as the price of the shares purchased represents an
attractive use of the Company's cash.

    The Company has recently purchased an 8.5 acre parcel of land in Irvine,
California, where it is developing 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.

    As of April 30, 1999, the Company had cash and restricted cash balances of
$23.7 million and $18.6 million of availability under its line of credit.
Company believes that these cash balances and available credit under its
existing lines 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, and in the quarter ended April 30, 1999, the Company completed
two additional 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 and during this quarter, of approximately $5 million.
Additional advances may be necessary in the future in order to continue the
orderly operation of the entities acquired. 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 forecast 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

INTEREST RATE RISK

    The Company's exposure to market risk for changes in interest rates relates
primarily to the increase or decrease in the amount of interest income the
Company can earn on its investment portfolio. The Company does not use
derivative financial instruments in its investment portfolio. The Company
invests in high-credit quality issuers and, by policy, limits the amount of
credit exposure to any one issuer. As stated in its policy, the Company ensures
the safety and preservation of its invested principal funds by limiting default
risk, market risk and reinvestment risk. The Company mitigates default risk by
investing in safe and high-credit quality securities and by constantly
positioning its portfolio to respond appropriately to a significant reduction in
a credit rating of any


                                       12
<PAGE>   13

investment issuer, guarantor or depository. The portfolio includes only
marketable securities with active secondary or resale markets to ensure
portfolio liquidity.

FOREIGN CURRENCY EXCHANGE RISK

    The Company transacts business in various foreign countries, but only has
significant assets deployed outside the United States in Germany. The Company
has effected intercompany advances and sold goods to Megabyte denominated in
U.S. dollars, and those amounts are subject to currency fluctuation, and require
constant revaluation on the Company's financial statements. The Company does not
operate a hedging program to mitigate the effect of a significant rapid change
in the value of the German mark compared to the U.S. dollar. If such a change
did occur, the Company's would have to take into account a currency exchange
gain or loss in the amount of the change in the U.S. dollar denominated balance
of the amounts outstanding at the time of such change. While the Company does
not believe such a gain loss is likely, and would not likely be material, there
can be no assurance that such a loss would not have an adverse material effect
on the Company's results of operations or financial condition.

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 believes that it may be
possible 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 management believes 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 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


                                       13
<PAGE>   14

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 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 September 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.
The Company has to date spent approximately $100,000 to upgrade computer
hardware to insure Year 2000 compliance, and that amount will be capitalized and
depreciated over the useful life of the asset, expected to be 3 years. The
Company anticipates that the cost of Year 2000 compliant software (including the
upgraded accounting software noted above) and hardware could exceed $1 million,
and is not likely to exceed $2.0 million, (excluding the costs of the Year 2000
compliance problems associated with the Company's vendors, customers, financial
institutions and government agencies noted above) although the Company believes
that a significant amount of the total expenditures would be capitalized and
depreciated over the useful life of the applicable asset, such as computer
hardware or software replaced to keep pace with technological advances. The
Company estimates that Year 2000 compliance charges will be paid from existing
Company working capital, and that the total Year 2000 compliance budget is
approximately 50% of the Company's total IT expenditures. 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.


                                       14
<PAGE>   15

                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings.

    As previously reported in the Company's filings with the Securities and
Exchange Commission, the Company and one of its executives are defendants 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 and the executive
breached an alleged oral contract with Miradco. Miradco had claimed that it is
entitled to receive up to 7% of the Company's Common Stock, with a minimum of
280,000 shares. On June 11, 1999, an Orange County jury returned a verdict in
favor of the Company and against Miradco. While the Plaintiffs may appeal the
verdict, the Company believes the claims of Miradco had no merit, and the
Company is extremely pleased with the jury's verdict.

    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)  Reports on Form 8-K. No reports on Form 8-K were filed for the
              quarter ended April 30, 1999, although the Company filed a Report
              on Form 8-K on June 7, 1999 reporting that Arthur Andersen had
              resigned as the Company's independent auditors on June 1, 1999
              (the "Former Auditors"). The Report noted that there had been no
              disagreements with the Former Auditors during the previous three
              years, with which statement the Former Auditors concurred in
              writing, and that the Company was seeking to replace the Former
              Auditors promptly.


                                       15
<PAGE>   16

                                   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 June, 1999.

                                        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             June 14, 1998
-----------------------------------   and Chief Executive Officer (Principal
             Alex Razmjoo             Executive Officer)


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


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


                                       16
<PAGE>   17

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                                                               SEQUENTIALLY
EXHIBIT                                                                                                           NUMBER
NUMBER                                        DESCRIPTION                                                          PAGE
-------                                       -----------                                                      ------------
<C>        <S>                                                                                                 <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 ...........................................................................

  11.1+    Statement re: Computation of Earnings Per Share ...................................................

  21.1+    List of Subsidiaries ..............................................................................

  27.1     Financial Data Schedule ...........................................................................
</TABLE>

----------

+  Previously filed


                                       17