<PAGE>   1
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended November 30, 1998.

                                       or

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

For the transition period from _____________________ to _____________________

                           COMMISSION FILE NO. 0-20189

                              EQUITRAC CORPORATION
             (Exact name of Registrant as specified in its charter)


            FLORIDA                                    59-1797862
(State or other jurisdiction of            (IRS Employee Identification Number)
incorporation or organization)


                           836 PONCE DE LEON BOULEVARD
                           CORAL GABLES, FLORIDA 33134
                                 (305) 442-2060
               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                          principal executive offices)


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


     As of January 6, 1999, there were 3,539,500 shares of the Registrant's
common stock, par value $.01, outstanding.




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


<PAGE>   2



                              EQUITRAC CORPORATION

                                      INDEX


<TABLE>
<CAPTION>
                                                                                PAGE
                                                                                ----

<S>                                                                              <C>
PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

          Condensed Balance Sheets
          as of November 30, 1998
          and February 28, 1998                                                   2

          Condensed Statements of Income
          for the three months and nine months
          ended November 30, 1998 and 1997                                        3

          Condensed Statement of Stockholders' Equity and
          Accumulated Other Comprehensive Income for the
          nine months ended November 30, 1998 and 1997                            4

          Condensed Statements of Cash Flows
          for the nine months ended
          November 30, 1998 and 1997                                              5

          Notes to Condensed Financial Statements                                 6

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


PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                                       16


SIGNATURES                                                                       16


</TABLE>


                                       1

<PAGE>   3



PART I        FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS


                              EQUITRAC CORPORATION
                            CONDENSED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                  (Unaudited)
                                                                   NOVEMBER 30,   FEBRUARY 28,
                                                                      1998           1998
                                                                   ------------   ------------
<S>                                                                 <C>            <C>     
                                     ASSETS
Current assets:
     Cash and cash equivalents                                      $  2,701       $  5,819
     Short-term investment securities                                  6,600          5,208
     Accounts receivable, net of allowances of $650                   10,864          8,178
     Inventories                                                       3,530          2,465
     Deferred income taxes                                             1,130            234
     Other current assets                                                388            444
                                                                    --------       --------
       Total current assets                                           25,213         22,348

Investment securities                                                  3,687          2,497
Property and equipment, net                                            8,009          6,418
Intangible assets, net                                                 2,468          3,111
Deferred income taxes                                                    637            556
Other assets                                                             238            184
                                                                    --------       --------
       Total assets                                                 $ 40,252       $ 35,114
                                                                    ========       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                $  1,426       $  1,720
    Accrued expenses and other current liabilities                     6,179          3,878
    Unearned income                                                      781          1,337
                                                                    --------       --------

           Total current liabilities                                   8,386          6,935
                                                                    --------       --------

Stockholders' equity:
    Common stock, $.01 par value; 15,000,000 shares
       authorized; 3,964,200 and 3,877,100 shares issued
       at November 30, and February 28, respectively                      40             39
    Additional paid-in capital                                        12,690         11,490
    Retained earnings                                                 22,605         18,830
    Accumulated other comprehensive income                               (92)             7
    Treasury stock, at cost (430,900 and 370,800 shares at
       November 30, and February 28, respectively)                    (3,377)        (2,187)
                                                                    --------       --------
           Total stockholders' equity                                 31,866         28,179
                                                                    --------       --------
               Total liabilities and stockholders' equity           $ 40,252       $ 35,114
                                                                    ========       ========

</TABLE>



                             See accompanying notes.


                                       2

<PAGE>   4






                              EQUITRAC CORPORATION
                         CONDENSED STATEMENTS OF INCOME
                      (in thousands, except share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED        NINE MONTHS ENDED
                                                      NOVEMBER 30,              NOVEMBER 30,
                                                 --------------------      --------------------
                                                  1998          1997         1998         1997
                                                 -------      -------      -------      -------
<S>                                              <C>          <C>          <C>          <C>    
Revenues:
     Sales                                       $ 6,913      $ 5,512      $20,454      $16,480
     Service and support                           4,878        4,306       14,312       12,242
     Rental                                        2,639        2,626        7,947        7,821
                                                 -------      -------      -------      -------

           Total revenues                         14,430       12,444       42,713       36,543
                                                 -------      -------      -------      -------

Costs and expenses:
       Cost of revenues                            5,955        5,223       18,038       15,065
       Product development                           730          669        2,203        2,150
       Selling expenses                            1,870        1,697        5,780        5,190
       General and administrative                  4,195        3,705       12,018       10,926
                                                 -------      -------      -------      -------

            Total costs and expenses              12,750       11,294       38,039       33,331
                                                 -------      -------      -------      -------

            Operating income                       1,680        1,150        4,674        3,212

Gain on sale of assets                               830           --          830           --
Interest income                                      185          165          563          435
                                                 -------      -------      -------      -------

            Income before income taxes             2,695        1,315        6,067        3,647

Income taxes                                       1,011          500        2,292        1,392
                                                 -------      -------      -------      -------

            Net income                           $ 1,684      $   815      $ 3,775      $ 2,255
                                                 =======      =======      =======      =======

Earnings per share

      Basic                                      $  0.48      $  0.23      $  1.07      $  0.66
                                                 =======      =======      =======      =======

      Diluted                                    $  0.45      $  0.22      $  1.00      $  0.62
                                                 =======      =======      =======      =======

</TABLE>





                             See accompanying notes.



                                       3

<PAGE>   5



                              EQUITRAC CORPORATION
                  CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                   AND ACCUMULATED OTHER COMPREHENSIVE INCOME
                    (IN THOUSANDS, EXCEPT NUMBER OF SHARES)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                      COMMON                                                             
                                                     STOCK AND                     ACCUMULATED                             
                                                     ADDITIONAL                      OTHER                           TOTAL      
                                        COMMON         PAID-IN        RETAINED   COMPREHENSIVE       TREASURY     STOCKHOLDERS' 
                                        SHARES         CAPITAL        EARNINGS        INCOME          STOCK         EQUITY
                                       ---------      ---------      ---------      ----------      ----------    -----------
<S>                                    <C>            <C>            <C>            <C>             <C>             <C>      
Balance, February 28, 1998             3,877,100      $  11,529      $  18,830      $       7       $  (2,187)      $  28,179


Net income for the nine
  months ended 
  November 30, 1998                           --             --          3,775             --              --           3,775

Accumulated other
comprehensive income
   net of tax:

  Unrealized loss on marketable
     securities, net of tax                   --             --             --            (39)             --             (39)
  Translation adjustment                      --             --             --            (60)             --             (60)

Total comprehensive income                    --             --             --             --              --           3,676

Exercise of employee
   stock options                          87,100            733             --             --              --             733
Tax benefit from stock
   plans                                      --            468             --             --              --             468

Purchase of treasury stock
     60,100 shares                            --             --             --             --          (1,190)         (1,190)
                                       ---------      ---------      ---------      ---------       ---------       ---------
Balance, November 30, 1998             3,964,200      $  12,730      $  22,605      $     (92)      $  (3,377)      $  31,866
                                       =========      =========      =========      =========       =========       =========


</TABLE>


<TABLE>
<CAPTION>
                                                      COMMON                                                             
                                                     STOCK AND                   ACCUMULATED                              
                                                     ADDITIONAL                     OTHER                             TOTAL    
                                        COMMON        PAID-IN        RETAINED   COMPREHENSIVE       TREASURY      STOCKHOLDERS'
                                        SHARES        CAPITAL        EARNINGS       INCOME           STOCK           EQUITY 
                                       ---------      --------      ---------      ---------       ---------      -----------
<S>                                   <C>            <C>                          <C>             <C>             <C>      
Balance, February 28, 1997             3,800,300      $ 10,779      $  15,672      $     (23)      $  (1,653)      $  24,775

Net income for the nine
  months ended 
  November 30, 1997                           --            --          2,255             --              --           2,255

Accumulated other
comprehensive income,
   net of tax:

  Unrealized gain on marketable
     securities, net of tax                   --            --             --             15              --              15
  Translation adjustment                      --            --             --            (36)             --             (36)

Total comprehensive income                    --            --             --             --              --           2,234

Exercise of employee
   stock options                          57,800           326             --             --              --             326

Purchase of treasury stock
  50,000 shares                               --            --             --             --            (534)           (534)

                                       ---------      --------      ---------      ---------       ---------       ---------
Balance, November 30, 1997             3,858,100      $ 11,105      $  17,927      $     (44)      $  (2,187)      $  26,801
                                       =========      ========      =========      =========       =========       =========


</TABLE>


                             See accompanying notes.

                                       4




<PAGE>   6




                              EQUITRAC CORPORATION

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                 (in thousands)

<TABLE>
<CAPTION>

                                                                              NINE MONTHS ENDED
                                                                                NOVEMBER 30,
                                                                           ---------------------
                                                                            1998           1997
                                                                           -------       -------
<S>                                                                        <C>           <C>    
Cash flows from operating activities:
    Net income                                                             $ 3,775       $ 2,255
    Adjustments to reconcile net income to
        net cash provided by operating activities:
    Depreciation                                                             2,094         2,147
    Amortization                                                               597           905
    Provision for doubtful accounts                                             --            50
    Deferred income taxes                                                     (969)           --
    Gain on sale of assets                                                    (830)           --
    Change in assets and liabilities:
         (Increase) decrease in:
           Accounts receivable                                              (3,061)       (1,681)
           Inventories                                                      (1,516)          456
           Other current assets                                                 56           (51)
           Other assets                                                        (54)            6
         Increase (decrease) in:
           Accounts payable                                                   (294)         (518)
           Accrued expenses                                                  2,397            88
           Unearned income                                                    (468)          446
                                                                           -------       -------

             Net cash provided by operating activities                       1,727         4,103
                                                                           -------       -------

Cash flows from investing activities:

    Purchases of property and equipment                                     (3,852)       (2,027)
    Acquisitions of product lines, principally intangible assets                --        (1,023)
    Cash proceeds from gain on sale of assets                                2,127            --
    Sales and maturities of investment securities                            4,269         2,255
    Purchases of investment securities                                      (6,872)       (3,694)
                                                                           -------       -------

             Net cash used in investing activities                          (4,328)       (4,489)
                                                                           -------       -------


Cash flows from financing activities:
    Proceeds from issuance of common stock                                     733           326
    Purchase of treasury stock                                              (1,190)         (534)
                                                                           -------       -------

             Net cash used in by financing activities                         (457)         (208)
                                                                           -------       -------

    Exchange rate effect on cash                                               (60)          (36)
                                                                           -------       -------

    Net decrease in cash and cash equivalents                               (3,118)         (630)
    Cash and cash equivalents, beginning of period                           5,819         4,755
                                                                           -------       -------
    Cash and cash equivalents, end of period                               $ 2,701       $ 4,125
                                                                           =======       =======

    Supplemental disclosure of cash flow information:
           Cash paid during the period for income taxes                    $ 1,912       $ 1,825


</TABLE>


                             See accompanying notes.

                                       5

<PAGE>   7


                              EQUITRAC CORPORATION

                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS


 1.  BASIS OF PRESENTATION

         The accompanying unaudited condensed financial statements have been
     prepared by the Company, in accordance with generally accepted accounting
     principles, pursuant to the rules and regulations of the Securities and
     Exchange Commission. Certain information and footnote disclosure normally
     included in financial statements have been condensed or omitted pursuant to
     such rules and regulations. In the opinion of management, the accompanying
     financial statements include all adjustments (of a normal recurring nature)
     which are necessary to state fairly the results for the interim periods
     presented. The results for the nine months ended November 30, 1998 are not
     necessarily indicative of the results to be expected for the full fiscal
     year. These unaudited condensed financial statements should be read in
     conjunction with the financial statements and notes thereto included in the
     Annual Report on Form 10-K for the fiscal year ended February 28, 1998,
     filed with the Securities and Exchange Commission.

         In March 1998, the Company adopted Statement of Financial Accounting
     Standards No. 130 Reporting Comprehensive Income ("SFAS 130"). The
     calculation of comprehensive income is included in the accompanying
     unaudited Condensed Statements of Stockholder's Equity and Accumulated
     Other Comprehensive Income.

 2.  GAIN ON SALE OF ASSETS

         On November 30, 1998, the Company sold the Equitrac Computer Services
     ("ECS") division which provides maintenance services on a wide range of
     computer equipment manufactured by others. ECS revenues for the quarter and
     nine months ended November 30, 1998 decreased to $1,165,000 and $4,056,000,
     respectively from $1,484,000 and $4,074,000 in the same periods last fiscal
     year. The cash proceeds from the sale were $2,127,000 and the Company
     recorded a gain on sale of assets in the amount of $830,000. The ECS
     division recorded an operating loss of $117,000 and $217,000 for the
     quarter and nine months ended November 30, 1998, respectively.

 3.  REVENUE RECOGNITION

         Revenues from sales of company-manufactured products sold to end-users
     are recognized upon installation and customers' acceptance, in accordance
     with the provisions of SOP 97-2, Software Revenue Recognition. Revenues
     from sales of company-manufactured products to independent dealers and
     distributors are recognized upon shipment. Revenues from resale of products
     by the ECS division are recognized upon shipment. Service and support
     revenues are recognized ratably over the contractual period in which the
     service and support are provided or as the services are provided. Amounts
     received in advance of services are deferred. Rental contract revenues,
     which includes service and support on the underlying rental equipment and
     software, is recognized ratably over the term of the respective lease.
     Rental contracts are accounted for as operating leases.



                                       6

<PAGE>   8


 4.  USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts in the financial statements
     and accompanying notes. Actual results could differ from those estimates.

 5.  CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid investments with a remaining
     maturity of three months or less at the time of purchase to be cash
     equivalents. Cash equivalents are carried at cost, which approximates fair
     value.

 6.  INVESTMENT SECURITIES

         The Company has classified its entire investment portfolio as
     available-for-sale. Available-for-sale securities are stated at fair value
     with unrealized gains and losses included in stockholders' equity.
     Interest and dividends on all securities are recognized when earned.

         Both gross unrealized gains and losses as of November 30, 1998 and
     1997, and realized gains and losses on sales of each type of security for
     the periods ended November 30, 1998 and 1997, were not material. For the
     purpose of determining gross realized gains and losses, the cost of
     securities sold is based upon specific identification.

7.   INVENTORIES

         Inventories, which consist primarily of system components, parts and
     supplies, are stated at the lower of weighted average cost or market. The
     weighted average cost of inventories approximates the "first in-first out"
     ("FIFO") method. Management performs periodic assessments to determine the
     existence of obsolete, slow-moving and nonsalable inventories and records
     necessary provisions to reduce such inventories to net realizable value.

 8.  PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost. Depreciation and
     amortization are provided on the straight-line method over the shorter of
     the estimated useful lives of the assets or the applicable lease term for
     leasehold improvements.

         Maintenance and repairs are charged to expense when incurred;
     betterments are capitalized. Upon retirement or sale, the cost and
     accumulated depreciation are removed from the accounts and any gain or loss
     is recognized currently.

  9.  PRODUCT DEVELOPMENT COSTS

         The Company examines its product development costs after technological
     feasibility has been established to determine the amount of capitalization
     that is required. For all periods presented herein, product development
     costs incurred subsequent to the establishment of technological feasibility
     have not been material.



                                       7
<PAGE>   9


 10.  FOREIGN CURRENCY TRANSLATION

         Translation of foreign currencies into U.S. dollars is computed for
     revenue and expense accounts using average exchange rates during the year.
     Net assets of the Company's Canadian operations, whose "functional
     currency" is the Canadian dollar are translated at current rates of
     exchange, with the resulting translation adjustment recorded directly into
     a separate component of stockholders' equity. The functional currency for
     the Company's other foreign operations is the U.S. dollar. Net assets of
     these operations are translated at current rates of exchange, with the
     resulting translation gains and losses included in the statement of income.









                                       8

<PAGE>   10


 11.  EARNINGS PER SHARE

         In fiscal 1998, the Company adopted SFAS No. 128, Earnings per Share
     ("EPS"). SFAS No. 128 requires the presentation of basic EPS and diluted
     EPS. Basic EPS is computed by dividing income available to common
     stockholders by the weighted average number of common shares outstanding.
     Diluted EPS includes the dilutive effect of stock options. All prior year
     EPS calculations have been restated in accordance with the provisions of
     SFAS No. 128. Adoption of SFAS No. 128 did not have a material effect on
     the Company's historically disclosed EPS.

<TABLE>
<CAPTION>

                                                                               Per-Share
     (in thousands, except per share amounts)        Net Income     Shares      Amount
                                                     ----------     ------     --------
<S>                                                    <C>          <C>        <C>     
Quarter ended November 30, 1998
Basic Earnings Per Share:
     Income available to common stockholders           $1,684       3,520      $   0.48
                                                                               --------
Options issued to employees                                           255
                                                       ------      ------
Diluted Earnings Per Share:
     Income available to common stockholders
plus assumed conversions                               $1,684       3,775      $   0.45
                                                       ======      ======      ========

Nine months ended November 30, 1998
Basic Earnings Per Share:
     Income available to common stockholders           $3,775       3,514      $   1.07
                                                                               --------
Options issued to employees                                           271
                                                       ------      ------
Diluted Earnings Per Share:
     Income available to common stockholders
plus assumed conversions                               $3,775       3,785      $   1.00
                                                       ======      ======      ========

Quarter ended November 30, 1997
Basic Earnings Per Share:
     Income available to common stockholders           $  815       3,497      $   0.23
                                                                               --------
Options issued to employees                                           293
                                                       ------      ------
Diluted Earnings Per Share:
Income available to common stockholders
plus assumed conversions                               $  815       3,790      $   0.22
                                                       ======      ======      ========

Nine months ended November 30, 1997
Basic Earnings Per Share:
     Income available to common stockholders           $2,255       3,397      $   0.66
                                                                               --------
Options issued to employees                                           253
                                                       ------      ------
Diluted Earnings Per Share:
Income available to common stockholders
plus assumed conversions                               $2,255       3,650      $   0.62
                                                       ======      ======      ========

</TABLE>


                                       9


<PAGE>   11



 12.  CONTINGENCIES

     The Company is involved from time to time in legal proceedings incident to
the normal course of its business. Management believes that the ultimate outcome
of any pending or threatened litigation would not have a material adverse effect
on the Company's financial position, results of operations or cash flows.

     In November, 1997, the Company filed a lawsuit in Canada against Promatek
Industries, Ltd., a Canadian company ("Promatek") for infringement of two
Canadian patents owned by the Company. In June 1998, Promatek filed a lawsuit in
the United States District Court for the Northern District of Illinois alleging,
among other things, violations by the Company of various U.S. antitrust and
trade practice laws and seeking injunctive relief and compensatory and punitive
damages against the Company. The Company believes that the U.S. lawsuit has been
brought by Promatek solely as a defensive measure to encourage the Company to
dismiss or settle its Canadian lawsuit. The Company believes that the claims
made by Promatek in the U.S. lawsuit are without merit and intends to vigorously
defend that action. The Company also intends to continue to pursue enforcement
of its patents against Promatek in the Canadian lawsuit.










                                       10

<PAGE>   12


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

RESULTS OF OPERATIONS

     The Company's revenues are derived from three principal sources: (1) sales
of new systems, upgrades and add-ons of equipment or software; (2) monthly
revenues from service and software support agreements and (3) monthly revenues
from leases of its systems. The Company offers its customers the option of
purchasing a system or leasing a system pursuant to an operating lease (the term
of which is typically 36 months or longer), which includes all service and
software support. The Company offers its purchase customers service and software
support agreements (the terms of which are typically for 36 months or longer).
Systems that are not purchased in conjunction with a service contract are
serviced by the Company on a time-and-materials basis. The Company's computer
service division offers its customers service agreements (the terms of which are
typically for 12 months) and also provides service on a time-and-materials
basis.

     On November 30, 1998, the Company sold the ECS division which provides
maintenance services on a wide range of computer equipment manufactured by
others. ECS revenues for the quarter and nine months ended November 30, 1998
decreased to $1,165,000 and $4,056,000, respectively from $1,484,000 and
$4,074,000 in the same periods last fiscal year. The cash proceeds from the sale
were $2,127,000 and the Company recorded a gain on sale of assets in the amount
of $830,000. The ECS division recorded an operating loss of $117,000 and
$217,000 for the quarter and nine months ended November 30, 1998, respectively.

     The following table sets forth, for the periods presented, selected items
in the Condensed Statements of Income as a percentage of total revenues.

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED     NINE MONTHS ENDED
                                              NOVEMBER 30,          NOVEMBER 30,
                                         -------------------     -------------------
                                           1998        1997        1998        1997
                                         -------     -------     -------     -------
<S>                                         <C>         <C>         <C>         <C>  
Revenues:
     Sales                                  47.9%       44.3%       47.9%       45.1%
     Service and support                    33.8        34.6        33.5        33.5
     Rental                                 18.3        21.1        18.6        21.4
                                         -------     -------     -------     -------
     Total revenues                        100.0%      100.0%      100.0%      100.0%
                                         -------     -------     -------     -------

Expenses:
     Cost of revenues                       41.3        42.0        42.2        41.2
     Product development                     5.1         5.4         5.2         5.9
     Selling expenses                       12.9        13.6        13.5        14.2
     General and administrative             29.1        29.8        28.1        30.0
                                         -------     -------     -------     -------

       Total expenses                       88.4        90.8        89.0        91.3

       Operating income                     11.6         9.2        11.0         8.7

Gain on sale of assets                       5.8          --         1.9          --
Interest income                              1.3         1.3         1.3         1.2
                                         -------     -------     -------     -------

     Income before income taxes             18.7        10.5        14.2         9.9

Income taxes                                 7.0         4.0         5.4         3.8
                                         -------     -------     -------     -------

     Net income                             11.7%        6.5%        8.8%        6.1%
                                         =======     =======     =======     =======

</TABLE>


                                       11

<PAGE>   13



REVENUES

     SALES REVENUES. Sales revenues for the quarter ended November 30, 1998
increased 25% to $6,913,000 from $5,512,000 in the same quarter last fiscal
year. Sales revenues for the nine months ended November 30, 1998 increased 24%
to $20,454,000 from $16,480,000 in the same nine month period last fiscal year.
The increase resulted primarily from an increase in sales of cost recovery
systems to professional service firms and from revenues derived from sales of
new Business Technology Division ("BTD") products, including OEM sales of Pitney
Bowes AccuTrac Mail Accounting Systems. These increases were offset by decreases
in computer equipment resale revenues from the ECS division. Resale revenues
decreased by $471,000 and $737,000 for the quarter and nine months ended
November 30, 1998 compared to the same periods last fiscal year. Sales of cost
recovery systems increased 21% to $5,695,000 for the quarter ended November 30,
1998 from $4,700,000 in the same quarter last fiscal year. BTD sales revenues
totaled $861,000 and $2,879,000 for the quarter and nine months ended November
30, 1998.

     SERVICE AND SUPPORT REVENUES. Service and support revenues for the quarter
ended November 30, 1998 increased 13% to $4,878,000 from $4,306,000 in the same
quarter last fiscal year. Service and support revenues for the nine months ended
November 30, 1998 increased 17% to $14,312,000 from $12,242,000 in the same nine
month period last fiscal year. This increase in service and support revenues
resulted from an increase in service contracts in the Company's cost recovery
divisions and an increase in service and support revenues generated by the ECS
division. Service and support revenues from the Company's cost recovery
divisions increased 12% and 13% for the quarter and nine months ended November
30, 1998 compared to the same periods last fiscal year. Service and support
revenues for the quarter and nine months ended November 30, 1998 and 1997,
included $822,000 and $1,691,000 of revenues generated by the ECS division
compared to $672,000 and $2,411,000 for the same periods last fiscal year.

     RENTAL REVENUE. Rental revenues for the quarter ended November 30, 1998
were $2,639,000 compared to $2,626,000 in the same quarter last fiscal year.
Rental revenues for the nine months ended November 30, 1998 increased to
$7,947,000 from $7,821,000 in the same nine month period last fiscal year.


EXPENSES

     COST OF REVENUES. Cost of revenues is comprised primarily of (i) payroll
and other expenses related to customer support and service personnel, (ii) the
cost of hardware and system components associated with system sales and service,
and (iii) depreciation of rental and service units. Cost of revenues for the
quarter ended November 30, 1998 increased to $5,955,000, or 41.3% of total
revenues, from $5,223,000, or 42.0% of total revenues, in the same quarter last
fiscal year. Cost of revenues for the nine months ended November 30, 1998
increased to $18,038,000, or 42.2% of total revenues, from $15,065,000, or 41.2%
of total revenues. Comparing the quarters ended November 30, 1998 and 1997, the
decrease in cost of revenues as a percentage of revenues is attributable to the
decrease in sales revenues from the ECS division which has a higher cost of
revenues expense as a percentage of revenues compared to the Company's cost
recovery divisions. For the nine months ended November 30, 1998 and 1997, the
increase in the cost of revenues as a percentage of total revenues is
attributable to the increase in revenues from the Company's BTD and ECS
divisions.


  

                                     12

<PAGE>   14


     PRODUCT DEVELOPMENT EXPENSES. Product development expenses for the quarter
ended November 30, 1998 increased to $730,000, or 5.1% of total revenues from
$669,000, or 5.4% of total revenues, in the same quarter last fiscal year.
Product development expenses for the nine months ended November 30, 1998
increased to $2,203,000, or 5.2% of total revenues, from $2,150,000, or 5.9% of
total revenues, in the same nine month period last fiscal year. Current
development efforts were focused primarily on enhancing and expanding the cost
recovery product lines as well as developing several new products. Products
under development during these periods include (i) TelemeTrac(TM), a product
which collects and reports photocopier meter totals remotely through cellular
telephone networks, (ii) PrintLog(TM), a digital output tracking application
designed to track all pages printed from a workstation to laser printers and
network photocopiers and assign each transaction to a client, project or
department, (iii) new version of System 4(TM), a Windows(R) NT based cost
recovery operating system and (iv) enhancements to the Pitney Bowes OEM product
line. The Company does not capitalize any of its product development costs since
development costs incurred subsequent to attainment of technological feasibility
of a new product line have not been material. Management anticipates that
product development costs may increase during the remainder of fiscal 1999 as
the Company invests in the development and enhancements of existing products, as
well as, new products.

     SELLING EXPENSES. Selling expenses for the quarter ended November 30, 1998
increased to $1,870,000, or 12.9% of total revenues from $1,697,000, or 13.6% of
total revenues, in the same quarter last fiscal year. Selling expenses for the
nine months ended November 30, 1998 increased to $5,780,000, or 13.5% of total
revenues, from $5,190,000, or 14.2% of total revenues, in the same nine month
period last fiscal year. These decreases in selling expenses as a percentage of
revenues resulted from the sales of BTD products which have a lower associated
selling expense and incremental revenues derived per sales representative during
the quarter and nine months ended November 30, 1998 compared to the same quarter
and nine month period last fiscal year.

      GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the quarter ended November 30, 1998 increased to $4,195,000, or 29.1% of
total revenues, from $3,705,000, or 29.8% of total revenues, in the same quarter
last fiscal year. General and administrative expenses for the nine months ended
November 30, 1998 increased to $12,018,000, or 28.1% of total revenues, from
$10,926,000, or 30.0% of total revenues, in the same nine month period last
fiscal year. These decreases in general and administrative expenses as a
percentage of revenues resulted primarily from the Company's ability to increase
revenues through internal sales growth without adding a commensurate level of
support and administrative positions.

     INTEREST INCOME. The Company's interest income increased to $185,000 during
the quarter ended November 30, 1998 from $165,000 during the same quarter last
fiscal year. Interest income for the nine months ended November 30, 1998
increased to $563,000 from $435,000 in the same nine month period last fiscal
year.

     INCOME TAXES. The Company's effective income tax rate was 37.5% and 37.8%
for the quarter and nine months ended November 30, 1998, compared to 38.0% and
38.2% in the same quarter and nine month period last fiscal year.




                                       13


<PAGE>   15


LIQUIDITY AND CAPITAL RESOURCES

     The Company has funded its operations over the past several years
principally from cash flow from operations. The Company generated $1,727,000 and
$4,103,000 in cash flows from operating activities for the nine months ended
November 30, 1998 and 1997, respectively. The Company's cash and cash
equivalents and investment securities decreased to $12,988,000 at November 30,
1998 from $13,524,000 at February 28, 1998 primarily as a result of the Company
purchasing its own outstanding common stock and the purchase of additional
inventory for its BTD and ECS divisions. The Company received cash proceeds from
the gain on sale of assets in the amount of $2,127,000 during the quarter ended
November 30, 1998. The decrease in cash flows from operating activities results
from an increase in working capital needs as the Company expands its product
lines, resulting in an increase in inventory and accounts receivables.

     The Board of Directors has authorized the Company to spend up to $4,500,000
to repurchase shares of the Company's issued and outstanding common stock, based
upon consideration of the Company's current cash position, management's
expectations of future cash flows from operating activities and the level of
cash required to fund future growth opportunities. Through November 30, 1998,
the Company repurchased 430,900 shares of common stock for an aggregate purchase
price of $3,377,000.

     The Company has purchased and has begun implementing a new enterprise-wide
information system. The Company has budgeted and anticipates spending
approximately $600,000 over the remainder of the current fiscal year relating to
the purchase and implementation of this new Oracle information system. In
addition, the Company will be relocating its manufacturing facilities in
anticipation of future growth. The relocation is expected to take place during
the first half of fiscal 1999. The Company anticipates that its cash and cash
equivalents, investment securities and cash flows from operating activities will
be adequate to meet the Company's cash requirements for the foreseeable future.

YEAR 2000 CONSIDERATIONS

     The Company has begun the implementation of a new enterprise wide
information system that correctly identifies the Year 2000. The Company is
currently implementing Oracle financial modules and expects to complete the
implementation before the fourth quarter of calendar year 1999. However, there
can be no assurance that this software implementation will be successfully
completed, or that the implementation will not have a material adverse impact on
the Company's financial position or results of operations. Although the Company
believes that the information systems of its major vendors (insofar as they
relate to the Company's business) comply with Year 2000 requirements, there can
be no assurance that the Year 2000 issue will not affect the information systems
of the Company's major vendors as they relate to the Company's business, or that
any such impact of a major vendor's information system would not have a material
adverse effect on the Company. The Company will be formulating a contingency
plan with respect to such entities with which it does business. The Company
believes that all current versions of its product lines are Year 2000 compliant.

FORWARD LOOKING STATEMENTS

     Certain statements in this Form 10-Q, including statements contained herein
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations", constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such forward
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance



                                       14

<PAGE>   16

or achievements of the Company to be materially different from any future
results, performance or achievements express or implied by such forward-looking
statements. Such factors include, but are not limited to the following: general
economic and business conditions; charges and costs related to acquisitions; and
the ability of the Company to develop and market products for the markets in
which it operates, to successfully integrate its acquired products and services,
to adjust to changes in technology, customer preferences, enhanced competition
and new competitors in the markets in which it operates.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1997, the FASB issued Statements of Financial Accounting No. 131,
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION ("SFAS
131"). The Company is required to adopt this statement during fiscal year 1999.
SFAS 131 establishes standards for reporting information about operating
segments. The Company is currently evaluating the impact of this standard on its
financial statement disclosures.

     In March 1998, the ACSEC issued SOP 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. SOP 98-1 establishes
criteria for determining which costs of developing or obtaining internal-use
computer software should be charged to expense and which should be capitalized.
SOP 98-1 is effective for all transactions entered into in fiscal years
beginning after December 15, 1998.










                                       15
<PAGE>   17




PART II       OTHER INFORMATION


ITEM 6.  Exhibits and Reports on Form 8-K

              A.  Exhibits

                  27    Financial Data Schedule (for SEC use only) 

              B.  Reports on Form 8-K

                  None.



                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf thereunto duly
authorized.


                                             EQUITRAC CORPORATION



Date:    January 15, 1999                    By: /s/ George P. Wilson      
                                                 ------------------------------
                                                 George P. Wilson
                                                 President and Chief
                                                 Executive Officer




Date:    January 15, 1999                    By: /s/ Scott J. Modist       
                                                 ------------------------------
                                                 Scott J. Modist
                                                 Sr. Vice President and
                                                 Chief Financial Officer







                                       16