<PAGE>

                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C.  20549
                                          
                                          
                                     FORM 10-Q
                                          
                                          
                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934
                                          
                                          
                    For the quarterly period ended June 30, 1998
                                          
                           Commission File No. 000-21375
                                          
                                          
                          ONTRACK DATA INTERNATIONAL, INC.
            (Exact name of  business issuer as specified in its charter)
                                          


              MINNESOTA                                 41-1521650
   (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization) 
                
     6321 BURY DRIVE, SUITES 13-21,                       55346
        EDEN PRAIRIE, MINNESOTA                         (Zip Code)
(Address of principal executive office)
                
           WWW.Ontrack.com                             (612) 937-1107
            (Web address)                        (Issuer's telephone number)


Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
                        -----                   -----

Number of shares of Common Stock, $.01 par value, outstanding as of 
July 31, 1998       9,965,488           


<PAGE>


                          ONTRACK DATA INTERNATIONAL, INC.
                                          
                                       INDEX
                                          
                                          
<TABLE>
                                                                               PAGE
                                                                               ----
<S>                                                                            <C>
PART 1.      FINANCIAL INFORMATION

     Item 1.   Financial Statements (unaudited): 

          Condensed Consolidated Balance Sheets as of 
          June 30, 1998 and December 31, 1997                                   3

          Condensed Consolidated Statements of Income for the
          three and six months ended June 30, 1998 and 1997                     4

          Condensed Consolidated Statements of Cash Flows 
          for the six months ended June 30, 1998 and 1997                       5

          Notes to Condensed Consolidated Financial Statements                  6-7

     Item 2.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations                              8-10


PART II.  OTHER INFORMATION 

     Item 1.   Legal Proceedings                                                11

     Item 2.   Changes in Securities                                            11

     Item 3.   Defaults Upon Senior Securities                                  11
          
     Item 4.   Submission of Matters to a Vote of Security Holders              11

     Item 5.   Other Information                                                12

     Item 6.   Exhibits and Reports on Form 8-K                                 12


SIGNATURES                                                                      13

</TABLE>

                                          2
<PAGE>



PART 1.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                           ONTRACK DATA INTERNATIONAL, INC.
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                        ( IN THOUSANDS, EXCEPT SHARE AMOUNTS )

<TABLE>
                                                                              June 30, 1998  December 31, 1997
                                                                              -------------  -----------------
                                                                                (Unaudited)
<S>                                                                           <C>            <C>
ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                                         $ 13,304       $ 17,315
Short-term investments                                                              11,235         14,861
Accounts receivable, net                                                             3,394          3,321
Prepaid expenses and other current assets                                            2,537          2,042
                                                                              -------------  -----------------
Total current assets                                                                30,470         37,539

Marketable securities                                                               11,561          3,506
Furniture and equipment, net                                                         3,959          4,080
                                                                              -------------  -----------------
TOTAL ASSETS                                                                      $ 45,990       $ 45,125
                                                                              -------------  -----------------
                                                                              -------------  -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY 

CURRENT LIABILITIES:                                                                      
Accounts payable                                                                  $  1,066       $    770
Accrued expenses                                                                     2,210          5,024
                                                                              -------------  -----------------
Total current liabilities                                                            3,276          5,794

SHAREHOLDERS' EQUITY:

Common stock ( 9,960,488 and 9,910,190 shares issued and
outstanding at June 30, 1998 and December 31, 1997, respectively)                      100             99

Additional paid-in capital                                                          31,194         30,880

Accumulated other comprehensive income                                                  37             20

Retained earnings                                                                   11,383          8,332
                                                                              -------------  -----------------
Total shareholders' equity                                                          42,714         39,331
                                                                              -------------  -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $ 45,990       $ 45,125
                                                                              -------------  -----------------
                                                                              -------------  -----------------
</TABLE>

                           SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                                  3
<PAGE>


                           ONTRACK DATA INTERNATIONAL, INC.
                     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                 ( IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS )
                                     (UNAUDITED)

<TABLE>

                                                         THREE MONTHS                   SIX MONTHS
                                                         ENDED JUNE 30,                ENDED JUNE 30,
                                                    -----------------------       -----------------------
                                                     1998           1997           1998           1997
                                                 -----------    -----------    -----------    -----------
     <S>                                         <C>            <C>            <C>            <C>
     REVENUES:
     Services                                    $     7,235    $     6,079    $    14,440    $    12,191
     Software                                          1,831          2,066          3,533          4,024
                                                 -----------    -----------    -----------    -----------
      TOTAL REVENUES                                   9,066          8,145         17,973         16,215


     COST OF REVENUES:                                      
     Services                                          1,426            981          2,754          1,927
     Software                                            289            391            601            706
                                                 -----------    -----------    -----------    -----------
      TOTAL COST OF REVENUES                           1,715          1,372          3,355          2,633
                                                 -----------    -----------    -----------    -----------
     GROSS MARGIN                                      7,351          6,773         14,618         13,582

     OPERATING EXPENSES:
     Research and development                          1,607          1,466          3,262          2,953
     Sales and marketing                               2,190          1,915          4,142          3,713
     General and administrative                        1,718          1,816          3,378          3,626
                                                 -----------    -----------    -----------    -----------
      TOTAL OPERATING EXPENSES                         5,515          5,197         10,782         10,292
                                                 -----------    -----------    -----------    -----------
     OPERATING INCOME                                  1,836          1,576          3,836          3,290

     INTEREST AND OTHER INCOME                           330            285            651            502
                                                 -----------    -----------    -----------    -----------
     INCOME BEFORE INCOME TAXES                        2,166          1,861          4,487          3,792

     PROVISION FOR INCOME TAXES                          670            614          1,436          1,300
                                                 -----------    -----------    -----------    -----------
     NET INCOME                                  $     1,496    $     1,247    $     3,051    $     2,492
                                                 -----------    -----------    -----------    -----------
                                                 -----------    -----------    -----------    -----------
     BASIC NET INCOME PER SHARE                  $      0.15    $      0.13    $      0.31    $      0.25

     DILUTED NET INCOME PER SHARE                $      0.15    $      0.12    $      0.30    $      0.25


     WEIGHTED AVERAGE SHARES USED IN computation of:        

     BASIC NET INCOME PER SHARE                    9,946,943      9,800,351      9,932,013      9,794,872

     DILUTED NET INCOME PER SHARE                 10,100,061     10,129,467     10,114,112     10,111,130

</TABLE>


                             SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                                     4
<PAGE>


                           ONTRACK DATA INTERNATIONAL, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   ( IN THOUSANDS )
                                     (UNAUDITED)

<TABLE>

                                                                              SIX MONTHS
                                                                             ENDED JUNE 30,
                                                                          1998           1997
                                                                        -------        -------
<S>                                                                     <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 NET INCOME                                                             $ 3,051        $ 2,492 

 ADJUSTMENTS TO RECONCILE NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES:
 Depreciation                                                             1,091            863 
 Changes in operating assets and liabilities:                                                  
 Accounts receivable                                                        (74)            52 
 Prepaid expenses and other assets                                         (494)           (31)
 Accounts payable and accrued expenses                                   (2,518)          (680)
                                                                        -------        -------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                 1,056          2,696 


CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of furniture and equipment                                       (970)          (885)
 Net purchase of marketable securities                                   (4,429)        (2,272)
 Other                                                                        -             80 
                                                                        -------        -------
NET CASH USED IN INVESTING ACTIVITIES                                    (5,399)        (3,077)


CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from exercise of stock options and employee                                          
 stock purchase plan                                                        332            179 
                                                                        -------        -------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                   332            179 
                                                                        -------        -------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                (4,011)          (202)

Cash and cash equivalents, beginning of period                           17,315         22,684 
                                                                        -------        -------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                $13,304        $22,482 
                                                                        -------        -------
                                                                        -------        -------

</TABLE>

                   SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                        5
<PAGE>


                          ONTRACK DATA INTERNATIONAL, INC.

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                          
1.   ORGANIZATION 

     ONTRACK Data International, Inc. (the "Company") provides data recovery
     services, utility software and other computer data related services.The
     Company's headquarters are in Minneapolis, Minnesota, and it has locations
     in Los Angeles, California; San Jose, California; Washington, DC.; New
     York, New York; London, England; Stuttgart, Germany and Paris, France. 

2.   SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
     been prepared pursuant to the rules and regulations of the Securities and
     Exchange Commission.Certain information and footnote disclosures normally
     included in annual financial statements prepared in accordance with
     generally accepted accounting principles have been condensed or omitted as
     permitted by such rules and regulations.These financial statements and
     related notes should be read in conjunction with the financial statements
     and notes thereto included in the Company's audited consolidated financial
     statements for the year ended December 31, 1997 contained in the Company's
     Annual Report on Form 10-K for 1997.

     In the opinion of management, the interim financial statements reflect
     adjustments, consisting of normal recurring accruals, which are necessary
     to present fairly the Company's financial position, results of operations
     and cash flow for the periods indicated.The results of operations of the
     six months ended June 30, 1998 are not necessarily indicative of the
     results for the full year.

     NET INCOME PER SHARE
     
     Basic net income per share includes no dilution and is computed by dividing
     net income available to common stockholders by the weighted average number
     of common shares outstanding for the period.Diluted net income per share
     reflects the potential dilution of securities that could share in the
     earnings of the Company.The difference between the Company's basic and
     diluted net income per share data as presented is due to the dilutive
     impact from stock options whose exercise price was below the average common
     stock price for the respective period presented.


                                          6
<PAGE>


3.   COMPREHENSIVE INCOME

     The Company adopted Statement of Financial Accounting Standards No. 130,
     Reporting Comprehensive Income ("SFAS No. 130") effective January 1,
     1998.SFAS No. 130 requires that items defined as other comprehensive
     income, such as foreign currency translation adjustments, be separately
     classified in the financial statements and that the accumulated balance of
     the other comprehensive income be reported separately from retained
     earnings and additional paid-in-capital in the equity section of the
     balance sheet.The components of comprehensive income for the six months
     ended June 30, 1998 and 1997 are as follows:

<TABLE>
                                                           Six months 
                                                          ended June 30,
                                                          1998      1997
                                                         ------    ------
     <S>                                                 <C>       <C>
     Comprehensive income:
     Net income                                          $3,051    $2,492
     Other comprehensive income:
          Foreign currency translation adjustment            17       (10)
                                                         ------    ------
     Comprehensive income                                $3,068    $2,482
                                                         ------    ------
                                                         ------    ------

</TABLE>


                                       7
<PAGE>


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


COMPARISON OF SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997

TOTAL REVENUES

Total revenues for the second quarter of 1998 increased 11.3% compared to the
second quarter of 1997.For the six months ended June 30, 1998, total revenue
increased 10.8% compared to the first six months of 1997.Of the Company's second
quarter and the first six months' 1998 revenues, approximately 17.9% and 18.4%,
respectively, are attributable to the Company's European operations, compared to
16.1% in both the second quarter and first six months of 1997.

SERVICES:

Service revenues for the second quarter of 1998 increased 19.0% compared to the
second quarter of 1997.For the six months ended June 30, 1998, service revenue
increased 18.4% compared to the first six months of 1997.The increases are due
principally to the increase in the number of data recovery jobs performed in the
United States and Europe, and to a lesser degree, increases in the Company's
Computer Evidence Services business.

SOFTWARE:
 
Software revenues are principally derived from sales through original equipment
manufacturers (OEM's) for the bundling of Disk Manager software with the OEM's
storage media products. The market for such storage media products is extremely
volatile.Accordingly, software revenues on a quarterly basis are difficult to
predict and can fluctuate based on the timing of the OEM's customer shipments. 

Software revenues for the second quarter of 1998 decreased 11.4% compared to the
second quarter of 1997.For the six months ended June 30, 1998, software revenues
decreased 12.2% compared to the first six months of 1997.The decreases in
software revenues are attributed to lower volumes of shipments of storage media
products by the Company's customers which include Disk Manager. 


GROSS MARGINS 

SERVICES:
 
Gross margins on service revenues as a percentage of service revenues for the
second quarter and six months ended June 30, 1998 were approximately 80.3% and
80.9%, respectively, compared to 83.9% and 84.2% for the comparable periods of
1997.The decreases are principally due to increased engineering personnel.The
Company views the addition of qualified data recovery engineers as critical to
its ability to grow the data recovery business.


                                      8
<PAGE>


SOFTWARE:

Gross margins on software revenues as a percentage of software revenues for the
second quarter and six months ending June 30, 1998 were approximately 84.2% and
83.0%, respectively, compared to 81.1% and 82.5% for the comparable periods of
1997.Software gross margins are impacted by the mix of royalty revenues, which
have minimal cost to the Company, and non royalty sales of the Company's
products.The increase in margins in both periods is due to the change in this
mix of software revenues.

OPERATING EXPENSES

RESEARCH AND DEVELOPMENT: 

Research and development expenses for the second quarter of 1998 increased 9.6%
compared to the second quarter of 1997 and increased 10.5% in the first six
months of 1998 compared to the same period of 1997.The increases were due
principally to higher salaries resulting from an increase in the number of
software developers and data recovery engineers who perform research and
development activities as well as to an increase in equipment purchased for
research and development purposes.Offsetting these increases were reductions in
the amount of incentive compensation earned in the quarter and six months.These
reductions were the result of the Company not achieving certain of its financial
goals during the quarter and six months.Research and development expenses as a
percentage of revenues were 17.7% and 18.1% for the quarter and six months ended
June 30, 1998, respectively, compared to 18.0% and 18.2% of revenues for the
comparable period of 1997.

SALES AND MARKETING:
 
Sales and marketing expenses for the second quarter of 1998 increased 14.4%
compared to the second quarter of 1997 and increased 11.6% in the first six
months of 1998 compared to the same period of 1997.As a percentage of revenues,
sales and marketing expenses were 24.2% and 23.0% for the second quarter and six
months ended June 30, 1998, respectively, compared to 23.5% and 22.9% for the
comparable periods of 1997.The increased percentages are due toincreased
expenditures on advertising, public relations and improvement of the Company's
website, offset by lower incentive compensation earned by sales and marketing
personnel in the quarter and six months.The lower incentive compensation is a
result of the Company not achieving certain of its financial goals during the
quarter and six months.

GENERAL AND ADMINISTRATIVE:

General and administrative expenses for the second quarter of 1998 decreased
5.4% compared to the second quarter of 1997 and decreased 6.8% in the first six
months of 1998 compared to the same period of 1997.As a percentage of revenues,
general and administrative expenses were 18.9% and 18.8% for the second quarter
and six months ended June 30, 1998, respectively, compared to 22.3% and 22.4%
for the comparable periods of 1997.The decline in 1998's second quarter and
first six months' general and administrative expenses and in such expenses as 


                                    9
<PAGE>


a percentage of revenues is due principally to a reduction in the amount of
incentive compensation earned in the quarter and six months.These reductions
were a result of the Company not achieving certain of its financial goals during
the quarter and six months.Also contributing to the reduced percentage is the
increase in revenues for the periods, as many general and administrative costs
do not vary directly with revenues.

INTEREST AND OTHER INCOME

The increase in interest and other income is a result of higher cash and
marketable securities balances, primarily due to cash flow generated from the
Company's operations. 

PROVISION FOR INCOME TAXES:

For the six months ended June 30, 1998, the Company provided for taxes at an
effective rate of 32.0% which is slightly lower than the Company's effective tax
rate in the last three quarters of 1997 and the first quarter of 1998.The
effective rate is lower than the statutory rate because of the impact of tax
exempt interest income earned on its investments.

NET INCOME PER SHARE

Basic net income per share for the second quarter and six months ended June 30,
1998 increased by $0.02and $0.06, respectively, compared to the same periods of
1997.Diluted net income per share for the same periods increased by $.03 and
$.05, respectively.The increases were due to higher net income.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow from operations was $1.2 million and $2.7 million for the quarter
ended June 30, 1998 and 1997, respectively.Cash provided by and used in
investment activities was primarily for the purchase of marketable securities
and furniture and equipment additions. 

The Company has invested its cash principally in tax exempt government
securities, $11.6 million of which are classified as long-term, with the
remaining proceeds classified as cash and cash equivalents or short-term
investments.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of federal
securities laws.These statements include statements regarding intent, belief, or
current expectations of the company and its management.These forward-looking
statements are not guarantees of the future performance and involve a number of
risks and uncertainties that may cause the Company's actual results to differ
materially from the results discussed in these statements.Please refer to the
Management's Discussion and Analysis section of the 1997 Annual Report to
Shareholders, incorporated by reference into the Company's Form 10-K report for
the year ended December 31, 1997, for cautionary statements on important factors
to consider in evaluating the forward-looking statements included in this Form
10-Q.


                                    10
<PAGE>


                          ONTRACK DATA INTERNATIONAL, INC.
                                          

PART II.  OTHER INFORMATION 

     Item 1.        LEGAL PROCEEDINGS
                    
                    None

     Item 2.        CHANGES IN SECURITIES

                    None

     Item 3.        DEFAULTS UPON SENIOR SECURITIES 

                    None
          
     Item 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
               
                    The Annual Meeting of Stockholders was held at Eden Prairie
                    City Center, 8080 Mitchell Road, Eden Prairie, Minnesota, on
                    May 21, 1998.The stockholders took the following actions: 

                    (a). The stockholders elected six directors to serve for 
                         one-year terms.The stockholders present in person or 
                         by proxy cast the following numbers of votes in 
                         connection with the election of directors, resulting 
                         in the election of all nominees: 

<TABLE>
                                                                 VOTES
                                                  VOTES FOR      WITHHELD
                                                  ---------      --------
                         <S>                      <C>            <C>
                         Michael W. Rogers        8,097,484      23,064
                         John E. Pence            8,097,484      23,064
                         Gary S. Stevens          8,097,484      23,064
                         Roger D. Shober          8,097,484      23,064
                         Robert M. White, Ph.D.   8,097,484      23,064
                         Richard J. Runbeck       8,097,484      23,064

</TABLE>

                    (b). The stockholders ratified the appointment of 
                         Pricewaterhouse Coopers LLP as the Company's 
                         independent auditors for fiscal 1998.8,113,669 votes 
                         were cast for the resolution; 749 votes were cast 
                         against the resolution; and shares representing 
                         6,130 votes abstained.


                                 11
<PAGE>


     Item 5.   OTHER INFORMATION

               The deadline for submission of shareholder proposals pursuant to
               Rule 14a-8 under the Securities Exchange Act of 1934, as amended,
               for inclusion in the Company's proxy statement for its 1999
               Annual Meeting of Shareholders is December 16, 1998.Additionally,
               under the Company's Bylaws, to be timely a shareholder proposal
               must be received by the Company not more than 60 days nor more
               than 90 days prior to the 1999 Annual Meeting, which is expected
               to be held on or about May 27, 1999.If the Company receives
               notice of a shareholder proposal that is not timely under this
               provision of the Bylaws, such proposal will be considered
               untimely pursuant to Rules 14a-4 and 14a-5(e) and the persons
               named in proxies solicited by the Board of Directors of the
               Company for its 1999 Annual Meeting of Shareholders may exercise
               discretionary voting power with respect to such proposal;
               further, the proposal may be excluded from consideration at the
               meeting. 

     Item 6.   EXHIBITS AND REPORTS ON FORM 8-K
     
               (a). Exhibit 27.1 Financial Data Schedule
               
               (b). Reports on Form 8-K
               
                    Form 8-K was filed on July 15, 1998 relating to the change
                    in the Company's independent accountants from
                    Pricewaterhouse Coopers LLP to Grant Thornton LLP.


                                         12
<PAGE>


                          ONTRACK DATA INTERNATIONAL, INC.

                                     SIGNATURES
                                          
                                          
                                          
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. 



                              ONTRACK DATA INTERNATIONAL, INC.
                                        (Registrant)






     Date:     August 11, 1998     By:                 

                                   -------------------------------------
                                   Michael W. Rogers
                                   Chairman and Chief Executive Officer 



     Date:     August 11, 1998     By:

                                   -------------------------------------
                                   Thomas P. Skiba 
                                   Vice President & Chief Financial Officer
                                          


                                    13