<PAGE>
===========================================================================
                      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 MARCH 31, 1997
                                      OR
-----        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
             SECURITIES EXCHANGE ACT OF 1934

For the transition period from    to      

COMMISSION FILE NUMBER 0-22718

                                    RACOTEK, INC.
                (Exact name of Registrant as specified in its charter)

               DELAWARE                                 #41-1636021
    (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                    Identification No.)

             7301 OHMS LANE, SUITE 200, MINNEAPOLIS, MINNESOTA, 55439
           (Address of principal executive offices, including zip code)
                                      
                                   (612) 832-9800
                 (Registrant's telephone number, including area code)
                                           
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  
   -----     -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                            Outstanding at 
              Class                         March 31, 1997
              ----                          --------------
    Common Stock, $.01 par value            24,918,246

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

THIS REPORT CONSISTS OF 12 SEQUENTIALLY NUMBERED PAGES.

<PAGE>

                                RACOTEK, INC.
                                           
                                    INDEX
                                           
                       PART I -- FINANCIAL INFORMATION
                                           
Item 1.  Financial Statements                                  Page No.
                                                               -------
    Statements of Operations
         Three Months Ended March 31, 1997 and 1996                3
    
    Balance Sheets
         March 31, 1997 and December 31, 1996                      4
         
    Statements of Cash Flows
         Three Months Ended March 31, 1997 and 1996                5

    Notes to Financial Statements                                  6

Item 2.  Management's Discussion and Analysis of 
         Financial Condition and Results of Operations             7

                             PART II -- OTHER INFORMATION
                                           
Items
1-5.     Not applicable                                           11

Item 6.  Exhibits and Reports on Form 8-K                         11

Signatures                                                        12

                                       2

<PAGE>

                            PART 1. FINANCIAL INFORMATION
                                           
ITEM 1: FINANCIAL STATEMENTS

                                    RACOTEK, INC.
                               STATEMENTS OF OPERATIONS
                                     (Unaudited)
                                           
(In thousands, except per share data)

                                              Three Months Ended
                                                 March 31,
                                       -------------------------------
                                           1997             1996
                                       -------------    --------------

Net revenues:
   Products                                  $189              $362
   Services                                 1,550             1,185
                                       -------------    --------------
                                            1,739             1,547
Cost and expenses:
   Cost of products                           179             1,284
   Cost of services                         1,080               961
   Research and development                 1,025             1,038
   Sales and marketing                      1,529             1,904
   General and administrative                 478               725
                                       -------------    --------------

Loss from operations                       (2,552)           (4,365)

Interest Income                               127               173
                                       -------------    --------------

Net loss                                  ($2,425)          ($4,192)
                                       -------------    --------------
                                       -------------    --------------

Net loss per share                         ($0.10)           ($0.17)
                                       -------------    --------------
                                       -------------    --------------

Number of shares used in computation       24,863            24,107
                                       -------------    --------------
                                       -------------    --------------







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

                                          3

<PAGE>

                                    RACOTEK, INC.
                                    BALANCE SHEETS

(in thousands, except per share data)


    ASSETS
                                                      March 31,    December 31,
                                                        1997           1996
                                                    ------------   -------------
                                                    (Unaudited)
Current assets:
   Cash and cash equivalents                            $4,003          $2,956
   Short-term investments                                6,007           8,991
   Accounts receivable, net                              1,499           1,616
   Inventories                                             343             374
   Prepaid expenses and other current assets               269             294
                                                    ------------   -------------
       Total current assets                             12,121          14,231

Property and equipment, net                              1,820           1,932
Restricted cash                                            470             470
Capitalized software development costs, net                 91             121
Other long-term assets                                     149             165
                                                    ------------   -------------
    Total assets                                       $14,651         $16,919
                                                    ------------   -------------
                                                    ------------   -------------

    LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
   Accounts payable                                       $446            $656
   Accrued expenses                                        977             882
                                                    ------------   -------------
    Total current liabilities                            1,423           1,538
                                                    ------------   -------------

Commitments

Stockholders' equity:
   Common stock, $0.01 par value, 35,000 shares
    authorized, 24,918 and 24,740 issued and
    outstanding at Mar. 31, 1997 and Dec. 31, 1996,
    respectively                                           249             247
   Additional paid-in capital                           71,148          70,878
   Accumulated deficit                                 (58,169)        (55,744)
                                                    ------------   -------------
     Total stockholders' equity                         13,228          15,381
                                                    ------------   -------------

     Total liabilities and stockholders' equity        $14,651         $16,919
                                                    ------------   -------------
                                                    ------------   -------------







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

                                          4

<PAGE>

                                    RACOTEK, INC.
                               Statements of Cash Flows
                                     (Unaudited)
                                           
(In thousands)

                                                         Three Months Ended
                                                            March 31,
                                                   ---------------------------
                                                         1997           1996
                                                   ------------   -------------
  Cash flows from operating activities:
     Net loss                                          ($2,425)        ($4,192)
     Adjustments to reconcile net loss to net cash
      used in operating activities:
        Depreciation and amortization                      237             213
        Provision for bad debts                             30             327
        Write-down of inventories                                          900
        Amortization of discounts on investments           (16)             14
        Stock issued for consulting services                41               -
     Changes in operating assets and liabilities:
        Accounts receivable                                 87             (45)
        Inventories                                         31             (34)
        Prepaid expenses and other current assets           25             184
        Accounts payable and accrued expenses             (115)           (462)
                                                   ------------   -------------
          Net cash used in operating activities         (2,105)         (3,095)

  Cash flows from investing activities:
     Purchase of investments                            (1,000)         (3,580)
     Proceeds from maturity of investments               4,000           6,112
     Purchase of property and equipment                    (79)            (62)
                                                   ------------   -------------
          Net cash provided from investing 
            activities                                   2,921           2,470

  Cash flows from financing activities:
     Proceeds from exercises of options                    231              42
                                                   ------------   -------------
          Net cash provided from financing 
            activities                                     231              42
                                                   ------------   -------------
  Net change in cash and cash equivalents                1,047            (583)
  Cash and cash equivalents, beginning of period         2,956           4,397
                                                   ------------   -------------
  Cash and cash equivalents, end of period              $4,003          $3,814
                                                   ------------   -------------
                                                   ------------   -------------




       The accompanying notes are an integral part of the financial statements.
 
                                         5

<PAGE>
                        NOTES TO FINANCIAL STATEMENTS


NOTE A.  BASIS OF PRESENTATION:

The unaudited financial statements of Racotek, Inc. ("Racotek" or the 
"Company") as of March 31, 1997 and for the three month periods ended March 
31, 1997 and 1996 reflect, in the opinion of management, all adjustments 
(which include only normal recurring adjustments) necessary to fairly state 
the financial position at March 31, 1997 and the results of operations and 
cash flows for the reported periods.  The results of operations for any 
interim period are not necessarily indicative of the results to be expected 
for any other interim period or for the full year.  The year-end balance 
sheet data was derived from audited financial statements, but does not 
include all disclosures required by generally accepted accounting principles. 
These financial statements should be read in conjunction with the Company's 
audited financial statements and related notes for the year ended December 
31, 1996, which were included in the Company's 1996 Annual Report and 
incorporated by reference in its 1996 Form 10-K.

In March 1997, the Financial Accounting Standards Board issued Statement No. 
128 "Earnings per Share", which the Company will adopt effective for its 1997 
year end reporting.  The Company will be required to report basic net income 
per share based on weighted average common shares outstanding, without 
considering common equivalent shares, and diluted net income per share based 
on weighted average common and common equivalent shares outstanding.  Diluted 
net income per share would be equivalent to the Company's current reporting 
of net loss per common and common equivalent share.

NOTE B.  SELECTED BALANCE SHEET INFORMATION (IN THOUSANDS):

                                          MARCH 31, 1997  DECEMBER 31, 1996
                                          --------------  -----------------
                                           (Unaudited)
ACCOUNTS RECEIVABLE, NET:
     Accounts receivable                        $1,806         $1,956
     Less allowance for doubtful accounts         (307)          (340)
                                                ------         ------
                                                $1,499         $1,616
                                                ------         ------
                                                ------         ------
PROPERTY AND EQUIPMENT, NET:
     Computer equipment                         $3,142         $3,064
     Furniture and equipment                       817            816
     Leasehold improvements                        213            213
                                                ------         ------
                                                 4,172          4,093
     Less accumulated depreciation and
          amortization                          (2,352)        (2,161)
                                                ------         ------
                                                $1,820         $1,932
                                                ------         ------
                                                ------         ------









                                          6

<PAGE>

   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS
                                           
   THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE 
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.  FACTORS THAT MIGHT 
CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED 
BELOW IN "FACTORS THAT MAY AFFECT FUTURE RESULTS" AS WELL AS THOSE IDENTIFIED 
IN THE COMPANY'S OTHER SEC FILINGS.
                                           
OVERVIEW
    Racotek first shipped KeyWare-TM- in the second quarter of 1995 
and has experienced growth in revenues from both the licensing of KeyWare and 
related customer support services since 1995.  However, the Company expects 
to incur substantial losses at least through 1997 because customers are 
delaying implementation of wireless mobile data systems.  These delays have 
occurred as a result of the limited commercial availability and geographic 
coverage of wireless networks such as cellular digital packet data ("CDPD") 
and low-earth orbit ("LEO") satellite, and the significant capital costs 
required for mobile computing devices.  The Company believes that the 
commercial availability and coverage of wireless networks are increasing and 
that capital costs are beginning to decline.

    Most prospective customers wish to test the Company's products and 
services during an evaluation period before implementing mobile data 
communications throughout their user base.  This reduces the amount of 
revenues the Company can expect to receive in the near term.  The Company 
continues to add new customers and believes that the recurring revenue from 
providing monthly support, software maintenance and transmission services to 
customers will constitute a substantial source of revenue in the long term.

    The Company has an increasing percentage of net revenues derived from 
professional services, including system planning, software development, 
system integration, training and installation management.  The Company 
believes that its extensive experience in building, enabling and supporting 
mobile data systems will continue to contribute to growth in professional 
service revenues, and that customers who purchase the Company's professional 
services may become purchasers of its other products and services. 

RESULTS OF OPERATIONS
    NET REVENUES
    Product revenues decreased from $362,000 for the quarter ended March 31, 
1996 to $189,000 for the quarter ended March 31, 1997.  The decrease in 
product revenues resulted from the Company's decision during 1996 to 
discontinue the production, purchase and distribution of specialized mobile 
radio ("SMR") products.  Product revenue per mobile user also decreased as a 
result of the introduction of KeyWare because, unlike the SMR-based products, 
KeyWare does not require customers to purchase the Company's proprietary 
hardware.  Product revenues will continue to fluctuate based on product mix, 
initial customer shipments and the timing and extent of customer roll-outs of 
their total user base.

    Service revenues increased from $1,185,000 for the quarter ended March 
31, 1996 to $1,550,000 for the quarter ended March 31, 1997. This increase is 
primarily the result of the Company's increased focus on marketing and 
providing consulting services.  For the quarter ended March 31, 1997, the 
Company earned $1,140,000 in revenues from consulting services as compared to 
$853,000 for the quarter ended March 31, 1996.  Managed network services and 
transmission services, which are the other primary components of service 
revenues, both increased due to an increase in the size of the Company's 
mobile user base.
                                           
                                          7

<PAGE>

    COST OF REVENUES
    Cost of product revenues decreased from $1,284,000 for the quarter ended 
March 31, 1996 to $179,000 for the quarter ended March 31, 1997.  Gross 
margins for the first quarter increased from -255% in 1996 to 5% in 1997.  
Cost of products for the quarter ended March 31, 1996 included a charge of 
approximately $900,000 resulting from the write-down of the Company's 
remaining SMR inventories to their net realizable values. The Company 
believes product margins will improve in the future with the change in the 
product mix to higher-margin software license sales and a reduction in 
hardware sales.  

     Cost of services increased from $961,000 for the quarter ended March 31, 
1996 to $1,080,000 for the quarter ended March 31, 1997.  The increase in the 
cost of services resulted primarily from an increase in the volume of 
services performed and a related increase in consulting personnel.  Service 
margins increased from 19% for the quarter ended March 31, 1996 to 30% for 
the quarter ended March 31, 1997 due to the increase in higher margin 
consulting services revenue. 

    RESEARCH AND DEVELOPMENT
    Research and development expenses decreased from $1,038,000 for the 
quarter ended March 31, 1996 to $1,025,000 for the quarter ended March 31, 
1997.  The Company expects research and development expenses to continue to 
decrease throughout 1997 due to the overall cost-reduction measures 
implemented by the Company.

    SALES AND MARKETING
    Sales and marketing expenses decreased from $1,904,000 for the quarter 
ended March 31, 1996 to $1,529,000 for the quarter ended March 31, 1997.  The 
decrease was due to the cost reduction measures taken in 1996 when the 
Company made the decision to discontinue the purchase and distribution of SMR 
related products.  The Company expects sales and marketing expenses to 
continue to remain constant or increase slightly in 1997 as the Company 
continues to promote its service and software products aggressively.

    GENERAL AND ADMINISTRATIVE
    General and administrative expenses decreased from $725,000 for the 
quarter ended March 31, 1996 to $478,000 for the quarter ended March 31, 
1997.  The decrease was due to the cost-reduction measures taken when the 
Company made the decision to discontinue the purchase and distribution of  
SMR products in 1996. The Company expects general and administrative expenses 
to continue to decrease throughout 1997 due to the overall cost-reduction 
measures implemented by the Company.

    INTEREST INCOME
    Interest income decreased from $173,000 for the quarter ended March 31, 
1996 to $127,000 for the quarter ended March 31, 1997.  The decrease is the 
result of a decrease in investments as the cash was required to fund 
operating activities.  The decrease is also related to declining interest 
rates on these investments.

                                          8

<PAGE>
                                           
LIQUIDITY AND CAPITAL RESOURCES
    As of March 31, 1997, the Company had no significant capital spending or 
purchase commitments and had cash and investments totaling $10,010,000 and 
working capital of $10,698,000.  For the three months ended March 31, 1997, 
the Company used $2,105,000 of cash in its operating activities, compared to 
$3,095,000 of cash for the three months ended March 31, 1996. The amount of 
cash used in operating activities decreased as a result of revenue growth and 
cost-reduction efforts, including the decision to discontinue producing, 
purchasing and distributing SMR products during 1996.  The Company expects to 
continue to incur negative cash flows from operating activities through at 
least 1997.  Net cash of $2,921,000  provided by investing activities during 
the three months ended March 31, 1997 resulted primarily from investments 
that matured in those years, net of investment purchases.  The Company 
generated $231,000 of cash from financing activities for the three months 
ended March 31, 1997 from the exercise of stock options.

    The Company believes that its existing capital resources will be 
sufficient to meet the Company's cash requirements into 1998.

FACTORS THAT MAY AFFECT FUTURE RESULTS
    There can be no assurance that the Company's business will grow as 
anticipated or that the Company will achieve or sustain profitability on a 
quarterly or annual basis in the future.  Delays in the commercial 
availability and geographic coverage of new wireless networks may continue to 
impede or prevent substantial growth of the Company's business.  There can be 
no assurance that the services offered by new wireless networks will attain 
commercial availability, that they will be available in a significant number 
of metropolitan areas or that they will provide a scope of geographic 
coverage attractive to customers in the metropolitan areas where they are 
available.  The Company's inability to offer products and services to 
customers on new wireless networks could have a material adverse effect on 
the Company's business.

    The Company's ability to provide communication services is dependent upon 
contractual relationships with wireless network providers.  There can be no 
assurance that the Company will be able to enter into or maintain 
relationships with wireless network providers, that any such relationships 
will be on economically favorable terms or that wireless network providers 
may not choose to compete against rather than cooperate with the Company.  
Furthermore, there can be no assurance that wireless network providers will 
have the capacity, ability and FCC authorization to provide high-quality 
airtime to the Company's customers on a continuous basis.  The Company's 
inability to obtain high-quality, reliable, continuous airtime from or 
maintain cooperative relationships with wireless network providers would 
materially and adversely affect the Company's business.

    The Company's success is affected by application software developers who 
help create a market for the Company's products by writing their application 
software programs so that the programs implement mobile data transmission 
through KeyWare.  There can be no assurance that the application software 
developers will choose to make their computer programs compatible with 
KeyWare. Furthermore, there can be no assurance that the application software 
developers who implement mobile data transmission through KeyWare will be 
successful in developing and marketing their Racotek-compatible products or 
will continue to use the Company's products in their business.  In addition, 
delays by these developers in completing their wireless application software 
integration is impeding the Company's efforts to persuade existing and 
prospective customers to implement the products across their entire fleets.  
Continuing delays in wireless application software integration could have a 
material adverse impact on the Company's business.

                                          9

<PAGE>
                                          
    The Company depends on third-party hardware manufacturers to develop and 
maintain computer hardware devices that are suitable for mobile data 
applications, such as handheld and vehicle-mounted devices, and to make these 
devices available to customers at attractive prices.  The prices for these 
hardware devices have declined and are expected to continue to decline.  The 
Company's ability to sell its products is affected by the price of these 
hardware devices.  Unless dependable, fully-featured KeyWare-compatible 
mobile devices are available at attractive prices, customers will be 
reluctant to implement mobile data systems and become Racotek customers, 
which would materially and adversely affect the Company's business.
    A substantial portion of the Company's revenue is derived from providing 
consulting services to mobile data users.  Consulting services cannot be 
standardized and mass-marketed as readily as software, and they may not 
provide as consistent a source of recurring revenue as monthly support, 
software maintenance and transmission services are expected to provide.  In 
order for the Company's revenues from consulting services to continue to 
grow, the Company must continue to add more customers and larger projects to 
build, enable and support data mobility systems.  The Company's inability to 
identify customers for its large-scale consulting services and/or the 
Company's inability to use its consulting services to obtain additional 
customers for its software licenses, support and transmission services could 
materially and adversely affect the growth of its business.
    The Company derives a substantial part of its revenue from a small number 
of customers whom, after evaluating the Company's products, proceed to 
install the Company's products throughout their total user base.  A decision 
by any one of these customers to delay or abandon roll-out of the Company's 
products across an entire fleet may have a material adverse effect on the 
Company's business and results of operations.
    Competition in the communication industry is intense.  Major software 
development companies, as well as computer, database and communications 
companies, are possible sources of future direct competition for the 
Company's products and services.  Many of the Company's current and possible 
direct competitors have financial, technical, marketing, sales, 
manufacturing, distribution and other resources substantially greater than 
those of the Company.  In addition to direct competitors, the Company 
presently faces competition from providers of other mobile communication 
services that customers might view as substitutes for wireless data 
transmission, such as cellular telephone, paging and conventional two-way 
voice radio.
    In addition to the factors listed above, actual results could vary 
materially from the foregoing forward-looking statements due to the Company's 
inability to hire and retain qualified personnel, the risk that the Company 
may need to enhance products beyond what was initially planned or if other 
risks and uncertainties identified in this Form 10-Q and the Company's other 
filings with the SEC occur.

                                          10

<PAGE>

                              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
    None

ITEM 5.  OTHER INFORMATION
    None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits - None
    
(b) Reports on Form 8-K
    No reports on Form 8-K were filed during the quarter ended March 31, 1997.






                                          11

<PAGE>

                                      SIGNATURES

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

                                    By:  Michael Fabiaschi
                                         -----------------
                                         Michael Fabiaschi
                                         President and Chief Executive Officer

                                    By:  David J. Maenke          
                                         -----------------
                                         David J. Maenke
                                         Chief Financial Officer and Secretary

                                    Dated: May  8, 1997



                                         12