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



                                  UNITED STATES


                       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, 2001

                  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 0-21366

                              TRICORD SYSTEMS, INC.
             -----------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                       DELAWARE                           41-1590621
            -------------------------------            ----------------
            (STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER
            INCORPORATION OR ORGANIZATION)            IDENTIFICATION NO.)

2905 NORTHWEST BOULEVARD, SUITE 20, PLYMOUTH, MINNESOTA                 55441
-------------------------------------------------------------------------------
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                   (ZIP CODE)

                                 (763) 557-9005
              ---------------------------------------------------
              (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 last practicable date.


<TABLE>
<CAPTION>
                                                   OUTSTANDING AT
                  CLASS                            APRIL 30, 2001
                  -----                            --------------
             <S>                                   <C>
              Common Stock,
             $0.01 par value                        24,377,616
</TABLE>
================================================================================

<PAGE>   2

                     PART I. FINANCIAL INFORMATION

                      ITEM 1: FINANCIAL STATEMENTS

                         TRICORD SYSTEMS, INC.
                        STATEMENTS OF OPERATIONS
                              (unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended March 31,
                                                                ----------------------------
(In thousands, except per share data)                               2001            2000
                                                                    ----            ----
<S>                                                              <C>                 <C>

Operating expenses:
      Research and development                                   $  2,883            1,240
      Sales and marketing                                           2,245              375
      General and administrative                                      844              654
                                                                  -------           ------
                                                                    5,972            2,269
                                                                  -------           ------

Operating loss                                                     (5,972)          (2,269)
                                                                  -------           ------

Other income (expense):
      Interest, net                                                   323               34
      Other, net                                                        1               (2)
                                                                  -------           ------
                                                                      324               32
                                                                  -------           ------

Loss from continuing operations                                    (5,648)          (2,237)
                                                                  -------           ------

Gain on disposal of discontinued operations                             -               44

Net loss                                                           (5,648)          (2,193)
                                                                  -------           ------

Beneficial conversion charge, Series E Preferred Stock               (167)               -
Premium on Series E Preferred Stock                                   (99)               -
                                                                  -------           ------

Net loss applicable to common shares                             $ (5,914)          (2,193)
                                                                  =======           ======

Loss per common share from continuing operations -
      basic and diluted                                          $  (0.24)           (0.11)
                                                                  =======           ======

Net loss per common share - basic and diluted                    $  (0.24)           (0.11)
                                                                  =======           ======

Weighted average common shares outstanding
      - basic and diluted                                          24,326           20,373
                                                                  =======           ======
</TABLE>


            See accompanying notes to financial statements.




                                       1

<PAGE>   3
                              TRICORD SYSTEMS, INC.
                                 BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                     March 31,     December 31,
(In thousands, except per share data)                                  2001           2000
                                                                     ---------      -------
                                                                    (unaudited)
Current assets:
<S>                                                                 <C>             <C>
     Cash and cash equivalents                                       $  33,466       16,825
     Inventories                                                           506            -
     Other current assets                                                  139          194
                                                                     ---------      -------
        Total current assets                                            34,111       17,019

Equipment and improvements, net                                          3,723        3,114
                                                                     ---------      -------

        Total Assets                                                 $  37,834       20,133
                                                                     =========      =======

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                $   1,223        1,521
     Accrued payroll, benefits and related taxes                         1,033        1,065
     Other accrued expenses                                                163          123
                                                                     ---------      -------
        Total current liabilities                                        2,419        2,709

Capital lease obligation                                                   150          112

Commitments

Convertible, redeemable Series E Preferred Stock,
     $1,000 par value; 25 shares authorized, 25 issued and
     outstanding (redemption value at March 31, 2001
     of $25,099)                                                         9,318            -

Stockholders' equity:
     Common stock, $0.01 par value; 75,000 shares
        authorized, 24,369 and 24,278 shares
        issued and outstanding                                             244          243
     Additional paid-in capital                                        129,803      115,704
     Unearned compensation                                                (968)      (1,151)
     Accumulated deficit                                              (103,132)     (97,484)
                                                                     ---------      -------
        Total stockholders' equity                                      25,947       17,312
                                                                     ---------      -------

        Total Liabilities, Convertible, Redeemable Preferred
           Preferred Stock and Stockholders' Equity                  $  37,834       20,133
                                                                     =========       ======
</TABLE>


        See accompanying notes to financial statements.





                                       2
<PAGE>   4

                              TRICORD SYSTEMS, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          Three Months Ended March 31,
                                                                          ----------------------------
(In thousands)                                                                2001            2000
                                                                            ---------        -------

Cash flows from operating activities:
<S>                                                                         <C>              <C>
     Net loss                                                               $ (5,648)        (2,193)
     Adjustments to reconcile net loss to net
      cash used in operating activities:
        Stock compensation                                                       151            783
        Depreciation and amortization                                            508             49
        Changes in operating assets and liabilities:
           Inventories                                                          (506)             -
           Other current assets                                                   55             32
           Accounts payable                                                     (298)            29
           Accrued payroll, benefits and related taxes                           (32)            (9)
           Other accrued expenses                                                (25)            70
                                                                            --------          -----
              Net cash used in operating activities                           (5,795)        (1,239)
Cash flows from investing activities:
     Capital expenditures                                                     (1,006)           (59)
                                                                            --------          -----
              Net cash used in investing activities                           (1,006)           (59)
                                                                            --------          -----
Cash flows from financing activities:
     Principal payments on capital lease obligations                             (18)             -
     Stock option and warrant exercises                                           60            994
     Proceeds from issuance of preferred stock and warrants, net              23,400              -
                                                                            --------          -----
              Net cash provided by financing activities                       23,442            994
                                                                            --------          -----
Net increase (decrease) in cash and cash equivalents                          16,641           (304)
Cash and cash equivalents at beginning of period                              16,825          3,082
                                                                            --------          -----

Cash and cash equivalents at end of period                                  $ 33,466          2,778
                                                                            ========          =====
</TABLE>

                 See accompanying notes to financial statements.



                                       3
<PAGE>   5

                              TRICORD SYSTEMS, INC.

                          NOTES TO FINANCIAL STATEMENTS



1.  BASIS OF PRESENTATION

The accompanying unaudited interim statements of operations, balance sheet and
statements of cash flows reflect all adjustments of a normal recurring nature,
which are, in the opinion of management, necessary for a fair presentation of
the financial position at March 31, 2001, and results of operations and cash
flows for the interim periods ended March 31, 2001 and 2000. The unaudited
financial statements should be read in conjunction with the Company's audited
financial statements for the year ended December 31, 2000, which were included
in the Company's 2000 Annual Report on Form 10-K. The year-end balance sheet
data included herein is derived from such audited financial statements, but does
not include all disclosures required by accounting principles generally accepted
in the United States of America. The results of operations for the interim
period ended March 31, 2001 are not necessarily indicative of the results to be
expected for the full year or any future periods.

2. CONVERTIBLE, REDEEMABLE SERIES E PREFERRED STOCK

On February 27, 2001 the Company closed a private placement of $25.0 million in
Series E Convertible Preferred Stock. Net cash proceeds from the placement were
approximately $23.4 million, net of approximately $1.6 million of offering
costs. Under terms of the offering, the Company issued 25,000 shares of 4.75%
Series E Convertible Preferred Stock ("Preferred Stock"). Each share of
Preferred Stock is convertible into the number of shares of the Company's Common
Stock that is equal to the stated value ($1,000) of each share plus accrued
premium and default payments (if any) divided by the conversion price, which is
currently $9.50, but is subject to adjustment in certain circumstances. In
addition, the Company issued warrants to the Preferred Stockholders with an
18-month term to purchase up to 986,842 additional shares of the Company's
Common Stock at $12.40 per share, and warrants with a 24-month term to purchase
up to 986,842 additional shares of the Company's Common Stock at $14.50 per
share. In addition, the Company issued warrants to the placement agent with a
five-year term to purchase up to 110,526 shares of the Company's Common Stock at
$9.50 per share.

Accounting for the preferred stock conversion feature in accordance with
Emerging Issues Task Force (EITF) issue No. 98-5 "Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Rates" and EITF Issue No. 00-27 "Application of Issue 98-5 to Certain
Convertible Investments" resulted in the allocation of approximately $7.9
million of the net offering proceeds to a "beneficial conversion feature". This
beneficial conversion feature was initially recorded as an increase in
additional paid-in capital and will be amortized using the effective interest
method as a non-cash charge against stockholders' equity over the shorter of
three years or the period during which the Preferred Stock remains outstanding.
These charges


                                       4
<PAGE>   6


will also increase the carrying value of the Preferred Stock. In addition, the
Company will accrue a premium on the stated value of outstanding Preferred
Stock, which is payable to the Preferred Stockholders in additional common stock
upon conversion or in cash upon redemption of the Preferred Stock, at an annual
rate of 4.75%. This premium will also be recorded as a non-cash charge against
stockholders' equity and an increase in the carrying value of Preferred Stock.
The charges against stockholders' equity resulting from the amortization of the
beneficial conversion feature and accrual of the premium will reduce income
(increase the loss) applicable to common stockholders which will reduce income
(increase the loss) per common share reported by the Company. If the Preferred
Shares remain outstanding for their full three year term, without adjustment of
the conversion price as described below, charges to equity for amortization of
the beneficial conversion feature and accrual of the premium would total
approximately $11.5 million. During the quarter ended March 31, 2001, the
Company recorded amortization of the beneficial conversion feature and accrued
premium of $167,000 and $99,000, respectively.

The fair value of the warrants was measured using the Black-Scholes
option-pricing model. The recorded value of the warrants of approximately $5.6
million, initially recorded as an increase in additional paid-in capital,
reflects an allocation of the net proceeds of the offering based upon the
relative fair values of the Preferred Stock and the warrants issued with the
Preferred Stock.

For a complete description of the rights and preferences of the Preferred Stock,
please see the Certificate of Designation, Preferences and Rights of the
Preferred Stock and other documents attached as exhibits to the Current Report
on Form 8-K as filed by the Company on February 28, 2001. Key terms of the
Preferred Stock include the following:

Voting Rights. The holders of the Preferred Stock have no voting rights except
as may be required by Delaware law.

Dividends. The holders of Preferred Stock are not entitled to the payment of
dividends other than the 4.75% premium. The Company is prohibited from paying
dividends to any other stockholders or from repurchasing or redeeming any other
class of stock without the prior approval of the majority of the Preferred
Stockholders.

Liquidation Preference. Upon any liquidation, dissolution or winding up of the
affairs of the Company or any change in control of the Company, as defined, the
holder of each share of Preferred Stock shall be entitled to be paid $1,000 per
share plus all accrued premium amounts and any default payments due (as defined)
(the "Liquidation Preference Amount") prior and in preference to any payment to
holders of Common Stock. If the assets of the Company upon such event are
insufficient to make such payment in full, then the holders of the Preferred
Stock shall be entitled to pro rata distribution of all the assets of the
Company.

Conversion. The holders of Preferred Stock may convert such stock into shares of
common stock at any time until maturity (also see Forced Conversion at Maturity
below).

Conversion Rate. The stated value of each share of the Preferred Stock ($1,000)
plus any premium accrued at 4.75% and any default payments due (as defined) is
convertible into common stock at $9.50 per share, subject to adjustment in
certain circumstances ("Conversion Rate").



                                       5
<PAGE>   7

Adjustments to Conversion Rate. The Conversion Rate is subject to adjustment at
maturity or upon certain future issuances of common stock or rights to acquire
Common Stock (as defined) at a price less than $9.50 per share. Any adjustment
to the conversion rate will result in an increase in the amount ascribed to the
beneficial conversion feature discussed above.

Forced Conversion or Redemption at Maturity. Subject to certain limitations (as
defined), any Preferred Stock remaining outstanding at February 27, 2004 shall
be subject to a forced conversion unless the Company elects to redeem such
outstanding Preferred Stock for the Liquidation Preference Amount. The
conversion rate for the forced conversion shall be based upon the lowest average
trading price of the Company's common stock for 10 of the last 15 trading days
preceding February 27, 2004. Most rights, including the right to earn the 4.75%
annual premium, shall cease for any shares of Preferred Stock remaining
outstanding after February 27, 2004.

Early Forced Conversion. At any time after February 27, 2002, if the Company's
Common Stock trades at an average price of at least $19 for 20 consecutive days
and the Company has fulfilled certain registration requirements, the Company may
require the holders of the Preferred Stock to convert their shares at the
Conversion Rate.

Optional Redemption. At any time, if the Company has fulfilled certain
registration requirements, the Company may elect to redeem any outstanding
shares of Preferred Stock at a price per share equal to 115% of the Liquidation
Preference Amount.

Required Redemption. In the event of certain defaults by the Company, which such
defaults primarily relate to a failure by the Company to issue shares of Common
Stock upon conversion of the Preferred Stock, the holders of the Preferred Stock
may require the Company to redeem the Preferred Stock at the Liquidation
Preference Amount or such other amount (as defined) to be determined at the date
of the redemption. Under certain circumstances the Company may be required to
obtain stockholders' approval to allow for issuance of additional shares of
Common Stock upon conversion of a portion of the Preferred Stock. If such
approval is not obtained, the Company may be required to redeem the portion of
shares of Preferred Stock which cannot be converted into Common Stock due to
the lack of stockholder consent.

Registration Rights. The Company is obligated to file a registration statement
with the Securities and Exchange Commission (SEC) to cover the resale of the
Company's common stock issuable upon the conversion of the Preferred Stock and
the exercise of the warrants issued with the Preferred Stock. The Company has
filed the required registration statement. If the registration statement is not
declared effective by the SEC within 120 days of the Preferred Stock sale
closing, or if effectiveness lapses while the Preferred Stock is outstanding,
the Company is subject to certain financial penalties (as defined).




                                       6
<PAGE>   8

3. INVENTORIES

Inventories, which consist primarily of work-in-process units, as well as beta
and evaluation units, are stated at the lower of cost or market. Cost is
determined using actual costs or standard costs which approximate actual costs
determined using the first-in, first-out method. Appropriate consideration is
given to deterioration, obsolescence or other factors in the evaluation of net
realizable value.

The Company also has signed a non-exclusive integration agreement with a
contract manufacturer to manufacture, integrate and assemble the Company's new
Lunar Flare(TM) NAS server appliance. Under the agreement, the manufacturer will
supply and assemble the hardware components that comprise Lunar Flare
appliances, integrate the Company's Illumina(TM) aggregation software, provide
testing services and drop-ship to the Company's channel partners and customers.
All product purchases by the Company from the manufacturer will be done through
purchase orders. The Company will determine the minimum number of units of
server appliances that the manufacturer will build and hold as finished goods,
ready for shipment to the Company's customers. The Company will provide a
non-cancelable, non-returnable purchase order for all such finished goods
inventory. In addition, the Company is required to provide the manufacturer with
a non-cancelable, non-returnable purchase order for unique parts (as defined by
the agreement) to be purchased by the manufacturer for integration into the
Company's server appliance. The Company will also be required to reimburse the
manufacturer for obsolete, unique and excess material (as defined) and related
supplier cancellation charges because of actions by the Company, such as
cancellation of a purchase order, termination of the agreement or implementation
of an engineering change order.

As of March 31, 2001, the Company had approximately $400,000 of outstanding
purchase orders related to inventory purchases.

4. DISCONTINUED OPERATIONS

In August 1999, the Company sold all remaining assets related to the server line
of business (sometimes referred to as the "legacy business"). The Company has
reported results of operations of the legacy business as discontinued operations
for all periods presented. Terms of the asset sale required the buyer to pay the
Company up to $200,000 of additional cash consideration based upon levels of
revenues generated from the legacy business through December 31, 2000 and any
such cash received has been reported as a gain on disposal of discontinued
operations. As of March 31, 2001, no further consideration is due to the
Company.

5.  SUPPLEMENTAL CASH FLOW INFORMATION

During the first quarter ended March 31, 2001, expenses for outside directors
meeting fees of $20,000 were settled through the issuance of 2,171 shares of
common stock.

During the first quarter of 2001, the Company acquired $111,000 of equipment
pursuant to terms of capital leases.



                                       7
<PAGE>   9

6. INCOME (LOSS) PER SHARE

Loss per common share from continuing operations is computed by dividing loss
from continuing operations applicable to common shares by the weighted average
number of common shares outstanding during each period. Net loss per common
share is computed by dividing net loss applicable to common shares by the
weighted average number of common shares outstanding during each period.
Potentially dilutive common shares are excluded from the calculation of loss per
common share from continuing operations and net loss per common share as their
impact is antidilutive. Loss per common share from continuing operations and net
loss per common share do not reflect common stock options and warrants
ultimately exercisable for the purchase of approximately 14,300,000 shares for
the three month period ended March 31, 2001 and approximately 8,600,000 shares
for the three month period ended March 31, 2000. The net loss per common share
does not reflect the approximately 2,650,000 common shares into which the Series
E Preferred Stock could be converted as of March 31, 2001 because the effect
would be antidilutive.

7. COMPREHENSIVE INCOME (LOSS)

The Company has no significant comprehensive income (loss) items other than net
loss.





                                       8
<PAGE>   10

                                     ITEM 2:

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


GENERAL

Tricord Systems, Inc. designs, develops and markets innovative server appliances
for content-hungry applications. The core of our technology is our patented
Illumina(TM) software that aggregates multiple appliances into a cluster,
managed as a single resource. During 2000, we continued developing our
aggregation software and began beta testing our initial Lunar Flare server
appliance for the network attached storage (NAS) market segment. In December
2000, we announced our first server appliance, Lunar Flare(TM) NAS, a general
file serving storage device for Windows(R) users designed to offer seamless
growth and ease of management. Lunar Flare NAS and other Illumina-enabled
appliances are designed to be virtually plug-and-play, offering seamless growth
and continuous access to content with no downtime. As we ended the first quarter
of 2001, our initial Lunar Flare NAS appliance continued in beta testing. In
late April 2001, we began shipping Lunar Flare NAS in limited availability.

Before focusing our efforts exclusively on the development of Illumina, we had
historically engaged in the business of designing, manufacturing, marketing and
supporting high-performance enterprise servers for use in mission critical
applications principally running on Microsoft(R) Windows NT(R) and Novell(R)
NetWare(R).

See "Factors That May Affect Future Results" at the end of this section for a
discussion regarding forward-looking statements contained herein.


RESULTS OF OPERATIONS

Research and Development

Research and development expenses increased to $2,883,000 for the first quarter
ended March 31, 2001, from $1,240,000 for the first quarter ended March 31,
2000, primarily due to headcount additions and the continued development and
testing of the Company's initial network-attached storage server appliance. The
Company anticipates that research and development costs will continue to rise
during the remainder of 2001 compared to 2000 levels, due primarily to increased
headcount and ongoing development efforts.

Sales and Marketing

Sales and marketing expenses increased to $2,245,000 for the first quarter ended
March 31, 2001 from $375,000 for the first quarter ended March 31, 2000,
primarily due to significant increases in headcount and increased expenditures
related to efforts of the Company to increase market awareness for its initial
Lunar Flare NAS server appliance.





                                       9
<PAGE>   11

The Company currently anticipates that sales and marketing expenses will
continue to increase significantly during the remainder of 2001 compared to 2000
levels, due primarily to the Company's plans to aggressively market and sell its
server appliance products.

General and Administrative

General and administrative expenses increased to $844,000 for the first quarter
ended March 31, 2001 from $654,000 for the quarter ended March 31, 2000,
primarily due to headcount additions and costs associated with expanding the
Company's general and administrative infrastructure in anticipation of the
Company's product release. The Company currently anticipates that general and
administrative expenses for 2001 will continue to grow and be greater than 2000
levels due primarily to continued expansion of the Company's infrastructure.

Stock-Based Compensation

Stock-based compensation decreased to $151,000 for the first quarter ended March
31, 2001 from $783,000 for the first quarter ended March 31, 2000, primarily due
to a decrease in the fair market value of the Company's common stock, which
resulted in a lower charge for stock compensation related to options which were
granted to non-employee contractors. These amounts do not affect the net
stockholders' equity of the Company. These non-cash expenses increased expenses,
loss from continuing operations and net loss applicable to common shares as
follows:

Non-Cash Stock Compensation Expense
(in thousands, except per share amounts)



<TABLE>
<CAPTION>
                                 March 31,
                             ---------------
                              2001     2000
                             ------   ------

<S>                          <C>      <C>
Research and development     $  109   $  393
Sales and marketing              12      109
General and administrative       30      281
                             ------   ------
                             $  151   $  783
                             ======   ======

Impact per common share      $(0.01)  $(0.04)
                             ======   ======
</TABLE>

Other Income, Net

Other income, net increased to $324,000 for the first quarter of 2001 from
$32,000 for the first quarter of 2000, primarily due to an increase in interest
income as a result of the investment of the net proceeds from private placements
in April 2000 and February 2001.




                                       10
<PAGE>   12

Series E Convertible Preferred Stock Charges

Preferred stock charges during the first quarter ended March 31, 2001 reflect
charges against stockholders' equity that consist of the beneficial conversion
charge of $167,000 and $99,000 representing the accrual of the 4.75% premium
related to the Series E Preferred Stock. The beneficial conversion charge
reflects amortization of the beneficial conversion feature related to the
preferred stock. These non-cash charges reduced stockholders' equity and
increased the net loss applicable to common shares. If the preferred stock
remains outstanding, the beneficial conversion charge will be between
approximately $500,000 and $600,000 and the premium will be approximately
$300,000, for each remaining quarter of 2001.


LIQUIDITY AND CAPITAL RESOURCES

The net increase in cash and cash equivalents during the first three months of
2001 was $16,641,000, due primarily to $23,400,000 received from the net
proceeds of the private placement of Series E Convertible Preferred Stock in
February 2001, partially offset by net cash used of $5,795,000 in operating
activities and capital expenditures of $1,006,000. Cash used in operating
activities was due primarily to the net loss of $5,648,000 for the first three
months of 2001. Capital expenditures were made to acquire equipment, expand
facilities and implement systems to support the expanding infrastructure of the
Company. The Company currently anticipates that total capital expenditures for
all of 2001 will approximate $3 million as the Company continues to build its
infrastructure to support the development, marketing, selling and delivery of
its server appliance products.

As of March 31, 2001, the Company had $33.5 million in cash and cash
equivalents. The Company currently believes that its cash and cash equivalents
are sufficient to fund its operations for at least the next twelve months.


FACTORS THAT MAY AFFECT FUTURE RESULTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements
within the meaning of the Private Securities Reform Act of 1995. When used in
this report, the words "anticipates," "believes," "expects," "intends,"
"forecasts," "plans," "future," "strategy," or words of similar import are
intended to identify forward-looking statements. Other statements of the
Company's plans and objectives may also be considered to be forward-looking
statements. Such statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from those expressed in
the forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to publish revised forward-looking
statements to reflect the occurrence of unanticipated events or circumstances
after the date hereof. The risks and uncertainties described below are not the
only ones we are faced with. Additional risks and uncertainties not presently
known to us, or that are currently deemed




                                       11
<PAGE>   13

immaterial, may also impair our business operations. If any of these risks
actually occur, our financial condition and operating results could be
materially adversely affected. Readers are urged to carefully review and
consider the various disclosures made in this Quarterly Report by the Company as
well as the Company's other filings with the Securities and Exchange Commission.

DURING 2000 AND THE FIRST QUARTER OF 2001, WE DID NOT GENERATE ANY REVENUES, AND
WE ANTICIPATE THAT ANY REVENUES THAT WE DO GENERATE WILL COME FROM PRODUCTS
BASED ON A SINGLE TYPE OF NEW SOFTWARE TECHNOLOGY THAT HAS NOT BEEN PREVIOUSLY
USED IN THE MARKETPLACE.

Since we sold the remaining assets associated with our server line of business
in August 1999 and through the first quarter of 2001, we have not generated any
revenues from the sale of products. Although we currently anticipate generating
revenues again starting in the second quarter of 2001, beginning with sales of
our initial Lunar Flare NAS server appliance, we cannot assure you when we will
generate revenues or that we will be able to generate revenues at a level that
meets expectations.

Further, Lunar Flare NAS utilizes Illumina, and all other products we currently
plan to develop are also designed to utilize Illumina. Because Illumina is a new
type of software technology, we cannot be sure that we will sell a significant
number of Lunar Flare NAS appliances, nor can we be sure that anyone will buy
our other Illumina-based products that we may develop. If demand for Lunar Flare
NAS and any other Illumina-based products that we may develop fails to
materialize, we will not have any products to sell for the foreseeable future.

SOFTWARE ERRORS OR FAILURES FOUND IN OUR PRODUCTS MAY RESULT IN A DELAY IN
DELIVERY OF OUR PRODUCTS OR LOSS OF, OR DELAY IN, MARKET ACCEPTANCE OF OUR
PRODUCTS WHICH COULD MATERIALLY ADVERSELY AFFECT OUR OPERATING RESULTS.

Software errors or failures found in our products may result in a delay in
delivery of our products. Further, even though we have performed a significant
amount of testing of our Illumina software and our initial Lunar Flare NAS
server appliance, they may still contain software errors or failures that may be
discovered by customers after shipment, which could result in loss of, or delay
in, market acceptance, which could in turn materially adversely affect our
operating results. Similarly, other products we develop may contain software
errors or failures which may result in a delay in delivery of such products or
which are not detected or remedied until after we ship such products. The
occurrence of such errors in either the Lunar Flare NAS or other Illumina-based
products could result in:

    -    The delay in delivery of these products;
    -    The loss of, or delay in, market acceptance and sales of these
         products;
    -    Diversion of development resources;
    -    Injury to our reputation; or
    -    Increased maintenance and warranty costs.



                                       12
<PAGE>   14

Moreover, because of the way customers may use our products, we may be subject
to significant liability claims if our products do not work properly. Although
the agreements we use to sell our Illumina-based products contain provisions
designed to limit our exposure to potential product liability claims, it is
possible that such limitation-of-liability provisions may not be effective as a
result of existing or future laws or unfavorable judicial decisions. If we are
found to be liable to defective product claims, such liability may have a
harmful effect on our business and financial condition.

THE SUCCESS OF OUR LUNAR FLARE NAS SERVER APPLIANCES AND OTHER ILLUMINA-BASED
PRODUCTS DEPENDS UPON MARKET ACCEPTANCE OF OUR TECHNOLOGY.

Due to the fact that we have been focusing nearly all of our resources on
developing products which utilize Illumina, our future financial performance
will be largely dependent on the acceptance of our Illumina aggregation
software. We cannot assure you that the server appliance market, our target
market for our aggregation software, will accept Illumina or the products
utilizing it. Factors that may affect the market acceptance of our products,
some of which are beyond our control, include the following:

    -    The growth and changing requirements of the server appliance market;
    -    The availability, performance, quality, price and total cost of
         ownership of our products;
    -    The availability, performance, quality, price, and total cost of
         ownership of competing products and technologies; and
    -    The successful development of our relationships with licensed
         manufacturers, original equipment manufacturers and channel partners.

If customers do not purchase the Lunar Flare NAS or our other Illumina-based
products for any reason, our revenues and operating results will be adversely
affected because we currently have no other products to sell.

WE OPERATE IN AN EXTREMELY COMPETITIVE AND RAPIDLY CHANGING MARKETPLACE, AND
MANY OF OUR COMPETITORS HAVE GREATER RESOURCES THAN US WHICH MAY ALLOW THEM TO
MORE QUICKLY REACT TO CHANGES IN THE MARKETPLACE.

We operate in an extremely competitive and rapidly changing marketplace, and we
cannot assure you that we can establish and maintain a competitive position
against current and potential competitors, especially those with greater
financial, marketing, service, support, technical and other resources. In
addition, we expect that the market for the Lunar Flare NAS, our initial server
appliance targeting the network-attached storage market, will become
consolidated with larger companies possibly being in a better position than us
to compete in this rapidly changing marketplace. As the server appliance market
continues to develop, a number of companies which have greater resources than us
could attempt to increase their presence in this market by acquiring or forming
strategic alliances with our competitors or potential business partners.

IF GROWTH IN THE NETWORK-ATTACHED-STORAGE ("NAS") MARKET DOES NOT MEET OUR
EXPECTATIONS, OUR FUTURE FINANCIAL PERFORMANCE COULD BE NEGATIVELY IMPACTED.



                                       13
<PAGE>   15

We believe our future financial performance will depend in large part upon the
continued growth in the NAS market. We expect that any revenues that we are able
to generate from product sales in 2001 will come primarily from Illumina-based
products which are sold in the NAS marketplace. The market for NAS products,
however, may not continue to grow at the current rate and could possibly
decline. Long-term trends in storage technology may change and competing
technologies, such as storage area networks, may emerge as the preferred storage
solution. If the NAS market grows more slowly than anticipated or declines, our
operating results could be materially adversely affected.

WE HAVE A HISTORY OF LOSSES AND EXPECT TO EXPERIENCE LOSSES IN THE FUTURE, WHICH
COULD RESULT IN THE MARKET PRICE OF OUR COMMON STOCK DECLINING.

Over the last five years, we have incurred significant net losses, including net
losses of $13.6 million, $7.6 million and $2.1 million in 2000, 1999 and 1998
respectively. We also incurred a net loss of $5.6 million for the first quarter
of 2001. We expect to continue to have losses in the future. In addition, we had
an accumulated deficit of $101.3 million as of March 31, 2001. We believe that
our future growth depends upon the success and market acceptance of Lunar Flare
NAS and other Illumina-based products, as well as our ability to develop new
products and adopt successful marketing and sales strategies, all of which will
require us to incur significant product development and sales and marketing
expenses. We anticipate that our expenses will increase substantially in 2001 as
we:

    -    Increase our sales and marketing activities;
    -    Introduce and expand our Lunar Flare product line;
    -    Establish and expand our distribution channels;
    -    Continue and expand our product development activities;
    -    Develop strategic partnerships and alliances with third parties;
    -    Create and market additional server appliance products based on
         Illumina; and
    -    Implement additional internal systems, develop additional
         infrastructure and hire additional personnel to keep pace with our
         growth.

As a result of our expected increases in expenses, we will need to generate
significant revenues to achieve profitability. If we do not significantly
increase our revenues or if we fail to control our costs as we implement our
business strategies, it will be difficult to achieve and maintain profitability.
If we do not achieve and maintain profitability, the market price of our common
stock may decline substantially.

IF WE FAIL TO ESTABLISH SUFFICIENT DIRECT AND INDIRECT SALES CHANNELS FOR OUR
PRODUCTS, OUR ABILITY TO GENERATE REVENUE MAY BE LIMITED.

In order to grow our business, we will need to increase market awareness of our
server appliances and proprietary software. To achieve these objectives, we
believe it will be necessary to establish and expand our direct and indirect
sales channels. We plan to sell our products directly to end users as well
as through indirect sales channels,




                                       14
<PAGE>   16


including value added resellers, agents and original equipment manufacturers.
These potential sales strategies present risks to our business. To sell our
products directly to end users, our sales people that we hire will need to sell
an entirely new product to customers in a market in which we have not previously
sold. We cannot assure you that we will be able to successfully market our
products to end users or that we will be able to do so profitably.

To sell our Illumina-based products through distribution partnerships and other
indirect sales channels, we will need to establish relationships with businesses
with whom we do not currently have relationships. Our failure to establish such
relationships on acceptable terms or in sufficient numbers could adversely
affect our ability to introduce and market our products successfully. Even if we
do establish such distribution relationships, using other businesses to sell the
products we are developing presents several risks to our business. These risks
include our inability to control the distributors, our dependence upon their
continued commercial success and financial stability, and the possibility that
they may be unable to market or sell our products effectively. In addition, we
anticipate our agreements with distribution partners will typically be
non-exclusive, so they could carry competing product lines, devote their efforts
to other products in different markets, reduce or discontinue sales of our
products, fail to devote the resources necessary to provide effective sales and
marketing support of our products or develop their own competing product lines.

WE FACE RISKS OF TECHNOLOGICAL CHANGES THAT MAY RENDER OUR PRODUCTS OBSOLETE.

The markets we serve are characterized by rapid technological change, changing
customer needs, frequent new product introductions and evolving industry
standards. The introduction of products embodying new technologies and the
emergence of new industry standards could render our products and software,
including Lunar Flare NAS and Illumina, obsolete and unmarketable. Our future
success will depend upon our ability to develop and introduce new products
(including new software releases and enhancements) on a timely basis that keep
pace with technological developments and emerging industry standards and address
the increasingly sophisticated needs of our customers. We cannot assure you that
we will be successful in developing and marketing new products that respond to
technological changes or evolving industry standards. If we are unable, for
technological or other reasons, to develop and introduce new products in a
timely manner in response to changing market conditions or customer
requirements, our operating results will be materially adversely affected.

OUR BUSINESS DEPENDS ON THE ACCEPTANCE OF OPERATING SYSTEM SOFTWARE FOR WHICH WE
HAVE NO RESPONSIBILITY OR CONTROL.

Our initial Lunar Flare NAS server appliance is designed to be used with the
Linux operating system, which is not designed or manufactured by us. We
anticipate that Lunar Flare NAS may in the future, after we further modify and
enhance it, be able to be used with the Windows NT(R) and UNIX(R) operating
systems, both of which are designed and manufactured by parties over whom we
have no control. Similarly, we anticipate future Illumina-based products may
also be designed to be used with the Windows NT(R), Linux




                                       15
<PAGE>   17

and UNIX(R) operating systems. Therefore, our business depends on the market
acceptance of Windows NT(R), Linux and UNIX(R) to run computer networks and the
willingness of the manufacturers of these operating systems to continue to offer
a quality product. Because we have no control over the market acceptance of any
of this operating software or their manufacturers to continue to offer quality
products that fulfill market demand, our ability to generate revenues will be
largely dependent on the ability and desire of such manufacturers to continue to
offer quality products that fulfill market demand.

WE MAY BE UNABLE TO HIRE AND RETAIN REQUIRED, HIGHLY-SKILLED MANAGERIAL AND
TECHNICAL PERSONNEL.

Our future success depends, in significant part, upon retaining the continued
service and performance of our senior management, team members, consultants and
other key personnel as well as our continued ability to attract and recruit
qualified personnel. Losing the services of any member of our management team
could impair our ability to effectively manage our company and to carry out our
business plan. We also need to hire additional sales, marketing, engineering,
service and administrative personnel to grow our business and generate revenues.
If we are unable to hire and retain these employees, our business and operations
would be adversely affected. Competition for people with the skills we require
is intense, and we cannot assure you that we will be able to hire such people or
that we will be able to do so without offering these people salaries that are
significantly higher than we have historically paid. Additions of new personnel
and departures of existing personnel could disrupt our business and may result
in the departure of other employees. We also depend on the continued service of
our key personnel and even though we have entered into employment agreements
with key management personnel, these agreements cannot prevent their departure.

WE RELY ON CONTRACT MANUFACTURERS/INTEGRATORS TO PRODUCE OUR PRODUCTS AND, IF
OUR MANUFACTURERS FAIL TO MEET OUR REQUIREMENTS, WE MAY BE UNABLE TO MEET
CUSTOMER REQUIREMENTS AND OUR BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED.

Our arrangements with our contract manufacturers who produce our products
currently do not guarantee production levels or manufacturing prices. These
manufacturers may not have additional capacity available when we need it and
they may experience shortages in supply of key components for an extended time,
which would cause delays in the production of our products, prevent us from
satisfying our contractual obligations and meeting customer expectations, and
result in lost sales or customers. Also, commencing volume production or
expanding production to another facility they own may be expensive and
time-consuming. In addition, commencement of the manufacturing of our products
at additional manufacturing sites we may need in the future may cause
transitional problems, including delays and quality control issues, which could
cause us to lose sales and impair our ability to achieve profitability. We may
need to find new or additional outside manufacturers to manufacture our products
in higher volume and at lower cost to meet increased demand and competition. If
we are required or choose to change outside manufacturers, we may lose sales and
our business could be materially adversely affected.



                                       16
<PAGE>   18

OUR RELIANCE UPON PATENTS, DOMESTIC TRADEMARK LAWS AND CONTRACTUAL PROVISIONS TO
PROTECT OUR PROPRIETARY RIGHTS MAY NOT BE SUFFICIENT TO PROTECT OUR INTELLECTUAL
PROPERTY FROM OTHERS WHO MAY SELL SIMILAR PRODUCTS.

Our products are differentiated from those of our competitors because we utilize
Illumina, our internally developed software. If we fail to protect Illumina and
our other intellectual property, other vendors could develop and sell products
with features similar to ours, and this could reduce demand for our products. We
have been granted one U.S. patent related to Illumina and we currently have
eight additional United States patent applications pending with respect to
Illumina to protect our intellectual property rights. We also rely on a
combination of trade secret and other intellectual property law, nondisclosure
agreements and other protective measures to establish and protect our
proprietary rights in our intellectual property.

We believe that the steps we have taken to safeguard our intellectual property
afford only limited protection. Others may develop technologies that are similar
or superior to our technology or design around the patents and trade secrets we
own. Despite the precautions we have taken, laws and contractual restrictions
may not be sufficient to prevent misappropriation of our technology or deter
others from developing similar technologies.

In addition, the laws of the countries in which we may market our services and
solutions may offer little or no effective protection of our proprietary
technology. Reverse engineering, unauthorized copying or other misappropriation
of our patented, proprietary technology or disclosure as a result of the use of
open source software, could enable third parties to benefit from our technology
without paying us for it, which would significantly harm our business.

OTHERS MAY ASSERT INTELLECTUAL PROPERTY CLAIMS AGAINST US AND OUR OPERATING
RESULTS WOULD SUFFER IF WE WERE SUBJECT TO A PROTRACTED INFRINGEMENT CLAIM OR IF
WE BECOME OBLIGATED TO PAY A SIGNIFICANT DAMAGE AWARD.

Substantial litigation regarding intellectual property rights and brand names
exists in our industry. We expect that server appliance products may be
increasingly subject to third-party infringement claims as the number of
competitors in our industry segment grows and the functionality of products in
different industry segments overlaps. We do not believe that our products employ
technology that infringes any proprietary rights of third parties. However,
third parties may claim that we infringe their intellectual property rights and
such claims may be found to be valid. Any claims, with or without merit, could:

    -    Be time-consuming to defend;
    -    Result in costly litigation;
    -    Divert our management's attention and resources;
    -    Cause product shipment delays; and
    -    Require us to enter into royalty or licensing agreements.



                                       17
<PAGE>   19

If we are found to be infringing upon the rights of others, we could be forced
to develop a non-infringing alternative that could be costly and time-consuming.
We may also be required, if we are found to be infringing on the intellectual
rights of others, to enter into royalty or licensing agreements with a third
party, which agreements may not be available on terms acceptable to us. A valid
claim by a third party of product infringement against us or our failure or
inability to license the infringed or similar technology could adversely affect
our business because we would not be able to sell the impacted product without
redeveloping it or incurring significant additional expenses.

WE MAY NEED ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE TO US AND, IF RAISED,
MAY DILUTE OUR EXISTING INVESTORS' OWNERSHIP INTEREST IN US.

We may need to raise additional funds to develop or enhance our software and
server appliances, fund expansion, respond to competitive pressures or acquire
complementary products, businesses or technologies. Additional financing may not
be available on terms that are acceptable to us or at all. If we raise
additional funds through the issuance of equity or convertible debt securities,
the percentage ownership of our stockholders would be reduced and these
securities may have rights, preferences and privileges senior to those of our
current stockholders which may adversely impact current stockholders. If
adequate funds are not available on acceptable terms, our ability to fund our
expansion, take advantage of unanticipated opportunities, develop or enhance
products or services, or otherwise respond to competitive pressures would be
significantly limited.

OUR STOCK IS SUBJECT TO POTENTIAL DILUTION THROUGH THE CONVERSION OF SERIES E
PREFERRED STOCK, AND THE ACCOUNTING TREATMENT FOR THE SERIES E PREFERRED STOCK
CONVERSION FEATURE WILL RESULT IN SIGNIFICANT, NON-CASH CHARGES AGAINST INCOME
APPLICABLE TO COMMON STOCKHOLDERS.

The shares of Series E Preferred Stock issued in February 2001 are convertible
into shares of our common stock at a conversion price of $9.50 per share of
common stock. However, the conversion price of the Series E Preferred Stock may
be decreased in certain circumstances (which could result in an increase in the
number of shares of common stock issued upon conversion of the Series E
Preferred stock), including if we sell shares of our common stock in certain
circumstances below the initial conversion price of $9.50 or issue securities
that are convertible into shares of common stock at an effective price of less
than $9.50 per share. In addition, if the Series E Preferred Stock is not
converted to our common stock prior to February 27, 2004 (unless the Company
elects to redeem the Preferred stock), it will automatically convert to common
stock on that date, and the conversion price will be based on the average market
price of our common stock during the fifteen trading days preceding that date.
If the average market price of our common stock is lower than $9.50 during these
fifteen days, the conversion price will be lower that $9.50 and the number of
shares of common stock into which the Series E Preferred Stock is convertible
will increase, possibly by a substantial amount, which would dilute the
percentage ownership of our existing shareholders. An increase in the number of
shares issued or issuable upon conversion of the Series E Preferred stock could
have a material adverse effect on the market price of our Common Stock.



                                       18
<PAGE>   20

Accounting for the preferred stock conversion feature in accordance with
Emerging Issues Task Force (EITF) issue No. 98-5 "Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Rates" and EITF Issue No. 00-27 "Application of Issue 98-5 to Certain
Convertible Investments" resulted in the allocation of approximately $7.9
million of the net offering proceeds to a "beneficial conversion feature". This
beneficial conversion feature will be amortized as a non-cash charge against
stockholders' equity over the shorter of three years or the period during which
the Preferred Stock remains outstanding. In addition, the Company will accrue a
premium on the stated value of outstanding Preferred Stock, which is payable to
the Preferred Stockholders in additional common stock upon conversion or in cash
upon redemption of the Preferred Stock, at an annual rate of 4.75%. This premium
will also be recorded as a non-cash charge against stockholders' equity. The
charges against stockholders' equity resulting from the amortization of the
beneficial conversion feature and accrual of the premium will reduce income
(increase the loss) applicable to common stockholders which will reduce income
(increase the loss) per common share reported by the Company. If the Preferred
Shares remain outstanding for their full three year term, without adjustment of
the conversion price as described above, charges to equity for amortization of
the beneficial conversion feature and accrual of the premium would total
approximately $11.5 million. If the conversion price is adjusted as described
above, an increase in the number of shares issued or issuable upon conversion of
the Series E Preferred stock could result in increased charges against income
applicable to common stockholders and could have a material adverse effect on
the market price of our Common Stock.

WE CURRENTLY DO NOT ANTICIPATE PAYING ANY CASH DIVIDENDS.

We currently intend to retain any future earnings for use in our business and do
not anticipate paying any cash dividends in the foreseeable future. Therefore,
any gains from your investment in our common stock will have to come from an
increase in its market price.

THE MARKET PRICE OF OUR COMMON STOCK HAS FLUCTUATED SIGNIFICANTLY IN THE PAST
AND WILL LIKELY CONTINUE TO DO SO IN THE FUTURE AND ANY BROAD MARKET
FLUCTUATIONS MAY MATERIALLY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK.

The market price of our common stock has been volatile in the past, and several
factors could cause the price to fluctuate substantially in the future. These
factors include:

    -    Successful and timely development and introduction of Lunar Flare NAS
         and other Illumina-based products;
    -    Fluctuations in our operating results;
    -    Fluctuations in the valuation of companies perceived by investors to be
         comparable to us;
    -    A shortfall in revenues or earnings compared to securities analysts'
         expectations;
    -    Changes in analysts' recommendations or projections;
    -    Announcements of new products, applications or product enhancements by
         us or our competitors; and
    -    Changes in our relationships with our suppliers, channel partners and
         customers.



                                       19
<PAGE>   21

In addition, the stock market has recently experienced volatility that has
particularly affected the market prices of equity securities of many technology
companies and that often has been unrelated to the operating results of such
companies. As a result, the market price of our common stock may fluctuate
significantly in the future and any broad market fluctuations may materially
adversely affect the market price of common stock. In the past, companies that
have experienced volatility in the market price of their stock have been the
subject of securities class action litigation. If we were the subject of
securities class action litigation, it could result in substantial costs and a
diversion of management's attention and resources.




                                       20
<PAGE>   22
                                     ITEM 3:

                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK


FINANCIAL INSTRUMENTS

The Company invests excess funds not required for current operations in cash
equivalents, primarily money market funds or high-grade commercial paper. Market
risk was estimated as the potential decrease in interest income resulting from a
hypothetical one percent decrease in interest rates for the cash equivalents,
which would have resulted in a decrease in interest income for the interim
period ended March 31, 2001 of approximately $50,000.



                                       21
<PAGE>   23
                           PART II. OTHER INFORMATION


Item 2.  Changes in Securities.

(c)  On February 27, 2001, the Company issued 25,000 shares of Series E
     Convertible Preferred Stock to RGC International Investors, LDC. The net
     proceeds to the Company from the issuance of these shares was approximately
     $23.4 million, net of approximately $1.6 million of offering costs,
     including a $1.5 million commission paid to a placement agent. The shares
     of the Series E Convertible Preferred Stock are convertible into shares of
     the Company's common stock. The conversion rights, along with other
     material attributes of the Series E Convertible Preferred Stock, are more
     fully described under the heading "2. Convertible, Redeemable Series E
     Preferred Stock" in the NOTES TO FINANCIAL STATEMENTS included in Part I of
     this Form 10-Q.

     In connection with the issuance of the shares of the Series E Convertible
     Preferred Stock, the Company issued (i) two warrants to RGC International
     Investors, LDC, one of which has an 18-month term to purchase up to 986,842
     additional shares of the Company's common stock at $12.40 per share, and
     the other of which has 24-month term to purchase up to 986,842 additional
     shares of the Company's common stock at $14.50 per share and (ii) one
     warrant to the Wit SoundView Corporation which has a five-year term to
     purchase up to 110,526 shares of the Company's common stock at $9.50 per
     share.

     The transactions described above were exempt from registration under
     Section 4(2) of the Securities Act of 1933, as amended, and the rules
     promulgated thereunder. The Company received assurances from RGC
     International Investors, LDC and Wit SoundView Corporation that the
     acquisition of the Company's preferred stock and warrants were for
     investment only and not with a view to or for sale in connection with any
     distribution thereof.

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     10.1  1998 Stock Incentive Plan, as amended and restated March 22, 2001
     10.2  1994 Employee Stock Purchase Plan, as amended and restated March 22,
           2001

(b) Reports on Form 8-K

     On January 19, 2001, the Company furnished a report on Form 8-K under Item
     9, Regulation FD Disclosure, related to a press release announcing that it
     would release its financial results for the fourth quarter and twelve
     months ended December 31, 2000 on January 25, 2001 and that it would host a
     conference call on January 25, 2001.




                                       22
<PAGE>   24

     On January 25, 2001, the Company furnished a report on Form 8-K under Item
     5, Other, related to a press release announcing its fourth quarter and year
     end 2000 financial results.

     On February 28, 2001, the Company furnished a report on Form 8-K under Item
     5, Other, related to a press release announcing its had closed on a round
     of financing for $25.0 million.

     On March 22, 2001, the Company furnished a report on Form 8-K under Item 5,
     Other, related to a press release announcing that it expects to introduce
     its initial server appliance product in limited availability near the end
     of April 2001.






                                       23
<PAGE>   25
                                    SIGNATURE

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.


                             TRICORD SYSTEMS, INC.

                                  (REGISTRANT)



                             By: /s/ Joan M. Wrabetz
                                --------------------
                                Joan M. Wrabetz, President and
                                Chief Executive Officer (Principal
                                Executive Officer)


                             By: /s/ Steven E. Opdahl
                                ---------------------
                                Steven E. Opdahl,
                                Chief Financial Officer
                                (Principal Financial Officer and
                                Principal Accounting Officer)

                             Date:  May 15, 2001





                                       24
<PAGE>   26
                                INDEX TO EXHIBITS


  Exhibit                                                              Page
 Number                                                               Number

   10.1       1998 Incentive Stock Option Plan, as amended and          26
                restated March 22, 2001
   10.2       1994 Employee Stock Purchase Plan, as amended             40
                and restated March 22, 2001









                                       25