<PAGE>

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                                    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 JUNE 30, 1997

----------     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.)

    2800 NORTHWEST BOULEVARD, PLYMOUTH, MINNESOTA             55441
   --------------------------------------------------------------------
     (Address of principal executive offices)               (Zip Code)


                                    (612) 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.

                                        OUTSTANDING AT
          CLASS                          JULY 31, 1997
          -----                         ---------------
     Common Stock,
     $.01 par value                        13,459,884


--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
     

<PAGE>

                  PART 1. FINANCIAL INFORMATION

                 ITEM 1: FINANCIAL STATEMENTS

                    TRICORD SYSTEMS, INC.
            CONSOLIDATED STATEMENTS OF OPERATIONS
                         (UNAUDITED)


<TABLE>
<CAPTION>
  
                                       Three Months Ended June 30,          Six Months Ended June 30,
                                      ---------------------------          --------------------------
(in thousands, except per share data)   1997                 1996           1997               1996
                                      --------             -------         ------              ------
<S>                                   <C>                  <C>             <C>                <C>    
REVENUES                              $ 3,311              12,012          8,184              30,462

Cost of goods sold                      4,490               9,252          9,406              21,860
                                      -------              ------         ------             -------
   Gross margin                        (1,179)              2,760         (1,222)              8,602
                                      -------              ------         ------             -------
Operating expenses:                          
  Research and development                828               1,790          2,611               3,764
  Sales and marketing                   1,098               4,952          3,492               9,842
  General and administrative              605               1,403          1,325               2,402
  Nonrecurring items, net                 864                   -            864                   -
                                      -------              ------         ------             -------
                                        3,395               8,145          8,292              16,008
                                      -------              ------         ------             -------
   Operating loss                      (4,574)             (5,385)        (9,514)             (7,406)
                                      -------              ------         ------             -------
Other income (expense):                      
  Interest income                          44                 106             99                 234
  Other, net                              (33)                (79)          (297)               (109)
                                      -------              ------         ------             -------
                                           11                 27           (198)                125
                                      -------              ------         ------             -------
   Net loss                           $(4,563)             (5,358)        (9,712)             (7,281)
                                      -------              ------         ------             -------    
                                      -------              ------         ------             -------
   Net loss per share                 $ (0.34)              (0.40)         (0.72)              (0.55)
                                      -------              ------         ------             -------
                                      -------              ------         ------             -------
   Average common shares outstanding   13,460              13,359         13,434              13,317
                                      -------              ------         ------             -------
                                      -------              ------         ------             -------
</TABLE>


         
  See accompanying notes to consolidated financial statements.  
  
                              1
<PAGE>


                  TRICORD SYSTEMS, INC.
               CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                         ASSETS
                                                      June 30,          December 31,
(in thousands, except per share data)                   1997                1996
                                                    ------------        ------------
                                                     (unaudited)
<S>                                                  <C>                   <C>
Current assets:
   Cash and cash equivalents                           $  3,974               5,711
   Accounts receivable, net                                 922               4,636
   Inventories                                            2,283               4,984
   Other current assets                                     610                 572
                                                    ------------        ------------
     Total current assets                                 7,789              15,903

Equipment and improvements, net                           1,079               5,717

Other assets                                                348                 318
                                                    ------------        ------------

     Total Assets                                      $  9,216              21,938
                                                    ------------        ------------
                                                    ------------        ------------



                          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                    $  1,090               2,897
   Accrued payroll, benefits and related taxes              501               1,275
   Deferred revenue                                       1,085               1,045
   Other accrued expenses                                 1,484               2,546
                                                    ------------        ------------
     Total current liabilities                            4,160               7,763

Stockholders' equity:
   Common stock, $.01 par value; 27,000 shares authorized,
     13,460 and 13,407 shares issued and outstanding        135                 134
   Additional paid-in capital                            77,583              77,522
   Cumulative translation adjustments                       275                (256)
   Accumulated deficit                                  (72,937)            (63,225)
                                                    ------------        ------------
     Total stockholders' equity                           5,056              14,175
                                                    ------------        ------------

     Total Liabilities and Stockholders' Equity        $  9,216              21,938
                                                    ------------        ------------
                                                    ------------        ------------
</TABLE>
     See accompanying notes to consolidated financial statements.

                            2
<PAGE>


                  TRICORD SYSTEMS, INC.                  
          CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                       (UNAUDITED)                       
                                               
                                               
                                                     Six Months Ended June 30,
                                                  ----------------------------
(In thousands)                                        1997              1996
                                                  ---------          ---------
                                              
Cash flows from operating activities:                    
  Net loss                                        $  (9,712)            (7,281)
  Adjustments to reconcile net loss to net  
  cash used in operating activities:    
     Depreciation and amortization                    2,036              2,398
     Provision for losses on inventory                1,332                351
     Loss on termination of facilities lease            975                  -
     Provision for losses on equipment                  764                  -
     Loss on disposal of equipment                      334                 29
     Provision for losses on accounts receivable        150                120
     Other                                              577                250
     Changes in operating assets and liabilities:
       Accounts receivable                            3,564              1,604
       Inventories                                    1,245                266
       Other current assets                             268               (105)
       Accounts payable                              (1,807)            (2,031)
       Accrued payroll, benefits and related taxes     (774)               133
       Deferred revenues and other accrued expenses  (1,022)                97
                                                  ---------          ---------
         Net cash used in operating activities       (1,946)            (4,169)
                                                  ---------          ---------
Cash flows from investing activities:                    
  Purchase of short-term investments                      -             (1,000)
  Proceeds from maturities of short-term investments      -              1,000
  Capital expenditures                                 (412)            (1,917)
  Change in other assets                                 60                125
                                                  ---------          ---------
         Net cash used in investing activities         (352)            (1,792)
                                                  ---------          ---------
Cash flows from financing activities:                    
  Stock option and employee stock purchase
  plan transactions                                      30                290
                                                  ---------          ---------
         Net cash provided by financing activities       30                290
                                                  ---------          ---------
Effect of exchange rate changes on cash                 531                325
                                                  ---------          ---------
Net decrease in cash and cash equivalents            (1,737)            (5,346)
Cash and cash equivalents at beginning of period      5,711             11,456
                                                   ---------          ---------
Cash and cash equivalents at end of period         $  3,974              6,110
                                                  ---------          ---------
                                                  ---------          ---------
      See accompanying notes to consolidated financial statements. 


                            3
<PAGE>
                  TRICORD SYSTEMS, INC.
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated statements of operations, balance 
sheet and statements of cash flows reflect all adjustments of a normal 
recurring nature, and also certain nonrecurring items as described in Notes 
6, 7, 8, 9 and 12, which are, in the opinion of management, necessary for a 
fair statement of the consolidated financial position at June 30, 1997, and 
of consolidated results of operations and cash flows for the interim periods 
ended June 30, 1997 and 1996.  The unaudited consolidated financial 
statements should be read in conjunction with Tricord Systems Inc.'s (the 
"Company's") audited consolidated financial statements for the year ended 
December 31, 1996, which were incorporated by reference in its 1996 Form 10-K 
Annual Report.  The year-end balance sheet data included herein is derived 
from audited financial statements, but does not include all disclosures 
required by generally accepted accounting principles.  The results of 
operations for the interim periods ended June 30, 1997 are not necessarily 
indicative of the results to be expected for the full year or any future 
quarters.

2.  BALANCE SHEET INFORMATION

                                       June 30,     December 31,
                                        1997            1996
                                     ----------     ------------
                                     (unaudited)

  Accounts receivable, net:
     Accounts receivable               $  3,815          7,840
     Allowance for doubtful accounts     (2,893)        (2,844)
                                       --------        -------
                                       $    922          4,636
                                       --------        -------
                                       --------        -------

  Inventories:
     Raw materials                     $  2,660          3,658
     Work-in-process                      3,005          4,696
     Finished goods                       2,445          3,194
     Evaluation units                         6             11
     Spare parts                          3,193            755
     Inventory reserve                   (9,026)        (7,330)
                                       --------         ------
                                       $  2,283          4,984
                                       --------         ------
                                       --------         ------

                            4
<PAGE>


3. CHANGE IN BUSINESS FOCUS

In February 1997, the Company announced that its effort to find strategic 
alternatives, including the possibility of finding a strategic partner, to 
strengthen the Company's probability of success in the server market was not 
successful.  The Company also announced that it would not bring its next 
generation server to market because the costs associated with bringing future 
server products through final development to market exceeded the available 
resources of the Company.  Instead, the Company will focus its resources on 
developing and marketing distributed data access and management products for 
the Windows NT environment that will incorporate the Company's distributed 
file system software technology and related I/O ("input/output") technology. 
Specialization in distributed data access and management products represents 
a natural evolution for the Company and combines the Company's historical I/O 
technology and related expertise with the distributed file system technology 
that the Company has been developing since its acquisition of such additional 
technology in 1996.  This evolution in the Company's strategy necessitated a 
reduction in the Company's workforce, affecting approximately 90 employees.  
The Company intends to sell its remaining enterprise server inventory 
through 1997 as long as there is sufficient customer demand and materials are 
available, and to honor its warranty, service and support agreements. The 
Company expects that its sales will consist mainly of spares, disk drives, 
memory and expansion products.

The Company does not anticipate any significant revenues from the development 
of products related to the distributed data access and management products in 
1997.

Because of the Company's announcement in February 1997 that it was 
discontinuing development of its next generation enterprise server and would 
sell its remaining enterprise server inventory only through 1997, the Company 
is currently evaluating its cash requirements.  If the Company's operations 
progress as currently anticipated, of which there can be no assurance, the 
Company believes that its existing cash and cash equivalents, together with 
funds generated from the continued liquidation of its remaining enterprise 
server inventory, will be sufficient to fund its operations for the remainder 
of 1997.  The Company is seeking additional capital through a number of 
different sources, including sales of assets and technology and OEM or other 
strategic investments or alliances.

4. MAJOR CUSTOMERS

Toshiba Corporation ("Toshiba") accounted for 19.8% of the Company's revenues 
in the second quarter of 1997 compared to 18.2% of the Company's revenues for 
the second quarter of 1996.  For the six months ended June 30, 1997, revenues 
from Toshiba were 8.5% compared to 20.3% for the same period last year.  
Revenues from Memorex Telex Corporation ("Memorex Telex") were 1.5% of the 
Company's revenues for the second quarter of 1997 compared to 6.8% in the 
second quarter of 1996, and 4.3% of the Company's revenues in the first six 
months of 1997 compared to 19.5% in the first six months of 1996.  Memorex 
Telex revenues for the first quarter of 1997 and six months ended June 30, 
were primarily from the European subsidiaries of Memorex Telex due to the 
fourth quarter 1996 Chapter 11 bankruptcy filing of the Memorex Telex 
domestic operations.   

                            5
<PAGE>

5. LEGAL PROCEEDING - SHAREHOLDER LAWSUIT TRIAL

On June 16, 1997, a federal jury in St. Paul, Minnesota absolved the Company 
of any liability in a class action lawsuit alleging securities fraud.  The 
jury found that the Company did not materially misrepresent its revenue 
prospects in early 1994.

6. SOFTWARE LICENSE - TOSHIBA CORPORATION

Included in nonrecurring items for the three months and six months ended 
June 30, 1997, is a $1,000,000 one-time license fee paid to the Company by 
Toshiba for the world-wide, non-exclusive right and license to the Availability
Management System ("AMS") Software.

7. LEASE TERMINATION AGREEMENT

The Company recorded a charge to nonrecurring items of $975,000 in the second 
quarter of 1997 upon reaching decisions and completing negotiations with its 
landlord regarding the disposition of its headquarters building and related 
furniture, leasehold improvements and a sublease.  Contrary to prior 
estimates, the value implicit in its below-market building lease and sublease 
to be realized as a result of these negotiations was less than the carrying 
value of leasehold improvements and furniture not recoverable through other 
means.  The agreement reached with its landlord provides that the Company 
will continue to receive sublease rentals, net of related costs, through the 
sublease term and would also be paid an additional $300,000 if the landlord 
sells the building prior to the end of the sublease in January 2002.  The 
second quarter 1997 charge is net of the $135,000 present value of net 
sublease rentals expected to be received.  If, for reasons not presently 
foreseeable, the tenant does not honor its sublease commitment and no legal 
remedies are available to the Company, an additional charge would be 
necessary. Also, netted against the second quarter 1997 nonrecurring item, 
and in return for the lease termination and vacating the facility by August 
31, 1997, the Company will receive a termination and vacation fee of $200,000 
no later than September 15, 1997, and reimbursement of actual out-of-pocket 
costs incurred by the Company to move to a new location, including telephone 
wiring, relocation of its telephone switch and computer network wiring.  The 
Company has signed a lease agreement for a new facility to fit its current 
operating space requirements and expects to occupy the new space by August 
31, 1997.  The Company will spend approximately $145,000 in leasehold 
improvements costs in its new facility.      

8. PROVISION FOR EXCESS AND OBSOLETE INVENTORY

In the second quarter of 1997, the Company took a charge of $1,332,000 
related to the write-down of obsolete and excess inventory.  The Company 
completed an updated  forecast of its anticipated usage of current on-hand 
inventory.  The Company determined that it had more inventory than was 
required through the end of 1998 and that the second quarter charge of 
$1,332,000 was needed to adjust inventory to its net realizable value.  

                            6
<PAGE>


9. PROVISION FOR LOSSES ON EQUIPMENT       

The Company recorded a charge to nonrecurring items of $764,000 in the second 
quarter of 1997 for the write-down of the net book value at June 30, 1997 of 
certain equipment based on an updated review of the equipment required to 
support the operations of the Company.  

10. REVOLVING CREDIT FACILITY

In May 1997, the Company received notice that its revolving credit facility 
would not be renewed at the August 9, 1997 maturity date, due to default of 
the Minimum Tangible Net Worth covenant, product restructuring and the change 
in the Company's focus.  In June 1997, the Company requested early 
termination of the credit facility, which was accepted. A termination fee 
included in the credit facility agreement has been waived. 

11. LEGAL PROCEEDING - MEMOREX TELEX CORPORATION CHAPTER 11 BANKRUPTCY

In June 1997 the Company filed a response to the complaint filed against the 
Company in the U.S. Bankruptcy Court in Delaware regarding certain payments 
made to the Company by Memorex Telex within 90 days prior to the October 15, 
1996 Chapter 11 bankruptcy filing by Memorex Telex. The complaint alleges 
that these payments are avoidable transfers under the Bankruptcy code and 
seeks return of approximately $1,300,000 from the Company, together with 
interest and attorney's fees and expenses.  The Company believes that certain 
defenses are available to it with respect to all or some of these amounts, 
and has instructed its counsel to defend this action vigorously.  If the 
Company is required to return all or some of these payments, depending on the 
amount and the timing, any such repayments could have a material adverse 
effect on the Company's future operations, cash flows and financial 
condition. The Company has been notified that a trial regarding this matter 
has been scheduled to commence January 5, 1998. 

12. MUTUAL SETTLEMENT AND RELEASE AGREEMENT

In June 1997, the Company signed a Mutual Settlement and Release Agreement 
with International Business Machines Corporation ("IBM") regarding IBM's 
assertion that certain of the Company's server systems and related products 
infringe on certain patents owned by IBM.  The Company and IBM agreed to 
settle this dispute by mutual settlement and release without admission of 
liability by either the Company or IBM.  The Company agreed to pay IBM 
$125,000 for the release granted by IBM, which amount is included in 
nonrecurring items for the second quarter of 1997.    

                            7
<PAGE>

13. NEW ACCOUNTING STANDARD

The Company will adopt the requirements of Statement of Financial Accounting 
Standards No. 128, "Earnings Per Share," in the fourth quarter of 1997.  The 
Company does not believe that the adoption of this new accounting standard 
will have a significant impact on earnings (loss) per share as currently 
reported compared to earnings (loss) per share after adoption of this 
standard.

                            8
<PAGE>

                         ITEM 2:

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


GENERAL

The Company 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 Windows NT 
and Novell NetWare.  

In February 1997, the Company announced that its effort to explore strategic 
alternatives, including the possibility of finding a strategic partner, to 
strengthen the Company's probability of success in the server market was not 
successful.  The Company also announced that it would therefore not bring its 
next generation server to market because the costs associated with bringing 
future server products through final development to market exceeded the 
available resources of the Company.  Instead, the Company is focusing its 
resources on developing and marketing distributed data access and management 
products for the Windows NT environment that will incorporate the Company's 
distributed file system software technology and related I/O ("input/output") 
technology.  I/O technology is a core competency of the Company and was one 
of the key differentiators of its enterprise server product line.  
Accordingly, specialization in distributed data access and management 
products represents a natural evolution for the Company and combines the 
Company's expertise in I/O technology with the distributed file system 
technology that the Company has been developing since the Company acquired 
such technology in August 1996.  This evolution in the Company's strategy 
necessitated a reduction in the Company's workforce in February 1997, 
affecting approximately 90 employees.  The Company intends to sell its 
remaining enterprise server inventory through 1997 as long as there is 
sufficient customer demand and materials available, and will honor its 
warranty, service and support agreements. The Company expects that its sales 
will consist mainly of spares, disk drives, memory and expansion products.

In addition to the factors described below, the Company's operating results 
could materially differ from those anticipated by the Company based upon the 
following  factors: the continued growth and acceptance of the Windows NT 
operating system and the growth in demand for attached storage; the Company's 
ability to develop, test and release its new products for this market on a 
timely basis; the ability of the Company to anticipate changes in technology 
and industry standards on a timely basis; the Company's ability to generate 
adequate cash to fund operations, which in turn will depend on its ability to 
sell a sufficient amount of its remaining enterprise server inventory and 
control operating expenses; the Company's ability to successfully establish 
one or more OEM relationships in order for the Company to introduce and 
market its distributed data access and management products; and competition 
from other companies in the Windows NT storage products market. 

                            9
<PAGE>

RESULTS OF OPERATIONS
 
REVENUES

Revenues for the second quarter and six months ended June 30, 1997 were 
$3,311,000 and $8,184,000 compared to $12,012,000 and $30,462,000 for the 
second quarter and six months ended June 30, 1996.  The decreases in product 
revenues are due to the Company's announcement, as previously discussed, that 
it would not bring its next generation server to market.  Decreases in 
revenue for the second quarter of 1997 compared to the second quarter of 1996 
reflected a $5,400,000 reduction in the ES Series product line; a $2,500,000 
reduction in associated add-on products such as disk drives, memory and 
expansion products; and an $800,000 reduction in the discontinued DS and 
Model Series product lines.  Decreases in revenue for the first six months of 
1997 compared to the first six months of 1996 reflected a $14,600,000 
reduction on the ES Series product line; a $4,900,000 reduction on associated 
add-on products; and a $2,800,000 reduction in the discontinued DS and Model 
series product lines.                           
                                                                             
Toshiba Corporation ("Toshiba") accounted for 19.8% of the Company's revenues 
in the second quarter of 1997 compared to 18.2% of the Company's revenues for 
the second quarter of 1996.  Included in the second quarter of 1997 was a 
purchase by Toshiba of spare parts and add-on products of approximately 
$650,000.  The Company does not expect any significant revenues from Toshiba 
going forward.  For the six months ended June 30, 1997, revenues from Toshiba 
were 8.5% compared to 20.3% for the same period last year.  Revenues from 
Memorex Telex Corporation ("Memorex Telex") were 1.5% of the Company's 
revenues for the second quarter of 1997 compared to 6.8% in the second 
quarter of 1996, and 4.3% of the Company's revenues in the first six months 
of 1997 compared to 19.5% in the first six months of 1996. Memorex Telex 
revenues for the first quarter of 1997 and six months ended June 30, were 
primarily from the European subsidiaries of Memorex Telex due to the fourth 
quarter 1996 Chapter 11 bankruptcy filing of the Memorex Telex domestic 
operations.   

The Company currently anticipates that revenues will be significantly less in 
1997 compared to the corresponding 1996 periods as the Company focuses its 
resources on developing its distributed data access and management products 
and enterprise server sales are basically limited to the Company's remaining 
inventory.  The Company intends to sell its remaining enterprise server 
inventory through 1997 as long as there is sufficient customer demand and 
materials are available.  In addition, the Company will sell spares and 
expansion products as long as materials are available.  The Company does not 
anticipate any significant revenues in 1997 from the sale or license of its 
distributed data access and management products, which have yet to be fully 
developed.  Actual 1997 revenues could materially differ from those expressed 
in the foregoing forward-looking statements, depending on a number of 
factors, including whether anticipated demand in 1997 for the Company's 
remaining enterprise server inventory differs from the Company's expectations 
and the ability of the Company to purchase components to satisfy customer 
demand.      

                            10
<PAGE>

GROSS MARGIN

Gross margin, as a percent of revenues, decreased to a loss of 36% in the 
second quarter of 1997 and a loss of 15% for the first six months of 1997 
compared to 23% in the second quarter of 1996 and 28% for the first six 
months of 1996.  The decrease in gross margin for the second quarter and 
first six months of 1997 compared to the second quarter and first six months 
of 1996 was primarily due to the second quarter 1997 charge of $1,332,000 for 
the write-down of inventory based on an updated review by the Company of 
forecasted revenues, as well as a significant decrease in the Company's sales 
volume, based on the Company's announcement, as discussed above, that it 
would not bring its next generation server to market. 

Production planning for 1997 has been set at levels which the Company 
believes it can attain and recover its remaining enterprise server inventory. 
The Company currently anticipates that gross margin will continue to be 
significantly less in 1997 compared to the corresponding 1996 periods, both 
in dollars and as a percent of revenue, because of the significant decrease 
in revenues in 1997 as discussed above.  Actual 1997 gross margin results 
could materially differ from those expressed in the foregoing forward-looking 
statement, depending on a number of factors, including the achievement of the 
Company's 1997 anticipated revenue level and the ability of the Company to 
purchase quality components in order to satisfy customer demand.   

RESEARCH AND DEVELOPMENT

Expenses for research and development consist primarily of compensation and 
related benefit costs, project expenses, consulting on development and 
depreciation on capital equipment used in the research and development 
process. Research and development expenses decreased 54% to $828,000 for the 
second quarter of 1997 from $1,790,000 for the second quarter of 1996, and 
decreased 31% to $2,611,000 for the first six months of 1997 from $3,764,000 
for the first six months of 1996, primarily due to a decrease in salary and 
benefit costs associated with fewer team members as a result of the work 
force reduction which took effect at the end of the first quarter of 1997. 

The Company currently anticipates that research and development 
costs will be a critical activity during 1997 as the Company 
focuses on the development of distributed data access and 
management products.  The Company does not, however, anticipate 
that research and development costs in 1997 will reach the levels 
of the last several years.  Actual 1997 research and development 
expenses could materially differ from those expressed in the 
foregoing forward-looking statements, depending on a number of 
factors, including the ability of the Company to achieve its 
business plan and obtain and commit the required resources to 
research and development and the ability to hire and train 
quality research and development team members as well as retain 
current research and development team members.  

                            11
<PAGE>

SALES AND MARKETING

Sales and marketing expenses include compensation and benefits, sales 
commissions, travel, trade shows, marketing materials and programs and 
facility costs associated with worldwide sales offices.  Sales and marketing 
expenses decreased 78% to $1,098,000 for the second quarter of 1997 from 
$4,952,000 for the second quarter of 1996, primarily from lower salaries and 
benefits due to fewer team members, the reduction of commissions related to 
reduced revenues, the closing of certain of the Company's domestic sales 
offices and the ongoing closing and consolidation of the Company's foreign 
subsidiaries and sales offices.  Sales and marketing expenses decreased 65% 
to $3,492,000 for the first six months of 1997 from $9,842,000 for the first 
six months of 1996 for the same reasons, except that the effect of the 
workforce reduction did not commence until the end of the first quarter of 
1997.                                      
                                             

The Company currently anticipates that sales and marketing expenses will 
continue to be significantly less in 1997 compared to the corresponding 1996 
periods as the Company focuses on the development of distributed data access 
and management products.  Actual 1997 sales and marketing expenses could 
materially differ from those expressed in the foregoing forward-looking 
statement, depending on a number of factors, including the ability of the 
Company to complete development and release commercially its distributed data 
access and management products in accordance with its currently anticipated 
timetable. 

GENERAL AND ADMINISTRATIVE

General and administrative expenses decreased 57% to $605,000 for the second 
quarter of 1997 from $1,403,000 for the second quarter of 1996 and decreased 
45% to $1,325,000 for the first six months of 1997 from $2,402,000 for the 
first six months of 1996, due to lower salaries because of fewer team members 
and a decrease due to the second quarter 1996 charge of $400,000 related to 
the securities class action lawsuit. 

The Company currently anticipates that general and administrative expenses 
will continue to be significantly less in 1997 compared to the corresponding 
1996 periods due to the  workforce reduction and the related support 
necessary for fewer team members.

NONRECURRING ITEMS

Nonrecurring items for the second quarter of 1997 are related to 
the net write-off of leasehold improvements of $975,000 due to 
the termination of the Company's lease of its present 
headquarters facility and the pending move to a smaller facility 
in August 1997; a $764,000 write-off of equipment related to the 
Company's updated review of the equipment required to support the 
operations of the Company; and $125,000 for the mutual settlement 
and release of an alleged patent infringement without admission 
of liability by the Company or IBM, partially offset by a 
$1,000,000 one-time license fee for world-wide distribution 
rights to the Company's AMS software.

OTHER INCOME (EXPENSE)

Interest income was $44,000 for the second quarter of 1997 and $99,000 for 
the first six months of 1997 compared to $106,000 for the second quarter of 
1996 and $234,000 for the first six months of 1996 due to lower interest 
income on lower cash and cash equivalent investments.  Other expense was 
$33,000 for the second quarter of 1997 compared to $79,000 for the second 
quarter of 1996.

                            12
<PAGE>


For the first six months of 1997, other expense was $297,000 compared to 
$109,000 for the first six months of 1996.  The increase in other expense for 
the first six months of 1997 compared to 1996 was primarily due a $247,000 
first quarter 1997 loss on disposal of certain assets of the Company's 
equipment due to the redirection of the Company's efforts to supporting 
distributed data access and management product development.

LIQUIDITY AND CAPITAL RESOURCES

The aggregate net decrease in cash and cash equivalents during the first six 
months of 1997 was $1,737,000, including $1,946,000 of cash used in operating 
activities, due to the net loss for the first six months of 1997, partially 
offset by depreciation and other non-cash losses and provisions and a 
reduction of the Company's accounts receivable.  As of June 30, 1997 and 
December 31, 1996, accounts receivable were $922,000 and $4,636,000, 
respectively.  The average days sales outstanding ("DSO") at June 30, 1997, 
excluding Memorex Telex, was 29 days compared to 32 days at December 31, 
1996.  As of June 30, 1997 and December 31, 1996, inventories were $2,283,000 
and $4,984,000, respectively.  The Company turned inventory on an annualized 
basis approximately 3.8 times, exclusive of the impact on cost of goods sold 
of the second quarter charge of $1,332,000 for the write-down of excess and 
obsolete inventory, in the first six months of 1997 compared to approximately 
5.4 times in 1996. 
 
Net cash used in investing activities was $352,000 in the first six months of 
1997, primarily due to capital expenditures of $412,000, partially offset by 
a decrease in other assets of $60,000.  Capital expenditures were primarily 
related to capitalization of internally-developed equipment systems and 
upgrades to existing systems for demonstration equipment prior to the 
Company's announcement of a change in its business focus, and for the 
purchase of computer equipment to support its ongoing operations.  The 
Company currently plans purchases of capital equipment of approximately 
$50,000 during the last six months of 1997, primarily for research and 
development.  The Company has no material commitments for the purchase of 
capital equipment.  

As of June 30, 1997, the Company had approximately $3,974,000 in cash and 
cash equivalents. Because of the Company's announcement in February 1997 that 
it was discontinuing development of its next generation enterprise server and 
would sell its remaining enterprise server inventory only through 1997, the 
Company is continuing to evaluate its cash requirements.  In May 1997, the 
Company received notice that its revolving credit facility would not be 
renewed at the August 9, 1997 maturity date, due to default of the Minimum 
Tangible Net Worth covenant, product restructuring and the change in the 
Company's focus.  In June 1997, the Company requested early termination of 
the credit facility.  If the Company's operations progress as currently 
anticipated, of which there can be no assurance, the Company believes that 
its existing cash and cash equivalents together with the funds generated from 
the continued liquidation of its remaining enterprise server inventory, will 
be sufficient to fund its operations for the remainder of 1997.  Actual cash 
requirements could materially differ from those expressed in the foregoing 

                            13
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forward-looking statement, depending on a number of factors, including the 
ability of the Company to develop, test and release distributed data access 
and management products in accordance with its currently anticipated 
timetable, the development of the attached-storage market for Windows NT 
computing environments in the manner anticipated by the Company, the ability 
of the Company to achieve anticipated revenue levels from the continued sale 
of enterprise servers and related components through the end of 1997, and the 
ability of the Company to maintain its cost structure in accordance with its 
operating plan.  In addition, the Company may be required to return all or 
some of the payments made by Memorex Telex and, depending on the amount and 
timing, any such repayments could have a material adverse effect on the 
Company's future operations, cash flows and financial condition.

The Company is seeking additional capital through a number of different 
sources, including sales of assets and technology and OEM or other strategic 
investments or alliances.  There can be no assurance, however, that 
additional capital will be available on acceptable terms or at all.

                            14
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                        PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS

On June 16, 1997, the Company was unanimously cleared by a federal jury of 
any liability in a three-year old class-action suit alleging securities 
fraud.  The jury found that the Company did not materially misrepresent its 
revenue prospects in early 1994.  

In June 1997 the Company filed a response to the complaint filed against the 
Company in the U.S. Bankruptcy Court in Delaware regarding certain payments 
made to the Company by Memorex Telex within 90 days prior to the October 15, 
1996 Chapter 11 bankruptcy filing by Memorex Telex. The complaint alleges 
that these payments are avoidable transfers under the Bankruptcy code and 
seeks return of approximately $1,300,000 from the Company, together with 
interest and attorney's fees and expenses.  The Company believes that certain 
defenses are available to it with respect to all or some of these amounts, 
and has instructed its counsel to defend this action vigorously.  If the 
Company is required to return all or some of these payments, depending on the 
amount and the timing, any such repayments could have a material adverse 
effect on the Company's future operations, cash flows and financial 
condition. The Company has been notified that a trial regarding this matter 
has been scheduled to commence January 5, 1998.  

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

    27.1  Financial data schedule

(b)  Reports on Form 8-K

    No reports on Form 8-K were filed during the quarter ended June 30,1997.

                            15
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                        SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) 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/ John J. Mitcham                
                                        ----------------------------------
                                         John J. Mitcham, President
                                         and Chief Executive Officer
                                          (Principal Financial Officer)     
                                                                              
                                    By:   /s/ Jeff A. Stewart                
                                        ----------------------------------
                                         Jeff A. Stewart, Vice President
                                         and Controller
                                         (Principal Accounting Officer)      
                          
                                    Date:  August 14, 1997

                            16
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                    INDEX TO EXHIBITS

Exhibit                                                Page
Number                                                Number
--------                                              -------

27.1       Financial data schedule                      18   

                                                      


                            17