<PAGE>

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

                                    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, 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                             MARCH 31, 1997
               -----                             --------------
           Common Stock,
           $.01 par value                          13,407,130

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

<PAGE>

                             PART 1. FINANCIAL INFORMATION

                              ITEM 1: FINANCIAL STATEMENTS

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



                                                    Three Months Ended March 31,
                                                    ----------------------------
(in thousands, except per share data)                  1997              1996
                                                    ----------         ---------
Revenues                                             $  4,873            18,450

Cost of goods sold                                      4,916            12,608
                                                    ----------         ---------

       Gross margin                                       (43)            5,842
                                                    ----------         ---------

Operating expenses:
    Research and development                            1,783             1,974
    Sales and marketing                                 2,394             4,890
    General and administrative                            720               999
                                                    ----------         ---------
                                                        4,897             7,863
                                                    ----------         ---------
 
       Operating loss                                  (4,940)           (2,021)
                                                    ----------         ---------

Other income (expense):
    Interest income                                        55               128
    Interest expense                                        -                 -
    Other, net                                           (264)              (30)
                                                    ----------         ---------
                                                         (209)               98
                                                    ----------         ---------

       Net loss                                     $  (5,149)           (1,923)
                                                    ----------         ---------
                                                    ----------         ---------
 
       Net loss per share                           $   (0.38)            (0.14)
                                                    ----------         ---------
                                                    ----------         ---------

       Average common shares outstanding               13,407            13,275
                                                    ----------         ---------
                                                    ----------         ---------


           See accompanying notes to consolidated financial statements.

                                         1

<PAGE>

                               TRICORD SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS


                                      ASSETS

                                                       March 31,    December 31,
(in thousands, except per share data)                    1997          1996
                                                     -----------    -----------
                                                     (unaudited)
Current assets:
    Cash and cash equivalents                        $    4,168         5,711
    Accounts receivable, net                              1,781         4,636
    Inventories                                           4,659         4,984
    Other current assets                                    478           572
                                                     -----------    -----------
       Total current assets                              11,086        15,903

Equipment and improvements, net                           4,258         5,717

Other assets                                                258           318
                                                     -----------    -----------

       Total Assets                                  $   15,602        21,938
                                                     -----------    -----------
                                                     -----------    -----------



                        LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                 $    2,422         2,897
    Accrued payroll, benefits and related taxes             799         1,275
    Deferred revenue                                      1,053         1,045
    Other accrued expenses                                1,810         2,546
                                                     -----------    -----------
       Total current liabilities                          6,084         7,763

Stockholders' equity:
    Common stock, $.01 par value; 27,000 shares 
     authorized, 13,407 shares issued and 
     outstanding                                            134           134
    Additional paid-in capital                           77,538        77,522
    Cumulative translation adjustments                      220          (256)
    Accumulated deficit                                 (68,374)      (63,225)
                                                     -----------    -----------
       Total stockholders' equity                         9,518        14,175
                                                     -----------    -----------

         Total Liabilities and Stockholders' Equity  $   15,602        21,938
                                                     -----------    -----------
                                                     -----------    -----------


              See accompanying notes to consolidated financial statements.

                                        2

<PAGE>

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

                                                   Three Months Ended March 31,
                                                   ----------------------------
(In thousands)                                         1997          1996
                                                   -----------   -----------

Cash flows from operating activities:
  Net loss                                          $  (5,149)      (1,923)
  Adjustments to reconcile net loss to net
   cash used in operating activities: 
     Depreciation and amortization                      1,279        1,182
     Loss on disposal of equipment                        247            -
     Provision for losses on accounts receivable           75           60
     Provision for losses on inventories                  416           83
     Other                                                330           (1)
     Changes in operating assets and liabilities:
       Accounts receivable                              2,780         (983)
       Inventories                                        (91)         493
       Other current assets                                94         (335)
       Accounts payable                                  (475)          41
       Accrued payroll, benefits and related taxes       (476)         111
       Deferred revenues and other accrued expenses      (728)          18
                                                   -----------   -----------
         Net cash used in operating activities         (1,698)      (1,254)
                                                   -----------   -----------
Cash flows from investing activities:
  Purchase of short-term investments                        -       (1,000)
  Proceeds from maturities of short-term 
    investments                                             -        1,000
  Capital expenditures                                   (381)        (748)
  Change in other assets                                   60         (110)
                                                   -----------   -----------
         Net cash used in investing activities           (321)        (858)
                                                   -----------   -----------
Cash flows from financing activities:
  Stock option transactions                                 -            3
                                                   -----------   -----------
         Net cash provided by financing activities          -            3
                                                   -----------   -----------
Effect of exchange rate changes on cash                   476          311
                                                   -----------   -----------
Net decrease in cash and cash equivalents              (1,543)      (1,798)
Cash and cash equivalents at beginning of period        5,711       11,456
                                                   -----------   -----------

Cash and cash equivalents at end of period         $    4,168        9,658
                                                   -----------   -----------
                                                   -----------   -----------

       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, which are, in the opinion of management, necessary for a 
fair statement of the consolidated financial position at March 31, 1997, and 
of consolidated results of operations and cash flows for the interim periods 
ended March 31, 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 period ended March 31, 1997 are not necessarily 
indicative of the results to be expected for the full year or any future 
quarters.

2.  BALANCE SHEET INFORMATION             

                                       March 31, 1997    December 31, 1996
                                       --------------    -----------------
                                        (unaudited)

   Accounts receivable, net:
   Accounts receivable                   $  4,595              7,480
   Allowance for doubtful accounts         (2,814)            (2,844)
                                         --------             ------
                                         $  1,781              4,636
                                         --------             ------
                                         --------             ------

   Inventories:
     Raw materials                       $  3,080              3,658
     Work-in-process                        3,791              4,696
     Finished goods                         2,525              3,194
     Evaluation units                          81                 11
     Spare parts                            2,574                755
     Inventory reserves                    (7,392)            (7,330)
                                         --------             ------
                                         $  4,659              4,984
                                         --------             ------
                                         --------             ------


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 

                                       4

<PAGE>

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 manufacture and sell its Pentium-based enterprise 
server product line through 1997, and to honor its warranty, service and 
support agreements.  The Company does not expect any significant charges for 
the remainder of 1997 as a result of this action.

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 current line of enterprise servers 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 sale of its current line of enterprise servers, will 
be sufficient to fund its operations for the remainder of 1997.  The Company 
expects to seek 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

Memorex Telex Corporation ("Memorex Telex") accounted for 6.4% of the 
Company's revenues for the first quarter of 1997 compared to 27.8% in the 
first quarter of 1996.  First quarter 1997 Memorex Telex revenues were 
primarily from European foreign subsidiaries due to the fourth quarter 1996 
Chapter 11 bankruptcy filing of the Memorex Telex domestic operations.  There 
were no revenues from Toshiba Corporation in the first quarter of 1997 
compared to 21.7% of the Company's revenues for the first quarter of 1996.  
Sales to Connect Computer Corporation, a reseller, were 3.1% of revenues for 
the first quarter of 1997 compared to 11.5% for the first quarter of 1996.

5. LEGAL PROCEEDING - MEMOREX TELEX CORPORATION CHAPTER 11 BANKRUPTCY

In May 1997 the Company received a notice that a complaint had been filed 
against the Company in the U.S. Bankruptcy Court in Delaware regarding 
certain payments made to the Company by Memorex Telex Corporation ("Memorex 
Telex") within 90 days prior to the October 15, 1996 Chapter 11 bankruptcy 
filing by Memorex Telex.  The complaint 

                                       5

<PAGE>

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.  Given the early stage of this action, no provision has been made 
for this matter as of March 31, 1997.      

6. REVOLVING CREDIT FACILITY

As of March 31, 1997, the Company was in default of the covenant under its 
revolving credit facility that required the Company to maintain not less than 
$10,000,000 of tangible net worth.  As of March 31, 1997, the Company has no 
borrowings under the revolving credit facility and has had no borrowings 
under the revolving credit facility in 1997 and 1996.  The revolving credit 
facility is based on eligible accounts receivable balances, and, based on the 
change in business focus announced by the Company in February 1997, is not 
estimated to be available to the Company at any time during the remainder of 
1997.  

7. NEW ACCOUNTING STANDARD

The Company plans to 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 its financial statements.

                                       6

<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.  The Company's enterprise servers are characterized by an 
open-system design, emphasizing system management, high availability, high 
performance and scalability. 

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 manufacture and 
sell its Pentium-based enterprise server product line through 1997, and will 
honor its warranty, service and support agreements.  The Company does not 
expect any significant charges for the remainder of 1997 as a result of this 
action.

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. 

                                       7

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth the percentage increase (decrease) and the 
percentage of revenues represented by certain line items in the Company's 
unaudited Consolidated Statements of Operations for the periods indicated:


    Percentage                                      Percentage of Revenues
Increase (Decrease)                                 ----------------------
   1996 to 1997                                           Three Months
-------------------                                      Ended March 31
      Three                                         ----------------------
     Months                                           1997            1996
    --------                                         ------          ------

     (74)%   Revenues. . . . . . . . . . . . .        100%            100%
     (61)    Cost of goods sold. . . . . . . .        101              68
    -------                                          ------          ------

    (101)    Gross margin. . . . . . . . . . .         (1)             32
    -------                                          ------          ------
             Operating expenses:
     (10)      Research and development. . . .         37              11
     (51)      Sales and marketing . . . . . .         49              27
     (28)      General and administrative. . .         15               5
    -------                                          ------          ------

     (38)        Total operating expenses. . .        101              43
    -------                                          ------          ------

    (144)      Operating loss. . . . . . . . .       (102)            (11)
     313     Other income (expense), net.. . .         (4)              1
    -------                                          ------          ------

    (168)%   Net loss. . . . . . . . . . . . .       (106)%           (10)%
    -------                                          ------          ------
    -------                                          ------          ------

REVENUES

Revenues for the first quarter ended March 31, 1997 were $4,873,000 compared 
to $18,450,000 for the first quarter ended March 31, 1996.  The decrease in 
product revenues for the first quarter of 1997 compared to the first quarter 
of 1996 is primarily due to the Company's announcement, as discussed above, 
that it would not bring its next generation server to market; a $9,200,000 
reduction in the ES Series product line, primarily due to increased 
competition in the enterprise server market; a $2,400,000 reduction in 
associated add-on products such as disk drives, memory and expansion 
products; and a $2,000,000 reduction in the discontinued DS and Model Series 
product lines.  The decrease in revenues for the first quarter of 1997 
compared to the first quarter of 1996 occurred across all distribution 
channels: a reduction of approximately $4,100,000 in the reseller channel and 
a $9,500,000 reduction in the OEM channel.  Memorex Telex Corporation 
("Memorex Telex") accounted for 6.4% of the Company's revenues for the first 
quarter of 1997 compared to 27.8% in the first quarter of 1996.  First 
quarter 1997 Memorex Telex revenues were primarily from European foreign 
subsidiaries due to the fourth quarter 1996 Chapter 11 bankruptcy filing of 
the Memorex Telex domestic operations.  There were no revenues from Toshiba 
Corporation ("Toshiba") in the first quarter of 1997 compared to 21.7% of the 
Company's revenues for the first quarter of 1996.  Sales to Connect Computer 
Corporation, a reseller, were 

                                       8

<PAGE>

3.1% of revenues for the first quarter of 1997 compared to 11.5% for the 
first quarter of 1996.

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 manufacture its enterprise server product 
line 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 
enterprise server products differs from the Company's expectations and the 
ability of the Company to purchase components to satisfy customer demand.     
 

GROSS MARGIN

Gross margin, as a percent of revenues, decreased to (1%) in the first 
quarter of 1997 compared to 32% in the first quarter of 1996.  The decrease 
in gross margin for the first quarter of 1997 compared to 1996 was due 
primarily to a significant decrease in the Company's sales volume, which 
lowered the amount over which costs could be allocated.

Production planning for 1997 has been set at levels which the Company 
believes it can attain and recover remaining assets.  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 and depreciation on capital equipment 
used in the research and development process. Research and development 
expenses decreased 10% to $1,783,000 for the first quarter of 1997 from 
$1,974,000 for the first quarter of 1996, primarily due to a decrease in 
salary and benefit costs associated with fewer team members, although this 
was offset somewhat by salary costs incurred in the first quarter of 1997 in 
connection with the workforce reduction.

                                       9

<PAGE>

The Company currently anticipates that research and development costs will be 
a key expense 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.  

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 51% to $2,394,000 for the first quarter of 1997 from 
$4,890,000 for the first quarter of 1996, primarily due to the reduction of 
commissions related to reduced revenues, lower salaries and benefits due to 
fewer team members, 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.  This decrease in the first quarter of 1997 
was offset somewhat by salary costs incurred in such quarter in connection 
with the workforce reduction.

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 28% to $720,000 for the first 
quarter of 1997 from $999,000 for the first quarter of 1996, primarily due to 
a decrease in legal and accounting fees.

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 February 1997 workforce reduction and the related 
support necessary for fewer team members.

OTHER INCOME (EXPENSE)

Other expense was $209,000 for the first quarter of 1997 compared to other 
income of $98,000 for the first quarter of 1996.  The increase in other 
expense for the first quarter is 

                                      10

<PAGE>

primarily related to the 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 
three months of 1997 was $1,543,000, including $1,698,000 of cash used in 
operating activities, due to the net loss for the first three months of 1997, 
partially offset by depreciation and a reduction of the Company's accounts 
receivable.  As of March 31, 1997 and December 31, 1996, accounts receivable 
were $1,781,000 and $4,636,000, respectively.  The average days sales 
outstanding ("DSO") at March 31, 1997, excluding Memorex Telex, was 29 days 
compared to 32 days at December 31, 1996.  As of March 31, 1997 and December 
31, 1996, inventories were $4,659,000 and $4,984,000, respectively.  The 
Company turned inventory on an annualized basis approximately 4.1 times in 
the first three months of 1997 compared to approximately 5.4 times in 1996. 
 
Net cash used in investing activities was $321,000 in the first three months 
of 1996, primarily due to capital expenditures of $381,000, 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.  The Company currently plans purchases of capital 
equipment of approximately $400,000 during the last nine months of 1997, 
primarily for research and development.  The Company has no material 
commitments for the purchase of capital equipment.  

As of March 31, 1997, the Company had approximately $4,168,000 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 current line of enterprise servers only through 1997, the 
Company is continuing to evaluate its cash requirements.  The Company's 
revolving credit facility is based on eligible accounts receivable balances 
and is not estimated to be available to the Company as 1997 progresses.  In 
addition, the Company is currently in default under, and believes that in the
near term it will continue to be in default under, the covenant under its 
revolving credit facility that requires the Company to maintain not less than 
$10,000,000 of tangible net worth.  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 sale of enterprise servers and related components,
will be sufficient to fund its operations for the remainder of 1997.  Actual 
cash requirements 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 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 

                                      11

<PAGE>

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, if the Company is required 
to return all or some of the payments made by Memorex Telex, 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 expects to seek 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.
                                      12

<PAGE>

                              PART II. OTHER INFORMATION
                                           
ITEM 1. LEGAL PROCEEDINGS

In May 1997 the Company received a notice that a complaint had been 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 repayments could have a 
material adverse effect on the Company's future operations, cash flows and 
financial condition.  Given the early stage of this action, no provision has 
been made for this matter as of March 31, 1997.    
 
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

    27.1  Financial data schedule

(b) Reports on Form 8-K

    The Company filed a Report on Form 8-K on February 12, 1997 under Item 5 
    of such Report to announce that it will not bring its next generation server
    to market and instead will redirect the focus of its resources on developing
    its unique distributed file system software technology and related IO 
    expertise.  No financial statements were filed as part of this Report.

                                      13

<PAGE>

                                      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/ Gregory T. Barnum
                                        ------------------------
                                        Gregory T. Barnum, Vice President
                                        of Finance & Administration
                                        (Principal Financial Officer)
                                    
                                    
                                    By: /s/ Jeff A. Stewart
                                        ------------------------
                                       Jeff A. Stewart, Corporate Controller
                                       (Principal Accounting Officer)
                                    
                                    Date:  May 15, 1997

                                      14

<PAGE>

                                  INDEX TO EXHIBITS
                                           
                                           
    Exhibit                                                    Page
    Number                                                    Number
    -------                                                   ------

     27.1      Financial data schedule                          16

                                      15