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 September 30, 1997
                                       or
|_|      Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934
         For the Transition Period From _______________ to ________________.

Commission file number 0-27074

                          SECURE COMPUTING CORPORATION
        ----------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                   Delaware                                52-1637226
        -------------------------------               -------------------
        (State or other jurisdiction of                (I.R.S. employer
        incorporation or organization)                identification no.)


              2675 Long Lake Road
              Roseville, Minnesota                            55113
    ----------------------------------------              ------------
    (Address of principal executive offices)               (Zip code)

                                 (612) 628-2700
               ---------------------------------------------------
               Registrant's telephone number, including area code

                                 Not Applicable
     ----------------------------------------------------------------------
      (Former name, former address and former fiscal year, if changed since
                                  last report)


       Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
       Yes  |X|      No  |_|

       Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date: Common Stock, $.01 par value
-- 15,719,841 issued and outstanding as of November 3, 1997, which number
includes $3,061,817 Exchangeable Shares that have the same voting and other
rights as Common Stock and are immediately exercisable for shares of Common
Stock.

<PAGE>


                          SECURE COMPUTING CORPORATION

                          QUARTERLY REPORT ON FORM 10-Q


PART I.              FINANCIAL INFORMATION                              PAGE NO.

Item 1.     Condensed Consolidated Financial Statements:

            Condensed Consolidated Balance Sheets
            (Unaudited) as of September 30, 1997 and
            December 31, 1996                                              3

            Condensed Consolidated Statements of
            Operations (Unaudited) for the three months
            ended September 30, 1997 and 1996 and the
            nine months ended September 30, 1997 and 1996                  4

            Condensed Consolidated Statements of
            Cash Flows (Unaudited) for the nine months
            ended September 30, 1997 and 1996                              5

            Notes to the Condensed Consolidated Financial
            Statements (Unaudited)                                         7

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


PART II.    OTHER INFORMATION                                              11

            SIGNATURES                                                     13

<PAGE>


                          PART 1. Financial Information

                          SECURE COMPUTING CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    September 30, 1997 and December 31, 1996

                 (Unaudited, in thousands except share amounts)

<TABLE>
<CAPTION>
                                                                     September 30,    December 31,
                                                                         1997             1996
                                                                      ----------       ----------
<S>                                                                   <C>            <C>     
ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                          $    8,689       $   12,130
   Investments                                                                 0            5,935
   Accounts receivable, net                                               12,127            7,098
   Other current assets                                                    3,460            4,266
                                                                      ----------       ----------
     Total current assets                                                 24,276           29,429

PROPERTY AND EQUIPMENT, AT COST                                           12,552           10,839
   Less accumulated depreciation and amortization                         (6,643)          (4,993)
                                                                      ----------       ----------
                                                                           5,909            5,846

OTHER ASSETS                                                               1,507            1,500
                                                                      ----------       ----------
                                                                      $   31,692       $   36,775
                                                                      ==========       ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and other accrued liabilities                     $    7,200       $    8,788
   Deferred revenue                                                        1,500            1,755
                                                                      ----------       ----------
     Total current liabilities                                             8,700           10,543

STOCKHOLDERS' EQUITY
   Preferred Stock, par value $.01; 2,000,000 shares authorized,
     none issued and outstanding                                            --               --
   Common Stock, par value $.01; 25,000,000 shares authorized;
     issued and outstanding -- September 30, 1997--15,620,600
     and December 31, 1996--15,101,152                                       156              151
   Additional paid-in capital                                             66,519           65,208
   Accumulated deficit                                                   (43,683)         (39,127)
                                                                      ----------       ----------
     Total stockholders' equity                                           22,992           26,232
                                                                      ----------       ----------
                                                                      $   31,692       $   36,775
                                                                      ==========       ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>


                          SECURE COMPUTING CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           For the three months ended September 30, 1997 and 1996 and
              for the nine months ended September 30, 1997 and 1996

               (Unaudited, in thousands except per share amounts)

<TABLE>
<CAPTION>
                                       Three months ended September 30,  Nine months ended September 30,
                                            1997              1996            1997              1996
                                       --------------------------------  -------------------------------
<S>                                      <C>              <C>              <C>              <C>       
Revenue:
   Products and services                 $    9,188       $    6,904       $   22,805       $   17,927
   Government contracts                       3,049            3,923           11,375           13,322
                                         ----------       ----------       ----------       ----------
                                             12,237           10,827           34,180           31,249

Cost of revenue                               4,502            4,894           14,423           14,378
                                         ----------       ----------       ----------       ----------
Gross profit                                  7,735            5,933           19,757           16,871

Operating expenses:
   Selling and marketing                      5,308            4,952           14,762           12,242
   Research and development                   2,052            2,540            6,930            7,260
   General and administrative                   890            1,603            3,049            4,810
   Acquisition costs                           --               --               --             13,069
                                         ----------       ----------       ----------       ----------
                                              8,250            9,095           24,741           37,381
                                         ----------       ----------       ----------       ----------
Operating loss                                 (515)          (3,162)          (4,984)         (20,510)

Net interest income                             127              302              429            1,130
                                         ----------       ----------       ----------       ----------
Loss before income taxes                       (388)          (2,860)          (4,555)         (19,380)

Income taxes                                   --               --               --               --
                                         ----------       ----------       ----------       ----------

Net loss                                 $     (388)      $   (2,860)      $   (4,555)      $  (19,380)
                                         ==========       ==========       ==========       ==========

Net loss per share                       $     (.02)      $     (.19)      $     (.29)      $    (1.39)
                                         ==========       ==========       ==========       ==========

Weighted average shares outstanding          15,619           14,838           15,494           13,961
                                         ==========       ==========       ==========       ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>


                          SECURE COMPUTING CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the nine months ended September 30, 1997 and 1996

                            (Unaudited, in thousands)

<TABLE>
<CAPTION>
                                                                Nine months ended September 30,
                                                                      1997             1996
                                                                -------------------------------
<S>                                                              <C>              <C>        
NET CASH USED IN OPERATING ACTIVITIES                             $   (8,349)      $  (15,315)

INVESTING ACTIVITIES
   Cash paid in purchase of Webster Network Strategies, Inc.            --               (759)
   Proceeds from sales of investments                                  5,935             (989)
   Purchase of property and equipment                                 (1,714)          (3,451)
   Increase in intangibles and other assets                             (629)            (338)
                                                                  ----------       ----------
     Net cash provided by (used in) investing activities               3,592           (5,537)

FINANCING ACTIVITIES
   Proceeds from long-term debt                                         --             (1,896)
   Proceeds from issuance of Common Stock                              1,316           11,112
                                                                  ----------       ----------
     Net cash provided by financing activities                         1,316            9,216
                                                                  ----------       ----------
     Increase (decrease) in cash and cash equivalents                 (3,441)         (11,636)

Cash and cash equivalents beginning of period                         12,130           32,924
                                                                  ----------       ----------
Cash and cash equivalents at end of period                        $    8,689       $   21,288
                                                                  ==========       ==========

NONCASH TRANSACTIONS
   Common Stock issued in purchase of Webster Network
     Strategies, Inc.                                                   --         $    2,601
                                                                  ==========       ==========

   Common Stock issued to purchase remaining interest
     in Border Network Technologies Europe Ltd.                         --         $      331
                                                                  ==========       ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>


                          SECURE COMPUTING CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)


1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         The accompanying condensed consolidated financial statements have been
         prepared by Secure Computing Corporation (the "Company") without audit
         and reflect all adjustments (consisting only of normal and recurring
         adjustments and accruals) which are, in the opinion of management,
         necessary to present a fair statement of the results for the interim
         periods presented. The statements have been prepared in accordance with
         the regulations of the Securities and Exchange Commission, but omit
         certain information and footnote disclosures necessary to present the
         statements in accordance with generally accepted accounting principles.
         The results of operations for the interim periods presented are not
         necessarily indicative of the results to be expected for the full
         fiscal year. These condensed financial statements should be read in
         conjunction with the Consolidated Financial Statements and footnotes
         thereto included in the Company's Annual 10-K Report for the year ended
         December 31, 1996, as filed with the Securities and Exchange
         Commission.

2.       PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of the
         Company and its subsidiaries. All intercompany balances and
         transactions have been eliminated in consolidation. The financial
         statements for all periods presented have been restated to reflect the
         pooling of interests of the Company and its acquired subsidiaries
         Secure Computing Canada Ltd. (formerly Border Network Technologies
         Inc.) and Enigma Logic, Inc.

3.       NET INCOME (LOSS) PER SHARE

         Net loss per share for the nine months ended September 30, 1997 and
         1996 are computed using the weighted average number of common shares
         outstanding during the periods including common stock equivalents if
         dilutive.

         In February 1997, the Financial Accounting Standards Board issued
         Statement No. 128, "Earnings Per Share", which is required to be
         adopted on December 31, 1997. At that time, the Company will be
         required to change the method currently used to compute earnings per
         share and to restate all prior periods. Under the new requirements for
         calculating earnings per share, the dilutive effect of stock options
         will be excluded. There is no impact expected to net income (loss) per
         share for the three month and nine month periods ended September 30,
         1997 and September 30, 1996.

<PAGE>


4.       STOCKHOLDERS' EQUITY

         On July 24, 1997, the Company's Board of Directors declared a dividend
         of one preferred share purchase right (the "Right") for each
         outstanding share of Common Stock, $.01 par value (the "Common
         Shares"), of the Company. The Board also authorized the issuance of one
         Right for each Non-Voting Exchangeable Share (the "Exchangeable
         Shares") of Secure Computing Canada Ltd. Under certain circumstances, a
         Right may be exercised to purchase one one-hundredth of a share of
         Series B Junior Participating Preferred Stock, $.01 par value (the
         "Preferred Shares"), for $50, subject to adjustment. The Rights become
         exercisable if a person or group acquires 15 percent or more of the
         Company's outstanding Common Shares, including Exchangeable Shares,
         subject to certain exceptions, or announces an offer which would result
         in such person or group acquiring 15 percent or more of the Company's
         outstanding Common Shares, including Exchangeable Shares. If a person
         or group acquires 15 percent or more of the Company's outstanding
         Common Shares, including Exchangeable Shares, subject to certain
         exceptions, each Right will entitle its holder to buy Common Stock of
         the Company having a market value of twice the exercise price of the
         Right.

<PAGE>


                          SECURE COMPUTING CORPORATION
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


RESULTS OF OPERATIONS

REVENUE. The Company's revenue increased by 13.0 percent to $12,237,000 for the
third quarter of 1997, up from $10,827,000 in the same period of 1996. For the
nine months ended September 30, 1997, revenue increased 9.4 percent to
$34,180,000 from $31,249,000 in 1997. The increase resulted from higher products
and services revenue. Products and services revenue was $9,188,000 and
$22,805,000 for the quarter and nine months ended September 30, 1997,
respectively, an increase of 33.1 and 27.2 percent over the same periods in
1996, and reflects the Company's increased marketing and sales efforts in the
commercial arena. Government contracts revenue was $3,049,000 and $11,375,000
for the quarter and nine months ended September 30, 1997, respectively, a
decrease of 22.3 percent and 14.6 percent over the same periods in 1996. The
decrease in 1997 is due to a one time acceleration of a government contract in
the first quarter of 1996.

GROSS PROFIT. Gross profit as a percentage of revenue increased from 54.8
percent in the third quarter of 1996 to 63.2 percent in the same period of 1997.
Gross profit percentage also increased in the nine month period ended September
30, 1997 to 57.8 percent from 54.0 percent in the same period of 1996. The
margin improvement is attributable to a higher proportion of revenue from
software sales and improved production efficiencies. The Company believes, with
the gains in products and services revenue, that margins for the remainder of
the year should trend higher.

SELLING AND MARKETING. Selling and marketing expenses increased by 7.2 percent
to $5,308,000 in the third quarter of 1997, up from $4,952,000 in the same
period of 1996. Selling and marketing expenses also increased in the nine month
period ended September 30, 1997 to $14,762,000, up from $12,242,000 in the same
period of 1996. As a percentage of revenue, selling and marketing expenses were
43.4 and 43.2 percent for the three month and nine month periods ended September
30, 1997, compared to 45.7 and 39.2 percent in 1996. The increase resulted
primarily from expenses associated with the Company's increased order activity,
a stronger marketing presence and personnel additions made to position the
Company for future growth. The Company expects the quarterly amount of selling
and marketing expenses to increase during the remainder of 1997.

RESEARCH AND DEVELOPMENT. Research and development expenses decreased by 19.2
percent to $2,052,000 in the third quarter of 1997, down from $2,540,000 in the
same period of 1996. Research and development expenses decreased slightly in the
first nine months of 1997 to $6,930,000, from $7,260,000 in the same period of
1996. As a percentage of revenue, research and development expenses were 16.8
and 20.3 percent for the three month and nine month periods ended September 30,
1997, compared to 23.5 and 23.2 percent for the same periods in 1996. The
decrease resulted primarily from synergies achieved from integrating duplicative
efforts. The Company expects research and development expenses to remain at
similar levels in the fourth quarter.

GENERAL AND ADMINISTRATIVE. General and administrative expenses as a percentage
of revenue were 7.3 percent for the third quarter of 1997, compared to 14.8
percent for the third quarter of 1996, and 8.9 percent for the first nine months
of 1997, compared to 15.4 percent for the first nine months of 1996. The
decrease resulted primarily from the Company's centralization of global finance
and operations functions. The Company expects the quarterly amounts of general
and administrative expenses as a percentage of revenue will stay flat during the
fourth quarter of 1997 and into 1998.

ACQUISITION COSTS. Certain acquisition costs were recognized in the second
quarter of 1996 relating to the Webster Network Strategies, Inc. ("Webster"),
Border Network Technologies Inc. ("Border") and Enigma Logic, Inc. ("Enigma")
acquisitions. Purchased technology of $4,110,000 was expensed in connection with
the Webster acquisition in accordance with purchase accounting rules. Also,
$8,959,000 of acquisition costs were recorded for investment banking and other
professional fees, and other accruals for the Border and Enigma acquisitions in
accordance with pooling rules.

<PAGE>


NET INTEREST INCOME (EXPENSE). The difference in net interest income (expense)
between the periods reflects interest earned on reduced levels of cash and cash
equivalents in 1997 by the Company.

INCOME TAXES. The Company recognized no income tax expense for either of the
periods in both 1997 and 1996. Management believes it is more likely than not
that deferred tax assets, which total $1,373,000 at September 30, 1997, will be
realized. The computation of the Company's deferred tax assets and valuation
allowance are based in part on taxable income expected to be earned on existing
government contracts and projected interest income. The amount of the deferred
tax assets considered realizable could be reduced in the near term if estimates
of future taxable income are reduced.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents and investments decreased by $9.4
million from December 31, 1996 to September 30, 1997. The decrease resulted
primarily from the use of cash to fund operations and purchase capital
equipment, which was partially offset by proceeds from stock option exercises.
As of September 30, 1997, the Company had working capital of $13.6 million. The
Company anticipates using available cash to fund growth in operations, invest in
capital equipment and to acquire businesses or license technology or products
related to the Company's lines of business.

Capital additions in the first nine months of 1997 were $1.7 million and were
primarily made up of computer equipment, office furniture and leasehold
improvements. The Company expects to invest another $200,000 throughout the
remainder of 1997 mainly for computer equipment and facilities and business
systems upgrades.

At its current level of operations, the Company believes that its existing cash
and cash equivalents are sufficient to meet the Company's current working
capital and capital expenditure requirements through at least the next 12
months.

FORWARD LOOKING STATEMENTS

Certain statements made above, which are summarized below, are forward-looking
statements that involve risks and uncertainties, and actual results may be
materially different. Factors that could cause actual results to differ include
those identified below:

*    THE COMPANY BELIEVES, WITH THE GAINS IN PRODUCTS AND SERVICES REVENUE, THAT
     MARGINS FOR THE REMAINDER OF THE YEAR SHOULD TREND HIGHER -- This
     expectation may be adversely impacted by presently unanticipated higher
     expenses, price cutting pressures or lower products and services revenue
     within the total revenue mix.

*    THE COMPANY EXPECTS THE QUARTERLY AMOUNT OF SELLING AND MARKETING EXPENSES
     TO INCREASE DURING THE REMAINDER OF 1997 -- This expectation may be
     impacted by current plans for a full scale product marketing and branding
     campaign being curtailed or delayed, or decreased products and services
     revenue resulting in lower selling expense.

*    THE COMPANY EXPECTS RESEARCH AND DEVELOPMENT EXPENSES TO REMAIN AT SIMILAR
     LEVELS IN THE FOURTH QUARTER -- This expectation depends on the Company
     maintaining the currently anticipated level of product development, which
     may not occur due to unexpected increases in such costs or because of a
     need to accelerate or begin new product development.

<PAGE>


*    THE COMPANY EXPECTS THE QUARTERLY AMOUNTS OF GENERAL AND ADMINISTRATIVE
     EXPENSES AS A PERCENTAGE OF REVENUE WILL STAY FLAT DURING THE REMAINDER OF
     1997 -- Meeting this expectation depends upon the Company's ability to
     control costs and achieve a higher level of revenue, which may not occur
     for a variety of reasons, including general market conditions for the
     Company's products and services, development and acceptance of new products
     offered by the Company and introductions of products by competitors.

*    MANAGEMENT BELIEVES IT IS MORE LIKELY THAN NOT THAT DEFERRED TAX ASSETS,
     WHICH TOTAL $1,373,000 AT SEPTEMBER 30, 1997, WILL BE REALIZED -- Meeting
     this expectation depends mainly on the Company's estimates of future
     taxible income and if these estimates change the company will adjust the
     asset accordingly.

*    THE COMPANY ANTICIPATES USING AVAILABLE CASH TO FUND GROWTH IN OPERATIONS,
     INVEST IN CAPITAL EQUIPMENT AND TO ACQUIRE BUSINESSES OR LICENSE TECHNOLOGY
     OR PRODUCTS RELATED TO THE COMPANY'S LINE OF BUSINESS -- This expectation
     depends upon the ability of the Company to generate revenue as expected and
     to avoid unexpected expenses so as to be able to use available cash for the
     purposes described above.

*    THE COMPANY EXPECTS TO INVEST ANOTHER $200,000 THROUGHOUT THE REMAINDER OF
     1997 MAINLY FOR COMPUTER EQUIPMENT AND FACILITIES AND BUSINESS SYSTEMS
     UPGRADES -- This expectation depends upon the ability of the Company to
     generate revenue as expected and avoid unexpected expenses so as to have
     funds available for this purpose. Additional funds beyond the $200,000
     figure could be invested if the Company determines that the desired
     equipment, facilities and upgrades are more costly than expected.

*    AT ITS CURRENT LEVEL OF OPERATIONS, THE COMPANY BELIEVES THAT ITS EXISTING
     CASH AND CASH EQUIVALENTS ARE SUFFICIENT TO MEET THE COMPANY'S CURRENT
     WORKING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS THROUGH AT LEAST THE
     NEXT 12 MONTHS -- This expectation may be adversely impacted by the
     Company's inability to generate revenue as currently expected, unexpected
     expenses and the need for additional funds to react to changes in the
     marketplace, including unexpected increases in personnel costs and selling
     and marketing expenses or currently unplanned acquisitions.

<PAGE>


                          SECURE COMPUTING CORPORATION


PART II.     OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

             Not applicable

ITEM 2.      CHANGES IN SECURITIES

             None

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

             Not applicable

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

             None

ITEM 5.      OTHER INFORMATION

             None

<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)    EXHIBITS

       The following exhibits are filed as part of this Quarterly Report on Form
       10-Q for the quarterly period ended September 30, 1997:

       3.1    Restated Certificate of Incorporation of the Company(1)

       3.2    By-Laws of the Company(2)

       4      Form of Rights Agreement, dated as of July 24, 1997 among Secure
              Computing Corporation, Norwest Bank Minnesota, National
              Association, as Rights Agent, and the Bank of Nova Scotia Trust
              Company of New York, as Trustee, which includes as Exhibit B the
              Form of Right Certificate(3)

       10     Secure Computing Corporation 1997 Non-Officer Stock Option Plan

       27     Financial Data Schedule

       Copies of Exhibits will be furnished upon request and payment of the
       Company's reasonable expenses in furnishing the Exhibits.

(b)    REPORTS ON FORM 8-K

       None




------------------------
(1)  Incorporated herein by reference to Exhibit 3.2 to the Company's Form 10-K
       filed on March 28, 1996 (File No. 0-27074).

(2)  Incorporated herein by reference to Exhibit 3.3 to the Company's
       Registration Statement on Form S-1 (Registration No. 33-97838).

(3)  Incorporated herein by reference to Exhibit 1 to the Company's Registration
       Statement on Form 8-A filed on August 8, 1997 (File No. 0-27074).
 

<PAGE>


                          SECURE COMPUTING CORPORATION

                                   SIGNATURES


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


                                           SECURE COMPUTING CORPORATION


DATE: November 12, 1997                    By:  \s\ Timothy P. McGurran
     -------------------                        ----------------------------
                                                       Timothy P. McGurran,
                                                   Vice President of Operations
                                                   and Chief Financial Officer
                                                   (Duly authorized officer and
                                                   Principal Financial Officer)

<PAGE>


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>

EXHIBIT                          DESCRIPTION                                      PAGE
-------                          -----------                                      ----
<S>       <C>                                                          <C>
  3.1        Restated Certificate of Incorporation of the Company       INCORPORATED BY REFERENCE

  3.2                       By-Laws of the Company                      INCORPORATED BY REFERENCE

   4                       Form of Rights Agreement                     INCORPORATED BY REFERENCE

   10     Secure Computing Corporation 1997 Non-Officer Stock Option      FILED ELECTRONICALLY
                                     Plan

   27                      Financial Data Schedule                        FILED ELECTRONICALLY

</TABLE>