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, 1998

                                       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.)


          One Almaden Blvd., Suite 400
                  San Jose, CA                                95113
    (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 - 16,326,383 issued and outstanding as of November 3, 1998, which number
includes 743,636 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                        3
                  (Unaudited) as of September 30, 1998 and             
                  December 31, 1997                                    

                  Condensed Consolidated Statements of                         4
                  Operations (Unaudited) for the three                 
                  months ended September, 1998                         
                  and 1997 and the nine months ended                   
                  September 30, 1998 and 1997.                         

                  Condensed Consolidated Statements of                         5
                  Cash Flows (Unaudited) for the nine                  
                  months ended September 30, 1998                      
                  and 1997                                             

                  Notes to the Condensed Consolidated Financial            6 - 7
                  Statements (Unaudited)                               

Item 2.           Management's Discussion and Analysis                     8 - 9
                  of Financial Condition and Results of                
                  Operations.                                          


PART II.       OTHER INFORMATION                                         10 - 11
               -----------------

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

               SIGNATURES                                                     12
               ----------


                                       2

<PAGE>


                          PART 1. FINANCIAL INFORMATION

                          SECURE COMPUTING CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

               (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                  September 30,      December 31,
                                                                      1998               1997
                                                                   -----------------------------
<S>                                                                <C>               <C>        
ASSETS

CURRENT ASSETS
     Cash and cash equivalents                                     $    17,672       $     4,880
     Accounts receivable, net                                           19,113            13,553
     Deferred income taxes                                               2,938             2,113
     Inventory                                                           1,531             1,123
     Other current assets                                                1,190             1,760
                                                                   -----------       -----------
        Total current assets                                            42,444            23,429

PROPERTY AND EQUIPMENT
     Equipment                                                           7,065             8,008
     Furniture & fixtures                                                2,049             2,595
     Leasehold improvements                                                947             1,301
                                                                   -----------       -----------
                                                                        10,061            11,904

     Less accumulated depreciation and amortization                     (6,233)           (6,286)
                                                                   -----------       -----------
                                                                         3,828             5,618

OTHER ASSETS                                                             3,301             2,007
                                                                   -----------       -----------
                                                                   $    49,573       $    31,054
                                                                   ===========       ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                                    4,050             2,175
     Accrued payroll liability                                           2,611             1,170
     Other accrued liabilities                                           2,264             1,094
     Deferred revenue                                                    2,410             1,815
                                                                   -----------       -----------
        Total current liabilities                                  $    11,335       $     6,254

STOCKHOLDERS' EQUITY
     Preferred Stock, par value $.01 per share:                             --                --
        Issued and outstanding shares---September 30, 1998 --
        16,000 and December 31, 1997 -- 0
     Common Stock, par value $.01 per share:
        Issued and outstanding shares---September 30, 1998 --
        16,250,655 and December 31, 1997 -- 15,762,820                     163               158
     Additional paid-in capital                                         85,884            68,131
     Accumulated deficit                                               (47,671)          (43,378)
     Foreign currency translation                                         (138)             (111)
                                                                   -----------       -----------
        Total stockholders' equity                                      38,238            24,800
                                                                   -----------       -----------
                                                                   $    49,573       $    31,054
                                                                   ===========       ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       3

<PAGE>


                          SECURE COMPUTING CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

           FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 AND
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

               (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                         Three months ended          Nine months ended
                                            September 30,              September 30,
                                         1998         1997          1998          1997
                                      -----------------------    ------------------------
<S>                                   <C>          <C>           <C>           <C>       
Products and services revenue         $   13,808   $    9,188    $   35,828    $   22,805
Government contracts revenue               2,549        3,049         7,829        11,375
                                      ----------   ----------    ----------    ----------
                                          16,357       12,237        43,657        34,180

Cost of revenue                            5,783        4,502        15,209        14,423
                                      ----------   ----------    ----------    ----------
Gross profit                              10,574        7,735        28,448        19,757

Operating expenses:
    Selling and marketing                  5,604        5,308        17,131        14,762
    Research and development               1,885        2,052         5,625         6,930
    General and administrative             1,418          890         3,295         3,049
    Restructure costs                         --           --         7,800            --
                                      ----------   ----------    ----------    ----------
                                           8,907        8,250        33,851        24,741

                                      ----------   ----------    ----------    ----------
Operating income/(loss)                    1,667         (515)       (5,403)       (4,984)

Net interest income                          228          127           285           429

                                      ----------   ----------    ----------    ----------
Income/(loss) before income taxes          1,895         (388)       (5,118)       (4,555)

Income taxes                                 208           --           825            --
                                      ----------   ----------    ----------    ----------
Net income/(loss)                     $    2,103   $     (388)   $   (4,293)   $   (4,555)
                                      ==========   ==========    ==========    ==========

Basic earnings/(loss) per share       $     0.13   $    (0.02)   $    (0.27)   $    (0.29)
                                      ==========   ==========    ==========    ==========

Weighted average shares outstanding       16,233       15,619        16,029        15,494
                                      ==========   ==========    ==========    ==========

Diluted earnings/(loss) per share     $     0.11   $    (0.02)   $    (0.27)   $    (0.29)
                                      ==========   ==========    ==========    ==========

Weighted average common shares
    and equivalents outstanding           19,137       15,619        16,029        15,494
                                      ==========   ==========    ==========    ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       4

<PAGE>


                          SECURE COMPUTING CORPORATION
                 CONDENSED CONSOLDIATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

                            (UNAUDITED, IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   Nine months ended September 30,
                                                                         1998            1997
                                                                   ------------------------------
<S>                                                                 <C>              <C>         
NET CASH USED IN OPERATING ACTIVITIES                               $    (2,381)     $    (8,349)

INVESTING ACTIVITIES
       Proceeds from sales of investments                                    --            5,935
       Purchase of property and equipment                                (1,623)          (1,714)
       Increase in intangibles and other assets                          (1,665)            (629)
                                                                    -----------      -----------
            Net cash provided by (used in) investing activities          (3,288)           3,592

FINANCING ACTIVITIES
       Proceeds from issuance of Preferred Stock                         15,432               --
       Proceeds from issuance of Common Stock                             2,326            1,316
       Proceeds from sales-lease-back transaction                           729               --
                                                                    -----------      -----------
            Net cash provided by investing activities                    18,487            1,316
                                                                    -----------      -----------

EFFECT OF EXCHANGE RATE CHANGES                                             (26)              --
       Increase (decrease) in cash and cash equivalents                  12,792           (3,441)

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD                             4,880           12,130
                                                                    -----------      -----------
CASH AND CASH EQUIVALENTS END OF PERIOD                             $    17,672      $     8,689
                                                                    ===========      ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       5

<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 Report on form 10-K for the
         year ended December 31, 1997, 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 inter-company 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 EARNINGS (LOSS) PER SHARE

         In February 1997, the Financial Accounting Standards Board issued
         Statement No. 128, "Earnings Per Share", which was adopted on December
         31, 1997. All earnings (loss) per share amounts for all periods have
         been presented, and where necessary, restated to conform to the
         Statement 128 requirements. Basic earnings per share is computed on the
         basis of the average number of common shares outstanding. Diluted loss
         per share does not include the effect of outstanding stock options and
         warrants in a loss period as they are anti-dilutive.

4.       RESTRUCTURING

         In the first quarter of 1998, the Company announced plans to implement
         a restructuring plan designed to facilitate further integration of
         acquired businesses, and recorded a pre-tax expense of $7.8 million to
         account for these actions, which include costs of lease terminations,
         streamlining its product offerings and reducing the Company's cost
         structure to increase operational efficiency. The plan resulted in the
         separation of some employees worldwide and the closing of certain
         facilities.

5.       SALE OF CONVERTIBLE PREFERRED STOCK

         In June 1998, the Company sold 16,000 shares of Series C Convertible
         Preferred Stock (the "Preferred Stock") resulting in net proceeds to
         the Company of approximately $15,432,000, net of $568,000 in
         transaction costs. In connection with the sale of the Preferred Stock,
         the Company also issued warrants to purchase 174,464 shares of the
         Company's Common Stock. The warrants may be exercised on the earlier of
         June 29, 2001 or a merger involving the Company in which the Company is
         not the surviving entity. The exercise price of the warrants is 130% of
         the average closing bid price of the Company's Common Stock on the 15
         trading days immediately prior to June 30, 1998. The Preferred Stock is
         convertible into the number of shares of Common Stock which may be
         purchased for the stated value of $1,000 per share of Preferred Stock
         at a per share price equal to the lower of a) the average closing bid
         price of the Common Stock for the five trading days immediately prior
         to the date of conversion, b) the average closing bid price of the
         Common Stock for the 15 trading days immediately prior to the date of
         conversion, and c) 103% of the average closing bid price of the Common
         Stock for the 15 trading days immediately prior to the day of issuance
         of the Preferred Stock.


                                       6

<PAGE>


6.       SIGNIFICANT ACCOUNTING POLICIES

         In November 1997, the Financial Accounting Standards Board issued SOP
         97-2 "Software Revenue Recognition" to replace SOP-91-1. The Company
         adopted SOP 97-2 in the first quarter of 1998 and it did not materially
         impact revenue recognition for this time period.

         As of January 1, 1998, the Company adopted Statement 130, "Reporting
         Comprehensive Income". Statement 130 establishes new rules for the
         reporting and display of comprehensive income and its components;
         however, the adoption of this Statement had no impact on the Company's
         net income or shareholders equity. Statement 130 requires foreign
         currency translation adjustments, which prior to adoption were reported
         separately in shareholders' equity to be included in other
         comprehensive income. Prior year financial statements have been
         reclassified to conform to the requirements of Statement 130. During
         the third quarter of 1998 and 1997, total comprehensive income amounted
         to $2,080,000 and ($388,000) respectively.


                                       7

<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 33.7 percent to $16,357,000 for the
third quarter of 1998 up from $12,237,000 in the same period of 1997. The
increase resulted from higher products and services revenue. Products and
services revenue was $13,808,000 for the quarter, an increase of 50.3 percent
over 1997, and reflects the Company's increased marketing and sales effort in
the commercial market. Government contracts revenue was $2,549,000 for the
quarter, a decrease of 16.4 percent from the third quarter of 1997, which
reflects the companies continued planned shift toward higher margin products.
The Company expects quarterly revenue from government contracts for the rest of
1998 to decline slightly in comparison to the third quarter of 1998.

GROSS PROFIT. Gross profit as a percentage of revenue increased from 63.2
percent in the third quarter of 1997 to 64.6 percent in 1998. The increase
resulted mainly from software only sales within products and services revenue,
which carry higher margins than sales of systems bundled with hardware. The
increased gross margin was also a result of a decrease in lower margin
government contract revenue. The Company believes, with the leveling in
government contracts revenue, that margins for the remainder of the year should
trend slightly higher.

SELLING AND MARKETING. Selling and marketing expense increased 5.6 percent to
$5,604,000 in the first quarter of 1998 up from $5,308,000 in the same period of
1997. As a percentage of revenue, selling and marketing expense was 34.3 percent
for the quarter compared to 43.4 percent in the same period of 1997. The
increase resulted primarily from expenses for a stronger sales and marketing
presence needed due to competitive pressures, increased international activities
and personnel additions made to position the Company for future growth. The
Company expects selling and marketing expenses for the rest of 1998 will remain
at levels comparable to the third quarter of 1998.

RESEARCH AND DEVELOPMENT. Research and development expense decreased by 8.1
percent to $1,885,000 in the third quarter of 1998 down from $2,052,000 in the
same period of 1997. As a percentage of revenue, research and development
expense was 11.5 percent for the quarter compared to 16.8 percent in the same
period of 1997. The decrease resulted primarily from savings achieved by
integrating duplicative development efforts.

GENERAL AND ADMINISTRATIVE. As a percentage of revenue, general and
administrative expenses were 8.7 percent for the third quarter of 1998 compared
to 7.3 percent for the third quarter of 1997. The Company expects the quarterly
rate of general and administrative expenses for the rest of 1998 to remain at
levels comparable to those of the third quarter of 1998.

RESTRUCTURE COSTS. In the first quarter of 1998, the Company announced and began
to implement a restructuring plan designed to facilitate further integration of
acquired businesses, and recorded a pre-tax expense of $7.8 million to account
for these actions, which include streamlining its product offerings and reducing
the unit's cost structure and the closure of certain facilities. The Company
expects that approximately $4.2 million of the non-recurring charges require
expenditures of cash. A significant portion of the restructuring activities have
been completed. The largest components of the charge will be lease termination
costs of approximately $2.5 million and the write off of related assets of $2.1
million.

NET INTEREST INCOME. The difference in net interest income between the periods
reflects higher average cash and investment balances in 1998 as compared to
1997.

INCOME TAXES. The Company recognized an income tax benefit in the third quarter
of 1998 of $208,000 compared to no income tax in the same period of 1997.
Management believes it is more likely than not that deferred tax assets, which
total $3.2 million at September 30, 1998, 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 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.


                                       8

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents increased by $12,792,000 from December
31, 1997 to September 30, 1998. The increase resulted primarily from the gross
proceeds of a $16,000,000 Preferred Stock offering offset by the use of cash to
fund the restructure, operations and purchase capital equipment. As of September
30, 1998, the Company had working capital of $31,109,000. The Company
anticipates using available cash to fund growth in operations, invest in capital
equipment, acquire businesses, license technology or products related to the
Company's line of business, and provide for restructuring activities.

Capital additions in the third quarter of 1998 were $426,000 and were primarily
made up of computer equipment, office furniture and leasehold improvements. The
Company expects to invest approximately $400,000 additional throughout the
remainder of 1998 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 EXPECTS THAT THE PERCENTAGE OF ITS REVENUES DERIVED FROM
     PRODUCTS AND RELATED SERVICES WILL INCREASE IN FUTURE YEARS, AS THE COMPANY
     INCREASINGLY FOCUSES ON PRODUCT SALES. Meeting this expectation depends
     upon the Company's ability to achieve a higher level of products and
     services revenue, which may not occur for a variety of reasons, including
     general market conditions for the Company's products and services, delays
     or difficulties in the development of new products inability to obtain
     market acceptance of new products offered by the Company, and introduction
     of products by competitors.

*    DURING 1998, THE COMPANY PLANS TO CONTINUE ITS RESEARCH AND DEVELOPMENT,
     GENERAL AND ADMINISTRATIVE, AND SALES AND MARKETING EXPENDITURES AT CURRENT
     LEVELS. This expectation depends on the Company maintaining the current
     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 and also may be affected by current plans for
     a full scale product marketing and branding campaign being curtailed,
     delayed or decreased products and services revenue resulting in lower
     selling expense. Fluctuations in revenue from quarter to quarter will
     likely have an increasingly significant impact on the Company's results of
     operations. Additionally, 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 introduction of
     products by competitors.

*    MANAGEMENT BELIEVES IT IS MORE LIKELY THAN NOT THAT DEFERRED TAX ASSETS,
     WHICH TOTAL $3.2 MILLION AT SEPTEMBER 30, 1998, WILL BE REALIZED. This
     expectation depends mainly on the Company maintaining, at current levels,
     its existing government contract business. If these contracts were lost or
     adjusted downward, deferred tax assets would be expected to be written down
     with a corresponding charge to income tax expense recorded.

*    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. The Company's ability 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 may impact whether the Company has sufficient cash resources
     to fund its product development and marketing and sales plans for the
     remainder of 1998 and early 1999.

*    THE COMPANY EXPECTS QUARTERLY REVENUE FROM GOVERNMENT CONTRACTS FOR THE
     REST OF 1998 TO REMAIN COMPARABLE TO THE THIRD QUARTER OF 1998. THE COMPANY
     BELIEVES IN THE LEVELING IN GOVERNMENT CONTRACTS REVENUE, THAT THE MARGINS
     FOR THE REMAINDER OF THE YEAR SHOULD TEND SLIGHTLY HIGHER. If the
     government contracts were lost or adjusted downward, the quarterly revenue
     from such contracts would decline, which decline could have a material
     adverse effect on the Company's business, financial condition or results of
     operations.


                                       9

<PAGE>


                          SECURE COMPUTING CORPORATION

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On July 27, 1998, the Delaware Chancery Court, in CARMODY V. TOLL
         BROTHERS, INC., Civil Action No. 15983, 1998 WL 418896 (Del. Ch. Ct.
         Jul. 27, 1998), held that the "dead hand" provision of the Toll
         Brothers, Inc. shareholder rights plan violated Delaware law. On August
         26, 1998, a purported class action complaint was filed in the Delaware
         Chancery Court in and for New Castle County by Rosalyn Golaine against
         the Company, certain of its present officers, present directors, and
         former directors (the "Golaine Action"). The complaint in the Golaine
         Action alleges that the provisions of the July 24, 1997 shareholder
         rights plan (the "Plan") permitting only those directors who voted for
         the Plan (or their designated successors) to redeem the Rights granted
         therein, violates Delaware law. The action seeks injunctive relief and
         damages of an unspecified amount. A number of such actions have been
         filed against other companies in response to the CARMODY V. TOLL
         BROTHERS, INC. decision.

         No trial in this action is scheduled and no discovery has occurred. The
         Company has amended the Plan which will render moot the injunctive
         relief requested, and believes it has meritorious defenses to the
         damages allegations. The Company intends to defend this action
         vigorously. The Company also is a defendant in various lawsuits,
         contractual disputes, and other legal claims, the results of which are
         not presently determinable. In the opinion of management, resolution of
         these legal actions is not expected to have a material adverse effect
         on the financial position of the Company. However, depending on the
         amount and timing, an unfavorable resolution of any of these matters
         could materially affect the Company's future results of operations or
         cash flows in a particular period.

ITEM 2.  CHANGES IN SECURITIES

         On June 30, 1998, the Company sold 16,000 shares of newly issued Series
         C Convertible Preferred Stock (the "Series C Preferred") and warrants
         to acquire 174,464 shares of Common Stock to two investors affiliated
         with Credit Suisse First Boston and Castle Creek Partners. The offer
         and sale of these securities were completed pursuant to the exemption
         provided by Regulation D under the Securities Act of 1933.

         The Series C Preferred is convertible at the election of the holder
         into shares of Common Stock beginning six months after issuance, and at
         any time prior to six months upon the occurrence of certain events,
         including a merger and similar transactions which would result in a
         change of control of the Company. The Series C Preferred is senior to
         the Company's Series A and Series B Convertible Preferred Stock and to
         the Company's Common Stock in respect of the right to receive dividend
         payments and liquidation preferences. The issuance of the Series C
         Preferred may result in dilution to existing stockholders. The
         foregoing summary of the principal rights and preferences of the Series
         C Preferred is a general description only and is qualified by the
         detailed terms and conditions of the Certificate of Designation of
         Series C Preferred Stock. A more comprehensive description of the
         rights and preferences of the Series C Preferred is contained in the
         Company's Report on Form 8-K filed with the Commission on July 15,
         1998. A copy of the Certificate of Designation of Series C Preferred
         Stock is filed as an exhibit to the Report on Form 8-K.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable


                                       10

<PAGE>


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

         The following matters were approved at the Company's Annual Meeting of
         Stockholders held on May 14, 1998 and reconvened May 27, 1998.

         a)    The following directors were elected:

         Directors                                For           Against
         -----------------------------------------------------------------------
         Betsy S. Atkins                       8,394,030         67,179
         Steven M. Puricelli                   8,394,030         67,179

         b)    Amendment of the 1995 Omnibus Stock Plan

                                                 Number of Common Shares Voted
         1995 Stock Plan                         For         Against     Abstain
         -----------------------------------------------------------------------
         Amendment to 1995 Stock Plan          5,786,464    2,668,465     27,494

         c)    The stockholders also approved the following proposal:

                                                 Number of Common Shares Voted
         Independent Accountants                 For         Against     Abstain
         -----------------------------------------------------------------------
         Ratification of Ernst & Young LLP
          as independent accountants           8,447,605       28,268      6,550

ITEM 5.  OTHER INFORMATION

         8-K dated July 15, 1998, as described in item 2.

         YEAR 2000 DISCLOSURE

         The Company has completed testing of its products and systems and
         believes that its products and systems sold after December 31, 1998
         will be Year 2000 compliant. The Company has also verified compliance
         of third party computer software and hardware utilized by the Company.
         The Company has not verified Year 2000 compliance of certain
         semiconductors embedded in other third-party equipment used by the
         Company, nor has the Company established the costs and risks associated
         with such third party equipment.

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, 1998:

         27.1   Financial Data Schedule


                                       11

<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 3, 1998                   By: \s\ Timothy P. McGurran
                                            --------------------------
                                            Timothy P. McGurran,
                                            Senior Vice President of Operations
                                              and Chief Financial Officer
                                            (Duly authorized officer and
                                            Principal Financial Officer)


                                       12

<PAGE>


                                INDEX TO EXHIBITS


EXHIBIT                  DESCRIPTION                               PAGE
-------                  -----------                               ----
 27.1              Financial Data Schedule                 FILED ELECTRONICALLY