<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, 1999

                                        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: 0-20124


                           NETWORK COMPUTING DEVICES, INC.
               (Exact name of registrant as specified in its charter)


                       Delaware                           77-0177255
             (State or other jurisdiction of           (I.R.S. Employer
              incorporation or organization)          Identification No.)

               350 North Bernardo Avenue, Mountain View, California 94043
                  (Address of principal executive offices and zip code)

                        Registrant's telephone number:  (650) 694-0650


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 ___


The number of shares outstanding of the Registrant's Common Stock was 
16,045,933 at April 30, 1999.

<PAGE>

                     NETWORK COMPUTING DEVICES, INC.


                                   INDEX

<TABLE>
<CAPTION>
                              Description                                  Page Number
                              -----------                                  -----------
<S>                                                                        <C>
Cover Page                                                                      1

Index                                                                           2

Part I:   Financial Information

     Item 1:   Financial Statements

          Condensed Consolidated Balance Sheets as of March 31, 1999 and 
               December 31, 1998                                                3

          Condensed Consolidated Statements of Operations for the Three-
               Month Periods Ended March 31, 1999 and 1998                      4

          Condensed Consolidated Statements of Cash Flows for the Three-
               Month Periods Ended March 31, 1999 and 1998                      5

          Notes to Condensed Consolidated Financial Statements                  6

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

     Item 3:   Market Risk Sensitive Instruments                               13

Part II:  Other Information

     Item 6:   Exhibits and Reports on Form 8-K                                14

Signature                                                                      15
</TABLE>



                                       2


<PAGE>

                         PART I:  FINANCIAL INFORMATION
                          ITEM 1.  FINANCIAL STATEMENTS

                         NETWORK COMPUTING DEVICES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (IN THOUSANDS)

<TABLE>
<CAPTION>
                                   ASSETS

                                                       March 31,           December 31,
                                                         1999                  1998
                                                       ---------           ------------
<S>                                                    <C>                 <C>
Current assets:
  Cash and cash equivalents                             $ 9,196              $ 8,553 
  Short-term investments                                  8,490               12,806 
  Accounts receivable, net                               18,922               21,590 
  Inventories                                            13,905               14,362 
  Deferred income taxes                                   3,332                3,126 
  Other current assets                                    3,174                3,214 
                                                        -------              -------
Total current assets                                     57,019               63,651 

Property and equipment, net                               3,772                3,850 
Other assets                                              7,943                7,645 
                                                        -------              -------
Total assets                                            $68,734              $75,146 
                                                        -------              -------
                                                        -------              -------

                          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                      $ 7,274              $10,438 
  Accrued expenses                                        6,104                5,647 
  Income taxes payable                                      363                  274 
  Current portion of capital lease obligations               91                   90 
  Deferred revenue                                        4,586                6,105 
                                                        -------              -------
Total current liabilities                                18,418               22,554 
Long-term portion of capital lease obligations               46                   69 
Shareholders' equity:
  Common stock                                               16                   16 
  Capital in excess of par value                         59,456               59,721 
  Retained earnings (accumulated deficit)                (9,202)              (7,214)
                                                        -------              -------
Total shareholders' equity                               50,270               52,523 
                                                        -------              -------
Total liabilities and shareholders' equity              $68,734              $75,146 
                                                        -------              -------
                                                        -------              -------
</TABLE>


                              See accompanying notes

                                       3
<PAGE>

                          NETWORK COMPUTING DEVICES, INC.

                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                      Three Months Ended March 31,
                                                                      ----------------------------
                                                                           1999           1998 
                                                                          -------        -------
<S>                                                                       <C>            <C>
Net revenues:
    Hardware products and services                                        $22,785        $22,573 
    Software licenses and services                                          3,639          8,091 
                                                                          -------        -------
Total net revenues                                                         26,424         30,664
Cost of revenues:
    Hardware products and services                                         14,064         17,344 
    Software licenses and services                                          1,110          2,466 
                                                                          -------        -------
Total cost of revenues                                                     15,174         19,810 
                                                                          -------        -------
Gross margin                                                               11,250         10,854 
Operating expenses:
  Research and development                                                  3,439          3,471 
  Marketing and selling                                                     8,358          7,505 
  General and administrative                                                1,685          1,041 
                                                                          -------        -------
Total operating expenses                                                   13,482         12,017 
                                                                          -------        -------

Operating income (loss)                                                    (2,232)        (1,163)
Interest income, net                                                          244            411 
                                                                          -------        -------

Income (loss) before income taxes                                          (1,988)          (752)
Provision for income taxes (income tax benefit)                                 -           (263)
                                                                          -------        -------
Net income (loss)                                                         $(1,988)       $  (489)
                                                                          -------        -------
                                                                          -------        -------

Net income (loss) per share
    Basic                                                                 $ (0.12)       $ (0.03)
                                                                          -------        -------
                                                                          -------        -------
    Diluted                                                               $ (0.12)       $ (0.03)
                                                                          -------        -------
                                                                          -------        -------

Shares used in per share computations
    Basic                                                                  16,054         16,612 
                                                                          -------        -------
                                                                          -------        -------
    Diluted                                                                16,054         16,612 
                                                                          -------        -------
                                                                          -------        -------
</TABLE>



                              See accompanying notes

                                       4
<PAGE>

                         NETWORK COMPUTING DEVICES, INC.

               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 Three Months Ended March 31,
                                                                 ----------------------------
                                                                      1999            1998
                                                                    -------          -------
<S>                                                              <C>                 <C>
Cash flows from operations:
  Net loss                                                          $(1,988)         $  (489)
  Reconciliation to cash provided by (used in) operations:
    Depreciation                                                        831              830 
    Amortization of goodwill                                            101                - 
    Deferred income taxes                                                 -             (246)
    Changes in:
      Accounts receivable, net                                        2,668            1,866 
      Inventories                                                       457            1,651 
      Other current assets                                               40             (335)
      Accounts payable                                               (3,164)          (1,370)
      Income taxes payable                                             (117)            (112)
      Accrued expenses                                                 (290)          (1,086)
      Deferred revenue                                                 (772)            (549)
                                                                    -------          -------
  Cash provided by (used in) operations                              (2,234)             160 
  Cash flows from investing activities:
    Short-term investments, net                                       4,316             (492)
    Changes in other assets                                            (399)             885 
    Property and equipment purchases, net                              (753)            (269)
                                                                    -------          -------
  Cash provided by investing activities                               3,164              124 
  Cash flows from financing activities:
    Principal payments on capital lease obligations                     (22)             (61)
    Repurchases of common stock                                        (555)               - 
    Proceeds from issuance of stock, net                                290            7,407 
                                                                    -------          -------
  Cash provided by (used in) financing activities                      (287)           7,346 
                                                                    -------          -------
  Increase in cash and equivalents                                      643            7,630 
  Cash and equivalents:
    Beginning of period                                               8,553           21,240 
                                                                    -------          -------
    End of period                                                   $ 9,196          $28,870 
                                                                    -------          -------
                                                                    -------          -------
</TABLE>


                              See accompanying notes


                                       5

<PAGE>

                         NETWORK COMPUTING DEVICES, INC.
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The unaudited condensed consolidated financial information of Network 
Computing Devices, Inc. (the "Company") furnished herein reflects all 
adjustments, consisting only of normal recurring adjustments, which in the 
opinion of management are necessary to fairly state the Company's 
consolidated financial position, results of operations and cash flows for the 
periods presented.  This Quarterly Report on Form 10-Q should be read in 
conjunction with the consolidated financial statements and notes thereto 
included in the Company's 1998 Annual Report on Form 10-K.  The consolidated 
results of operations for the three-month period ended March 31, 1999 are not 
necessarily indicative of the results to be expected for any subsequent 
quarter or for the entire year ending December 31, 1999. 

NET INCOME (LOSS) PER SHARE   

Basic net income (loss) per share is computed using the weighted-average 
number of common shares outstanding during the period.  Diluted net income 
(loss) per share is computed using the weighted-average number of common 
shares and potential common shares from stock options and warrants 
outstanding, when dilutive, using the treasury stock method.  At March 31, 
1999 and 1998 there were 4,960,457 and 3,471,402 options and warrants 
outstanding, respectively, that could potentially dilute earnings per share 
("EPS") in the future that were not included in the computation of diluted 
EPS because to do so would have been antidilutive for those periods.

INVENTORIES 

Inventories, stated at the lower of standard cost, which approximates actual 
cost on a first-in, first-out basis, or market, consisted of (in thousands):

<TABLE>
<CAPTION>
                                                        March 31,        December 31,
                                                          1999              1998
                                                          ----              ----
<S>                                                    <C>               <C>
          Purchased components and sub-assemblies       $10,619            $10,733
          Work in process                                   776              1,285
          Finished goods                                  2,510              2,344
                                                        -------            -------
                                                        $13,905            $14,362
                                                        -------            -------
                                                        -------            -------
</TABLE>

INTEREST AND TAX PAYMENTS

Interest payments, primarily related to interest on capital lease 
liabilities, were $4,300 and $5,300 for the first three months of 1999 and 
1998, respectively.  Income tax payments were $45,200 and $40,200 for the 
first three months of 1999 and 1998, respectively. 

STOCK REPURCHASE PROGRAM  

In November 1997, the Company's Board of Directors adopted a program to 
repurchase up to 1,000,000 shares of the Company's common stock during the 
12-month period ended October 31, 1998.  In July 1998, the repurchase program 
was completed with an aggregate of 1,000,000 shares repurchased at prices 
ranging from $6.50 to $9.63 at a total aggregate price of $8.5 million.  In 
June 1998, the Company announced an additional program to repurchase up to 
750,000 shares of the Company's common stock during the 12-month period 
ending May 31, 1999.  Repurchases of 664,800 shares have been made as of 
March 31, 1999 under this program at prices ranging from $4.98 to $8.25 at a 
total aggregate price of $4.2 million.  

MAJOR CUSTOMERS AND OPERATING SEGMENTS

International Business Machines Corporation ("IBM") accounted for 
approximately 9% and 24% of the Company's revenues for the first three months 
of 1999 and 1998, respectively.  Tech Data and Adtcom accounted for 
approximately 18% and 14% 

                                       6

<PAGE>


                         NETWORK COMPUTING DEVICES, INC.
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


of the Company's revenues for the first three months of 1999, respectively.  
Revenues from Tech Data and Adtcom were less than 10% of revenues for the 
first three months of 1998.

The Company has one operating segment, the thin client business segment.






                                       7

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS

THIS DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS, INCLUDING BUT NOT 
LIMITED TO STATEMENTS WITH RESPECT TO THE COMPANY'S FUTURE FINANCIAL 
PERFORMANCE, OPERATING RESULTS, PLANS AND OBJECTIVES.  ACTUAL RESULTS MAY 
DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED DEPENDING UPON A VARIETY 
OF FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE SUB-HEADING, "FUTURE 
PERFORMANCE AND RISK FACTORS."

THE FOLLOWING DISCUSSION SHOULD BE READ ONLY IN CONJUNCTION WITH THE 
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND NOTES 
THERETO INCLUDED IN PART I -- ITEM 1 OF THIS QUARTERLY REPORT ON FORM 10-Q, 
AND THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO AND 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998, CONTAINED IN THE COMPANY'S 
1998 ANNUAL REPORT ON FORM  10-K. 

OVERVIEW

Network Computing Devices, Inc. (the "Company") provides thin client hardware 
and software that delivers simultaneous, high-performance, easy-to-manage and 
cost effective access to all of the information on enterprise intranets and 
the Internet from thin client, UNIX and PC desktops.  The Company's product 
line includes the NCD THINSTAR line of Windows-based terminals, optimized to 
access Microsoft's Windows NT Server 4.0, Terminal Server Edition, the NCD 
EXPLORA thin clients and the NCD NC200 and NCD NC400 network computers, 
acquired in the acquisition of Tektronix Inc. Network Displays business unit 
("NWD").  On the software side, the Company's products are the NCD THINPATH 
family of client and server software, developed to enhance the connectivity, 
management and features of the NCD thin clients as well as PCs in accessing 
information and applications on Terminal Server.  Some of the software 
products were part of the NCD THINSTAR software family in 1998; they have 
been re-named and were announced in March 1999 as part of the NCD THINPATH 
software family. These products are sold through distributor/VAR channels, 
system integrators and OEMs worldwide.

The Company sells hardware products to International Business Machines 
Corporation ("IBM") pursuant to the joint development agreement dated June 
27, 1996 (the "IBM Agreement") of a network application terminal for resale 
by IBM.  The non-exclusive IBM Agreement provides for IBM to purchase a 
portion of its requirements for such products from the Company through 
December 31, 2000, although no minimum purchase volumes are required by the 
contract.

RECENT DEVELOPMENTS

On December 31, 1998, the Company completed the acquisition of Tektronix' 
Network Displays business unit ("NWD") for $3.0 million in cash and warrants 
to purchase one million shares of the Company's common stock at $8.00 per 
share.  The acquisition was accounted for as a purchase business combination 
with a total purchase price of $5.9 million.  The purchase price was 
allocated as follows:  $1.7 million to net assets acquired, $1.4 million to 
in-process research and development and $2.8 million to other intangible 
assets.  In addition to acquiring certain assets of NWD, approximately 83 
former NWD employees, primarily in sales, marketing and engineering roles, 
joined NCD.  In conjunction with this acquisition, the Company undertook 
various restructuring activities to eliminate redundancies with the acquired 
business, including the reduction in personnel of approximately 40 employees. 
The Company recorded a charge of approximately $1.0 million in the fourth 
quarter of 1998 related to these restructuring activities.  During the first 
quarter of 1999, the Company paid approximately $640,000 of restructuring 
liabilities, leaving approximately $260,000 accrued at March 31, 1999.

RESULTS OF OPERATIONS

TOTAL NET REVENUES

Total net revenues for the first three months of 1999 were $26.4 million, a 
decrease of 14% from 1998 first quarter net revenues of $30.7 million.  Sales 
related to the IBM Agreement accounted for approximately 9% and 24% of 
revenues in the first three months of 1999 and 1998, respectively.  Other 
major customers of the Company in the first quarter of 1999 included Tech 
Data and Adtcom which accounted for approximately 18% and 14% of the 
Company's revenues, respectively.

HARDWARE REVENUES

Hardware revenues consist primarily of revenues from the sale of thin client 
products and related hardware, and to a lesser extent, fees for related 
service activities.  Hardware revenues were $22.8 million for the first three 
months of 1999, essentially 


                                       8

<PAGE>

unchanged from revenues of $22.6 million in the first three months of 1998.  
The mix in revenues changed, however, as shipments of the Company's 
Windows-based Terminals and network computer products acquired in the NWD 
acquisition offset the combined impact of decreased shipments to IBM, lower 
average selling prices and decreased shipments of monitors.

SOFTWARE REVENUES

Software revenues consist primarily of revenues from the licensing of 
software products and related support services.  Software products that are 
included in revenue for the periods presented are (i) NCD THINPATH, the 
Company's proprietary software to extend the functionality of its 
Windows-based Terminals and for implementing thin client computing to a 
variety of enterprise desktops,  (ii) NCD WINCENTER, the Company's multi-user 
WINDOWS NT application server software and (iii) NCD PC-XWARE, the Company's 
thin client software for PCs.  Revenues from software and related services 
decreased 55% to $3.6 million for the first three months of 1999 from $8.1 
million for the first three months of 1998.  This decrease primarily reflects 
decreased WINCENTER revenues related to the Company's transition from an OEM 
of Citrix' WinFrame for NT 3.5 products to a provider of value-add software 
to that product, and the market's move from Citrix WinFrame for NT 3.5 to 
MetaFrame for NT 4.0 concurrently with the availability of multi-user Windows 
NT 4.0 from Microsoft. The Company's OEM relationship with Citrix for Citrix' 
WinFrame product ended on September 30, 1998.  This will result in 
significantly reduced sales of WINCENTER products, and, potentially, a 
decrease in total software revenues in future periods if the Company's newly 
announced software products do not achieve sufficient marketplace acceptance.

GROSS MARGIN ON HARDWARE REVENUES

The Company's gross margin percentages on hardware revenues were 38% and 23% 
for the first three months of 1999 and 1998, respectively.  The increase in 
margin for the first three months of 1999 relates to decreased sales of lower 
margin products including monitors and products sold to IBM on an OEM basis 
under the IBM Agreement.  

GROSS MARGIN ON SOFTWARE REVENUES

The Company's gross margin percentages on software revenues were 69% and 70% 
for the first three months of 1999 and 1998, respectively.  The slight 
decrease in gross margin percentages for the first three months of 1999 is 
primarily related to increased royalty costs associated with NCD WINCENTER 
products which have transitioned to MetaFrame for NT 4.0.  The effect of this 
transition is minimal, however, as NCD WINCENTER sales decreased as a 
percentage of total software revenues.  Certain technology used in the 
Company's products is licensed from third parties on a royalty-bearing basis; 
accordingly, royalties are a significant component of total software cost of 
sales. 

RESEARCH AND DEVELOPMENT EXPENSES

Research and development ("R&D") expenses of $3.4 million and $3.5 million 
for the first three months of 1999 and 1998, respectively, were essentially 
unchanged.  As a percentage of net revenues, R&D expenses were 13% and 11% 
for the first three months of 1999 and 1998, respectively, as the Company 
continues to invest in development efforts in a period of lower revenues.

MARKETING AND SELLING EXPENSES

Marketing and selling expenses were $8.4 million and $7.5 million for the 
first three months of 1999 and 1998, respectively.  The increase primarily 
reflects increased salary costs related to additional sales personnel as a 
result of the acquisition of the Network Displays business unit of Tektronix. 
As a percentage of net revenues, marketing and selling expenses were 32% and 
24% for the first three months of 1999 and 1998, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative ("G&A") expenses were $1.7 million and $1.0 
million for the first three months of 1999 and 1998, respectively.  The 
increase in the first three months of 1999 reflects increased costs related 
to outside service fees and the amortization of goodwill.  As a percentage of 
net revenues, G&A expenses were 6% and 3% for the first three months of 1999 
and 1998, respectively.


                                       9

<PAGE>

INTEREST INCOME, NET 

Interest income, net of interest expense, was $244,000 and $411,000 for the 
first three months of 1999 and 1998, respectively.  The decrease was 
primarily due to the combined effect of lower average balances at lower 
interest rates in interest-earning accounts.

INCOME TAXES AND INCOME TAX BENEFIT

The Company recognized no income tax benefit for the first three months of 
1999 and an income tax benefit of $263,000 in the first three months of 1998. 
At March 31, 1999, the Company's net deferred tax assets were approximately 
$6.8 million. During 1998, the Company recorded a valuation allowance against 
a portion of its deferred tax assets because operating losses created 
uncertainty about the Company's ability to generate sufficient taxable income 
to utilize all deferred tax assets.  Based on the Company's expected 
operating results, management believes that it is more likely than not that 
the Company will realize the benefit of the recognized deferred tax assets.  
See Future Performance and Risk Factors below.

FINANCIAL CONDITION

Total assets of $68.7 million at March 31, 1999 decreased from $75.1 million 
at December 31, 1998.  The change in total assets primarily reflects 
decreases in cash and short-term investments and accounts receivable of $3.7 
million and $2.7 million, respectively.  Total liabilities as of March 31, 
1999 decreased by $4.2 million, or 18%, from December 31, 1998.  The decrease 
was primarily related to decreases in accounts payable and deferred revenue 
of $3.2 million and $1.5 million, respectively.

CAPITAL REQUIREMENTS

Capital spending requirements for the remainder of 1999 are estimated at 
approximately $2.8 million.  At March 31, 1999, the Company had commitments 
for capital expenditures of approximately $660,000, primarily related to 
manufacturing tooling.  

LIQUIDITY

As of March 31, 1999, the Company had combined cash and equivalents and 
short-term investments totaling $17.7 million, with no significant debt.  
Cash used in operations was $2.2 million in the first three months of 1999 
compared to cash provided by operations of $0.2 million in the first three 
months of 1998. In the first three months of 1999, a decrease in accounts 
payable of $3.2 million and the net loss of $2.0 million were only partially 
offset by a decrease in accounts receivable of $2.7 million.  In the first 
three months of 1998, decreases in accounts receivable and inventories of 
$1.9 million and $1.7 million, respectively, and depreciation of $830,000 
were largely offset by decreases in accounts payable and accrued expenses of 
$1.4 million and $1.1 million, respectively, and a net loss of $489,000. Cash 
flows provided by financing activities in the first three months of 1998 
primarily reflects Intel's investment in the Company's common stock. 

The Company believes that its existing sources of liquidity, including cash 
generated from operations, will be sufficient to meet operating cash 
requirements and capital lease repayment obligations at least through the 
next twelve months.  

YEAR 2000 ISSUES

In the next year, most companies could face a potentially serious information 
systems problem because many software applications and operational programs 
written in the past were designed to handle date formats with two-digit years 
and thus may not properly recognize calendar dates beginning in the Year 
2000. This problem could result in computers either outputting incorrect data 
or shutting down altogether when attempting to process a date such as 
"01/01/00."  In response to this, the Company has formed a task force (the 
"Task Force") specifically assigned to addressing Year 2000 issues.  

The Task Force is composed of members from all essential functional groups 
within the Company.  The Task Force meets regularly, and the meeting minutes 
are reviewed on a regular basis at the Executive Staff's operational meeting. 
The Company has reviewed all of its current product offerings and believes 
that its current products are Year 2000 compliant.  As to the Company's 
internal operations, the Task Force's general plan of action includes 
inventorying all essential systems, equipment and facilities, contacting 
suppliers to ascertain vendor readiness for Year 2000, testing all critical 
systems and resolving all mission-critical problems by the end of the third 
quarter of 1999.  The Company is currently on schedule to complete all 
mission-critical Year 2000 problems by the end of the third quarter of 1999.


                                       10

<PAGE>

The Company has completed a comprehensive inventory, and is currently in the 
process of completing the evaluation, remediation and testing of its systems, 
equipment and facilities.  The Company has also identified all essential 
suppliers and has contacted them to determine whether these suppliers' 
operations, products and services are, or will be, Year 2000 ready.  The 
Company has received substantially all supplier responses.  In addition, the 
Company is in the process of an on-going audit of its largest supplier to 
ensure Year 2000 readiness.  The Company has a number of projects underway to 
replace or upgrade systems, equipment and facilities that are not currently 
Year 2000 ready.  To date, the Company has not identified any specific 
contingency plans should the replacement or upgrade of these systems not be 
completed on a timely basis. 

The Company estimates the total Year 2000 costs to be between $500,000 to 
$750,000.  As of March 31, 1999, the Company has spent approximately $83,000 
related to Year 2000 issues.  The Company has budgeted all Year 2000 costs 
independently of the Company's information technology budget.  All costs will 
be paid from the Company's operating funds.

In addition to potential costs or losses directly associated with the Year 
2000 issue, the Company could experience reduced revenues resulting from 
other companies' information systems budgets being allocated to solving Year 
2000 issues, thus reducing amounts available to purchase the Company's 
products.  The Company could also be exposed to a potential adverse impact 
resulting from the failure of key suppliers, financial institutions and other 
third parties to adequately address the Year 2000 problem, despite assurances 
to the contrary given to the Company.  However, the Company cannot currently 
estimate the incidental costs and losses which may be incurred from reliance 
on these third parties, nor can any assurance be given that the Year 2000 
problem will not have a material adverse effect on the Company's business, 
operating results or financial condition. 

The Company believes that the most reasonable likely worst case scenario 
related to Year 2000 compliance that the Company may experience would be a 
delay or inability to procure components from suppliers or an interruption of 
orders from key customers due to their failure to successfully remediate Year 
2000 related issues.  Such scenarios, if they were to develop, could 
materially, adversely affect the Company and its operations.  The Company has 
in place only general contingency plans, such as replacement of suppliers and 
stockpiling of critical components, to respond to such scenarios.

FUTURE PERFORMANCE AND RISK FACTORS

THE COMPANY'S FUTURE BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION ARE 
SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES, INCLUDING THOSE DESCRIBED BELOW. 

EVOLVING THIN CLIENT COMPUTING MARKET

The Company derives a majority of its revenues from the sale of thin client 
network computing products and related software.  Until several years ago, 
the Company's thin client product offerings primarily focused on the UNIX 
marketplace using the Company's X protocol.  The Company's introduction of 
its WINCENTER multi-user Windows NT application server software and new, 
lower-priced thin client network computing devices allowed the Company to 
offer thin client network computing systems that provide users with access to 
Windows applications.  The Company's expansion of its thin client computing 
model into the Windows-based environment has been limited because of the 
Company's inability to offer an endorsed Microsoft solution within the 
Windows market prior to the introduction of the Windows-based terminal in 
June 1998 and intense competition from alternative desktop systems, 
particularly personal computers, whose selling prices are at historic lows 
for relatively high performance configurations.  The Company's future success 
will depend substantially upon increased acceptance of the thin client 
computing model and the successful marketing of the Company's new thin client 
computing hardware and software products.  There can be no assurance that the 
Company's new thin client computing products will compete successfully with 
alternative desktop solutions or that the thin client computing model will be 
widely adopted in the rapidly evolving desktop computer market.  The failure 
of new markets to develop for the Company's thin client computing products 
would have a material, adverse effect on the Company's business, operating 
results and financial condition.  

OTHER RISK FACTORS

The Company has committed significant resources, including research and 
development, manufacturing and sales and marketing resources, to the 
execution of the IBM Agreement.  The production cycle of related product 
requires the Company to rely on IBM to provide accurate product requirement 
forecasts, which have in the past, and will in the future, be subject to 
changes by IBM.  Should the Company commence production of related product 
based on provided forecasts that are subsequently reduced, the Company bears 
the risk of increased levels of unsold inventories.  Should the expected 
business 


                                       11
<PAGE>

volumes associated with the IBM Agreement not occur, or occur in volumes 
below management's expectations, there would be a material, adverse effect on 
the Company's operating results.  

The Company experiences significant competition from other network computer 
manufacturers, suppliers of personal computers and workstations and software 
developers.  Competition within the thin client computing market has 
intensified over the past several years, resulting in price reductions and 
reduced profit margins.  The Company expects this intense competition to 
continue, and there can be no assurance that the Company will be able to 
continue to compete successfully against current and future competitors as 
the desktop computer market evolves and competition increases.  The Company's 
software products also face substantial competition from software vendors 
that offer similar products, including several large software companies, 
including Microsoft and Citrix.

The Company's operating results have varied significantly, particularly on a 
quarterly basis, as a result of a number of factors, including general 
economic conditions affecting industry demand for computer products, the 
timing and market acceptance of new product introductions by the Company and 
its competitors, the timing of significant orders from and shipments to large 
customers, periodic changes in product pricing and discounting due to 
competitive factors, and the availability and pricing of key components, such 
as DRAMs, video monitors, integrated circuits and electronic sub-assemblies, 
some of which require substantial order lead times.  The Company's operating 
results may fluctuate in the future as a result of these and other factors, 
including the Company's success in developing and introducing new products, 
its product and customer mix, licensing costs, the level of competition which 
it experiences and its ability to develop and maintain strategic business 
alliances. 

The Company currently anticipates that the mix of hardware revenues as a 
component of total revenues may rise as a result of potential OEM 
relationships for the Company's thin client computing products.  This 
condition would likely lead to overall reduced gross margins on total 
revenues.  In addition, the Company operates with a relatively small backlog. 
Revenues and operating results therefore generally depend on the volume and 
timing of orders received, which are difficult to forecast and which may 
occur disproportionately during any given quarter or year.  The Company's 
expense levels are based in part on its forecast of future revenues.  If 
revenues are below expectations, the Company's operating results may be 
adversely affected.  The Company has experienced a disproportionate amount of 
shipments occurring in the last month of its fiscal quarters.  This trend 
increases the risk of material quarter-to-quarter fluctuations in the 
Company's revenues and operating results. 

The Company's future results will depend to a considerable extent on its 
ability to continuously develop, introduce and deliver in quantity new 
hardware and software products that offer its customers enhanced performance 
at competitive prices. The introduction of new or enhanced products also 
requires the Company to manage the transition from older, displaced products 
in order to minimize disruption to customer ordering patterns, avoid 
excessive levels of older product inventories and ensure that adequate 
supplies of new products can be delivered to meet customer demand.  As the 
Company is continuously engaged in this product development and transition 
process, its operating results may be subject to considerable fluctuation, 
particularly when measured on a quarterly basis.  The inability to finance 
important research and development projects, delays in the introduction of 
new and enhanced products, the failure of such products to gain market 
acceptance, or problems associated with new product transitions could 
adversely affect the Company's operating results.  

The Company has significant deferred tax assets and will have to generate 
approximately $17 million of future taxable income to realize its net 
deferred tax assets.  If the Company is unable to realize its net deferred 
tax assets, it will have to establish an additional valuation allowance, 
which could have a material, adverse effect on future operating results.  
Although management believes that the Company will achieve the operating 
results necessary to realize these assets, there can be no assurance that 
future levels of taxable income will be sufficient to realize the net 
deferred tax assets.

The Company relies increasingly on independent distributors and resellers for 
the distribution of its products.  In early 1996, the Company experienced 
significant returns of its software products from its distributors.  Although 
controls have since been improved, there can be no assurance that the Company 
will not experience some level of returns in the future.  In addition, there 
can be no assurance that the Company's distributors and resellers will 
continue their current relationships with the Company or that they will not 
give higher priority to the sale of other products, which could include 
products of the Company's competitors.  A reduction in sales effort or 
discontinuance of sales of the Company's products by its distributors and 
resellers could lead to reduced sales and could adversely affect the 
Company's operating results.  In addition, there can be no assurance as to 
the continued viability or the financial stability of the Company's 
distributors and resellers, the Company's ability to retain its existing 
distributors and resellers or the Company's ability to add distributors and 
resellers in the future. 


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<PAGE>

The Company relies on independent contractors for virtually all of the 
sub-assembly of the Company's thin client computing products.  The Company's 
reliance on these independent contractors limits its control over delivery 
schedules, quality assurance and product costs.  In addition, a number of the 
Company's independent suppliers are located abroad.  The Company's reliance 
on these foreign suppliers subjects the Company to risks such as the 
imposition of unfavorable governmental controls or other trade restrictions, 
changes in tariffs and political instability.  The Company currently obtains 
all of the sub-assemblies used for its thin client computing products 
(consisting of all major components except monitors and cables) from a single 
supplier located in Thailand.  Any significant interruption in the supply of 
sub-assemblies from this contractor would have a material, adverse effect on 
the Company's business and operating results. However, the Company now has 
the capability to obtain sub-assemblies from an alternative location of its 
single supplier, which is located in Mexico. Disruptions in the provision of 
components by the Company's other suppliers, or other events that would 
require the Company to seek alternate sources of supply, could also lead to 
supply constraints or delays in delivery of the Company's products and 
adversely affect its operating results. 

A number of components and parts used in the Company's products, including 
certain semiconductor components, also are currently available from single or 
limited sources of supply.  The Company has no long-term purchase agreements 
or other guaranteed supply arrangements with suppliers of these single or 
limited source components.  The Company has generally been able to obtain 
adequate supplies of parts and components in a timely manner from existing 
sources under purchase orders and endeavors to maintain inventory levels 
adequate to guard against interruptions in supplies.  However, the Company's 
inability to obtain sufficient supplies of these parts and components from 
existing suppliers or to develop alternate supply sources would adversely 
affect the Company's operating results. 

A majority of the Company's international sales are denominated in U.S. 
dollars, and an increase in the value of the U.S. dollar relative to foreign 
currencies could make the Company's products less competitive in those 
markets.  International sales and operations may also be subject to risks 
such as the imposition of governmental controls, export license requirements, 
restrictions on the export of technology, political instability, trade 
restrictions, changes in tariffs and difficulties in staffing and managing 
international operations and managing accounts receivable.  In addition, the 
laws of certain countries do not protect the Company's products and 
intellectual property rights to the same extent as the laws of the United 
States.  There can be no assurance that these factors will not have an 
adverse effect on the Company's future international sales and, consequently, 
on the Company's operating results.   

The Company's success depends to a significant degree upon the continuing 
contributions of its senior management and other key employees, particularly 
Robert G. Gilbertson, President and Chief Executive Officer and Rudolph G. 
Morin, Executive Vice President of Operations & Finance and Chief Financial 
Officer.  The Company believes that its future success will depend in large 
part on its ability to attract and retain highly-skilled engineering, 
managerial, sales and marketing personnel.  Competition for such personnel is 
intense, and there can be no assurance that the Company will be successful in 
attracting, integrating and retaining such personnel.  Failure to attract and 
retain key personnel could have a material, adverse effect on the Company's 
business, operating results or financial condition. 

The market price of the Company's common stock has fluctuated significantly 
over the past several years and is subject to material fluctuations in the 
future in response to announcements concerning the Company or its competitors 
or customers, quarterly variations in operating results, announcements of 
technological innovations, the introduction of new products or changes in 
product pricing policies by the Company or its competitors, general 
conditions in the computer industry, developments in the financial markets 
and other factors.  In particular, shortfalls in the Company's quarterly 
operating results from historical levels or from levels forecast by 
securities analysts could have an adverse effect on the trading price of the 
common stock.  The Company may not be able to quantify such a quarterly 
shortfall until the end of the quarter, which could result in an immediate 
and adverse effect on the common stock price.  In addition, the stock market 
has, from time to time, experienced extreme price and volume fluctuations 
that have particularly affected the market prices for technology companies 
and which have been unrelated to the operating performance of the affected 
companies.  Broad market fluctuations of this type may adversely affect the 
future market price of the Company's common stock.

ITEM 3.  MARKET RISK SENSITIVE INSTRUMENTS

The Company's market risk sensitive instruments as of March 31, 1999 are 
primarily exposed to interest rate risks.  Because of the short-term 
maturities of these instruments, a 100 basis point change in related interest 
rates would not have a material 


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<PAGE>

effect on their fair value.  Fluctuations in foreign exchange rates do not 
have a material effect on the Company's financial statements.

                           PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  The following exhibits are filed herewith:

     Exhibit 27     Financial Data Schedule.

(b)  The Company filed the following reports on Form 8-K for the three-month 
     period ended March 31, 1999:

     (i)  Form 8-K filed January 14, 1999 regarding the Company's 
          reincorporation in Delaware.

     (ii) Form 8-K/A filed January 14, 1999 regarding the Company's amendment 
          of its Rights Plan.



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<PAGE>

                          NETWORK COMPUTING DEVICES, INC.


                                   SIGNATURE

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


                                   Network Computing Devices, Inc.
                                   (Registrant)

Date:  May 12, 1999

                                   By:  /s/ Rudolph G. Morin
                                        --------------------------
                                        Rudolph G. Morin
                                        Executive Vice President, Operations 
                                        & Finance and Chief Financial Officer 
                                        (Duly Authorized and Principal 
                                        Financial and Accounting Officer)








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