<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 June 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: 0-20124
                                           
                                           
                           NETWORK COMPUTING DEVICES, INC.
                (Exact name of registrant as specified in its charter)
                                           
                                           
                  California                              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:  (415) 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 
17,008,123 at June 30, 1997.

<PAGE>

                            NETWORK COMPUTING DEVICES, INC.
                                           

                                         INDEX




                        DESCRIPTION                                PAGE NUMBER
-----------------------------------------------------------        -----------

Cover Page                                                              1

Index                                                                   2

Part I:   Financial Information

     Item 1:   Financial Statements

           Condensed Consolidated Balance Sheets as of 
             June 30, 1997 and December 31, 1996                        3

           Condensed Consolidated Statements of Operations 
             for the Three-and Six-Month Periods Ended 
             June 30, 1997 and 1996                                     4

           Condensed Consolidated Statements of Cash Flows 
             for the Six-Month Periods Ended June 30, 1997 
             and 1996                                                   5

           Notes to Condensed Consolidated Financial Statements         6

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

Part II:  Other Information
     
     Item 1:   Legal Proceedings                                        16

     Item 4:   Submission of Matters to a Vote of Security Holders      16

     Item 6:   Exhibits and Reports on Form 8-K                         17

Signature                                                               18


                                      2
<PAGE>

                        NETWORK COMPUTING DEVICES, INC.

                        PART I:  FINANCIAL INFORMATION
                        ITEM 1.  FINANCIAL STATEMENTS

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


                                     ASSETS

                                                     June 30,      December 31,
                                                       1997           1996
                                                    -----------    -----------
                                                    (UNAUDITED)
Current assets:
  Cash and cash equivalents                          $  14,356     $  23,832 
  Short-term investments                                22,306        11,839 
  Accounts receivable, net                              25,295        21,549 
  Inventories                                           10,602         9,776 
  Refundable and deferred income tax assets              4,259         8,287 
  Other current assets                                   3,113         3,652
                                                     ---------     --------- 
Total current assets                                    79,931        78,935 

Property and equipment, net                              4,868         4,895 
Other assets                                             1,757         1,863 
                                                     ---------     ---------
Total assets                                         $  86,556     $  85,693 
                                                     ---------     ---------
                                                     ---------     ---------


                         LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                    $  6,557     $   4,383 
  Accrued expenses                                       8,755         9,337 
  Current portion of capital lease obligations             373           748 
  Deferred revenue                                       3,697         3,486 
                                                     ---------     ---------
Total current liabilities                               19,382        17,954 
Long-term portion of capital lease obligations             205           314 
Shareholders' equity:
  Undesignated preferred stock                               -             - 
  Common stock                                          66,212        68,217 
  Retained earnings                                        757          (792)
                                                     ---------     ---------
Total shareholders' equity                              66,969        67,425 
                                                     ---------     ---------
Total liabilities and shareholders' equity           $  86,556     $  85,693 
                                                     ---------     ---------
                                                     ---------     ---------

                            See accompanying notes.

                                       3
<PAGE>

                          NETWORK COMPUTING DEVICES, INC.

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


<TABLE>
<CAPTION>
                                                    Three Months Ended June 30,       Six Months Ended June 30,
                                                    ---------------------------       --------------------------
                                                       1997             1996            1997             1996 
                                                    ---------        ----------       ---------       ----------
<S>                                                 <C>              <C>             <C>             <C>
Net revenues:
    Hardware products and services                  $  26,889        $  22,193       $  49,816       $  47,100 
    Software licenses and services                      7,473            7,135          15,610          12,667 
                                                    ---------        ---------       ---------       ---------
Total net revenues                                     34,362           29,328          65,426          59,767 
Cost of revenues:
    Hardware products and services                     18,767           20,609          33,836          41,271 
    Software licenses and services                      1,550            2,193           4,542           3,631 
                                                    ---------        ---------       ---------       ---------
Total cost of revenues                                 20,317           22,802          38,378          44,902 
                                                    ---------        ---------       ---------       ---------

Gross margin                                           14,045            6,526          27,048          14,865 
Operating expenses:
  Research and development                              3,527            4,019           6,971           8,139 
  Marketing and selling                                 8,229            9,402          15,370          18,959 
  General and administrative                            1,677            3,527           3,342           6,036 
                                                    ---------        ---------       ---------       ---------
Total operating expenses                               13,433           16,948          25,683          33,134 
                                                    ---------        ---------       ---------       ---------

Operating income (loss)                                   612          (10,422)          1,365         (18,269)
Interest income, net                                      549              385           1,017             824 
Other income                                                -                -             200               - 
Gain (loss) on sale of product lines                        -              (27)              -           6,932 
                                                    ---------        ---------       ---------       ---------
Income (loss) before income taxes                       1,161          (10,064)          2,582         (10,513)
Provision for income taxes (income tax benefit)           464           (4,017)          1,033          (4,206)
                                                    ---------        ---------       ---------       ---------
Net income (loss)                                   $     697        $  (6,047)      $   1,549       $  (6,307)
                                                    ---------        ---------       ---------       ---------
                                                    ---------        ---------       ---------       ---------

Net income (loss) per share:
     Primary                                        $    0.04        $   (0.37)      $    0.08       $   (0.38)
                                                    ---------        ---------       ---------       ---------
                                                    ---------        ---------       ---------       ---------
     Fully diluted                                  $    0.04        $   (0.37)      $    0.08       $   (0.38)
                                                    ---------        ---------       ---------       ---------
                                                    ---------        ---------       ---------       ---------

Shares used in per share computations:
     Primary                                           18,820           16,504          18,857          16,382
                                                    ---------        ---------       ---------       ---------
                                                    ---------        ---------       ---------       ---------
     Fully diluted                                     18,821           16,504          18,858          16,382
                                                    ---------        ---------       ---------       ---------
                                                    ---------        ---------       ---------       ---------
</TABLE>

                            See accompanying notes.


                                      4
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (UNAUDITED - IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 Six Months Ended June 30,
                                                                 -------------------------
                                                                    1997           1996
                                                                 ---------      ----------
<S>                                                              <C>            <C>
Cash flows from operations:
     Net income (loss)                                           $  1,549       $  (6,307)
     Reconciliation to cash provided (used) by operations: 
          Depreciation and amortization                             1,616           1,799 
          Gain on sale of product lines                                 -          (6,932)
          Deferred income taxes                                     1,026               - 
          Changes in:
               Accounts receivable, net                            (3,746)          5,293 
               Inventories                                           (826)         (1,074)
               Refundable income taxes                              3,002               - 
               Other current assets and other                         539          (2,881)
               Accounts payable                                     2,174          (6,506)
               Accrued expenses                                      (582)         (2,629)
               Deferred revenue                                       211             664 
                                                                ---------       ---------
          Cash provided (used) by operations                        4,963         (18,573)
          Cash flows from investing activities:
               Short-term investments, net                        (10,467)          7,289 
               Proceeds from sale of product lines                      -           8,625 
               Changes in other assets                                106             973 
               Property and equipment purchases, net               (1,589)         (1,599)
                                                                ---------       ---------
          Cash provided (used) by investing activities            (11,950)         15,288 
          Cash flows from financing activities:
               Principal payments on capital lease obligations       (484)           (735)
               Repurchases of common stock                         (3,402)            (89)
               Proceeds from issuance of common stock, net          1,397           1,728 
                                                                ---------       ---------
          Cash provided (used) by financing activities             (2,489)            904 
          Decrease in cash and equivalents                         (9,476)         (2,381)
          Cash and equivalents:
               Beginning of period                                 23,832          13,364 
                                                                ---------       ---------
               End of period                                    $  14,356       $  10,983 
                                                                ---------       ---------
                                                                ---------       ---------
</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 1996 Annual Report on Form 10-K.  The consolidated 
results of operations for the three- and six-month periods ended June 30, 
1997 are not necessarily indicative of the results to be expected for any 
subsequent quarter or for the entire year ending December 31, 1997.  Certain 
financial statement amounts from 1996 have been reclassified to conform to 
the current year's presentation.
                                       
PER SHARE INFORMATION   
                                       
Per share information is computed using the weighted-average number of common 
and dilutive common equivalent shares outstanding.  For primary and fully 
diluted earnings per share, common equivalent shares consist of the 
incremental shares issuable upon the assumed exercise of dilutive stock 
options (using the treasury stock method).  The effect of common equivalent 
shares is not included in earnings per share calculations during periods in 
which such effect would be antidilutive.  The Financial Accounting Standards 
Board recently issued Statement of Financial Accounting Standards ("SFAS") 
No. 128, "Earnings Per Share." SFAS No. 128 requires the presentation of 
basic earnings per share ("EPS") and, for companies with complex capital 
structures, diluted EPS. SFAS No. 128 is effective for annual and interim 
periods ending after December 15, 1997.  The Company expects that for 
profitable periods, basic EPS will be higher than primary earnings per share 
as presented in the accompanying consolidated financial statements, and 
diluted EPS will not differ materially from fully diluted earnings per share 
as presented in the accompanying financial statements.  Computations for loss 
periods should not change significantly.
                                       
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):
                                       
                                       
                                             June 30,          December 31,
                                               1997                1996 
                                               ----                ----

Purchased components and sub-assemblies      $  8,407            $ 8,396
Work in process                                   492                240
Finished goods                                  1,703              1,140
                                             --------            -------
                                             $ 10,602            $ 9,776
                                             --------            -------
                                             --------            -------

INTEREST AND TAX PAYMENTS

Interest payments, primarily related to interest on capital lease 
liabilities, were $14,000 and $41,000 for the second quarters of 1997 and 
1996, respectively, and $36,000 and $65,000 for the first six months of 1997 
and 1996, respectively.  Income tax payments were $60,100 for the second 
quarter of 1997 and $113,700 for the first six months of 1997, while an 
income tax refund of $3.0 million was received during the second quarter of 
1997.  There were no income tax payments for the second quarter and first six 
months of 1996.

1997 STOCK REPURCHASE PROGRAM

In April 1997, the Company's Board of Directors adopted a program to 
repurchase, from time to time, at management's discretion, up to 1,000,000 
shares of the Company's common stock on the open market during the 12-month 
period ending April 30, 1998 at prevailing market prices. Repurchases are 
made under the program using the Company's cash and short-


                                      6
<PAGE>

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


term investments.  Through June 30, 1997, an aggregate of 291,500 shares were 
repurchased at prices ranging from $10.75 to $12.00 per share for a total 
purchase price of $3.4 million.  Additionally, the Company had committed to 
repurchase an additional 145,000 shares at prices ranging from $11.63 to 
$12.00 per share for a total purchase price of $1.7 million.  At June 30, 
1997, total shares repurchased, or committed to be repurchased, were 436,500 
for a total cost of $5.1 million.

Subsequent to June 30, 1997, the Company has repurchased, or committed to 
repurchase, an additional 460,000 shares at prices ranging from $8.38 to 
$11.63 for a total cost of $4.7 million.  Aggregate repurchases, or 
commitments to repurchase, as of July 24, 1997 under the 1997 stock 
repurchase program are 896,500 shares for a total cost of $9.8 million.

MAJOR CUSTOMERS AND RELATED ACCOUNTS RECEIVABLE

International Business Machines Corporation ("IBM") accounted for 
approximately 23% and 20% of the Company's revenues for the second quarter 
and first six months of 1997, respectively.  At June 30, 1997, related 
accounts receivable due from IBM were approximately $10.3 million, or 41% of 
the total accounts receivable balance.


                                       7
<PAGE>

                         NETWORK COMPUTING DEVICES, INC.
                                       
                                       
 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

OVERVIEW

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, 1996, CONTAINED IN THE COMPANY'S 
1996 ANNUAL REPORT ON FORM 10-K. 

The Company provides network computer hardware and software that delivers 
high-performance, easy-to-manage, simultaneous access to any application on 
an enterprise network from any desktop.  The Company's product lines include 
the EXPLORA and HMX families of Universal Network Computers, WINCENTER 
PRO-TM- multi-user WINDOWS NT-Registered Trademark- application server 
software, and PC-XWARE-Registered Trademark- network computer software for 
PCs.  

During 1996, the Company underwent significant changes to its operations, 
including changes in senior management, product focus, and business unit 
organization.  During the first half of the year, the Company initiated and 
completed the disposition of two software product lines, MARINER and 
Z-MAIL-Registered Trademark-.  Also during the first half of 1996, the 
Company recorded operating losses of $18.3 million, and combined cash and 
short-term investments had declined from $36.2 million at December 31, 1995 
to $26.4 million at June 30, 1996.  By the end of the second quarter, the 
Company announced that it had appointed a new President and Chief Executive 
Officer, Robert G. Gilbertson, and a new Executive Vice President of 
Operations & Finance and Chief Financial Officer, Rudolph G. Morin.  Shortly 
thereafter, Doug Klein, a founder of the Company, was appointed to Senior 
Vice President & Chief Technology Officer and Lorraine Hariton, the Vice 
President of Business Development, was added to the senior management team.  
In September 1996, Cecil M. Dye was appointed Senior Vice President of Sales 
& Marketing.  This new senior management team initiated a "turnaround" 
program that included recombining its Systems and Software business units, 
spending and hiring controls, significant reorganization of the Research & 
Development and Sales & Marketing functions and asset management initiatives. 
By the end of the second half, profitable, cash-flow positive operations had 
been achieved. The Company's ability to continue this trend is subject to 
various risks and uncertainties, however, and there is no assurance that this 
trend toward profitability will continue into the future.  See below under 
"Future Performance and Risk Factors."

In June 1996, the Company announced an agreement with International Business 
Machines Corporation ("IBM") for the joint development of a network 
application terminal for resale by IBM.  Under the agreement (the "IBM 
Agreement") and a subsequent letter of intent and funding agreement, IBM 
agreed to fund a portion of the Company's development efforts through at 
least the second quarter of 1997. The IBM Agreement provides for IBM to 
purchase a substantial portion of its requirements for such products from the 
Company during 1997 and 1998.  In March 1997, IBM commenced shipping 
production versions of such products. However, the volume of sales to IBM 
under the IBM Agreement may be difficult to predict.  See below under "Future 
Performance and Risk Factors -- Fluctuations in Operating Results."  

During 1995, the Company took various actions to reorganize the two basic 
components of its business into two separate business units: the Systems 
business, consisting of the Company's network computers and related software; 
and the Software business, consisting of its lines of PC connectivity 
software and, initially, its electronic messaging software and its MARINER 
Internet access software.  In addition, the Company took steps to consolidate 
the management and sales organizations of the geographically separated 
segments of its Software business and reoriented its software sales strategy 
toward the increased use of distributors, value added resellers ("VARs") and 
other resellers.

During the third quarter of 1995, the Company created and began implementing 
a plan to restructure the business to improve its operating performance.  The 
plan included substantial modifications to the Company's manufacturing 
processes, phasing out lower margin products, a reduction in the amount of 
leased space, and a reduction in the number of employees.  During the third 
quarter of 1995, the Company recognized charges totaling $7.5 million for the 
implementation of this plan.  Included 


                                       8
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.


in these restructuring charges were amounts related to the severance of 
personnel, phase-out of certain products, and costs associated with the 
termination of lease obligations.  In the fourth quarter of 1996, the Company 
substantially concluded such restructuring activities and determined that 
$1.1 million in related accruals was in excess of amounts required.  As a 
result, the Company recognized a $1.1 million credit for business 
restructuring during the fourth quarter of 1996.  The credit relates 
primarily to lease obligations that were exited or subleased at dates or 
rates more favorable than those anticipated at the time of the initial 
restructuring plan.

In 1994, the Company began the development of MARINER, an Internet access and 
navigation tool which it intended to market to large enterprises, as well as 
to original equipment manufacturers ("OEMs") and VARs.  In January 1995, the 
Company entered into a software development and licensing agreement with AT&T 
to develop a custom version of MARINER for AT&T (the "AT&T Agreement").  The 
AT&T Agreement provided for total minimum royalties of $15 million through 
1998, and contemplated the development of additional Internet access products 
for license to AT&T.  In September 1995, the AT&T Agreement was amended to 
terminate these provisions for additional product development and to provide 
instead that the Company would be paid fees totaling $9 million through 1996 
for development work completed at the time of the amendment and for a license 
to evaluate the MARINER product.  In 1995, the Company recognized license 
fees totaling $6.8 million under the AT&T Agreement and received $500,000 in 
fees for non-recurring engineering costs that offset research and development 
expenses.  In 1995, the Company also recognized revenues of $300,000 from 
other customers related to the MARINER product line.  In 1996 and the first 
six months of 1997, the Company recognized license fees totaling $426,000 and 
$1.0 million, respectively.  The Company anticipates that revenues of 
$167,000 will be recognized in the third quarter of 1997, and that no 
additional related revenues will be recognized in the future.  In light of 
the Company's inability to develop a long-term relationship with AT&T, as 
well as other changes in the Internet market, including the development of 
intense price competition among vendors of Internet access products, the 
Company determined in late 1995 to sell the MARINER product line and focus 
its attention on its core business of providing desktop information access 
solutions for network computing environments.  In February 1996, the Company 
sold the MARINER product line to FTP Software, Inc. ("FTP") for $9.8 million. 
The Company paid FTP a one-time license fee of $2.5 million for the right to 
incorporate MARINER technology into future versions of the Company's hardware 
and software products.  The net gain recognized on this transaction was $7.0 
million.

In February 1994, the Company acquired all of the outstanding stock of Z-Code 
Software Corp. ("Z-Code"), a developer of electronic mail and messaging 
application products (collectively, "Z-MAIL") for open system environments.  
The Company's Z-MAIL electronic messaging product was a part of the Company's 
Software business unit.  In light of disappointing operating results, 
intensifying competition in this market, and other related factors, the 
Company determined during the second quarter of 1996 to sell or discontinue 
this product line.  In June 1996, the Company sold its Z-MAIL product line to 
NetManage, Inc. for a total sales price of $1.3 million.  The net loss 
recognized on this transaction was $27,000.

RESULTS OF OPERATIONS

As mentioned above under "Overview," the Company determined to recombine its 
two former business units (i.e., "Systems" and "Software") into a single 
operation in June 1996.  Although the Company is now managed as one operating 
entity, the Company is reporting hardware and software revenues 
independently.  Revenues, cost of revenues and gross margins relating to 
prior operating periods have been conformed to the current presentation, and 
the following discussions of net revenues and gross margins address the 
revised presentation. 

TOTAL NET REVENUES

Total net revenues were $34.4 million and $29.3 million for the second
quarters of 1997 and 1996, respectively, representing an increase of
17%, and $65.4 million and $59.8 million for the first six months of
1997 and 1996, respectively, representing an increase of 9%. 
International revenues were 35% and 32% of total net revenues for the
second quarters of 1997 and 1996, respectively, and 32% and 33% for
the first six months of 1997 and 1996, respectively.  Revenues under
the IBM Agreement accounted for approximately 23% and 20% of the
Company's revenues for the second quarter and first six months of 1997,
respectively.  No single customer accounted for greater than 10% of
the Company's revenues in the same periods of 1996.

HARDWARE REVENUES

Hardware revenues consist primarily of revenues from the sale of network 
computers, related hardware, and to a lesser extent, fees for related service 
activities.  Hardware revenues were $26.9 million and $22.2 million for the 
second quarters of 1997 and 1996, respectively, and $49.8 million and $47.1 
million for the first six months of 1997 and 1996, respectively.  The 


                                      9
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.


increases in revenues were due to increased unit volume shipments, including 
revenues from IBM related to the IBM Agreement, partially offset by lower 
average selling prices.

SOFTWARE REVENUES

Software revenues consist primarily of revenues from the licensing of 
software products and related support services.  Current software products 
that are generating revenue include WINCENTER, the Company's multi-user 
WINDOWS NT application server software, PC-XWARE, the Company's network 
computer software for PCs, and NCDWARE-Registered Trademark-, the Company's 
proprietary network computer software. Revenues from software and related 
services were $7.5 million and $7.1 million for the second quarters of 1997 
and 1996, respectively, and $15.6 million and $12.7 million for the first six 
months of 1997 and 1996, respectively. The increase in software revenues 
resulted primarily from higher sales of WINCENTER and the related support 
revenues, offset in part by declines in revenues related to PC-XWARE and the 
absence of revenues related to the former Z-MAIL product line, which was sold 
during the second quarter of 1996.  Revenues related to the former Z-MAIL 
product line of $352,000 and $1.1 million had been recognized in the second 
quarter and first six months of  1996, respectively, while no such revenues 
were recognized during the second quarter and first six months of 1997.  In 
addition, revenues related to the AT&T Agreement of $250,000 were recognized 
in the second quarter of 1997 while no such revenues were recognized in the 
second quarter of 1996.  Revenues related to the AT&T Agreement of  $1.0 
million were recognized in the first six months of 1997 compared to $426,000 
in the first six months of 1996.  The Company anticipates that $167,000 of 
revenues related to the AT&T Agreement will be recognized in the third 
quarter of 1997, and that no additional related revenues will be recognized 
in the future.

GROSS MARGIN ON HARDWARE REVENUES

The Company's gross margin percentages on hardware revenues were 30% and 7% 
for the second quarters of 1997 and 1996, respectively, and 32% and 12% for 
the first six months of 1997 and 1996, respectively.  The dramatic increase 
in margin in 1997 compared to 1996 is primarily due to a charge of 
approximately $3.0 million incurred in the second quarter of 1996 to reduce 
the value of certain inventories to market price.  Also benefiting margin 
percentages in 1997 were declines in material costs, reflecting declines in 
the cost of certain semiconductor and other components.  In addition, the 
Company benefited from certain volume purchase discounts in association with 
the IBM Agreement during the second quarter and first six months of 1997 
while no such purchasing benefits were realized in the same periods of 1996.  
The Company currently anticipates that the mix of hardware OEM revenues as a 
component of total hardware revenues will continue to rise.  In addition, the 
Company plans to increase the mix of revenues generated through indirect 
channels.  The anticipated changes in the mix of revenues by sales channel 
are likely to result in overall reduced gross margin percentages on hardware 
revenues in future periods.

GROSS MARGIN ON SOFTWARE REVENUES

The Company's gross margin percentages on software revenues were 79% and 69% 
for the second quarters of 1997 and 1996, respectively, and 71% for the first 
six months of both 1997 and 1996.  The increase in the gross margin 
percentage for the second quarter of 1997 was primarily due to the impact of 
AT&T, as the second quarter of 1997 included revenue that was not included in 
the second quarter of 1996, in addition to a reduction of estimated 
obligations in the second quarter of 1997 associated with the AT&T Agreement. 
This was offset slightly by a higher mix of WINCENTER revenues in 1997, 
which carry a lower margin due to higher third-party royalty costs, and 
reduced revenues of other higher margin software products, including revenues 
associated with the former Z-MAIL product line.  The gross margin percentage 
for the first six months of 1997 remained unchanged from the same period of 
1996 due to the increase in the gross margin percentage due to AT&T as 
discussed above, offset by reduced margin from increased WINCENTER sales and 
the absence of sales of higher margin Z-MAIL products and the reduction of 
PC-XWARE sales.  Certain technology used in the Company's products is 
licensed from third parties on a royalty-bearing basis.  The costs associated 
with such royalties increased substantially during 1996, and will continue to 
be a significant component of total software cost of sales. 

RESEARCH AND DEVELOPMENT EXPENSES

Research and development ("R&D") expenses were $3.5 million and $4.0 million 
for the second quarters of 1997 and 1996, respectively, and $7.0 million and 
$8.1 million for the first six months of 1997 and 1996, respectively.  
Decreases in 1997 are primarily due to the absence of R&D expenses related to 
the MARINER and Z-MAIL product lines in the second quarter and first six 
months of 1997 while spending on such product line development was a 
significant component of R&D expenses during the same periods of 1996. As a 
percentage of net revenues, R&D expenses were 10% and 14% for the second 
quarters of 


                                       10
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.


1997 and 1996, respectively, and 11% and 14% for the first six months of 1997 
and 1996, respectively.  The Company plans to increase its investment in 
research and development in the area of network computing products through 
1997.

MARKETING AND SELLING EXPENSES

Marketing and selling expenses were $8.2 million and $9.4 million for the 
second quarters of 1997 and 1996, respectively, and $15.4 million and $19.0 
million for the first six months of 1997 and 1996, respectively.  The 
decreases reflect lower labor and other employee-related expenses due to 
decreased headcount from the sale of the Z-MAIL and MARINER product lines.  
The Company also experienced increased efficiencies in these areas resulting 
from the reconsolidation of the Company's remaining business units, which 
commenced in June of 1996.  As a percentage of net revenues, marketing and 
selling expenses were 24% and 32% for the second quarters of 1997 and 
1996, respectively, and 23% and 32% for the first six months of 1997 and 
1996, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative ("G&A") expenses were $1.7 million and $3.5 
million for the second quarters of 1997 and 1996, respectively, and $3.3 
million and $6.0 million for the first six months of 1997 and 1996, 
respectively.  The decreases were primarily related to cost containment 
measures implemented by new senior management, including reductions in legal 
costs and outside consulting fees and the reconsolidation of separate 
business units into a single operating entity.  G&A expenses for the second 
quarter and first six months of 1996 included increased expense related to 
both the severance costs associated with the elimination of certain positions 
within the Company and to increased personnel costs that resulted from the 
division of the Systems and Software businesses into separate business units. 
As a percentage of net revenues, G&A expenses were 5% and 12% for the second 
quarters of 1997 and 1996, respectively, and 5% and 10% for the first six 
months of 1997 and 1996, respectively.

INTEREST INCOME

Interest income, net of interest expense, was $549,000 and $385,000 for the 
second quarters of 1997 and 1996, respectively, and $1.0 million and $824,000 
for the first six months of 1997 and 1996, respectively.  The increase was 
primarily due to higher average balances in interest-bearing accounts. 

OTHER INCOME 

Other income for the first six months of 1997 includes the receipt of
insurance proceeds for certain legal expenses incurred in association
with securities litigation costs.

GAIN (LOSS) ON SALE OF PRODUCT LINES

The loss on the sale of the product line for the second quarter of 1996 
represents the net loss on the Company's sale of the Z-MAIL division.  The 
gain on the sale of  product lines for the first six months of 1996 
represents the net gain recognized on the sale of the Company's MARINER 
product line in February 1996, offset slightly by the net loss on the sale of 
Z-MAIL in June 1996.

INCOME TAXES AND INCOME TAX BENEFIT

The Company recognized an income tax provision of $0.5 million and $1.0 
million for the second quarter and first six months of 1997, respectively, 
and an income tax benefit of $4.0 million and $4.2 million for the second 
quarter and first six months of 1996, respectively.

FINANCIAL CONDITION

Total assets as of June 30, 1997 increased by $0.9 million, or 1%, from 
December 31, 1996.  The change in total assets reflected increases in 
accounts receivable of $3.7 million and in cash and short-term investments of 
$1.0 million, partially offset by a decrease of $4.0 million in refundable 
and deferred income tax assets.  The increase in accounts receivable was 
primarily related to increased sales volumes related to the IBM Agreement, 
which has increased the Company's days sales outstanding.  The increase in 
cash and equivalents and short-term investments was primarily related to the 
receipt of income tax refunds, offset partially by repurchases of the 
Company's common stock.  The decrease in refundable and deferred income taxes 
was primarily related to income tax refunds received.


                                      11
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.


Total liabilities as of June 30, 1997 increased by $1.3 million, or 7%, from 
December 31, 1996.  This increase was primarily due to an increase of $2.2 
million in accounts payable which was primarily related to increased 
inventory receipts. 

CAPITAL REQUIREMENTS

Capital spending requirements for the remainder of 1997 are estimated at 
approximately $1.5 million, and at June 30, 1997, the Company had commitments 
for capital expenditures of approximately $250,000, primarily related to 
manufacturing tooling. 

LIQUIDITY

In April 1997, the Company's Board of Directors adopted a program to 
repurchase from time to time at management's discretion up to 1,000,000 
shares of the Company's common stock on the open market during the 12-month 
period ending April 30, 1998 at prevailing market prices.  Repurchases are 
made under the program using the Company's cash resources.  Shares 
repurchased will be available for the issuance under the Company's stock 
plans and for other corporate purposes. Through June 30, 1997, an aggregate 
of 291,500 shares were repurchased at prices ranging from $10.75 to $12.00 
per share for a total purchase price of $3.4 million.  Additionally, the 
Company had committed to repurchase an additional 145,000 shares at prices 
ranging from $11.63 to $12.00 per share for a total purchase price of $1.7 
million.  At June 30, 1997, total shares repurchased, or committed to be 
repurchased, were 436,500 for a total cost of $5.1 million. Subsequent to 
June 30, 1997, the Company has repurchased, or committed to repurchase, an 
additional 460,000 shares at prices ranging from $8.38 to $11.63 for a total 
cost of $4.7 million.  Aggregate repurchases, or commitments to repurchase, 
as of July 24, 1997 under the 1997 stock repurchase program are 896,500 
shares  for a total cost of $9.8 million.

As of June 30, 1997, the Company had combined cash and equivalents and 
short-term investments totaling $36.7 million, with no significant debt. 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.  

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 NETWORK COMPUTING MARKET

The Company derives a majority of its revenues from the sale of network 
computer products and related software.  During the past several years, the 
Company and other manufacturers of network computing systems and products 
have experienced intense competition from alternative desktop computing 
products, particularly personal computers, which has slowed the growth and 
development of the network computing market.  Until recently, the absence of 
X protocol support from Microsoft Corporation ("Microsoft"), combined with 
the proliferation of off-the-shelf Windows-based application software, 
constituted an obstacle to the expansion of the network computing model into 
Windows-based environments.  The introduction of the Company's WINCENTER 
multi-user WINDOWS NT application server software and new, lower-priced 
network computers have allowed the Company to offer network computing systems 
that provide users with access to Windows applications, although sales of 
these new products have been limited to date.  The Company's future success 
will depend in substantial part upon increased acceptance of the network 
computing model and the successful marketing of the Company's new network 
computing products.  There can be no assurance that the Company's new network 
computing products will compete successfully with alternative desktop 
solutions or that the network computing model will be widely adopted in the 
rapidly evolving desktop computer market.  The failure of new markets to 
develop for the Company's network computing products would have a material, 
adverse effect on the Company's business, operating results and financial 
condition.  See "Item 1.  Business - Industry  Background" and "Business - 
Markets and Applications" in the Company's Annual Report on Form 10-K for the 
year ended December 31, 1996.


                                       12
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.


COMPETITION

The desktop computer and information access markets are characterized by 
rapidly changing technology and evolving industry standards.  The Company 
experiences significant competition from other network computer 
manufacturers, suppliers of personal computers and workstations and software 
developers.  Competition within the network 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.  See "Item 1.  Business 
- Competition" in the Company's Annual Report on Form 10-K for the year ended 
December 31, 1996.

FLUCTUATIONS IN OPERATING RESULTS 

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 that 
it experiences and its ability to develop and maintain strategic business 
alliances. 

The Company has committed significant resources, including research and 
development, manufacturing and sales and marketing resources, to the 
implementation of the IBM Agreement (see "Overview").  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 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 currently anticipates that the mix of hardware revenues as a 
component of total revenues may rise as a result of the IBM Agreement and the 
Company's current efforts to develop other OEM relationships for its network 
computers.  In addition, the Company plans to increase its revenues generated 
through indirect sales.  This change in the mix of revenues by product type 
and by sales channel is likely to result in overall reduced gross margin 
percentages on hardware revenues and 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.  In the past, the Company has experienced reduced 
orders during the first and third quarters due to buying patterns common in 
the computer industry.  In addition, sales in Europe have been adversely 
affected in the third calendar quarter, when many European customers reduce 
their business activities. 

NEW PRODUCT DEVELOPMENT AND TIMELY INTRODUCTION OF NEW AND ENHANCED
PRODUCTS

The markets for the Company's products are characterized by rapidly changing 
technologies, evolving industry standards, frequent new product introductions 
and short product life cycles.  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 development and 
introduction of new products is a complex and uncertain process requiring 
substantial financial resources and high levels of innovation, accurate 
anticipation of technological and market trends and the successful and timely 
completion of product development.  Once a hardware product is developed, the 
Company must rapidly bring it into volume production, a process that requires 
accurate forecasting of customer requirements in order to achieve acceptable 
manufacturing costs.  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 


                                       13
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.


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.  See "Item 1.  Business - Industry Background" and "Business - 
Product Development" in the Company's Annual Report on Form 10-K for the year 
ended December 31, 1996.

RELIANCE ON INDEPENDENT DISTRIBUTORS AND RESELLERS

The Company increasingly relies substantially on independent distributors and 
resellers, particularly in European markets, for the marketing and 
distribution of its products, particularly its software products.  During 
1995, the Company consolidated its Software sales operations by creating a 
single organization devoted to the sale of the Company's PC connectivity and 
messaging software and re-oriented its software sales strategy toward the 
increased use of distributors, VARs and other resellers.  In early 1996, the 
Company experienced significant returns of its software products from its 
distributors. 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. See "Item 
1.  Business - Marketing and Sales" in the Company's Annual Report on Form 
10-K for the year ended December 31, 1996.

RELIANCE ON INDEPENDENT CONTRACTORS 

The Company relies on independent contractors for virtually all of the 
sub-assembly of the Company's network computer 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 network computer 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. Although the Company is 
currently planning to develop alternative locations in different countries 
from which to obtain sub-assemblies, there is no assurance that the Company 
will be successful in this pursuit. 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.  The operations of certain of the 
Company's foreign suppliers were briefly disrupted during 1992 due to 
political instability in Thailand. See "Item 1.  Manufacturing and Supplies" 
in the Company's Annual Report on Form 10-K for the year ended December 31, 
1996.

INTERNATIONAL SALES 

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.  Over the past two years, from time to time, a significant portion 
of international revenues have been derived from sales to a customer in the 
United Kingdom that have been denominated in pound sterling and sales 
denominated in foreign currencies may increase in the future.  These sales 
are subject to exchange rate fluctuations which could affect the Company's 
operating results negatively or positively, depending on the value of the 
U.S. dollar against the other currency.  Where the Company believes foreign 
currency-denominated sales could pose significant exposure to exchange rate 
fluctuations, the Company acquires forward exchange contracts in an effort to 
reduce such exposure.  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 


                                     14
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.


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. 

DEPENDENCE ON KEY PERSONNEL 

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, its President and Chief Executive Officer, and Rudolph 
G. Morin, its Executive Vice President of Operations & Finance and Chief 
Financial Officer.  The loss of these individuals or other key management 
personnel could have a material adverse effect on the Company's business, 
operating results or financial condition.  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. 

VOLATILITY OF STOCK PRICE 

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.


                                    15
<PAGE>

                      NETWORK COMPUTING DEVICES, INC.
                                     
                        PART II - OTHER INFORMATION
                                      
ITEM 1.  LEGAL PROCEEDINGS

In April 1996, two purported class action complaints, WOODWARD, ET AL V. 
BRADLEY, ET AL and CURLEY, ET AL V. MARINARO, ET AL, were filed in the United 
States District Court for the Northern District of California, and a third 
purported class action complaint, MAIZEL, ET AL V. MARINARO, ET AL, was filed 
in the Superior Court of the State of California for the County of Santa 
Clara.  In May 1996, a fourth purported class action complaint, CLEVELAND, ET 
AL V. MARINARO, ET AL, was filed in the United States District Court for the 
Northern District of California.  The plaintiffs in the MAIZEL, CURLEY and 
CLEVELAND actions claimed to be suing on behalf of a class of persons who 
purchased the Company's Common Stock during the period February 2, 1995 to 
March 21, 1996; the plaintiffs in the WOODWARD action claimed to be suing on 
behalf of a class of persons who purchased the Company's Common Stock during 
the period February 1, 1996 to March 21, 1996.  Certain named current and 
former officers and a director of the Company were named as defendants in the 
actions. The MAIZEL complaint also named as defendants Morgan Stanley & Co. 
and Stephen Milunovich, an employee of Morgan Stanley & Co.  The complaints 
alleged, among other things, that the Company issued false and misleading 
statements to the public about the Company's financial performance and 
prospects, in violation of California and federal securities laws.  The 
complaint in the MAIZEL action alleged that the officer and director 
defendants sold or otherwise disposed of the Company's Common Stock in 
violation of California securities laws. 

The parties entered a settlement agreement during the first quarter of 1997.  
As part of the settlement arrangement, the Company agreed to contribute $1.1 
million toward the $12 million in costs to settle all pending securities 
litigation.  This settlement arrangement was approved by the federal court 
handling the case at a settlement hearing held on May 2, 1997.  A final 
judgment and order of dismissal of action was filed on May 2, 1997.  The 
Company anticipates that no further charges related to such settlement will 
be incurred in the future.

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

The Annual Meeting of Shareholders of the Company was held on May 28, 1997.

(a)  The following five persons nominated by management were elected as 
     directors at the meeting:

              Robert G. Gilbertson
              Philip Greer
              Paul Low
              Stephen A. MacDonald
              Peter Preuss

(b)   A proposal to increase the number of shares of Common Stock reserved 
      for issuance under the Company's 1989 Stock Option Plan by 200,000 
      shares was approved by a vote of 12,497,198 shares for, 3,427,258 
      shares against, 119,347 shares abstaining, and 130,914 broker 
      non-votes. 

(c)   A proposal to increase the number of shares of Common Stock reserved 
      for issuance under the Company's Employee Stock Purchase Plan by 
      100,000 shares was approved by a vote of 14,814,006 shares for, 
      1,190,595 shares against, 66,002 shares abstaining, and 104,114 
      broker non-votes. 

(d)   A proposal to increase the number of shares of Common Stock reserved 
      for issuance under the Company's 1994 Outside Directors' Stock 
      Option Plan by 50,000 shares was approved by a vote of 12,649,390 
      shares for, 3,421,675 shares against, 76,752 shares abstaining, and 
      26,900 broker non-votes. 

(e)   A proposal to ratify the selection of KPMG Peat Marwick LLP as 
      independent auditors of the Company for the current fiscal year was 
      approved by a vote of 16,113,340 shares for, 24,905 shares against, 
      and 36,472 shares abstaining.


                                     16
<PAGE>
                         NETWORK COMPUTING DEVICES, INC.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  The following exhibits are filed herewith:

     Exhibit 10.44  IBM Letter of Intent and Funding Agreement.

     Exhibit 11.1   Statement Regarding Computation of Shares Used in Income 
                    (Loss) Per Share Computations. 

     Exhibit 27     Financial Data Schedule.

(b)  The Company filed no reports on Form 8-K during the three-month period 
     ended June 30, 1997.


                                      17
<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:  July 24, 1997

                              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)


                                       18