SECURITIES AND EXCHANGE COMMISSION

                             Washington, DC 20549


                                  FORM 10-Q

                 QUARTERLY REPORT UNDER SECTIONS 13 OR 15(d)

                    OF THE SECURITIES EXCHANGE ACT OF 1934


    For the Quarter Ended June 30, 2001     Commission File Number 0-13071


                            INTERPHASE CORPORATION
            (Exact name of registrant as specified in its charter)

            Texas                                      75-1549797
 (State of incorporation)                   (IRS Employer Identification No.)


                      13800 Senlac, Dallas, Texas 75234
                   (Address of principal executive offices)

                                (214)-654-5000
             (Registrant's telephone number, including area code)

 ____________________________________________________________________________

 Indicate by  check mark  whether the  registrant (1)  has filed  all reports
 required by  Section 13  or 15(d)  of  the Securities  Exchange Act of  1934
 during the  preceding  12 months  (or  for a  much  shorter period that  the
 registrant was required to  file such reports), and  (2) has been subject to
 such filing requirements for the past 90 days.         Yes  [ X ]   No [   ]
 ____________________________________________________________________________
 Indicate the  number of shares outstanding of  each of the issuer's  classes
 of common stock, as of the latest practicable date.

           Class                                Outstanding at August 1, 2001
 ----------------------------                   -----------------------------
 Common Stock, $.10 par value                            5,722,806


<PAGE>

                            INTERPHASE CORPORATION

                                    INDEX


 Part I - Financial Information

      Item 1.   Consolidated Interim Financial Statements

                Consolidated Balance Sheets as of June 30, 2001
                and December 31, 2000                                       3

                Consolidated Statements of Operations for the three months
                and six months ended June 30, 2001 and 2000                 4

                Consolidated Statements of Cash Flows for the six months
                ended June 30, 2001 and 2000                                5

                Notes to Consolidated Interim Financial Statements        6-10

      Item 2.   Management's Discussion and Analysis of
                Financial Condition and Results of Operations            10-14


 Part II - Other Information

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

                Signature                                                  15

<PAGE>

 INTERPHASE CORPORATION
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except number of share data)         (unaudited)
                                                       June 30,      Dec. 31,
 ASSETS                                                  2001          2000
                                                       ----------------------
 Cash and cash equivalents                            $  14,156     $  10,587
 Marketable securities                                    7,272         6,886
 Trade accounts receivable, less allowances
   for uncollectible accounts of $163 and
   $273, respectively                                     4,995        14,085
 Inventories                                              8,414        13,193
 Prepaid expenses and other current assets                3,682           941
 Deferred income taxes                                      827           844
                                                       ----------------------
      Total current assets                               39,346        46,536

 Machinery and equipment                                  7,804         8,033
 Leasehold improvements                                   2,913         2,954
 Furniture and fixtures                                     584           490
                                                       ----------------------
                                                         11,301        11,477
 Less-accumulated depreciation and amortization          (9,965)       (9,755)
                                                       ----------------------
      Total property and equipment, net                   1,336         1,722

 Capitalized software, net                                  315           490
 Deferred income taxes, net                               1,146         1,146
 Acquired developed technology, net                           -         1,680
 Goodwill, net                                            2,470         2,590
 Other assets                                               191           309
                                                       ----------------------
      Total assets                                    $  44,804     $  54,473
                                                       ======================

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Accounts payable                                     $   1,029     $   1,417
 Deferred revenue                                           484         1,093
 Accrued liabilities                                      2,752         2,816
 Accrued compensation                                     1,182         1,947
 Income taxes payable                                         -            78
 Current portion of debt                                    529         1,683
                                                       ----------------------
      Total current liabilities                           5,976         9,034
 Long term debt, net of current portion                   3,500         3,500
                                                       ----------------------
      Total liabilities                                   9,476        12,534

 Commitments and contingencies

 Common stock redeemable; 203,330 and 284,664
   shares, respectively                                   1,271         1,780

 SHAREHOLDERS' EQUITY
 Common stock, $.10 par value; 100,000,000 shares
   authorized; 5,722,806 and 5,480,550 shares
   issued and outstanding, respectively                     572           548
 Additional paid in capital                              37,028        36,805
 Retained (deficit) earnings                             (3,016)        3,178
 Cumulative other comprehensive loss                       (527)         (372)
                                                       ----------------------
      Total shareholders' equity                         34,057        40,159
                                                       ----------------------
      Total liabilities and shareholders' equity      $  44,804     $  54,473
                                                       ======================

              The accompanying notes are an integral part of these
                      consolidated financial statements.

<PAGE>


 INTERPHASE CORPORATION
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands except per share amounts)
 (unaudited)

 Three Months Ended June 30,                          Six Months Ended June 30,
   -------------------------                             --------------------
      2001        2000                                      2001       2000
   ---------------------                                 --------------------
  $   7,108    $  13,332   Revenues                     $  17,059   $  26,917
      8,403        6,067   Cost of sales                   13,294      12,156
   ---------------------                                 --------------------
     (1,295)       7,265   Gross margin                     3,765      14,761

      2,087        2,516   Research and development         4,300       5,070

      2,172        3,019   Sales and marketing              4,222       5,451
      1,031        1,108   General and administrative       2,126       2,207
                           Restructuring costs
      2,091            -     and other special charges      2,091           -
   ---------------------                                 --------------------
      7,381        6,643     Total operating expenses      12,739      12,728
   ---------------------                                 --------------------
     (8,676)         622   Operating (loss) income         (8,974)      2,033
   ---------------------                                 --------------------

        103          124   Interest, net                      186         201
       (184)         401   Other, net                        (221)        169
   ---------------------                                 --------------------

                          (Loss) income from
                            continuing operations before
     (8,757)       1,147    income taxes                   (9,009)      2,403

                          (Benefit) provision
     (2,751)         451    for income taxes               (2,815)        984
   ---------------------                                 --------------------

                          (Loss) income from
     (6,006)         696    continuing operations          (6,194)      1,419
   ---------------------                                 --------------------
                          Discontinued Operations
                            Gain on disposal of
          -            -    VOIP business, net of tax           -         571
   ---------------------                                 --------------------
  $  (6,006)   $     696  Net (loss) income             $  (6,194)  $   1,990
   =====================                                 ====================

                          (Loss) income from continuing
                            operations per share
  $   (1.05)   $    0.12      Basic EPS                 $   (1.08)  $    0.24
   ---------------------                                 --------------------

  $   (1.05)   $    0.11      Diluted EPS               $   (1.08)  $    0.22
   ---------------------                                 --------------------
                           Net (loss) income per share
  $   (1.05)   $    0.12      Basic EPS                 $   (1.08)  $    0.34
   ---------------------                                 --------------------
  $   (1.05)   $    0.11      Diluted EPS               $   (1.08)  $    0.31
   ---------------------                                 --------------------

      5,727        5,801   Weighted average common shares   5,742       5,823
   ---------------------                                 --------------------
                           Weighted average common and
      5,727        6,214     dilutive shares                5,742       6,324
   ---------------------                                 --------------------

              The accompanying notes are an integral part of these
                      consolidated financial statements.

<PAGE>

 INTERPHASE CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (unaudited)                                         Six Months ended June 30,
                                                       ----------------------
                                                         2001          2000
                                                       ----------------------
 Cash flow from operating activities:
   (Loss) income from continuing operations           $  (6,194)    $   1,419
   Gain on disposal of VOIP business                          -           571
   Adjustment to reconcile (loss) income from
     continuing operations to net cash provided
     by operating activities:
   Depreciation and amortization                          1,143         1,270
   Deferred income taxes                                     17          (367)
   Tax benefit from stock option exercises                   94           231
   Non-cash restructuring costs and other
     special charges                                      7,544             -

    Change in assets and liabilities:
        Trade accounts receivable                         9,090         2,681
        Inventories                                      (1,157)          515
        Prepaid expenses and other current assets        (2,741)          655
        Accounts payable, deferred revenue and
          accrued liabilities                            (1,061)         (204)
        Accrued compensation                               (765)         (577)
        Income taxes payable                                (78)         (194)
                                                       ----------------------
    Net adjustments                                      12,086         4,010
                                                       ----------------------
        Net cash provided by operating activities         5,892         6,000
 Cash flows from investing activities:
    Additions to property, equipment, capitalized
      software and leasehold improvements                  (459)         (848)
    Decrease (increase) in other assets                      84          (590)
    Cash received in sale of VOIP business                    -         1,230
    Proceeds from the sale of marketable securities       6,429         5,586
    Purchases of marketable securities, net of
      unrealized holding period gain or loss             (6,867)       (7,906)
                                                       ----------------------
        Net cash used by investing activities              (813)       (2,528)
 Cash flows from financing activities:
    Payments on debt                                     (1,154)       (1,106)
    Purchase of redeemable common stock                    (509)         (508)
    Proceeds from the exercise of stock options             153           377
                                                       ----------------------
        Net cash used by financing activities            (1,510)       (1,237)
                                                       ----------------------
 Net increase in cash and cash equivalents                3,569         2,235
 Cash and cash equivalents at beginning of period        10,587        10,988
                                                       ----------------------
 Cash and cash equivalents at end of period           $  14,156     $  13,223
                                                       ======================

 Supplemental Disclosure of Cash Flow Information:
 Income taxes paid                                    $     178     $   1,513
 Interest paid                                        $     213     $     317


              The accompanying notes are an integral part of these
                      consolidated financial statements.

<PAGE>

              NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS


 1.   BASIS OF PRESENTATION

 The accompanying  consolidated  interim  financial  statements  include  the
 accounts of Interphase  Corporation and its  wholly owned subsidiaries  (the
 "Company").  Significant  intercompany accounts and  transactions  have been
 eliminated.

 In September 1999, the Company completed the sale of its Voice Over Internet
 Protocol  ("VOIP")  businesses.   Accordingly,  the  Company's  consolidated
 financial statements  and  notes  included  herein,  for  all  2000  periods
 presented  reflect  the  VOIP  business  as  a  discontinued  operation   in
 accordance with Accounting  Principles Board Opinion  No. 30.   See  further
 discussion of the sale in Note 6.

 While the accompanying interim financial statements are unaudited, they have
 been prepared by the  Company pursuant to the  rules and regulations of  the
 Securities and  Exchange Commission.  In the  opinion  of the  Company,  all
 material  adjustments  and  disclosures  necessary  to  fairly  present  the
 results of such  periods have been  made.  Certain information and  footnote
 disclosures normally included in financial statements prepared in accordance
 with accounting principles generally accepted in the United States have been
 condensed or omitted pursuant to the rules and regulations of the Securities
 and  Exchange  Commission.  These financial  statements  should be  read  in
 conjunction with the consolidated financial statements and notes thereto for
 the year ended December 31, 2000.

 Certain prior period amounts have been reclassified to conform with the 2001
 presentation.


 2.   RESTRUCTURING COSTS AND OTHER SPECIAL CHARGES

 In the second quarter  2001, the Company  announced a restructuring  program
 designed to  allow  the  Company  to  continue  aggressive  funding  of  its
 development organizations,  while preserving  cash levels  and securing  new
 design-ins.  As a result of the restructuring program, continued decline  in
 predicted revenue  and  customers'  cautious expectations  that  the  market
 recovery may now be delayed until  2002, the Company recorded  restructuring
 costs and other  special charges of  $2.1 million,  classified as  operating
 expenses, and an  additional excess and  obsolete inventory  charge of  $4.4
 million, classified  as  cost  of sales.  The  following paragraphs  provide
 specific information  regarding the  restructuring costs  and other  special
 charges which were recorded during the second quarter of 2001.

 The restructuring program resulted in the reduction of approximately 22%  of
 the Company's workforce, impacting all business functions in North  America.
 As a result, the Company recorded a workforce reduction charge of   $483,000
 relating  to severance and fringe benefits.  In addition, the Company  wrote
 off $123,000 of non-utilized fixed assets.

 Due to the decline in current business conditions, decline in legacy product
 revenues and  the diminished  expected future  benefits from  the  purchased
 intangibles related  to  the acquisition  of  Synaptel, S.A.  in  1996,  the
 Company recorded  a charge  of $1.5  million related  to the  impairment  of
 developed  technology  and assembled  workforce.  These  intangible  assets,
 purchased in  the acquisition  of Synaptel,  S.A., relate  to the  Company's
 legacy product lines.  In the  second quarter 2000, the Company developed  a
 strategy to end-of-life many  of its legacy products  in an effort to  focus
 its resources on its new product lines.  This strategy resulted in increased
 sales of legacy products in 2000; however, legacy product sales declined  in
 the first quarter  of 2001  and declined further  in the  second quarter  of
 2001.   Management does  not expect  significant  revenues from  its  legacy
 product lines in future periods.

 The Company wrote off $5.9 million  of excess and obsolete inventory  during
 the second quarter  of 2001, resulting  in an additional  charge to cost  of
 sales of $4.4 million.   Approximately 74% of  the write-off relates to  the
 Company's legacy product lines.   The remaining $1.5  million of excess  and
 obsolete inventory written off was  charged against the already  established
 reserve.  This additional excess and obsolete inventory charge was due to  a
 sudden and significant decrease in predicted  revenue and was calculated  in
 accordance with the Company's established policy.

 Only the severance  and fringe benefit  payments relating  to the  workforce
 reduction impacted cash flow.  Most remaining cash expenditures relating  to
 workforce reductions  and termination  of agreements  will  be paid  by  the
 fourth quarter of 2001.

 A summary of the restructuring costs  and other special charges is  outlined
 as follows (in thousands):

                                             Second Quarter       Accrual
                               Total       Cash Payments and    Balance at
                              Charge        Non-Cash Charges   June 30, 2001
                              ----------------------------------------------
 Workforce reduction         $   483             $    17           $ 466
 Fixed asset write-off           123                 123               -
 Impairment of
   purchased intangibles       1,485               1,485               -
 Excess and obsolete
   inventory charge            4,394               4,394               -
                              ----------------------------------------------
                             $ 6,485             $ 6,019           $ 466
                              ==============================================


 3.   CREDIT FACILITY

 The Company maintains a  credit facility with a  bank.  The credit  facility
 consists of an $8.5 million acquisition term loan, a $2.5 million  equipment
 financing   facility  and  a $5  million  revolving  credit  facility.   The
 revolving credit facility matures June 30,  2002, and bears interest at  the
 bank's  base  rate  (currently 6.75%).  Management  intends  to  extend  the
 revolving credit facility past the current  expiration date.  The term  loan
 is  payable  in  equal  quarterly  installments  of  $548,000  plus  accrued
 interest, with  the remaining  balance scheduled  to be  paid in  the  third
 quarter of  2001.   The Company  has the  ability to  satisfy the  quarterly
 payments on the  term notes through  borrowings under  the revolving  credit
 component of the credit facility.  The credit facility is collateralized  by
 marketable  securities,  accounts  receivable  and  equipment.   The  credit
 facility includes certain restrictive  financial covenants including,  among
 others, tangible  net  worth,  total  liabilities  to  tangible  net  worth,
 interest coverage  and  quick ratio  and  is  subject to  a  borrowing  base
 calculation.  Due to  the loss from operations  and  the restructuring costs
 and other  special charges  incurred during  the  second quarter  2001,  the
 Company was out  of compliance  with certain of  its covenants  at June  30,
 2001, however, the Company  obtained a waiver  from its bank.   At  June 30,
 2001, the Company had  borrowings of $4 million  and availability under  the
 revolving credit facility was $1.5 million.


 4.   COMPREHENSIVE INCOME

 The following table shows the Company's comprehensive income (in thousands):

                                      Three months ended     Six months ended
                                           June 30,              June 30,
                                        2001      2000       2001       2000
                                      ---------------------------------------
 Net (loss) income                   $ (6,006)   $  696   $ (6,194)   $ 1,990
 Other comprehensive income:
 Unrealized holding (loss) gain
   arising during period, net of tax      (49)     (732)        52       (709)
 Foreign currency translation
   adjustment                             (76)      (12)      (207)       (82)
                                      ---------------------------------------
 Comprehensive (loss) income         $ (6,131)   $  (48)  $ (6,349)   $ 1,199
                                      =======================================


 5.   NET INCOME PER COMMON AND COMMON DILUTIVE SHARE

 The following table shows the calculations of the Company's weighted average
 common and dilutive equivalent shares outstanding (in thousands):

                                      Three months ended     Six months ended
                                            June 30,              June 30,
                                        2001       2000       2001       2000
                                      ----------------------------------------
 Weighted average shares outstanding    5,727      5,801      5,742     5,823
 Dilutive impact of stock options           -        413          -       501
                                      ----------------------------------------
 Total weighted average common and
   common equivalent shares
   outstanding                          5,727      6,214      5,742     6,324
                                      ----------------------------------------
 Anti-dilutive weighted shares
   excluded from shares outstanding     2,009        319      1,117       271



 6.   DISPOSITION OF ASSETS

 In June 1999, the Company sold an 80% interest in part of its VOIP business,
 Quescom, for $1,172,000 to the former owner of Interphase's Paris Operation.
 The sales proceeds  consisted of  $300,000 due  at closing  with a  $830,000
 technology license  fee.  In  2000,  the  remaining  $830,000  due  for  the
 technology license fee was collected and  recorded as a gain on disposal  of
 discontinued operations.  Additionally,  in 2000, the  Company sold its  20%
 interest in Quescom for $400,000, resulting in a gain of $91,000.  The total
 gain in 2000 was $571,000 net of $350,000 tax.


 7.   SEGMENT INFORMATION

 The  Company  is  principally  engaged   in  the  design,  development   and
 manufacturing of high-performance  connectivity products utilizing  advanced
 technologies being used  in next generation  telecommunication networks  and
 enterprise data/storage networks.  Except for revenue performance, which  is
 monitored by  product line,  the chief  operating decision-makers  generally
 review financial information presented on a consolidated basis,  accompanied
 by information  by  geographic  region  for  purposes  of  making  operating
 decisions and  assessing financial  performance.   Accordingly, the  Company
 considers itself to be in a single industry segment.

 Geographic revenue and long lived assets related to North America and  other
 foreign countries as of and for the  three month and six month period  ended
 June 30, 2001 and 2000 are as follows:  (in thousands)

                 Three months ended June 30:   Six months ended June 30:
 Revenue                   2001         2000         2001        2000
 ---------------------------------------------------------------------
 North America           $ 5,769     $ 11,293     $ 14,004    $ 22,547
 Europe                    1,127        1,501        2,565       3,359
 Pac Rim                     212          538          490       1,011
                          --------------------------------------------
 Total                   $ 7,108      $13,332     $ 17,059     $26,917
                          ============================================

 Geographic long-lived  assets exclude  corporate assets.   Corporate  assets
 include cash and cash equivalents, marketable securities and intangibles.

 Long lived assets            June 30, 2001         Dec. 31, 2000
 ----------------------------------------------------------------
 North America                    $ 1,464                 $ 1,995
 Europe                               183                     215
 Pacific Rim                            4                       2
                                   ------------------------------
 Total                            $ 1,651                 $ 2,212
                                   ==============================
 Additional information regarding revenue by product line is as follows:  (in
 thousands)

                      Three months ended June 30: Six months ended June 30:
 Revenue                 2001          2000          2001          2000
 -----------------------------------------------------------------------
 Storage               $ 2,361       $ 5,075       $ 4,830      $ 12,330
 Broadband Telecom       1,382         4,148         3,941         6,716
 Combo                   2,075           262         3,201           370
 LAN                       953         3,069         3,916         6,116
 WAN                       186           522           526           913
 Other                     151           256           645           472
                        ------------------------------------------------
 Total                 $ 7,108      $ 13,332      $ 17,059      $ 26,917
                        ================================================


 8.  RECENTLY ISSUED ACCOUNTING POLICIES

 On January 1, 2001, the Company  adopted Statements of Financial  Accounting
 Standards ("SFAS")  No.  133,  "Accounting for  Derivative  Instruments  and
 Hedging Activities," as amended by SFAS No. 137 and SFAS No. 138.  SFAS  No.
 133 requires all derivatives to be recorded  at fair value.  Changes  in the
 fair  values  of  derivatives  are  recorded  in  either  the  statement  of
 operations or as a component of  comprehensive income, depending on  whether
 the derivative qualifies as  a hedge, and depending  on the type of  hedging
 relationship that exists.  Adoption of this standard did not have a material
 effect on the Company's financial statements.

 In June 2001, the Financial Accounting Standards Board issued SFAS No.  141,
 "Business  Combinations",  and  No.  142,  "Goodwill  and  Other  Intangible
 Assets." The most significant changes made by SFAS No. 141 are: 1) requiring
 that the purchase method of accounting be used for all business combinations
 initiated after June 30, 2001; and 2) establishing specific criteria for the
 recognition of  intangible assets  separately from  goodwill. SFAS  No.  142
 primarily addresses  the accounting  for  acquired goodwill  and  intangible
 assets.  The provisions of SFAS No.  142 will be effective for fiscal  years
 beginning after December 15, 2001. The most significant changes made by SFAS
 No. 142  are: 1)  goodwill and  indefinite-lived intangible  assets will  no
 longer be  amortized; 2)  goodwill will  be  tested, annually  and  whenever
 events or circumstances  occur indicating that  goodwill might be  impaired;
 and 3) the amortization period of  intangible assets with finite lives  will
 no longer be limited to forty  years.  The Company  will adopt SFAS No.  141
 effective July  1, 2001,  and SFAS  No. 142  effective January  1, 2002.  In
 connection with the adoption of SFAS No.  142, the Company will be  required
 to perform a transitional goodwill impairment  assessment.  The adoption  of
 this standard in  2002 will result  in an annual  reduction in  amortization
 expense of $240,000 related to the Company's existing goodwill.  The Company
 has not yet determined if there will be an impairment of its goodwill as  it
 is currently assessing the accounting  implications of adopting of  adopting
 SFAS No. 141 and No. 142.
<PAGE>


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

 This report contains  forward-looking statements with  respect to  financial
 results  and certain  other matters.  These  statements are  made under  the
 "safe harbor" provisions of the Private Securities Litigation Reform Act  of
 1995 and involve a number of risks and uncertainties that could cause actual
 results to differ materially from  those in the forward-looking  statements.
 Such risks and  uncertainties include, without  limitation, fluctuations  in
 demand, the quality and price of similar or comparable networking  products,
 access to sources of capital, general  economic conditions in the  Company's
 market areas and that future sales and growth rates for the industry and the
 Company could be lower than anticipated.


 RESULTS OF OPERATIONS

 In September 1999,  the Company  completed the  sale of  its remaining  VOIP
 business.  Accordingly, the Company's consolidated financial statements  and
 notes included  herein, for  all 2000  periods  presented reflect  the  VOIP
 business  as  a  discontinued   operation  in  accordance  with   Accounting
 Principles Board Opinion No. 30.

 Revenues consist  of product  and service  revenues  and are  recognized  in
 accordance  with   SEC  Staff   Accounting   Bulletin  No.   101,   "Revenue
 Recognition."  Product revenues are recognized upon shipment, provided  fees
 are fixed and determinable, a customer order is obtained, and collection  is
 probable.  Revenues from reseller  agreements are typically recognized  when
 the product is sold through to the end customer.  Deferred revenue  consists
 of revenue from reseller arrangements and certain arrangements with extended
 payment terms.  Service revenue is recognized as the services are performed.

 Revenues:  Total revenues for the three months ended June 30, 2001  ("second
 quarter 2001") were  $7.1 million.   Revenues for  the same  period in  2000
 ("comparative period") were  $13.3 million.   The reduction  in revenues  is
 generally due  to the  continued market  slowdown, which  has  significantly
 reduced computer and communications  equipment purchasing by key  customers,
 as  well as the discontinuance of several lines of legacy technologies.  The
 decrease in  revenues  was  partially offset  by  revenue  growth  in  Combo
 technologies.  Combo technologies grew to $2.1 million in the second quarter
 2001 from just $262,000 in the comparative period.

 Two customers individually accounted for 36% and 17% of the Company's second
 quarter 2001 revenue.  In the comparative period, two customers individually
 accounted for 21% and 12% of the Company's revenue.

 Total revenues for the  six months ended June  30, 2001 were $17.1  million.
 Revenues for the six  months  ended June  30, 2000 were  $26.9 million.  The
 reduction in revenues  is generally due  to the  continued market  slowdown,
 which  has  significantly  reduced  computer  and  communications  equipment
 purchasing by key customers, as well as the discontinuance of several  lines
 of legacy technologies.  In addition, approximately 17% of the revenues  for
 the six months ended  June 30, 2000 were  attributable to Hewlett  Packard's
 purchase of  a single  Fibre  Channel product,  which  ceased in  the  first
 quarter of 2000.  The decrease  in revenues was partially offset by  revenue
 growth in Combo technologies.  Combo  technologies grew to $3.2 million  for
 the six months ended  June 30, 2001  from just $370,000  for the six  months
 ended June 30, 2000.

 Gross Margin:  Gross margin as a percentage of sales was a negative 18%  for
 the second  quarter 2001  and 54%  for the  comparative period.   The  gross
 margin percentage for the six  months ended June 30,  2001 and 2000 was  22%
 and 55%, respectively.   Most of  the decline in  the gross  margin rate  is
 attributable to the additional excess and obsolete inventory charge of  $4.4
 million incurred  in  the second  quarter  2001,  as described  in  Note  2.
 However, the change in product mix, as well as the under-utilization of  the
 Company's manufacturing facility also contributed  to the reduction.   Gross
 margin as a percentage  of sales, before  considering the additional  excess
 and obsolete inventory charge, was 44%  and 48% for the second quarter  2001
 and the six months ended June 30, 2001 respectively.

 Research and Development:   The Company's investment  in the development  of
 new products through research and development was $2.1 million in the second
 quarter 2001 and $2.5 million in the comparative period.  As a percentage of
 revenue, research and development  expenses were 29%  in the second  quarter
 2001 and 19% in the comparative  period.  Research and development  expenses
 for the six months ended June 30, 2001  and 2000 were $4.3 million and  $5.1
 million, respectively.  Research and development costs, in total,  decreased
 as spending on  legacy sustaining  engineering was  down, in  line with  the
 Company's exit from legacy technologies through its end-of-life program.

 Sales and Marketing:  Sales and marketing expenses were $2.2 million in  the
 second  quarter  2001  and  $3 million  in  the  comparative period.   As  a
 percentage of revenue, sales and marketing  expenses were 30% in the  second
 quarter 2001  and  23% in  the  comparative  period.   Sales  and  marketing
 expenses for the six months ended June  30, 2001 and 2000 were $4.2  million
 and $5.5  million,  respectively.   The  decrease  in  sales  and  marketing
 expense, in  total, is  primarily the  result of  decreased revenues,  which
 resulted in reduced sales commissions and bonuses for the period.

 General and Administrative:   General  and administrative  expenses were  $1
 million in  the second  quarter 2001  and $1.1  million in  the  comparative
 period.  As  a percentage of  revenue, general  and administrative  expenses
 were 15%  in the  second quarter  2001  and 8%  in the  comparative  period.
 General and administrative expenses for the  six months ended June 30,  2001
 and 2000 were $2.1 million and $2.2 million, respectively.  The increase  as
 a percentage of revenue is due to decreased sales volume.

 Interest, Net:  Interest  income, net of interest  expense, was $103,000  in
 the second  quarter 2001,  down slightly  from $124,000  in the  comparative
 period.  Interest income, net of interest expense, for the six months  ended
 June 30,  2001  and  2000  was  $186,000  and $201,000,  respectively.   The
 decrease relates  to the  decline in  investment rates  of return  partially
 offset by lower debt levels and a lower borrowing interest rate.

 Other Expense, Net:  Other expense, net, was $184,000 in the second  quarter
 2001 and was in  an income position of  $401,000 in the comparative  period.
 Other expense, net for the six months  ended June 30, 2001 was $221,000  and
 was in an  income position of  $169,000 for the  six months  ended June  30,
 2000.  Other expense,  net primarily reflects  the amortization of  goodwill
 and purchased  intangibles  related  to  a  1996  acquisition  of  Synaptel.
 However, during the second quarter of  2000, the Company engaged in  hedging
 transactions on certain marketable  securities received in  the sale of  its
 VOIP business resulting in a gain  of approximately $613,000.  Other  income
 for the six  months ended June  30, 2001 includes  proceeds received in  the
 first  quarter  of  2001  related  to  the  settlement  of  a  lawsuit   for
 approximately $130,000.

 All of the Company's goodwill is  associated with the entire company  rather
 than any  specific identifiable  asset or  product  line. Each  quarter  the
 Company evaluates  whether an  impairment of  this enterprise  goodwill  may
 exist by comparing the book value of its common stock to the product of  (i)
 the number of shares of  common stock issued and  outstanding at the end  of
 the quarter and (ii) the market price of the common stock at the end of  the
 quarter. If the product of shares  and market price exceeds the book  value,
 impairment does not exist. If the product of shares and market price is less
 than book value, the Company evaluates  whether the condition is other  than
 temporary based (i) primarily on whether fluctuations in the Company's stock
 price subsequent to the quarter-end result in a product of shares and market
 price that exceeds book value and  (ii) on all other available evidence.  If
 the product of shares and market price is continuously less than book  value
 based on daily closing market prices  for the prior six months, the  Company
 evaluates whether  the condition  is other  than temporary  considering  all
 other available evidence. If the Company  determines the condition is  other
 than temporary,  additional amortization  is  recorded for  the  impairment,
 equal to the excess book value at the end of the quarter.

 The Company may record an additional goodwill amortization charge  as of the
 end of any  quarter when  the product  of the  number of  shares issued  and
 outstanding and the closing  market price of its  common stock is less  than
 the book value of  its common stock. Management  does not believe that  they
 can predict the common  stock price and accordingly,  are unable to  predict
 when, if ever, such additional goodwill  amortization might be recorded.  At
 June 30,  2001,  the  Company  had 5.7  million  common  shares  issued  and
 outstanding with a book value of $37.6 million; therefore, the common  stock
 price would had  to have  been below  $6.60 per  share before  consideration
 would have been given to recording additional goodwill amortization. At June
 30, 2001,  the  common  stock  price  was  $5.15.  No  impairment  loss  was
 recognized because  the Company  believed, after  considering all  available
 evidence, the condition to be a temporary decline in the price of its  stock
 caused by  market volatility,  as prior  to June  30, 2001,  the product  of
 shares and market  price exceeded book  value for  substantially the  entire
 preceding six months. Future calculations of whether an impairment may exist
 will be affected by  any future issuances or  purchases of common stock,  by
 amortization of existing  goodwill, by any  goodwill recorded in  connection
 with future acquisitions,  by any  other changes to  the book  value of  the
 common stock, and by the future common stock price.  The Company is adopting
 SFAS No. 142  effective January  1, 2002,  and will  conform its  accounting
 policy on assessing impairment of goodwill to that standard at that time.

 Income Taxes:   The  Company's effective  income tax  rate was  31% for  the
 second quarter  2001 and  39% for  the comparative  period.   The  Company's
 effective income tax rate was 31% for the six months ended June 30, 2001 and
 41% for the six months ended June 30, 2000.  The rate reduction is due to an
 increase in non-deductible intangible amortization related to the impairment
 of developed technology and assembled workforce as described in Note 2.

 Net (Loss) Income:   The Company reported a  net loss of  $6 million in  the
 second quarter 2001 and  net income of $696,000  in the comparative  period.
 The Company reported a  net loss of  $6.2 million for  the six months  ended
 June 30, 2001 and net income of $2 million for the six months ended June 30,
 2000.


 LIQUIDITY AND CAPITAL RESOURCES

 The Company's cash,  cash equivalents and  marketable securities  aggregated
 $21.4 million at June 30, 2001, and $17.5 million at December 31, 2000.  The
 growth in  cash, cash  equivalents and  marketable securities  is  primarily
 attributable to strong cash collections on accounts receivable.

 At June  30, 2001,  the  Company had  no  material commitments  to  purchase
 capital assets.   The Company's  significant long-term  obligations are  its
 operating leases on its facilities, future  debt payments and repurchase  of
 Interphase common stock from Motorola, Inc. (described below).  The  Company
 has not  paid any  dividends since  its inception  and does  not  anticipate
 paying any dividends in 2001.

 The Company has a $16 million credit facility with a financial  institution.
 This credit facility  includes an  $8.5 million  term loan,  a $2.5  million
 equipment loan and a  $5 million revolving credit  facility.  The term  loan
 and equipment loans  are due in  quarterly installments  with the  remaining
 balance scheduled to be paid  in the third quarter  of 2001.  The  revolving
 credit facility expires  in June  2002.   Management intends  to extend  the
 revolving credit facility past the current expiration date.  As of June  30,
 2001, the current portion of this credit facility is approximately $529,000.

 Effective October 1998,  the Company approved  a stock repurchase  agreement
 with Motorola, Inc. to purchase ratably from October 1998 to July 2002,  all
 of the shares owned by Motorola for $4.1 million at $6.25 per share.   Under
 the terms of the  agreement, Motorola retains the  right as an equity  owner
 and has assigned its voting rights to the Company.  The Company cancels  the
 stock upon  each repurchase.  Prior to  the repurchase  agreement,  Motorola
 owned approximately  12% of  the Company's  outstanding common  stock.   The
 future scheduled payments are classified as  redeemable common stock in  the
 accompanying consolidated  balance sheets.   As  of June  30, 2001,  456,670
 shares have been repurchased  for $2.9 million  and retired; 203,330  shares
 remain to be repurchased.

 The Company expects that its  cash, cash equivalents, marketable  securities
 and proceeds from its credit facility  will be adequate to meet  foreseeable
 cash needs for the next 12 months.


                                   PART II

 OTHER INFORMATION

 Item 6.   REPORTS ON FORM 8-K

           None

           Exhibits

           None

<PAGE>


 SIGNATURE

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


                                         INTERPHASE CORPORATION
                                         (Registrant)
 Date:  August 14, 2001

                                         /s/ Steven P. Kovac
                                         ------------------------------
                                         Steven P. Kovac
                                         Chief Financial Officer,
                                         Vice President of Finance and
                                         Treasurer
                                         (Principal Financial and
                                         Accounting Officer)