<PAGE>
                                  UNITED STATES
                       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, 2002 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 12, 2002
                 -----                        ------------------------------
    Common Stock, $.10 par value                        5,514,276


<PAGE>



                             INTERPHASE CORPORATION

                                      INDEX



<Table>
<S>                 <C>                                                               <C>
Part I - Financial Information

         Item 1.    Consolidated Interim Financial Statements

                    Consolidated Balance Sheets as of June 30, 2002 (unaudited)
                    and December 31, 2001                                                    3

                    Consolidated Statements of Operations for the three months
                    and six months ended June 30, 2002 and 2001 (unaudited)                  4

                    Consolidated Statements of Cash Flows for the six months
                    ended June 30, 2002 and 2001 (unaudited)                                 5

                    Notes to Consolidated Interim Financial Statements                    6-11

         Item 2.    Management's Discussion and Analysis of
                    Financial Condition and Results of Operations                        12-17


PART II - OTHER INFORMATION

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

                    Signature                                                               18
</Table>





                                       2
<PAGE>
INTERPHASE CORPORATION

CONSOLIDATED BALANCE SHEETS
(in thousands, except number of share data)

<Table>
<Caption>
                                                                         (unaudited)
                                                                            Jun. 30,                  Dec. 31,
                                                                              2002                      2001
                                                               ---------------------------  -------------------
<S>                                                                      <C>                        <C>
ASSETS

Cash and cash equivalents                                                $    13,736                $    10,415
Marketable securities                                                          5,348                      5,216
Restricted cash                                                                3,500                      3,500
Trade accounts receivable, less allowances for uncollectible
  accounts and returns of $270 and $370, respectively                          4,617                      5,046
Inventories                                                                    3,792                      6,655
Prepaid expenses and other current assets                                        469                        480
Income taxes receivable                                                            -                      2,476
Deferred income taxes                                                          1,644                      1,636
                                                               ---------------------------  -------------------
     Total current assets                                                     33,106                     35,424

Machinery and equipment                                                        6,293                      6,117
Leasehold improvements                                                         2,941                      2,936
Furniture and fixtures                                                           557                        543
                                                               ---------------------------  -------------------
                                                                               9,791                      9,596
Less-accumulated depreciation and amortization                                (9,090)                    (8,653)
                                                               ---------------------------  -------------------
     Total property and equipment, net                                           701                        943

Capitalized software, net                                                        282                        335
Deferred income taxes, net                                                     2,629                      2,373
Other assets                                                                     204                        168
                                                               ---------------------------  -------------------
     Total assets                                                        $    36,922                $    39,243
                                                               ===========================  ===================

LIABILITIES AND SHAREHOLDERS' EQUITY

     LIABILITIES
Accounts payable                                                         $     1,036                  $     921
Deferred revenue                                                                 235                        110
Accrued liabilities                                                            1,498                      1,615
Accrued compensation                                                           1,259                      1,177
                                                               ---------------------------  -------------------
     Total current liabilities                                                 4,028                      3,823

Long term debt                                                                 3,500                      3,500
                                                               ---------------------------  -------------------
     Total liabilities                                                         7,528                      7,323

     COMMITMENTS AND CONTINGENCIES
Common stock redeemable; 40,662 and 121,996 shares,
    respectively                                                                 254                        762

     SHAREHOLDERS' EQUITY
Common stock, $.10 par value; 100,000,000 shares
    authorized; 5,516,076 and 5,518,476 shares issued and
    outstanding, respectively                                                    552                        552
Additional paid in capital                                                    37,310                     37,324
Retained deficit                                                              (8,453)                    (6,394)
Cumulative other comprehensive loss                                             (269)                      (324)
                                                               ---------------------------  -------------------
     Total shareholders' equity                                               29,140                     31,158
                                                               ---------------------------  -------------------
     Total liabilities and shareholders' equity                          $    36,922                $    39,243
                                                               ===========================  ===================
</Table>

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



                                       3
<PAGE>

INTERPHASE CORPORATION

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


<Table>
<Caption>
     Three Months Ended Jun. 30,                                                  Six Months Ended Jun. 30,
-----------------------------------                                          ----------------------------------
             2002             2001                                                       2002              2001
-----------------------------------                                          ----------------------------------
<S>                      <C>          <C>                                          <C>              <C>
        $   6,016        $   7,108    Revenues                                     $   12,316       $    17,059
            4,454            8,403    Cost of sales                                     8,262            13,294
-----------------------------------                                           ----------------------------------
            1,562           (1,295)   Gross margin                                      4,054             3,765

            1,713            2,087    Research and development                          3,362             4,300
            1,610            2,172    Sales and marketing                               2,981             4,222
              815            1,031    General and administrative                        1,569             2,126
                                      Restructuring costs and other special
                -            2,091    charges                                               -             2,091

-----------------------------------                                           ----------------------------------
            4,138            7,381       Total operating expenses                       7,912            12,739
-----------------------------------                                           ----------------------------------

           (2,576)          (8,676)    Operating loss                                  (3,858)           (8,974)
-----------------------------------                                           ----------------------------------

              134              103    Interest, net                                       327               186
              (55)            (184)    Other, net                                           1              (221)
-----------------------------------                                           ----------------------------------

           (2,497)          (8,757)    Loss before income taxes                        (3,530)           (9,009)

           (1,004)          (2,751)    Benefit for income taxes                        (1,471)           (2,815)
-----------------------------------                                           ----------------------------------

      $    (1,493)      $   (6,006)     Net loss                                   $   (2,059)      $    (6,194)
===================================                                           ==================================

                                      Loss per share
      $     (0.27)      $    (1.05)           Basic EPS                            $    (0.37)      $     (1.08)
-----------------------------------                                           ----------------------------------
      $     (0.27)      $    (1.05)           Diluted EPS                          $    (0.37)      $     (1.08)
-----------------------------------                                           ----------------------------------

            5,565            5,727    Weighted average common shares                    5,586             5,742
-----------------------------------                                           ----------------------------------
                                      Weighted average common and dilutive
            5,565            5,727    shares                                            5,586             5,742
-----------------------------------                                           ----------------------------------
</Table>

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


                                       4
<PAGE>


INTERPHASE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

<Table>
<Caption>
                                                                               Six Months ended Jun. 30,
                                                                       ----------------------------------------
                                                                               2002                2001
                                                                       ----------------------  ----------------
<S>                                                                           <C>                 <C>
CASH FLOW FROM OPERATING ACTIVITIES:
  Net loss                                                                    $     (2,059)       $    (6,194)
  Adjustment to reconcile net loss to net cash provided by
    operating activities:
  Allowance for uncollectible accounts and returns                                     100                110
  Depreciation and amortization                                                        433              1,143
  Deferred income taxes                                                               (264)                17
  Tax benefit from stock option exercises                                                -                 94
  Non-cash restructuring costs and other special charges                                 -              6,002
   Change in assets and liabilities:
       Trade accounts receivable                                                       329              8,978
       Inventories                                                                   2,863                385
       Prepaid expenses and other current assets                                        17                163
       Income taxes receivable                                                       2,476             (2,913)
       Other assets                                                                    (21)               (18)
       Accounts payable, deferred revenue and accrued
        liabilities                                                                     88               (983)
       Accrued compensation                                                             12               (717)
       Income tax payable                                                                -                (78)
       Other                                                                           359               (256)
                                                                       -----------------------  ---------------
   Net adjustments                                                                   6,392             11,927
                                                                       -----------------------  ---------------
       Net cash provided by operating activities                                     4,333              5,733
CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property, equipment, capitalized software
    and leasehold improvements
                                                                                      (121)              (276)
   Proceeds from sale of marketable securities                                         864              6,429
   Purchases of marketable securities, net of unrealized
    holding period gain or loss                                                     (1,010)            (6,763)
                                                                       -----------------------  ---------------
       Net cash used by investing activities                                          (267)              (610)
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on debt                                                                      -             (1,154)
   Purchase of redeemable common stock                                                (508)              (509)
   Purchase of common stock                                                            (14)                 -
   Proceeds from the exercise of stock options                                           -                153
                                                                       -----------------------  ---------------
       Net cash used by financing activities
                                                                                      (522)            (1,510)
                                                                       -----------------------  ---------------
Effect of exchange rate changes on cash and cash equivalents                          (223)               (44)
                                                                       -----------------------  ---------------
Net increase in cash and cash equivalents                                            3,321              3,569
Cash and cash equivalents at beginning of period                                    10,415             10,587
                                                                       -----------------------  ---------------
Cash and cash equivalents at end of period                                    $     13,736        $    14,156
                                                                       =======================  ===============
</Table>

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



                                       5
<PAGE>
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS


1.  BASIS OF PRESENTATION

Interphase Corporation and subsidiaries ("Interphase" or the "Company") enables
rapid platform design and integration for the global voice and data
communications markets through custom and off-the-shelf communications
equipment, embedded software development suites, and systems integration and
consulting services for telecom and enterprise networks. The company's products
connect computer and telecommunication servers to Wide Area Networks (WANs),
Local Area Networks (LANs) and Storage Area Networks (SANs) using Asynchronous
Transfer Mode (ATM), Ethernet, Signaling System 7 (SS7), IP, Fibre Channel,
HDLC, Frame Relay and Integrated Services Digital Network (ISDN) technologies.

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

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, 2001.

Certain prior period amounts within the Consolidated Statements of Cash Flows
have been reclassified to conform with the 2002 presentation.

The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, requires Company management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Areas involving significant estimates are the allowance for bad debts, warranty
reserves, allowance for returns and inventory valuation.


                                       6
<PAGE>

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 regarding market recovery, 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 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
nonutilized fixed assets.

Due to the decline in 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 during the second quarter 2001. 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 continued to decline through the second quarter of 2001. Management
did 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.



                                       7
<PAGE>


Only the severance and fringe benefit payments relating to the workforce
reduction impacted cash flow. A summary of the restructuring costs and other
special charges is outlined as follows (in thousands):

<Table>
<Caption>
                                                  Second
                                                 Quarter
                                                  Cash
                                                 Payments        Third         Fourth
                                                   and          Quarter        Quarter           Accrual
                                  Total          Noncash         Cash            Cash           Balance at
                                 Charge          Charges        Payments       Payments       Dec. 31, 2001
                              -------------- ---------------- -------------- -------------- ------------------
<S>                             <C>               <C>            <C>            <C>               <C>
Workforce reduction            $    483           $   17         $ 384          $ 82              $ -
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         $ 384          $ 82              $ -
                               ============= ================ ============== ============== ==================
</Table>

3. INVENTORIES

Inventories are valued as the lower of cost or market and include material,
labor and manufacturing overhead. Cost is determined on a first-in, first-out
basis (in thousands):

<Table>
<Caption>
                                                                Jun. 30, 2002      Dec. 31, 2001
                                                              ------------------ ------------------
<S>                                                              <C>                 <C>
Raw Materials                                                    $  2,751            $  4,740
Work-in-Process                                                       786               1,397
Finished Goods                                                        255                 518
                                                              ------------------ ------------------
Total                                                            $  3,792            $  6,655
                                                              ================== ==================
</Table>

Valuing inventory at the lower of cost or market involves an inherent level of
risk and uncertainty due to technology trends in the industry and customer
demand for our products. Future events may cause significant fluctuations in our
operating results.


                                       8
<PAGE>

4. CREDIT FACILITY

The Company has a $5 million revolving credit facility with a bank. The
revolving credit facility matures on June 30, 2003 and is secured throughout the
term of the credit facility by a ninety-day certificate of deposit issued by the
bank in the principal amount equal to the stated principal amount of the
promissory note. Management intends to extend the revolving credit facility past
the current expiration date. The certificate of deposit is reflected as
restricted cash on the accompanying balance sheet. The credit facility bears
interest at the rate of approximately 1% per annum above the certificate of
deposit rate, which is currently 1.44%, and includes certain restrictive
covenants including, among others, a tangible net worth restriction. As of June
30, 2002, the Company was in compliance with all restrictive covenants included
in the revolving credit facility. At June 30, 2002, the Company had borrowings
of $3.5 million and availability under the revolving credit facility was $1.5
million.

5.  COMPREHENSIVE INCOME

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

<Table>
<Caption>
                                              Three months ended June 30,       Six months ended June 30,
                                                 2002             2001             2002            2001
                                          ----------------- ---------------- --------------- ----------------
<S>                                              <C>              <C>             <C>              <C>
Net loss                                         $ (1,493)        $ (6,006)       $ (2,059)        $ (6,194)
Other comprehensive income:
Unrealized holding (loss) gain
arising during period, net of tax                     (51)             (49)             14               52
Foreign currency translation adjustment               222              (76)             41             (207)
                                          ----------------- ---------------- --------------- ----------------
Comprehensive loss                               $ (1,322)        $ (6,131)       $ (2,004)        $ (6,349)
                                          ================= ================ =============== ================
</Table>

6. NET INCOME PER COMMON AND COMMON DILUTIVE SHARE

Diluted earnings per share consist only of the dilutive impact of stock options,
using the treasury stock method. Due to the Company's net losses for the periods
presented, the effect of dilutive securities would have been antidilutive.
Options that would have otherwise been included in the calculation of diluted
earnings per common share were 12,869 and 20,444 stock options for the
three-month periods ended June 30, 2002 and 2001 and 31,778 and 91,180 stock
options for the six-month periods ended June 30, 2002 and 2001, respectively.


                                       9
<PAGE>

7. SEGMENT INFORMATION

The Company is principally engaged in the business of enabling rapid platform
design and integration for the global voice and data communications markets
through custom and off-the-shelf communications equipment, embedded software
development suites, and systems integration and consulting services for telecom
and enterprise networks. Except for revenue performance, which is monitored by
product line, the chief operating decision-makers review financial information
presented on a consolidated basis, 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 periods and six-month periods
ended June 30, 2002 and 2001 are as follows: (in thousands)

<Table>
<Caption>
                                      Three months ended June 30:                 Six months ended June 30:
Revenue                                2002                 2001                  2002                 2001
----------------------- --------------------- -------------------- --------------------- --------------------
<S>                                  <C>                   <C>                  <C>                 <C>
North America                        $ 4,610              $ 5,769              $  8,659             $ 14,004
Europe                                 1,100                1,127                 2,540                2,565
Pac Rim                                  306                  212                 1,117                  490
                        --------------------  -------------------  --------------------- --------------------
Total                                $ 6,016              $ 7,108              $ 12,316             $ 17,059
                        ===================== ==================== ===================== ====================
</Table>

Geographic long-lived assets consist of property and equipment and capitalized
software, net of the related accumulated depreciation and amortization. (in
thousands)

<Table>
<Caption>
Long-lived assets                 June 30, 2002      December 31, 2001
------------------------- ---------------------- ----------------------
<S>                                       <C>                  <C>
North America                             $ 810                $ 1,116
Europe                                      172                    160
Pacific Rim                                   1                      2
                          ---------------------- ----------------------
Total                                     $ 983                $ 1,278
                          ====================== ======================
</Table>

Additional information regarding revenue by product line is as follows: (in
thousands)

<Table>
<Caption>
                                         Three months ended June 30:               Six months ended June 30:
Revenue                                 2002                  2001                2002                 2001
------------------------- -------------------- --------------------- ------------------ ---------------------
<S>                                   <C>                    <C>               <C>                   <C>
Telecom                               $ 2,827               $ 1,382           $  4,986              $  3,941
Combo                                   2,111                 2,075              4,739                 3,201
LAN                                       486                   953              1,282                 3,916
Storage                                   313                 2,361                751                 4,830
WAN                                        24                   186                112                   526
Other                                     255                   151                446                   645
                          -------------------- --------------------- ------------------ ---------------------
Total                                 $ 6,016               $ 7,108           $ 12,316              $ 17,059
                          ==================== ===================== ================== =====================
</Table>

8.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and
SFAS 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



                                       10
<PAGE>

SFAS No. 142 are 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 are no longer 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 adopted
SFAS No. 141 effective July 1, 2001, and SFAS No. 142 effective January 1, 2002,
however, as the Company's goodwill was determined to be impaired and was written
off in the fourth quarter of 2001, the adoption of these standards did not have
a material effect on the Company's financial position or results of operations
for the periods ended June 30, 2002.

The following tables show the impact that SFAS No. 142 would have had if adopted
as of January 1, 2001: (in thousands)

<Table>
<Caption>
                                          Three months ended Jun. 30,         Six months ended Jun. 30,
                                            2002            2001              2002               2001
                                       --------------- ---------------- ------------------ ------------------
<S>                                          <C>              <C>                <C>               <C>
Reported net loss                            $(1,493)         $(6,006)           $(2,059)          $ (6,194)
Goodwill amortization                              -               60                  -                120
                                       --------------- ---------------- ------------------ ------------------
Adjusted net loss                            $(1,493)         $(5,946)           $(2,059)          $ (6,074)
                                       =============== ================ ================== ==================
</Table>

<Table>
<Caption>
                                           Three months ended Jun. 30,        Six months ended Jun. 30,
                                               2002            2001              2002               2001
                                       --------------- ---------------- ------------------ ------------------
<S>                                           <C>              <C>                <C>                <C>
Basic loss per share:
Reported net loss                             $(0.27)          $(1.05)            $(0.37)            $(1.08)
Goodwill amortization                              -             0.01                  -               0.02
                                       --------------- ---------------- ------------------ ------------------
Adjusted basic net loss per share             $(0.27)          $(1.04)            $(0.37)            $(1.06)
                                       =============== ================ ================== ==================
</Table>

<Table>
<Caption>
                                           Three months ended Jun. 30,        Six months ended Jun. 30,
                                               2002            2001              2002               2001
                                       --------------- ---------------- ------------------ ------------------
<S>                                           <C>              <C>                <C>                <C>
Diluted loss per share:
Reported net loss                             $(0.27)          $(1.05)            $(0.37)            $(1.08)
Goodwill amortization                              -             0.01                  -               0.02
                                       --------------- ---------------- ------------------ ------------------
Adjusted diluted net loss per share           $(0.27)          $(1.04)            $(0.37)            $(1.06)
                                       =============== ================ ================== ==================
</Table>

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived assets to
be disposed of. This statement supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of;"
however, this statement retains the fundamental provisions of SFAS No. 121 for
(a) recognition and measurement of the impairment of long-lived assets to be
held and used, and (b) measurement of long-lived assets to be disposed of by
sale. This statement also supersedes the accounting and reporting provisions of
APB Opinion No. 30, "Reporting the Results of Operations -- Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions" for segments of a business to be
disposed of. SFAS No. 144 is effective for fiscal years beginning after December
15, 2001. The Company adopted this standard effective January 1, 2002. The
adoption of this standard did not have a material effect on the Company's
financial position or results of operations for the periods ended June 30, 2002.


                                       11
<PAGE>

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

This report contains forward-looking statements about the business, financial
condition and prospects of the Company. These statements are made under the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. The actual results of the Company could differ materially from those
indicated by the forward-looking statements because of various risks and
uncertainties, including without limitation, changes in product demand, the
availability of products, changes in competition, economic conditions, various
inventory risks due to changes in market conditions and other risks indicated in
the Company's filings and reports with the Securities and Exchange Commission.
All the foregoing risks and uncertainties are beyond the ability of the Company
to control, and in many cases, the Company cannot predict the risks and
uncertainties that could cause its actual results to differ materially from
those indicated by the forward-looking statements. When used in this report, the
words "believes," "plans," "expects," "intent" and "anticipates" and similar
expressions as they relate to the Company or its management are intended to
identify forward-looking statements.

RESULTS OF OPERATIONS

Revenues consist of product and service revenues and are recognized in
accordance with SEC Staff Accounting Bulletin ("SAB") 101, "Revenue
Recognition." Product revenues are recognized upon shipment, provided fees are
fixed and determinable, a customer purchase order is obtained, and collection is
probable. Revenues from reseller agreements are recognized when the product is
sold through to the end customer unless an established return history supports
recognizing revenue upon shipment, less a provision for estimated sales returns.
The Company maintains its allowance for returns as a reduction to accounts
receivable. Deferred revenue consists of revenue from reseller arrangements and
certain arrangements with extended payment terms. Revenue from extended payment
terms is recognized in the period the payment becomes due if all other revenue
recognition criteria have been met. Service revenue is recognized as the
services are performed. The Company offers to its customers a limited warranty
that its products will be free from defect in the materials and workmanship for
a specified period. The Company has established a warranty reserve, as a
component of accrued liabilities, for any potential claims.

REVENUES: Total revenues for the three months ended June 30, 2002 were $6
million. Revenues for the same period in 2001 ("comparative period") were $7.1
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. Legacy revenues decreased from $1.7 million for the three
months ended June 30, 2001 to $513,000 for the three months ended June 30, 2002.
In addition to the decrease in legacy technologies, revenues from Fibre Channel
products decreased from $1.8 million for the three months ended June 30, 2001 to
$310,000 for the three months ended June 30, 2002. The decrease in legacy and
Fibre Channel revenues was partially offset by revenue growth in the telecom
product line. Telecom product revenues increased to $2.8 million in the second
quarter 2002 from $1.4 million in the comparative period.



                                       12
<PAGE>

Two customers individually accounted for 35% and 33% of the Company's second
quarter 2002 revenue. In the comparative period, two customers individually
accounted for 36% and 17% of the Company's revenue.

Total revenues for the six months ended June 30, 2002 were $12.3 million.
Revenues for the six months ended June 30, 2001 were $17.1 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. Legacy revenues decreased from $5.2 million for the six months
ended June 30, 2001 to $1.4 million for the six months ended June 30, 2002. In
addition to the decrease in legacy technologies, revenues from Fibre Channel
products decreased from $4.1 million for the six months ended June 30, 2001 to
$733,000 for the six months ended June 30, 2002. The decrease in legacy and
Fibre Channel revenues was partially offset by revenue growth in combo
technologies and the telecom product line. Combo technologies revenue increased
to $4.7 million for the six months ended June 30, 2002 from $3.2 million for the
six months ended June 30, 2001. Telecom product revenues increased to $5 million
for the six months ended June 30, 2002 from $3.9 million for the six months
ended June 30, 2001.

GROSS MARGIN: Gross margin as a percentage of sales was 26% for the second
quarter 2002 and a negative 18% for the comparative period. The increase in the
gross margin percentage primarily relates to an excess and obsolete inventory
charge of $4.4 million incurred during the second quarter 2001 compared to an
excess and obsolete inventory charge of $1.1 million incurred during the second
quarter 2002. Gross margin as a percentage of sales, before considering the
excess and obsolete inventory charges, was 44% for the second quarter 2002 and
the comparative period.

The gross margin percentage for the six months ended June 30, 2002 and 2001 was
33% and 22%, respectively. The increase in the gross margin percentage primarily
relates an excess and obsolete inventory charge of $4.4 million incurred during
the second quarter 2001 compared to an excess and obsolete inventory charge of
$1.1 million incurred during the second quarter 2002. This increase was
partially offset by the change in product mix. Gross margin as a percentage of
sales, before considering the excess and obsolete inventory charges, was 41% and
48% for the six months ended June 30, 2002 and 2001, respectively.

RESEARCH AND DEVELOPMENT: The Company's investment in the development of new
products through research and development was $1.7 million in the second quarter
2002 and $2.1 million in the comparative period. As a percentage of revenue,
research and development expenses were 28% in the second quarter 2002 and 29% in
the comparative period. Approximately 70% of the decrease in research and
development expenses for the three months ended June 30, 2002, was due to a
reduction in headcount associated with the Company's restructuring program and
other cost reduction initiatives implemented at the end of the second quarter
2001. The remaining portion of the decrease primarily related to decreased
spending on legacy sustaining engineering, partially offset by an increase in
telecommunications development spending. Research and development costs were
relatively flat as a percentage of sales.



                                       13
<PAGE>


The Company's investment in the development of new products through research and
development was $3.4 million and $4.3 million for the six months ended June 30,
2002 and 2001, respectively. As a percentage of revenue, research and
development expenses were 27% for the six months ended June 30, 2002 and 25% for
the six months ended June 30, 2001. Approximately 56% of the decrease in
research and development expenses for the six months ended June 30, 2002, was
due to a reduction in headcount associated with the Company's restructuring
program and other cost reduction initiatives implemented at the end of the
second quarter 2001. The remaining portion of the decrease primarily related to
decreased spending on legacy sustaining engineering, partially offset by an
increase in telecommunications development spending. Research and development
costs as a percentage of sales increased due to the decrease in revenues.

SALES AND MARKETING: Sales and marketing expenses were $1.6 million in the
second quarter 2002 and $2.2 million in the comparative period. As a percentage
of revenue, sales and marketing expenses were 27% in the second quarter 2002 and
31% in the comparative period. The decrease in sales and marketing expenses for
the three months ended June 30, 2002, was primarily due to a reduction in
headcount associated with the Company's restructuring program and other cost
reduction initiatives implemented at the end of the second quarter 2001. Sales
and marketing expenses decreased as a percentage of revenue due to the expense
reduction being greater than the revenue reduction.

Sales and marketing expenses were $3 million and $4.2 million for the six months
ended June 30, 2002 and 2001, respectively. As a percentage of revenue, sales
and marketing expenses were 24% for the six months ended June 30, 2002 and 25%
for the six months ended June 30, 2001. The decrease in sales and marketing
expenses for the six months ended June 30, 2002, was primarily due to a
reduction in headcount associated with the Company's restructuring program and
other cost reduction initiatives implemented at the end of the second quarter
2001. Sales and Marketing expenses were relatively flat as a percentage of
sales.

GENERAL AND ADMINISTRATIVE: General and administrative expenses were $815,000 in
the second quarter 2002 and $1 million in the comparative period. As a
percentage of revenue, general and administrative expenses were 14% in the
second quarter 2002 and 15% in the comparative period. The decrease in general
and administrative expenses for the three months ended June 30, 2002, is
primarily the result of a reduction in headcount associated with the Company's
restructuring program and cost reduction initiatives implemented at the end of
the second quarter 2001. General and administrative expenses were relatively
flat as a percentage of sales.

General and administrative expenses were $1.6 million and $2.1 million for the
six months ended June 30, 2002 and 2001, respectively. As a percentage of
revenue, general and administrative expenses were 13% for the six months ended
June 30, 2002 and 12% for the six months ended June 30, 2001. The decrease in
general and administrative expenses for the six months ended June 30, 2002, is
primarily the result of a reduction in headcount associated with the Company's
restructuring program and cost reduction initiatives implemented at the end of
the second quarter 2001. General and administrative expenses were relatively
flat as a percentage of sales.


                                       14
<PAGE>

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 regarding market recovery, 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 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
nonutilized fixed assets.

Due to the decline in 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 during the second quarter 2001. 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 continued to decline through the second quarter of 2001. Management
did not expect significant revenues from its legacy product lines in future
periods.

INTEREST INCOME, NET: Interest income, net of interest expense, was $134,000 in
the second quarter 2002 and $103,000 in the comparative period. The increase
relates to higher daily cash levels available for investment and lower borrowing
interest rates.

Interest income, net of interest expense, was $327,000 and $186,000 for the six
months ended June 30, 2002 and 2001, respectively. The increase relates to
higher daily cash levels available for investment and lower borrowing interest
rates.

OTHER INCOME (EXPENSE), NET: Other income (expense), net, was ($55,000) in the
second quarter 2002 and ($184,000) in the comparative period. Other income
(expense), net in the comparative period includes the amortization of goodwill
and purchased intangibles. As the carrying value of the Company's goodwill and
purchased intangibles exceeded its fair value, the Company wrote off the
carrying amount of its goodwill in the fourth quarter of 2001 and its purchased
intangibles in the second quarter of 2001. Accordingly, the decrease in other
(expense) is primarily due to the elimination of amortization expense related to
these items.

Other income (expense), net was $1,000 and ($221,000) for the six months ended
June 30, 2002 and 2001, respectively. Other income (expense), net in the six
months ended June 30, 2001, includes the amortization of goodwill and purchased
intangibles. As the carrying value of the Company's goodwill and purchased
intangibles exceeded its fair value, the Company wrote off the carrying amount
of its goodwill in the fourth quarter of



                                       15
<PAGE>

2001 and its purchased intangibles in the second quarter of 2001. Accordingly,
the decrease in other (expense) is primarily due to the elimination of
amortization expense related to these items.

INCOME TAXES: The Company's effective income tax rate was (40%) for the second
quarter 2002 and (31%) for the comparative period. The effective rate for the
second quarter 2002 differed from the statutory rate due to foreign income,
which is offset by foreign loss carryforwards. The effective rate for the second
quarter 2001 included the impact of nondeductible goodwill and purchased
intangibles amortization.

NET LOSS: The Company reported a net loss of $1.5 million in the second quarter
2002 and a net loss of $6 million in the comparative period. The Company
reported a net loss of $2.1 million for the six months ended June 30, 2002 and a
net loss of $6.2 million for the six months ended June 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2002, cash and cash equivalents totaled $13.7 million, an
increase of $3.3 million from the December 31, 2001 balance of $10.4 million.
The increase was attributable to cash provided by operating activities of $4.3
million, partially offset by cash used by investing activities of $267,000 and
cash used by financing activities of $522,000. Cash provided by operating
activities was primarily comprised of a decrease in inventories of $2.9 million,
a decrease in income taxes receivable of $2.5 million and a decrease in accounts
receivable of $329,000, partially offset by cash used to fund operations of $2.1
million. Cash used by investing activities was primarily comprised of purchases
of marketable securities of $1 million and fixed asset additions of $121,000,
partially offset by proceeds from the sale of marketable securities of $864,000.
Cash used by financing activities was primarily comprised of the purchase of
redeemable common stock of $508,000.

At June 30, 2002, 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
2002.

In October 2001, the Company announced that its Board of Directors had
authorized the repurchase of up to $5 million of its common stock. Purchases are
authorized to be made from time to time during a twenty-four month period in the
open market or in privately negotiated transactions depending on market
conditions. The Company will cancel all shares that it repurchases. The
repurchase plan does not obligate the Company to repurchase any specific number
of shares and may be suspended at any time. The Company repurchased and
cancelled shares with a market value of approximately $6,000 during the three
months ended June 30, 2002.

The Company has a $5 million revolving credit facility with a financial
institution. The revolving credit facility expires in June 2003. As of June 30,
2002, the Company had borrowings of $3.5 million classified as long-term debt on
its balance sheet. These borrowings are fully collateralized by a certificate of
deposit.


                                       16
<PAGE>

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, 2002, 619,338 shares have been repurchased for $3.9
million and retired and 40,662 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 twelve months. However, it is possible that the Company may
require additional sources of financing earlier than anticipated, as a result of
unexpected cash needs or opportunities, an expanded growth strategy or
disappointing operating results. Additional funds may not be available on
satisfactory terms when needed, whether within the next twelve to eighteen
months or thereafter.

ITEM 6.  REPORT ON FORM 8-K AND EXHIBITS

         REPORT ON FORM 8-K

         The Company filed a report on Form 8-K with the Securities and Exchange
         Commission on June 19, 2002, reporting on changes in Registrant's
         Certifying Accountant.

<Table>
<Caption>
  EXHIBITS NO.                  DESCRIPTION
  -----------                   -----------
<S>             <C>
    99.1       Certification Pursuant to 18 U.S.C Section 1350, As Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    99.2       Certification Pursuant to 18 U.S.C Section 1350, As Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</Table>


                                       17
<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, 2002

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



                                       18
<PAGE>

                               INDEX TO EXHIBITS


<Table>
<Caption>
  EXHIBITS NO.                  DESCRIPTION
  -----------                   -----------
<S>             <C>
    99.1       Certification Pursuant to 18 U.S.C Section 1350, As Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    99.2       Certification Pursuant to 18 U.S.C Section 1350, As Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</Table>