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                      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 September 30, 1997          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)

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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 _____

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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 NOVEMBER 3, 1997

Common Stock, No par value                                 5,497,178

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                                       1
<PAGE>

                            INTERPHASE CORPORATION
                                       
                                     INDEX
                                       

PART I -FINANCIAL INFORMATION

    Item 1.   Consolidated Interim Financial Statements                   

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

              Consolidated Statements of Operations for the three months
              and nine months ended September 30, 1997 and 1996               4

              Consolidated Statements of Cash Flows for the nine months
              ended September 30, 1997 and 1996                               5

              Supplemental Schedule of Cash Flows                             6

              Notes to Consolidated Interim Financial Statements              7

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


PART II- OTHER INFORMATION

    Item 6.   Reports on form 8-K and exhibits   

              Signature                                                      11






                                       2

<PAGE>

                            INTERPHASE CORPORATION
                         CONSOLIDATED BALANCE SHEETS
                   (in thousands, except number of shares)

<TABLE>
                                                                September 30,  December 31,
ASSETS                                                              1997          1996
------                                                          ---------------------------
                                                                 (Unaudited)
<S>                                                             <C>             <C>
Cash and cash equivalents                                         $  3,119      $  2,271 
Marketable securities                                                3,211         3,579 
Trade accounts receivable, less allowances for uncollectible              
     accounts of $514 and $503, respectively                         9,092        15,182 
Inventories, net                                                    16,610        12,599 
Prepaid expenses and other current assets                              923         1,221 
Deferred income taxes, net                                             874           886 
                                                                  ----------------------
     Total current assets                                           33,829        35,738 

Machinery and equipment                                             13,929        12,340 
Leasehold improvements                                               2,924         2,863 
Furniture and fixtures                                                 433           278 
                                                                  ----------------------
                                                                    17,286        15,481 
Less-accumulated depreciation and amortization                     (13,279)      (10,394)
                                                                  ----------------------
     Total property and equipment, net                               4,007         5,087 

Capitalized software, net                                              283           400 
Deferred income taxes, net                                             392           392 
Acquired developed technology, net                                   4,501         5,819 
Goodwill, net                                                        3,698         3,902 
Other assets                                                         2,260         2,586 
                                                                  ----------------------
     Total assets                                                 $ 48,970      $ 53,924 
                                                                  ----------------------
                                                                  ----------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable                                                  $  3,058      $  4,279 
Accrued liabilities                                                  2,790         3,097 
Accrued compensation                                                 1,883         2,962 
Income taxes payable                                                     -            93 
Current portion of debt                                              2,465         2,471 
                                                                  ----------------------
     Total current liabilities                                      10,196        12,902 

Deferred lease obligations                                              52            72 
Other liabilities                                                    1,800         1,120 
Long term debt                                                       8,219         9,444 
                                                                  ----------------------
     Total liabilities                                              20,267        23,538 
                                                                                         
Common stock, no par value                                          35,222        35,195 
Retained deficit                                                    (6,616)       (4,959)
Cumulative foreign currency translation adjustment                     123           164 
Unrealized holding period loss                                         (26)          (14)
                                                                  ----------------------
     Total shareholders' equity                                     28,703        30,386 
                                                                  ----------------------
     Total liabilities and shareholders' equity                   $ 48,970      $ 53,924 
                                                                  ----------------------
                                                                  ----------------------
</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>
   Three Months Ended                                                     Nine Months Ended 
------------------------                                               -----------------------
30-Sep-97      30-Sep-96                                               30-Sep-97     30-Sep-96
---------      ---------                                               ---------     ---------
<C>            <C>           <S>                                       <C>           <C>
 $13,611        $16,370      Revenues                                   $48,848      $ 39,565 
   7,402          8,499      Cost of sales                               25,391        19,915 
 -------        -------                                                 -------      --------
   6,209          7,871      Gross profit                                23,457        19,650 

   3,795          3,205      Research and development                    10,537         7,759 
   2,986          2,874      Sales and marketing                          8,814         7,194 
   1,585          1,475      General and administrative                   4,548         3,460 
       -              -      Acquired in-process R&D                          -        11,646 
 -------        -------                                                 -------      --------
   8,366          7,554          Total operating expenses                23,899        30,059 
 -------        -------                                                 -------      --------

  (2,157)           317      Operating income  (loss)                      (442)      (10,409)
 -------        -------                                                 -------      --------

     120            116      Interest income                                332           333 
    (294)          (248)     Interest expense                              (861)         (248)
    (227)             7      Other, net                                    (635)           (3)
 -------        -------                                                 -------      --------

  (2,558)           192      Income (loss) before income taxes           (1,606)      (10,327)

    (367)            25      Provision (benefit) for income taxes            51           427 
 -------        -------                                                 -------      --------

 $(2,191)       $   167      Net income  (loss)                         $(1,657)     $(10,754)
 -------        -------                                                 -------      --------
 -------        -------                                                 -------      --------

                             Net income (loss) per common and
 $ (0.40)       $  0.03        common equivalent share                  $ (0.30)     $  (2.19)
 -------        -------                                                 -------      --------
 -------        -------                                                 -------      --------

                             Weighted average common and common 
   5,494          5,709        equivalent shares                          5,493         4,920 
 -------        -------                                                 -------      --------
 -------        -------                                                 -------      --------
</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>
                                                                        Nine Months Ended 
                                                                      ----------------------
                                                                      30-Sep-97    30-Sep-96
                                                                      ---------    ---------
<S>                                                                   <C>          <C>
CASH FLOW FROM OPERATING ACTIVITIES:
  Net loss                                                             $(1,657)    $(10,754)
  Adjustment to reconcile net income to net cash provided (used) 
     by operating activities:
  Depreciation and amortization                                          3,642        2,938 
  Write off of acquired in-process research and development               -          11,646 
  Change in assets and liabilities, net of Synaptel acquisition;
    Trade accounts receivable                                            6,090       (8,599)
    Inventories                                                         (4,011)      (1,148)
    Prepaid expenses and other current assets                              298          154 
    Accounts payable and accrued liabilities                            (1,630)       1,195 
    Accrued compensation                                                (1,079)         181 
  Deferred income taxes payable                                             12           77 
  Other long term liabilities                                              680         -   
  Deferred lease obligations                                               (20)         (99)
                                                                       -------     --------
  Net adjustments                                                        3,982        6,345 
                                                                       -------     --------
    Net cash provided (used) by operating activities                     2,325       (4,409)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, equipment and leasehold improvements             (808)      (2,542)
  Additions to capitalized software                                       (106)      (1,088)
  Decrease in other assets                                                 326         (153)
  Cash acquired in Synaptel acquisition                                   -              11 
  (Increase) in acquired developed technology                             -          (2,500)
  Decrease in marketable securities                                        368        5,298 
  Change in holding period gain/loss on marketable securities              (12)         (25)
                                                                       -------     --------
    Net cash provided (used) by investing activities                      (232)        (999)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment on debt                                                       (1,731)         (27)
  Proceeds from debt                                                       500        2,580 
  Change in cumulative foreign currency translation                        (41)        -   
  Increase in common stock                                                  27          992 
                                                                       -------     --------
    Net cash provided (used) by financing activities                    (1,245)       3,545 
                                                                       -------     --------
Net increase (decrease) in cash and cash equivalents                       848       (1,863)
Cash and cash equivalents at beginning of period                         2,271        2,977 
                                                                       -------     --------
Cash and cash equivalents at end of period                             $ 3,119     $  1,114 
                                                                       -------     --------
                                                                       -------     --------
Supplemental Disclosure of Cash Flow Information:
Income taxes paid                                                          302          478 
Income taxes refunded                                                        2            8 
Interest paid                                                              770         -   
</TABLE>
                                       
                 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF 
                    THESE CONSOLIDATED FINANCIAL STATEMENTS.

                                       5
<PAGE>

                            INTERPHASE CORPORATION

                     SUPPLEMENTAL SCHEDULE OF CASH FLOWS
                                (in thousands)


Supplemental schedule of noncash investing and financing activities

In June 1996, the Company purchased all of the capital stock of Synaptel.  


     Fair value of assets acquired                         $  (26,676)
     Liabilities assumed                                        7,687 
     Acquisition debt                                           8,000 
     Common stock issued                                        9,200 
     Accrued aquisition costs                                   1,800 
                                                           ---------- 
          Cash acquired in Synaptel acquisition            $       11 
                                                           ---------- 
                                                           ---------- 



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.













                                       6

<PAGE>

                                INTERPHASE CORPORATION

                  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.  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 generally accepted
accounting principles 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, 1996.

2.   ACQUISITIONS

SYNAPTEL

Effective June 29, 1996 the Company acquired all the capital stock of Synaptel,
S.A., ("Synaptel"), a French company  for approximately $19,000,000.   The
purchase consideration consisted of $8,000,000 in cash, 594,595 shares of the
Company's common stock, valued at approximately $9,200,000 and $1,800,000 of
accrued acquisition costs. The Company financed the cash portion of the
consideration through a credit facility with a financial institution.  This
acquisition has been accounted for using the purchase method of accounting from
the effective date of the acquisition.  The total purchase consideration in
excess of the fair value of the tangible and identified intangible assets
acquired is included in goodwill.  Identified intangibles acquired included
approximately $11,600,000 of  in-process research and development, $4,230,000 of
developed technology and $415,000 related to Synaptel's assembled workforce.
Acquired in-process research and development activities had no alternative
future use and had not achieved technological feasibility and were expensed in
June 1996. 

In addition to the purchase consideration discussed above, the purchase
agreement included provisions for additional consideration of  $3,500,000 cash
and 450,000 options to purchase the Company's common stock at an exercise price
of $18.50 per share if Synaptel attains certain revenue and operating income
targets through 1998.  The actual cash earn-out and number of employee stock
options may increase or decrease depending upon performance against targets. 
The cash payments pursuant to these provisions will be accounted for as
additional purchase consideration when payment is probable.  The compensatory
elements, if any, for these stock options will be expensed over the exercise
periods.  In 1996 and 1997, no additional consideration was paid.

ACQUIRED PRODUCT RIGHTS

In June 1996, the Company acquired the rights to manufacture, market, and sell
certain FDDI products from Cisco Systems, Inc. for a purchase price of
$2,500,000.   The acquired product rights are included in acquired developed
technology in the accompanying consolidated balance sheets.


                                       7

<PAGE>


3.   NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE

Net income (loss) per common and common equivalent share is computed using the
weighted average number of outstanding shares and common equivalent shares.  The
dilutive impact of outstanding stock options have been considered under the
treasury stock method using the greater of the average bid price or closing bid
price for the period.   

Weighted average common and common equivalent shares:

                             Three Months Ended      Nine Months Ended
                                  Sep 30,                  Sep 30,
                             ------------------      ----------------- 
     (IN THOUSANDS)           1997         1996       1997        1996 
                             -----        -----      -----       ----- 
     Outstanding             5,494        5,348      5,493       4,920
     Stock options            ----          361       ----         ---
                             -----        -----      -----       ----- 
          Total              5,494        5,709      5,493       4,920
                             -----        -----      -----       ----- 
                             -----        -----      -----       ----- 

There is no material difference between primary diluted and fully diluted EPS
for the periods presented.

The Company will adopt SFAS No. 128, Earnings per Share, for its December 31,
1997 consolidated financial statements.  As a result, the Company's reported
earnings per share for 1996 and each of the quarters in 1997, will be restated. 
Upon the adoption of SFAS No. 128, basic earnings per common share will be
computed by dividing net income by the weighted average number of shares of
common stock outstanding during the year.  Diluted earnings per common share
will be computed by dividing net income by the weighted average of common stock
and common stock equivalents outstanding during the year.  The following 
pro-forma information is presented in accordance with the provisions of SFAS 
No. 128:

                                        Three Months Ended   Nine Months Ended
                                               Sep 30,            Sep 30,
    PRIMARY EPS                             1997    1996      1997      1996
    -----------                         --------------------------------------
    Per share amounts
    Primary EPS as reported                 $ (0.40) $.03      $ (0.30) $(2.19)
    Effect of SFAS No. 128                      -     -            -       -
                                            -------------      ---------------
    Pro-forma basic EPS as restated         $ (0.40) $.03      $ (0.30) $(2.19)


                                        Three Months Ended   Nine Months Ended
                                               Sep 30,            Sep 30,
    FULLY DILUTED EPS                       1997    1996      1997      1996
    -----------------                       -------------     ----------------
    Per share amounts
    Fully diluted EPS as reported           $ (0.40) $.03      $ (0.30) $(2.19)
    Effect of SFAS No. 128                      -     -            -       -
                                            -------------      ---------------
    Pro-forma diluted EPS as restated       $ (0.40) $.03      $ (0.30) $(2.19)
                                            -------------      ---------------




                                       8

<PAGE>

1.   CREDIT FACILITY

Prior to and in conjunction with the Synaptel acquisition discussed in Note 2,
the Company entered into a  credit facility with BankOne Texas NA.  The credit
facility consists of an $8,500,000 acquisition term loan, a $2,500,000 equipment
financing facility  and a $5,000,000 revolving credit facility.   The facility
is subject to an annual renewal provision, and bears interest at the bank's base
rate (currently 8.5%).  The term loan is payable in equal quarterly installments
of $548,000 plus accrued interest which commenced on November 30, 1996 with
final payment due November 30, 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 revolving portion of the loan is
due June 30, 1999.  The credit facility is collateralized by marketable
securities, assignment of 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, quick ratio, debt service coverage, and is subject to a borrowing base
calculation. At September, 1997, total availability under this credit facility
was $1,812,000.


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

RESULTS OF OPERATIONS

Revenues for the three months ended September 30, 1997  ("third quarter")
decreased  $2,759,000 or approximately 17% to $13,611,000 as compared to
$16,370,000 for the same period in 1996 ("comparative period").  In the third
quarter 1997 local area networking ("LAN") product revenue decreased 5% over
the comparative period.  The decline in LAN revenue was the result of lower FDDI
and older ethernet/token ring product revenues, partially offset by increases in
both ATM and fast ethernet product revenues.  FDDI product revenues decreased
44%, older ethernet/token ring product revenues decreased 57% while ATM
increased 48% and fast ethernet increased 200%, over the comparative period. 
LAN products in total comprised 78% of total revenues for the third quarter, and
68% for the comparative period.  FDDI, ATM, fast ethenet and older
ethernet/token ring products represented 28%, 11%, 33% and 6% of total revenues,
respectively for the third quarter.  In the third quarter wide area networking
("WAN") product revenues decreased 79% over the comparable period and comprised
5% of revenues.

Mass storage product revenues, primarily SCSI and Fibre channel adapter cards,
increased 26% in the third quarter 1997 from the comparative period.  Mass
storage products comprised 13% of total revenues in the third quarter 1997 and
9% in the comparative period. SCSI and Fibre channel product revenues were 9%
and 5% of revenues, respectively for the third quarter.

Geographically, North America revenues comprised 77% of consolidated revenues in
the third quarter 1997 compared to 68%  in the comparative period.  European
revenues comprised 20% of consolidated revenues in the third quarter 1997 and
30% in the comparative period.  Pacific Rim revenues comprised 3% of
consolidated revenues in the third quarter 1997 and 2% in the comparative
period.

The Company's current marketing strategy is to increase market penetration
through sales to major OEM customers.  One of these customers accounted for
approximately 41% of the Company's revenue for the third quarter.  

Revenues for the nine months ended September 30, 1997 increased $9,283,000 or
23% to $48,848,000 as compared to $39,565,000 for the same period in 1996.  The
growth  in revenue is due to increased revenue from fast-ethernet products and
the inclusion of WAN products due to the acquisition of Synaptel S.A. in June
1996.  Revenues from LAN, Mass Storage and WAN products comprised 77%, 11% and
9% respectively,  of consolidated revenues for the nine month period ended
September 30, 1997.  


                                       9

<PAGE>

The gross margin percentage for the three month period ended September 30, 1997
was approximately 46% as compared to approximately 48% for the comparable
period. The gross margin percentage for the nine month period ended September
30, 1997 was approximately 48% as compared to approximately 50% for the same
period in 1996.  The decrease in gross margin percentages in 1997 compared to
1996 reflect the increases in fast ethernet and ATM product revenues, which
produce lower gross margin percentages, as well as the decreases in FDDI, SCSI
and older ethernet product revenues, which typically produce higher gross margin
percentages.

Operating expenses for the three month period ended September 30, 1997 were
$8,366,000 as compared to $7,554,000 for the comparable period.  The increased
operating expenses reflects increased levels of research and development
activities in 1997 compared to 1996.  Operating expenses for the nine month
period ended September 30, 1997 were $23,899,000 as compared to $18,413,000 for
the same period in 1996 (excluding $11,646,000 related to acquired in-process
R&D in the quarter ended June 30, 1996). The increased operating expenses
reflect the addition of the Synaptel operations as well as increased levels of
research and development activities in 1997 compared to 1996.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash, cash equivalents and marketable securities aggregated
$6,330,000 at September 30, 1997, and $5,850,000 at December 31, 1996.  In the
third quarter of 1997, the Company invested approximately $250,000 in plant and
equipment.  The improved cash position is primarily due to a decrease in 
accounts receivable partially off set by an increase in inventory and decreases
in accrued liabilities and accrued compensation.  In the next twelve months,
scheduled debt payments on the Company's credit facility are approximately
$2,192,000.  

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

NEW ACCOUNTING PRONOUNCEMENTS

Effective July 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income, and SFAS No. 131 Disclosures about Segments of an
Enterprise and Related Information.  SFAS No. 130 requires the Company to report
comprehensive income in the financial statements.  SFAS No. 131 requires the
Company to disclose revenues, profit and loss, and assets for business and
geographical segments similar to disclosures required under current standards. 
These statements are effective for fiscal years beginning after December 15,
1997, with earlier adoption permitted.  The Company will consider adopting  SFAS
No. 130 and SFAS No. 131 in its December 31, 1997 consolidated financial
statements and anticipates no material impact on the financial statements or
footnotes to the financial statements.


                                      10

<PAGE>

                                       PART II

OTHER INFORMATION


Item 6.   Reports on form 8-K

          None

          EXHIBITS


          EXHIBIT 27   Financial Data Schedule

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: November 11, 1997


                                       /s/ Robert L. Drury
                                       ---------------------------------
                                       Robert L. Drury
                                       Chief Financial Officer and
                                       Vice President Finance
                                       (Principal Financial and
                                       Accounting officer)






                                      11