SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549
           _________________________________________________
                               FORM 10-K

           ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

 For the Fiscal Year Ended December 31, 1997  Commission File Number 0-13071

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


             Texas                                75-1549797
        (State or other jurisdiction of        (I.R.S.Employer
        incorporation or organization)        Identification No.)


                   13800 Senlac, Dallas, Texas 75234
         (Address of principal executive offices and zip code)
   Registrant's telephone number, including area code:  (214) 654-5000

        Securities registered pursuant to Section 12(b) of the Act:
                                 None

        Securities registered pursuant to Section 12(g) of the Act:
                            Title of Class
                      Common Stock, no par value

 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 such  shorter period  that  the
 registrant was required to file such  reports), and (2) has been  subject
 to such filing requirements for the past 90 days.        Yes x     No    
 Indicate by check  mark if disclosure  of delinquent  filers pursuant  to
 Item 405  of Regulation  S-K is  not contained  herein, and  will not  be
 contained, to the best of registrant's knowledge, in definitive proxy  or
 information statements incorporated by reference in Part III of this Form
 10-K or any amendment to this 10-K. [   ]

 The aggregate market value of the voting stock held by non-affiliates  of
 the registrant on March  2, 1998 was approximately  $37,032,542.   As  of
 March 2,  1998, registrant  had outstanding  5,517,118 shares  of  Common
 Stock.

                    DOCUMENTS INCORPORATED BY REFERENCE

 Parts of the following documents are incorporated by reference into  this
 annual report on Form 10-K Report:  (1) Portions of the Definitive  Proxy
 Statement for Annual Meeting of Shareholders to be held on April 30, 1998
 (Part III).
<PAGE>                                                                      

                                PART I
                                                                   
   ITEM 1.   BUSINESS.

   Introduction
       
   Interphase  Corporation   and  subsidiaries   ("Interphase"  or   the
   "Company") designs,  develops,  manufactures,  markets  and  supports
   high-performance network and mass storage products based on  advanced
   technologies for some  of today's  most powerful  computer systems.  
   Interphase's  network  and   mass  storage   products  include   high
   performance network  adapters,  concentrators  and  computer  network
   operating system software drivers.  The Company's local area  network
   ("LAN") products implement high speed networking technologies such as
   Fiber Distributed Data Interface ("FDDI"), Asynchronous Transfer Mode
   ("ATM"),  fast ethernet (both 100 VG-AnyLAN and 100 Base T), as  well
   as ethernet (10Base T) and  Token Right technologies that  facilitate
   the high speed movement of information across computer networks.  The
   Company's wide area network ("WAN") products serving both the  server
   class and client  class utilize Integrated  Services Digital  Network
   ("ISDN") and X.25 technologies.  In addition, the Company  announced,
   in early 1997, its first Digital Subscriber Loop "(xDSL") product, an
   Asynchronous DSL ("ADSL") adapter card.   The Company's mass  storage
   controllers are currently based  on Small Computer Systems  Interface
   ("SCSI") technology  and   high  speed  Fibre Channel  technology  to
   facilitate the movement of  data to and from  mass storage devices.  
   Fibre Channel  can also  be used  for a  high speed  interconnect  in
   clustered applications.  The Company's  products are designed to  not
   only comply with the appropriate open system technical standards  but
   also optimize  the performance  of the  customer's network  and  mass
   storage environments.
<PAGE>
   The Company's LAN  adapters and  mass storage controllers consist  of
   both hardware  and  software.  The hardware  is  essentially  printed
   circuit boards  which  plug into  the  backplane of  a  computer  and
   incorporate industry standard bus  architectures of the most  popular
   client/server platforms such as PCI, Sbus, EISA, VME, GIO and PMC, as
   well  as  input-output  front-ends  for  many  performance   oriented
   computer systems.  The Company's  network adapters support a  variety
   of media including  fiber optic cabling  and unshielded twisted  pair
   ("UTP") and shielded twisted pair ("STP") copper wire.  The Company's
   software consists  of  drivers  for the  most  popular  client/server
   operating systems such  as Windows  NT, Netware,  HP-UX, IRIX,  O/S2,
   Solaris, SunO/S, AIX  and certain  real-time operating  systems.   In
   addition the  software may  include diagnostics,  station  management
   ("SMT") and in certain cases off loads the processing of the protocol
   stack from  the server  to  the adapter  card.   The  Company's  FDDI
   concentrator products are stand-alone network devices which serve  as
   a single point of  connection for multi-port  local area networks  as
   well as perform certain network traffic  management tasks.  The  mass
   storage controllers  provide  a  high-speed  connection  to  computer
   peripheral  devices, such as disk drives, tape drives and printers.  
   The Company's  WAN adapters  are complete  ISDN packages  that  allow
   standalone desktops  and notebooks  to connect  to Shiva  Lan  Rover,
   PPP/ISDN routers,  and FTP  software ONnet  as  well as  X.25  remote
   access products.  The Company's products are used in a wide range  of
   computer   applications   including   graphics   workstations,   high
   performance work groups,  CPU clusters, medical  imaging,   telephone
   switching, on-line  transaction  processing  and  financial  services
   networks.

   With respect to  the client/server computer  market, the majority  of
   the Company's  products  have  traditionally been  installed  in  the
   server (or "host") as  opposed to the client  (or "desktop") side  of
   the network.   This reflects the  Company's historical  focus on  the
   development of  high-performance, fully  featured products  that  are
   targeted for the most demanding  computer networks. Given the  recent
   emergence of  more  powerful  desktop computing  environments  and  a
   growth  in  demand  for  data  intensive  applications,  the  Company
   believes that  its  strengths in  certain  network and  mass  storage
   technologies will create significantly more opportunities for desktop
   installations of its products in future years.
<PAGE>
   The Company believes that its  success in gaining significant  market
   share in  its  selected  markets  is  dependent  upon  not  only  the
   development and  manufacturing  of  high  performance,  high  quality
   products but  also in  establishing and  maintaining the  appropriate
   distribution  channels.     The   Company  has   original   equipment
   manufacturer ("OEM") agreements with some of the best known companies
   in the computer business  for its network  products and mass  storage
   controllers.   The  Company's  customers include  OEM's  of  computer
   systems  and  network  switches,  systems  integrators,  value  added
   resellers ("VAR"),  distributors  and end-users.         The  Company
   believes that it  must maintain an  ongoing synergistic  relationship
   with its customers and demonstrate technology leadership coupled with
   sophisticated manufacturing  and customer  support capabilities.  The
   Company's manufacturing  and  development  activities  are  certified
   under the ISO  9001 international quality  standard.  This  standard,
   considered the most comprehensive of the ISO 9000 standards,  applies
   to not  only  manufacturing  quality,  but  design,  development  and
   support quality systems  as well.   Certain companies  in the  United
   States  and  Europe  now  require  ISO  certification  of  their  key
   suppliers.  The Company's  headquarters and manufacturing  facilities
   are located in Dallas, Texas.

   Effective June 29,  1996, the Company  purchased all  the issued  and
   outstanding capital stock  of Synaptel S.A.  ("Synaptel").   Synaptel
   designs and  distributes  a broad  line  of remote  access  and  ISDN
   products,  which  include  both  significant  software  content   and
   interoperability with a broad range of networking protocols.

   The Company, a Texas corporation, was founded in 1977. 

   Product Overview

   The bus structure of a computer system is the pathway over which data
   flows among the system's components,  such as the central  processing
   units ("CPU"),  disk or  tape drives  and network  adapters. The  bus
   structure of a computer coordinates the  timing and routing of  data,
   as well  as  defines the  system  architecture for  components  which
   interface with each other.  The  Company develops and sells  products
   based on high performance bus architectures such as PCI, Sbus,  EISA,
   VME, GIO  and  PMC.     These  bus architectures  were  developed  by
   computer system manufacturers and are considered "open systems" since
   certain specifications  of  the  architecture  are  published.    The
   concept of open  systems has  gained significant  momentum in  recent
   years and has allowed end-users to configure a computing and  network
   environment   that   incorporates   desired   technology,   features,
   scalibility and  support  from  a  variety  of  product  and  service
   providers.
<PAGE>
   The CPU of a computer performs basic arithmetic, local memory  access
   and  input/output   functions  for   communication  with   peripheral
   equipment as well as other  functions associated with data  transfers
   within a network such as protocol  processing. When commanded by  the
   CPU, a network  adapter facilitates the  high-speed communication  of
   data among computer systems over a network as well as validates  data
   completeness and  integrity. Network  adapters also  perform  varying
   levels of  protocol  processing  and network  management  tasks.    A
   network protocol is the  set of rules or  conventions used to  govern
   the exchange of information  between networked nodes  or LANs.   Most
   computer applications require immediate access to a greater volume of
   data than  can  be stored  in  the  computer's local  memory.    This
   necessitates external data storage capacity provided by disk or  tape
   drives.  A  disk controller directs  the data  storage and  retrieval
   operations of the disk  drive and controls the  flow of data  between
   the CPU and disk drive.  The disk controller locates and formats  the
   data stored on the disk, performs data validity checking, data  error
   detection and correction and informs the  CPU of the status of  these
   operations and of the controller itself.  A tape controller  performs
   the same functions as  a disk controller but  interfaces with a  tape
   drive.  Multifunction controllers operate like a disk controller  but
   allow the CPU to access disk drives and tape drives simultaneously.  


   Intelligent  controllers   designed   by  the   Company   incorporate
   proprietary firmware  (i.e., programs  developed by  the Company  and
   stored in  memory  on the  product)  and software  to  perform  these
   functions simultaneously and independently from the CPU, which allows
   the CPU  to perform  other operations  at the  same time  as  network
   communications, data storage or retrieval occurs.

   Network Products

   Revenues derived from  networking products represented  approximately
   77% and 71% of consolidated revenues for the years ended December 31,
   1997 and 1996, respectively and 61%  of consolidated revenues  during
   the year ended October 31, 1995.

   LAN

   Over the past several years the Company has developed a diverse  line
   of LAN products targeted  for the VME, Sbus,  EISA, PCI, GIO and  PMC
   bus marketplace.  The majority of these products are sold directly to
   OEMs but  a  substantial  portion are  also  sold  to  VAR's,  system
   integrators, distributors and large end-users.   

   The Company's products  included within  this broad  grouping can  be
   further divided into  board level controller  (adapter) products  and
   stand-alone network devices. 
<PAGE>
   Board Level Products-

        FDDI Product Line-

   FDDI is a stable, standardized, 100Mbit  per second technology.   Its
   combination of speed and stability make FDDI ideal for reliable high-
   performance workgroup connections. FDDI high performance adapters are
   often used  for movement  of large  graphical  images such  as  color
   prepress and medical imaging applications.   These adapters are  also
   used in  enterprise servers  for high-demand  transaction  processing
   networks in corporate systems.

   PMC/FDDI 4511  provides  reliable,  high-performance  100  Mbps  FDDI
   connectivity for PMC-based systems.  It supports multimode fiber  and
   copper wiring.

   EISA/FDDI 4811 is a  high performance FDDI  network adapter for  EISA
   bus systems.   It provides for  full implementation  of FDDI  Station
   Management  (SMT)  on-board,   freeing  the  host   CPU  to   execute
   applications and upper level protocols. 

   VME/FDDI 5211 represents a third generation FDDI network adapter from
   Interphase.  This host based product is capable of supporting varying
   types of media (e.g., fiber or copper) and contains an optical bypass
   control.  It  can be used  in VME64 systems  and is  capable of  link
   level or on-board protocol  processing.  Its RISC-based  architecture
   can be configured  for either single  or dual attachment  to an  FDDI
   network and  is  available in  a  9U or  6U  form factor  (refers  to
   standard form factors of the printed circuit board).  

   PCI/FDDI 5511  is a  high performance  FDDI network  adapter for  PCI
   based systems.  It provides Single Attach (SAS) connectivity for FDDI
   workstations or server connectivity to a concentrator in a  workgroup
   topology.  It also comes with  a Dual Attach (DAS) option for  direct
   A-B connectivity to an FDDI ring or concentrator, or for dual  homing
   between  two  concentrators.    The  5511  provides  connections  for
   multimode fiber and  TP-PMD compliant Category  5 Unshielded  Twisted
   Pair copper wiring.

   Sbus/FDDI  5611 is a high  performance FDDI network adapter for  SBus
   systems.   The 5611 is designed to capitalize on the high performance
   of Sun SPARC and compatible systems with a direct memory access (DMA)
   architecture.

   Sbus/FDDI CDDI WA-C303  adapter provides  high performance,  100-Mbps
   connectivity  to  FDDI  networks  for  SPARC-based  worstations   and
   servers.     It supports single  attachment and fault-tolerant,  dual
   attachment connections.

   EISA/FDDI CDDI WA-C323  adapter   provides high performance 100  Mbps
   connectivity to workgroup servers and workstations.  

        Ethernet and Fast Ethernet Product Line-

   VME/Ethernet 4207  provides a connection  to an ethernet network  for
   VMEbus systems.  It is a high performance protocol processor that  is
   capable of data rate transfers of over 30 Mbytes/second.
<PAGE>
   VME Ethernet 4221 adapter is  a  10 Base-T product.  This adapter  is
   an intelligent  network  interface  which  can  provide  up  to  four
   Ethernet ports from a single VME or VME64 slot.

   PMC/100 Base T  4524 adapter provides  802.3u 100Base-T  connectivity
   for most  PMC-compliant  systems.   Driver  support includes:    AIX,
   Solaris and Window NT.

    SBus /100VG-AnyLan 4622 adapter provides Sun SPARC stations and 100%
   compatibles with selectable connectivity to networks based either  on
   10Base-T or 100VG-AnyLAN technology.

   EISA/100 Base-T  4824 adapter  provides either  100 Mbps  or 10  Mbps
   automatically configured based on the type of network connection.

        ATM Product Line-

   ATM is a  scalable network technology  capable of providing  enhanced
   quality of service  in managing video,  audio and data  transmissions
   compared to  other  existing   network  technologies.   The  scalable
   capability of  ATM  allows  the  deployment  of  products  with  data
   transfer rates of 25 Mb, 51 Mb, 100 Mb, 155 Mb and 622 Mb, based upon
   the same core technology  and operating within the  same network.    

   ATM will also provide enhanced network management capabilities and is
   expected to  be  suitable  for  many  desktop  and  server  computing
   environments.  This developing industry standard is expected to  gain
   wide acceptance among both network and computer system  manufacturers
   as well as large cable system operations and telecommunications firms
   (by whom it was initially developed  and promoted).  The ATM  adapter
   market is anticipated to grow rapidly over the next several years.   
   These adapters can connect stations  over ATM using multimode  fiber,
   single-mode fiber,  or  Category  5 Unshielded  Twisted  Pair  copper
   cable.

   PMC ATM    4515  adapter  provides  reliable,  high  performance  ATM
   connectivity for PMC-based systems.  This adapter supports SONET OC-3
   155 Mpbs connectivity.

   SBus ATM  4615  adapter provides  full  duplex ATM  connectivity  for
   virtually  all  Sun  Sbus  platforms  from  600  MP  Servers  to  the
   SPARCcenter 2000.  This adapter supports SunOS 4.1.3. and Solaris 2.3
   or greater.

   EISA ATM 4815 adapter provides full duplex ATM connectivity for  many
   EISA-compliant systems from high performance PCs and workstations  to
   powerful mutiprocessing servers running Windows NT and Novell

   GIO ATM  4915  adapter  provides full  duplex  ATM  connectivity  for
   virtually all  Silicon Graphics  GIO-based platforms.   This  adapter
   supports SGI's IRIX operating system version 5.3.

   VME ATM 5215 adapter  provides full duplex  ATM connectivity for  SGI
   Onyz and Challenge systems running the IRIX

   PCI ATM  5515  / 5575 adapter provides  full duplex ATM  connectivity
   for most PCI-compliant  systems.  This  adapter supports Windows  NT,
   Novell NetWare UnixWare, Solaris and AIX.  NetWare.
<PAGE>
   PCI ATM 5525 adapter  provides full duplex  25 Mbps ATM  connectivity
   for most PCI-compliant systems.

   Stand Alone Network Devices-

   M1600 FDDI Concentrator  provides multiport connectivity  to an  FDDI
   network.  It  supports up  to 16  master ports  and facilitates  high
   speed FDDI  networking between  a variety  of computing  devices  and
   across different types  of FDDI media  including fiber  and copper.  
   This device is "hot swappable" meaning that individual modules may be
   replaced, removed or added without interrupting the entire network.  
   Other fault  tolerance features  include an  external optical  bypass
   control and  an optional  redundant power  supply, making  the  M1600
   well-suited for demanding FDDI backbone environments.

   M800 FDDI Concentrator  contains many  of the  same high  performance
   features as the M1600 FDDI Concentrator  but is designed for  smaller
   workgroups with large data transfer requirements.  It is available in
   a table top or rack mountable design. 

   M400 FDDI Concentrator  is a compact,  fixed port concentrator  ideal
   for small  workgroup  cluster.  Available  in  either  4  or  8  port
   configurations,  the M400 provides options for fiber or copper  media
   connectivity  and  the  ability   to  select  managed  or   unmanaged
   operations.

   WAN

   Interphase has a line  of WAN products that  provide optimal WAN  and
   ISDN connectivity  solutions  for servers,  remote  LANs and  PCs  in
   multi-vendor networking environments.   Interphase  WAN products  are
   compatible with Novell,  Microsoft, IBM, Sun,  Unix, SNA, X.25  Frame
   Relay and ISDN. 

   Server Class  products  include  fully  featured,  multi-purpose  and
   multi-operating systems  products for  ISDN  or X.25  technologies.  
   These products are used by networking professionals to outfit  remote
   offices or  central offices  with ISDN/WAN  adapter that  can  manage
   multiple ISDN channels or multiple communication modes.

   Client Class products are passive ISDN or modem, board level products
   which are used in desktop and laptop computers.  Typical products are
   Syncard Modems,  Syncard  PCMCIA  ISDN, and  Syncard  ISDN,  and  are
   dedicated primarily  to Windows  operating  systems for  desktop  and
   laptop applications.


   Mass Storage Controller Products

   Revenues derived from  mass storage  controller products  represented
   approximately 12%  and 14%  of consolidated  revenues for  the  years
   ended  December  31,  1997  and  1996,  respectively    and  34%   of
   consolidated revenues during the year ended October 31, 1995. 
<PAGE>
   The Company's  mass  storage  product  line  includes  products  that
   function in  VMEbus,  EISA  bus,  Multibus  and  PCIbus  systems.    
   Presently, SCSI is the most popular mass storage technology for  both
   desktop and  server applications  since  it is  "device  independent"
   whereas many technologies prior to SCSI were not.  Device independent
   refers to the fact  that the controller can  access and send data  to
   and from a variety  of peripheral devices (e.g.,   disk drives,  tape
   drives or printers).     Historically, the  primary market for  these
   products has been computer system OEM's.  The Company introduced  its
   first Fibre Channel product in 1996.    Fibre Channel is an  emerging
   high-speed data transfer technology.  Fibre Channel is regarded as  a
   follow-on migration path  from SCSI.   It is 10  to 250 times  faster
   than existing technologies, including  SCSI, capable of  transmitting
   at rates of one gigabit per second simultaneously in both directions.
   This kind of performance is a practical necessity when sizable files
   containing x-rays or MRI scans are retrieved from a storage device.  
   Fibre Channel  can also  operate over  distances up  to 10  km.   For
   disaster recovery purposes it is an  ideal technology for backing  up
   mission critical  data to  mass storage  device  at a  secure  remote
   location.

   SCSI

   V/SCSI 4210 is a high performance dual channel  SCSI host adapter for
   VMEbus applications.    It supports  up  to seven  SCSI  devices  per
   channel and  can  be configured  with  one or  two  independent  SCSI
   channels.   By  utilizing  the BUSpacket  Interface  it  can  provide
   transfer rates of up to 5 MBytes/second in synchronous mode and up to
   1.5 MBytes/second in the asynchronous mode. This product is available
   in either a 6U or 9U form factor.

   V/SCSI-2 4220 is designed for VMEbus  and VME64 systems. It  complies
   with the industry standard  SCSI-2 interface.   It also contains  two
   channels that  support up  to 14  SCSI-1 or  SCSI-2 devices.   It  is
   capable of data rates  of up to 10  MBytes/second in the  synchronous
   mode and 5 MBytes/second in the  asynchronous mode.  This product  is
   available in  either  a 6U  or  9U  form factor.    Additionally,  an
   optional daughter card is available which allows for a connection  to
   an Ethernet network.  The incorporation of an Ethernet daughter  card
   with a  SCSI adapter  in this  manner  utilizes only  one slot  in  a
   computer backplane.


   Fibre Channel

   PCI/Fibre Channel  5526   adapter  provides single  port  connection,
   powered by the Hewlett-Packard Tachyon Fibre Channel protocol engine.

   PCI/Fibre Channel  6526  adapter is  a  3U CompactPCI  adapter  which
   delivers full  100mbps throughput  for next  generation mass  storage
   applications.

   Interphase (i)chipTPI  is a  single chip  solution which  allows  the
   Hewlett-Packard Tachyon  Fibre  Channel  controller  to  be  used  in
   conjunction with the industry standard PCI bus. 
<PAGE>
   New Product Development

   The markets for  the Company's  products are  characterized by  rapid
   technological development, evolving industry standards, frequent  new
   product introductions and relatively  short product life cycles.  The
   Company's success  is substantially  dependent  upon its  ability  to
   anticipate and  react to  these changes,  maintain its  technological
   expertise, expand  and  enhance  its product  offerings  in  existing
   technologies, and  to develop  in a  timely  manner new  products  in
   emerging technologies, such  as ATM-based  networking, which  achieve
   market acceptance.  The  Company believes it  must offer products  to
   the market  which  not  only  meet  ever-increasing  performance  and
   quality   standards,    but    also   provide    compatibility    and
   interoperability with products and  architectures offered by  various
   computer and network systems vendors.   The continued utility of  the
   Company's  products  can  be   adversely  affected  by  products   or
   technologies developed by others.

   The Company has been engaged in  the development of new products  and
   the refinement  of  its  existing  products  since  its  inception.  
   Interphase has been active in  the formulation of industry  standards
   sanctioned by groups such as the IEEE and ANSI and is a member of the
   ATM Forum, VME International Trade Association (VITA), Fibre  Channel
   Association, RAID Advisory Board,  PCI Bus Consortium, Fast  Ethernet
   Alliance, SCSI  Committee,  the  LADDIS  Group,  ONC/NFS  Consortium,
   University of New Hampshire FDDI Interoperability Lab, FC-Open (Fibre
   Channel) Consortium, and  ANTC Consortium  for FDDI  interoperability
   testing.

   In 1997,  the Company    applied the  majority  of   its  engineering
   development resources to products for the emerging ATM market.   This
   network technology provides for the  integration of voice, video  and
   data transmission  in local  area networks  and wide  area  networks,
   significant improvements in network managability, and scalability  of
   speed from 25 megabits  per second ("Mbps") to  51, 100, 155 and  622
   Mbps. 

   In addition,  the Company has  continued its focus on FDDI  products,
   including PCI, GIO, and Sbus FDDI adapter cards and the M400 low cost
   four  or  eight   port  FDDI  concentrator   with  copper  or   fiber
   connectivity and optional SNMP management.

   Since the acquisition of Synaptel, engineering development activities
   have also  been  focused on  products  for  the WAN  market.    These
   development efforts include products based  upon ISDN, X.25 and  xDSL
   technologies.
<PAGE>
   Marketing and Customers

   The Company's standard products  are sold to  OEM's for inclusion  in
   scientific, industrial, medical, engineering workstations,  printing,
   mini-supercomputer, graphics and  other computer applications.  These
   purchasers incorporate the Company's products in proprietary  systems
   for resale to distributors, system  integrators and VAR's (which  add
   specially designed software) prior to resale to end-users.  Also, the
   Company sells products  directly to sophisticated  end-users such  as
   large   corporations,    universities   and    scientific    research
   organizations.  During  1997 sales to  Hewlett Packard accounted  for
   $26,402,000 or 40% of consolidated revenue, and was the only customer
   accounting for more than 10% of  consolidated revenues.  During  1996
   no single  customer  accounted  for more  that  10%  of  consolidated
   revenues.  During the year ended October 31, 1995,  sales to  Pyramid
   Corporation accounted for $7,039,000 or 15% of consolidated revenues,
   and  was  the  only  customer  accounting   for  more  than  10%   of
   consolidated revenues.  

   In 1989, Motorola  purchased 660,000 shares  of common  stock of  the
   Company at  a price  of  $11.00 per  share.   In  addition,  Motorola
   received warrants to purchase an additional 660,000 shares of  common
   stock at an exercise  price of $15.40 per  share.  The warrants  were
   not exercised  by Motorola  and  expired in  March  1996.   Sales  to
   Motorola approximated 3%, 6% and 6% of the Company's revenues for the
   years ended  December  31,  1997,  1996,  and  October  31,  1995,  
   respectively.   

   The Company markets its products  through its own sales  organization
   and, to  a lesser  extent, through  a  network of  independent  sales
   representatives.   In  addition  to  the  Company's  headquarters  in
   Dallas, Texas, the  Company has   sales  offices located  in or  near
   Santa Clara,  California;  Boston, Massachusetts;  Phoenix,  Arizona;
   Minneapolis, Minnesota;  Tokyo, Japan;  London, England;  and  Paris,
   France. The Company's sales personnel market products directly to key
   customers as well  as support  the sales  representative network.  In
   addition, the Company has  entered into distribution agreements  with
   key  national  and  international  distribution  partners,  including
   Anixter, Fuji-Xerox, Gates/Arrow and Westcon.

   Interphase emphasizes  its extensive  product support,  training  and
   field support to its customers.  The Company's products are generally
   sold with a one year warranty  covering components and labor.   After
   the expiration of the warranty period, support services are generally
   provided by the Company for a stated flat fee.
<PAGE>
   The Company and its customers generally enter into written agreements
   specifying, among  other  items standard  in  commercial  agreements,
   product  specifications,   failure  rates,   shipping   requirements,
   shipment rescheduling terms, price/volume schedules and  manufacturer
   warranties. Substantially  all of  these  agreements do  not  contain
   determinable purchase commitments of the customers, providing instead
   that actual purchase and  shipments of products  be made by  specific
   purchase order.    Accordingly, any  shipment  rates stated  in  such
   contracts  are  subject  to  rescheduling  and/or  cancellation,  and
   therefore are  not indicative  of the  future purchase  orders to  be
   submitted by such  customer.  In  addition, the actual  terms of  the
   contracts tend to be modified in  the ordinary course of business  by
   means of subsequent purchase order terms and by course of dealing.
   
   The Company does not believe that  the level of backlog of orders  is
   either material or indicative of future results, since its  contracts
   are subject to revision through subsequent purchase orders and  since
   its customers  are generally  permitted  to cancel  purchase  orders,
   within certain parameters, prior to shipment without penalty.

   The majority of the  Company's sales are to  OEMs with payment  terms
   typically being net 30-45 days from date of invoice.


   Manufacturing and Supplies

   Most  manufacturing  operations  are   currently  conducted  at   the
   Company's headquarters in  Dallas, Texas.   In addition, the  Company
   utilizes  contract  manufacturing  operations  for  the  assembly  of
   certain products, including those produced in France.  The  Company's
   products consist  primarily  of various  integrated  circuits,  other
   electronic components  and  firmware  assembled  onto  an  internally
   designed printed circuit board.

   The  Company   uses   internally  designed,   applications   specific
   integrated circuits ("ASIC"), some of which are sole-sourced, on most
   of its products  as well as  standard off-the  shelf items  presently
   available from two or more suppliers.   Historically the Company  has
   not experienced any significant  problems in maintaining an  adequate
   supply of these parts sufficient to satisfy customer demand, and  the
   Company believes that it has good relations with its vendors

   The Company  generally  does not  manufacture  products to  stock  in
   finished goods  inventory,  as  substantially all  of  the  Company's
   production is dedicated to specific customer  purchase orders.  As  a
   result, the  Company  does  not have  any  material  requirements  to
   maintain significant inventories or other working capital items.
<PAGE>
   Intellectual Property and Patents

   While the Company believes that  its success is ultimately  dependent
   upon the  innovative  skills of  its  personnel and  its  ability  to
   anticipate technological changes, its ability to compete successfully
   will depend,  in  part,  upon  its  ability  to  protect  proprietary
   technology contained in its products.  The Company does not currently
   hold any patents relative to its current product lines.  Instead, the
   Company relies  upon a  combination of  trade secret,  copyright  and
   trademark laws and contractual restrictions to establish and  protect
   proprietary rights in its products.  The development of  alternative,
   proprietary and other technologies  by third parties could  adversely
   affect the competitiveness of the  Company's products.  Further,  the
   laws of some countries do not  provide the same degree of  protection
   of the Company's proprietary information as do the laws of the United
   States.  Finally, the Company's adherence to industry-wide  technical
   standards and specifications may limit the Company's opportunities to
   provide proprietary product features capable of protection.

   The Company  is  also subject  to  the risk  of  litigation  alleging
   infringement  of   third  party   intellectual  property   rights.   
   Infringement claims could require  the Company to expend  significant
   time and  money in  litigation, pay  damages, develop  non-infringing
   technology or acquire licenses to the technology which is the subject
   of asserted infringement.

   The Company has entered into several nonexclusive software  licensing
   agreements that allow  the Company to  incorporate software into  its
   product line thereby  increasing its  functionality, performance  and
   interoperability.      

   Employees

   At December 31,  1997, the Company  had 222  full-time employees,  of
   which 74 were engaged in manufacturing  and quality assurance, 72  in
   research and development,  50 in  sales, sales  support, service  and
   marketing and 26 in general management and administration.

   The Company's success to date has been significantly dependent on the
   contributions of  a  number  of  its  key  technical  and  management
   employees. The Company does not  maintain life insurance policies  on
   its key employees and, except for a few executive officers, does  not
   have employment  agreements with  key employees.    The loss  of  the
   services of one or more of these key employees could have a  material
   adverse effect on  the Company.   In addition,  the Company  believes
   that its future success will depend in large part upon its ability to
   attract  and   retain  highly   skilled  and   motivated   technical,
   managerial, sales  and marketing  personnel.   Competition  for  such
   personnel is intense. 

   None  of  the  Company's  employees  are  covered  by  a   collective
   bargaining  agreement  and  there  have  been  no  work  stoppages.  
   Additionally,  the  Company  considers  its  relationship  with   its
   employees to be good.
<PAGE>
   Competition

   The  computer  network  industry  is  intensely  competitive  and  is
   significantly affected by product introductions and market activities
   of  industry   participants.     The  Company   expects   substantial
   competition to continue.  The Company's competition includes  vendors
   specifically dedicated to  the mass storage  controller and  computer
   network product  markets.    Traditionally the  Company's  major  OEM
   customers have chosen not to manufacture adapters for their  products
   or do not manufacture sufficient  quantities or types of  controllers
   to meet their  needs.  Increased  competition could  result in  price
   reductions, reduced margins and loss of market share.

   Many  of  the  Company's  current  and  potential  competitors   have
   significantly  greater  financial,  technical,  marketing  and  other
   resources and larger installed  bases than the  Company.  Several  of
   the Company's  competitors have  been  acquired by  major  networking
   companies.  These  acquisitions are  likely to  permit the  Company's
   competitors  to  devote  significantly   greater  resources  to   the
   development  and  marketing  of  new  competitive  products  and  the
   marketing of existing competitive products to their larger  installed
   bases.    The   Company  expects  that   competition  will   increase
   substantially as a result of these and other industry  consolidations
   and alliances, as  well as  the emergence  of new  competitors.   The
   Company believes that it has been able to compete as a result of  its
   perceived  technological  leadership  within  the  Company's   market
   segment and its reputation for high product performance. 

   ITEM 2.   PROPERTIES.

   The Company leases a 96,000 square  foot facility located in  Farmers
   Branch,  Texas,  a   suburb  of  Dallas.     The  facility   includes
   approximately $2.8 million in  leasehold improvements that were  made
   by the Company.   The lease,  inclusive of  renewal options,  extends
   through 2009.      In  addition the  Company  leases  a  facility  in
   Chaville, France (near  Paris) which supports  the European  markets.
   The Company believes that  its facilities and  equipment are in  good
   operating condition and are adequate for its operations.  The Company
   owns most of the  equipment used in its  operations.  Such  equipment
   consists primarily of engineering  equipment, manufacturing and  test
   equipment, and fixtures. 

   ITEM 3.        LEGAL PROCEEDINGS.

        None

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

        Not applicable
<PAGE>
                                   PART II

   ITEM 5.        MARKET FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED
                  SHAREHOLDER MATTERS.

   Since January 1984  shares of the  Company's common  stock have  been
   traded on  The  Nasdaq Stock  Exchange  under the  symbol  INPH.  The
   following table summarizes  its high and  low price  for each  fiscal
   quarter during 1997 and 1996 as reported by Nasdaq.

   Fiscal 1997               High        Low
   First Quarter            11.125      8.00
   Second Quarter            8.875      6.25
   Third Quarter            11.125     7.875
   Fourth Quarter            8.625      5.75

   Fiscal 1996
   First Quarter            13.875     9.875
   Second Quarter            20.25     13.50
   Third Quarter             16.50     10.00
   Fourth Quarter           16.375     10.00

   The Company had  approximately 900  beneficial owners  of its  Common
   Stock, of which 94 are of record , as of March 2, 1998.

   The Company has  not paid  dividends on  its Common  Stock since  its
   inception.  The Board of Directors does not anticipate payment of any
   dividends in  the  foreseeable future  and  intends to  continue  its
   present  policy  of  retaining  earnings  for  reinvestment  in   the
   operations of the Company.
<PAGE>
   ITEM 6.        SELECTED FINANCIAL DATA

   Statement of Operations Data:
   (In Thousands, except per share data)
                                             Two months
                            Twelve months      ended        Twelve months
                            ended Dec. 31,    Dec. 31,      ended Oct. 31,
                            1997      1996      1995    1995    1994     1993

Revenues                  $66,004   $56,752   $ 3,379  $47,368 $40,303  $38,496

Gross Profit               32,016    27,964     1,224   23,547  20,066   18,764

Research and               13,327     9,902     1,360    7,327   7,862    8,772
development

Sales and marketing        11,686    10,297     1,173    8,583   7,599    9,087

General and                 6,248     4,905       634    4,004   4,146    4,847
Administrative

Special Charges                 -    11,646         -        -   1,148    2,447

Operating income              755   (8,786)   (1,943)    3,633   (689)  (6,389)
(loss)

Other, net                (1,525)     (705)        94      589     278      404

Income (loss) before        (770)   (9,491)   (1,849)    4,222  (411))  (5,985)
income tax

Net income (loss)         $ (971) $(10,055)  $(1,167)  $ 2,759 $ (280)  $4,201)

  Net income loss per    $ (0.18)   $(1.99)  $ (0.25)   $ 0.60 $(0.06)  $(0.94)
share (Basic)
  Net income loss per    $ (0.18)   $(1.99)  $ (0.25)   $ 0.55 $(0.06)  $(0.94)
share (Diluted)

Weighted average            5,496     5,062     4,663    4,561   4,484    4,472
common shares
Weighted average
common
 & common equivalent        5,496     5,062     4,663    5,051   4,484    4,472
shares


                              December 31,                 October 31,
Balance Sheet Data:         1997       1996          1995     1994      1993
Working capital           $25,244    $22,836       $24,328  $20,776   $19,053

Total assets               49,447     53,924        35,430   31,943    32,339

Total Liabilities          19,904     23,538         5,019    5,094     5,239

Shareholders' equity       29,543     30,386        30,411   26,849    27,100
<PAGE>


   ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                            CONDITION AND RESULTS OF OPERATIONS

   Consolidated Statement of Operations Percentage of Revenues
                                                 Two months
                                     Year ended    ended   Year ended
                                       Dec. 31,    Dec. 31,  Oct. 31,
                                     1997    1996    1995     1995
   Revenues                         100.0%  100.0%  100.0%  100.0%
   Cost of sales                     51.5%   50.7%   63.8%   50.3%


   Gross profit                      48.5%   49.3%   36.2%   49.7%

   Research and development          20.2%   17.4%   40.2%   15.4%
   Sales and marketing               17.7%   18.1%   34.7%   18.1%
   General and administrative         9.5%    8.6%   18.8%    8.5%
   Acquired in-process R&D            0.0%   20.5%    0.0%    0.0%


   Operating income (loss)            1.1%  -15.3%  -57.5%    7.7%
                                               
   Interest income                    0.7%    0.7%    2.8%    1.2%
   Interest expense                  -1.7%   -0.9%    0.0%    0.0%
   Other, net                        -1.3%   -1.0%    0.0%    0.0%
                                               
   Income (loss) before income       -1.2%  -16.5%  -54.7%    8.9%
   taxes

   Provision (benefit) for income     0.3%    1.0%  -20.2%    3.1%
   taxes


   Net income (loss)                 -1.5%  -17.5%  -34.5%    5.8%



<PAGE>

   RESULTS OF OPERATIONS

   Effective January  1, 1996,  Interphase Corporation  ("the  Company")
   changed its  fiscal year  end from  October 31  to December  31.  For
   comparison purposes, results  for the year  ended December 31,  1996,
   are being compared  with results  from the  year ended  October   31,
   1995.   The  Company  has  not  recast  October  31,  1995  financial
   information presented herein to conform to the new fiscal year  ends,
   as management does not believe such recasting would be as  meaningful
   for comparative purposes. 

   In June  1996, the  Company acquired  Synaptel, S.A  ("Synaptel"),  a
   French company which designs and distributes  a broad line of  remote
   access and ISDN  products,  which  include both significant  software
   content  and  interoperability  with  a  broad  range  of  networking
   protocols.

   Revenues:  Total revenues  for the year ended  December 31, 1997  and
   1996  were $66,004,000 and $56,752,000, respectively and  $47,368,000
   for the year  ended October 31,  1995.  This  represents a growth  in
   revenues of 16% from 1996 to 1997.  The increase in revenues  was led
   by significant revenue growth in the Company's Fibre Channel  product
   line, a three-fold increase in sales  of the Company's Fast  Ethernet
   product line,  and  22% increase in sales of ATM products.  This  was
   offset by   a  shift  from the  Company's  FDDI, SCSI,  and  Ethernet
   products by 20% from 1996 to 1997.  In 1997, FDDI revenues  accounted
   for approximately 33% of total revenues, Fast Ethernet 30%, SCSI  9%,
   WAN 8%, ATM   8%,  Ethernet 6% and   Fibre  Channel 3%.   Local  area
   networking products  in total  comprised 77%  of total  revenues  for
   1997,  mass storage  product revenues  12%  and wide area  networking
   products 8%.   North American revenues grew 26%, Pacific Rim revenues
   declined 8%, and   European revenues declined  12% compared to  1996.
   The Company's  current  marketing  strategy  is  to  increase  market
   penetration through  sales to  major OEM  customers.   One  of  these
   customers accounted for approximately 40% of the Company's revenue in
   1997.

   The increase in revenues   from 1995 to  1996 was $9,384,000,   which
   represents a growth in revenues of approximately 20%.  Revenues  from
   the  WAN  product  line  were  approximately  $7,100,000  since   the
   acquisition in mid-1996.  The remaining increase in revenues was  led
   by a 17% increase in sales of the Company's FDDI product line, a  17%
   increase in sales of Ethernet products,  a 116% increase in sales  of
   ATM products and partially offset by a 51% decline in SCSI  products.
     In 1996  FDDI revenues  accounted for  approximately 43%  of  total
   revenues, SCSI 13%, Ethernet  12%, ATM 8%, Fast  Ethernet 8% and  WAN
   13%.  Local area networking products in total comprised 71% of  total
   revenues for  1996,  mass  storage products  revenues  14%  of  total
   revenues and wide area  networking products 13%  of total revenues.  
   North America revenues grew 2%, Pacific Rim revenues declined 3%  and
   European revenues increased twofold  compared to 1995, primarily  due
   to the acquisition of Synaptel. 
<PAGE>
   Cost of Sales:  Cost of sales expressed  as a percentage of  revenues
   was  51%, 51% and 50% for the years ended December 31, 1997 and 1996,
   and   October 31,  1995, respectively.   In  1997, the  SCSI and  WAN
   products experienced improved gross margins over 1996, Ethernet,  100
   Base T /VGAnyLan  and Fibre Channel  were relatively   unchanged  and
   FDDI products experienced  a slight increase  in cost of  sales as  a
   percentage of revenues compared to 1996.  In 1996, the FDDI  products
   experienced  improved gross margins over 1995, SCSI and ATM  products
   were unchanged and Ethernet experienced a slight improvement  in cost
   of sales as a percentage of revenues compared to 1995. 

   Research  and  Development:      The  Company's  investment  in   the
   development of  new products  through  research and  development  was
   $13,327,000, $9,902,000  and   $7,327,000 in  1997, 1996,  and  1995,
   respectively. As a  percentage of revenue,  research and  development
   expenses were 20%, 17% and 15% for 1997, 1996 and 1995, respectively.
   The  increase in  spending  in 1997 reflected additional spending  on
   development for  ATM, WAN,  Fibre Channel  and  Fast Ethernet.    The
   increase in  spending  in  1996  was  primarily  the  result  of  the
   acquisition of Synaptel.   As a percentage  of revenue, research  and
   development expenses are expected to decrease in 1998.

   Sales and Marketing:  Sales and marketing expenses were  $11,686,000,
   $10,297,000, and $8,583,000 in 1997, 1996, and 1995, respectively. As
   a percentage of revenue, sales and marketing expenses were 18%,   for
   each year. As a percentage of revenue, sales and marketing   expenses
   are expected to remain constant in 1998.

   Special Charges:       In  the second  quarter  of 1996  the  Company
   recorded a  charge  of $11,646,000  for  acquired in-process  R&D  in
   association with the  acquisition of Synaptel.   Acquired  in-process
   research and development activities had no alternative future use and
   had not achieved technological feasibility; accordingly, the  amounts
   were  expensed  in  the   accompanying  consolidated  statements   of
   operations for the period ended December 31, 1996.

   General and Administrative:      General and administrative  expenses
   were $6,248,000, $4,905,000 and $4,004,000  in 1997, 1996, and  1995,
   respectively. As a percentage of revenue, general and  administrative
   expenses were 9% for each year.  As a percentage of revenue,  general
    and administrative  expenses are  expected to  remain constant    in
   1998.

   Interest Income:    Interest  income  was  $438,000,  $421,000  and  
   $586,000 in 1997, 1996 and 1995, respectively. The change in interest
   income from year to year is a reflection of the increase and decrease
   in the funds available for investment.

   Interest Expense:  Interest expense  was $1,126,000, $535,000 and  $0
   in 1997,  1996 and  1995, respectively.    The increase  in  interest
   expense in 1997 is the result of the debt incurred by the Company  to
   fund the Synaptel  acquisition in  mid-1996 being  outstanding for  a
   full year in 1997.

   Other Expense:  Other expense was $837,000 and $591,000  in 1997  and
   1996,  respectively.     Other  expense  primarily   reflects     the
   amortization of goodwill and acquired developed technologies  related
   to the Synaptel acquisition.
<PAGE>
   Provision (Benefit) for Income Taxes:  The Company experienced a  net
   loss before  taxes in  1997,  however, due  to  the effects  of  non-
   deductible goodwill and  state income taxes,  the Company  had a  tax
   provision of $201,000.  The provision decreased 64% from 1996 to 1997
   primarily due to  the write-off of  acquired in-process research  and
   development in 1996 which was not tax benefited.
                              
   Net Income (Loss):  The Company  reported a net loss was $971,000  in
   1997, a net loss of $10,055,000 in 1996, and net income of $2,759,000
   in 1995.    The loss  in 1996 was  attributable to  the write-off  of
   acquired  in-process   research   and  development      ($11,646,000)
   associated with the acquisition of Synaptel.

   Adoption of Accounting Standards: The  Company  adopted Statement  of
   Financial  Accounting  Standards  ("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  all
   periods  presented  were  restated.    SFAS  No.  128  requires   the
   presentation of basic and diluted earnings per share.  Basic earnings
   per common share is computed by  dividing net income by the  weighted
   average number of shares of common stock outstanding during the year.
    Diluted earnings per common share is computed by dividing net income
   by the  weighted average  number of  common  stock and  common  stock
   equivalents outstanding during the year. 

   In 1996, the  Company adopted  SFAS No. 121,     "Accounting for  the
   Impairment of  Long-Lived  Assets and  for  Long-Lived Assets  to  be
   Disposed  of,"  and  SFAS   No.  123,  "Accounting  for   Stock-Based
   Compensation."      The  adoption  of SFAS  No.  121 resulted  in  no
   significant impact on  the consolidated financial  statements of  the
   Company.  The  Company adopted  the footnote  disclosure approach  to
   SFAS No. 123, and the Company's pro-forma disclosure can be found  in
   the notes to the consolidated financial statements.

   Pending  Accounting  Pronouncements:  In  July  1997,  the  Financial
   Accounting Standards  Board (FASB)  issued 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 adopt these  statements
   in 1998.

<PAGE>
   LIQUIDITY AND CAPITAL RESOURCES

   The  Company's  cash,  cash  equivalents  and  marketable  securities
   aggregated $5,519,000, $5,850,000  and $12,686,000   at December  31,
   1997, 1996  and    October  31, 1995,    respectively.    Cash,  cash
   equivalents and marketable  securities remained relatively  unchanged
   from  1996 to 1997.  The decrease of $6,836,000 from 1995 to 1996  is
   primarily due to the  acquisition of the CISCO  product line and  the
   growth in  accounts  receivable  and  inventories.  Expenditures  for
   equipment and  purchased  software were  $1,150,000,  $2,539,000  and
   $2,728,000 in  1997, 1996  and 1995,  respectively. At  December  31,
   1997, the Company  had no  material commitments  to purchase  capital
   assets.   The Company's  significant  long-term obligations  are  its
   operating lease on its Dallas facility and future debt payments.  The
   Company has not paid any dividends  since its inception and does  not
   anticipate paying  any dividends  in 1998.   In  connection with  the
   Synaptel acquisition in June  1996, the Company  entered into a  two-
   year  $16,000,000  credit  facility  with  a  financial  institution,
   subject to annual renewal provisions.  This credit facility  includes
   an $8,500,000 term loan, a $2,500,000 equipment loan and a $5,000,000
   revolving credit facility.  The term loan and equipment loan are  due
   in quarterly installments beginning in  November 1996, and expire  in
   November 2001.  The revolving credit facility expires in June 1999.  
   In 1998, maturities  of this  credit facility  will be  approximately
   $2,192,000.  

   The Company  is  currently  assessing certain  year  2000  issues  on
   various  computer   related  systems,   and  it   will  initiate   an
   implementation plan before year  2000 to minimize potential  material
   adverse consequences.  The cost to implement this plan has yet to  be
   determined, however  the  Company does  not  expect the  cost  to  be
   material to its  financial position or  results of  operations.   The
   costs  associated  with  this  implementation  will  be  expensed  as
   incurred.  The Company  expects that its  cash, cash equivalents  and
   marketable securities will be adequate  to meet foreseeable needs  in
   1998.

   Use of Forward-Looking Statements:   Certain statements contained  in
   MD&A are  forward-looking, including  statements concerning  expected
   expenses and the adequacy of the Company's sources of cash to finance
   its current and future operations.  Factors which could cause  actual
   results to materially differ  from management's expectations  include
   the following:  general  economic conditions and  growth in the  high
   tech industry; competitive factors and pricing pressures; changes  in
   product mix; the timely development  and acceptance of new  products;
   inventory risks  due  to  shifts in  market  domain;  and  the  risks
   described from time to time in the Company's SEC filings.


   ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

        See Item 14 (a) below.

   ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
             ON ACCOUNTING AND FINANCIAL DISCLOSURE.

        Not applicable
<PAGE>
                              PART III

   ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

   The information required by this Item will be included in the Proxy
   Statement for the Annual Meeting of Shareholders to be held on April
   30, 1998, which is incorporatted herein by referece.

   ITEM 11.  EXECUTIVE COMPENSATION.

   The information required by this Item  will be included in the  Proxy
   Statement for the Annual Meeting of Shareholders to be held on  April
   30, 1998, which is incorporated herein by reference.


   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
        MANAGEMENT.

   The information required by this Item  will be included in the  Proxy
   Statement for the Annual Meeting of Shareholders to be held on  April
   30, 1998, which is incorporated herein by reference.

   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

   The information required by this Item  will be included in the  Proxy
   Statement for the Annual Meeting of Shareholders to be held on  April
   30, 1998, which is incorporated herein by reference.

<PAGE>
                                PART IV

   ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
        FORM 8-K.

   (a)  (i)  and (ii)  Financial Statements and Schedules.
        Reference is  made to the listing on  page F-1 of all  financial
   statements and schedules filed as a part of this  report.

        (iii)   Exhibits.
        Reference is  made to the Index  to Exhibits on  page E-1 for  a
   list of all exhibits filed during the period covered  by  this report.

   b)        Reports on Form 8-K.

   No reports on Form 8-K have  been filed by the Registrant during  the
   quarter ended  December 31, 1997.

<PAGE>       

                                SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) 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

   Date:     March 25, 1998                By:  /s/ R. Stephen Polley   
                                                                    
                                      R. Stephen Polley
                                      President and Chief Executive Officer

   Pursuant to the requirements of the Securities Exchange Act of  1934,
   this report has been signed below by the following persons on  behalf
   of the registrant and in the capacities indicated on March 25, 1998.

                     Name                             Title

                                      Chairman of the Board of Directors,
                                      Chief Executive Officer, 
                                       and President
        /s/ R. Stephen Polley       (Principal executive officer)
            R. Stephen Polley
                                     Chief Financial Officer,
                                     Vice President of  Financial
                                     and Treasurer
       /s/ Gregory B. Kalush         (Principal finance officer)
           Gregory B. Kalush

       /s/ Gary  W. Fiedler        Director
             Gary Fiedler

       /s/ Dale Crane              Director
              Dale Crane

       /s/ James F. Halpin         Director
           James F. Halpin

       /s/ Paul N. Hug             Director
            Paul N. Hug

       /s/ Willaim Voss            Director
          William Voss

       /s/ David H. Segrest        Director
          David H. Segrest

       /s/ S. Thomas Thawley       Director
          S. Thomas Thawley

<PAGE>  

                   INDEX TO FINANCIAL STATEMENTS AND
                     FINANCIAL STATEMENT SCHEDULES



   Report of Independent Public Accountants -
        ARTHUR ANDERSEN LLP                                      F-2

   Consolidated Balance Sheets - December 31, 1997  and 1996     F-3

   Consolidated Statements of Operations - Periods Ended
        December 31, 1997, 1996, 1995 and  October 31, 1995      F-4
                                                               
   Consolidated Statements of Shareholders' Equity - Periods Ended
       December 31, 1997, 1996, 1995 and  October 31, 1995       F-5

   Consolidated Statements of Cash Flows - Periods Ended     F-6 to F-7
        December 31, 1997, 1996, 1995 and October 31, 1995 

   Notes to Consolidated Financial Statements                F-8 to F-18

                                                                 
                                    F-1
<PAGE>
                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



   To the Shareholders and Board of Directors of Interphase Corporation:

   We have  audited  the  accompanying consolidated  balance  sheets  of
   Interphase Corporation (a Texas  corporation) and subsidiaries as  of
   December 31, 1997 and 1996,  and the related consolidated  statements
   of operations, shareholders'  equity, and  cash flows  for the  years
   ended December 31, 1997 and 1996, the two month period ended December
   31, 1995  and the  year  ended October  31,  1995.   These  financial
   statements are the responsibility of  the Company's management.   Our
   responsibility is to express an opinion on these financial statements
   based on our audits.

   We  conducted  our  audits  in  accordance  with  generally  accepted
   auditing standards.  Those standards require that we plan and perform
   the audit to obtain reasonable assurance about whether the  financial
   statements are  free of  material misstatement.   An  audit  includes
   examining, on  a  test basis,  evidence  supporting the  amounts  and
   disclosures in  the financial  statements.   An audit  also  includes
   assessing the accounting  principles used  and significant  estimates
   made by  management,  as well  as  evaluating the  overall  financial
   statement presentation.    We  believe  that  our  audits  provide  a
   reasonable basis for our opinion.
                                                                 
   In our opinion,  the financial statements  referred to above  present
   fairly,  in  all  material   respects,  the  financial  position   of
   Interphase Corporation and subsidiaries as  of December 31, 1997  and
   1996, and the results  of their operations and  their cash flows  for
   the years ended  December 31,  1997 and  1996, the  two month  period
   ended December  31, 1995  and the  year ended  October 31,  1995,  in
   conformity with generally accepted accounting principles.

                                 ARTHUR ANDERSEN  LLP
   Dallas, Texas
   February 4, 1998


                                      F-2
<PAGE>
<TABLE>

                            INTERPHASE CORPORATION
                        CONSOLIDATED BALANCE SHEET
                  (in thousands, except number of shares)
                                                                     
                                            
                                                Dec. 31, 1997  Dec. 31, 1996
   <S>                                                 <C>       <C>
   Cash and cash equivalents                           $2,247    $2,271
   Marketable securities                                3,272     3,579
   Trade accounts receivable, less allowances for
   uncollectible
   accounts of $544 and $503 respectively              13,030    15,182
   Inventories, net                                    14,895    12,599
   Prepaid expenses and other current assets              798     1,221
   Deferred income taxes, net                             686       886
        Total current assets                           34,928    35,738
   Machinery and equipment                             12,079    12,340
   Leasehold improvements                               2,890     2,863
   Furniture and fixtures                                 417       278
                                                       15,386    15,481
   Less-accumulated depreciation and amortization    (11,817)   (10,394)
                                 
        Total property and equipment, net               3,569     5,087
   Capitalized software, net                              225       400
   Deferred income taxes, net                             862       392
   Acquired developed technology, net                   4,400     5,819
   Goodwill, net                                        3,310     3,902
   Other assets                                         2,153     2,586
        Total assets                                  $49,447   $53,924
 LIABILITIES AND SHAREHOLDERS' EQUITY
        Liabilities
   Accounts payable                                    $2,636    $4,279
   Accrued liabilities                                  2,484     3,097
   Accrued compensation                                 1,910     2,962
   Income taxes payable                                   197        93
   Current portion of debt                              2,457     2,471
        Total current liabilities                       9,684    12,902
   Other liabilities                                      600     1,192
   Long term debt, net of current portion               9,620     9,444
        Total liabilities                              19,904    23,538
   Commitments and contingencies

        Shareholders' Equity
   Common stock, no par value; 100,000,000 shares      35,326    35,195
   authorized; 5,516,578
      and 5,491,658 shares outstanding, respectively
   Retained earnings (deficit)                        (5,930)   (4,959)
   Cumulative foreign currency translation                178       164
   adjustment
   Unrealized holding period loss                        (31)      (14)
        Total shareholders' equity                     29,543    30,386
        Total liabilities and shareholders' equity    $49,447   $53,924
The accompanying notes are an integral part of these consolidated financial statements.
                                    F-3
</TABLE>
<PAGE>
<TABLE>

                           INTERPHASE CORPORATION
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share amounts)
                                                       Two months Year
                                        Year ended       ended    ended
                                          Dec. 31,       Dec. 31, Oct. 31
                                        1997    1996     1995      1995     
  <S>                                 <C>      <C>        <C>     <C>
  Revenues                            $66,004  $56,752    $3,379  $47,368
  Cost of sales                        33,988   28,788     2,155   23,821
 
  Gross profit                         32,016   27,964     1,224   23,547
 
  Research and development             13,327    9,902     1,360    7,327
  Sales and marketing                  11,686   10,297     1,173    8,583
  General and administrative            6,248    4,905       634    4,004
  Acquired in-process R&D                   -   11,646         -      -

     Total operating expenses          31,261   36,750     3,167   19,914
 
  Operating income (loss)                 755  (8,786)   (1,943)    3,633

  Interest income                         438      421        94      586
  Interest expense                    (1,126)    (535)         -        -
  Other, net                            (837)    (591)         -        3
 
  Income (loss) before income taxes     (770)  (9,491)   (1,849)    4,222

  Provision (benefit) for income          201      564     (682)    1,463
  taxes
 
  Net income (loss)                    $(971)$(10,055)  $(1,167)   $2,759
 
  Net income (loss) per share
     Basic earnings per share          $(0.18)  $(1.99)   $(0.25)    $0.60
     Diluted earnings per share        $(0.18)  $(1.99)   $(0.25)    $0.55

    Weighted average common shares        5,496    5,062     4,663    4,561
    Weighted average common and common
  equivalent shares                     5,496    5,062     4,663    5,051

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

                                    F-4

</TABLE>
<PAGE>
<TABLE>
                          INTERPHASE CORPORATION
              CONSOLIDATE STATEMENTS OF SHAREHOLDERS' EQUITY
                              (in thousands)

                                                                              Cumulative
                                                        Retained  Unrealized  Foreign
                                        Common Stock    Earnings  Holdings    Currency
                                       Shares  Amount  (Deficit)  Period Loss Translation  Total
<S>                                      <C>   <C>        <C>        <C>          <C>     <C>        
Balance at October 31, 1994              4,513 $23,493    $3,504     $(148)       $-      $26,849

 Option exercises, including related       148     684         -         -         -          684
 tax benefit
 Unrealized holding period gain              -       -         -       119         -          119
 Net income                                  -       -     2,759         -         -        2,759

Balance at October 31, 1995              4,661  24,177     6,263       (29)        -       30,411

 Option exercises, including related         6      17         -         -         -           17
 tax benefit
 Unrealized holding period gain              -       -         -         -         -           -
 Net loss                                    -       -    (1,167)        -         -       (1,167)

Balance at December 31, 1995             4,667 $24,194    $5,096      $(29)       $-      $29,261

 Option exercises, including related       230   1,801         -         -         -        1,801
 tax benefit
 Common stock issued in Synaptel           595   9,200         -         -         -        9,200
 acquisition
 Cumulative foreign currency                 -       -         -         -       164          164
 translation
 Unrealized holding period gain              -       -         -        15         -           15
 Net loss                                    -       -   (10,055)        -         -      (10,055)

Balance at December 31, 1996             5,492 $35,195   $(4,959)     $(14)     $164      $30,386

 Option exercises, including related        24     131         -         -         -          131
 tax benefit
 Cumulative foreign currency                 -       -         -         -        14           14
 translation
 Unrealized holding period gain              -       -         -       (17)        -          (17)
 Net loss                                    -       -      (971)        -         -         (971)

Balance at December 31, 1997             5,516 $35,326   $(5,930)     $(31)     $178      $29,543


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


                                    F-5
</TABLE>
<PAGE>
<TABLE>

                          INTERPHASE CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands)
                                                                     Two months
                                              Year ended  Year ended ended    Year ended
                                                 Dec. 31,  Dec. 31,  Dec. 31,  Oct. 31,
                                                      1997     1996     1995     1995
   <S>                                           <C>       <C>       <C>       <C>
   Cash flows from operating activities:         
     Net income (loss)                           $(971)    $(10,055) $(1,167)  $2,759

     Adjustment to reconcile net income (loss) to net
   cash provided (used) by operating activities:
     Write off of acquired in-process research        0       11,646        0       0
   and development
      Depreciation and amortization               4,739        4,234      525   2,814
      Deferred income taxes                       (270)        (358)        1     170
      Change in assets and liabilities, net of
   Synaptel acquisition
          Trade accounts receivable               2,152      (8,584)    3,575 (1,863)
          Inventories                           (2,296)      (1,345)  (2,173)   (909)
          Refundable income taxes                     0            0        0     219
          Prepaid expenses and other current        423        (151)       93   (224)
   assets
          Accounts payable and accrued          (2,081)        (409)    (304)    (28)
   liabilities
          Accrued compensation                  (1,052)        (258)       43   (106)
          Income taxes payable                      104           0    (366)     366
      Net adjustments                             1,719       4,775    1,394     439

          Net cash provided (used) by operating     748      (5,280)      227   3,198
   activities

   Cash flows from investing activities:
      Additions to property, equipment,         (1,150)      (2,539)    (511) (2,728)
   capitalized software and leasehold
   improvements
      Decrease (increase) in other assets           373        (200)     (71)    (93)
      Decrease (increase) in marketable             307        5,788      (1) (1,528)
   securities
      Cash acquired in Synaptel acquisition           0           11        0       0
      Change in unrealized holding period loss     (17)           15        0       0
   on marketable securities
      Acquisition of developed technologies           0       (2,500)        0       0

          Net cash (used) provided by investing   (487)          575    (583) (4,349)
   activities

</TABLE>
<PAGE>
<TABLE>
   <S>                                           <C>       <C>       <C>       <C>   <S>
   Cash flows from financing activities:
      Increase (decrease) in other long term      (592)        1,093      (4)    (27)
   liabilities
      Payments of debt                          (2,338)      (1,134)       0       0
      Proceeds from debt                          2,500       2,075        0       0
      Increase in foreign currency translation       14         164        0       0
   adjustment
      Increase in common stock from exercise of     131       1,801       17     684
   options
          Net cash provided by financing          (285)       3,999       13     657
   activities

   Net increase (decrease) in cash and cash        (24)       (706)    (343)   (494)
   equivalents

   Cash and cash equivalents at beginning of      2,271       2,977    3,320   3,814
   year

   Cash and cash equivalents at end of year      $2,247      $2,271   $2,977  $3,320

   Supplemental Disclosure of Cash Flow
   Information:
   Interest paid                                   $996        $438       $0      $0
   Taxes refunded                                    27          40      283     244
   Taxes paid                                       389         476        0   1,014
The accompanying notes are an integral part of these consolidated financial statements.

                                    F-6
</TABLE>
<PAGE>


                          INTERPHASE CORPORATION
                    SUPPLEMENTAL SCHEDULE OF CASH FLOWS
                              (in thousands)



   Supplemental schedule of non-cash investing and financing activities

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

   Fair value of assets acquired                $(27,403)
        Liabilities assumed                         8,414
        Acquisition debt                            8,000
        Common stock issued                         9,200
        Aquisition costs                            1,800

             Cash acquired in Synaptel          $      11
             acquisition


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




                                    F-7
<PAGE>

   INTERPHASE CORPORATION
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   1.  SUMMARY OF SIGNIFICANT ACCOUNTING  POLICIES

   Principles  of  Consolidation  and  Basis  of  Presentation:      The
   consolidated financial statements include the financial statements of
   Interphase  Corporation  ("the   Company")  and   its  wholly   owned
   subsidiaries.  All significant intercompany accounts and transactions
   have been eliminated.

   Effective January 1, 1996,  the Company changed  its fiscal year  end
   from October 31 to December 31. For comparison purposes, results  for
   the year ended  December 31, 1996,  are being  compared with  results
   from the year ended October   31, 1995.   The Company has not  recast
   October 31, 1995 financial information presented herein to conform to
   the new  fiscal  year  end,  as  management  does  not  believe  such
   recasting would be as meaningful for comparative purposes. 

   In 1996, the  Company acquired Synaptel,  S.A ("Synaptel"), a  French
   company which designs and distributes a  broad line of remote  access
   and ISDN products,  which  include both significant software  content
   and interoperability with a broad range of networking protocols.

   Cash and Cash Equivalents:  The Company considers cash and  temporary
   investments with original  maturities of less  than three months,  as
   well  as  interest  bearing  money   market  accounts,  to  be   cash
   equivalents.

   Marketable Securities:  As of December  31, 1997 and  1996, the  fair
   market value of marketable securities was $3,272,000 and  $3,579,000,
   respectively.  In accordance with  the requirements of the  Statement
   of Financial Accounting Standards  ("SFAS") No. 115, "Accounting  for
   Certain Investments in  Debt and Equity  Securities," all  marketable
   securities are  classified  as  "available-for-sale  securities"  and
   reported at fair  value.  Unrealized  gains and  losses are  excluded
   from earnings and reported as  a separate component of  shareholders'
   equity, net  of related  deferred taxes.   The  Company's results  of
   operations will continue to include earnings from such securities  as
   calculated on a  yield-to-maturity basis.   During  1997 the  Company
   realized a net gain  of $34,000 from the  sale of securities.  During
   1996 the  Company  realized  a  loss of  $16,000  from  the  sale  of
   securities.   As of  December  31, 1997  and  1996, the  Company  had
   recorded a valuation  loss of   $31,000 and $14,000  (net of  taxes),
   respectively  with respect to certain available-for-sale securities.

   Allowance for doubtful accounts:  As  of December 31, 1997, 1996  and
   October 31, 1995, the allowance  for doubtful accounts was  $544,000,
   $503,000, and $238,000.  The activity in this account was as  follows
    (in thousands):

                     Balance at               Write-offs              Balance
                     Beginning   Charged to   Net of      Synaptel    at End
   Year Ended:       of Period   Expense      Recoveries  Acquisition of Period
   December 31, 1997   $ 503    $ 337          $ (296)      $ -        $ 544
   December 31, 1996     238       50             (50)      265          503
   October 31, 1995      240        -              (2)        -          238
<PAGE>
   Inventories:  Inventories are valued at  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):

                      Dec. 31,1997  Dec. 31, 1996
   Raw Materials        $  7,922     $  6,040
   Work-in-process         5,943        5,193
   Finished Goods          1,030        1,366
   Total                 $14,895      $12,599


                                      F-8

   Property and Equipment:  Property and equipment are recorded at cost.
   Depreciation  and amortization are provided over the estimated useful
   lives of depreciable  assets using  the straight-line  method.   When
   property and equipment are  sold or otherwise  retired, the cost  and
   accumulated depreciation  applicable to  such assets  are  eliminated
   from the accounts,  and any resulting  gain or loss  is reflected  in
   current operations.   Related  depreciation expense  and  accumulated
   depreciation were as follows (in thousands):

                                Depreciation     Accumulated
                                     Expense    Depreciation
   Year ended December 31, 1997      $ 2,781        $ 11,817
   Year ended December 31, 1996        2,782          10,394
   Year ended October 31, 1995         2,414           8,820

   The depreciable lives of property and equipment are as follows:

   Machinery and equipment     3-5   years
   Leasehold improvements      3-10 years
   Furniture and fixtures      5-7   years

   Capitalized  Software:    Capitalized  software  represents   various
   software licenses purchased by the Company and utilized in connection
   with the Company's network and mass  storage products as well as  the
   general operations of the Company.  Capitalized software is amortized
   over  3-5  years  utilizing   the  straight-line  method.     Related
   amortization expense and accumulated amortization were as follows (in
   thousands):

                                    Amortization    Accumulated
                                         Expense   Amortization
   Year ended December 31, 1997             $223        $ 1,950
   Year ended December 31, 1996              362          2,128
   Year ended October 31, 1995               400          1,441


   Research and  Development  Subsidy:   Included  in  other  assets  at
   December 31, 1997, is a receivable  for a subsidy of  $1,651,000  due
   from the French government  related  to the research and  development
   activities of Synaptel. 
<PAGE>
   Intangibles:    As  a result  of the  acquisition of  Synaptel,  S.A.
   ("Synaptel") and certain product rights acquired from Cisco  Systems,
   Inc. ("Cisco"),  the Company  acquired intangible  assets related  to
   developed technologies, assembled  workforce and  goodwill (See  Note
   2). Developed technology and assembled  workforce are amortized on  a
   straight-line basis over a  7-year period.   Goodwill related to  the
   Synaptel acquisition is amortized on a straight-line basis over a 10-
   year period.    Acquired  product rights  from  Cisco  are  amortized
   ratably over the  anticipated revenue stream  of such products  sold.
   The December  31,  1997  intangible  balances  at  cost  and  related
   amortization expense and accumulated amortization were as follows (in
   thousands):
                                      Amortization Expense Accum.       Ending
                          Intangibles   1997   1996  1995  Amortization Balance
Developed technology            $4,230  $600   $150   $-        $750    $3,480
Assembled workforce                390    60     15    -          75       315
Goodwill-Synaptel                3,596   263     23    -         286     3,310
Acquired Product Rights-Cisco    2,500   812    768    -       1,580       920

   Intangibles are reviewed for impairment whenever events or changes in
   circumstances  indicate  that   the  carrying  amount   may  not   be
   recoverable.  Any impairment would be recognized in operating results
   if a permanent reduction in value were to occur.


                                    F-9
   Revenue Recognition:  Revenue from product sales is recorded when the
   earnings process  has  been  completed,  which  is  at  the  time  of
   shipment.

   Concentration  of   Credit  Risk:     Financial   instruments   which
   potentially expose the Company to  concentrations of credit risk,  as
   defined  by  SFAS  No.  105,  consist  primarily  of  trade  accounts
   receivable.   The  majority  of the  Company's  sales  have  been  to
   original equipment manufacturers of computer systems.

    The Company conducts credit evaluations of its customers'  financial
   condition and  limits  the  amount  of  trade  credit  extended  when
   necessary.    The  Company  establishes  an  allowance  for  doubtful
   accounts based upon factors surrounding  the credit risk of  specific
   customers, historical trends, and other information.

   Research and Development:  Research and development costs are charged
   to expense as incurred.

   Foreign Currency Translation:  Assets and liabilities of certain non-
   U.S. subsidiaries  are  translated  at current  exchange  rates,  and
   related revenues  and expenses  are  translated at  average  exchange
   rates in effect during the period.  Resulting translation adjustments
   are reflected in shareholders' equity.
<PAGE>
   Income Taxes:  The Company utilizes the liability method to determine
   deferred taxes.  Deferred tax assets and liabilities are based on the
   estimated future  tax effects  of differences  between the  financial
   statement and  tax  basis  of  assets  and  liabilities  given    the
   provisions of enacted tax law.  The Company's consolidated  financial
   statements include deferred income taxes arising from the recognition
   of revenues  and expenses  in different  periods for  income tax  and
   financial reporting purposes. 

   Net Income  (Loss)  Per Common  and  Common Equivalent  Share:    The
   Company adopted  Statement of Financial Accounting Standards ("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  all periods presented  are restated.   Under SFAS  No.
   128, basic earnings  per common share  are computed  by dividing  net
   income by  the weighted  average number  of  shares of  common  stock
   outstanding during the year.  Diluted  earnings per common share  are
   computed by dividing  net income by  the weighted  average of  common
   stock and common stock equivalents outstanding during the year. 

   Weighted average common and common equivalent shares (in thousands):

                                                     Two months
                                                     ended        Year ended
                                Year ended Dec. 31,  Dec. 31,     Oct.  31,
                                  1997     1996       1995          1995
   Outstanding weighted average
   shares outstanding             5,496   5,062       4,663        4,561

   Dilutive impact    of  stock       -       -           -          490
   options

   Total outstanding weighted
   average common and common
   equivalent shares              5,496   5,062       4,663        5,051

   Anit-dilutive options of 101,000,  371,000 and 435,000 were  excluded
   from the dilutive calculation in 1997, 1996, and the two month period
   ended December 31, 1995, respectively.

                                   F-10

   Recently Issued Accounting  Policies:  In  1996, the Company  adopted
   SFAS No. 121,   "Accounting for the  Impairment of Long-Lived  Assets
   and for  Long-Lived  Assets to  be  Disposed of",  which  establishes
   accounting standards for the impairment of long-lived assets, certain
   identifiable intangibles, and goodwill.  The adoption of SFAS No. 121
   did  not  have  a  material  effect  on  the  consolidated  financial
   statements of the Company.
<PAGE>
   In 1996, the Company  adopted  SFAS No.  123, "Accounting for  Stock-
   Based Compensation".    SFAS No.  123  requires companies  to  either
   recognize compensation expense related  to employee stock options  in
   the income statement or disclose the pro-forma effect on earnings  of
   the stock options in the footnotes  to the financial statements.  The
   Company adopted the footnote disclosure approach of SFAS No. 123, and
   the Company's pro  forma disclosure  can be found  in Note  5 to  the
   consolidated financial statements.

   In 1997, the Company adopted   SFAS No. 128, Earnings per Share,  for
   its December 31, 1997 consolidated financial statements.

   Effective  July  1997,  the  Financial  Accounting  Standards   Board
   ("FASB") issued  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 adopt  these  statements in  1998  and
   anticipates  no  material  impact  on  the  financial  statements  or
   footnotes to the financial statements.

   Certain Reclassifications:   Certain  prior  year amounts  have  been
   reclassified to conform with the 1997 presentation.

   Use of  Estimates:    The  preparation  of  financial  statements  in
   conformity with  generally  accepted accounting  principles  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.
<PAGE>
   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 was 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  was  included in  goodwill.  
   Identified intangibles acquired included approximately $11,600,000 of
   in-process   research  and   development,  $4,230,000  of   developed
   technology and $390,000  related to  Synaptel's assembled  workforce.
   Acquired  in-process  research  and  development  activities  had  no
   alternative  future   use   and  had   not   achieved   technological
   feasibility;  accordingly,  the  amounts  were    expensed    in  the
   accompanying  consolidated  statement of  operations  for the  year  
   ended December  31, 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 1997 and 1996,  no additional
   consideration was paid.

                                   F-11

   The unaudited pro  forma financial information  is presented for  the
   years ended December 31, 1996 and  October 31, 1995.  This  unaudited
   pro forma  financial  information gives  effect  to the  purchase  of
   Synaptel as if such transaction had occurred as of November 1,  1994,
   and  excludes  the  $11,646,000  write-off  of  acquired   in-process
   research and development (in thousands):

                                  Year ended        Year ended
                              December 31, 1996   October 31, 1995
                   
   Net sale                       $ 59,845         $ 58,115
   Net income (loss)                (1,388)           2,317
   Basic earnings per share          (0.26)            0.45
   Diluted earnings per share        (0.26)            0.41


   Unaudited pro forma  financial information for  the two-month  period
   ended December 31, 1995 is not available.
<PAGE>
   The  unaudited pro  forma financial information  does not purport  to
   represent what  the  results  of  operations  of  the  Company  would
   actually have been if the  aforementioned transactions  had  occurred
   on November 1, 1994, nor do they project the results of operations or
   financial position for any future periods or at any future date.

   ACQUIRED PRODUCT RIGHTS

   In June 1996, the Company acquired the rights to manufacture, market,
   and sell certain FDDI  products from Cisco   for a purchase price  of
   $2,500,000.   The  acquired product rights  are included in  acquired
   developed technology in the accompanying December 31, 1997 and  1996,
   consolidated balance sheet.


   3.   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 revolving credit facility
   is a two-year facility  with an annual  renewal provision, and  bears
   interest at the bank's base rate (currently 8.5%).  The term loan and
   equipment loan are payable  in equal quarterly installments  totaling
   $548,000 plus accrued interest commencing 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  borrowing
   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 December 31, 1997, the Company was in
   compliance  with  all   covenants.  At  December   31,  1997,   total
   availability under this credit facility was $1,500,000.


   At December 31, 1997, the Company's outstanding debt consisted of the
   following (in thousands):

                                 Dec. 31, 1997  Dec. 31, 1996    

   Acquisition Term Loan              $6,375     $8,075
   Equipment Financing Loan            1,866      2,358
   Borrowings  under   revolving       3,500      1,000
   credit facility
   Other                                 336        482
   Total                              12,077     11,915
   Less current portion                2,457      2,471
   Total long term debt               $9,620     $9,444

   The total scheduled debt principal  payments are $2,457,000 in  1998,
   $5,692,000 in 1999, $2,192,000 in 2000,  $1,664,000 in 2001 and  zero
   thereafter.

<PAGE>                                   F-12

   4.  INCOME TAXES

   The provision (benefit)  for income taxes  for each period  presented
   was as follows (in thousands):
                                                   Two Month     Year ended
                              Year ended Dec. 31,  ended Dec. 31,   Oct 31,
                                    1997   1996     1995            1995

   Current provision (benefit)      $471   $922       $(683)      $1,293
   Deferred provision (benefit)    (270)  (358)           1          170
   Total                            $201  $ 564       $(682)      $1,463

   Tax effect of  temporary differences  that give  rise to  significant
   components of the  deferred tax assets  as of December  31, 1997  and
   1996, are presented as follows (in thousands):

                                     Year ended    Year ended
                                       Dec. 31,      Dec. 31,
                                         1997          1996 
   Current deferred tax assets:
   Assets:
   Inventory                              $ 155      $ 294
   Accounts receivable                       88        120
   Vacation accrual                         148        154
   Other expenses                           295        318
   Total                                  $ 686      $ 886

   Noncurrent deferred tax assets
   (liabilities), net:
   Assets:
   Depreciation                             850        765
   Amortization                             459          -
                                        $ 1,309      $ 765
   Liabilities:
   Other                                  (447)      (373)
   Total                                  $ 862       $392


   The Company has not  recorded a valuation  allowance with respect  to
   the various deferred  tax assets as  management believes  it is  more
   likely than  not that  these assets  will  be realized.    Management
   periodically reviews the realizability of the Company's deferred  tax
   assets,  as  appropriate,   when  existing   conditions  change   the
   probability of realization.   The differences  between the  provision
   (benefit) for income taxes computed  on income before income taxes at
   the U.S. federal statutory income tax rate (34%) and the amount shown
   in the Consolidated Statements of Operations are presented below  (in
   thousands):
<PAGE>
                                                   Two Month     Year ended
                              Year ended Dec. 31,  ended Dec. 31,   Oct 31,
                                    1997   1996     1995            1995

   Income taxes at               $(262)  $(3,227)    $ (628)      $1,435
   statutory rate            
     State income taxes              1        46       (35)          102
     Write off of in-
     process research and
     development not tax benefited   -     3,960          -            -
   Non-deductible goodwill
     amortization                  314        64          -            -
   Other                           148     (279)       (19)         (74)
   Provision (benefit) for      $  201   $   564    $ (682)       $1,463
   income taxes


<PAGE>
                                   F-13
   5.  COMMON STOCK

   Amended and  Restated Stock  Option  Plan:     In 1996,  the  Company
   amended and  restated  its  Stock  Option  Plan  which,  as  amended,
   authorizes the issuance  to employees of  up to  2,350,000 shares  of
   common stock in incentive stock options (as defined in section 422 of
   the Internal Revenue Code of 1986, as amended) and nonqualified stock
   options.  The exercise price of  the incentive stock options must  be
   at least equal to the fair market value of the Company's common stock
   on the date of  the grant, while the  exercise price of  nonqualified
   stock options  may be  less than  fair market  value on  the date  of
   grant, as determined by  the board.   Options generally vest  ratably
   over a 5-year  period from the  date of grant.   The  term of  option
   grants may be up to 10 years.  Grants prior to June 1994 expire after
   6 years.   Options   are  canceled  upon the  lapse of  three  months
   following termination of employment except in  the event of death  or
   disability, as defined.

   Stock Option Sub-Plan:  This plan was adopted in 1988 for the benefit
   of the Company's employees located in the United Kingdom.  This  plan
   authorizes the issuance of  options to purchase  common stock of  the
   Company at prices  at least  equal to the  fair market  value of  the
   common stock on the date of the grant. The options vest after 3 years
   and expire after 10 years.  The options are canceled upon termination
   of employment, except in the event of death, retirement or injury, as
   defined.    The following table summarizes the transactions under the
   Stock Option Plan and the Stock Option Sub-Plan (in thousands, except
   option prices):
                              Number of    Range of   Weighted Average
                               Options   Option Price    Option Price     
   Balance, October 31, 1994       757   4.00- 8.00        5.10

   Granted                         536   9.57- 16.13      11.35
   Exercised                     (134)   4.00-  7.38       5.02
   Canceled                      (102)   4.00- 11.44       7.25
   Balance, October 31, 1995     1,057   4.00- 16.13       8.07

   Exercised                       (3)   4.00- 11.44       5.77
   Balance, December 31, 1995    1,054   4.00- 16.13       8.08

   Granted                         370  10.00- 16.00      13.91
   Exercised                     (194)   4.00- 11.44       6.08
   Canceled                      (118)   4.00- 12.07       8.36
   Balance, December 31, 1996    1,112   4.00- 16.13      10.34

   Granted                         381   6.00- 10.37       7.95
   Exercised                      (24)   6.00- 11.00       7.26
   Canceled                       (59)   4.00- 15.00      10.17
   Balance, December 31, 1997    1,410   4.00- 16.13      10.80

   Exercisable at December         427   4.00- 16.13       9.08
   31, 1997

<PAGE>
                                   F-14

   Director Stock  Options:   In May  1994, the  Company formalized  its
   program  ("directors'  plan")  of  granting  stock  options  to   its
   directors.  500,000 common shares were made available for grant under
   this plan.  Stock Option grants pursuant to the directors' plan  will
   vest within one year and have a term of 5 years.  The exercise prices
   related to  these options  were  equal to  the  market value  of  the
   Company's stock on the date of grant.  The following table summarizes
   the transactions under the Director Stock Option Plan (in  thousands,
   except option prices):

                                      Number of  Range of      Weighted Average
                                       Options   Option Price   Option Price
   Balance, October 31, 1994              144   4.38- 6.63        5.61

   Granted                                 40  10.25- 16.88      11.91
   Balance, October 31, 1995              184   4.38- 16.88       6.98

   Granted                                 30  14.88- 14.88      14.88
   Exercised                             (38)  4.75-  10.25       6.20

   Balance, December 31, 1996             176   4.38- 16.88       8.52

   Granted                                 55   6.75- 11.12       7.78
   Balance, December 31, 1997             231   4.38- 16.88       8.35

   Exercisable at  December  31, 1997     185   4.38- 16.88       8.66

   Accounting for  Stock-Based  Compensation:    In  1996,  the  Company
   adopted SFAS No.  123, "Accounting for  Stock-Based Compensation."   
   The Company  has two  stock option  plans, the  Amended and  Restated
   Stock  Option  plan,  which  also  includes  the  Sub-Plan,  and  the
   Directors Plan.   The  Company accounts  for  these plans  under  APB
   Opinion No. 25, under which no compensation cost has been recognized.
    Had compensation cost  for these plans  been determined pursuant  to
   the provisions of SFAS No. 123, the Company's pro forma net loss  for
   1997 and  1996  would  have been  $(2,121,000)  and  $(10,653,000),  
   respectively, resulting  in  basic  loss per  share  of  $(0.39)  and
   $(2.10), respectively.  The  fair  value  of  each  option  grant  is
   estimated on the date of grant using the Black-Scholes option pricing
   model  with  the  following  weighted-average  assumptions  used  for
   options granted in 1997 and 1996:   risk-free interest rate of 6%  in
   1997 and 7% in 1996, expected  dividend yield of zero, expected  term
   of 4.48 years in 1997 and 6.4 years in 1996, and expected  volatility
   of 93.6% in  1997 and  112.96% in 1996.   The  weighted average  fair
   valuation per share was $5.56 in 1997, and $9.19 in 1996.

   Because the SFAS No. 123 method of  accounting has  not been  applied
   to  options granted prior to January 1, 1995, the resulting pro-forma
   compensation cost may not be representative of that to be expected in
   future years. 
<PAGE>
   6.  ACCRUED LIABILITIES

   Accrued liabilities consisted of the following (in thousands):

                           December 31, December 31,
                               1997       1996
   Accrued royalties          $   70     $ 265
   Accrued outside               320       354
   commissions
   Accrued property tax          182       211
   Accrued acquisition           479       546
   cost
   Accrued other               1,433     1,721
                             $ 2,484   $ 3,097

                                   F-15

   7.  RELATED PARTY TRANSACTIONS

   The Company paid  approximately $347,000  and $668,000  for the  year
   ended December 31, 1997 and 1996,  respectively, $67,000 for the  two
   months ended December  31, 1995,  and   $397,000 for  the year  ended
   October 31,  1995, to  certain outside  directors of  the Company  or
   their firms as remuneration for their professional services.

   8.  TRANSACTIONS WITH MOTOROLA, INC.

   Motorola owns   660,000    shares of  the  Company's common  stock.  
   Motorola has the right to require  registration and to designate  one
   member of the board  of directors.   Shipments to Motorola  comprised
   the following percentage  of the Company's  revenues for the  periods
   indicated:  

                                 % of Total Revenues
   Year ended December 31, 1997         3 %
   Year ended December 31, 1996         6 %
   Two month period ended               4 %
   December 31, 1995
   Year ended October 31, 1995          6 %

   9.  EMPLOYEE BENEFIT PLAN

   The Company maintains a defined contribution plan for those employees
   who meet  the  plan's length  of  service requirements.    Under  the
   defined contribution plan, employees may make voluntary contributions
   to the plan, subject to certain limitations, and the Company  matches
   employee's contributions up to 3% of the employees' annual salary. At
   the Company's option, a discretionary contribution to the plan can be
   made.  The total  expense under this plan  was $171,000 and  $262,000
   for the years ended December 31, 1997 and 1996 respectively,  $27,000
   for the   two-month transition period  ended December  31, 1995,  and
   $282,000 for the year ended October 31, 1995.  The Company offers  no
   post-retirement or post-employment benefits. 
<PAGE>
   10.  OTHER FINANCIAL INFORMATION

   Major Customers:  The Company had one customer in 1997, no  customers
   in 1996,  no customers  in the  two-month transition  period and  one
   customer in  1995   accounting for  more than  10% of  the  Company's
   consolidated revenues.  Net  revenues resulting from these  customers
   were as follows ($ in thousands):

   Year           Total Revenues      % of Consolidated Revenues
   1997              $ 26,402                40%
   1995                 7,039                15%

                                   F-16

   Commitments:  The Company leases its office, research and development
   and manufacturing facility and certain manufacturing equipment  under
   noncancelable operating leases  to 2010.   Rent  expense related  to
   these leases are recorded on a straight-line basis.   As of  December
   31, 1997, operating lease  commitments having noncancelable terms  of
   more than one year are as follows (in thousands):

   Year ending December 31,
   1998             $1,001
   1999                799
   2000                205
   2001                171
   2002                 64
   Thereafter          509

   Total rent expense for operating leases was approximately as  follows
   (in thousands):

   Year                     Total Rent Expense
   1997                               $1,024
   1996                                  817
   Two month transition period           148
   1995                                  702

    Contingencies:  The Company is involved in various legal actions and
   claims arising  in  the  ordinary course  of  business.    Management
   believes that such  litigation and  claims will  be resolved  without
   material effect on  the Company's  financial position  or results  of
   operations. 

   Geographic Information:   The  Company  operates principally  in  the
   United States, Europe and  the Pacific Rim.   A geographic detail  of
   revenue is as follows (in thousands):

                                            Transition
                                             Period
   Region                    1997     1996    1995     1995
   North America          $ 53,059  $42,102  $2,712  $41,207
   Europe                   10,867   12,383     457    3,818
   Pacific Rim               2,078    2,267     210    2,343

<PAGE>

                                   F-17
<PAGE>
   11.         QUARTERLY FINANCIAL DATA (Unaudited)

                                           Quarter Ended
                             March 31  June 30  September 30    December 31
   1997                          (in thousands, except per share amounts)
   Revenues                    $16,858  $18,379     $13,611     $17,156
   Gross profit                  8,086    9,162       6,209       8,559
   Income (loss) before            138      814      (2,558)        836
   taxes
   Net income (loss)                97      437      (2,191)        686
   Net income (loss) per
   share
   Basic EPS                     $ .02     $.08       $(.40)       $.12
   Diluted EPS                   $ .02     $.08       $(.40)       $.12

                                           Quarter Ended
                             March 31  June 30  September 30    December 31
   1996                          (in thousands, except per share amounts)
   Revenues                   $11,877    $11,318    $16,370     $17,187
   Gross profit                 6,191      5,588      7,871       8,314
   Income (loss) before         1,007   (11,526)        192         836
   taxes
   Net income (loss)              644   (11,565)        167         699
   Net income (loss) per
   share
   Basic EPS                     $.14    $(2.45)       $.03        $.13
   Diluted EPS                   $.13    $(2.45)       $.03        $.12

   Operating  results  in  the  second   quarter  of  1996  included   a
   $11,646,000 expense  for the  write-off  of acquired  in-process  R&D
   associated with the Synaptel acquisition

                                 Period ended
   Transition Period             December 31, 1995
                       (in thousands, except per share amounts)

   Revenues                       $ 3,379
   Gross profit                     1,224
   Income (loss) before           (1,849)
   taxes
   Net income (loss)              (1,167)
   Net  income   (loss)
   per share
   Basic EPS                       $(.25)
   Diluted EPS                     $(.25)
                                        
                                         Quarter Ended
                         January 31  April 30  July 31  October 31
                           (in thousands, except per share amounts)
   1995
   Revenues                 $11,022  $11,473    $12,356   $12,517
   Gross profit               5,420    5,771      6,083     6,273
   Income before taxes          948    1,005      1,166     1,103
   Net income                   606      645        745      763 
   Net income per share
   Basic EPS                   $.13     $.14       $.16      $.17
   Diluted EPS                 $.12     $.13       $.14      $.15

<PAGE>
                                   F-18


                           INDEX TO EXHIBITS

   Exhibits

     2 (a)   Stock Purchase Agreement, dated as of June 29, 1996,  among
   Interphase Corporation, Synaptel   and   Philippe  Oros,       Xavier
   Sutter, Francois Lecerf, Schroder Ventures French Enterprise Fund LPI
   (USA), Schroder     ventures French  Enterprise  Fund UKLP  (UK)  and
   Schroder Ventures Holding Limited (UK). (7)
    3 (a)    Certificate of Incorporation of the registrant. (1)
    3 (b)    Amended and Restated Bylaws of the registrant  adopted
             on December 5, 1995. (6)
   10 (b)    Registrant's Amended  and Restated  Stock Option  Plan  and
             Amendment No. 1 and 2 thereto. (9)
   10 (c)    Registrant's Incentive Stock Option Sub-Plan. (3)
   10 (d)    Stock Purchase Warrant issued to Motorola, Inc. (4)
   10 (e)    Lease on Dallas facility. (5)
   10 (g)    Directors Stock Option  Plan and Amendment No. 1 thereto.(6)
   10 (i )   Loan Agreement between  Interphase Corporation and  BankOne
             Texas, N.A. (8)
   10 (j)    Purchase Agreement between Interphase Corporation and Cisco
             Systems Inc. (9)
   23 (a)    Consent of Independent Public Accountants. (10)
   27        Financial Data Schedule. (10)

   (1)  Filed as an exhibit to Registration Statement No. 2-86523 on
        Form S-1 and incorporated herein by reference.
   (2)  Filed as  an exhibit to Report on Form  10-K for the year  ended
        October 31, 1984 and incorporated  herein    by reference.
   (3)  Filed as  an exhibit to Report on Form  10-K for the year  ended
        October 31, 1988 and incorporated herein by reference.
   (4)  Filed  as an  exhibit to  Report on  Form 10-Q  for the  quarter
        ended April 30, 1989 and incorporated herein by reference.
   (5)  Filed as  an exhibit to Report on Form  10-K for the year  ended
        October 31, 1994 and incorporated herein by reference.
   (6)  Filed as  an exhibit to Report on Form  10-K for the year  ended
        October 31, 1995 and incorporated herein by     reference.
   (7)  Filed as  an exhibit to Report  on Form 8-K  on August 6,  1996,
        and incorporated herein by    reference.
   (8)  Filed as  an exhibit to Report on Form  8-KA on October 4,  1996
        and incorporated herein by    reference.
   (9)  Filed as  an exhibit to Report on Form  10-K for the year  ended
        December  31, 1996 and  incorporated herein  by reference.
   (10) Filed herein.

                                    E-1