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, 1999 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 6, 2000  was approximately $132,175,000.   As  of
  March  6,  2000,  registrant   had  5,827,409  shares  of  Common   Stock
  outstanding.
                     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 May 3,  2000
  (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    connectivity    products    utilizing    advanced
    technologies   for  today's   enterprise   networking   and   storage
    environments and other embedded computer applications.   Interphase's
    products  include  server-based  adapter  cards,  network   operating
    system device drivers, and management software applications.

    Key Terms and Definitions

    Interphase  is a  technology  company  and many  terms  used  by  the
    Company may be unfamiliar  to those outside the industry.   Following
    are  some  key terms  that  may  be  useful  in  helping  the  reader
    understand the  products, technologies and  markets relevant for  the
    Company.

    Key computer hardware and  software components related to  Interphase
    product offerings include:

    Adapter - Also called  a communications controller, host bus  adapter
    (HBA) or network interface card (NIC).   An adapter is a  device that
    connects a computer  server to one or  more peripheral devices  (such
    as switches,  hubs, storage devices,  etc.) or other  computers.   An
    adapter  card  typically  plugs   into  the  expansion  bus  on   the
    motherboard  of the  computer  and communicates  with  the  operating
    system  controlling  the  system  via  the  use  of  specific  device
    drivers.  Adapters and associated device drivers are the  key product
    components designed, manufactured and marketed by Interphase.

    Server - A computer  in a network shared by  multiple users.    These
    are  typically  more powerful  than  computers  used  by  individuals
    (often  referred   to  as  "desktops")   and  require  advanced   I/O
    connectivity.   In enterprise  network environments,  some  computers
    may be dedicated to a single task.  For instance, an  Internet server
    is a computer that provides World Wide Web services on  the Internet.
     If the Web server is used internally  and not by the public, it  may
    be known as an "intranet server."

    Embedded System - As related  to Interphase, an embedded system is  a
    highly specialized  computer server that  resides in an  "industrial"
    environment  requiring  high-availability  and  maximized  "up-time."
    Typical uses for  this type of  server include military  applications
    such as on-board ship communications or avionics,  or next-generation
    telecommunication  applications such  as  intelligent  call  routing,
    call number  portability or base  station communications control  for
    wireless service.   Interphase refers to its  products for this  type
    of system as "embedded controllers" or "embedded system products."
<PAGE>
    Operating  System  -  The  master  control  program  that   runs  the
    computer. It is the first program loaded when the computer  is turned
    on, and its main  part, called the kernel,  resides in memory at  all
    times.  It may  be  developed by  the  vendor of  the  computer  it's
    running in, or  by a third party.   It is  an important component  of
    the computer system, because  it sets the operational guidelines  for
    all application programs  that run on the  system. All programs  must
    "talk to" the  operating system.   Popular network operating  systems
    today include Windows NT, HP-UX, AIX and Linux.

    Device Drivers  - A program  routine that links  an adapter card  (or
    other device)  to the operating  system.  It  is written by  software
    engineers  who understand  the detailed  knowledge of  the  adapter's
    command  language  and  characteristics,  and  contains  the  precise
    machine language necessary to perform the functions requested  by the
    application.   When  a new  adapter is  added  to the  computer,  its
    driver must  be installed in  order to run  it. The operating  system
    calls the driver, and the driver "drives" the adapter.  Routines that
    perform internal functions, such as memory managers and  disk caches,
    are also called drivers.

    Core technologies used by Interphase include:

    Fibre Channel  - A  high-speed transmission  technology that  can  be
    used  as  a front-end  communications  network,  a  back-end  storage
    network, or both at the same  time.  With Fibre Channel, servers  can
    not only talk to the  storage system via SCSI (storage protocol,  see
    below),  but the  hosts  can talk  to  each other  via  IP  (Internet
    Protocol)  over the  same network.  Fibre Channel  supports  existing
    peripheral  interfaces and  communications  protocols.  Its  name  is
    somewhat  misleading as  Fibre  Channel supports  coaxial  cable  and
    twisted pair copper  wiring as well single  mode and multimode  fiber
    connections.

    ATM -  (Asynchronous Transfer  Mode) A  network technology  for  both
    LANs and  WANs that  supports realtime  voice and  video as  well  as
    data. The  topology uses  switches that establish  a logical  circuit
    from end  to end,  which guarantees a  quality of  service (QoS)  for
    that transmission. However,  unlike telephone switches that  dedicate
    circuits  end to  end,  unused bandwidth  in  ATM's circuits  can  be
    appropriated whenever  available. For  example, idle  bandwidth in  a
    videoconference circuit  can be used  to transfer data.  ATM is  also
    highly scalable  and supports  transmission speeds of  1.5, 25,  100,
    155, 622 and 2488 Mbps.

    Gigabit Ethernet  - An Ethernet  technology that raises  transmission
    speed to  1 Gbps  and is  used primarily  for backbone  networks  and
    high-speed server-to-server connectivity.

    SCSI - (Small Computer  System Interface)  Pronounced "skuzzy,"  SCSI
    is a  widely used communications  technology for connecting  computer
    servers to storage devices.  The technology is especially  popular in
    applications  where network  servers are  attached to  numerous  SCSI
    drives and configured as fault-tolerant RAID clusters.  In  the event
    one drive fails the  system is still operational. SCSI-based RAID  is
    widely  used in  file servers,  database  servers and  other  network
    servers.   Emerging  Interphase  products utilize  Ultra2  SCSI  that
    provides up to 80 Mbps data throughput and Ultra3 SCSI  which doubles
    the throughput to 160 Mbps.
<PAGE>
    SS7 - (Signaling System 7)  The protocols used in the U.S.  telephone
    system  for  setting  up  calls  and  providing   modern  transaction
    services such  as caller  ID, automatic recall  and call  forwarding.
    When you dial "1" in front of  a number, SS7 routes the call to  your
    long distance carrier. It also routes local calls based on  the first
    three digits of the phone number.

    Frame Relay  - A high-speed  packet switching protocol  used in  wide
    area networks  (WANs).  Providing a  granular service  of up  to  DS3
    speed  (45  Mbps),  it  has  become  very  popular  for  LAN  to  LAN
    connections  across  remote  distances.  Frame  Relay  services   are
    offered by all the major telecommunications carriers. Frame  relay is
    much  faster  than X.25  networks,  the  first  packet-switching  WAN
    standard,  because frame  relay  was designed  for  today's  reliable
    circuits and performs less rigorous error detection.

    General networking  environments into which  Interphase products  are
    placed include:

    SAN -  (Storage Area  Network)   A flexible  "any-to-any"  networking
    infrastructure linking multiple servers to multiple storage  devices.
    Based  on  Fibre Channel  technology, SANs have  recently emerged  as
    the  highest performance  data communications  environment  available
    today  to interconnect  servers  and  storage.   Running  at  Gigabit
    speeds, SANs  offer better  scalability, fault  recovery and  general
    manageability  than current  client-server LAN-based  approaches  for
    real-time and  data intensive  applications.   Storage Area  Networks
    are being  widely deployed  for video  editing, pre-press,  and  data
    mining applications and throughout the general IT marketplace.

    WAN -   (Wide Area  Network) A communications  network that covers  a
    wide geographic  area, such  as state or  country.   A WAN  typically
    extends a LAN (Local  Area Network, see below) outside the  building,
    over telephone common carrier lines  to link to other LANs in  remote
    locations,   such  as   branch  offices   or  at-home   workers   and
    telecommuters.  WANs typically  run over leased phone lines, but  are
    increasingly also  employing the  Internet for  VPN (virtual  private
    network) connectivity.

    LAN -  (Local Area  Network) A  short distanced  data  communications
    network that is contained within a building or complex.   Its primary
    use is to  link computers and peripheral  devices (such as  printers)
    and to provide individuals with access to databases  and applications
    running on servers attached to the network.  Anyone connected  to the
    LAN  can send  messages  to  and work  jointly  with  others  on  the
    network.

    AIN - (Advanced Intelligent Network) The primary architecture  of the
    public switched telephone system (PSTN) in the 1990s,  which provides
    enhanced  voice,  video  and   data  services  and  dynamic   routing
    capabilities.  It uses  digital switches  known as  Signal  Switching
    Points  (SSPs) that  query databases  in  computer systems  known  as
    Service Control Points (SCPs).

<PAGE>
    Strategy

    The Company's  strategy is  to provide  innovative,  high-performance
    connectivity  solutions  for  the  computer  and   telecommunications
    server  market.   To achieve  this  strategy, Interphase  intends  to
    pursue five key initiatives including:

    Offer a full Fibre Channel and Storage Networking  product portfolio.
    In  order  to  provide Interphase  customers with  effective  storage
    solutions,  the Company  will  continue  to broaden  its  SAN  market
    offerings  with  next-generation  Fibre  Channel  HBAs  that  provide
    enhanced functionality for a greater portion of the market.   As part
    of  this initiative,  Interphase will  also introduce  other  adapter
    products that provide  an innovative approach  for combining LAN  and
    storage technologies  to provide  functionality required  by the  new
    generation of Internet servers.

    Introduce  a   comprehensive  line   of  embedded   controllers   for
    telecommunication servers.   To capitalize on  the trend  towards the
    acquisition  of  I/O  connectivity   from  third  party  vendors   by
    telecommunication  server  providers,  Interphase  will  introduce  a
    number  of  new products  based  on  PMC  (PCI  Mezzanine  Card)  and
    CompactPCI  architectures that  provide  enhanced  functionality  for
    telecommunication applications.

    Enlarge OEM  account base.   Over the past  25 years, Interphase  has
    established strong  relationships with  key suppliers  of  enterprise
    computer servers.   The Company  will continue to  grow this  account
    base  as  well  as  pursue  new  business  with  OEMs  providing  SAN
    solutions and next-generation telecommunication servers.

    Expand distribution channels.  Interphase will intensify  its efforts
    to build a  broad-based distribution channel  that will enable  cost-
    effective  penetration into  multiple  market  segments  through  the
    efforts of value added remarketers (VARs) and system integrators.

    Formalize partnerships.  Interphase  has been  a leading proponent of
    open  systems   and  multivendor  interoperability.     Because   the
    continued  growth  of   opportunities  for  enterprise  storage   and
    telecommunications servers  will require  multivendor  solutions, the
    Company intends to formalize  its efforts with existing  partners and
    recruit additional  partners within  its key market  segments.   This
    initiative also includes identifying partners through  which combined
    technology  agreements  will  allow  Interphase  to  bring   new  and
    innovative solutions to the market.


    Products

    Interphase  offers a  comprehensive portfolio  of Fibre  Channel  SAN
    adapters  (including  HBA  SAN  management  software)  communications
    controllers  for   embedded  systems,   traditional  LAN   networking
    adapters, and adapters for remote access and WAN communications.

<PAGE>
    Fibre Channel SAN Products

    Interphase Fibre Channel SAN products targeted for use  in enterprise
    applications include the following:

      *  5526  PowerSAN PCI  Fibre  Channel Adapter  -  a 33Mhz  PCI  bus
         adapter  which  provides single  port  100  MBps  Fibre  Channel
         connectivity

      *  5527  PowerSAN PCI  Fibre  Channel Adapter  -  a 66Mhz  PCI  bus
         adapter  which  provides single  port  100  MBps  Fibre  Channel
         connectivity

      *  5540 PowerSAN 2000 PCI Fibre  Channel Adapter - a 66Mhz PCI  bus
         adapter   which   provides   price-effective   1-Gbps    storage
         connectivity for basic Fibre Channel SAN connectivity

      *  5550 PowerSAN 2000 PCI Fibre  Channel Adapter - a 66Mhz PCI  bus
         adapter  which provides  two  independent 1-Gbps  Fibre  Channel
         connections for high-reliability SAN applications

      *  5560 PowerSAN 2000 PCI Fibre  Channel Adapter - a 66Mhz PCI  bus
         adapter which  provides 2-Gbps  Fibre Channel  connectivity  for
         applications requiring maximized data throughput

      *  FibreView Enterprise  -  a JAVA-based management  utility  which
         allows enterprise  IT managers to  control Fibre Channel  server
         connections from anywhere within the network via the Internet.

    Interphase also offers products that combine leading LAN  and storage
    technologies  onto a  single  adapter  as part  of  its  SAN  product
    offerings.  These products help preserve expansion slots in  the host
    server by providing multiple storage and networking  connections from
    a single adapter.

      *  5570 SlotOptimizer  PCI Storage  Networking Adapter  -  a 64-bit
         PCI multifunction  adapter card  providing full  duplex  Gigabit
         Fibre   Channel    and   high-performance    Gigabit    Ethernet
         connectivity.

      *  552C SlotOptimizer  PCI Storage  Networking Adapter  -  a 64-bit
         PCI multifunction  adapter card  combining dual  channel  Ultra2
         SCSI connectivity with two 10/100 Ethernet ports.

      *  553C SlotOptimizer  PCI Storage  Networking Adapter  -  a 64-bit
         PCI multifunction  adapter card  combining dual  channel  Ultra3
         SCSI connectivity with two 10/100 Ethernet ports.

<PAGE>
          Communication Controllers for Embedded Systems

    Current generation Interphase products  designed for use in  embedded
    servers include:

      *  6526  CompactPCI  Fibre Channel    Adapter  -  a  3U  CompactPCI
         adapter  which  delivers  full  100  MBps  throughput  for  next
         generation  mass   storage  applications   in  embedded   system
         environments.

      *  6546 CompactPCI Fibre Channel Adapter - a 6U  CompactPCI adapter
         that provides two embedded Fibre Channel ports and  provides two
         PMC sites for additional communications I/O connectivity.

      *  6575  CompactPCI ATM  Adapter -  a  3U CompactPCI  adapter  that
         provides full  duplex ATM  connectivity at OC-3  data rates  for
         industrial and telecommunications servers computers.

      *  4575 PMC ATM  Communications Controller -  a PCI Mezzanine  Card
         that  provides reliable,  high performance  ATM SONET  OC-3  155
         Mbps connectivity.

      *  4535  PMC ATM  over  T1/E1  Communications Controller  -  a  PCI
         Mezzanine Card that provides ATM communications over  high speed
         T1 or E1 connections.   The 4535 also provides protocol  support
         for SS7 and Frame Relay

      *  4535 PMC Communicaitons Controller  - a PCI Mezzanine Card  that
         provides four high-speed  serial communication links to  provide
         connection to  the Public  Switch Telephone  Network to  support
         advanced SS7 or AIN applications.

      *  4531  PMC ATM  over  T3/E3  Communications Controller  -  a  PCI
         Mezzanine  Card that  provides  reliable, high  performance  ATM
         communications over T3/E3  connections for applications such  as
         aggregating Internet traffic for  transport over the public  ATM
         backbone network.


    LAN Networking Adapters

    The Company  has a  comprehensive family of  LAN Networking  Adapters
    that utilize  technologies such  as Ethernet,  Fast Ethernet,  100VG-
    AnyLAN,  FDDI  and  ATM.      Key  products  in  the  Interphase  LAN
    Networking Adapter family include:

      *  5575 PCI  ATM  Adapter  -  A  PCI  adapter  card that  provides
         full duplex  ATM connectivity  for systems  running Windows  NT,
         Novell NetWare, UnixWare, Solaris and AIX.

      *  5524 PCI 100Base - T Adapter - a PCI adapter card that  provides
         100   Mbps   connectivity   featuring   full    auto-negotiation
         capabilities to  select full  or half duplex  operation in  both
         100  Mbps   Fast  Ethernet  or   10  Mbps  Ethernet   networking
         environments.
<PAGE>
    Remote Access and WAN Communications Adapters
    Interphase  has  an award-winning  family  of  adapters  that  enable
    remote access server  communications in enterprise WAN  environments.
    A remote  access server is a computer that provides access  to remote
    users  (such  as  telecommuters,  road  warriors  and  branch  office
    locations)  via  analog  or  digital  modems  and  ISDN  connections.
    Interphase  remote access  and  WAN communications  adapters  provide
    high-speed connections  and include  the protocol  support  necessary
    for WAN  communications such  as SNA,  X.25,  Frame Relay  and  ISDN.
    Current  generation Interphase  products for  remote access  and  WAN
    connectivity include:

      *  5535  ENTIA-PRI   Communications  Controller   -  an   PCI   WAN
         controller  that uses  an on-board  CPU  and memory  to  locally
         execute all  communications protocols.  Providing either  single
         or dual  port PRI or  T1/E1 connectivity, this  controller is  a
         cost-effective connectivity solution  for small and medium  size
         enterprise networking environments.

      *  5535 ENTIA-BRI Communications Controller - a PCI  WAN controller
         that uses  an on-board  CPU and  memory to  locally execute  all
         communications  protocols. Featuring  4  ISDN  BRI  (Basic  Rate
         Interface) ports,  this controller provides  multiple BRI  ports
         for cost-effective branch offices communications.

      *  5535 ENTIA-SR Communications Controller  - a PCI WAN  controller
         that uses  an on-board  CPU and  memory to  locally execute  all
         communications protocols. The serial port on the  the controller
         operates  as  a   single  unchannelized  data  port   supporting
         communications at speeds between  56K and T1 (1.544 Mbps) or  E1
         (2.048 Mbps).   This provides an excellent  solution for LAN  to
         LAN    interconnections   or    for   branch    office    router
         interconnections in a leased line networking environment.

      *  5536 ENTIA-DM PCI Digital  Modem Adapter - a PCI WAN  controller
         that uses  an on-board  CPU and  memory to  locally process  all
         communications protocols. Offering up  to 60 digital modems  and
         simultaneous processing of both ISDN and analog (V.34  and V.90)
         call  traffic, this  adapter is  a cost-effective  solution  for
         remote   users   requiring   access   to   enterprise    network
         applications.

    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  Fibre  Channel-based  storage  area
    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.
<PAGE>
    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,   VME
    International  Trade Association  (VITA), Fibre  Channel  Association
    (FCA), Fibre  Channel Community, PCI  Industrial Manufacturers  Group
    (PICMG), Project  UDI, 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.

    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  may
    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 1999, sales to Hewlett Packard  accounted for
    $36,869,000  or  50% of  consolidated  revenues,  and  was  the  only
    customer accounting for more  than 10% of consolidated revenues.   In
    December 1999, after  a request-for-quote procedure, Hewlett  Packard
    notified the Company that it had not been chosen to provide a  33 Mhz
    Fibre  Channel  adapter  to  Hewlett  Packard.    The   adapter  will
    partially  replace   the  Interphase  product   that  accounted   for
    substantial sales  to Hewlett  Packard in  1999.   Nevertheless,  The
    Company  believes that  its relationship  with Hewlett  Packard  will
    continue to expand  in 2000.  During  1998, sales to Hewlett  Packard
    accounted for $28,349,000  or 41% of  consolidated revenues, and  was
    the  only customer  accounting  for  more than  10%  of  consolidated
    revenues.   During  1997,  sales  to Hewlett  Packard  accounted  for
    $26,402,000  or  40% of  consolidated  revenues,  and  was  the  only
    customer accounting for more than 10% of consolidated revenues.

    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; 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  Tech
    Data, 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 to three-year warranty  covering components
    and labor.  After the expiration of the warranty period,  the Company
    generally provides support services 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  dates
    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  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

    Manufacturing operations  are currently  conducted at  the  Company's
    headquarters  in  Dallas, Texas.    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
    some  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 finished goods inventories.
<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, 1999, the  Company had 222  full-time employees,  of
    which 75 were engaged  in manufacturing and quality assurance, 68  in
    research and  development, 46  in sales, sales  support, service  and
    marketing and 33 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 does not have  employment agreements with  key
    employees except  for a  few executive  officers.   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.


    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 $2.9 million in  leasehold improvements that were  made
    by the  Company.  The  lease, inclusive of  renewal options,  extends
    through  2002.     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   quarter
    during 1999 and 1998 as reported by Nasdaq.

    Fiscal 1999                   High            Low
    -----------                  ------          ------
    First Quarter                 9.063           6.125
    Second Quarter               23.000           6.500
    Third Quarter                34.375          15.938
    Fourth Quarter               44.750          17.250

    Fiscal 1998                   High            Low
    -----------                  ------          ------
    First Quarter                 8.813           6.063
    Second Quarter                9.500           6.500
    Third Quarter                 8.000           5.000
    Fourth Quarter                8.688           5.250

    The Company had  approximately 6500 beneficial  owners of its  common
    stock, of which 67 are of record as of March 6, 2000.

    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
<TABLE>
 Statement of Operations Data:
 (In Thousands, except per share data)

                                                                                Two         Twelve
                                                                               months       months
                                                                               ended        ended
                                     Twelve months ended December 31,         Dec. 31,     Oct. 31,
                                  1999       1998       1997        1996        1995        1995
                                 ---------------------------------------       ------      ------
 <S>                            <C>        <C>       <C>         <C>          <C>         <C>
 Revenues                       $73,502    $68,690   $ 66,004    $ 56,752     $ 3,379     $47,368
                                 ----------------------------------------------------------------

 Gross Profit                    34,702     33,598     32,016      27,964       1,224      23,547
                                 ----------------------------------------------------------------

 Research and development        10,590     10,766     13,327       9,902       1,360       7,327

 Sales and marketing             11,036     10,060     11,686      10,297       1,173       8,583

 General and administrative       5,366      5,417      6,248       4,905         634       4,004

 Special charges                      -          -          -      11,646           -           -
                                 ----------------------------------------------------------------

 Operating income (loss)          7,710      7,355        755      (8,786)     (1,943)      3,633
                                 ----------------------------------------------------------------

 Other, net                      (1,030)    (1,583)    (1,525)       (705)          94        589

 Income (loss) from continuing
 operations before income tax     6,680      5,772       (770)     (9,491)     (1,849)      4,222
                                 ----------------------------------------------------------------
 Income (loss) from continuing
 operations                       4,291      3,542       (971)    (10,055)     (1,167)      2,759
                                 ----------------------------------------------------------------
 Discontinued operations, net      (867)      (829)         -           -           -           -
                                 ----------------------------------------------------------------

 Net income (loss)               $3,424     $2,713      $(971)   $(10,055)    $(1,167)     $2,759
                                 ----------------------------------------------------------------

 Net income (loss) from
 continuing operations per share
   Basic                         $ 0.77     $ 0.64   $  (0.18)    $ (1.99)    $ (0.25)     $ 0.60
   Diluted                        $0.70     $ 0.63   $  (0.18)    $ (1.99)    $ (0.25)     $ 0.55

 Net income (loss) per share
   Basic                         $ 0.61     $ 0.49   $  (0.18)    $ (1.99)    $ (0.25)     $ 0.60
   Diluted                        $0.56     $ 0.48   $  (0.18)    $ (1.99)    $ (0.25)     $ 0.55

 Weighted average common shares   5,593      5,508      5,496       5,062       4,663       4,561
 Weighted average common
  & common equivalent shares      6,113      5,628      5,496       5,062       4,663       5,051

</TABLE>
<PAGE>
<TABLE>

                                                  December 31,                  October 31,
 Balance Sheet Data:           1999       1998       1997      1996      1995       1995
                             -------------------------------------------------    -------
 <S>                        <C>        <C>        <C>       <C>       <C>        <C>
 Working capital            $ 35,314   $ 26,314   $ 25,244  $ 22,836  $ 23,141   $ 24,328

 Total assets                 54,671     50,288     49,447    53,924    33,624     35,430

 Total liabilities            14,536     18,463     19,904    23,538     4,363      5,019

 Redeemable common stock       2,796      3,813          -         -         -          -

 Shareholders' equity         37,339     28,012     29,543    30,386    29,261     30,411

</TABLE>

    ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                        CONDITION AND RESULTS OF OPERATIONS
<TABLE>
    Consolidated Statement of Operations Percentage of Revenues


                                               Year ended December 31,
                                           1999        1998         1997
                                          --------------------------------
    <S>                                   <C>         <C>          <C>
    Revenues                              100.0 %     100.0 %      100.0 %
    Cost of sales                          52.8 %      51.1 %       51.5 %
                                          --------------------------------
    Gross profit                           47.2 %      48.9 %       48.5 %

    Research and development               14.4 %      15.7 %       20.2 %
    Sales and marketing                    15.0 %      14.6 %       17.7 %
    General and administrative              7.3 %       7.9 %        9.5 %
                                          --------------------------------
    Operating income                       10.5 %      10.7 %        1.1 %
                                          --------------------------------

    Interest income                         0.6 %       0.5 %        0.7 %
    Interest expense                       (0.9)%      (1.5)%       (1.7)%
    Other, net                             (1.1)%      (1.3)%       (1.3)%
                                          --------------------------------

    Income (loss) from continuing
      operations before income taxes        9.1 %       8.4 %       (1.2)%
    Provision for income taxes              3.3 %       3.2 %        0.3 %
                                          --------------------------------

    Income (loss) from continuing           5.8 %       5.2 %       (1.5)%
    operations

    Discontinued operations                (1.2)%      (1.2)%          -
                                          --------------------------------
    Net income (loss)                       4.6 %       4.0 %       (1.5)%
                                          ================================
</TABLE>
<PAGE>
    RESULTS OF OPERATIONS

    As of  September 1999, the  Company completed the  sale of its  Voice
    over Internet Protocol  ("VOIP") business; accordingly the  Company's
    consolidated  financial   statements  and  notes   for  all   periods
    presented reflect the VOIP business as a discontinued operation.

    Revenues:   Total revenues  for the  years ended  December 31,  1999,
    1998 and 1997  were $73.5 million, $68.7  million and $66.0  million,
    respectively.

    The growth in  revenues from 1998 to  1999 was 7%.   The increase  in
    revenue  was attributable  to growth  in  the Company's  Storage  and
    Embedded product lines, partially offset by a decline in LAN  and WAN
    products.  In 1999, Storage revenues, which consist of  Fibre Channel
    and  SCSI  technologies accounted  for  approximately  48%  of  total
    revenues, LAN revenues which consist of FDDI, Fast Ethernet,  ATM and
    Ethernet, accounted for 36%  of total revenues, WAN accounted for  7%
    of  total revenues and Embedded  accounted  for 9% of total revenues.
    North American revenues grew 14%, Pacific Rim revenues grew  78%, and
    European revenues declined  26% compared to 1998.  In 1999, sales  to
    one OEM   customer accounted for approximately  50% of the  Company's
    revenue.

    The growth  in revenues from  1997 to  1998 was 4%.  The increase  in
    revenue  was attributable  to growth  in  the Company's  Storage  and
    Embedded product lines, partially offset by a decline in LAN  and WAN
    products. In 1998, Storage  revenues, which consist of Fibre  Channel
    and  SCSI  technologies accounted  for  approximately  25%  of  total
    revenues, LAN revenues which consist of FDDI, Fast Ethernet,  ATM and
    Ethernet, accounted for 62% of total revenues, WAN accounted  for 10%
    of total revenues and Embedded  accounted for  3%  of total revenues.
    North American revenues grew  1%, Pacific Rim revenues declined  31%,
    and European revenues grew 27% compared  to 1997.  In 1998, sales  to
    one OEM  customer accounted  for approximately 41%  of the  Company's
    revenue.

    Cost of Sales:  Cost of sales expressed  as a percentage  of revenues
    were approximately  53% for the   year ended  December 31, 1999,  51%
    for the  year ended  December 31,  1998 and  52% for  the year  ended
    December 31,  1997.  In  2000, cost  of sales is  expected to  remain
    consistent with prior years.

    Research  and  Development:      The  Company's  investment   in  the
    development  of new  products through  research and  development  was
    $10,590,000, $10,766,000  and $13,327,000  in 1999,  1998, and  1997,
    respectively. As  a percentage of  revenue, research and  development
    expenses  were   14%,  16%  and   20%  for  1999,   1998  and   1997,
    respectively.    In  2000,  research  and  development  expenses  are
    expected to remain consistent with 1999.

    Sales and Marketing:  Sales and marketing expenses  were $11,036,000,
    $10,060,000 and $11,686,000 in 1999, 1998 and 1997,  respectively. As
    a percentage of revenue,  sales and marketing expenses were 15%,  15%
    and 18% for 1999, 1998 and 1997,  respectively.   In 2000, sales  and
    marketing expenses are expected to remain consistent with 1999.
<PAGE>
    General  and Administrative:    General and  administrative  expenses
    were $5,366,000, $5,417,000  and $6,248,000 in  1999, 1998 and  1997,
    respectively. As a percentage of revenue, general  and administrative
    expenses were 7%, 8% and  10% for 1999, 1998 and 1997,  respectively.
    In 2000,  general and administrative expenses are expected  to remain
    consistent with 1999.

    Interest  Income:    Interest  income  was  $481,000,   $338,000  and
    $438,000  in  1999,  1998  and  1997,  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 $694,000,  $1,025,000  and
    $1,126,000 in  1999, 1998 and  1997, respectively.   The decrease  in
    interest expense  is  due to  the pay-down  of the  Company's  credit
    facility.

    Other Expense:   Other expense was $817,000,  $896,000  and $837,000
    in  1999, 1998  and  1997,  respectively.   Other  expense  primarily
    reflects  the  amortization   of  goodwill  and  acquired   developed
    technologies related to the 1996 Synaptel acquisition.

    Provision for  Income Taxes:  The Company's provision  for taxes  was
    $2,389,000,  $2,230,000,  and  $201,000  in  1999,  1998   and  1997,
    respectively.   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 effective income  tax rates were 36%  in 1999 and  39%  in  1998.
    The decrease in  the effective income tax  rate was primarily  due to
    utilization of tax loss carry forwards from its Synaptel subsidiary.

    Discontinued Operations:   In September  19999 the Company  completed
    the  sale of  its  VOIP business.  Gain  on disposal  of  assets  was
    $326,000 net of tax  in 1999.  Operating losses,  net of tax for  the
    VOIP  business  were  $1,193,000  and  $829,000  for  1999  and  1998
    respectively. Due  to the  uncertainty of  payment on  the  remaining
    proceeds, the Company will  recognize income as payment is  received.
    In January 2000,  the  $830,000 note receivable was collected.   This
    amount will be recorded as income during the first quarter.

    Net Income (Loss):  The Company reported net income of  $3,424,000 in
    1999 and $2,713,000 in 1998, and a net loss of $971,000 in 1997.
<PAGE>

    LIQUIDITY AND CAPITAL RESOURCES

    The  Company's  cash,  cash  equivalents  and  marketable  securities
    aggregated $16,276,000,  $7,961,000 and  $5,519,000 at  December  31,
    1999,  1998  and 1997,  respectively.    The  growth  in  cash,  cash
    equivalents and marketable securities from 1998 to 1999  is primarily
    attributable  to  cash generated  by  the  Company's  operations  and
    proceeds received from the  exercise of stock options.   Expenditures
    for equipment and purchased software were $2,003,000,  $2,892,000 and
    $1,150,000 in  1999, 1998 and  1997, respectively.   At December  31,
    1999, 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, future debt payments  and buy
    back of Interphase Common Stock from Motorola.  In 1996,  the Company
    entered  into  a  $16,000,000   credit  facility  with  a   financial
    institution.  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  and  equipment  loans  are  due  in  quarterly
    installments, and  expire in  November 2001.   The  revolving  credit
    facility expires in  June 2001.  In  2000, maturities of this  credit
    facility will be approximately  $2,192,000. The Company has not  paid
    any dividends since its inception and does not anticipate  paying any
    dividends in 2000.

    Effective  October 1998,  the  Company approved  a  stock  repurchase
    agreement with Motorola, Inc.  to purchase ratably from October  1998
    to  July 2002,  all  of the shares owned  by Motorola for $4,125,000.
    Under the  terms of the  agreement Motorola retains  the right as  an
    equity owner and has assigned its voting rights to the  Company.  The
    Company  plans  to  cancel  the stock upon each repurchase.  Prior to
    the  repurchase  agreement  Motorola owned  approximately  12% of the
    Company's outstanding  common stock.   The future scheduled  payments
    are  classified  as  redeemable  common  stock  in  the  accompanying
    consolidated balance sheet.  As of December 31, 1999,  212,668 shares
    have  been purchased  for $1,329,175  and  retired;   447,332  shares
    remain to be purchased.

    The  Company expects  that  its cash,  cash  equivalents,  marketable
    securities and proceeds from its credit facility will be  adequate to
    meet foreseeable needs for the next 12 months.
    Year 2000

    The  Company, its  suppliers and  customers  did not  experience  any
    significant malfunctions  or errors in  their operations or  business
    systems as a result of the Y2K issue.

    The  products  that  the  Company  sells  are  Y2K  compliant.    The
    Company's internal  reporting  system  has  been  replaced with a Y2K
    compliant  Enterprise  Reporting  Planning   (ERP)  system.    Direct
    expenditures were  approximately $900,000. The  Company funded  these
    expenditures through its normal operating budget, and as  required by
    generally accepted accounting  principles, these costs were  expensed
    as incurred, excluding the  capitalization of application software.
    The capitalization for software was approximately $367,000.

<PAGE>
    Recently Issued Accounting Pronouncements

    In June 1998, the  Financial Accounting Standards Board, issued  SFAS
    No.  133,   "Accounting  for  Derivative   Instruments  and   Hedging
    Activities."  SFAS  133 establishes new  standards of accounting  and
    reporting for  derivative instruments and  hedging activities.   SFAS
    133 requires that all derivatives be recognized at fair value  in the
    balance sheet,  and the  corresponding gains  or losses  be  reported
    either  in  the  statement  of  operations  or  as  a   component  of
    comprehensive income,  depending on  the type  of hedge  relationship
    that exists.  SFAS 133  will be effective for fiscal years  beginning
    after June 15, 2000.   We do not expect SFAS  133 to have a  material
    effect on our financial position or results of operations.



    ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

    The Company is exposed to market risk from changes in  interest rates
    which  may  adversely  affect  its  financial  position,  results  of
    operations and  cash flows.   In seeking to  minimize the risks  from
    interest rate fluctuations, the Company manages exposures  through it
    regular operating  and financing  activities.  The  Company does  not
    use financial instruments for  trading or other speculative  purposes
    and is not party to any leveraged financial instruments.

    The Company is  exposed to interest rate  risk primarily through  its
    borrowing activities,  which are  described in  the "Long-Term  Debt"
    Notes   to  the   Consolidated   Financial  Statements,   which   are
    incorporated herein by reference.


    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.

    Directors

    See information  regarding the  directors and  nominees for  director
    under the heading "Election of Directors" of the Proxy  Statement for
    the Annual Meeting of Shareholders to  be held May 3, 2000, which  is
    incorporated herein by reference.

    Executive Officers

    As of  March 6, 2000,  the executive officers  of the Company,  their
    respective ages,  positions held  and tenure as  officers are  listed
    below:
                                                                 Executive
                                                                Officers of
                                                                the Company
           Name         Age  Position(s) Held with the Company     Since
    -----------------   ---  ---------------------------------     -----
    R. Stephen Polley   49   Chairman                               1993

    Gregory B. Kalush   43   Chief Executive Officer,               1998
                             and President

    Steven P. Kovac     44   Chief Financial Officer                1999
                             Vice President of Finance
                             and Treasurer

    R.  Stephen  Polley  joined  the  Company  as  President   and  Chief
    Operating  Officer  and was  elected  a  director  by  the  Board  of
    Directors in  November 1993.   In  June 1994,  Mr. Polley  was  named
    Chief Executive Officer of the Company and appointed Chairman  of the
    Board of Directors.  In  March 1999, Mr. Polley resigned all  officer
    positions,  to  become  Chief  Executive  Officer  and  President  of
    Cozone.com, a division of  CompUSA,  Inc.,  but remained  Chairman of
    the  Board.  Mr. Polley  is not  seeking  reelection to  the Board of
    Directors  in  2000.  In  June  1998,  Mr.  Polley  was  appointed  a
    director of ObjectSpace.  ObjectSpace is a  provider  of  distributed
    computing solutions built  on  100% Pure Java(tm).  From August  1992
    to February 1993,  Mr. Polley acted as  a consultant in strategic and
    management matters and as a  director for  Computer  Automation, Inc.
    Computer Automation provided  various products and  services for  use
    in facsimile management  systems,  minicomputers and  microcomputers.
    From  1987 to  April 1992,  Mr. Polley  served  as  President,  Chief
    Executive  Officer and a director of Intellicall, Inc., a diversified
    supplier  of  telecommunications  products  and   services  including
    private pay  telephones  and  microprocessor-based automated operator
    systems.
<PAGE>
    Gregory B.  Kalush  joined the  Company in  February 1998,  as  Chief
    Financial  Officer, Vice  President of  Finance  and Treasurer.    In
    March  1999,  Mr.  Kalush  was  appointed  Chief  Executive  Officer,
    President,  and  Director   of  the  Company.     Prior  to   joining
    Interphase, Mr. Kalush was  with DSC Communications Corporation  from
    1995 to 1997.  While at DSC he served as Vice  President Transmission
    Data Services,  Vice President  of Operations,  International  Access
    Products  and Group  Vice  President of  Finance,  Transport  Systems
    Group.   Prior to DSC, Mr. Kalush was with IBM Corporation  from 1978
    to 1994.  During that  time his  positions included  Chief  Financial
    Officer  and  Operations  Executive  for  the  Skill  Dynamics  Unit,
    Director of  Finance, Planning and  Administration for the  southwest
    area, and Division  Director of Finance and  Operations for the  Data
    Systems division.

    Steven  P. Kovac  joined  the  Company in  1999  as  Chief  Financial
    Officer,  Vice  President  of  Finance  and  Treasurer.     Prior  to
    Interphase, From  1997 to 1999  Mr. Kovac served  as Chief  Operating
    Officer  and Chief  Financial  Officer  for TPN  Inc.    a  satellite
    television network.   From 1989  to 1997 Mr.  Kovac was the  Regional
    Vice  President of  Finance  and  Chief Financial  Officer  for  AT&T
    Wireless Services,  McCaw Cellular  Communications and  LIN  Cellular
    Communications.  From  1988 to 1989 Mr.  Kovac was Vice President  of
    Finance and  Administration for  BBL Industries,  which  manufactures
    paging terminals  and  voice messaging  equipment.   Mr. Kovac  is  a
    member of the Board of Directors for Integrated  Systems Corporation,
    a reseller of DSL and satellite ISP, located in Denver Colorado.


    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  May
    3, 2000, 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  May
    3, 2000, 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  May
    3, 2000, 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.

  The Registrant has  filed no  Reports on  Form 8-K  during the  quarter
  ended December 31, 1999.


<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 29, 2000           By:  /s/ Gregory B. Kalush
                                          ---------------------
                                          Gregory B. Kalush
                                          Chief Executive Officer
                                           and President

  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 29, 2000.


                    Name                             Title

     /s/ R. Stephen Polley                  Chairman of the Board and
   ----------------------------------       Director
         R. Stephen Polley

    /s/ Gregory B. Kalush                   Chief Executive Officer and
   ----------------------------------       President
        Gregory B. Kalush                   (Principal executive officer)


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

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

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

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

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

    /s/ William R. Voss                     Director
   ----------------------------------
        William R. Voss

<PAGE>

                          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)   Amendment to Articles of Incorporation of the registrant. (10)
    3 (c)   Amended  and Restated  Bylaws of  the registrant  adopted  on
            December 5, 1995. (6)
   10 (a)   Registrant's Amended  and  Restated  Stock  Option  Plan  and
            Amendment No. 1 and 2 thereto. (9)
   10 (b)   Registrant's Amended and Restated Stock Option Plan Amendment
            No. 4. (10)
   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 (f)   Directors Stock Option Plan and Amendment No. 1 thereto. (6)
   10 (g)   Directors Stock Option Plan Amendment No. 2  (10)
   10 (h)   Loan Agreement  between  Interphase Corporation and BankOne
            Texas, N.A. (8)
   10 (i)    Purchase Agreement between Interphase Corporation and Cisco
            Systems Inc. (9)
   10 (j)    Motorola Stock Repurchase Agreement (2)
   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 8-K  on October 15, 1998,
       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

<PAGE>
                  INDEX TO FINANCIAL STATEMENTS AND
                    FINANCIAL STATEMENT SCHEDULES




  Management's Report on Financial Responsibility                  F-2

  Report of Independent Public Accountants -
       ARTHUR ANDERSEN LLP                                         F-3

  Consolidated Balance Sheets - December 31, 1999 and 1998         F-4

  Consolidated Statements of Operations - Years Ended
       December 31, 1999, 1998 and 1997                            F-5

  Consolidated Statements of Shareholders' Equity - Years Ended
       December 31, 1999, 1998 and 1997                            F-6

  Consolidated Statements of Cash Flows - Years Ended
       December 31, 1999, 1998 and 1997                            F-7

  Notes to Consolidated Financial Statements                    F-8 to F-21


                                    F-1
<PAGE>

              MANAGEMENT'S REPORT ON FINANCIAL RESPONSIBILITY


  Management is  responsible  for the  preparation  and fairness  of  the
  consolidated financial  statements of  Interphase Corporation  and  all
  other information contained  in this annual  report.  The  accompanying
  consolidated financial statements have been prepared in accordance with
  generally accepted accounting principles and reflect informed judgments
  and estimates, which management believes to be reasonable.

  The Company  maintains  an  effective  system  of  internal  accounting
  controls, which are modified  periodically as the Company's  operations
  change.  Additionally, the Company is receptive to suggestions made  by
  Arthur Andersen  LLP,  its independent  public  accountants,  regarding
  enhancements and changes to the Company's existing internal  accounting
  controls.  Overall,  management believes  that its  system of  internal
  accounting controls is adequate to  provide reasonable assurance as  to
  the integrity  and reliability  of its  financial statements,  and  the
  safeguarding of assets.

  The Board of  Directors, acting through  its Audit Committee,  monitors
  the accounting affairs of the Company and has approved the accompanying
  consolidated financial statements.  The Audit Committee, consisting  of
  three directors, reviews the results of the annual financial  statement
  audit,  and  the  actions  taken  by  management  in  discharging   its
  responsibilities for  accounting and  financial reporting.   The  Audit
  Committee meets  periodically and  privately  with management  and  the
  independent public accountants to assure that each is carrying out  its
  responsibilities.



  Gregory B. Kalush
  Chief Executive Officer and President

  February 9, 2000


                                    F-2

<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, 1999 and 1998, and the related consolidated statements  of
  operations, shareholders' equity, and cash flows for each of the  three
  years  in  the  period  ended  December  31,  1999.    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, 1999 and  1998, and the
  results of  their operations and their cash flows for each of the three
  years  in  the  period  ended  December  31, 1999, in  conformity  with
  generally accepted accounting principles.



                          ARTHUR ANDERSEN  LLP


  Dallas, Texas
  February 9, 2000

                                    F-3
<PAGE>
<TABLE>
   INTERPHASE CORPORATION
   CONSOLIDATED BALANCE SHEETS
   (in thousands, except number of shares data)
                                                          December 31,
   ASSETS                                               1999       1998
   ------                                           ----------------------
   <C>                                              <C>         <C>

   Cash and cash equivalents                        $   10,988  $    4,531
   Marketable securities                                 5,288       3,430
   Trade accounts receivable, less allowances
     for uncollectible accounts of $260 and
     $164 respectively                                  14,005      13,716
   Inventories, net                                     11,678      13,488
   Prepaid expenses and other current assets             1,383         856
   Deferred income taxes, net                              774         516
                                                     ---------------------
     Total current assets                               44,116      36,537
                                                     ---------------------
   Machinery and equipment                               9,149      10,135
   Leasehold improvements                                2,907       2,909
   Furniture and fixtures                                  475         515
                                                     ---------------------
                                                        12,531      13,559
                                                     ---------------------
   Less-accumulated depreciation                       (10,334)    (10,339)
                                                     ---------------------
     Total property and equipment, net                   2,197       3,220
                                                     ---------------------
   Capitalized software, net                               684         773
   Deferred income taxes, net                            1,458       1,376
   Acquired developed technology, net                    2,280       3,365
   Goodwill, net                                         2,830       3,070
   Other assets                                          1,106       1,947
                                                     ---------------------
     Total assets                                   $   54,671  $   50,288
                                                     =====================
<PAGE>
   LIABILITIES AND SHAREHOLDERS' EQUITY
   ------------------------------------
     Liabilities
   Accounts payable                                 $    2,129  $    2,883
   Accrued liabilities                                   1,586       1,639
   Accrued compensation                                  2,131       2,041
   Income taxes payable                                    754       1,408
   Current portion of debt                               2,202       2,252
                                                     ---------------------
     Total current liabilities                           8,802      10,223
   Other liabilities                                       570         873
   Long-term debt, net of current portion                5,164       7,367
                                                     ---------------------
     Total liabilities                                  14,536      18,463

   Commitments and contingencies
   Common stock redeemable; 447,332
     and 610,000 shares respective                       2,796       3,813

     Shareholders' Equity
   Common stock, no par value; 100,000,000              36,537      31,221
     shares authorized; 5,391,296 and 4,861,858
     shares issued and outstanding, respectively
   Retained earnings (deficit)                             207      (3,217)
   Cumulative other comprehensive income                   595           8
                                                     ---------------------
     Total shareholders' equity                         37,339      28,012
                                                     ---------------------
     Total liabilities and shareholders' equity     $   54,671  $   50,288
                                                     =====================

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

                                  F-4
</TABLE>
<PAGE>
<TABLE>
   INTERPHASE CORPORATION
   CONSOLIDATED STATEMENTS OF OPERATIONS
   (in thousands, except per share amounts)


<CAPTION>
                                           Year ended December 31,
                                     ---------------------------------
                                        1999        1998       1997
                                     ---------------------------------
   <S>                               <C>         <C>         <C>

   Revenues                          $  73,502   $  68,690   $  66,004
   Cost of sales                        38,800      35,092      33,988
                                     ---------------------------------
   Gross profit                         34,702      33,598      32,016
                                     ---------------------------------
   Research and development             10,590      10,766      13,327
   Sales and marketing                  11,036      10,060      11,686
   General and administrative            5,366       5,417       6,248
                                     ---------------------------------
     Total operating expenses           26,992      26,243      31,261
                                     ---------------------------------
   Operating income                      7,710       7,355         755

   Interest income                         481         338         438
   Interest expense                       (694)     (1,025)     (1,126)
   Other, net                             (817)       (896)       (837)
                                     ---------------------------------
   Income (loss) from continuing
     operations before income taxes      6,680       5,772        (770)

   Provision for income taxes            2,389       2,230         201
                                     ---------------------------------
   Income (loss) from continuing
     operations                          4,291       3,542        (971)

   Discontinued operations (Note 4)
   Gain on disposal of VOIP business,
     net of tax                            326           -           -
   Operating losses from VOIP
     business, net of tax               (1,193)       (829)          -
                                     ---------------------------------
   Net income (loss)                 $   3,424    $  2,713   $    (971)
                                     =================================

   Income (loss) from continuing
    operations per share
     Basic                           $    0.77    $   0.64   $   (0.18)
                                     ---------------------------------
     Diluted                         $    0.70    $   0.63   $   (0.18)
                                     ---------------------------------
   Net income (loss) per share
     Basic                           $    0.61    $   0.49   $   (0.18)
                                     ---------------------------------
     Diluted                         $    0.56    $   0.48   $   (0.18)
                                     ---------------------------------

   Weighted average common shares        5,593       5,508       5,496
                                     ---------------------------------
   Weighted average common and
     common equivalent shares            6,113       5,628       5,496
                                     ---------------------------------
   The accompanying notes are an integral part of these consolidated
     financial statements.

                                  F-5
</TABLE>
<PAGE>
<TABLE>
  INTERPHASE CORPORATION
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
  (in thousands)

                                                                     Cumulative
                                                          Retained     Other
                                         Common Stock     Earnings  Comprehensive         Comprehensive
                                        Shares   Amount   (Deficit)    Income      Total  Income (loss)
                                         ------------------------------------------------  ---------
  <S>                                    <C>   <C>        <C>         <C>        <C>       <C>
  Balance at December 31, 1996           5,492 $ 35,195   $ (4,959)   $   150    $ 30,386
  Option exercises, including
    related tax benefit                     24      131          -          -         131  $       -

  Comprehensive income (loss):
    Foreign currency translation             -        -          -         14          14         14
    Unrealized holding period loss           -        -          -        (17)        (17)       (17)

  Net loss                                   -        -       (971)         -        (971)      (971)
                                                                                            --------
  Total comprehensive income (loss)          -        -          -          -           -   $   (974)
                                         ------------------------------------------------   --------
  Balance at December 31, 1997           5,516   35,326     (5,930)       147      29,543
                                         ------------------------------------------------
  Option exercises, including
    related tax benefit                      6       20          -          -          20   $      -

  Redeemable common stock                 (660)  (4,125)         -          -      (4,125)         -

  Comprehensive income:
    Foreign currency translation             -        -          -       (205)       (205)      (205)
    Unrealized holding period gain           -        -          -         66          66         66

  Net income                                 -        -      2,713          -       2,713      2,713
                                                                                            --------
  Total comprehensive income                 -        -          -          -           -   $  2,574
                                         ------------------------------------------------   --------
  Balance at December 31, 1998           4,862 $ 31,221   $ (3,217)   $     8    $ 28,012
                                         ------------------------------------------------
  Option exercises                         529    3,816          -          -       3,816   $      -

  Tax benefit from option exercises          -    1,500          -          -       1,500          -

  Comprehensive income:
    Foreign currency translation             -        -          -       (105)       (105)      (105)
    Unrealized holding period gain,
      net of                                 -        -          -        692         692        692

  Net income                                 -        -      3,424          -       3,424      3,424
                                                                                            --------
  Total comprehensive income                 -        -          -          -           -   $  4,011
                                         ------------------------------------------------   --------
  Balance at December 31, 1999           5,391 $ 36,537    $   207    $   595    $ 37,339
                                         ------------------------------------------------

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

                                  F-6
</TABLE>
<PAGE>
<TABLE>
INTERPHASE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                             Years ended December 31,
                                                         --------------------------------
                                                            1999        1998        1997
                                                         --------------------------------
<S>                                                      <C>         <C>         <C>
Cash flows from operating activities:
  Net income (loss) from continuing operations           $  4,291    $  3,542    $   (971)
  Operating loss from discontinued operations              (1,193)       (829)          -
  Gain on disposal of discontinued operations                 326           -           -
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
   Depreciation and amortization                            3,640       4,013       4,739
   Deferred income taxes                                     (340)       (344)       (270)
   Tax benefit from stock option exercices                  1,500           -           -
   Changes in assets and liabilities-
       Trade accounts receivable                             (289)       (686)      2,152
       Inventories                                          1,810       1,407      (2,296)
       Prepaid expenses and other current assets             (527)        (58)        423
       Accounts payable and accrued liabilities              (787)       (643)     (2,081)
       Accrued compensation                                    90         131      (1,052)
       Income taxes payable                                  (654)      1,211         104
                                                         --------------------------------
   Net adjustments                                          3,576       4,202       1,719
                                                         --------------------------------
       Net cash provided by operating activities            7,867       7,744         748
                                                         --------------------------------
Cash flows from investing activities:
   Additions to property, equipment, capitalized
     software and leasehold improvements                   (2,003)     (2,892)     (1,150)
   Decrease in other assets                                 1,021         206         373
   Cash received in sale of VOIP                              600           -           -
   (Increase) decrease in marketable securities            (1,858)       (158)        307
                                                         --------------------------------
       Net cash used by investing activities               (2,240)     (2,844)       (470)
                                                         --------------------------------
Cash flows from financing activities:
   Decrease in other long-term liabilities                   (303)        273        (592)
   Payments on debt                                        (2,253)     (2,458)     (2,338)
   Proceeds from debt                                           -           -       2,500
   Change in comprehensive income                             587        (139)         (3)
   Purchase of redeemable common stock                     (1,017)       (312)          -
   Proceeds from the exercise of stock options              3,816          20         131
                                                         --------------------------------
       Net cash provided (used) by financing activities       830      (2,616)       (302)
                                                         --------------------------------
Net increase (decrease) in cash and cash equivalents        6,457       2,284         (24)
Cash and cash equivalents at beginning of year              4,531       2,247       2,271
                                                         --------------------------------
Cash and cash equivalents at end of year                 $ 10,988    $  4,531    $  2,247
                                                         ================================

Supplemental Disclosure of Cash Flow Information:
Interest paid                                            $    698    $    953    $    996
Taxes refunded                                                  -           -          27
Taxes paid                                                  1,703         891         389

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

                                  F-7
</TABLE>
<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.

  The Company completed the sale of its VOIP business as of September 30,
  1999.  Accordingly, the Company's consolidated financial statements and
  notes for  all  periods  presented  reflect  the  VOIP  business  as  a
  discontinued operation. See further discussion of sale in Note 4.

  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, 1999 and   1998, the  fair
  market value of  marketable securities was  $5,288,000 and  $3,430,000,
  respectively. All marketable securities  are classified as  "available-
  for-sale securities" and are reported at fair value.  Unrealized  gains
  and losses are  excluded from  net income  and reported  as a  separate
  component  of  comprehensive  income  in  shareholders  equity.     The
  Company's results of operations will continue to include earnings  from
  such securities as calculated on a yield-to-maturity basis. During 1998
  the Company realized a loss of $34,000 from the sale of securities. The
  Company had an unrealized gain of  $626,000 in 1999, and an  unrealized
  gain of  $83,000  (net of  taxes)  in  1998, with  respect  to  certain
  available-for-sale securities.
<TABLE>
  Allowance for doubtful  accounts:  As  of December 31,  1999, 1998  and
  1997, the allowance  for doubtful accounts  was $260,000, $164,000  and
  $544,000.  The activity in this account was as follows  (in thousands):


                       Balance at              Write-offs    Balance
                       Beginning  Charged to     Net of       at End
  Year Ended:          of Period   Expense     Recoveries    of Period
  --------------------------------------------------------------------
  <S>                  <C>          <C>          <C>           <C>
  December 31, 1999    $ 164        $ 120        $ (24)        $ 260
  December 31, 1998      544          392         (772)          164
  December 31, 1997      503          337         (296)          544

</TABLE>
<PAGE>
  Inventories (net):   Inventories are  valued at  the lower  of cost  or
  market and include  material, labor  and manufacturing  overhead.   The
  reserve for obsolescence was $1,644,000 in  1999 and $497,000 in  1998.
  Cost is determined on a first-in, first-out basis (in thousands):


                                   Years ended December 31,
                                    1999               1998
                                  --------------------------
  Raw Materials                  $  8,044           $  8,119
  Work-in-process                   3,352              4,828
  Finished Goods                      282                541
                                  -------            -------
  Total                          $ 11,678           $ 13,488
                                  =======            =======

  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):

         Year ended        Depreciation      Accumulated
        December 31:          Expense        Depreciation
        ------------          -------        ------------
           1999              $ 2,035           $ 10,334
           1998                2,436             10,339
           1997                2,781             11,817

  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):

         Year ended         Amortization     Accumulated
        December 31:          Expense        Amortization
        ------------          -------        ------------
            1999               $ 280           $ 1,875
            1998                 302             1,656
            1997                 223             1,950


  Research and Development Subsidy:  Included in other assets at December
  31, 1999 and  1998, is  a receivable  for a  subsidy of   $529,000  and
  $1,437,000, respectively,  due from the  French government  related  to
  the research and  development activities of  the Company's Paris  based
  operation.
<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 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,  1999 intangible balances at  cost
  and related amortization expense  and accumulated amortization were  as
  follows (in thousands):
<TABLE>

                                    Amortization Expense  Accumulated   Ending
                      Intangibles   1999    1998    1997  Amortization  Balance
                      ---------------------------------------------------------
 <S>                   <C>         <C>     <C>     <C>      <C>         <C>
 Developed technology  $ 4,230     $ 600   $ 600   $ 600    $1,950      $ 2,280
 Assembled workforce       390        60      60      60       195          195
 Goodwill-Synaptel       3,596       240     240     263       766        2,830
 Acquired Product
   Rights-Cisco          2,500       485     435     812     2,500          -

</TABLE>

  Long-Lived  Assets:    Intangibles  and  other  long-lived  assets  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.

  Revenue Recognition:  Revenue from product  sales is recorded when  the
  earnings process  has been  completed, as  evidenced by  a delivery,  a
  fixed and  determinable price  and  when collectibility  is  reasonably
  assured.

  Concentration of Credit Risk:  Financial instruments which  potentially
  expose the Company to concentrations  of credit risk 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  as a  component of    comprehensive
  income.
<PAGE>
  Income Taxes:   The  Company determines  its deferred  taxes using  the
  liability method.  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:

<TABLE>
  The following table  shows the  calculation of  the Company's  weighted
  average common and common equivalent shares outstanding (in thousands):


                                      Years ended December 31,
                                        1999    1998    1997
                                       ---------------------
  <S>                                  <C>     <C>     <C>
  Weighted average
  shares outstanding                   5,593   5,508   5,496

  Dilutive impact  of stock options      520     120       -
                                       -----   -----   -----
  Total outstanding weighted
  average common and common
  equivalent shares                    6,113   5,628   5,496
                                       =====   =====   =====
</TABLE>

  Anti-dilutive options of 117,000,  944,000 and 1,027,000 were  excluded
  from the dilutive calculation in 1999, 1998 and 1997, respectively.

  Recently Issued  Accounting  Policies:   In  June 1998,  the  Financial
  Accounting Standards  Board,  issued  SFAS  No.  133,  "Accounting  for
  Derivative Instruments and Hedging  Activities."  SFAS 133  establishes
  new standards of  accounting and reporting  for derivative  instruments
  and hedging  activities.   SFAS 133  requires that  all derivatives  be
  recognized at fair value  in the balance  sheet, and the  corresponding
  gains or losses be reported either in the statement of operations or as
  a components of comprehensive  income, depending on  the type of  hedge
  relationship that exists.   SFAS  133 as amended  by SFAS  137 will  be
  effective for fiscal years beginning after June 15, 2000.  The  Company
  does not expect  SFAS 133 to  have a material  effect on our  financial
  position or results of operations.

  Certain Reclassifications:    Certain  prior  year  amounts  have  been
  reclassified to conform with the 1999 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.   ACQUISITION

  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 amount was expensed
  in 1996.

  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 matures June
  30, 2001, 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 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  credit
  facility  is   collateralized   by  marketable   securities,   accounts
  receivable  and  equipment.    The  credit  facility  includes  certain
  restrictive financial covenants including,  among others, tangible  net
  worth, total  liabilities to  tangible  net worth,  interest  coverage,
  quick ratio, debt service coverage, and is subject to a borrowing  base
  calculation.  At December 31, 1999, the Company was in compliance  with
  all covenants.  At December  31, 1999,  total availability  under  this
  revolving credit facility was $1,500,000.
<PAGE>
<TABLE>
  At December 31, 1999 and 1998, the Company's outstanding debt consisted
  of the following (in thousands):

                                       Year ended December 31,
                                          1999        1998
                                        -------------------
  <S>                                  <C>         <C>
  Acquisition term loan                $  2,975    $  4,675
  Equipment financing loan                  881       1,373
  Borrowings under revolving
   credit facility                        3,500       3,500
  Other                                      10          71
                                        -------     -------
  Total                                   7,366       9,619
  Less current portion                    2,202       2,252
                                        -------     -------
  Total long-term debt                 $  5,164    $  7,367
                                        =======     =======

</TABLE>
  The total scheduled debt  principal payments are   $2,202,000 in  2000,
  $5,164,000 in 2001 and zero thereafter.


  4.  DISPOSITION OF ASSETS

  Effective June 30, 1999,  the Company sold an  80% interest in part  of
  its VOIP  business, Quescom,  for $1,172,000  to  the former  owner  of
  Synaptel.  The sales proceeds consisted of $300,000 due at closing with
  a $830,000 technology license fee.  The license fee is payable based on
  capital availability of the purchaser or based on 5% of the purchaser's
  revenues, beginning July 1, 2000.  Due to the uncertainty of payment on
  the remaining license  fee, the Company  will recognize  the income  as
  payment is received.  The Company received $300,000 and has included  a
  gain of  $186,000 net  of $114,000  tax, in  gain on  disposal of  VOIP
  business, in the Consolidated Statement of Operations.  This investment
  is included in other assets.

  In January 2000,  the remaining $830,000  was collected.   This  amount
  will be recorded as income in the first quarter of 2000.

  Effective September 27, 1999 the Company sold the remainder of its VOIP
  business, Zirca  Corporation  ("Zirca")  along  with  the  technologies
  developed by Zirca for  $300,000 cash and stock  valued at $517,680  to
  UniView Technologies, resulting in a gain  of $140,000, net of  $86,000
  tax.  The  UniView securities  received as  part of  the agreement  are
  included on the  Consolidated Balance Sheet  in Marketable  Securities,
  and accounted for as available for sale securities.
<PAGE>
<TABLE>
  The following are the results of operations for the discontinued losses
  for the period presented: (in thousands)

                                                  Year ended December 31,
                                                    1999           1998
                                                  -------        -------
  <S>                                            <C>            <C>
  Loss from discontinued                         $ (1,924)      $ (1,337)
  operations before tax
  Income tax benefit                                  731            508
                                                  -------        -------
  Net loss from discontinued operations          $ (1,193)      $   (829)
                                                  =======        =======
</TABLE>
  As of  December  31, 1998,  the  Company's VOIP  business  segment  had
  $752,000 of  fixed  assets.   There  were  no operations  in  the  VOIP
  business in 1997.

<PAGE>
  5.  INCOME TAXES
<TABLE>
  The provision for income taxes applicable to continuing operations  for
  each period presented was as follows (in thousands):

                              Year ended December  31,
                            1999       1998        1997
                            ----------------------------
  <S>                      <C>        <C>         <C>
  Current provision        $2,729     $2,574      $  471
  Deferred (benefit)        (340)      (344)       (270)
                            -----      -----       -----
  Income tax expense       $2,389     $2,230      $  201
                            =====      =====       =====

  Tax effect  of  temporary differences  that  give rise  to  significant
  components of the deferred tax assets as of December 31, 1999 and 1998,
  are presented as follows (in thousands):

                                    Year ended December  31,
                                       1999          1998
                                      --------------------
  <S>                                <C>            <C>
  Current deferred tax assets:
  Inventory                          $  559         $  169
  Accounts receivable                   147             81
  Vacation accrual                       20             58
  Other accruals                         48            208
                                      -----          -----
  Total                              $  774         $  516
                                      =====          =====

  Noncurrent deferred tax
    assets (liabilities), net:
  Assets:
  Depreciation                       $1,450         $1,361
  Amortization                          682            544
                                      -----          -----
                                      2,132          1,905
  Liabilities:
  Other                               (674)          (529)
                                      -----          -----
  Total                              $  458         $1,376
                                      =====          =====
</TABLE>
<PAGE>
  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 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):
<TABLE>

                                           Year ended December 31,

                                           1999      1998      1997
                                         ---------------------------
  <S>                                   <C>       <C>        <C>
  Income taxes at statutory rate        $  2,271  $  1,962   $  (262)
    State income taxes                       168        11         1
  Non-deductible goodwill
    amortization                             306       306       314
  Benefit of tax loss carry-forward         (339)     (131)       -
  Other                                      (17)       82       148
                                         -------   -------    ------
  Provision for income taxes            $  2,389  $  2,230   $   201
                                         =======   =======    ======
</TABLE>

  6.  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.
<PAGE>
  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):
<TABLE>
                                  Number of  Weighted Average
                                   Options     Option Price
                                   ------------------------
  <S>                                <C>          <C>
  Balance, December 31, 1996         1,112        10.34
                                     =====        -----

  Granted                              381         7.95
  Exercised                            (24)        7.26
  Canceled                             (59)       10.17
                                     -----        -----
  Balance, December 31, 1997         1,410        10.80
                                     =====        -----

  Granted                              246         6.83
  Exercised                            (17)        4.17
  Canceled                            (499)        7.90
                                     -----        -----
  Balance, December 31, 1998         1,140         8.62
                                     =====        -----

  Granted                              793        16.47
  Exercised                           (441)        7.09
  Canceled                            (270)        8.48
                                     -----        -----
  Balance, December 31, 1999         1,222        13.22
                                     =====        -----

  Exercisable at December 31, 1999     180         7.71
                                     =====        -----
</TABLE>
<PAGE>
<TABLE>
  The following table summarizes information about options granted  under
  the Plan that were outstanding at December 31, 1999:


                                 Options Outstanding                 Options Exercisable
                                 -------------------                ----------------------
  Range of Exercise    Number of   Weighted-Average     Weighted      Number      Weighted
       Prices         Outstanding    Remaining          Average     Exercisable   Average
                      at 12/31/99   Contractual         Exercise    at 12/31/99   Exercise
                         (000)         Life              Price         (000)       Price
   ---------------------------------------------------------------------------------------
   <S>                    <C>          <C>             <C>              <C>       <C>
   $ 4.25-$ 7.75          483          7.99            $   6.85         137       $  6.67
   $ 8.00-$18.50          437          9.12               13.49          43         11.09
   $20.50-$33.81          302          9.80               23.03           -             -
   ---------------------------------------------------------------------------------------
        Total           1,222          8.84            $  13.22         180        $ 7.71

</TABLE>
  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 in  one
  year and have a  term of five  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  Weighted Average
                                      Options     Option Price
                                      ------------------------
  Balance, December 31, 1996            176           8.52
                                        ===           ====

  Granted                                55           7.78
                                        ---           ----
  Balance, December 31, 1997            231           8.35
                                        ===           ====

  Granted                                40           8.09
                                        ---           ----
  Balance, December 31, 1998            271           8.31
                                        ===           ====

  Granted                                35           7.50
  Exercised                             (88)          8.20
  Cancellations                         (25)          6.63
                                        ---           ----
  Balance, December 31, 1999            193           8.43
                                        ===           ====

  Exercisable at December 31, 1999      158           8.64
                                        ===           ====
<PAGE>
<TABLE>

  The following table summarizes information about options granted  under
  the Plan that were outstanding at December 31, 1999:


                                 Options Outstanding                 Options Exercisable
                                 -------------------                ----------------------
  Range of Exercise    Number of   Weighted-Average     Weighted      Number      Weighted
       Prices         Outstanding    Remaining          Average     Exercisable   Average
                      at 12/31/99   Contractual         Exercise    at 12/31/99   Exercise
                         (000)         Life              Price         (000)       Price
   ---------------------------------------------------------------------------------------
   <S>                    <C>          <C>             <C>              <C>       <C>
    $4.25-$7.75           118          3.60             $ 6.09           83       $ 5.49
    $8.00-$18.50           75          2.32              12.12           75        12.12
   ---------------------------------------------------------------------------------------
       Total              193          3.10             $ 8.43          158       $ 8.64
</TABLE>

  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 income  for 1999, 1998  and net  loss in  1997
  would have been $1,463,000, $1,635,000 and $(2,121,000),  respectively,
  resulting in diluted  earnings per share  of $0.24  $0.29 and  $(0.39),
  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
  1999, 1998 and 1997:  risk-free interest rate of 6% for each year 1999,
  1998 and 1997, expected dividend yield  of zero in each year,  expected
  term of 4.83 years in 1999, 4.41 years in 1998 and 4.48 years in  1997,
  and expected volatility of 140.29% in 1999, 117.31% in 1998 and   93.6%
  in 1997.  The weighted average  fair valuation per share was $14.25  in
  1999, $5.42 in 1998 and  $5.56 in 1997.

  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.


  7.  ACCRUED LIABILITIES

  Accrued liabilities consisted of the following (in thousands):

                                   Years ended December 31,
                                     1999           1998
                                    ---------------------
  Accrued outside commissions      $   362        $   371
  Accrued property tax                 147             67
  Accrued other                      1,077          1,201
                                    ------         ------
                                   $ 1,586        $ 1,639
                                    ======         ======
<PAGE>
  8.  RELATED-PARTY TRANSACTIONS

  The Company paid approximately $366,000, $425,000 and $347,000 for  the
  years ended December 31, 1999, 1998 and 1997, respectively, to  certain
  outside directors of  the Company or  their firms  as renumeration  for
  their professional  services.   The  Company  believes the  terms  were
  equivalent to those of unrelated parties.

  9.  TRANSACTIONS WITH MOTOROLA, INC.

  Shipments  to  Motorola  comprised  the  following  percentage  of  the
  Company's revenues for the periods indicated:

                                     % of Total
  Year ended December 31,             Revenues
  -----------------------             --------
   1999                                1.0 %
   1998                                3.0 %
   1997                                3.0 %

  Stock Repurchase:  Effective October 1998, the Company approved a stock
  repurchase agreement with Motorola, Inc. to purchase all of the  shares
  owned by Motorola  for $4,125,000, ratably  from October  1998 to  July
  2002.  Under the terms of the agreement, Motorola retains the right  as
  an equity owner and has assigned its voting rights to the Company.  The
  Company plans to  cancel the  stock upon  each purchase.  Prior to  the
  repurchase agreement, Motorola owned approximately 12% of the Company's
  outstanding common stock.  The future scheduled payments are classified
  as redeemable  common stock  in the  accompanying consolidated  Balance
  Sheet.  As of December 31, 1999, 212,668 shares have been purchased for
  $1,329,175 and retired.

  10.  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.
  The total expense under this plan  was $232,000, $240,000 and  $171,000
  for the years ended December 31, 1999, 1998 and 1997 respectively.  The
  Company offers no post-retirement or post-employment benefits.

  11.  OTHER FINANCIAL INFORMATION

  Major Customers:  The Company had one customer that accounted for  more
  than 10%  in  1999,  1998  and  1997,  of  the  Company's  consolidated
  revenues.  Net revenues resulting from this customer  were  as  follows
  ($ in thousands):

    Year           Total Revenues      % of Consolidated Revenues
    -------------------------------------------------------------
    1999              $ 36,869                    50%
    1998                28,349                    41%
    1997                26,402                    40%

<PAGE>
  Commitments:  The Company leases  its office, research and  development
  and manufacturing facility  and certain  manufacturing equipment  under
  noncancelable operating leases to 2005.  Rent expense related to  these
  leases is recorded on a straight-line basis.   As of December 31, 1999,
  operating lease commitments having noncancelable terms of more than one
  year are as follows (in thousands):

    Year ending December 31:
    ------------------------
    2000                     $  1,120
    2001                          985
    2002                          878
    2003                          262
    2004                          182
    Thereafter                     84


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

    Year                     Total Rent Expense
    ----                     ------------------
    1999                           $1,231
    1998                            1,089
    1997                            1,024

  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.
<PAGE>
  SEGMENT DATA

  The Company  is  principally engaged  in  the design,  development  and
  manufacturing of  advanced  technologies for  enterprise  networks  and
  storage environments.    The  chief  operating  decision-makers  review
  financial information presented on a consolidated basis, accompanied by
  information by  geographic  region  for purposes  of  making  operating
  decisions  and  assessing  financial  performance.    Accordingly,  the
  Company considers itself to be in a single industry segment.
<PAGE>
<TABLE>
  Geographic revenue and long lived assets  related to North America  and
  other foreign countries  as of  and for  the years  ended December  31,
  1999, 1998, and 1997 are as follows (in thousands):

     Revenues               1999        1998         1997
     ----------------------------------------------------
     <S>                 <C>         <C>         <C>
     North America       $ 60,791    $ 53,478    $ 53,059
     Europe                10,173      13,785      10,867
     Pacific Rim            2,538       1,427       2,078
                          -------     -------     -------
     Total               $ 73,502    $ 68,690    $ 66,004
                          =======     =======     =======

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

     Long lived assets       1999        1998        1997
     ----------------------------------------------------
     <S>                 <C>         <C>         <C>
     North America       $  2,658    $  3,701    $  3,474
     Europe                   223         292         320
     Pacific Rim              -           -           -
                          -------     -------     -------
     Total               $  2,881    $  3,993    $  3,794
                          =======     =======     =======

  Additional information regarding revenue by product-line is as follows:

     Product Revenue         1999        1998        1997
     ----------------------------------------------------
     <S>                 <C>         <C>         <C>
     WAN                 $  5,016    $  6,983    $  5,342
     LAN                   26,516      42,652      52,613
     Embedded               6,422       1,823         127
     Storage               35,548      17,232       7,922
                          -------     -------     -------
     Total               $ 73,502    $ 68,690    $ 66,004
                          =======     =======     =======
</TABLE>
<PAGE>
<TABLE>
   QUARTERLY FINANCIAL DATA (Unaudited)

                                                Quarter Ended
                             March 31    June 30  September 30  December 31
                             ----------------------------------------------
  1999                          (in thousands, except per share amounts)
  ----
  <S>                         <C>        <C>          <C>          <C>
  Revenues                    $17,169    $17,657      $20,511      $18,165
  Gross profit                  7,819      8,272        9,845        8,766
  Income from continuing
    operations before taxes     1,482      1,114        2,387        1,697
  Income from continuing
    operations                    936        763        1,390        1,202
  Discontinued operations        (512)      (243)        (112)           0
  Net Income                      424        520        1,278        1,202

  Net income per share
  Basic EPS                   $   .08    $   .10      $   .22      $   .21

  Diluted EPS                 $   .08    $   .09      $   .20      $   .19


                                             Quarter Ended
                             March 31    June 30   September 30  December 31
                             -----------------------------------------------
  1998                           (in thousands, except per share amounts)
  ----
  <S>                         <C>        <C>          <C>          <C>
  Revenues                    $17,589    $16,087      $17,046      $18,124
  Gross profit                  8,143      8,080        8,366        9,038
  Income before taxes           1,180        877        1,264        1,114
  Net income                      708        510          723          772
  Net income per share
  Basic EPS                   $   .13    $   .09      $   .13      $   .14
  Diluted EPS                 $   .13    $   .09      $   .13      $   .14


                                             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 taxes      138        814       (2,558)         836
  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

</TABLE>