Table of Contents

----

----

----

|   | þ | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|--------|---------------------------------------------------------------------------------------------------|

| For      the Quarterly Period Ended June 30,2008 |
|--------------------------------------------------|

|   | o | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|---|-----------------------------------------------------------------------------------------------------|

| For      the Transition Period From _____ to_____ |
|---------------------------------------------------|

| Delaware                             | 33-0732700                  |
|--------------------------------------|-----------------------------|
| (State      or other jurisdiction of | (IRS      Employer          |
| Incorporation      or Organization)  | Identification      Number) |

| Large accelerated      filer o | Accelerated filer      þ    |
|-------------------------------------|----------------------------------|
|                                |                             |
| Non-accelerated      filer o        | Smaller reporting      company o |

----

----

Table of Contents

HI/FN, INC.

| PART I.           | FINANCIAL INFORMATION                                                                                               |          |
|-------------------|---------------------------------------------------------------------------------------------------------------------|---------------|
| Item 1.           | Financial Statements (unaudited)                                                                                    |          |
|              | Condensed Consolidated Balance Sheets   as of June 30, 2008 and September 30,      2007              |  1       |
|              | Condensed Consolidated Statements of      Operationsfor the three and nine months ended June 30, 2008 and      2007 |  2       |
|              | Condensed Consolidated Statements of Cash      Flowsfor the nine months ended June 30, 2008 and      2007           |  3       |
|              | Notes to Condensed Consolidated Financial      Statements                                                           | 4 – 11  |
| Item 2.           | Management’s Discussion and Analysis of Financial Condition      and Results of Operations                    | 12 – 22 |
| Item 3.           | Quantitative and Qualitative Disclosures About Market      Risks                                                    | 23            |
| Item 4.           | Controls and Procedures                                                                                             | 23            |
|              |                                                                                                                |          |
| PART II.          | OTHER INFORMATION                                                                                                   |          |
| Item 1A.          | Risk Factors                                                                                                        | 25            |
| Item 2.           | Unregistered Sales of Equity Securities and Use of      Proceeds                                                    |          |
| Item 6.           | Exhibits                                                                                                            | 26            |
| Signatures        | 27                                                                                                                  |
| Index to Exhibits |                                                                                                                |
| Exhibit 31.1      |                                                                                                                |
| Exhibit 31.2      |                                                                                                                |
| Exhibit 32.1      |                                                                                                                |
| Exhibit 32.2      |                                                                                                                |

----

Table of Contents

PART 1

Item 1

| HI/FN, INC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONDENSED      CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
| (in      thousands)(unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | June      30,2008 |   |   | September      30, 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
| CURRENT      ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |
|          Cash and cash      equivalents                                                                                                              |   | $ | 16,128 |   |   | $ | 17,049 |   |
|          Short-term      investments                                                                                                                 |   |   | 19,824 |   |   |   | 18,273 |   |
|          Accounts receivable,      net                                                                                                               |   |   | 6,891 |   |   |   | 7,450 |   |
|          Inventories (finished      goods)                                                                                                           |   |   | 2,760 |   |   |   | 2,784 |   |
|          Prepaid expenses and other current      assets                                                                                              |   |   | 1,682 |   |   |   | 1,428 |   |
|           Total current      assets                                                                                                                                 |   |   | 47,285 |   |   |   | 46,984 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|          Other      receivables                                                                                                                      |   |   | 154 |   |   |   | 189 |   |
|          Property and equipment,      net                                                                                                       |   |   | 1,987 |   |   |   | 1,982 |   |
|          Intangible assets,      net                                                                                                            |   |   | 3,781 |   |   |   | 6,028 |   |
|          Goodwill                                                                                                                               |   |   | 1,425 |   |   |   | 1,425 |   |
|          Other      assets                                                                                                                      |   |   | 2,255 |   |   |   | 2,358 |   |
|                  Total assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | 56,887 |   |   | $ | 58,966 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| CURRENT      LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
|          Accounts      payable                                                                                                                       |   | $ | 1,679 |   |   | $ | 1,467 |   |
|          Accrued expenses and other current      liabilities                                                                                         |   |   | 4,174 |   |   |   | 4,051 |   |
|           Total current      liabilities                                                                                                                            |   |   | 5,853 |   |   |   | 5,518 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| STOCKHOLDERS’      EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
|          Common      stock                                                                                                                           |   |   | 15 |   |   |   | 15 |   |
|          Additional paid-in      capital                                                                                                             |   |   | 174,690 |   |   |   | 171,573 |   |
|          Accumulated other comprehensive income      (loss)                                                                                          |   |   | (16 | ) |   |   | 3 |   |
|          Accumulated      deficit                                                                                                                    |   |   | (118,319 | ) |   |   | (113,716 | ) |
|          Treasury stock, at      cost                                                                                                                |   |   | (5,336 | ) |   |   | (4,427 | ) |
|         Total stockholders’      equity                                                                                                                                 |   |   | 51,034 |   |   |   | 53,448 |   |
|                  Total liabilities and stockholders’ equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $ | 56,887 |   |   | $ | 58,966 |   |

----

Table of Contents

| HI/FN, INC.CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (in      thousands, except per share data)(unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Three      Months EndedJune      30, |   |   | Nine      Months EndedJune      30, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Processors                                                                                                                                |   | $ | 9,660 |   |   | $ | 11,046 |   |   | $ | 28,201 |   |   | $ | 29,819 |   |
| Software      licenses and      other                                                                                                     |   |   | 560 |   |   |   | 625 |   |   |   | 2,213 |   |   |   | 2,150 |   |
|              Total net      revenues                                                                                  |   |   | 10,220 |   |   |   | 11,671 |   |   |   | 30,414 |   |   |   | 31,969 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs      and operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of revenues –      processors                                                                                             |   |   | 3,517 |   |   |   | 3,882 |   |   |   | 9,807 |   |   |   | 10,517 |   |
| Cost      of revenues – software licenses and other                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 152 |   |   |   | 82 |   |   |   | 456 |   |   |   | 247 |   |
| Research      and      development                                                                                                        |   |   | 3,140 |   |   |   | 2,916 |   |   |   | 10,238 |   |   |   | 10,336 |   |
| Sales      and      marketing                                                                                                             |   |   | 2,678 |   |   |   | 2,097 |   |   |   | 8,002 |   |   |   | 6,036 |   |
| General      and      administrative                                                                                                      |   |   | 1,816 |   |   |   | 1,940 |   |   |   | 4,813 |   |   |   | 7,040 |   |
| Amortization      of intangible      assets                                                                                               |   |   | 749 |   |   |   | 737 |   |   |   | 2,247 |   |   |   | 2,212 |   |
|              Total costs and operating      expenses                                                                  |   |   | 12,052 |   |   |   | 11,654 |   |   |   | 35,563 |   |   |   | 36,388 |   |
| Income (loss) from      operations                                                                                    |   |   | (1,832 | ) |   |   | 17 |   |   |   | (5,149 | ) |   |   | (4,419 | ) |
| Interest      income                                                                                                                      |   |   | 290 |   |   |   | 508 |   |   |   | 1,127 |   |   |   | 1,512 |   |
| Other      expenses,      net                                                                                                             |   |   | (247 | ) |   |   | (19 | ) |   |   | (455 | ) |   |   | (43 | ) |
| Income      (loss) before income      taxes                                                                           |   |   | (1,789 | ) |   |   | 506 |   |   |   | (4,477 | ) |   |   | (2,950 | ) |
| Provision      for income      taxes                                                                                  |   |   | 100 |   |   |   | 222 |   |   |   | 126 |   |   |   | 175 |   |
| Net      income      (loss)                                                                                           |   | $ | (1,889 | ) |   | $ | 284 |   |   | $ | (4,603 | ) |   | $ | (3,125 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss) per share                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| -      Basic                                                                                                                              |   | $ | (0.13 | ) |   | $ | 0.02 |   |   | $ | (0.31 | ) |   | $ | (0.22 | ) |
| -      Diluted                                                                                                                            |   | $ | (0.13 | ) |   | $ | 0.02 |   |   | $ | (0.31 | ) |   | $ | (0.22 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding, basic and diluted                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| -      Basic                                                                                                                              |   |   |  14,848 |   |   |   | 14,109 |   |   |   | 14,828 |   |   |   | 14,010 |   |
| -      Diluted                                                                                                                            |   |   |  14,848 |   |   |   | 14,398 |   |   |   | 14,828 |   |   |   | 14,010 |   |

----

Table of Contents

| HI/FN, INC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| (in      thousands)(unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | June      30, |   |
| Nine      Months Ended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2008 |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |
| Net      loss                                                                                                                                                                                      |   | $ | (4,603 | ) |   | $ | (3,125 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Adjustments      to reconcile net loss to net cash provided by (used in) operating      activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
|          Depreciation and      amortization                                                                                                                                                   |   |   | 1,214 |   |   |   | 1,342 |   |
|          Amortization of intangible      assets                                                                                                                                               |   |   | 2,247 |   |   |   | 2,212 |   |
|          Short-term investment impairment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 382 |   |   |   | - |   |
|          Stock-based compensation expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 1,380 |   |   |   | 1,749 |   |
|          Write-down of excess and obsolete      inventory                                                                                                                                     |   |   | 115 |   |   |   | 54 |   |
|          Allowance for (recovery of) doubtful      accounts                                                                                                                                   |   |   | (16 | ) |   |   | 7 |   |
| Changes      in assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
|          Accounts      receivable                                                                                                                                                             |   |   | 575 |   |   |   | (818 | ) |
|          Inventories                                                                                                                                                                          |   |   | (91 | ) |   |   | (1,487 | ) |
|          Prepaid expenses and other current      assets                                                                                                                                       |   |   | (324 | ) |   |   | 110 |   |
|          Other      receivables                                                                                                                                                               |   |   | 105 |   |   |   | - |   |
|          Other      assets                                                                                                                                                                    |   |   | (373 | ) |   |   | (836 | ) |
|          Accounts      payable                                                                                                                                                                |   |   | 212 |   |   |   | 478 |   |
|          Accrued expenses and other current      liabilities                                                                                                                                  |   |   | 273 |   |   |   | (1,201 | ) |
|           Net cash provided by (used in) operating      activities                                                                                                                                      |   |   | 1,096 |   |   |   | (1,515 | ) |
| Cash      flows from investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |
| Sale      and maturities of short-term      investments                                                                                                                                            |   |   | 33,860 |   |   |   | 28,691 |   |
| Purchases      of short-term      investments                                                                                                                                                      |   |   | (35,812 | ) |   |   | (28,427 | ) |
| Purchases      of property and      equipment                                                                                                                                                      |   |   | (743 | ) |   |   | (513 | ) |
| Release      of escrow funds relating to Siafu      acquisition                                                                                                                                    |   |   | (150 | ) |   |   | - |   |
|           Net cash used in investing      activities                                                                                                                                                    |   |   | (2,845 | ) |   |   | (249 | ) |
| Cash      flows from financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |
| Proceeds      from issuance of common stock for stock option exercises and employee      stock purchase plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 1,737 |   |   |   | 887 |   |
| Repurchase      of common      stock                                                                                                                                                               |   |   | (909 | ) |   |   | (174 | ) |
|           Net cash provided by financing      activities                                                                                                                                                |   |   | 828 |   |   |   | 713 |   |
| Net decrease in cash and cash      equivalents                                                                                                                  |   |   | (921 | ) |   |   | (1,051 | ) |
| Cash      and cash equivalents at beginning of      period                                                                                                      |   |   | 17,049 |   |   |   | 20,437 |   |
| Cash      and cash equivalents at end of      period                                                                                                            |   | $ | 16,128 |   |   | $ | 19,386 |   |

----

Table of Contents

HI/FN, INC

----

Table of Contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | June      30,2008     |         |   | September      30, 2007 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------------|--------|-------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | ($      in thousands) |         |
| Property      and equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                  |         |   |                    |   |
|              Computer      equipment                                                                                                                      |   | $                     | 9,192        |   |                    | $      | 8,465 |   |
|              Furniture and      fixtures                                                                                                                       |   |                  | 914          |   |                    |   | 912 |   |
|              Leasehold      improvements                                                                                                                       |   |                  | 792          |   |                    |   | 789 |   |
|              Office      equipment                                                                                                                        |   |                  |  908    |   |                    |   | 906 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                  | 11,806       |   |                    |   | 11,072 |   |
|              Less: accumulated depreciation and      amortization                                                                                         |   |                  |  (9,819 | )      |                    |   | (9,090 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                     | 1,987        |   |                    | $      | 1,982 |   |

| Intangible      assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |    |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|          Developed and core      technology                                                                                                               |   | $      | 16,771  |   |   | $      | 16,771 |   |
|              Less: accumulated      amortization                                                                                      |   |   | (12,990 | )      |   |   | (10,743 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 3,781   |   |   |   | 6,028 |   |
|          Goodwill                                                                                                                                         |   |   | 1,425   |   |   |   | 1,425 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $      | 5,206   |   |   | $      | 7,453 |   |

| Fiscal      year ending September 30, |   |   |   |   |   |   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| 2008      (3 months ended)            |   | $      | 749    |   |   |   |   |   |
|          2009          |   |   | 1,231  |   |   |   |   |   |
|          2010          |   |   | 643    |   |   |   |   |   |
|          2011          |   |   | 643    |   |   |   |   |   |
|          2012          |   |   | 515    |   |   |   |   |   |
| Total      estimated amortization     |   | $      | 3,781  |   |   |   |   |   |

| Other      assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|              Design tools and other licensed intellectual property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $      | 4,790  |   |   | $      | 4,235 |   |
|                  Less: accumulated      amortization                                                                                         |   |   | (2,711 | )      |   |   | (2,235 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $      | 2,079  |   |   | $      | 2,000 |   |
|              Refundable deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 176    |   |   |   | 358 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $      | 2,255  |   |   | $      | 2,358 |   |

| Accrued      expenses and other current liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|              Accrued vacant facility lease      cost                                                                                              |   | $      | 429    |   |   | $      | 713 |   |
|              Accrued non-recurring engineering      costs                                                                                         |   |   | 993    |   |   |   | 104 |   |
|              Compensation and employee      benefits                                                                                              |   |   | 1,656  |   |   |   | 1,606 |   |
|              Deferred income and      revenue                                                                                                     |   |   | 769    |   |   |   | 1,004 |   |
|              Income taxes      payable                                                                                                            |   |   | 13     |   |   |   | 9 |   |
|              Other                                                                                                                                |   |   | 314    |   |   |   | 615 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $      | 4,174  |   |   | $      | 4,051 |   |

----

Table of Contents

|                                                                 |   | Three      Months EndedJune      30, |      |   | Nine      Months EndedJune      30, |   |
|----------------------------------------------------------------------|--------|--------------------------------------|-----------|--------|-------------------------------------|--------|
|                                                                 |   | 2008                                 |      |   | 2007                                |   |   | 2008 |   |   | 2007 |   |
|                                                                 |   |                                 |      |   |                                |   |   |   |   |   |   |   |
|          Outstanding options to purchase common stock |   |                                 | 3,252,263 |   |                                |   | 2,820,610 |   |   |   | 3,252,263 |   |   |   | 4,206,478 |   |

|                                                        |   | Three      Months EndedJune      30, |   |   | Nine      Months EndedJune      30, |   |
|-------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                        |   | 2008                                 |   |   | 2007                                |   |   | 2008 |   |   | 2007 |   |
|                                                        |   | (in      thousands)                  |   |
|          Net income (loss)                   |   | $                                    | (1,889 | )      |                                | $      | 284 |   |   | $ | (4,603 | ) |   | $ | (3,125 | ) |
|   Unrealized gain/(loss) on      financial instruments |   |                                 | (10    | )      |                                |   | (6 | ) |   |   | (19 | ) |   |   | 1 |   |
|   Comprehensive income      (loss)                     |   | $                                    | (1,899 | )      |                                | $      | 278 |   |   | $ | (4,622 | ) |   | $ | (3,124 | ) |

|                              |                                             |   | Options      Outstanding |   |            | Options      Vested and Exercisable                     |   |
|-----------------------------------|--------------------------------------------------|--------|--------------------------|--------|-----------------|---------------------------------------------------------|--------|
| Range      ofExercise      Prices |                                             |   |  Quantity           |   |            | Weighted      AverageRemaining      Life(in      years) |   |   | Weighted      AverageExercise      Price |   |   | Quantity |   |   | Weighted      AverageExercise      Price |   |
|                              |                                             |   |                     |   |            |                                                    |   |   |   |   |   |   |   |   |   |   |
| $                                 |   0.00 -   $      4.85            |   |                     |   | 506,209         |                                                    |   |   | 7.32 |   |   | $ | 3.69 |   |   |   | 276,714 |   |   | $ | 4.39 |   |
|                              |        4.90 -      5.00 |   |                     |   | 123,287         |                                                    |   |   | 1.00 |   |   |   | 4.99 |   |   |   | 118,339 |   |   |   | 4.99 |   |
|                              |        5.09 -      5.10 |   |                     |   | 354,143         |                                                    |   |   | 8.29 |   |   |   | 5.10 |   |   |   | 144,690 |   |   |   | 5.10 |   |
|                              |        5.11 -      5.84 |   |                     |   | 343,888         |                                                    |   |   | 8.33 |   |   |   | 5.62 |   |   |   | 128,054 |   |   |   | 5.45 |   |
|                              |        5.92 -      6.13 |   |                     |   | 340,320         |                                                    |   |   | 8.70 |   |   |   | 6.08 |   |   |   | 158,316 |   |   |   | 6.11 |   |
|                              |        6.21 -      6.66 |   |                     |   | 382,043         |                                                    |   |   | 5.91 |   |   |   | 6.50 |   |   |   | 241,465 |   |   |   | 6.56 |   |
|                              |        6.71 -      7.95 |   |                     |   | 349,617         |                                                    |   |   | 6.63 |   |   |   | 7.15 |   |   |   | 277,100 |   |   |   | 7.23 |   |
|                              |        7.99 -    10.52       |   |                     |   | 368,200         |                                                    |   |   | 6.57 |   |   |   | 9.18 |   |   |   | 293,600 |   |   |   | 9.45 |   |
|                              | 10.76      -    14.98             |   |                     |   | 325,385         |                                                    |   |   | 3.72 |   |   |   | 13.13 |   |   |   | 325,385 |   |   |   | 13.13 |   |
|                              | 15.99      -    69.88        |   |                     |   | 159,171         |                                                    |   |   |  2.62 |   |   |   |  26.02 |   |   |   |  159,171 |   |   |   | 26.02 |   |
| $                                 |        0.00 - $ 69.88                       |   |                     |   |  3,252,263 |                                                    |   |   |  6.52 |   |   | $ | 7.71 |   |   |   |  2,122,834 |   |   | $ |  8.94 |   |

----

Table of Contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Shares |    |   | Weighted      AverageFair      ValuePer      Share |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|----------------------------------------------------|--------|
|          Balance at September 30, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 111,619 |   |                                               | $      | 6.04 |   |
| RSUs      Granted                                                                                                                                               |   |   | 137,500 |   |                                               |   | 5.84 |   |
| RSUs      Exercised                                                                                                                                             |   |   | (36,619 | )      |                                               |   | 5.44 |   |
| RSUs      Forfeited/Cancelled                                                                                                                                   |   |   | -       |   |                                               |   | - |   |
|          Balance at June 30,      2008                                                                                       |   |   | 212,500 |   |                                               | $      | 6.01 |   |

|                                                                                   |   | Three      Months EndedJune      30, |   |   | Nine      Months EndedJune      30, |   |
|----------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                   |   | 2008                                 |   |   | 2007                                |   |   | 2008 |   |   | 2007 |   |
|                                                                                   |   | (in      thousands)                  |   |
|          Cost of revenues                                               |   | $                                    | 7      |   |                                | $      | 12 |   |   | $ | 22 |   |   | $ | 25 |   |
|          Research and development                                       |   |                                 | 165    |   |                                |   | 397 |   |   |   | 504 |   |   |   | 688 |   |
|          Sales and marketing                                            |   |                                 | 141    |   |                                |   | 73 |   |   |   | 407 |   |   |   | 194 |   |
|          General and administrative                                     |   |                                 | 97     |   |                                |   | 280 |   |   |   | 447 |   |   |   | 842 |   |
|              Total stock-based compensation expense |   | $                                    | 410    |   |                                | $      | 762 |   |   | $ | 1,380 |   |   | $ | 1,749 |   |

----

Table of Contents

|                                                                            |   | Three      Months EndedJune      30, |   |   | Nine      Months EndedJune      30, |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                            |   | 2008                                 |   |   | 2007                                |   |   | 2008 |   |   | 2007 |   |
|                                                                            |   | (in      thousands)                  |   |
|          North America:                                          |   |                                 |   |   |                                |   |   |   |   |   |   |   |
|             United States                         |   | $                                    | 4,610  |   |                                | $      | 4,643 |   |   | $ | 13,100 |   |   | $ | 12,720 |   |
|             Other                                 |   |                                 | 399    |   |                                |   | 213 |   |   |   | 677 |   |   |   | 662 |   |
|                Total North America |   |                                 | 5,009  |   |                                |   | 4,856 |   |   |   | 13,777 |   |   |   | 13,382 |   |
|          Asia:                                                   |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|             Hong Kong                             |   |                                 | 3,695  |   |                                |   | 5,164 |   |   |   | 11,195 |   |   |   | 14,290 |   |
|             Malaysia                              |   |                                 | 165    |   |                                |   | 206 |   |   |   | 923 |   |   |   | 1,263 |   |
|             Thailand                              |   |                                 | 251    |   |                                |   | 309 |   |   |   | 720 |   |   |   | 489 |   |
|             Japan                                 |   |                                 | 262    |   |                                |   | 425 |   |   |   | 655 |   |   |   | 915 |   |
|             Singapore                             |   |                                 | 62     |   |                                |   | 90 |   |   |   | 356 |   |   |   | 224 |   |
|             China                                 |   |                                 | 10     |   |                                |   | - |   |   |   | 175 |   |   |   | - |   |
|             Taiwan                                |   |                                 | 50     |   |                                |   | 15 |   |   |   | 107 |   |   |   | 45 |   |
|             Korea                                 |   |                                 | -      |   |                                |   | 13 |   |   |   | 10 |   |   |   | 13 |   |
|                 Total Asia    |   |                                 | 4,495  |   |                                |   | 6,222 |   |   |   | 14,141 |   |   |   | 17,239 |   |
|          Europe and other                                        |   |                                 | 716    |   |                                |   | 593 |   |   |   | 2,496 |   |   |   | 1,348 |   |
|          Total                     |   | $                                    | 10,220 |   |                                | $      | 11,671 |   |   | $ | 30,414 |   |   | $ | 31,969 |   |

|                                                                       |   | Three      Months EndedJune      30, |   |   | Nine      Months EndedJune      30, |   |
|----------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                       |   | 2008                                 |   |   | 2007                                |   |   | 2008 |   |   | 2007 |   |
|          Cisco Systems, Inc. and its contract manufacturers |   |                                 | 49%    |   |                                |   | 47% |   |   |   | 49% |   |   |   | 52% |   |
|          Huawei Technologies, Inc.                          |   |                                 | 10%    |   |                                |   | 12% |   |   |   | 8% |   |   |   | 13% |   |
|          EMC Corporation                                    |   |                                 | 10%    |   |                                |   | 7% |   |   |   | 10% |   |   |   | 4% |   |
|                                                                       |   |                                 | 69%    |   |                                |   | 66% |   |   |   | 67% |   |   |   | 69% |   |

----

Table of Contents

----

Table of Contents

----

Table of Contents

----

Table of Contents

Item 2

----

Table of Contents

----

Table of Contents

|                                                          |   | Three Months Ended      June 30, |   | Year-over-Year    Change |   | Nine Months Ended      June 30, |   | Year-over-Year    Change |              |
|----------------------------------------------------------|--------|----------------------------------|--------|--------------------------|--------|-------------------------------------------|--------|--------------------------|-------------------|
|          (dollars in thousands)           |   | 2008                             |   | 2007                     |   |                                      | 2008   |                          |  2007        |
|     Processors             |   | $                                | 9,660  |                     | $      | 11,046                                    |   |                     |        (13)% |   | $ | 28,201 |   | $ | 29,819 |   |   |          (5)% |   |
|     Software      licenses and other |   |                             | 560    |                     |   | 625                                       |   |                     |        (10)% |   |   | 2,213 |   |   | 2,150 |   |   |     3% |   |
|                                                     |   | $                                | 10,220 |                     | $      | 11,671                                    |   |                     |        (12)% |   | $ | 30,414 |   | $ | 31,969 |   |   |          (5)% |   |

|                                                     |   |                   |                       |                   |   |                            |              |        |                         |
|----------------------------------------------------------|--------|-------------------|----------------------------|-------------------|--------|----------------------------|-------------------|--------|------------------------------|
|                                                     |   | % of net revenues |                       | % of net revenues |   |                       | % of net revenues |        |  % of net      revenues |
|     Processors             |   |              |        95%            |              |   |        95%            |              |   |                         |   |   |        93% |   |   |        93% |   |   |      |   |
|     Software      licenses and other |   |              |          5% |              |   |          5% |              |   |                    |   |   |          7% |   |   |          7% |   |   |   |   |
|      Total                           |   |              | 100%                       |              |   | 100%                       |              |   |                         |   |   | 100% |   |   | 100% |   |   |   |   |

|                                                                       |   | Three      Months EndedJune      30, |   |   | Nine      Months EndedJune      30, |   |
|----------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                       |   | 2008                                 |   |   | 2007                                |   |   | 2008 |   |   | 2007 |   |
|          Cisco Systems, Inc. and its contract manufacturers |   |                                 | 49%    |   |                                |   | 47% |   |   |   | 49% |   |   |   | 52% |   |
|          Huawei Technologies, Inc.                          |   |                                 | 10%    |   |                                |   | 12% |   |   |   | 8% |   |   |   | 13% |   |
|          EMC Corporation                                    |   |                                 | 10%    |   |                                |   | 7% |   |   |   | 10% |   |   |   | 4% |   |
|                                                                       |   |                                 | 69%    |   |                                |   | 66% |   |   |   | 67% |   |   |   | 69% |   |

----

Table of Contents

|                                                          |   | Three Months      Ended June 30, |   | Year-over-Year    Change |   | Nine Months Ended      June 30, |   | Year-over-Year    Change |             |
|----------------------------------------------------------|--------|---------------------------------------|--------|--------------------------|--------|--------------------------------------|--------|--------------------------|------------------|
|          (dollars in thousands)           |   | 2008                                  |   | 2007                     |   |                                 | 2008   |                          |  2007       |
|     Processors             |   | $                                     | 3,517  |                     | $      | 3,882                                |   |                     |   (9)% |   | $ | 9,807 |   | $ | 10,517 |   |   |          (7)% |   |
|     Software      licenses and other |   |                                  | 152    |                     |   | 82                                   |   |                     |   85%  |   |   | 456 |   |   | 247 |   |   |  85% |   |
|                                                     |   | $                                     | 3,669  |                     | $      | 3,964                                |   |                     |        (7)% |   | $ | 10,263 |   | $ | 10,764 |   |   |          (5)% |   |

|                                                     |   |                            |   |                            |   |        |                       |        |                                       |
|----------------------------------------------------------|--------|----------------------------|--------|----------------------------|--------|--------|----------------------------|--------|--------------------------------------------|
|                                                     |   | % of revenue      category |   | % of revenue      catagory |   |   | %      of revenue catagory |        |  %      of revenue      catagory |
|     Processors             |   |                       | 36%    |                       |   | 35%    |                       |   |                                       |   |   | 35% |   |   | 35% |   |   |      |   |
|     Software      licenses and other |   |                       | 27%    |                       |   | 13%    |                       |   |                                  |   |   | 21% |   |   | 11% |   |   |   |   |
|      Total                           |   |                       | 36%    |                       |   | 34%    |                       |   |                                       |   |   | 34% |   |   | 34% |   |   |   |   |

----

Table of Contents

|                                                                                   |   | Three Months      Ended June 30, |   | Year-over-Year    Change |   | Nine Months Ended      June 30, |   | Year-over-Year    Change |           |
|-----------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------|--------|--------------------------------------|--------|--------------------------|----------------|
|          (dollars in thousands)                                    |   | 2008                                  |   | 2007                     |   |                                 | 2008   |                          |  2007     |
|     Research      & development expenses   |   | $                                     | 3,140  |                     | $      | 2,916                                |   |                     |        8% |   | $ | 10,238 |   | $ | 10,336 |   |   |    (1)% |   |
|     As      a percentage of net revenues                      |   |                                  | 31%    |                     |   | 25%                                  |   |                     |           |   |   | 34% |   |   | 32% |   |   |   |   |

|                                                                         |   | Three Months      Ended June 30, |   | Year-over-Year    Change |   | Nine Months Ended      June 30, |   | Year-over-Year    Change |            |
|-------------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------|--------|--------------------------------------|--------|--------------------------|-----------------|
|          (dollars in thousands)                          |   | 2008                                  |   | 2007                     |   |                                 | 2008   |                          |  2007      |
|          Sales & marketing expenses   |   | $                                     | 2,678  |                     | $      | 2,097                                |   |                     |        28% |   | $ | 8,002 |   | $ | 6,036 |   |   |    33% |   |
|     As      a percentage of net revenues            |   |                                  | 26%    |                     |   | 18%                                  |   |                     |            |   |   | 26% |   |   | 19% |   |   |   |   |

----

Table of Contents

|                                                                                     |   | Three Months      Ended June 30, |   | Year-over-Year    Change |   | Nine Months Ended      June 30, |   | Year-over-Year    Change |             |
|-------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------|--------|--------------------------------------|--------|--------------------------|------------------|
|          (dollars in thousands)                                      |   | 2008                                  |   | 2007                     |   |                                 | 2008   |                          |  2007       |
|     General      & administrative expenses   |   | $                                     | 1,816  |                     | $      | 1,940                                |   |                     |        (6)% |   | $ | 4,813 |   | $ | 7,040 |   |   |    (32)% |   |
|     As      a percentage of net revenues                        |   |                                  | 18%    |                     |   | 17%                                  |   |                     |             |   |   | 16% |   |   | 22% |   |   |   |   |

----

Table of Contents

|                                                                      |   | Three Months      Ended June 30, |   | Year-over-Year    Change |   | Nine Months Ended      June 30, |   | Year-over-Year    Change |           |
|----------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------|--------|--------------------------------------|--------|--------------------------|----------------|
|          (dollars in thousands)                       |   | 2008                                  |   | 2007                     |   |                                 | 2008   |                          |  2007     |
|     Amortization      of intangibles   |   | $                                     | 749    |                     | $      | 737                                  |   |                     |        2% |   | $ | 2,247 |   | $ | 2,212 |   |   |    2% |   |
|     As      a percentage of net revenues         |   |                                  | 7%     |                     |   | 6%                                   |   |                     |           |   |   | 7% |   |   | 7% |   |   |   |   |

|                                                                              |   | Three Months      Ended June 30, |   | Year-over-Year    Change |   | Nine Months Ended      June 30, |   | Year-over-Year    Change |              |
|------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------|--------|--------------------------------------|--------|--------------------------|-------------------|
|          (dollars in thousands)                               |   | 2008                                  |   | 2007                     |   |                                 | 2008   |                          |  2007        |
|     Interest      income & other expenses, net  |   | $                                     | 43     |                     | $      | 489                                  |   |                     |        (91)% |   | $ | 672 |   | $ | 1,469 |   |   |    (54)% |   |
|     As      a percentage of net revenues                 |   |                                  | 0%     |                     |   | 4%                                   |   |                     |              |   |   | 2% |   |   | 5% |   |   |   |   |

|                                                              |   | Three Months      Ended June 30, |   | Year-over-Year    Change |   | Nine Months Ended      June 30, |   | Year-over-Year    Change |              |
|--------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------|--------|--------------------------------------|--------|--------------------------|-------------------|
|          (dollars in thousands)               |   | 2008                                  |   | 2007                     |   |                                 | 2008   |                          |  2007        |
|     Provision      for income taxes      |   | $                                     | 100    |                     | $      | 222                                  |   |                     |        (55)% |   | $ | 126 |   | $ | 175 |   |   |    (28)% |   |
|     As      a percentage of net revenues |   |                                  | 1%     |                     |   | 2%                                   |   |                     |              |   |   | 0% |   |   | 1% |   |   |   |   |

----

Table of Contents

|                                                                        |   | June      30,       |   |
|-----------------------------------------------------------------------------|--------|---------------------|--------|
|          Nine Months Ended                                   |   | 2008                |   |   | 2007 |   |
|                                                                        |   | (in      thousands) |   |
|          Net cash provided by (used in) operating activities |   | $                   | 1,096  |   |   | $ | (1,515 | ) |
|          Net cash used in investing activities               |   |                | (2,845 | ) |   |   | (249 | ) |
|          Net cash provided by financing activities           |   |                | 828    |   |   |   | 713 |   |
| Net decrease in cash and cash      equivalents                              |   | $                   | (921   | ) |   | $ | (1,051 | ) |

----

Table of Contents

----

Table of Contents

|                                                |   |                |   |   | Payments      Due By Period |   |
|-----------------------------------------------------|--------|---------------------|--------|--------|-----------------------------|--------|
|          Contractual Obligations     |   | Total               |   |   | Less      than1      year   |   |   | 1      – 3years |   |   | 3      – 5years |   |   | More      than      5 years |   |
|                                      |   | (in      thousands) |   |
|          Operating lease commitments |   | $                   | 2,264  |   |                        | $      | 1,414 |   |   | $ | 801 |   |   | $ | 49 |   |   | $ | - |   |
|          Inventory purchases         |   |                | 3,345  |   |                        |   | 3,345 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|          Non-recurring engineering   |   |                | 994    |   |                        |   | 994 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|          Totals                      |   | $                   | 6,603  |   |                        | $      | 5,753 |   |   | $ | 801 |   |   | $ | 49 |   |   | $ | - |   |

----

Table of Contents

----

Table of Contents

Item 3

Item 4.

----

Table of Contents

----

Table of Contents

PART II

Item 1A

Item 2

|                                                    |                                     |         |                                 |         |                                                                                                                              |         |
|---------------------------------------------------------|------------------------------------------|--------------|--------------------------------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------|--------------|
|          Period                     | TotalNumber of SharesPurchased |    | AveragePrice Paidper Share |    | Total Number of Shares Purchased      as Part of Publicly      Announced Plans      or Programs (1) |    | Approximate Dollar Value of Shares ThatMay      Yet Be Purchased      Under the Plans or Programs |   |
|          April 1, 2008 to April 30, 2008 | -                                        |         | $                                    | -            |                                                                                                                         | -            |    | $ | 8,000,000 |   |
|          May 1, 2008 to May 31, 2008     | 63,417                                   |         |                                 | 4.67         |                                                                                                                         | 63,417       |    |   | 7,703,715 |   |
|          June 1, 2008 to June 30, 2008   | 128,325                                  |         |                                 | 4.77         |                                                                                                                         | 191,742      |    |   | 7,091,113 |   |
| Total                                                   | 191,742                                  |         | $                                    | 4.74         |                                                                                                                         | 191,742      |   |   |   |   |
|                                                    |                                     |         |                                 |         |                                                                                                                         |         |    |   |   |   |

----

| (1) |   | On      May 1, 2008, Hifn announced that its Board of Directors had authorized a      stock repurchase program under which Hifn may repurchase up to $8.0      million of its common stock. The stock repurchase program expires on      September 30, 2008. Hifn is not obligated to make any additional      repurchases under this stock repurchase program and may discontinue the      repurchase program at any time. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

Item6.

|  Exhibit Number    |  Exhibit                                                                                                                                                | Incorporated      by Reference |                   |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|------------------------|
|  Form                   |  File      No.                                                                                                                                          |  Exhibit                  |  Filing      Date | Filed      Herewith |
|                         |                                                                                                                                                         |                           |                   |   |   |   |
|          10.1 | Forms      of Severance and Change of Control Agreement between the registrant and      each of Russell Dietz, William R. Walker and Douglas L.      Whiting | 8-K                            | 000-24765              | 99.1 | 05/19/2008 |   |
|          31.1 | Certification      of Chief Executive Officer pursuant to Rule 13A-14(a) or      15D-14(a)                                                                   |                           |                   |   |   | X |
|          31.2 | Certification      of Chief Financial Officer pursuant to Rule 13A-14(a) or      15D-14(a)                                                                   |                           |                   |   |   | X |
|          32.1 | Certification      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |                           |                   |   |   | X |
|          32.2 | Certification      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |                           |                   |   |   | X |

----

Table of Contents

SIGNATURES

|                                  | hi/fn,      inc.(Registrant)                                                                                          |
|---------------------------------------|-----------------------------------------------------------------------------------------------------------------------|
|                                  |                                                                                                                  |
| Date: August 1,      2008   | By: /s/ William R.      Walker                                                                                        |
|                                  | William R.      Walker                                                                                                |
|                                  | Vice President,      Finance, Chief Financial Officer and Secretary (principal financial and      accounting officer) |

----

Table of Contents

INDEX TO EXHIBITS

|  Exhibit Number    |  Exhibit                                                                                                                                                | Incorporated      by Reference |                   |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|------------------------|
|  Form                   |  File      No.                                                                                                                                          |  Exhibit                  |  Filing      Date | Filed      Herewith |
|                         |                                                                                                                                                         |                           |                   |   |   |   |
|          10.1 | Forms      of Severance and Change of Control Agreement between the registrant and      each of Russell Dietz, William R. Walker and Douglas L.      Whiting | 8-K                            | 000-24765              | 99.1 | 05/19/2008 |   |
|          31.1 | Certification      of Chief Executive Officer pursuant to Rule 13A-14(a) or      15D-14(a)                                                                   |                           |                   |   |   | X |
|          31.2 | Certification      of Chief Financial Officer pursuant to Rule 13A-14(a) or      15D-14(a)                                                                   |                           |                   |   |   | X |
|          32.1 | Certification      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |                           |                   |   |   | X |
|          32.2 | Certification      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |                           |                   |   |   | X |

----