UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): ~~June~~August 308, 2005

TeraForce Technology Corporation
__________________________________________
(Exact name of registrant as specified in its charter)


Delaware	0-11630	76-0471342
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

1240 East Campbell Road, Richardson, Texas		75081
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


Registrant’s telephone number, including area code:		469-330-4960

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 28.0401 ~~Triggering~~Other Events ~~That Accelerate or Increase a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement~~.

~~The~~As previously disclosed, the Company's ~~12%~~and ~~Convertible~~its ~~Subordinated~~wholly ~~Notes~~owned subsidiary, DNA Computing Solutions, Inc. (collectively the "~~Notes~~Debtors") ~~matured~~filed for protection under Chapter 11 of the Federal Bankruptcy Code (the "Bankruptcy Code") on ~~June~~August 303, 2005~~. Principal~~ ~~and~~in ~~accrued~~the ~~interest~~United ~~due~~States ~~under~~Bankruptcy Court for the ~~notes~~Northern ~~amounts~~District toof ~~approximately~~Texas ~~$3,215,000~~Dallas Division (the "Bankruptcy Court"). The ~~Company~~cases ~~has~~are ~~not~~now ~~made~~being ~~payment~~jointly ofadministered ~~these~~under ~~amounts. Failure~~case tonumber ~~make~~05-38756-BJH-11.The ~~these~~Debtors ~~payments~~have ~~consititutes~~entered into an ~~event~~Asset Purchase Agreement with GE Fanuc Embedded Systems, Inc. ("GEF") for the sale of ~~default~~substantially all of the assets of DNA Computing Solutions, Inc. pursuant to ~~the~~section ~~note~~363 ~~agreement~~of ~~underlying~~the Bankruptcy Code (the ~~Notes~~"APA"). The ~~holders~~Debtors ofhave filed a motion with the ~~Notes~~Bankruptcy ~~have~~Court requesting the ~~right~~entry toof ~~demand~~an ~~that~~order ~~the~~(a) ~~unpaid~~authorizing ~~principal~~and scheduling an auction, (b) authorizing and ~~accured~~approving ~~interest~~(i) ~~are~~bidding ~~immmediately~~procedures, ~~due~~(ii) break-up fee and ~~payable. The~~expense ~~Company~~reimbursement, ~~has~~(iii) ~~not~~notice ~~received~~of ~~such~~the ~~demand.Default~~auction, ~~under~~and (iv) the ~~Notes~~form ~~constitutes~~and manner of sale notice and (c) scheduling a ~~default~~sale ~~under~~hearing (the ~~Company's~~"Bid ~~other~~Procedures ~~borrowing~~Motion"). A ~~arrangements,~~hearing ~~including~~on the ~~$2,750,000~~Bid ~~credit~~Procedures ~~agreement~~Motion ~~with~~has ~~Encore~~been ~~Bank,~~scheduled by the $3Bankruptcy Court for 9:00 a.m. CDT,~~900~~ Thursday,~~000~~ ~~credit~~August ~~agreement~~11, ~~with~~2005.The ~~Bank~~Debtors ~~One~~have requested, NAsubject ~~and~~to ~~the~~Bankruptcy ~~Company's~~Court ~~$500~~approval,~~000~~ ~~convertible~~that ~~note~~(i) ~~payable. Upon~~potential ~~notice~~bidders ~~from~~be ~~the~~required ~~holders~~to ofsubmit ~~these~~bids ~~obligations~~no ~~these~~later ~~amounts~~than August 24, ~~plus~~2005, ~~any~~(ii) ~~accrued~~an ~~and~~auction ~~unpaid~~be ~~interest,~~scheduled ~~becomes~~for ~~immediately~~August ~~due~~26, 2005, and ~~payable~~(iii) a hearing on the Sale Motion (as defined below) be scheduled for August 29, 2005. The ~~Company~~Debtors ~~has~~have ~~not~~also ~~received~~filed ~~such~~a ~~notice~~motion ~~from~~with the ~~holders~~Bankruptcy ofCourt ~~any~~requesting the entry of ~~these~~an ~~obligations.Pursuant~~order authorizing, pursuant to ~~the~~sections ~~terms~~105(A), 363 and 1146(C) of the ~~subordination~~Bankruptcy ~~provisions~~Code, the sale to GEF of substantially all of the ~~Notes~~assets of DNA Computing Solutions, Inc. and approving the ~~Company~~APA is(the ~~prohibited~~"Sale ~~from~~Motion"). Pursuant ~~making~~to ~~any~~the ~~payments~~Sale ~~pursuant~~Motion, the Debtors are requesting authority to sell the ~~Notes~~assets ifto anthe ~~event~~highest ofand ~~default~~best ~~exists~~bid onreceived ~~any~~from ~~senior~~Qualified ~~debt,~~Bidders (as defined in the Bid Procedures Motion) at the auction. ~~The~~If ~~credit~~there ~~agreement~~are ~~with~~no ~~Encore~~Qualified ~~Bank~~Bidders, ~~and~~the ~~Bank~~auction ~~One~~will be cancelled and substantially all of the ~~$500~~assets of DNA Computing Solutions,~~000~~ ~~convertible~~Inc. ~~note~~will ~~are~~be ~~considered~~sold ~~senior~~to ~~debt~~GEF ~~for~~pursuant ~~this~~to ~~purpose~~the APA, subject to Bankruptcy Court approval.~~Should~~ The Sale Motion contemplates that the ~~holders~~sale ofwill ~~any~~be ofeffectuated at the ~~obligations~~end ~~described~~of ~~above~~August, ~~make~~2005 ~~demand~~or the beginning of September, 2005. The Bankruptcy Court has not yet scheduled a hearing on the Sale Motion.The Company’s ~~for~~Current ~~payment~~Report oron ~~instigate~~Form ~~legal~~8-K ~~actions~~dated August 1, ~~the~~2005 ~~Company~~and ~~could~~disclosing beinformation ~~forced~~pursuant to ~~seek~~Items ~~bankruptcy~~1.01, ~~protection~~1.03, 2.03 and 2.04 is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TeraForce Technology Corporation
July 6, 2005	By:	Robert P. Capps
August 8, 2005	By:	Robert P. Capps
		Name: Robert P. Capps
		Title: Chief Financial Officer

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