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| Washington,      D.C. 20549 |
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| FORM      10-K              |

| ý | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,2007 |
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| o | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 FOR THE TRANSITION PERIOD FROMTO |
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| Delaware(State      or other jurisdictionof      incorporation or organization) | 04-2751645(I.R.S.      EmployerIdentification      No.) |
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| Title      of Each Class                    | Name      of each exchange on which registered |
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| Common      stock, par value $.01 per share | The      NASDAQ Stock Market LLC               |

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|   | · | Telaxis      Communications Corporation – In April 2003, we (then a private company      known as Young Design, Inc.) acquired Telaxis, a publicly traded company      focused on developing high capacity millimeter wave wireless products, and      thus became a publicly traded company.  Young Design, Inc. had      developed, produced, and sold wireless data products, primarily in      microwave frequencies. |
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|   | · | KarlNet,      Inc. – In May 2004, we acquired KarlNet, a pioneer and leader in software      development for operating and managing wireless  networks. |
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|   | · | Terabeam      Corporation – In June 2004, we acquired Terabeam Corporation, a developer      and provider of wireless fiber solutions using high frequency millimeter      wave (60 GHz radio frequency) and free space optics (transferring data      through the air with light) technologies which had raised a substantial      amount of cash as a private company.  In addition to the cash      and wireless fiber solutions, the Terabeam Corporation acquisition      provided us with the capability to pursue non-communication millimeter      wave products business (such as radar systems and sub-systems) from      military and non-military governmental and other customers through its      Harmonix Division. |
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|   | · | Ricochet      Networks – In June 2004, we acquired Ricochet Networks,      Inc.  Ricochet was a wireless Internet service provider,      originally formed to acquire certain assets from the bankruptcy estate of      Metricom, that operated the Ricochet® wireless network in the Denver and      San Diego metropolitan areas. |
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|   | · | Proxim      Corporation – In July 2005, we acquired substantially all of the assets      and operations of Proxim Corporation (“Old Proxim”) from the bankruptcy      estate of Old Proxim.  Old Proxim was the result of the merger      between Western Multiplex Corporation and Proxim, Inc. in March      2002.  Both Western Multiplex and Proxim, Inc. were designers      and manufacturers of broadband wireless systems.  In      August 2002, Old Proxim acquired Agere Systems’ 802.11 wireless local      area network equipment business, including its ORiNOCO® 802.11a and b      product line. |
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|   | · | advancing      our broadband mesh and MeshMAXsystems; |
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|   | · | advancing      our point-to-multipoint systems; |
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|   | · | advancing      our point-to-point systems; |
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|   | · | adapting      our products to additional frequencies and  interfaces; |
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|   | · | developing      higher speed products; |
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|   | · | designing      our products for lower cost, outsourced manufacturing, assembly, and      testing. |
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|   | · | an      unpredictable customer demandenvironment; |
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|   | · | limited      backlog; |
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|   | · | uncertain      acceptance of new products andservices; |
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|   | · | competition;      and |
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|   | · | challenges      in managing growth. |
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|   | · | A      three-year supply agreement pursuant to which Agere originally agreed to      supply Old Proxim with chipsets, modules and cards at specified      prices; |
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|   | · | a      perpetual license originally enabling Old Proxim to use Agere technology      related to the wireless LAN equipment business;  and |
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|   | · | a      7-1/2 year patent cross-license agreement for Old Proxim’s and      Agere’s respective patentportfolios. |
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|   | · | PTP      radio transmission and circuitdesign |
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|   | · | WLAN      and Mesh Layer 2 MAC |
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|   | · | PMP      and WLAN Layer 3 Routing |
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|   | · | PMP      and WLAN Mobility |
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|   | · | Wireless      LAN Switch |
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|   | · | Optical      Transmission |
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|   | · | Antenna      Design |
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|   | · | decrease      the growth of the broadband wirelessindustry; |
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|   | · | hinder      our ability to conduct businessinternationally; |
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|   | · | reduce      our revenues; |
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|   | · | affect      the costs and pricing of ourproducts; |
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|   | · | increase      our operating expenses; and |
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|   | · | expose      us to significant liabilities. |
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| Item      1A. | Risk      Factors. |
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|   | · | We have been unable to increase      our revenues and may be unable to grow our revenues in the      future.  We have been unable to increase our revenues for      a number of quarters in a row despite being in what are perceived as      expanding markets.  This is having an adverse impact on our      business, financial condition, and relations with customers, suppliers,      employees, investors, and others.  Our continued inability to      increase our revenues could have a material adverse affect on our ability      to continue as a going concern. |
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|   | · | We cannot predict whether we      will be able to achieve profitability, which could adversely affect our      ability to continue as a going concern and our stock      price.  We were profitable on an operating and GAAP basis      in the fourth fiscal quarter of 2005.  We were not profitable in      any quarter of 2006 or 2007.  We have made no predictions      concerning our future profitability or lack of      profitability.  Our inability to achieve profitability may      affect our ability to continue as a going concern and cause the market      price of our stock to decline or prevent it from  rising. |
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|   | · | We currently have limited      capital resources, which could adversely impact our operations, ability to      grow our business, attractiveness as a supplier to customers,      attractiveness to investors, and viability as an ongoing      company.  We have a recent history of unprofitable      operations, and our capital resources have been declining and are      limited.  These factors could cause potential customers to      question our long-term viability as a supplier and thus decide not to      purchase products from us.  Further, our limited capital      resources could inhibit our ability to grow our business because typically      we have to pay our suppliers sooner than we receive payment from our      customers.  These factors could cause potential investors to      question our long-term viability or believe that we will need to raise      additional capital on terms more favorable than a typical investor would      obtain by simply buying our stock in the public markets and thus decide      not to purchase our stock.  All these factors could have an      adverse impact on our operations, financial results, stock price, and      viability as an ongoing company. |
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|   | · | We have limited capital      resources and our prospects for obtaining additional financing, if      required, are uncertain.  Our future capital requirements      will depend on numerous factors, including expansion  of |
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|   | · | Our common stock may be      delisted from the Nasdaq Capital Market, which could adversely affect our      business and relations with employees, customers, and      others.  Our common stock is currently traded on the      Nasdaq Capital Market.  We have received notice from The Nasdaq      Stock Market that our stock price (technically, the closing bid price) has      failed to maintain the required minimum $1.00 per share.  We      have been given until August 20, 2008 to achieve compliance with that rule      by having the bid price of our stock close at $1.00 or more for at least      ten consecutive business days.  If compliance with that rule is      not be demonstrated by August 20, 2008, Nasdaq will determine whether we      meet the initial listing criteria for the Nasdaq Capital Market, except      for the bid price requirement.  If so, Nasdaq will notify us      that we have been granted an additional 180 day compliance      period.  There can be no assurance that we will be able to      achieve compliance with this minimum bid price rule by August 20, 2008;      that we would be granted an additional 180 day compliance period; or that      we would be able to achieve compliance with the minimum bid price rule      even if granted the additional compliance period.  While there      are many actions that may be taken to attempt to increase the price of our      stock, two of the possibilities are a reverse stock split and a stock      repurchase.  At this time, we have limited capital available for      any stock repurchase.  Any such actions (even if successful) may      have adverse effects on us, such as adverse reaction from employees,      investors and financial markets in general, adverse publicity, and adverse      reactions from customers.  There are other requirements for      continued listing on the Nasdaq Capital Market, and there can be no      assurance that we will continue to meet these listing      requirements.  Should our stock be delisted from the Nasdaq      Capital Market, we may apply to have our stock traded on the      Over-The-Counter Bulletin Board.  There can be no assurance that      our common stock would be timely admitted for trading on that      market.  This alternative may result in a less liquid market      available for existing and potential stockholders to buy and sell shares      of our stock and could further depress the price of our    stock. |
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|   | · | We may raise additional capital      on terms that we or our stockholders find onerous, which could adversely      affect our financial results and stock price.  In the      future, we may be able to raise additional debt or equity capital only on      terms that we find onerous.  Alternatively, some of our      stockholders may find the terms of our capital arrangements to be      onerous.  For example, some of our stockholders expressed      displeasure at our issuing shares in July 2007 in a private placement at a      price below the current trading price of our stock.  We may also      obtain funds through arrangements with partners or others that may require      us to relinquish rights to certain of our technologies or potential      products or other assets.  The terms of our capital arrangements      or the perceived onerous nature of those arrangements could adversely      affect our financial results and stockprice. |
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|   | · | We may sell or otherwise      dispose of portions of our business and assets for strategic reasons or to      raise capital, which could adversely affect our business, financial      results, and relationships.  As we analyze our company,      strategic direction, and capital requirements, we may decide to sell some      of our product lines, intellectual property, or other      assets.  We may decide to do so for a variety of reasons,      including to raise capital, to focus on certain portions of our current      business, and to reduce our expenses.  Any such decisions could      adversely impact our relationships with customers, employees, investors,      and others for a variety of reasons depending on the actual decisions      made.  For example, it may be perceived that such decisions are      due to our questionable financial viability.  It may be      perceived that we have decided to dispose of certain product lines that      some people may believe have more potential than others.  Any      such decisions and related consequences could have an adverse impact on      our business, financial results, and relationships with third      parties. |
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|   | · | Our lower stock price and      weaker financial condition may make it harder to attract and retain      qualified employees.  We operate in an industry where      there are numerous employment opportunities.  As a result, our      employees and people we may be looking to employ typically have choices as      to where they want to work.  Our lower stock price, resulting      decreased incentive impact of stock options, difficulties in growing our      revenue, lower cash levels, and general weaker financial condition may      make it harder for us |
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|   | · | The continuing uncertainty in      the telecommunications industry and the global economy is adversely      affecting our sales due in part to our being a smaller, younger      company.  The overall economic climate in the United      States and many other parts of the world has been in a      downturn.  This downturn has resulted in our customers having      less capital available from capital markets, and less willingness to spend      internal capital, to purchase equipments such as ours.  As a      result, potential customers may be less willing to spend their limited      budgets on products from us, a relatively small, young company that may      not survive the leaner economic times.  Also, it may be causing      customers to pay us slower.  Because we do not have the      financial resources or name recognition of larger companies, this economic      cycle may adversely affect the growth and stability of our business and      our financial condition and results of  operations. |
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|   | · | The broadband wireless      equipment industry in which we principally operate is intensely      competitive which could negatively impact our financial      results.  The telecommunications equipment industry in      which we operate is intensely competitive.  Most of our products      are intended for outdoor broadband wireless networks (generally our      broadband wireless access and point-to-point products) or indoor wireless      networks (generally our enterprise Wi-Fi products).  Competition      is intense in this industry for a number of reasons.  For      example, there are relatively few barriers to entry in this      market.  Also, this industry has attracted substantial media and      other attention in recent months in part due to the ability of this      equipment to provide broadband Internet connectivity simply, quickly, and      efficiently.  These same reasons, among others, have caused a      number of companies to develop products that compete (or could be viewed      as competing) with ours.  This large number of companies      offering products that may be perceived to be similar or even      interchangeable with our products can have the effect of reducing the      prices at which we are able to sell our products.  In turn, this      can reduce our gross margins and negatively impact our general financial      results. |
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|   | · | We face substantial competition      from a number of larger companies with substantially greater resources and      longer operating histories, and we may not be able to compete      effectively.  Many of our competitors or perceived      competitors offer a variety of competitive products and services and some      may offer broader telecommunications product lines.  These      companies include AirSpan Networks, Alcatel, Alvarion, Aruba Networks,      Business Networks AB, Ceragon, Cisco (including LinkSys), D-Link, Ericson,      Fujitsu, Harris Corporation, Harris Stratex Networks, Intel Corporation,      Motorola (including Orthogon and Symbol Technologies), NEC, Netgear,      Nokia, Nortel, SMC, and 3Com Corporation.  Additionally, our      millimeter wave radio products must compete with the existing and new      fiber optic infrastructure and suppliers in the United States and      elsewhere.  Many of these companies have greater customer      recognition, installed bases, financial resources, and sales, production,      marketing, manufacturing, engineering, and other capabilities than we      do. |
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|   | · | We also face competition from      private and start-up companies given the limited barriers to entry in our      business.  We face actual and potential competition not      only from established companies, but also from start-up and other private      companies that are developing and marketing new commercial products and      services.  Many of the products we sell are based on standards      established by the Institute of Electrical and Electronics Engineers      (IEEE) that require interoperability.  Also, there are not      substantial technical development difficulties, manufacturing      difficulties, prohibitive intellectual property rights, or high business      start-up costs that may create greater barriers to entry in other      businesses.  As a result, there are limited barriers to entry      into a number of markets we serve.  This lack of significant      barriers and the perceived attractiveness of some of these markets, among      other reasons, have resulted in private companies entering these      markets.  These private companies include Aperto, Belair      Networks, Bridgewave, Buffalo, Colubris Networks, Firetide, Meru, Redline,      Skypilot, Strix, Trango Broadband, Trapeze Networks, and      Tropos. |
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|   | · | We may experience difficulty in      differentiating our products from other broadband wireless products which      may reduce our sales and gross margins.  We believe that      some products in the |
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|   | · | Potential customers may view      price as the primary differentiator between our products and products of      our competitors, which could reduce the price at which we can sell our      products and negatively impact our financial      results.  Because many products in our broadband wireless      equipment business have to comply with specific public standards, at times      potential customers may perceive there to be little other than price to      differentiate our products from products of a competitor.  This      intense customer focus on pricing can have the effect of reducing the      prices at which we are able to sell our products.  In turn, this      can reduce our gross margins and negatively impact our general financial      results. |
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|   | · | Alternative broadband      connectivity technologies may have advantages over our products and make      our products less attractive to customers.  A number of      competing technologies may be able to provide high-speed, broadband access      or connectivity.  These competing technologies include digital      subscriber lines, hybrid fiber coaxial cable, fiber optic cable, T-1/E-1      and other high-speed wire, laser (also known as free space optics),      satellite, and other mesh wireless, point-to-multipoint wireless, and      point-to-point wireless technologies.  Some of these      technologies may have advantages over our products, such as lower cost,      greater range, better security, and greater current market      acceptance. |
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|   | · | New broadband connectivity      technologies may be developed that have advantages over our products and      make our products less attractive to customers.  New      products or new technologies may be developed that supplant or provide      lower-cost or better performing alternatives to our      products.  For example, many of the products we sell are based      on the IEEE 802.11a/b/g standards.  We believe products are      being developed based on various new IEEE 802.11 standards, such as      802.11n (MIMO), 802.11r (fast roaming), and 802.11s (wireless mesh), and      IEEE 802.16 (also known as WiMAX) standards which may have advantages over      products based on the IEEE 802.11a/b/g standards, such as greater data      transmission capabilities, greater quality of service, non-line of sight      capabilities, and longer range. |
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|   | · | The actual or potential      availability of new broadband connectivity technologies could cause our      customers to delay buying decisions.  We operate in a      business where there is rapid technological change, and new standards,      products, and technologies are continually introduced to the market in      actual or conceptual form.  These new products or technologies      may have or appear or be described to have advantages over our products or      other products then currently available.  Even though actual      products may not be available until some (perhaps indefinite) time after      initial introduction of the conceptual standard, product, or technology,      the possibility of obtaining these new products could cause potential      customers to delay their decision to buy products such as      ours.  This delay could adversely impact our business, financial      condition, and results ofoperations. |
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|   | · | The costs of developing      products to operate in accordance with these new broadband connectivity      technologies would be substantial and could adversely affect our operating      results.  As a well-known supplier of broadband wireless      equipment, we are expected to provide products on the cutting-edge of      technology.  This means supplying products operating in      accordance with new broadband connectivity      technologies.  Developing these products is a time-consuming and      expensive process.  These costs could adversely affect our      operating results.  Alternatively, if we do not develop new      products, customers may view us as not maintaining our technological      leadership so be unwilling to purchase products from  us. |
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|   | · | We are selling into a market      that has a broad range of desired product characteristics and features      which may make it difficult for us to develop products that will address a      broad enough market to be commercially viable.  We are      selling into a market place that is experiencing a convergence of      competing technologies.  The market that we currently serve is      experiencing a convergence of voice driven telecommunications methodology      and data centric networking based methodology.  As a result      there exists a divergence of product requirements and corporate cultures      for our customers and even within the same customer.  Typically,      established telecommunications providers desire extremely robust products      with the expectation of a relatively long effective      life.  Networking providers on the other hand are looking for      optimal performance at any given time with the assumption that they will      be upgrading the equipment again in several years and therefore are      extremely cost sensitive.  In addition, established      telecommunications providers seek products that fit into their existing      networks (T-1, E-1, OC-3, OC-12 interfaces and data rates) while      networking based providers prefer ethernet interfaces and data      rates.  If we are unable to satisfy one or more of the      requirements of our current and prospective customers, we may lose, or      fail to gain, meaningful marketshare. |
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|   | · | We may not develop products for      the portions of the broadband connectivity and access markets that      grow.  Predicting which segments of the broadband      connectivity and access markets will develop and at what rate these      markets will grow is difficult.  We may needlessly spend money      and resources developing products for a market that does not      develop.  On the other hand, we may miss market opportunities if      we fail to act promptly and decisively to develop new      products.  These issues may be exacerbated due to our primary      research and development being done in Hyberabad, India.  Our      business, financial condition, and results of operations will be      materially adversely affected if we develop the wrong product or miss      market opportunities. |
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|   | · | Our sales may decline if we are      unable to keep pace with rapid technological changes and industry      standards.  Our ability to succeed in our competitive      market will depend upon successful development, introduction, and sale of      new products and enhancements on a timely and cost-effective basis in      response to changing customer requirements and competitors’ product      developments.  We may not be successful in selecting,      developing, manufacturing, and marketing new products or enhancements      which could adversely affect our sales.  Our customers may      believe that we are not investing sufficiently in research and development      to maintain a strong pipeline of new products and therefore decide not to      purchase current products from us. |
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|   | · | We believe that the prices for      our products will decline over time which could hurt our financial      results.  We believe that average selling prices for our      products will tend to decline from the point at which a product is      initially priced and marketed.  Reasons for this decline may      include the maturation of such products, the effect of volume price      discounts in existing and future contracts, technology changes, and the      intensification of competition, including from lower-cost foreign      suppliers.  This price decline could hurt our financial      results. |
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|   | · | The expected price decline of      our products will hurt our financial results unless we are able to offset      those declines with cost savings or new product      introductions.  We will attempt to offset expected price      declines of our products by reducing our product costs and non-product      costs and by introducing new products with higher gross      margins.  If we are unable to offset declining selling prices by      reducing direct materials and manufacturing expenses, our gross margins      will decline.  If we cannot develop new products in a timely      manner or we fail to achieve increased sales of new products at higher      gross margins, our revenue and gross margins may  decline. |
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|   | · | Our plans to continue to      introduce new products will require capital and other investments that may      not be recovered.  We devote significant resources to the      development and marketing of new products and technologies and expect to      continue to do so.  These investments include facilities,      equipment, inventory, personnel, and other items to develop and produce      these products and to provide marketing, sales, service and support, and      administration organizations to service and support these      products.  We anticipate many of these commitments and      expenditures would be made in advance of realization of increased sales,      which may not occur.  If sales do not increase as expected, our      gross margins and general financial performance would be adversely      affected. |
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|   | · | Our financial results have      fluctuated significantly, and we expect the fluctuations will continue for      a variety of reasons, many of which are out of our      control.  Our quarterly financial results have fluctuated      significantly for a number of reasons including our acquisitions of the      assets of Proxim Corporation in July 2005; Terabeam Corporation, Ricochet      Networks, Inc., and KarlNet, Inc. in the second quarter of 2004; the      combination of Telaxis and Young Design in April 2003; our limited      long-term commitments from customers; the receipt of significant customer      orders from time to time; timing of obtaining customers for any new      products we may introduce; the mix of our product sales; our manufacturing      capacity constraints and our ability to fulfill orders; our inability to      obtain components in the quantities we need; new product introductions by      us or by our competitors; seasonal factors that may affect capital      spending by customers; and general economic conditions.  We      expect that many of these and other factors will continue to affect our      business and will cause our financial results to fluctuate in the      future. |
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|   | · | Our past acquisition and      disposition activity contributes to the difficulty in predicting our      future financial performance.  The combination of Telaxis      and Young Design in April 2003 resulted in changes in our financial      performance.  The historically unprofitable financial results of      Telaxis caused the operating results of the combined company to be      unprofitable in the second quarter of 2003.  Although the      combined company did briefly return to profitability, the acquisitions of      the unprofitable Terabeam Corporation, KarlNet, Inc., and Ricochet      Networks, Inc. in the second quarter of 2004 have caused the company to be      unprofitable in later 2004 and early 2005.  However, the      company’s balance sheet was significantly stronger given the addition of      the assets from the acquired companies.  These additional assets      enabled us to acquire the operations of Proxim Corporation in July 2005,      which has significantly increased our revenue but also our      expenses.  Then in July 2007, our Ricochet Networks subsidiary      discontinued its operations in the San Diego metropolitan area and sold      its operations in the Denver metropolitan area.  These      acquisitions and dispositions have caused our financial results to      fluctuate, sometimes dramatically.  These past transactions and      potential future acquisition or disposition activity could contribute to      fluctuations in our financial results and to difficulties in predicting      our financial performance. |
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|   | · | We may not achieve the      contemplated benefits of any acquisition we make which could materially      and adversely affect our business.  We may not be able to      achieve the expected synergies and other benefits of any acquisitions we      make at all or to the extent and in the time periods      expected.  We may not be able to integrate the operations in a      cost-effective, timely manner without material liabilities or loss of      desired employees, suppliers, or customers.  Our management may      be distracted from our core business due to the      acquisition.  The expected cost savings from the transaction may      not be fully realized or may take longer to realize than      expected.  The time and costs required to integrate, establish,      manage, and operate the operations we acquire may be greater than we      anticipated.  Our investors, competitors, customers, suppliers,      employees, and others may react negatively to the      acquisition.  We may make acquisitions in business areas in      which we have little experience operating so may not fully benefit from      the acquisition.  We may face unexpected difficulties, costs,      and delays in implementing common internal controls, disclosure controls,      systems, and procedures, including financial accounting systems,      particularly in light of the enhanced scrutiny given to those items in the      current environment.  Addition of these operations may increase      the difficulty for us, financial analysts, and others to predict the      combined company’s future business and financial      performance.  These factors may cause us to want or need to      raise additional debt or equity capital, which, if available at all, may      be on terms deemed undesirable by investors, customers, suppliers,      employees, or others.  These factors could materially and      adversely affect our business, perception in our market, and financial      results.  Should these factors materially and adversely affect      our business, it could result in a material impairment charge to      write-down goodwill. |
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|   | · | Our past acquisitions and      dispositions have exposed us to risks and liabilities, which could have a      material adverse affect on our business.  We have been      and may be further exposed to lawsuits, risks, liabilities, or obligations      imposed on or threatened against us arising from the various acquisition      and disposition activities we have undertaken.  For example, we      believe that Symbol Technologies, Inc. commenced its lawsuit against us as      a result of our acquiring Proxim Corporation’s operations.  Our      acquisition of Terabeam Corporation exposed us to a substantial number of      leases for unused facilities, not all of which have been resolved to      date.  The sale and transfer by our Ricochet Networks subsidiary      of the operations of the Ricochet® network in the Denver metropolitan area      could expose us to liabilities and obligations as not all the contracts      relating to those Denver operations have been formally transferred to the      buyer.  Under our agreement to buy KarlNet, Inc., we agreed to      pay up to an additional $2.5 million if certain conditions were      met.  Although it is our position that none of that amount is      owed, we have received |
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|   | · | Purchase accounting treatment      and the impact of amortization and impairment of intangible assets      relating to the Proxim Corporation asset purchase and other acquisitions      could cause our operating results to be adversely      affected.  In accordance with generally accepted      accounting principles, we accounted for the Proxim Corporation asset      purchase using the purchase method of accounting.  We have      allocated the cost of the individual assets acquired and liability      assumed, including various identifiable intangible assets (such as      acquired technology and acquired trademarks and trade names), based on      their respective fair values at the date of the completion of the      acquisition.  For example, in the third quarter of 2006, we      recorded a charge of $4.8 million related to the developed technology      acquired from Proxim Corporation.  Also, in the fourth quarter      of 2007, we recorded a charge of $8.1 million for impairment of goodwill      and intangible assets.  We may be required to further reduce the      carrying value of these assets in the future which could adversely impact      our financial results. |
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|   | · | The fact that we receive few      long-term purchase commitments from customers contributes to the      difficulty in predicting our future financial      performance.  Due to the nature of our products and      customers, we generally have a very short time between receiving an order      and shipping the order.  Few of our customers provide us with      long-term purchase commitments.  As a result, we generally have      a relatively low backlog and have limited visibility of sales going      forward.  This lack of visibility contributes to the difficulty      in predicting our future financial performance by us, financial analysts,      and investors. |
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|   | · | The fact that we receive few      long-term purchase commitments from customers contributes to our inventory      risk which could adversely affect our financial      results.  Due to the nature of our products and      customers, we generally have a very short time between receiving an order      and shipping the order.  Few of our customers provide us with      long-term purchase commitments.  As a result, we generally have      limited visibility of sales going forward.  However, our      customers generally demand relatively quick delivery of      products.  This means that we have to estimate product      demand.  If we under-estimate demand, we may lose      sales.  If we over-estimate demand, we may end up with having to      take charges for excess and/or obsolete inventory.  For example,      in the fourth quarter of 2007, we recorded a charge of $2.5 million      related to excess and obsolete inventory.  These factors could      adversely affect our financialresults. |
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|   | · | Receipt of significant customer      orders have caused our financial results to fluctuate and contribute to      the difficulty in predicting our future financial      performance.  At times, we have received significant      orders from customers that have caused our financial results to      fluctuate.  For example, we received large orders from a single      customer in 2003 that contributed positively to the financial results of      several quarters in 2003.  The non-recurrence of those orders in      2004 made our financial results look worse in comparison.  We      expect that at times we may get similar significant orders in the future      which could cause significant fluctuations in sales, gross margins, and      operating results.  These fluctuations contribute to the      difficulty in predicting our future financial performance by us, financial      analysts, and investors. |
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|   | · | Difficulties in obtaining the      components we need to manufacture our products have caused our financial      results to fluctuate and contribute to the difficulty in predicting our      future financial performance.  At times we have been      unable to obtain sufficient components to manufacture certain of our      products.  We believe this shortage had a negative impact on our      revenue and financial results for those quarters.  Given the      number of components in our products, the age of some of our products, and      the limited number of suppliers of some of these components, we may      experience similar component shortages from time to time in the      future.  These shortages could contribute to fluctuations in our      financial results and to the difficulty in predicting our future financial      performance. |
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|   | · | We expect that changes in stock      option accounting rules will adversely impact our reported operating      results and may adversely affect our competitiveness in the employee      marketplace.  We have adopted FASB Statement No. 123R      (“SFAS 123R”), Share-Based Payment, as      our accounting method for stock options for accounting periods beginning      January 1, 2006 and after.  SFAS 123R requires that all      share-based payments to all employees, including grants of employee stock      options, are to be included in the financial statements based on their      fair values.  The adoption of SFAS 123R and resulting charges on      our financial statements have significantly reduced our operating and net      income and we expect will continue to do so.  These charges may      result in our having operating and net losses rather  than |
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|   | · | Our indirect sales model makes      us dependent on third party distributors and resellers, which could      adversely impact our financial results and      reputation.  Most of our products are sold through both      domestic and international distributors and resellers.  These      distributors generally focus on selling to a specific market or geographic      region.  These distributors and resellers carry and sell      products from other suppliers in addition to our own.  We expect      to continue to engage additional distributors and resellers to sell our      products.  Use of distributors and resellers makes us dependent,      to some extent, on those third parties who will have the relationships      with the end customers.  We may not be successful in attracting      qualified distributors and resellers.  Use of these distributors      and resellers could cause significant fluctuation in and adversely impact      our future revenue and operating results due to price, extended payment      term, and other concessions demanded by our distributors, our limited      relationships with actual end-users of our products, the time and costs      associated with maintaining our distributor and reseller relationships,      the time and costs associated with engaging new distributors and      resellers, the possibility that they may give other suppliers’ products      priority over our own, the possibility of channel and price conflict, the      possibility of customer confusion and customer dissatisfaction, and      potential accounting, operational, and financial results problems if they      build excess inventory. |
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|   | · | We have a limited number of      distributors so any decrease in business from them could cause a decline      in our revenue.  The loss of business from any of our      distributors or the delay of significant orders from our distributors      could significantly reduce our revenue, even if it is only      temporary.  We do not have long-term contracts with our      distributors.  Our ability to accurately forecast our revenue      hinges on the timing and size of future purchase orders taken by our      distributors.  Any reduction in revenue could have a materially      adverse affect on our operating results and financial      condition. |
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|   | · | We may be unsuccessful in our      efforts to obtain larger customers, and these efforts could adversely      impact our current business.  We are trying to expand our      customer base by obtaining larger customers.  Our efforts may      not be successful.  For example, larger customers may not want      to deploy products like many of ours that operate in unlicensed      frequencies or they may seek products with feature sets that are different      from what we offer.  Our efforts could adversely impact our      current business due to diversion of efforts and attention, our current      customers not being pleased by our customer expansion efforts, and other      reasons. |
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|   | · | Our business depends in part on      continued demand for broadband connectivity and      access.  The future success of our business is dependent      in part upon the continued and increasing demand for high-speed, broadband      connectivity and access, particularly with regard to the Internet, and for      high-speed telecommunications products.  The markets for such      services may not grow at all or asexpected. |
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|   | · | We depend on our senior      employees who are extensively involved in many aspects of our business,      and our business would likely be harmed if we lose their services and      cannot hire additional qualified personnel.  Particularly      because we are a relatively small company, our future operating results      depend in significant part upon the continued contributions of senior      management and key sales and technical personnel, many of who would be      difficult to replace if their services become unavailable to us due to      death, illness, or other reasons.  Future operating results also      depend upon the ability to attract and retain qualified management, sales,      and technical personnel.  Competition for these personnel is      intense, and we may not be successful in attracting or retaining      them.  Only a limited number of persons with the requisite      skills to serve in these positions may exist, and it may be difficult for      us to hire the skilled personnel we need.  We have experienced      difficulty in attracting, hiring, and retaining experienced sales      personnel with the right blend of skills for our company, and we may      experience difficulty with other types of personnel in the      future. |
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|   | · | We have no key-man life      insurance on any of our executive officers or other      employees.  Loss of the services of any of our key      executive officers or other key employees could have a material adverse      effect on our business, financial condition, and results of      operations.  The lack of key man insurance means that we would      receive no insurance proceeds to buffer any such adverse      effects. |
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|   | · | We do not currently have a      succession plan in place.  We currently do not have a      succession plan in place if our chief executive officer or other senior      personnel were to become unable to perform their responsibilities due to      illness, injury, termination of service, or other reasons.  Loss      of the services of our chief executive officer or other senior personnel      could have a material adverse effect on our business, financial condition,      and results of operations.  Lack of a succession plan could      exacerbate our difficulties in overcoming the issues created by the loss      of services of our chief executive officer or other senior personnel due      to uncertainty and responsibility transition  issues. |
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|   | · | Our recent change of Chief      Executive Officer may be viewed negatively and have an adverse impact on      our business.  In January 2008, we announced that we had      terminated our former Chief Executive Officer without cause and promoted      our former President to the combined position of President and Chief      Executive Officer.  In February 2008, we announced payments to      our former Chief Executive Officer in connection with that termination of      approximately $780,000 and other terms of his      separation.  Investors, employees, customers, suppliers, and      others could react negatively to the termination of our former Chief      Executive Officer, the amounts paid to our former Chief Executive Officer,      and the promotion of our former President.  The terms of his      separation and these potential negative reactions could adversely impact      our revenue, capital needs, ability to retain employees, relations with      customers, suppliers, investors, and others, and business in      general. |
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|   | · | Our limited internal      manufacturing capacity may be insufficient to meet customers’ desires for      our products, which could harm our sales and damage our      reputation.  Our internal manufacturing capacity, by      design, is limited.  At times, we have been unable to deliver      certain internally-manufactured products as quickly and in the quantities      that customers desire.  These inabilities could damage      relationships with customers and have a material adverse effect on our      reputation, business, financial condition, and results of      operations. |
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|   | · | Our limited internal      manufacturing capacity makes us dependent on contract manufacturers, which      could harm our sales and damage our reputation.  Our      internal manufacturing capacity, by design, is limited.  We      currently expect to rely on domestic and international contract      manufacturers to provide manufacturing of our complete products,      components, and subassemblies.  Our failure to obtain      satisfactory performance from any contract manufacturers could cause us to      fail to meet customer requirements, lose sales, and expose us to product      quality issues.  For example, a recent decision by one of our      contract manufacturers to transition manufacturing to China has had a      negative impact on our ability to obtain quality product in the quantities      and at the times desired.  In turn, this could damage      relationships with customers and have a material adverse effect on our      reputation, business, financial condition, and results of      operations. |
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|   | · | We may be unable to engage      contract manufacturers to manufacture our products which could force us to      increase our internal manufacturing capacity.  The      technical nature of our products, the wide variety of our products, and      the current uncertainty and historical fluctuation in our business may      make contract manufacturers unwilling or reluctant to manufacture products      for us at all or on acceptable terms.  It may be difficult and      time-consuming to engage a third-party manufacturer or      manufacturers.  If we are unable to engage a third-party      manufacturer or manufacturers, we may have to increase our internal      manufacturing capability.  We may be unable to do so at all or      without significant expense. |
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|   | · | Interruptions in our      manufacturing operations could have an adverse effect on our      revenue.  Any interruption in our manufacturing      operations could cause our product supply to be interrupted or lose market      opportunities and have an adverse affect on our revenue, customer      relationships, and operating results.  Interruptions could      result from  introduction of new products or processes; timing,      language, cultural, and other issues arising from the use of contract      manufacturers located outside the U.S.; terminations of relationship with      manufacturers; not producing products at adequate capacity; delays in      shipments of our products due to changes in demand; or insufficient      quality or quantity of products. |
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|   | · | Because many of our components      or products are provided by limited or single-source suppliers, we may not      be able to obtain sufficient quantities to meet our business      needs.  Many of the components, subassemblies, and      services necessary for the manufacture of our systems are obtained from a      sole supplier or a limited group of suppliers.  We generally do      not have any committed long-term supply agreements with these      vendors.  We have from time to time experienced an inability to      obtain an adequate supply of |
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|   | · | Because many of our components      or products are provided by limited or single-source suppliers, we may not      be able to obtain sufficient quantities at prices to make our products      profitably.  Many of the components, subassemblies, and      services necessary for the manufacture of our systems are obtained from a      sole supplier or a limited group of suppliers.  Our inability to      obtain these items at the prices we desire could hurt our sales and lower      our margins. |
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|   | · | Because many of our components      or products are provided by limited or single-source suppliers, we may      have to purchase extra inventory that ultimately may not be      used.  Many of the components, subassemblies, and      services necessary for the manufacture of our systems are obtained from a      sole supplier or a limited group of suppliers.  A supplier may      decide to end the manufacture of a product and provide us with an      opportunity to make a last-time buy of the product.  In that      situation, we have to estimate our future needs for that      product.  If we underestimate, we would have an insufficient      supply to manufacture our products.  If we overestimate, we may      end up purchasing inventory that is not used or becomes obsolete and that      ultimately we have to write off.  That loss could adversely      affect our financial results. |
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|   | · | Our inability to receive      sufficient quantities of limited or single source components or products      could make us develop alternative sources, which could reduce our sales      and may be time consuming and expensive if it can be done at      all.  In the event of a reduction or interruption in the      supply of a key component, we may have to develop alternative sources for      the component.  We may not be able to locate an alternative      supplier of certain products or components at all or at acceptable      prices.  Our inability to develop alternative sources for      components could result in delays or reductions in product shipments,      increase our costs, and reduce or eliminate our profit      margins.  Even if we are successful at developing alternative      sources, a significant amount of time could be required to receive an      adequate flow of components from the alternative  source. |
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|   | · | Our inability to receive      sufficient quantities of limited or single source components or products      could make us reconfigure our products, which could reduce our sales and      may be time consuming and expensive if it can be done at      all.  In the event of a reduction or interruption in the      supply of a key component, we may have to reconfigure our products to work      with different components.  Reconfiguration of our products to      adapt to new components could entail substantial time and      expense.  We may be unable to reconfigure our products to work      with new components.  Even if we are successful at reconfiguring      our products, a significant amount of time could be required to receive an      adequate flow of replacementcomponents. |
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|   | · | Our reliance on limited or      single-source suppliers makes us vulnerable to difficulties at those      suppliers.  The production of our products is vulnerable      to production difficulties, quality variations, work stoppages, acts of      God such as weather and fire, and other events beyond our control at our      suppliers.  All of these events could adversely affect the cost      and timely delivery of ourproducts. |
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|   | · | Failure to maintain adequate      levels of inventory could result in a reduction or delay in sales and harm      our results of operations.  In a competitive industry      such as the wireless telecommunications equipment industry, the ability to      effect prompt turnaround and delivery on customer orders can make the      difference in maintaining an ongoing relationship with our      customers.  This competitive market condition requires us to      keep some inventory of certain products on hand to meet such market      demands.  Given the variability of customer requirements and      purchasing power, it is difficult to predict the amount of inventory      needed to satisfy demand.  If we over- or under-estimate      inventory requirements to fulfill customer needs, our results of      operations could be adversely affected.  If market conditions      change swiftly, it may not be possible to terminate purchasing contracts      in a timely fashion to prevent excessive inventory      increases.  In particular, increases in inventory could      materially adversely affect operations if such inventory is ultimately not      used or becomes obsolete. |
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|   | · | Our failure to effectively      manage our recent and anticipated future growth could strain our      management, infrastructure, and other resources and adversely affect our      results of operations.  We expect our recent and      anticipated future growth to present management, infrastructure, systems,      and other |
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|   | · | Difficulties in reducing our      operating expenses could harm our results of      operations.  A material portion of our operating expenses      is fixed.  If we experience a material reduction or delay in      sales, we may find it difficult to reduce our operating expenses on a      timely basis.  Difficulties of this nature would adversely      affect our financial condition and harm our operating    results. |
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|   | · | War in Iraq and the war on      terrorism could adversely affect domestic and international demand for our      products.  The war in Iraq and on terrorism has led to      economic uncertainty at home and abroad which could impact the demand for      our products.  Customers as a result may reduce their spending      on our products coupled with the increased shipping costs and delays due      to heightened security, which could have a material adverse affect on our      operating results. |
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|   | · | We typically permit flexible      purchase order changes that may adversely affect our margins and operating      results.  We have typically permitted purchase orders to      be modified or canceled with limited or no penalties.  Any      inability or failure to reduce actual costs or cancel supplier and      contract manufacturing commitments in response to a customer modification      or cancellation could adversely affect our gross margins and operating      results. |
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|   | · | Our business and financial      results could be adversely affected by warranty      claims.  Products as complex as ours frequently contain      undetected errors or defects, especially when first introduced or when new      versions are released.  This is especially a concern for us      given our anticipated continuing introduction of new      products.  The occurrence of such errors or defects could result      in products being returned under warranty for repair or replacement with      us having to bear the associated expense.  Although we maintain      what we believe to be appropriate overall warranty reserves based on      historical repair occurrences, an unanticipated high repair occurrence      related to a specific product or number of products could make the      reserves inadequate at any specific time and adversely affect our      financial results. |
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|   | · | Our business and financial      condition could be adversely affected by product liability      claims.  Products as complex as ours frequently contain      undetected errors or defects, especially when first introduced or when new      versions are released.  This is especially a concern for us      given our anticipated continuing introduction of new      products.  The occurrence of such errors or defects could result      in product liability claims being brought against us.  Although      we have not had any material product liability claims brought against us      to date, such claims may be brought in the future and could adversely      affect our financial results. |
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|   | · | Our international business      activities expose us to a number of risks not present in our United States      operations, which we have limited experience      addressing.  Our international business activities may      carry additional costs, risks and difficulties, including complying with      complex foreign laws and treaties applicable to doing business and selling      our products in other countries; availability of suitable export      financing; timing and availability of export licenses; tariffs and other      trade barriers; difficulties in staffing and managing foreign operations;      difficulties in complying with foreign customs and general ways of doing      business; and political and economic instability which may be more      pronounced in less-developed areas.  We have limited experience      in facing many of these issues and may not be able to address the issues      in a manner to enable us to expand our international sales and      operations. |
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|   | · | Because of international sales      and operations, we may be exposed to currency risk that could adversely      affect our financial condition and results of      operations.  Particularly following our acquisition of      the operations of Proxim Corporation, a significant portion of our sales      to date have been made to customers located outside the United States, and      we expect that a significant portion of our future sales will continue to      be to customers outside the United States.  We are currently      trying to increase our sales to customers outside the United      States.  Historically, our international sales have been      denominated in United States dollars.  For international sales      that are denominated in United States dollars, a decrease in the relative      value of foreign currencies could make our products less price-competitive      and could have an |
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|   | · | Given the extent of our      international operations, the decline in the value of the dollar has      increased our expenses.  We have significant      international operations and employees located in countries outside the      United States.  Often salaries of those employees and other      expenses of our international operations are paid in local currency of the      applicable countries.  The value of the dollar has declined      recently relative to the value of many currencies of other      countries.  This decline has had the impact of increasing the      net expense to us of our international operations.  Given the      relatively fixed nature of these expenses, it is difficult to reduce these      expenses quickly.  Continued decline in the value of the dollar      will continue to increase the net expense of our international      operations.  These increased expenses can adversely affect our      results of operations and overall financial  condition. |
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|   | · | The laws and legal systems of      foreign governments may limit our ability to enforce our rights against      our customers.  Our customer purchase and other      agreements may be governed by foreign laws, which may differ significantly      from United States laws.  Also, the court systems and procedures      in foreign countries may differ significantly from United States      courts.  Therefore, we may be limited in our ability to collect      our accounts receivable, to enforce our other rights under such      agreements, and to collect damages, ifawarded. |
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|   | · | Lack of relationships in      foreign countries may limit our ability to expand our international      operations and sales.  In many cases, regulatory      authorities in foreign countries own or strictly regulate local telephone      companies.  Established relationships between government-owned      or government-controlled telephone companies and their traditional      indigenous suppliers of telecommunications equipment often limit access to      those markets.  The successful expansion of our international      operations in some markets will depend in part on our ability to form and      maintain strong relationships with established companies providing      communication services and equipment or other local partners in those      regions.  The failure to establish regional or local      relationships could limit our ability to successfully market or sell our      products in international markets and expand our international      operations. |
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|   | · | Governmental regulation      affecting markets in which we compete or products we make or services we      offer could adversely affect our business and results of      operations.  Radio communications and services are      extensively regulated by the United States and foreign governments as well      as by international treaties.  To operate in a jurisdiction, we      must obtain regulatory approval for our products and comply with differing      and evolving standards and regulations.  The delays inherent in      this approval process may cause the cancellation, postponement, or      rescheduling of the installation of communications systems by us and our      customers.  The failure to comply with regulations in a      jurisdiction could result in the suspension or cessation of our ability to      operate in that jurisdiction.  New regulations or changes in the      interpretation of existing regulations could require us to modify our      products or services and incur substantial costs to bring our products or      services into compliance. |
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|   | · | Our products typically require      regulatory approval before they can be commercially      deployed.  Our products must typically receive regulatory      approvals before they can be commercially deployed.  As a      result, customers may require that we obtain these approvals before buying      or agreeing to buy our products.  Obtaining these approvals can      be a long, expensive process.  Delays in obtaining the necessary      approvals could hinder market acceptance of our products, delay sales of      our products, and adversely affect our ability to market those      products. |
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|   | · | New regulations could have an      adverse impact on our ability to supply products and our financial      results.  New regulations could be enacted that adversely      impact our business.  For example, the directive on the      restriction on the use of certain hazardous substances in electrical and      electronic equipment (RoHS directive) limits the use of substances (such      as lead and mercury) in products sold in the European Union      marketplace.  Also, the directive on waste electronic and      electrical equipment (WEEE) imposes obligations on suppliers of electronic      equipment sold in the European Union marketplace.  New      regulations such as these may disrupt our supply of components needed to      supply our products at the times and in the quantities desired by our      customers.  They may also require that we revise the design of      some of our products and have some of our products re-qualified with our      customers or regulatory agencies.  The  new |
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|   | · | Changes in governmental      regulation could adversely affect our competitive      position.  Governmental laws and regulations applicable      to our products and services evolve and change      frequently.  These changes could hurt our competitive      position.  For example, a point we often use in marketing our      equipment products is that our products have been approved by the United      States Federal Communications Commission, which sometimes can be a long,      expensive process.  The Federal Communications Commission may      relax this approval process and potentially allow more products to operate      as approved products.  If enacted, these regulations could make      it easier for competitive products to qualify as products approved by the      Federal Communications Commission.  Conversely, if the Federal      Communications Commission made the certification process more difficult,      it could impede our ability to bring products to market in a timely      manner.  In either case, this could adversely affect our      competitive position.  Similarly, changes in the laws and      regulations applicable to our service business could adversely affect our      competitive position in thatbusiness. |
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|   | · | We are subject to domestic and      international authorities’ allocations of the radio frequency      spectrum.  Equipment to support new systems and services      can be marketed only if suitable frequency allocations are made available      to telecommunications service providers.  The process of      allocating frequencies to service providers is typically expensive,      complex, and lengthy.  If service providers and others are      delayed in deploying new systems and services, we could experience lack of      orders or delays in orders.  Similarly, failure by regulatory      authorities to allocate suitable frequency spectrum could have a material      adverse effect on our results. |
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|   | · | At time we rely on a limited      number of customers for a material portion of our sales, which exposes us      to risks relating to the loss of sales and credit      risk.  For the year ended December 31, 2007, three      unrelated customers each accounted for more than 10% of our      sales.  In addition, we have a number of other substantial      customers.  We are currently attempting to increase our number      of substantial customers which could increase our customer concentration      risks.  Our ability to maintain or increase our sales in the      future will depend in part upon our ability to obtain additional orders      from these customers.  Our customer concentration also results      in concentration of credit risk.  An acquisition of one of our      significant customers could cause any current orders to be delayed or      canceled and no new orders being placed with us and could further      concentrate our customer base.  Adverse developments such as      these with our significant customers could adversely impact our sales and      financial results. |
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|   | · | The continuing uncertainty in      the telecommunications industry has caused us to maintain tight credit      limits, which may be adversely affecting our sales.  Many      of our potential customers have faced or are facing financial difficulties      due to the industry-wide uncertainty and depressed      conditions.  As a result, we have maintained what we believe to      be stringent policies concerning the extension of credit to potential      customers.  We believe that these tight credit policies may be      limiting our sales.  As a result, we may loosen our credit      policies, which may increase our sales but may also increase the      likelihood of having bad debts from customers who can’t or won’t      pay. |
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|   | · | Given the relatively small size      of some of our customers, they may not be able to pay for the products      they purchase from us in the time period we expect or at      all.  We are subject to credit risk in the form of trade      accounts receivable.  We could face difficulties in receiving      payment in accordance with our typical policies allowing payment within 30      days, although we have granted longer terms to some      customers.  Some of our customers are new and smaller service      providers which do not have the financial resources of existing, larger      service providers.  Any delay, inability, or refusal to pay for      purchases of our products may materially adversely affect our      business.  Difficulties of this nature have occurred in the      past, and we believe they will likely occur in the  future. |
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|   | · | Our failure or inability to      protect our intellectual property could adversely affect our business and      operations, particularly in our equipment business which has otherwise      relatively low barriers to entry.  Our ability to compete      depends in part on our ability to protect our intellectual      property.  The steps we have taken to protect our technology may      be inadequate to prevent misappropriation of our technology and      processes.  Existing trade secret, trademark, and copyright laws      offer only limited protection.  Our patents could be invalidated      or circumvented.  Inability or failure to protect our      intellectual property could |
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|   | · | Laws of foreign countries where      we do business may provide less intellectual property protection for our      products, which could adversely affect our ability to compete in our      price-sensitive business.  The laws of certain foreign      countries in which our products are or may be developed, manufactured, or      sold may provide less protection for the intellectual property contained      in our products.  We may not seek to obtain patents and other      forms of intellectual property rights in certain foreign countries to the      same extent we seek United States patents and other forms of intellectual      property protection, which could reduce our international      protection.  This may make the possibility of piracy of our      technology and products more likely.  This piracy could result      in cheaper copies of our products being available on the market, which      could adversely affect our business and financial  results. |
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|   | · | Our intellectual property      rights do not prevent other companies from developing similar technology,      which could be superior to ours.  Other companies could      develop products that use similar and perhaps superior      technology.  This technology could be developed in a way to not      violate or infringe our intellectual property rights.  As a      result, our intellectual property rights provide no assurance that      competing and perhaps superior products won’t be developed, even if we are      able to protect our intellectual property  rights. |
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|   | · | We may engage in litigation to      protect our intellectual property, which could be costly, long, and      distracting even if ultimately successful.  If we believe      our intellectual property rights are being infringed, we may commence      litigation or take other actions to enforce our patents, protect our trade      secrets and know-how, or determine the scope and validity of the patents      or intellectual property rights of others.  There can be no      assurance that we would be successful in any such      litigation.  Further, any lawsuits we commence would increase      the likelihood of counterclaims being brought against us by the companies      we sue.  Any litigation could result in substantial cost and      divert the attention of our management, which could harm our operating      results and future operations. |
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|   | · | Much of our material      intellectual property is not protected by patents, which may reduce the      extent to which we can protect our intellectual      property.  We rely primarily on trade secret laws,      confidentiality procedures, patents, copyrights, trademarks, and licensing      arrangements to protect our intellectual property.  While we do      have a number of patents, the patents alone do not provide significant      protection for much of our intellectual property used in our current      equipment products.  A significant portion of our proprietary      technology is know-how, and employees with know-how may depart before      transferring their know-how to other employees.  The fact that      much of our intellectual property is not covered by patents could reduce      the extent to which we can protect our rights in that intellectual      property. |
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|   | · | Our products and operations      could infringe on the intellectual property rights of others, which could      have an adverse impact on our business.  We would have to      address any such infringements by seeking licenses, altering our products,      or no longer selling the products.  Any licenses we may be      required to seek may be expensive or otherwise      onerous.  Similarly, changing our products may be costly,      time-consuming, and impractical and could detract from the value of our      products.  A party making a claim of infringement could secure a      judgment against us that requires us to pay substantial      damages.  A judgment could also include an injunction or other      court order that could prevent us from selling our      products.  Any claim of infringement by a third party also could      cause us to incur substantial costs defending against the claim, even if      the claim is invalid, and could distract the attention of our      management.  Any of these events could seriously harm our      business. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our settlement of the      litigation commenced against us by Symbol Technologies adversely impacts      our financial results.  In February 2006, we settled the      lawsuit that had been brought against us by Symbol Technologies, Inc.      alleging that certain of our products violated certain of their      patents.  Symbol had successfully sued Proxim Corporation      alleging that certain of Proxim Corporation’s products infringed two of      the Symbol patents that Symbol asserted against us.  As part of      the settlement, we agreed to pay Symbol fixed royalties totaling $4.3      million through the second quarter of 2009.  We will have to pay      these royalties even if we discontinue the sale of products alleged by      Symbol to violate their patents.  Additionally, we may end up      paying Symbol more fixed royalties than we would have paid if we had      negotiated a royalty based on product sales or some other contingent      basis.  As a result, the settlementof |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | The pending intellectual      property infringement litigation could have an adverse impact on our      business.  On June 1, 2007, Linex Technologies, Inc.      filed suit against us seeking damages for alleged infringement by our mesh      products of two United States patents purportedly owned by      Linex.  This matter is at an extremely early stage, and there      can be no assurance that the outcome of these claims will be favorable for      us.  Even if we are completely successful in defending the      claims asserted against us in this lawsuit, we expect we will incur      significant defense costs and that management, technical, and other      personnel will be distracted and diverted by this lawsuit.  If      we are unsuccessful in defending against this lawsuit, we may be required      to pay damages to Linex for past infringement as well as a royalty on      future product sales.  All of these issues could have an adverse      impact on our ability to sell our products, operating results, need for      capital, and business in general. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Compliance with new      governmental regulations, such as Section 404 of the Sarbanes-Oxley Act,      could increase our costs and adversely impact our financial      results.  Increasing amounts of time and resources are      being spent on complying with ever-changing governmental regulations and      public disclosure requirements.  Specifically, Section 404 of      the Sarbanes-Oxley Act currently requires that management and independent      public accountants review and evaluate annually internal control systems      of companies subject to that section and attest to their      effectiveness.  We are not currently subject to the auditor      review portions of Section 404 and do not know when or if we will be      required to comply with the requirements of that section or what the      requirements will be if and when we become subject to that      section.  However, in anticipation of becoming subject to that      section, we have begun our compliance efforts and are expending related      time and costs.  The costs and time required to become Section      404 compliant could be substantial, even assuming we are completely      successful.  In addition, even before becoming subject to      Section 404, we are being billed significantly increased independent      auditor fees, we believe largely due to the Sarbanes-Oxley Act and other      regulations.  Compliance with the Sarbanes-Oxley Act and other      regulations could cause us to increase our legal, accounting, other      personnel, and other costs as more time and personnel would be needed to      help maintain compliance.  These costs of compliance could      adversely impact our financialresults. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We are a defendant in pending      stockholder litigation that could materially and adversely affect our      business.  We are a party to four purported securities      class action lawsuits.  These lawsuits relate to the      underwriters’ alleged unlawful activities in connection with our initial      public offering in February 2000.  The lawsuits have been      assigned along with approximately 1,000 other lawsuits making      substantially similar allegations against hundreds of other publicly      traded companies and their public offering underwriters to a single      federal judge for consolidated pre-trial purposes.  A tentative      settlement of these lawsuits had been reached between the plaintiffs and      affected companies, but that proposed settlement was terminated due to      higher court rulings.  With the termination of that proposed      settlement, we continue to defend the litigation      vigorously.  These lawsuits are at a relatively early stage and      involve substantial uncertainty and, accordingly, we cannot predict the      outcome.  Defending lawsuits of this nature can be a lengthy and      expensive process, and we may not prevail.  Even if we prevail      or the action is settled, the costs associated with these lawsuits could      be substantial.  In addition, these lawsuits could have other      material adverse impacts on us, such as management distraction, adverse      publicity, and adverse reaction from the financial markets, from our      customers, or from actual or potential strategic partners.  The      difficulties and uncertainties relating to these lawsuits very likely may      be increased and complicated because of the large number of pending      similar cases and other parties involved.  The outcome of these      lawsuits could materially compromise our ability to continue to operate      our business. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Proceeds under our directors’      and officers’ insurance policies may be unavailable or insufficient to      cover our exposure arising from the pending stockholder      litigation.  We have a total of $15 million in directors      and officers insurance coverage applicable to this pending stockholder      litigation.  We currently believe that this insurance coverage      would be sufficient to cover our exposure arising from that      litigation.  However, the insurance proceeds may be unavailable      if the companies issuing those policies experience financial difficulties      or are otherwise unable or unwilling to pay under those      policies.  Also, there can beno |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Our stock price has been      volatile and may continue to be volatile.  The market      price of our common stock has been volatile and is likely to remain      volatile.  Some of the reasons for the volatility are within our      control, but many are beyond our control and unrelated to our operating      performance.  We believe the following factors, among others,      have contributed to our stock pricevolatility: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Our      financial performance and results |
|--------|---|--------------------------------------------|

|   | o | Announcements      by us concerning our relationships with our existing or new      customers |
|--------|---|-----------------------------------------------------------------------------------------------|

|   | o | Announcements      by us concerning our completed and contemplated acquisitions and other      strategic growth plans |
|--------|---|-----------------------------------------------------------------------------------------------------------------------|

|   | o | Announcements      by our customers |
|--------|---|-------------------------------------|

|   | o | Our      integration of Telaxis Communications and Young Design following the April      2003 combination of the twocompanies |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------|

|   | o | Our      integration of Terabeam Corporation, Ricochet Networks, Inc. and KarlNet,      Inc. following the second quarter 2004 acquisition of those      companies |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Our      integration of the assets of Proxim Corporation, acquired in the third      quarter of 2005 |
|--------|---|------------------------------------------------------------------------------------------------------|

|   | o | Sales      of shares of our stock that we issued in connection with our completed      acquisitions or the perception that such shares may be  sold |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | The      relatively low number of shares of our stock that trade on an average      day |
|--------|---|-----------------------------------------------------------------------------------------|

|   | o | The      introduction of new products by us |
|--------|---|---------------------------------------------|

|   | o | The      financial performance of ourcompetitors |
|--------|---|--------------------------------------------------|

|   | o | The      introduction of new products by ourcompetitors |
|--------|---|---------------------------------------------------------|

|   | o | Other      announcements by our competitors |
|--------|---|---------------------------------------------|

|   | o | General      conditions of the financial markets |
|--------|---|--------------------------------------------------|

|   | · | Two stockholders own a      significant beneficial interest in our common stock which could allow them      to influence matters requiring stockholder approval.  As      of March 14, 2008, we believe that Lloyd I. Miller, III, directly and      indirectly, and Robert E. Fitzgerald, our former chief executive officer,      directly and through Concorde Equity II, LLC (a company controlled by      him), controlled approximately 15% and 11%, respectively, of our common      stock.  As a result of their ownership these stockholders may be      able to exert influence over actions, which require stockholder approval,      for example, certain types of changes in control or amendments to our      certificate of incorporation. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Future actual or potential      stock sales by Robert Fitzgerald and Concorde Equity II could cause our      stock price to fall or prevent it from increasing.  Our      stock held by Robert Fitzgerald and Concorde Equity II is currently      subject to restrictions on sale or transfer due to Mr. Fitzgerald having      been our chief executive officer until mid-February      2008.  However, portions of this stock can be (and have been)      sold in the open market.  Given that Mr. Fitzgerald is no longer      our chief executive officer, he may engage in more aggressive stock sales      than he did while he was our chief executive      officer.  Generally, these sales would require public      filings.  Certain of our other stockholders and other third      parties could view these stock sales negatively because they would be      made, directly or indirectly, by our former chief executive      officer.  These actual or potential sales of our stock could      cause our stock price to fall or prevent it from increasing for numerous      other reasons.  For example, a substantial amount of our common      stock becoming available (or being perceived to become available) for sale      in the public market could cause the market price of our common stock to      fall or prevent it from increasing, particularly given the relatively low      trading volumes of our stock. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Future actual or potential      stock sales by Lloyd I. Miller, III could cause our stock price to      fall.  Mr. Miller controlled approximately 15% of our      outstanding common stock on March 14, 2008.  Because Mr. Miller      owns directly or indirectly more than 10% of our outstanding common stock,      any sales or distributions by Mr. Miller are required to be reported      publicly shortly after they occur.  Actual or potential sales of      this stock by Mr. Miller could cause our stock price to fall or prevent it      from increasing for numerous reasons.  For example, a      substantial amount of our common stock becoming available (or being      perceived to become available) for sale in the public market could cause      the market price of our common stock to fall or prevent it from      increasing, particularly given the relatively low trading volumes of our      stock.  Also, Mr. Miller recommended that two people be placed      on our current board of directors so sales by Mr. Miller could be viewed      as being based on knowledge gained from those  directors. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Future actual or potential      sales of the stock we issue upon exercise of stock options could cause our      stock price to fall.  As of February 29, 2008, we had      options outstanding to buy approximately 3,007,357 shares of our common      stock and may grant options or other stock grants relating to an      additional approximately 299,134 shares of our common stock.  We      have filed registration statements with the SEC relating to the shares of      our common stock that may be issued pursuant to the exercise of those      outstanding stock options and stock options or other stock grants that we      may grant in the future.  In many cases, holders of those      options could decide to exercise the options and immediately sell the      shares.  A substantial amount of this common stock becoming      available (or being perceived to become available) for sale in the public      market could cause the market price of our common stock to fall or prevent      it from increasing, particularly given the relatively low trading volumes      of our stock.  Further, actual or potential sales of this stock      could be viewed negatively by other investors because some of these stock      options are held by our directors and senior  executives. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Future actual or potential      sales of the stock we issue upon exercise of stock warrants could cause      our stock price to fall.  On February 29, 2008, we had      warrants outstanding to purchase approximately 980,000 shares of our      common stock at a weighted average purchase price of $2.33 per      share.  Shares of our common stock received upon exercise of      those warrants may, depending on the method of exercise, be immediately      available for public sale.  A substantial amount of this common      stock becoming available (or being perceived to become available) for sale      in the public market could cause the market price of our common stock to      fall or prevent it from increasing, particularly given the relatively low      trading volumes of our stock. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If we acquire other companies      or product lines by issuing stock, the result may be dilutive to existing      stockholders.  In the second quarter of 2004, we acquired      three companies and issued approximately 12.6 million shares in connection      with those acquisitions.  We may acquire other companies,      businesses, and product lines in the future and may issue shares of our      stock in connection with any such acquisitions.  Any such      issuances could significantly dilute the holdings of our current      stockholders, particularly given the lower current trading price of our      common stock. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If we raise additional capital      by issuing stock, the result may be dilutive to existing      stockholders.  Our board of directors may decide to issue      additional equity securities in many situations without the need for any      stockholder vote.  Given the recent prices for our common stock,      significant dilution to our stockholders could result if we raise      additional funds by issuing equity securities.  Further, these      issuances may also involve issuing stock at a price per share below the      current trading prices.  For example, in July 2007, we issued      4.3 million shares of our common stock in a private placement at a price      of $1.75 per share.  That price was an approximately 14%      discount from the last sale price of our common stock on the date the      documentation was signed of $2.04 pershare. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The terms of any equity      securities we may issue in the future may be better than the terms of our      common stock.  Our board of directors is authorized to      create and issue equity securities that have rights, privileges, and      preferences senior to those of our common stock.  In many      situations, our board could take these actions without the need for any      stockholder vote.  For example, we have 4.5 million shares of      “blank check” preferred stock which the board could issue, in many cases      without any stockholder vote.  The board could establish voting      rights, dividend rights, liquidation rights, conversion rights, and other      rights and preferences of this preferred stock senior and better than the      rights associated with our commonstock. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | The equity issuance we      completed in July 2007 could have adverse impacts on      us.  In July 2007, we issued 4,300,000 shares of our      common stock and warrants to purchase an additional 2,150,000 shares of      our common stock in a private placement to institutional and other      accredited investors.  We have filed a registration statement      covering those shares which enables the public resale of that      stock.  We believe approximately 115,000 shares of our stock      issued in this private placement transaction have been publicly      resold.  Taking into account the 2,335,300 shares of our stock      we agreed to repurchase and related cancellation of warrants to purchase      1,225,000 shares of our common stock, we believe this registration      statement now covers 1,850,000 shares of our outstanding common stock and      925,000 shares of our common stock which may be acquired upon the exercise      of warrants.  This registration could cause our stock price to      fall or prevent it from increasing.  Also, a substantial amount      of this common stock being sold or becoming available (or being perceived      to become available) for sale in the public market could cause the market      price of our common stock to fall or prevent it from increasing,      particularly given the relatively low trading volumes of our      stock.  Customers, investors, employees, competitors, and others      may react negatively to this stock sale and warrant issuance, the price at      which the stock was sold and warrants may be exercised, the dilution      resulting from the sale and issuance, and other ramifications of these      transactions.  Our stock price has declined significantly since      this transaction was announced and may decline further.  The      investors in this private placement have specified rights to participate      in future equity financings which could hurt our ability to raise      additional capital. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The equity repurchase we      completed in November 2007 could have material adverse impacts on      us.  In November 2007, we agreed to repurchase 2,335,300      shares of our common stock that had been issued in the July 2007 private      placement at a price of $1.70 per share, which price was higher than the      then-current market value of our common stock.  As part of this      repurchase transaction, those selling participants also surrendered to us      for cancellation warrants to purchase an aggregate of 1,225,000 shares of      our common stock.  We used approximately $4.0 million of our      cash on hand for this repurchase, out of approximately $11.5 million cash      as of September 30, 2007.  This reduced level of cash could      increase our need or desire to raise additional capital through business      line or asset dispositions, bank financings, equity issuances, or other      means.  This reduced level of cash may change the terms on which      third parties, including suppliers, may want to do business with      us.  Investors, suppliers, employees, customers, competitors,      and others may react negatively this stock repurchase and other      ramifications of these transactions.  These transactions could      result in increased liabilities and other adverse consequences for      us. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                |   | Proxim      Common Stock |   |
|---------------------|--------|--------------------------|--------|
|                |   | High                     |   |   | Low |   |
| 2006                |   |                     |   |   |   |   |
| First      Quarter  |   | $                        | 5.19   |   |   | $ | 2.59 |   |
| Second      Quarter |   | $                        | 3.96   |   |   | $ | 1.97 |   |
| Third      Quarter  |   | $                        | 2.40   |   |   | $ | 1.75 |   |
| Fourth      Quarter |   | $                        | 3.00   |   |   | $ | 1.95 |   |
|                |   |                     |   |   |   |   |   |   |
| 2007                |   |                     |   |   |   |   |   |   |
| First      Quarter  |   | $                        | 2.50   |   |   | $ | 1.86 |   |
| Second      Quarter |   | $                        | 2.95   |   |   | $ | 1.92 |   |
| Third      Quarter  |   | $                        | 2.36   |   |   | $ | 1.54 |   |
| Fourth      Quarter |   | $                        | 1.58   |   |   | $ | 0.81 |   |

| Plan      category                                                      | Number      of securitiesto      be issued uponexercise      ofoutstanding      options,warrants      and rights(1)      (a) | Weighted-averageexercise      price ofoutstanding      options,warrants      and rights(1)(b) | Number      of securities remainingavailable      for future issuanceunder      equity compensationplans      (excluding securitiesreflected      in column (a)(c) |
|-------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity      compensationplans      approved bysecurity      holders     | 3,156,215                                                                                                                    | $2.98                                                                                         | 141,823      (2)                                                                                                                                                   |
| Equity      compensationplans      not approvedby      security holders | 15,000                                                                                                                       | $2.12                                                                                         | -                                                                                                                                                                  |
| Total                                                                   | 3,171,215                                                                                                                    | $2.97                                                                                         | 141,823                                                                                                                                                            |

----

| Period                                                         | (a)      TotalNumber      ofShares      (orUnits)Purchased | (b)      AveragePrice      Paid perShare      (or Unit) | (c)      Total Number ofShares      (or Units)Purchased      as Partof      PubliclyAnnounced      Plans orPrograms | (d)      MaximumNumber      (orApproximate      DollarValue)      of Shares (orUnits)      that May YetBe      Purchased Underthe      Plans orPrograms |
|----------------------------------------------------------------|------------------------------------------------------------|---------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| Month      #1 (October 1, 2007 –October      31, 2007)   | 0                                                          | N/A                                                     | N/A                                                                                                                 | N/A                                                                                                                                                     |
| Month      #2 (November 1, 2007–      November 30, 2007) | 2,335,300      (1)                                         | $1.70                                                   | 0                                                                                                                   | 0                                                                                                                                                       |
| Month      #3 (December 1, 2007–      December 31, 2007) | 0                                                          | N/A                                                     | N/A                                                                                                                 | N/A                                                                                                                                                     |
| Total                                                          | 2,335,300                                                  | $1.70                                                   | 0      (2)                                                                                                          | 0      (2)                                                                                                                                              |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2003   |   |   | 2004   |   |   | 2005    |   |   | 2006    |   |   | 2007   |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|-------------|
| Consolidated      Statements of Operations Data:                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |    |   |   |    |   |   |   |        |
| Revenue,      net                                                                                          |   | $      | 27,241 |   |   | $      | 21,614 |    |   | $      | 56,133  |   |   | $      | 72,707      |   |   | $ | 66,280 |   |
| Gross      profit                                                                                          |   |   | 11,527 |   |   |   | 9,196  |    |   |   | 24,337  |   |   |   | 30,645      |   |   |   | 28,969 |   |
| Selling      and marketing      expense                                                                    |   |   | 2,204  |   |   |   | 2,328  |    |   |   | 9,539   |   |   |   | 17,668      |   |   |   | 20,152 |   |
| General      and administrative      expense                                                               |   |   | 7,090  |   |   |   | 8,830  |    |   |   | 10,828  |   |   |   | 11,616      |   |   |   | 12,298 |   |
| Research      and development      expense                                                                 |   |   | 1,704  |   |   |   | 2,657  |    |   |   | 7,464   |   |   |   | 14,151      |   |   |   | 8,313 |   |
| Restructuring      and impairment      costs                                                               |   |   | -      |   |   |   | -      |    |   |   | 5,608   |   |   |   | 8,990       |   |   |   | 8,234 |   |
| Income      (loss) from continuing operations                                                                                                                                                                                                                                                                                                                                                                          |   |   | 300    |   |   |   | 37     |    |   |   | (8,672  | )      |   |   | (21,315     | ) |   |   | (17,398 | ) |
| Extraordinary      item                                                                                    |   |   | 4,347  |   |   |   | -      |    |   |   | -       |   |   |   | -           |   |   |   | - |   |
| Discontinued      operations                                                                               |   |   | -      |   |   |   | (1,383 | )       |   |   | (2,488  | )      |   |   | (1,848      | ) |   |   | (1,666 | ) |
| Net      income (loss) applicable to common shareholders                                                                                                                                                                                                                                                                                                                                                               |   |   | 4,647  |   |   |   | (1,346 | )       |   |   | (11,160 | )      |   |   | (23,163     | ) |   |   | (19,064 | ) |
| Basic      earnings (loss) per share from continuing operations                                                                                                                                                                                                                                                                                                                                                        |   | $      | 0.02   |   |   | $      | 0.00   |    |   | $      | (0.40   | )      |   | $      | (0.99       | ) |   | $ | (0.75 | ) |
| Basic      – Extraordinary      gain                                                                 |   | $      | 0.35   |   |   | $      | -      |    |   | $      | -       |   |   | $      | -           |   |   | $ | - |   |
| Basic      –Discontinued      operations                                                             |   | $      | -      |   |   | $      | (0.07  | )       |   | $      | (0.11   | )      |   | $      | (      0.09 | ) |   | $ | (0.07 | ) |
| Basic      earnings (loss) per      share                                                                  |   | $      | 0.37   |   |   | $      | (0.07  | )  |   | $      | (0.51   | )      |   | $      | (1.08       | ) |   | $ | (0.82 | ) |
| Diluted      earnings (loss) per share from continuing operations                                                                                                                                                                                                                                                                                                                                                      |   | $      | 0.02   |   |   | $      | 0.00   |    |   | $      | (0.40   | )      |   | $      | (0.99       | ) |   | $ | (0.75 | ) |
| Diluted      – Extraordinary      gain                                                               |   | $      | 0.34   |   |   | $      | -      |    |   | $      | -       |   |   | $      | -           |   |   | $ | - |   |
| Diluted–Discontinued      operations                                                                 |   | $      | -      |   |   | $      | (0.07  | )       |   | $      | (0.11   | )      |   | $      | (0.09       | ) |   | $ | (0.07 | ) |
| Diluted      earnings (loss) per share                                                                                                                                                                                                                                                                                                                                                                            |   | $      | 0.36   |   |   | $      | (0.07  | )       |   | $      | (0.51   | )      |   | $      | (1.08       | ) |   | $ | (0.82 | ) |
| Shares      used in computing basic earnings per share                                                                                                                                                                                                                                                                                                                                                                 |   |   | 12,571 |   |   |   | 19,792 |    |   |   | 21,801  |   |   |   | 21,523      |   |   |   | 23,278 |   |
| Shares      used in computing diluted earnings per share                                                                                                                                                                                                                                                                                                                                                               |   |   | 12,841 |   |   |   | 19,792 |    |   |   | 21,801  |   |   |   | 21,523      |   |   |   | 23,278 |   |

|                                                      |   |   |   |   |   |   |
|-----------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                      |   | 2003   |   |   | 2004   |   |   | 2005 |   |   | 2006 |   |   | 2007 |   |
| Consolidated      Balance Sheet Data:                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents and short term investments |   | $      | 8,990  |   |   | $      | 40,737 |   |   | $ | 14,393 |   |   | $ | 10,458 |   |   | $ | 6,329 |   |
| Working      capital                                      |   |   | 12,577 |   |   |   | 41,532 |   |   |   | 14,802 |   |   |   | 10,432 |   |   |   | 6,472 |   |
| Total      assets                                         |   |   | 20,719 |   |   |   | 77,284 |   |   |   | 74,758 |   |   |   | 49,875 |   |   |   | 36,410 |   |
| Long-term      obligations, less current portion          |   |   | 1,298  |   |   |   | 1,270 |   |   |   | 2,956 |   |   |   | 2,088 |   |   |   | 1,023 |   |
| Total      stockholders’ equity                     |   | $      | 16,185 |   |   | $      | 65,991 |   |   | $ | 52,718 |   |   | $ | 30,834 |   |   | $ | 17,337 |   |

----

| Quarter(in      thousands, except per share data)                                                                                                                                                                                                                                                                                                                     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 2007                                                                                                                                                                                                                                                                                                                                                                  |   | First |   |   | Second |   |   | Third |   |   | Fourth |   |
| Revenue                                                                            |   | $ | 16,674 |   |   | $ | 18,116 |   |   | $ | 16,903 |   |   | $ | 14,587 |   |
| Gross      profit                                                                  |   |   | 7,634 |   |   |   | 8,249 |   |   |   | 8,286 |   |   |   | 4,800 |   |
| Net      income (loss) from continuing operations                                                                                                                                                                                                                                                                                                                     |   |   | (2,726 | ) |   |   | 83 |   |   |   | (1,658 | ) |   |   | (13,097 | ) |
| Net      income (loss) from discontinued operations                                                                                                                                                                                                                                                                                                                   |   |   | (260 | ) |   |   | (422 | ) |   |   | (1,078 | ) |   |   | 94 |   |
| Net      income      (loss)                                                        |   |   | (2,986 | ) |   |   | (339 | ) |   |   | (2,736 | ) |   |   | (13,003 | ) |
| Basic      and diluted earnings (loss) per share                                                                                                                                                                                                                                                                                                                      |   | $ | (0.14 | ) |   | $ | (0.02 | ) |   | $ | (0.11 | ) |   | $ | (0.52 | ) |

| Quarter(in      thousands, except per share data)                                                                                                                                                                                                                                                                                             |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 2006                                                                                                                                                                                                                                                                                                                                          |   | First |   |   | Second |   |   | Third |   |   | Fourth |   |
| Revenue                                                                        |   | $ | 17,646 |   |   | $ | 20,037 |   |   | $ | 17,322 |   |   | $ | 17,702 |   |
| Gross      profit                                                              |   |   | 7,369 |   |   |   | 8,554 |   |   |   | 6,502 |   |   |   | 8,220 |   |
| Net      income (loss) from continuing operations                                                                                                                                                                                                                                                                                             |   |   | (4,205 | ) |   |   | (2,563 | ) |   |   | (13,079 | ) |   |   | (1,468 | ) |
| Net      income (loss) from discontinued operations                                                                                                                                                                                                                                                                                           |   |   | (278 | ) |   |   | (422 | ) |   |   | (585 | ) |   |   | (563 | ) |
| Net      income      (loss)                                                    |   |   | (4,483 | ) |   |   | (2,985 | ) |   |   | (13,664 | ) |   |   | (2,031 | ) |
| Basic      and diluted earnings (loss) per share                                                                                                                                                                                                                                                                                              |   | $ | (0.21 | ) |   | $ | (0.14 | ) |   | $ | (0.64 | ) |   | $ | (0.09 | ) |

| Quarter(in      thousands, except per share data)                                                                                                                                                                                                                                                                                             |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 2005                                                                                                                                                                                                                                                                                                                                          |   | First |   |   | Second |   |   | Third |   |   | Fourth |   |
| Revenue                                                                        |   | $ | 5,908 |   |   | $ | 6,475 |   |   | $ | 12,382 |   |   | $ | 31,368 |   |
| Gross      profit                                                              |   |   | 3,111 |   |   |   | 3,257 |   |   |   | 5,276 |   |   |   | 12,693 |   |
| Net      income (loss) from continuing operations                                                                                                                                                                                                                                                                                             |   |   | (379 | ) |   |   | (491 | ) |   |   | (9,415 | ) |   |   | 1,613 |   |
| Net      income (loss) from discontinued operations                                                                                                                                                                                                                                                                                           |   |   | (591 | ) |   |   | (496 | ) |   |   | (598 | ) |   |   | (803 | ) |
| Net      income      (loss)                                                    |   |   | (970 | ) |   |   | (987 | ) |   |   | (10,013 | ) |   |   | 810 |   |
| Basic      and diluted earnings (loss) per share                                                                                                                                                                                                                                                                                              |   | $ | (0.04 | ) |   | $ | (0.04 | ) |   | $ | (0.47 | ) |   | $ | 0.04 |   |

----

|   | 1. | price      is fixed and determinable at the date ofsale; |
|--------|----|----------------------------------------------------------|

|   | 2. | buyer’s      payment obligation is not contingent onresale; |
|--------|----|-------------------------------------------------------------------|

|   | 3. | buyer’s      payment obligation would not be changed in the event of theft or physical      damage of the product; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------|

|   | 4. | buyer      acquiring the product for resale has economic substance apart from that      provided by the seller; |
|--------|----|-----------------------------------------------------------------------------------------------------------------|

|   | 5. | seller      does not have significant obligations for future resale of the product;      and |
|--------|----|----------------------------------------------------------------------------------------------|

|   | 6. | the      amount of future returns can be reasonably  estimated. |
|--------|----|-----------------------------------------------------------------|

----

----

|   | a. | Determine      whether impairment exists. The first step of the impairment test is to      determine whether impairment exists by comparing the fair value of the      reporting unit with its carrying value (including goodwill).  If      the fair value is not impaired, the second step of impairment is not      necessary. If the fair value is less than the recorded amount, impairment      exists and the second step of the test is  performed. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Measure      the amount of the impairment loss. The second step of the impairment test      measures the amount of impairment loss by comparing the fair value of      reporting unit goodwill to its carrying amount. If the carrying amount of      the reporting unit goodwill is greater than the implied fair value, an      impairment loss equal to the difference is recognized and goodwill is      written down. The implied fair value of the reporting unit goodwill is the      excess of the fair value of reporting unit over the amounts assigned to      the assets and liabilities. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Capitalized      Software |
|--------|---------------------------|

----

|                                          |   |               |   |
|-----------------------------------------------|--------|--------------------|--------|
|                                          |   | 2007               |   |   | 2006 |   |   |   |   |   |   |   |
|                                          |   | % of      Net |   |   | % of      Net |   |   | Annual      Dollar |   |   | Annual |   |
|                                          |   | Revenue            |   |   | Revenue |   |   | Change      (in 000s) |   |   | %      Change |   |
| Net      revenues                             |   |               | 100    | % |   |   | 100 | % |   | $ | (6,427 | ) |   |   | (9 | %) |
| Cost      of sales                            |   |               | 56     |   |   |   | 58 |   |   |   | (4,751 | ) |   |   | (11 | ) |
| Gross      profit                             |   |               | 44     |   |   |   | 42 |   |   |   | (1,676 | ) |   |   | 5 |   |
| Operating      expenses                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and marketing expense            |   |               | 30     |   |   |   | 24 |   |   |   | 2,484 |   |   |   | 14 |   |
| Restructuring      and impairment costs       |   |               | 12     |   |   |   | 12 |   |   |   | (756 | ) |   |   | (8 | ) |
| Research      and development expense         |   |               | 13     |   |   |   | 20 |   |   |   | (5,838 | ) |   |   | (41 | ) |
| General      and administrative               |   |               | 19     |   |   |   | 16 |   |   |   | 682 |   |   |   | 6 |   |
| Total      operating expenses                 |   |               | 74     |   |   |   | 72 |   |   |   | (3,428 | ) |   |   | (7 | ) |
| Operating      income (loss)                  |   |               | (30    | ) |   |   | (30 | ) |   |   | 1,752 |   |   |   | (8 | ) |
| Other      income                             |   |               | 4      |   |   |   | 1 |   |   |   | 2,281 |   |   |   | 428 |   |
| Income      tax expense (benefit)             |   |               | -      |   |   |   | - |   |   |   | 116 |   |   |   | 171 |   |
| Income      (loss) from continuing operations |   |               | (26    | ) |   |   | (29 | ) |   |   | 3,917 |   |   |   | 18 |   |
| Discontinued      operations                  |   |               | (3     | ) |   |   | (3 | ) |   |   | 182 |   |   |   | 10 |   |
| Net      income (loss)                        |   |               | (29    | )% |   |   | (32 | )% |   |   | 4,099 |   |   |   | 18 | % |

----

----

|                                                        |   |               |   |   |               |   |   |                  |   |   |          |   |
|-------------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|--------|-----------------------|--------|--------|---------------|--------|
|                                                        |   | 2006               |   |   | 2005               |   |   |                  |   |   |          |   |
|                                                        |   | % of      Net |   |   | % of      Net |   |   | Annual      Dollar    |   |   | Annual        |   |
|                                                        |   | Revenue            |   |   | Revenue            |   |   | Change      (in 000s) |   |   | %      Change |   |
| Net      revenues                                           |   |               | 100    | %      |               |   | 100    | %                     |   | $      | 16,574        |   |   |   | 30 | % |
| Cost      of sales                                          |   |               | 58     |   |               |   | 57     |                  |   |   | 10,266        |   |   |   | 32 |   |
| Gross      profit                                           |   |               | 42     |   |               |   | 43     |                  |   |   | 6,308         |   |   |   | 26 |   |
| Operating      expenses                                     |   |               |   |   |               |   |   |                  |   |   |          |   |   |   |   |   |
| Selling      and marketing expense                          |   |               | 24     |   |               |   | 17     |                  |   |   | 8,129         |   |   |   | 85 |   |
| Restructuring      and impairment costs                     |   |               | 12     |   |               |   | 10     |                  |   |   | 3,382         |   |   |   | 60 |   |
| Research      and development expense                       |   |               | 20     |   |               |   | 13     |                  |   |   | 6,687         |   |   |   | 90 |   |
| General      and administrative                             |   |               | 16     |   |               |   | 19     |                  |   |   | 788           |   |   |   | 7 |   |
| Total      operating expenses                               |   |               | 72     |   |               |   | 59     |                  |   |   | 18,986        |   |   |   | 57 |   |
| Operating      income (loss)                                |   |               | (30    | )      |               |   | (16    | )                     |   |   | (12,678       | )      |   |   | (139 | ) |
| Other      income                                           |   |               | 1      |   |               |   | 1      |                  |   |   | 18            |   |   |   | 3 |   |
| Income      tax expense (benefit)                           |   |               | -      |   |               |   | -      |                  |   |   | 84            |   |   |   | (525 | ) |
| Minority      interest in net income (loss) of Merry Fields |   |               | -      |   |               |   | -      |                  |   |   | 101           |   |   |   | 100 |   |
| Income (loss)      from continuing operations          |   |               | (29    | )      |               |   | (15    | )                     |   |   | (12,643       | )      |   |   | (146 | ) |
| Discontinued      operations                                |   |               | (3     | )      |               |   | (5     | )                     |   |   | 640           |   |   |   | 26 |   |
| Net      income (loss)                                      |   |               | (32    | )%     |               |   | (20    | )%                    |   |   | (12,003       | )      |   |   | (108 | ) |

----

|   | · | A      charge of $881,000 from the write off of intangibles related to the      acquisition of Karlnet, Inc. |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | A      $2.1 million charge related to the developed components technology      acquired in the acquisition of Terabeam  Corporation. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | A      charge of $4.8 million related to the developed technology acquired in the      acquisition of Old Proxim in 2005. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | A      $3.6 million impairment charge related to the Terabeam trade name in      accordance with SFAS 142.  Subsequent to the Old Proxim      acquisition, the Company chose to sell its wireless equipment products      under the go to market name of Proxim Wireless.  Since there      will be no future revenue stream based on the Terabeam name, the Company      determined that the fair value of the Terabeam trade name was de      minimis. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A      $1.1 million charge related to the write off of certain software      development costs that had been previously  capitalized. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | December      31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2007              |   |   | 2006 |   |
| Working      capital                                                                                           |   |              | 6,472  |   |   |   | 10,432 |   |
| Cash      and cash      equivalents                                                                            |   |              | 6,329  |   |   |   | 10,290 |   |
| Short      term      investments                                                                               |   |              | -      |   |   |   | 168 |   |
| Restricted      cash                                                                                           |   |              | 76     |   |   |   | 76 |   |

----

|                                                                                                                                                                                                                                                                                                                                                     |   | Payments      due by period (numbers in thousands) |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                     |   | Total                                              |   |   | Less      than 1year |   |   | 1      -3 years |   |   | 4 –      5 years |   |   | After      5 years |   |
| Operating      leases – buildings – in use                                                                                                                                                                                                                                                                                                   |   |                                               | 3,717  |   |   |   | 1,531 |   |   |   | 1,174 |   |   |   | 552 |   |   |   | 460 |   |
| Operating      leases – buildings – not in use                                                                                                                                                                                                                                                                                               |   |                                               | 520    |   |   |   | 177 |   |   |   | 322 |   |   |   | 21 |   |   |   | - |   |
| Purchase      commitments and      other                                                       |   |                                               | 2,200  |   |   |   | 1,150 |   |   |   | 1,050 |   |   |   | - |   |   |   | - |   |
| Operating      leases –      equipment                                                   |   |                                               | 296    |   |   |   | 131 |   |   |   | 165 |   |   |   | - |   |   |   | - |   |
| Employment      Contracts                                                                      |   |                                               | 1.019  |   |   |   | 1,019 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      contractual cash obligations                                                                                                                                                                                                                                                                                                                  |   |                                               | 7,752  |   |   |   | 4,008 |   |   |   | 2,711 |   |   |   | 573 |   |   |   | 460 |   |

----

|   | · | Ownership      interest in subsidiaries held by parties other then the parent should be      clearly identified, labeled and presented in the consolidated financial      statements with equity separate from the parent  company. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      amount of consolidated net income attributable to the parent and to the      noncontrolling interest should be clearly identified and presented on the      face of the consolidated incomestatement. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Changes      in a parent’s ownership interest while the parent retains its controlling      financial interest in its subsidiary should be accounted for consistently,      i.e., as equity transactions. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | When      a subsidiary is deconsolidated, any retained noncontrolling equity      investment in the former subsidiary must be initially measured at fair      value. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Disclosure      requirements that clearly identify and distinguish between the interests      of the parent and those of the noncontrolling  owners. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                 |   | Page   |
|----------------------------------------------------------------------|--------|--------|
| Report      of Independent Registered Public Accounting Firm         |   | 53     |
|                                                                 |   |   |
| CONSOLIDATED      FINANCIAL STATEMENTS                               |   |   |
| Consolidated      Balance Sheets                                     |   | 54     |
| Consolidated      Statements of Operations                           |   | 55     |
| Consolidated      Statement of Changes in Stockholders’ Equity |   | 56     |
| Consolidated      Statements of Cash Flows                           |   | 57     |
| Notes      to Consolidated Financial Statements                      |   | 59     |
| Schedule      II – Valuation and Qualifying Accounts           |   | 80     |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | December      31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2007              |    |   | 2006 |   |
| Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              |    |   |   |   |
| Current      assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |              |    |   |   |   |
| Cash      and cash      equivalents                                                                                                                      |   | $                 | 6,329   |   |   | $ | 10,290 |   |
| Investment      securities –      available-for-sale                                                                                               |   |              | -       |   |   |   | 168 |   |
| Accounts      receivable, net of  allowances for doubtful accounts, returns      and discounts  of  $2,044  for 2007 and      $3,608 for 2006                                                                                                                                                                                                                                                                                                                                                                          |   |              | 10,010  |   |   |   | 5,539 |   |
| Inventory                                                                                                                                                |   |              | 7,154   |   |   |   | 10,142 |   |
| Prepaid      expenses                                                                                                                                    |   |              | 1,029   |   |   |   | 1,246 |   |
| Total      current      assets                                                                                                                                          |   |              | 24,522  |   |   |   | 27,385 |   |
| Property      and equipment,      net                                                                                                          |   |              | 2,542   |   |   |   | 2,660 |   |
| Other      Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              |    |   |   |   |   |   |
| Restricted      cash                                                                                                                           |   |              | 76      |   |   |   | 76 |   |
| Goodwill                                                                                                                                       |   |              | -       |   |   |   | 7,922 |   |
| Intangible      assets,      net                                                                                                               |   |              | 9,015   |   |   |   | 11,545 |   |
| Deposits      and prepaid      expenses                                                                                                        |   |              | 255     |   |   |   | 287 |   |
| Total      other      assets                                                                                                                                            |   |              | 9,346   |   |   |   | 19,830 |   |
| Total      assets                                                                                                                                                       |   | $                 | 36,410  |   |   | $ | 49,875 |   |
| Liabilities      and Stockholders’ Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |              |    |   |   |   |   |   |
| Current      liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              |    |   |   |   |   |   |
| Accounts      payable and accrued      expenses                                                                                                          |   | $                 | 12,984  |   |   | $ | 13,887 |   |
| Deferred      revenue                                                                                                                                    |   |              | 4,001   |   |   |   | 2,198 |   |
| License      agreement payable - current      maturities                                                                                                 |   |              | 1,065   |   |   |   | 868 |   |
| Total      current      liabilities                                                                                                                                     |   |              | 18,050  |   |   |   | 16,953 |   |
| License      agreement payable, net of current      maturities                                                                                 |   |              | 1,023   |   |   |   | 2,088 |   |
| Total      liabilities                                                                                                                                                  |   |              | 19,073  |   |   |   | 19,041 |   |
| Commitments      and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              |    |   |   |   |   |   |
| Stockholders’      Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |              |    |   |   |   |   |   |
| Preferred      stock, $0.01 par value; 4,500,000 shares authorized, none issued at      December 31, 2007 and December 31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                |   |              | -       |   |   |   | - |   |
| Common      stock, $0.01 par value, 100,000,000 shares authorized, 23,519,069 issued      and outstanding at December 31, 2007 and 21,552,572 issued and outstanding      at December 31, 2006                                                                                                                                                                                                                                                                                                                                                                 |   |              | 235     |   |   |   | 216 |   |
| Additional      paid-in      capital                                                                                                                          |   |              | 63,451  |   |   |   | 57,976 |   |
| Accumulated      deficit                                                                                                                                      |   |              | (46,349 | ) |   |   | (27,285 | ) |
| Accumulated      other comprehensive income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |              |    |   |   |   |   |   |
| Net      unrealized loss on available-for-sale      securities                                                                                                |   |              | -       |   |   |   | (73 | ) |
| Total      stockholders’      equity                                                                                                                                   |   |              | 17,337  |   |   |   | 30,834 |   |
| Total      liabilities and stockholders’      equity                                                                                                                   |   | $                 | 36,410  |   |   | $ | 49,875 |   |

----

|                                                                                |   | For      the Years Ended December 31, |    |
|-------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                |   | 2007                                  |    |   | 2006 |   |   | 2005 |   |
| Revenues                                                                            |   | $                                     | 66,280  |   |   | $ | 72,707 |   |   | $ | 56,133 |   |
| Cost      of goods sold                                                             |   |                                  | 34,844  |   |   |   | 40,560 |   |   |   | 29,653 |   |
| Restructuring      provision for excess and obsolete inventory                      |   |                                  | 2,467   |   |   |   | 1,502 |   |   |   | 2,143 |   |
| Gross      profit                                                                   |   |                                  | 28,969  |   |   |   | 30,645 |   |   |   | 24,337 |   |
| Operating      expenses:                                                            |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Selling      costs                                                                  |   |                                  | 20,152  |   |   |   | 17,668 |   |   |   | 9,539 |   |
| Restructuring      charges                                                          |   |                                  | 91      |   |   |   | 116 |   |   |   | 944 |   |
| Restructuring      charge for impairment of intangibles assets and goodwill         |   |                                  | 8,143   |   |   |   | 8,874 |   |   |   | 4,664 |   |
| Impairment      of service reporting unit goodwill                                  |   |                                  | -       |   |   |   | - |   |   |   | - |   |
| General      and administrative                                                     |   |                                  | 12,298  |   |   |   | 11,616 |   |   |   | 10,828 |   |
| Research      and development                                                       |   |                                  | 8,313   |   |   |   | 14,151 |   |   |   | 7,464 |   |
| Total      operating expenses                                                       |   |                                  | 48,997  |   |   |   | 52,425 |   |   |   | 33,439 |   |
| Operating      loss                                                            |   |                                  | (20,028 | ) |   |   | (21,780 | ) |   |   | (9,102 | ) |
| Other      income (expense):                                                        |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Interest      income (expense)                                                      |   |                                  | 208     |   |   |   | 368 |   |   |   | 695 |   |
| Interest      expense                                                               |   |                                  | (126    | ) |   |   | (190 | ) |   |   | (161 | ) |
| Gain      on sale of  assets                                              |   |                                  | 23      |   |   |   | 202 |   |   |   | - |   |
| Other      income (expense)                                                         |   |                                  | 2,709   |   |   |   | 153 |   |   |   | (19 | ) |
| Total      other income (expense)                                                   |   |                                  | 2,814   |   |   |   | 533 |   |   |   | 515 |   |
| Loss      from continuing operations before income taxes and minority      interest |   |                                  | (17,214 | ) |   |   | (21,247 | ) |   |   | (8,587 | ) |
| Provision      (benefit) for income taxes                                           |   |                                  | 184     |   |   |   | 68 |   |   |   | (16 | ) |
| Loss      from continuing operations before minority interest                       |   |                                  | (17,398 | ) |   |   | (21,315 | ) |   |   | (8,571 | ) |
| Minority      interest in net income of Merry Fields                                |   |                                  | -       |   |   |   | - |   |   |   | (101 | ) |
| Loss      from continuing operations                                                |   |                                  | (17,398 | ) |   |   | (21,315 | ) |   |   | (8,672 | ) |
| Loss      from discontinued operations, net of  income    taxes           |   |                                  | (1,666  | ) |   |   | (1,848 | ) |   |   | (2,488 | ) |
| Net      income (loss)                                                              |   | $                                     | (19,064 | ) |   | $ | (23,163 | ) |   | $ | (11,160 | ) |
|                                                                                |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Weighted      average shares - basic and diluted                                    |   |                                  | 23,278  |   |   |   | 21,523 |   |   |   | 21,801 |   |
|                                                                                |   |                                  |    |   |   |   |   |   |   |   |   |   |
|                                                                                |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Net      loss per share from continuing operations- basic and    diluted            |   |                                  | (0.75   | ) |   |   | (0.99 | ) |   |   | (0.40 | ) |
| Net      loss per share from discontinued operations- basic and    diluted          |   |                                  | (0.07   | ) |   |   | (0.09 | ) |   |   | (0.11 | ) |
| Net      loss per share - basic and diluted                                         |   | $                                     | (0.82   | ) |   | $ | (1.08 | ) |   | $ | (0.51 | ) |

----

|                                                                                       |   | Common      Stock |       |   |   |   |   |                     |   |   |                      |   |   |          |    |   |             |   |   |                                            |   |
|--------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|--------|--------|--------|--------------------------|--------|--------|---------------------------|--------|--------|---------------|---------|--------|------------------|--------|--------|-------------------------------------------------|--------|
|                                                                                       |   | Shares            |       |   | Amount |   |   | AdditionalPaid-inCapital |   |   | RetainedEarnings(Deficit) |   |   | TreasuryStock |    |   | MinorityInterest |   |   | AccumulatedOtherComprehensive(Loss)      Income |   |   | Total |   |
| Balances, December 31,      2004                                                      |   |              | 22,345,847 |   |   | $      | 228    |                     |   | $      | 59,637                    |   |   | $             | 7,277   |   |             | $      | (1,155 | )                                               |   | $ | - |   |   | $ | 4 |   |   | $ | 65,991 |   |
| Treasury      stock purchased                                                              |   |              | (1,033,750 | )      |   |   | (15    | )                        |   |   | (3,207                    | )      |   |          | -       |   |             |   | 1,155  |                                            |   |   | - |   |   |   | - |   |   |   | (2,067 | ) |
| Exercise      of stock options and warrants                                                |   |              | 134,120    |   |   |   | 1      |                     |   |   | 188                       |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 189 |   |
| Merry      Fields, loss of control                                                         |   |              | -          |   |   |   | -      |                     |   |   | 20                        |   |   |          | (239    | )      |             |   | -      |                                            |   |   | 219 |   |   |   | - |   |   |   | - |   |
| Minority      interest in net income of Merry Fields                                       |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | -       |   |             |   | -      |                                            |   |   | 101 |   |   |   | - |   |   |   | 101 |   |
| Deconsolidation      of Merry Fields                                                       |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | -       |   |             |   | -      |                                            |   |   | (320 | ) |   |   | - |   |   |   | (320 | ) |
| Comprehensive      income:                                                                 |   |              |       |   |   |   |   |                     |   |   |                      |   |   |          |    |   |             |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                     |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | (11,160 | )      |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (11,160 | ) |
| Unrealized      gain (loss) on investments, net of reclassification      adjustments  |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | (16 | ) |   |   | (16 | ) |
| Total      comprehensive income (loss)                                                |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | (11,160 | )      |             |   | -      |                                            |   |   | - |   |   |   | (16 | ) |   |   | (11,176 | ) |
| Balances, December 31,      2005                                                      |   |              | 21,446,217 |   |   | $      | 214    |                     |   | $      | 56,638                    |   |   | $             | (4,122  | )      |             | $      | -      |                                            |   | $ | - |   |   | $ | (12 | ) |   | $ | 52,718 |   |
| Exercise      of stock options and warrants                                                |   |              | 106,355    |   |   |   | 2      |                     |   |   | 79                        |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 81 |   |
| Employee      stock option amortization                                                    |   |              | -          |   |   |   | -      |                     |   |   | 1,259                     |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 1,259 |   |
| Comprehensive      income:                                                                 |   |              |       |   |   |   |   |                     |   |   |                      |   |   |          |    |   |             |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                     |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | (23,163 | )      |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (23,163 | ) |
| Unrealized      gain (loss) on investments, net of reclassification      adjustments  |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | (61 | ) |   |   | (61 | ) |
| Total      comprehensive income (loss)                                                |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | (23,163 | )      |             |   | -      |                                            |   |   | - |   |   |   | (61 | ) |   |   | (23,224 | ) |
| Balances, December 31, 2006                                                           |   |              | 21,552,572 |   |   | $      | 216    |                     |   | $      | 57,976                    |   |   | $             | (27,285 | )      |             | $      | -      |                                            |   | $ | - |   |   | $ | (73 | ) |   | $ | 30,834 |   |
| Exercise      of stock options and warrants                                                |   |              | 1,797      |   |   |   |   |                     |   |   | 3                         |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 3 |   |
| Common      stock issued                                                                   |   |              | 4,300,000  |   |   |   | 43     |                     |   |   | 7,425                     |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 7,468 |   |
| Common      stock retired                                                                  |   |              | (2,335,300 | )      |   |   | (24    | )                        |   |   | (3,946                    | )      |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (3,970 | ) |
| Employee      stock option amortization                                                    |   |              | -          |   |   |   | -      |                     |   |   | 1,993                     |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 1,993 |   |
| Comprehensive      income:                                                                 |   |              |       |   |   |   |   |                     |   |   |                      |   |   |          |    |   |             |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                     |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | (19,064 | )      |             |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (19,064 | ) |
| Unrealized      gain (loss) on investments, net of reclassification      adjustments  |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | -       |   |             |   | -      |                                            |   |   | - |   |   |   | 73 |   |   |   | 73 |   |
| Total      comprehensive income (loss)                                                |   |              | -          |   |   |   | -      |                     |   |   | -                         |   |   |          | (19,064 | )      |             |   | -      |                                            |   |   | - |   |   |   | 73 |   |   |   | (18,991 | ) |
| Balances, December 31, 2007                                                           |   |              | 23,519,069 |   |   | $      | 235    |                     |   | $      | 63,451                    |   |   | $             | (46,349 | )      |             | $      | -      |                                            |   | $ | - |   |   | $ | - |   |   | $ | 17,337 |   |

----

|                                                                                                                              |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                              |   | For      The Years Ended December 31, |   |
|                                                                                                                              |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Cash      flows from operating activities:                                                                                        |   |   |   |   |   |   |   |   |   |
| Net      Income (loss)                                                                                                            |   | $ | (19,064 | ) |   | $ | (23,163 | ) |   | $ | (11,160 | ) |
| Less:      Net Income from discontinued operations                                                                                |   |   | (      1,666 | ) |   |   | (1,848 | ) |   |   | (2,488 | ) |
| Net      income (loss) from continuing operations                                                                                 |   |   | (17,398 | ) |   |   | (21,315 | ) |   |   | (8,672 | ) |
| Depreciation      and amortization                                                                                                |   |   | 3,619 |   |   |   | 5,050 |   |   |   | 2,857 |   |
| (Gain)      loss on disposal of equipment and long-term assets                                                                    |   |   | 150 |   |   |   | - |   |   |   | - |   |
| Loss      (gain) on disposal of available-for-sale securities                                                                     |   |   | (99 | ) |   |   | 30 |   |   |   | 120 |   |
| Bad      debt allowance                                                                                                           |   |   | 244 |   |   |   | 95 |   |   |   | 415 |   |
| Inventory      allowance                                                                                                          |   |   | 754 |   |   |   | (1,190 | ) |   |   | - |   |
| Employee      stock option amortization                                                                                           |   |   | 1,993 |   |   |   | 1,259 |   |   |   | - |   |
| Restructuring      charge for impairment of intangible assets                                                                     |   |   | 220 |   |   |   | 8,874 |   |   |   | 4,664 |   |
| Restructuring      provision for excess and obsolete inventory                                                                    |   |   | 2,467 |   |   |   | 1,502 |   |   |   | 2,143 |   |
| Restructuring      provision for impairment of goodwill                                                                           |   |   | 7,922 |   |   |   | - |   |   |   |   |   |
| Impairment      of service unit goodwill                                                                                          |   |   | - |   |   |   | - |   |   |   | 200 |   |
| Changes      in assets and liabilities affecting operations:                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted      cash                                                                                                              |   |   | - |   |   |   | - |   |   |   | 60 |   |
| Accounts      receivable, net                                                                                                     |   |   | (4,731 | ) |   |   | 2,668 |   |   |   | (1,607 | ) |
| Inventory                                                                                                                         |   |   | (766 | ) |   |   | (611 | ) |   |   | (33 | ) |
| Deposits                                                                                                                          |   |   | 1 |   |   |   | (431 | ) |   |   | (181 | ) |
| Prepaid      expenses  and other assets                                                                                 |   |   | 172 |   |   |   | 61 |   |   |   | (770 | ) |
| Refundable      income taxes                                                                                                      |   |   | (37 | ) |   |   | - |   |   |   | 151 |   |
| Accounts      payable and accrued expenses                                                                                        |   |   | (769 | ) |   |   | (1,695 | ) |   |   | 3,145 |   |
| Deferred      revenue                                                                                                             |   |   | 1,885 |   |   |   | (283 | ) |   |   | 2,366 |   |
| Net      cash provided by (used in) continuing operatingactivities:                                                               |   |   | (4,373 | ) |   |   | (5,986 | ) |   |   | 4,858 |   |
| Net      cash provided by (used in) discontinued operating    activities                                                          |   |   | (995 | ) |   |   | (1,512 | ) |   |   | (1,858 | ) |
| Net      cash provided by (used in) operating activities                                                                          |   |   | (5,368 | ) |   |   | (7,498 | ) |   |   | 3,000 |   |
| Cash      flows from investing activities:                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Release      of restricted cash                                                                                                   |   |   | - |   |   |   | 5,000 |   |   |   | - |   |
| Proceeds      on disposal of property and other assets                                                                            |   |   | - |   |   |   | - |   |   |   | 169 |   |
| Purchase      of securities                                                                                                       |   |   | - |   |   |   | - |   |   |   | (241 | ) |
| Purchase      of property and equipment                                                                                           |   |   | (978 | ) |   |   | (445 | ) |   |   | (293 | ) |
| Investment      in capitalized software                                                                                           |   |   | (788 | ) |   |   | - |   |   |   | (382 | ) |
| Proceeds      from the sale of securities                                                                                         |   |   | 340 |   |   |   | - |   |   |   | 5,214 |   |
| Cash      used for acquisitions                                                                                                   |   |   | - |   |   |   | - |   |   |   | (24,300 | ) |
| Cash      received from the acquisition of a business                                                                             |   |   | - |   |   |   | - |   |   |   | 384 |   |
|  Net      cash provided by (used in) continuing investingactivities:                                                         |   |   | (1,426 | ) |   |   | 4,555 |   |   |   | (19,449 | ) |
|  Net      cash provided by  (used in) discontinued investing      activities                                       |   |   | 200 |   |   |   | - |   |   |   | - |   |
| Net      cash provided by (used in) investing activities                                                                          |   |   | (1,226 | ) |   |   | 4,555 |   |   |   | (19,449 | ) |
| Cash      flows from financing activities:                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Retirement      of common stock                                                                                                   |   |   | (3,970 | ) |   |   | - |   |   |   | (2,069 | ) |
| Issuance      of common stock                                                                                                     |   |   | 7,468 |   |   |   | - |   |   |   | - |   |
| Exercise      of stock options and warrants                                                                                       |   |   | 3 |   |   |   | 81 |   |   |   | 189 |   |
| Repayment      of license agreement payable                                                                                       |   |   | (868 | )  |   |   | (962 | ) |   |   | - |   |
| Repayment      of notes payable                                                                                                   |   |   | - |   |   |   | - |   |   |   | (2,906 | ) |
|  Net      cash provided by (used in) continuing financingactivities:                                                         |   |   | 2,633 |   |   |   | (881 | ) |   |   | (4,786 | ) |
|  Net      cash provided by (used in) discontinued financing    activities                                                    |   |   | - |   |   |   | (19 | ) |   |   | - |   |
| Net      cash provided by (used in) financing activities                                                                          |   |   | 2,633 |   |   |   | (900 | ) |   |   | (4,786 | ) |
|             Net      increase (decrease) in cash and cash equivalents |   |   | (3,961 | ) |   |   | (3,843 | ) |   |   | (21,235 | ) |
| Cash      and cash equivalents, beginning of period                                                                               |   |   | 10,290 |   |   |   | 14,133 |   |   |   | 35,368 |   |
| Cash      and cash equivalents, end of period                                                                                     |   | $ | 6,329 |   |   | $ | 10,290 |   |   | $ | 14,133 |   |

----

| Supplemental      disclosure of cash flow information:                             |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cash      paid for interest                                                        |   | $      | 126    |   |   | $      | 119    |   |   | $      | 160    |   |
| Income      taxes paid                                                             |   | $      | 196    |   |   | $      | 68     |   |   | $      | -      |   |
| Deconsolidation      of subsidiary:  Property and equipment removed      |   | $      | -      |   |   | $      | -      |   |   | $      | 1,455  |   |
| Note      payable removed                                                          |   | $      | -      |   |   | $      | -      |   |   | $      | 1,194  |   |
| Acquisition      of license agreement in exchange for license agreement    payable |   | $      | -      |   |   | $      | -      |   |   | $      | 2,956  |   |

----

|   | 1. | The      price is fixed and determinable at the date of  sale; |
|--------|----|----------------------------------------------------------------|

|   | 2. | The      buyer’s payment obligation is not contingent on  resale; |
|--------|----|-------------------------------------------------------------------------|

|   | 3. | The      buyer’s payment obligation would not be changed in the event of theft or      physical damage of the product; |
|--------|----|------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | The      buyer acquiring the product for resale has economic substance apart from      that provided by the seller; |
|--------|----|---------------------------------------------------------------------------------------------------------------------|

|   | 5. | The      seller does not have significant obligations for future resale of the      product; and |
|--------|----|--------------------------------------------------------------------------------------------------|

|   | 6. | The      amount of future returns can be reasonably  estimated. |
|--------|----|-----------------------------------------------------------------|

----

----

|   | a. | Determine      whether impairment exists. The first step of the impairment test is to      determine whether impairment exists by comparing the fair value of the      reporting unit with its carrying value (including goodwill).  If      the fair value is not impaired, then the second step of impairment is not      necessary. If the fair value is less than the recorded amount, impairment      exists and the second step of the test is  performed. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Measure      the amount of the impairment loss. The second step of the impairment test      measures the amount of impairment loss by comparing the fair value of      reporting unit goodwill to its carrying amount. If the carrying amount of      the reporting unit goodwill is greater than the implied fair value, an      impairment loss equal to the difference is recognized and goodwill is      written down. The implied fair value of the reporting unit goodwill is the      excess of the fair value of reporting unit over the amounts assigned to      the assets and liabilities. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Pro-Forma      Expense for 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Year      End |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 2005          |    |
| Net      (loss) attributable to common shareholders as reported                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $             | (11,160 | ) |
| Less:      Total stock based compensation expense determined                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |          |    |   |
|           under      the fair value method for all awards                                                                                                                                                                                                                                                                                                                                                                                        |   |          | (2,017  | ) |
| Pro      forma net (loss) per common share, as reported                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |          | (13,177 | ) |
| Denominator      for diluted loss per      share                                                                                |   |          | 21,801  |   |
| Basic      net (loss) per common share, as      reported                                                                        |   | $             | (0.51   | ) |
| Basic      net (loss) per common share, pro      forma                                                                          |   | $             | (0.60   | ) |
| Diluted      net (loss) per common share, as reported                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $             | (0.51   | ) |
| Diluted      net (loss) per common share, pro forma                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $             | (0.60   | ) |

----

----

|   | · | Ownership      interest in subsidiaries held by parties other then the parent should be      clearly identified, labeled and presented in the consolidated financial      statements with equity separate from the parent  company. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      amount of consolidated net income attributable to the parent and to the      noncontrolling interest should be clearly identified and presented on the      face of the consolidated incomestatement. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Changes      in a parent’s ownership interest while the parent retains its controlling      financial interest in its subsidiary should be accounted for consistently,      i.e., as equity transactions. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | When      a subsidiary is deconsolidated, any retained noncontrolling equity      investment in the former subsidiary must be initially measured at fair      value. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Disclosure      requirements that clearly identify and distinguish between the interests      of the parent and those of the noncontrolling  owners. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |              |   |   |              |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | December      31, |   |   | December      31, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 2007              |   |   | 2006              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |              |   |   |              |   |
| Raw      materials                                                                               |   | $                 | 6,748  |   |              | $      | 8,247 |   |
| Work      in      process                                                                        |   |              | 374    |   |              |   | 480 |   |
| Finished      goods                                                                              |   |              | 7,531  |   |              |   | 11,068 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |              | 14,653 |   |              |   | 19,795 |   |
| Allowance      for excess and obsolescence and other reserves                                                                                                                                                                                                                                                                                                                                                                                                       |   |              | (7,499 | )      |              |   | (9,653 | ) |
| Net      Inventory                                                                               |   | $                 | 7,154  |   |              | $      | 10,142 |   |

----

| 5. | Intangible      Assets and Goodwill |
|----|-------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | December      31,   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2007                |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (in      thousands) |   |
| Trade      names – indefinite useful      life                                                                                 |   | $                   | 2,250  |   |   | $ | 2,250 |   |
| Less:      Impairment charges and      disposals                                                                                     |   |                | (1,470 | ) |   |   | (1,100 | ) |
| Trade      names – indefinite useful life,      net                                                                            |   | $                   | 780    |   |   | $ | 1,150 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | December      31,   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 2007                |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | (in      thousands) |   |
| Patents,      customer relationships and other technologies with identifiable useful      lives                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                   | 11,308 |   |   | $ | 14,521 |   |
| Total      amortizable intangible      assets                                                                             |   |                | 11,308 |   |   |   | 14,521 |   |
| Less:  accumulated      amortization                                                                            |   |                | (3,073 | ) |   |   | (4,126 | ) |
| Amortizable      intangible assets,      net                                                                              |   | $                   | 8,235  |   |   | $ | 10,395 |   |

| Acquisition     |   | 2007   |   |   | 2006   |   |
|-----------------|--------|--------|--------|--------|--------|--------|
| KarlNet         |   | $      | -      |   |   | $      | 2,491 |   |
| Terabeam        |   |   | -      |   |   |   | 3,322 |   |
| Old      Proxim |   |   | -      |   |   |   | 2,109 |   |
| Goodwill        |   | $      | -      |   |   | $      | 7,922 |   |

----

----

|                                                                                                                                                                                                                                                                          |   | December      31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                          |   | 2007              |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                          |   | Cost      Basis   |   |   | Carrying      Value |   |   | Cost      Basis |   |   | Carrying      Value |   |
| Available-for-sale:                                                                                                                                                                                                                                                           |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Equity      investments                                          |   | $                 | -      |   |   | $ | - |   |   | $ | 240 |   |   | $ | 168 |   |
| Total                                                            |   | $                 | -      |   |   | $ | - |   |   | $ | 240 |   |   | $ | 168 |   |

|                                                                                                                                                                                                                                                                                                                                     |   | 2007 |   |   | 2006   |   |   | 2005 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------|--------|--------|--------|--------|--------|------|--------|
| Equity      securities                                                    |   | $    | 99     |   |   | $      | (30    | )    |   | $ | (120 | ) |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | December      31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 2007              |   |   | 2006 |   |
| Building      and      improvements                                                                                       |   | $                 | 580    |   |   | $ | 469 |   |
| Capitalized      software                                                                                                 |   |              | 1,663  |   |   |   | 1,033 |   |
| Equipment                                                                                                                 |   |              | 3,997  |   |   |   | 4,065 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              | 6,240  |   |   |   | 5,567 |   |
| Less:  accumulated      depreciation                                                                            |   |              | (3,698 | ) |   |   | (2,907 | ) |
| Property      and equipment,      net                                                                                     |   | $                 | 2,542  |   |   | $ | 2,660 |   |

|                                                                        |   | Bad      Debt Reserve |   |   | Allowances      And Returns |   |   | Total      Reserves and Allowances |   |
|-----------------------------------------------------------------------------|--------|-----------------------|--------|--------|-----------------------------|--------|--------|------------------------------------|--------|
|                                                                        |   | 2007                  |   |   | 2006                        |   |   | 2007                               |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
| Balance      as of January 1                                           |   | $                     | 1,663  |   |                        | $      | 7,342  |                               |   | $ | 1      ,945 |   |   | $ | 1,786 |   |   | $ | 3,608 |   |   | $ | 9,128 |   |
| Increase      (decrease) to the provision                                   |   |                  | 244    |   |                        |   | 95     |                               |   |   | 6,280 |   |   |   | 8,746 |   |   |   | 6,524 |   |   |   | 8,841 |   |
| Charge      offs and other adjustments made during    the  period |   |                  | (991   | )      |                        |   | (5,774 | )                                  |   |   | (7,097 | ) |   |   | (8,587 | ) |   |   | (8,088 | ) |   |   | (14,361 | ) |
| Balance      as of December 31                                         |   | $                     | 916    |   |                        | $      | 1,663  |                               |   | $ | 1,128 |   |   | $ | 1,945 |   |   | $ | 2,044 |   |   | $ | 3,608 |   |

----

|                                                                                                                                                                                                                                                                                                                                                 |   | Product      Warranty Costs |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                 |   | 2007                        |   |   | 2006 |   |
| Balance      as of      January 1                                                     |   | $                           | 1,102  |   |   | $ | 1,366 |   |
| Warranty      claims provided for                                                                                                                                                                                                                                                                                                                    |   |                        | 567    |   |   |   | 575 |   |
| One      time reduction of excess warranty reserve                                                                                                                                                                                                                                                                                                   |   |                        | (539   | ) |   |   | - |   |
| Settlements      and other provision adjustments                                                                                                                                                                                                                                                                                                     |   |                        | (433   | ) |   |   | (839 | ) |
| Balance      as of      December 31                                                   |   | $                           | 697    |   |   | $ | 1,102 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                |   | December      31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 2007              |   |   | 2006 |   |
| Current      portion of      payable                                                                     |   |              | 1,065  |   |   |   | 868 |   |
| Long      term portion of      payable                                                                   |   |              | 1,023  |   |   |   | 2,088 |   |
| Total      license Agreement      Payable                                                                |   | $                 | 2,088  |   |   | $ | 2,956 |   |

| 2008                     |   | $ | 1,065 |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|---|-------|--------|
| 2009                     |   | $ | 1,023 |   |
| 2010      and beyond                                                                                                         |   | $ | -     |   |

|                                                                                                                                                                                                                                                                                                                |   | December      31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                |   | 2007              |   |   | 2006 |   |   | 2005 |   |
| Current      tax expense (benefit)                                                                                                                                                                                                                                                                                  |   |              |   |   |   |   |   |   |   |
| Federal                                                   |   | $                 | -      |   |   | $ | - |   |   | $ | - |   |
| State                                                     |   |              | 6      |   |   |   | 68 |   |   |   | (16 | ) |
| Foreign                                                   |   |              | 178    |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                |   | $            | 184    |   |   |   | 68 |   |   |   | (16 | )  |
| Deferred      tax expense (benefit)                                                                                                                                                                                                                                                                                 |   |              |   |   |   |   |   |   |   |   |   |   |
| Federal                                                   |   |              | -      |   |   |   | - |   |   |   | - |   |
| State                                                     |   |              | -      |   |   |   | - |   |   |   | - |   |
| Foreign                                                   |   |              | -      |   |   |   | - |   |   |   | - |   |
| Total      Deferred                                                                                                                                                                                                                                                                                                 |   |              | -      |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                |   |              |   |   |   |   |   |   |   |   |   |   |
| Total      Provision                                                                                                                                                                                                                                                                                                |   | $                 | 184    |   |   | $ | 68 |   |   | $ | (16 | ) |

----

|                                                                                                                                                                                                                                                                                                                                                                                                       |   | December      31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2007              |   |   | 2006 |   |   | 2005 |   |
| Tax      expense (benefit) at U.S. statutory rate                                                                                                                                                                                                                                                                                                                                                          |   | $                 | (6,608 | ) |   | $ | (8,107 | ) |   | $ | (3,906 | ) |
| State      income      taxes                                                                             |   |              | 6      |   |   |   | (927 | ) |   |   | (446 | ) |
| Change      in valuation      allowance                                                                  |   |              | 3,236  |   |   |   | 1,917 |   |   |   | 5,430 |   |
| Permanent      tax      differences                                                                      |   |              | -      |   |   |   | 7,185 |   |   |   | (1,073 | ) |
| Non      deductible impairment charges                                                                                                                                                                                                                                                                                                                                                                     |   |              | 2,850  |    |   |   | - |   |   |   | - |   |
| Non      deductible stock compensation expense                                                                                                                                                                                                                                                                                                                                                             |   |              | 698    |   |   |   | - |   |   |   | - |   |
| Other      differences                                                                                   |   |              | 2      |   |   |   | - |   |   |   | (21 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                       |   |              |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income      taxes                                                           |   | $                 | 184    |   |   | $ | 68 |   |   | $ | (16 | ) |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | December      31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2007              |    |   | 2006 |   |
| Deferred      Tax Asset:                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |              |    |   |   |   |
| Federal      and State Net Operating      Loss                                                                     |   | $                 | 8,700   |   |   | $ | 7,560 |   |
| Inventory      valuation      allowance                                                                            |   |              | 1,200   |   |   |   | 1,335 |   |
| Allowance      for bad      debt                                                                                   |   |              | 1,100   |   |   |   | (32 | ) |
| Accruals                                                                                                           |   |              | 1,300   |   |   |   | (91 | ) |
| Total      Deferred Tax Assets                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |              | 12,300  |   |   |   | 8,772 |   |
| Valuation      allowance                                                                                                          |   |              | (12,300 | ) |   |   | (8,772 | ) |
| Net      Deferred Tax Assets                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                 | -       |   |   | $ | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |              |    |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |              |    |   |   |   |   |   |
| Long      Term Deferred Tax Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |              |    |   |   |   |   |   |
| Intangible      and depreciable      assets                                                                        |   | $                 | 200     |   |   | $ | 89 |   |
| Valuation      allowance                                                                                           |   |              | (200    | ) |   |   | (89 | ) |
| Net      deferred tax asset (liabilities)                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                 | -       |   |   | $ | - |   |

----

|                                                 |   |                |   |
|------------------------------------------------------|--------|---------------------|--------|
|                                                 |   | Total               |   |
|                                                 |   | (In thousands) |   |
| Balance      at January 1, 2007                      |   | $                   | -      |   |
| Increases      related to current year tax positions |   |                | -      |   |
|                                                 |   |                |   |   |
| Balance      at December 31, 2007                    |   | $                   | -      |   |

| 2008                              |   | $      | 4,008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------|--------|
| 2009                              |   |   | 1,918 |   |
| 2010                              |   |   | 793   |   |
| 2011                              |   |   | 312   |   |
| 2012                              |   |   | 261   |   |
| Thereafter                        |   |   | 460   |   |
| Total                             |   | $      | 7,752 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                              |   | Warrants      Outstanding |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                              |   | Number      of Shares     |       |   | Per      ShareExercise      Price |   |
| Outstanding      December 31,      2004                                                              |   |                      | 841,465    |   |   | $ | 0.40      – 17.05 |   |
| Warrants      issued                                                                                 |   |                      | -          |   |   | $ | - |   |
| Warrants      exercised                                                                              |   |                      | (31,948    | ) |   | $ | 2.08      – 2.08 |   |
| Warrants      expired/canceled                                                                       |   |                      | (371,047   | ) |   | $ | 0.40      – 17.05 |   |
| Outstanding      December 31,      2005                                                              |   |                      | 438,470    |   |   | $ | 0.40      – 5.68 |   |
| Warrants      issued                                                                                 |   |                      | -          |   |   | $ | - |   |
| Warrants      exercised                                                                              |   |                      | (69,287    | ) |   | $ | 2.08      – 2.27 |   |
| Warrants      expired/canceled                                                                       |   |                      | (215,806   | ) |   | $ | 2.08      – 5.68 |   |
| Outstanding      December 31,      2006                                                              |   |                      | 153,377    |   |   | $ | 0.40      – 2.27 |   |
| Warrants      issued                                                                                 |   |                      | 2,150,000  |   |   | $ | 2.45 |   |
| Warrants      exercised                                                                              |   |                      | -          |   |   | $ | - |   |
| Warrants      anti-dilution      adjustment                                                          |   |                      | 3,244      |   |   | $ | - |   |
| Warrants      expired/canceled                                                                       |   |                      | (1,326,621 | ) |   | $ | 2.02      - $2.45 |   |
| Outstanding      December 31,      2007                                                              |   |                      | 980,000    |   |   | $ | 0.40-$2.45 |   |

| Expiration      Date                                                                                                                                                         |   | Number      of Warrants |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
| 2008                             |   |                    | 55,000  |   |
| 2012                             |   |                    | 925,000 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Options      Outstanding |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Number      of Shares    |      |   | Per      Share Exercise Price |   |
| Balance      at December 31,      2004                                                                                         |   |                     | 1,171,634 |   |   | $ | 0.92      – 161.00 |   |
|     Options      granted                                                                                   |   |                     | 1,488,000 |   |   | $ | 2.35      – 3.34 |   |
|     Options      exercised                                                                                 |   |                     | (102,172  | ) |   | $ | 1.60      – 2.47 |   |
|     Options      expired/canceled                                                                          |   |                     | (514,416  | ) |   | $ | 1.60      – 161.00 |   |
| Balance      at December 31,      2005                                                                                         |   |                     | 2,043,046 |   |   | $ | 0.92      – 161.00 |   |
| Options      granted                                                                                                                          |   |                     | 1,118,750 |   |   | $ | 1.81      – 5.06 |   |
| Options      exercised                                                                                                                        |   |                     | (37,068   | ) |   | $ | 1.60      – 4.00 |   |
| Options      expired/canceled                                                                                                                 |   |                     | (532,636  | ) |   | $ | 1.32      – 17.88 |   |
| Balance      at December 31,      2006                                                                                         |   |                     | 2,592,092 |   |   | $ | 0.92      – 161.00 |   |
| Options      granted                                                                                                                          |   |                     | 1,154,350 |   |   | $ | 1.07      – 3.96 |   |
| Options      exercised                                                                                                                        |   |                     | (1,797    | ) |   | $ | 1.60 |   |
| Options      expired/canceled                                                                                                                 |   |                     | (573,430  | ) |   | $ | 1.44      – 6.35 |   |
| Outstanding      December 31,      2007                                                                                        |   |                     | 3,171,215 |   |   | $ | 0.92      – 161.00 |   |

| Options      Outstanding                      |   |                | Options      Exercisable |   |
|-----------------------------------------------|--------|---------------------|--------------------------|--------|
|                                          |   | NumberOutstanding   |                     |   | WeightedAverageRemaining |   |   | Weighted-Average |   |   | NumberExercisable |   |   | Weighted-Average |   |
| Range      of Exercise Price                  |   | (in      thousands) |                     |   | ContractualLife |   |   | ExercisePrice |   |   | (in      thousands) |   |   | ExercisePrice |   |
| $   0.92      – $ 1.44   |   |                | 462,000                  |   |   |   | 4.9 |   |   |   | 1.36 |   |   |   | 49,166 |   |   | $ | 1.04 |   |
| $   1.63      – $ 1.98   |   |                | 349,733                  |   |   |   | 4.3 |   |   |   | 1.83 |   |   |   | 32,739 |   |   |   | 1.93 |   |
| $   2.12      – $ 2.31   |   |                | 256,250                  |   |   |   | 2.3 |   |   |   | 2.27 |   |   |   | 84,916 |   |   |   | 2.26 |   |
| $   2.35      – $ 2.50   |   |                | 351,968                  |   |   |   | 2.7 |   |   |   | 2.43 |   |   |   | 303,622 |   |   |   | 2.43 |   |
| $   2.53      – $ 2.72   |   |                | 350,000                  |   |   |   | 3.2 |   |   |   | 2.5 |   |   |   | 199,994 |   |   |   | 2.58 |   |
| $   2.73      – $ 3.03   |   |                | 318,148                  |   |   |   | 3.1 |   |   |   | 2.80 |   |   |   | 192,590 |   |   |   | 2.75 |   |
| $   3.34      – $ 3.34   |   |                | 500,000                  |   |   |   | 2.2 |   |   |   | 3.34 |   |   |   | 400,000 |   |   |   | 3.34 |   |
| $   3.76      – $ 3.96   |   |                | 219,793                  |   |   |   | 3.8 |   |   |   | 3.87 |   |   |   | 61,742 |   |   |   | 3.78 |   |
| $   4.00      – $ 5.76   |   |                | 282,226                  |   |   |   | 3.3 |   |   |   | 4.97 |   |   |   | 164,897 |   |   |   | 4.97 |   |
| $   6.35      – $ 161.00 |   |                | 81,097                   |   |   |   | 1.3 |   |   |   | 12.61 |   |   |   | 73,133 |   |   |   | 13.25 |   |
| Total                                         |   |                | 3,171,215                |   |   |   | 3.4 |   |   | $ | 2.97 |   |   |   | 1,562799 |   |   | $ | 3.49 |   |

|                                                                                                                                                                                                                                                                                                                                                       |   | 2007   |                 |   | 2006   |   |            | 2005   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------|--------|--------|--------|-----------------|--------|--------|
| Expected      volatility                                                               |   |   | 157%      - 240      | %      |   |   | 250%      - 284 | %      |   |   | 111 | % |
| Expected      dividends                                                                |   |   | -                    |   |   |   | -               |   |   |   | - |   |
| Expected      term (in      years)                                                     |   |   | 2.5      – 4.0 |   |   |   | 4               |   |   |   | 5 |   |
| Risk-free      rate                                                                    |   |   | 4.3      % - 4.8     | %      |   |   | 4.5%      - 5.0 | %      |   |   | 3.6      % - 3.6 | % |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | December      31,                          |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2007                                       |    |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (in      thousands, except per share data) |    |
| Numerator                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                       |    |   |   |   |   |   |   |
| Net      loss from continuing      operations                                                                                  |   | $                                          | (17,398 | ) |   | $ | (21,315 | ) |   | $ | (8,672 | ) |
| Net      loss from discontinued      operations                                                                                |   |                                       | (1,666  | ) |   |   | (1,848 | ) |   |   | (2,488 | ) |
| Net      loss                                                                                                                  |   | $                                          | (19,064 | ) |   | $ | (23,163 | ) |   | $ | (11,160 | ) |
| Denominator      – weighted average shares:                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                       |    |   |   |   |   |   |   |   |   |   |
| Denominator      for basic earnings loss per      share                                                                        |   |                                       | 23,278  |   |   |   | 21,523 |   |   |   | 21,801 |   |
| Dilutive      effect of stock      options                                                                                     |   |                                       | -       |   |   |   | - |   |   |   | - |   |
| Denominator      for diluted loss per      share                                                                               |   |                                       | 23,278  |   |   |   | 21,523 |   |   |   | 21,801 |   |
| Basic      and diluted loss per share from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                       | (0.75   | ) |   |   | (0.99 | ) |   |   | (0.40 | ) |
| Basic      and diluted loss per share from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                       | (0.07   | ) |   |   | (0.09 | ) |   |   | (0.11 | ) |
| Basic      and diluted loss per      share                                                                                     |   | $                                          | (0.82   | ) |   | $ | (1.08 | ) |   | $ | (0.51 | ) |

----

|                                                                                                                                                                                                                                                                                                                                                                                                   |   | %      of Company Sales |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|
| Region                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2007                    |   |   | 2006 |   |   | 2005 |   |
| U.S  and      Canada                                                             |   |                    | 45     | % |   |   | 42 | % |   |   | 65 | % |
| Latin      America (Mexico, Central, South America, and Caribbean) and      Canada                                                                                                                                                                                                                                                                                                                     |   |                    | 9      | % |   |   | 13 | % |   |   | 8 | % |
| Asia      Pacific (China, Taiwan, Japan, other Pacific territories, Australia, New      Zealand)                                                                                                                                                                                                                                                                                                       |   |                    | 16     | % |   |   | 17 | % |   |   | 11 | % |
| Europe,      Middle East and Africa (E.M.E.A.)                                                                                                                                                                                                                                                                                                                                                         |   |                    | 30     | % |   |   | 28 | % |   |   | 16 | % |

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                             |   | December      31, 2007 |   |   | December      31, 2006 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|
| Revenue      from discontinued      operations                                                                       |   | $                      | 2,181  |   |                   | $      | 2,      677 |   |
| Loss      on disposal of assets from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                    |   |                   | (581   | )      |                   |   | - |   |
| Operating      loss from discontinued      operations                                                                |   |                   | (1,085 | )      |                   |   | (1,848 | ) |
| Net      loss from discontinued      operations                                                                      |   | $                      | (1,666 | )      |                   | $      | (1,848 | ) |

| (in      thousands)                        |   | December      31, 2007 |   |   | December      31, 2006 |   |
|--------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|
| Current      assets                        |   | $                      | 69     |   |                   | $      | 680 |   |
| Property,      plant and equipment         |   |                   | -      |   |                   |   | 171 |   |
| Other      long-term assets                |   |                   | 11     |   |                   |   | 191 |   |
| Current      liabilities                   |   |                   | (33    | )      |                   |   | (212 | ) |
| Net      assets of discontinued operations |   | $                      | 47     |   |                   | $      | 830 |   |

| Quarter      Results (Unaudited)(in      thousands, except per share data)                                                                                                                                                                                                                                                   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 2007                                                                                                                                                                                                                                                                                                                              |   | First |   |   | Second |   |   | Third |   |   | Fourth |   |
| Revenue                                                                                                                                                                                                                                                                                                                           |   | $ | 16,674 |   |   | $ | 18,116 |   |   | $ | 16,903 |   |   | $ | 14,587 |   |
| Gross      profit                                                                                                                                                                                                                                                                                                                 |   |   | 7,634 |   |   |   | 8,249 |   |   |   | 8,286 |   |   |   | 4,800 |   |
| Net      income (loss) from continuing operations                                                                                                                                                                                                                                                                                 |   |   | (2,726 | ) |   |   | 83 |   |   |   | (1,658 | ) |   |   | (13,097 | ) |
| Net      income (loss) from discontinued operations                                                                                                                                                                                                                                                                               |   |   | (260 | ) |   |   | (422 | ) |   |   | (1,078 | ) |   |   | 94 |   |
| Net      income      (loss)                                                  |   |   | (2,986 | ) |   |   | (339 | ) |   |   | (2,736 | ) |   |   | (13,003 | ) |
| Basic      and diluted earnings (loss) per share                                                                                                                                                                                                                                                                                  |   | $ | (0.14 | ) |   | $ | (0.02 | ) |   | $ | (0.11 | ) |   | $ | (0.52 | ) |

| Quarter      Results (Unaudited) (in      thousands, except per share data) |   |
|---------------------------------------------------------------------------------------|--------|
| 2006                                                                                  |   | First |   |   | Second |   |   | Third |   |   | Fourth |   |
| Revenue                                                                               |   | $ | 17,646 |   |   | $ | 20,037 |   |   | $ | 17,322 |   |   | $ | 17,702 |   |
| Gross      profit                                                                     |   |   | 7,369 |   |   |   | 8,554 |   |   |   | 6,502 |   |   |   | 8,220 |   |
| Net      income (loss) from continuing operations                                     |   |   | (4,205 | ) |   |   | (2,563 | ) |   |   | (13,079 | ) |   |   | (1,468 | ) |
| Net      income (loss) from discontinued operations                                   |   |   | (278 | ) |   |   | (422 | ) |   |   | (585 | ) |   |   | (563 | ) |
| Net      income (loss)                                                                |   |   | (4,483 | ) |   |   | (2,985 | ) |   |   | (13,664 | ) |   |   | (2,031 | ) |
| Basic      and diluted earnings (loss) per share                                      |   | $ | (0.21 | ) |   | $ | (0.14 | ) |   | $ | (0.63 | ) |   | $ | (0.09 | ) |

----

----

----

|   | · | If,      at any time before August 20, 2008, the bid price of the company’s common      stock closes at $1.00 per share or more for a minimum of 10 consecutive      business days, NASDAQ will provide written notification that the company      complies with NASDAQ Marketplace Rule  4310(c)(4). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If      compliance with that rule cannot be demonstrated by August 20, 2008,      NASDAQ will determine whether the company meets the NASDAQ Capital Market      initial listing criteria set forth in NASDAQ Marketplace Rule 4310(c),      except for the bid price requirement.  If the company meets the      initial listing criteria, NASDAQ will notify the company that it has been      granted an additional 180 calendar day compliance  period. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If      the company is not eligible for an additional compliance period, NASDAQ      will provide written notification that the company’s securities will be      delisted.  In that event, the company could appeal NASDAQ’s      determination to delist its securities to a NASDAQ Listing Qualifications      Panel. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                         |   | Balance      at thebeginning      of theperiod |   |   | Additions |   |   | Deductions |   |   | Balance      at theend      of the period |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|--------|-----------|--------|--------|------------|--------|--------|-------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                         |   |                                           |   |   |      |   |   |       |   |   |                                      |   |
| December      31, 2005:                                                                                                                                                                                                                                                                                                                      |   |                                           |   |   |      |   |   |       |   |   |                                      |   |
| Allowance      for uncollectible accounts, returns and discounts                                                                                                                                                                                                                                                                             |   | $                                              | 590    |   |      | $      | 9,245  |       |   | $      | (707                                      | )      |   | $ | 9,128 |   |
| Inventory      allowance                                                           |   |                                           | 600    |   |      |   | 10,701 |       |   |   | (2,334                                    | )      |   |   | 8,967 |   |
| Deferred      tax      allowance                                                   |   |                                           | 1,514  |   |      |   | 5,430  |       |   |   | -                                         |   |   |   | 6,944 |   |
|                                                                                                                                                                                                                                                                                                                                         |   |                                           |   |   |      |   |   |       |   |   |                                      |   |   |   |   |   |
| December      31, 2006:                                                                                                                                                                                                                                                                                                                      |   |                                           |   |   |      |   |   |       |   |   |                                      |   |   |   |   |   |
| Allowance      for uncollectible accounts, returns and discounts                                                                                                                                                                                                                                                                             |   | $                                              | 9,128  |   |      | $      | 8,841  |       |   | $      | (14,361                                   | )      |   | $ | 3,608 |   |
| Inventory      allowance                                                           |   |                                           | 8,967  |   |      |   | 1,920  |       |   |   | (1,234                                    | )      |   |   | 9,653 |   |
| Deferred      tax      allowance                                                   |   |                                           | 6,944  |   |      |   | 1,917  |       |   |   | -                                         |   |   |   | 8,861 |   |
|                                                                                                                                                                                                                                                                                                                                         |   |                                           |   |   |      |   |   |       |   |   |                                      |   |   |   |   |   |
| December      31, 2007:                                                                                                                                                                                                                                                                                                                      |   |                                           |   |   |      |   |   |       |   |   |                                      |   |   |   |   |   |
| Allowance      for uncollectible accounts, returns and discounts                                                                                                                                                                                                                                                                             |   | $                                              | 3,608  |   |      | $      | 6,524  |       |   | $      | (8,088                                    | )      |   | $ | 2,044 |   |
| Inventory      allowance                                                           |   |                                           | 9,653  |   |      |   | 3,221  |       |   |   | (5,375                                    | )      |   |   | 7,499 |   |
| Deferred      tax      allowance                                                   |   |                                           | 8,861  |   |      |   | 3,639  |       |   |   | -                                         |   |   |   | 12,500 |   |

----

----

----

----

|                                 | PROXIM      WIRELESS CORPORATION |
|--------------------------------------|----------------------------------|
|                                 |                             |   |
| Date:  March      28, 2008 | By:                              | /s/      Pankaj S. Manglik |
|                                 |                             | Pankaj      S. Manglik, |
|                                 |                             | Chief      Executive Officer |
|                       |                             |   |

| Signature                                                   |   | Title                                                                                              |   | Date                      |
|-------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|--------|---------------------------|
|  /s/      Pankaj S. Manglik Pankaj      S. Manglik     |   |  Chief      Executive Officer, President, and Director (principal executive      officer)     |   |  March      28, 2008 |
|  /s/      Brian J. Sereda Brian      J. Sereda         |   |  Chief      Financial Officer and Treasurer (principal financial and      accounting officer) |   |  March      28, 2008 |
|  /s/      Daniel A. Saginario Daniel      A. Saginario |   |  Director                                                                                     |   |  March      28, 2008 |
|  /s/      John W. Gerdelman John      W. Gerdelman     |   |  Director                                                                                     |   |  March      28, 2008 |
|  /s/      J. Michael Gullard J.      Michael Gullard   |   |  Director                                                                                     |   |  March      28, 2008 |
|  /s/      Alan B. Howe Alan      B. Howe               |   |  Director                                                                                     |   |  March      28, 2008 |
|  /s/      Robert A. Wiedemer Robert      A. Wiedemer   |   |  Director                                                                                     |   |  March      28, 2008 |

----

| ExhibitNumber | Description      of Document                                                                                                                                                                        |   |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 2.1           | Asset      Purchase Agreement by and between the Registrant and Proxim Corporation,      Proxim Wireless Networks, Inc., and Proxim International Holdings, Inc.      dated as of July 18, 2005 (1) |   |
|          |                                                                                                                                                                                                |   |
| 2.2           | Agreement      and Plan of Merger by and among the Registrant, T-Rex Acquisition      Corporation, and Terabeam Corporation dated as of April 14, 2004      (2)                                     |   |
|          |                                                                                                                                                                                                |   |
| 2.3           | Agreement      and Plan of Merger by and among the Registrant, KFire Merger Corporation,      KarlNet, Inc., Douglas J. Karl, and Elise L. Karl dated as of May 13, 2004      (3)                   |   |
|          |                                                                                                                                                                                                |   |
| 3.1           | Certificate      of Incorporation of the Registrant as filed with the Delaware Secretary of      State on May 5, 2003 (4)                                                                           |   |
|          |                                                                                                                                                                                                |   |
| 3.2           | Certificate      of Merger of Telaxis Communications Corporation with and into YDI      Wireless, Inc. as filed with the Delaware Secretary of State on July 7,      2003 (4)                       |   |
|          |                                                                                                                                                                                                |   |
| 3.3           | Certificate      of Ownership and Merger as filed with the Delaware Secretary of State on      November 3, 2005 (5)                                                                                 |   |
|          |                                                                                                                                                                                                |   |
| 3.4           | Certificate      of Ownership and Merger as filed with the Delaware Secretary of State on      September 4, 2007 (6)                                                                                |   |
|          |                                                                                                                                                                                                |   |
| 3.5           | By-laws      of the Registrant (4)                                                                                                                                                                  |   |
|          |                                                                                                                                                                                                |   |
| 3.6           | Amendment      1 to By-laws of Registrant (7)                                                                                                                                                       |   |
|          |                                                                                                                                                                                                |   |
| 4.1           | Form      of certificate evidencing ownership of common stock of the      Registrant                                                                                                                |   |
|          |                                                                                                                                                                                                |   |
| 4.2           | Rights      Agreement by and between the Registrant and Registrar and Transfer      Company, as Rights Agent dated as of May 18, 2001 (8)                                                           |   |
|          |                                                                                                                                                                                                |   |
| 4.3           | Amendment      No. 1 to Rights Agreement by and between the Registrant and Registrar and      Transfer Company, as Rights Agent dated as of September 9, 2002      (9)                              |   |
|          |                                                                                                                                                                                                |   |
| 4.4           | Amendment      No. 2 to Rights Agreement by and between the Registrant and Registrar and      Transfer Company, as Rights Agent dated as of March 17, 2003      (10)                                |   |
|          |                                                                                                                                                                                                |   |
| 4.5           | Amendment      No. 3 to Rights Agreement by and between the Registrant and Registrar and      Transfer Company, as Rights Agent dated as of May 15, 2003    (4)                                     |   |
|          |                                                                                                                                                                                                |   |
| 10.1*         | 1996      Stock Plan of the Registrant (11)                                                                                                                                                         |   |
|          |                                                                                                                                                                                                |   |
| 10.2*         | Amendment      No. 1 to 1996 Stock Plan of the Registrant (12)                                                                                                                                      |   |
|          |                                                                                                                                                                                                |   |
| 10.3*         | 1997      Stock Plan of the Registrant (11)                                                                                                                                                         |   |
|          |                                                                                                                                                                                                |   |
| 10.4*         | Amendment      No. 1 to 1997 Stock Plan of the Registrant (12)                                                                                                                                      |   |
|          |                                                                                                                                                                                                |   |
| 10.5*         | 1999      Stock Plan of the Registrant (11)                                                                                                                                                         |   |
|          |                                                                                                                                                                                                |   |
| 10.6*         | Amendment      No. 1 to 1999 Stock Plan of the Registrant (12)                                                                                                                                      |   |
|          |                                                                                                                                                                                                |   |
| 10.7*         | 2001      Nonqualified Stock Plan of the Registrant (13)                                                                                                                                            |   |
|          |                                                                                                                                                                                                |   |
| 10.8*         | Amendment      No. 1 to 2001 Nonqualified Stock Plan of the Registrant    (12)                                                                                                                      |   |
|          |                                                                                                                                                                                                |   |
| 10.9*         | Young      Design, Inc. 2002 Stock Incentive Plan (14)                                                                                                                                              |   |
|          |                                                                                                                                                                                                |   |
| 10.10*        | 2004      Stock Plan of the Registrant (12)                                                                                                                                                         |   |
|          |                                                                                                                                                                                                |   |
| 10.11*        | Amendment      No. 1 to 2004 Stock Plan of the Registrant (15)                                                                                                                                      |   |
|          |                                                                                                                                                                                                |   |
| 10.12*        | Amendment      No. 2 to 2004 Stock Plan of the Registrant (16)                                                                                                                                      |   |
|          |                                                                                                                                                                                                |   |

----

| ExhibitNumber | Description      of Document                                                                                                                                                                                        |   |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10.13*        | Form      of Non-Qualified Stock Option Agreement to be issued to Directors of the      Registrant upon Initial Election or Appointment to Board of Directors      (17)                                             |   |
|          |                                                                                                                                                                                                                |   |
| 10.14*        | Form      of Non-Qualified Stock Option Agreement to be issued to Incumbent      Directors of the Registrant on an Annual Basis (17)                                                                                |   |
|          |                                                                                                                                                                                                                |   |
| 10.15*        | Form      of Incentive Stock Option Agreement for Executive Officers      (18)                                                                                                                                      |   |
|          |                                                                                                                                                                                                                |   |
| 10.16*        | Form      of Indemnification Agreement, a substantially similar version of which was      entered between the Registrant and each of Messrs. Fitzgerald, Saginario,      Wiedemer, and Renauld (19)                 |   |
|          |                                                                                                                                                                                                                |   |
| 10.17*        | Policy      Statement Concerning the Compensation of Directors of the Registrant who      are not Insiders, dated February 9, 2005 (17)                                                                             |   |
|          |                                                                                                                                                                                                                |   |
| 10.18*        | Employment      Agreement between the Registrant and Pankaj S. Manglik dated as of January      16, 2008 (20)                                                                                                       |   |
|          |                                                                                                                                                                                                                |   |
| 10.19*        | Form      of Incentive Stock Option Agreement between the Registrant and Pankaj S.      Manglik dated as of May 19, 2006 (16)                                                                                       |   |
|          |                                                                                                                                                                                                                |   |
| 10.20*        | Non-Qualified      Stock Option Agreement between the Registrant and Pankaj S. Manglik dated      as of January 28, 2008 (21)                                                                                       |   |
|          |                                                                                                                                                                                                                |   |
| 10.21*        | Amended      and Restated Employment Agreement between the Registrant and David L.      Renauld dated as of October 25, 2007 (22)                                                                                   |   |
|          |                                                                                                                                                                                                                |   |
| 10.22*        | Letter      Employment Agreement between the Registrant and Brian J. Sereda dated      August 2, 2006 (18)                                                                                                          |   |
|          |                                                                                                                                                                                                                |   |
| 10.23*        | Employment      Agreement by and between Proxim Wireless Corporation and Geoff Smith dated      December 8, 2005 (23)                                                                                               |   |
|          |                                                                                                                                                                                                                |   |
| 10.24*        | Employment      Agreement between the Registrant and Robert E. Fitzgerald dated as of      February 9, 2005 (17)                                                                                                    |   |
|          |                                                                                                                                                                                                                |   |
| 10.25*        | Non-Qualified      Stock Option Agreement between the Registrant and Robert E. Fitzgerald      dated as of February 9, 2005 (17)                                                                                    |   |
|          |                                                                                                                                                                                                                |   |
| 10.26*        | Separation      Agreement and Release between the Registrant and Robert E. Fitzgerald      dated as of February 25, 2008 (24)                                                                                       |   |
|          |                                                                                                                                                                                                                |   |
| 10.27*        | Letter      Employment Agreement between the Registrant and Len Eisenstein dated May      24, 2006 (25)                                                                                                             |   |
|          |                                                                                                                                                                                                                |   |
| 10.28*        | Employment      Agreement by and between the Registrant and David F. Olson dated July 27,      2005 (26)                                                                                                            |   |
|          |                                                                                                                                                                                                                |   |
| 10.29*        | Amended      and Restated Employment Agreement by and between Proxim Wireless      Corporation and David F. Olson and consented to by the Registrant, dated      December 8, 2005 (23)                              |   |
|          |                                                                                                                                                                                                                |   |
| 10.30         | Secured      Promissory Note from KarlNet, Inc. in favor of the Registrant dated May      13, 2004 (3)                                                                                                              |   |
|          |                                                                                                                                                                                                                |   |
| 10.31         | Security      Agreement between KarlNet, Inc. and the Registrant dated as of May 13,      2004 (3)                                                                                                                  |   |
|          |                                                                                                                                                                                                                |   |
| 10.32         | Lease      Agreement by and between Young Design, Inc. and Merry Fields, LLC dated as      of August 24, 2000 (4)                                                                                                   |   |
|          |                                                                                                                                                                                                                |   |
| 10.33         | Office      Lease by and between Ricochet Networks, Inc. and 1400 Glenarm Place      Venture dated as of February 1, 2005, with related Guaranty by the      Registrant in favor of 1400 Glenarm Place Venture (27) |   |

----

| ExhibitNumber | Description      of Document                                                                                                                                                                                                                                                                                                                                     |   |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10.34         | Intellectual      Property Agreement by and between Agere Systems, Inc. and Proxim      Corporation dated August 5, 2002 (26)                                                                                                                                                                                                                                    |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.35         | Patent      License Agreement by and between Agere Systems Guardian Corporation, Agere      Systems, Inc. and Proxim Corporation dated August 5, 2002    (26)                                                                                                                                                                                                    |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.36         | Supply      Agreement by and between Agere Systems, Inc. and Proxim Corporation dated      August 5, 2002 (26)                                                                                                                                                                                                                                                   |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.37         | Lease,      dated as of May 10, 2005, by and between CarrAmerica Realty Operating      Partnership, L.P. and Proxim Corporation (28)                                                                                                                                                                                                                             |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.38         | First      Amendment to Lease by and between the Registrant and CarrAmerica Realty      Operating Partnership, L.P. dated as of October 31, 2005    (29)                                                                                                                                                                                                         |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.39         | Lease      Agreement by and between the Registrant and Adom Realty Trust dated      October 7, 2005 (30)                                                                                                                                                                                                                                                         |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.40         | Settlement      Agreement between the Registrant and Symbol Technologies, Inc. dated as of      February 24, 2006 (31)                                                                                                                                                                                                                                           |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.41         | Assignment      Agreement dated as of April 24, 2007 between the Registrant and SPH      America, LLC (32)                                                                                                                                                                                                                                                       |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.42         | Assignment      Agreement dated as of April 24, 2007 among the Registrant and SPH America,      LLC (32)                                                                                                                                                                                                                                                         |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.43         | Purchase      Agreement dated as of July 19, 2007 among the Registrant and each investor      named therein (33)                                                                                                                                                                                                                                                 |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.44         | Registration      Rights Agreement dated as of July 23, 2007 among the Registrant and each      investor named therein (33)                                                                                                                                                                                                                                      |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.45         | Form      of warrant issued July 23, 2007 (33)                                                                                                                                                                                                                                                                                                                   |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.46         | Purchase      and Release Agreement dated as of November 1, 2007 among the Registrant      and SRB Greenway Capital (Q.P.), L.P., SRB Greenway Capital, L.P., and SRB      Greenway Offshore Operating Fund, L.P. and Steven R. Becker      (34)                                                                                                                 |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.47         | Purchase      and Release Agreement dated as of November 2, 2007 among the Registrant      and Clarion Capital Corporation, Clarion World Offshore Fund, Ltd., The      Amended & Restated Declaration of Trust of Morton A. Cohen, Dated May      9, 2005, and Shaker Investments Tower, L.P. and Morton A. Cohen      and Edward Hemmelgarn (34) |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 21.1          | Subsidiaries      of the Registrant                                                                                                                                                                                                                                                                                                                              |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 23.1          | Consent      of Fitzgerald, Snyder & Co., P.C.                                                                                                                                                                                                                                                                                                               |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 31.1          | Certification      of Chief Executive Officer Pursuant to Rule 13a-14(a)                                                                                                                                                                                                                                                                                         |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 31.2          | Certification      of Chief Financial Officer Pursuant to Rule 13a-14(a)                                                                                                                                                                                                                                                                                         |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 32.1          | Certification      Pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of      2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of      the United States Code)                                                                                                                                                          |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 99.1          | Form      of Noncompetition Agreement, a substantially similar version of which was      entered between the Registrant and each of Douglas J. Karl and Elise L.      Karl dated as of May 13, 2004 (3)                                                                                                                                                          |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 99.2          | Stock      Purchase Agreement by and between the Registrant and Ricochet Investments,      LLC dated as of June 25, 2004 (35)                                                                                                                                                                                                                                    |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 99.3          | Non-Competition      and Confidentiality Agreement by and among Victor Mitchell, Ricochet      Networks, Inc., and the Registrant dated as of June 25, 2004      (35)                                                                                                                                                                                            |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 99.4          | Guarantee      from Victor Mitchell in favor of the Registrant dated as of June 25, 2004      (35)                                                                                                                                                                                                                                                               |   |
|          |                                                                                                                                                                                                                                                                                                                                                             |   |
| 99.5          | Asset      Purchase Agreement dated as of July 31, 2007 between Ricochet Networks,      Inc. and Civitas Wireless Solutions, LLC and joined in by Judi A. Evans      (36)                                                                                                                                                                                        |   |

----

| ExhibitNumber | Description      of Document                                                                                                                             |   |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 99.6          | Intellectual      Property Transfer and License Agreement dated as of July 31, 2007 between      the Registrant and Civitas Wireless Solutions, LLC (36) |   |
|          |                                                                                                                                                     |   |
| 99.7          | License      Agreement dated as of July 31, 2007 between the Registrant and Civitas      Wireless Solutions, LLC (36)                                    |   |

| (1)  | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on July      22, 2005.                           |
|------|---------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      April 16, 2004.                          |
| (3)  | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on May      20, 2004.                            |
| (4)  | Incorporated      herein by reference to the exhibits to Form 10-Q filed with the SEC on      August 14, 2003.                        |
| (5)  | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      November 4, 2005.                        |
| (6)  | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      September 6, 2007.                       |
| (7)  | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on May      29, 2007.                            |
| (8)  | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on May      21, 2001.                            |
| (9)  | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      September 12, 2002.                      |
| (10) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      March 20, 2003.                          |
| (11) | Incorporated      herein by reference to the exhibits to Form S-1 filed with the SEC on      September 27, 1999 (File No. 333-87885). |
| (12) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      September 15, 2004.                      |
| (13) | Incorporated      herein by reference to the exhibits to Form 10-Q filed with the SEC on      August 10, 2001.                        |
| (14) | Incorporated      herein by reference to the exhibits to Form S-8 filed with the SEC on      April 11, 2003 (File No. 333-104481).    |
| (15) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on May      27, 2005.                            |
| (16) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on May      25, 2006.                            |
| (17) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      February 15, 2005.                       |
| (18) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      August 4, 2006.                          |
| (19) | Incorporated      herein by reference to the exhibits to Form 10-Q filed with the Commission      on November 14, 2000.               |
| (20) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      January 16, 2008.                        |
| (21) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      February 1, 2008.                        |
| (22) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      October 30, 2007.                        |
| (23) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      December 12, 2005.                       |
| (24) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      February 28, 2008.                       |
| (25) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on July      31, 2006.                           |
| (26) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      August 2, 2005.                          |
| (27) | Incorporated      herein by reference to the exhibits to Form 10-K filed with the SEC on      March 31, 2005.                         |
| (28) | Incorporated      herein by reference to the exhibits to Form 10-Q filed with the SEC on      August 15, 2005.                        |
| (29) | Incorporated      herein by reference to the exhibits to Form 10-K filed with the SEC on      March 30, 2006.                         |
| (30) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      October 26, 2005.                        |
| (31) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      February 28, 2006.                       |
| (32) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      April 30, 2007.                          |
| (33) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on July      24, 2007.                           |
| (34) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      November 6, 2007.                        |
| (35) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on July      8, 2004.                            |
| (36) | Incorporated      herein by reference to the exhibits to Form 8-K filed with the SEC on      August 6, 2007.                          |