**For      Further Information Contact:**

**FOR      IMMEDIATE RELEASE**

**TERABEAM      ANNOUNCES **

**FOURTH      QUARTER AND FULL YEAR 2005 FINANCIAL RESULTS**

**San      Jose, CA, February 28, 2006**

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**About      Terabeam**

**Safe      Harbor Statement**

*Statements      in this press release that are not statements of historical facts are      forward-looking statements that involve risks, uncertainties, and assumptions.      Terabeam’s actual results may differ materially from the results anticipated in      these forward-looking statements. The forward-looking statements involve risks      and uncertainties that could contribute to such differences including those      relating to and arising from the ongoing uncertainty in the telecommunications      industry and larger economy; the intense competition in our industries and      resulting impacts on our pricing, gross margins, and general financial      performance; difficulties or delays in developing and supplying new products      with the contemplated or desired features, performance, compliances,      certifications, cost, price, and other characteristics; the difficulties in      predicting Terabeam’s future financial performance; Terabeam’s      recent*

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*acquisition      of Proxim Corporation’s operations, assets, and relationships; and the impacts      and effects of any other strategic transactions Terabeam may evaluate or      consummate. Further information on these and other factors that could affect      Terabeam’s actual results is and will be included in filings made by Terabeam      from time to time with the Securities and Exchange Commission and in its other      public statements.*

*-      Financial Tables Follow -*

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| **TERABEAM,                INC.**                                                                                                                                                                                                                       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED                BALANCE SHEETS**                                                                                                                                                                                                          |
| **(in                thousands, except per share data)**                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                    |   | **December                31,** |   | **December                31,** |   |
|                                                                                                                                                                                                                                                    |   | **2005** |   | **2004** |   |
| **Assets**                                                                                                                                                                                                                                              |   |   | **(unaudited** | **)** |   |   |   |
| Current                assets:                                                                                                                                                                                                                          |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                                                |   | $ | 14,133 |   | $ | 35,368 |   |
| Investment                securities - available-for-sale                                                                                                                                                                                               |   |   | 260 |   |   | 5,369 |   |
| Accounts                receivable, net                                                                                                                                                                                                                 |   |   | 8,378 |   |   | 2,972 |   |
| Refundable                income taxes                                                                                                                                                                                                                  |   |   | - |   |   | 151 |   |
| Inventory                                                                                                                                                                                                                                               |   |   | 10,070 |   |   | 7,442 |   |
| Prepaid                expenses                                                                                                                                                                                                                         |   |   | 1,322 |   |   | 253 |   |
| Total                current assets                                                                                                                                                                                                                     |   |   | 34,163 |   |   | 51,555 |   |
| Property                and equipment, net                                                                                                                                                                                                              |   |   | 3,924 |   |   | 2,511 |   |
| Other                Assets:                                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| Restricted                cash                                                                                                                                                                                                                          |   |   | 5,076 |   |   | 5,136 |   |
| Goodwill                                                                                                                                                                                                                                                |   |   | 7,380 |   |   | 6,072 |   |
| Intangible                assets, net                                                                                                                                                                                                                   |   |   | 23,817 |   |   | 11,919 |   |
| Deposits                                                                                                                                                                                                                                                |   |   | 398 |   |   | 91 |   |
| Total                other assets                                                                                                                                                                                                                       |   |   | 36,671 |   |   | 23,218 |   |
| Total                assets                                                                                                                                                                                                                             |   | $ | 74,758 |   | $ | 77,284 |   |
| **Liabilities                and Stockholders’ Equity**                                                                                                                                                                                           |   |   |   |   |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| Accounts                payable and accrued expenses                                                                                                                                                                                                    |   | $ | 15,569 |   | $ | 6,965 |   |
| Deferred                revenue                                                                                                                                                                                                                         |   |   | 2,503 |   |   | 159 |   |
| License                agreement payable - current maturities                                                                                                                                                                                           |   |   | 981 |   |   | - |   |
| Current                maturities of notes payable - other current liabilities                                                                                                                                                                          |   |   | 31 |   |   | 2,899 |   |
| Total                current liabilities                                                                                                                                                                                                                |   |   | 19,084 |   |   | 10,023 |   |
| License                agreement payable, net of current maturities                                                                                                                                                                                     |   |   | 2,956 |   |   |   |   |
| Notes                payable, net of current maturities                                                                                                                                                                                                 |   |   | - |   |   | 1,270 |   |
| Total                liabilities                                                                                                                                                                                                                        |   |   | 22,040 |   |   | 11,293 |   |
| Commitments                and contingencies                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| **Stockholders’                Equity**                                                                                                                                                                                                           |   |   |   |   |   |   |   |
| Preferred                stock, $0.01 par value; authorized 4,500,000, none issued at December                31,                2005 and December 31, 2004                                                                                             |   |   | - |   |   | - |   |
| Common                stock, $0.01 par value, 100,000,000 shares authorized, 21,446,217                issued                and outstanding at December 31, 2005 and 22,845,847 issued with 22,345,847                outstanding at December 31, 2004 |   |   | 214 |   |   | 228 |   |
| Additional                paid-in capital                                                                                                                                                                                                               |   |   | 56,638 |   |   | 59,637 |   |
| Retained                earnings                                                                                                                                                                                                                        |   |   | (4,122 | ) |   | 7,277 |   |
| Treasury                stock                                                                                                                                                                                                                           |   |   | - |   |   | (1,155 | ) |
| Accumulated                other comprehensive income:                                                                                                                                                                                                  |   |   |   |   |   |   |   |
| Net                unrealized gain (loss) on available-for-sale securities                                                                                                                                                                              |   |   | (12 | ) |   | 4 |   |
| Total                stockholders’ equity                                                                                                                                                                                                         |   |   | 52,718 |   |   | 65,991 |   |
| Total                liabilities and stockholders’ equity                                                                                                                                                                                         |   | $ | 74,758 |   | $ | 77,284 |   |

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| **TERABEAM,                INC.**                                        |
|--------------------------------------------------------------------------|
| **CONSOLIDATED                STATEMENTS OF OPERATIONS**                 |
| **(in                thousands, except per share data)**                 |
|                                                                     |   |
|                                                                     |   | **For                  the Three Months Ended**December 31,  |   | **For                the Year Ended****December                31,**  |   |
|                                                                     |   | **2005****(unaudited)** |   | **2004****(unaudited)** |   | **2005****(unaudited)** |   | **2004** |   |
| Revenues                                                                 |   | $ | 27,073 |   | $ | 5,777 |   | $ | 58,982 |   | $ | 22,897 |   |
| Cost                of goods sold                                        |   |   | 14,421 |   |   | 2,988 |   |   | 31,930 |   |   | 13,414 |   |
| Restructuring                provision for excess and obsolete inventory |   |   | - |   |   | - |   |   | 2,143 |   |   | - |   |
| Gross                profit                                              |   |   | 12,652 |   |   | 2,789 |   |   | 24,909 |   |   | 9,483 |   |
| Operating                expenses:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling                costs                                             |   |   | 3,958 |   |   | 758 |   |   | 9,789 |   |   | 2,557 |   |
| Restructuring                charges                                     |   |   | - |   |   | - |   |   | 944 |   |   | - |   |
| Restructuring                charge for impairment of intangible assets  |   |   | - |   |   | - |   |   | 4,664 |   |   | - |   |
| Impairment                of service reporting unit goodwill             |   |   | 200 |   |   | - |   |   | 200 |   |   | - |   |
| General                and administrative                                |   |   | 4,275 |   |   | 2,688 |   |   | 12,902 |   |   | 9,976 |   |
| Research                and development                                  |   |   | 3,562 |   |   | 911 |   |   | 8,000 |   |   | 2,949 |   |
| Total                operating expenses                                  |   |   | 11,995 |   |   | 4,357 |   |   | 36,499 |   |   | 15,482 |   |
| Operating                income (loss)                                   |   |   | 657 |   |   | (1,568 | ) |   | (11,590 | ) |   | (5,999 | ) |
| Other                income (expenses):                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                           |   |   | 83 |   |   | 400 |   |   | 695 |   |   | 810 |   |
| Interest                expense                                          |   |   | (21 | ) |   | (70 | ) |   | (161 | ) |   | (209 | ) |
| Gain                on sale of Phazar stock                              |   |   | - |   |   | 3,882 |   |   | - |   |   | 3,882 |   |
| Other                income (expense)                                    |   |   | 87 |   |   | (341 | ) |   | (19 | ) |   | 168 |   |
| Total                other income (expenses)                             |   |   | 149 |   |   | 3,871 |   |   | 515 |   |   | 4,651 |   |
| Income                (loss) before income taxes                         |   |   | 806 |   |   | 2,303 |   |   | (11,075 | ) |   | (1,348 | ) |
| Benefit                (provision) for income taxes                      |   |   | 5 |   |   | 4 |   |   | 16 |   |   | 2 |   |
| Income                (loss) before minority interest                    |   |   | 811 |   |   | 2,307 |   |   | (11,059 | ) |   | (1,346 | ) |
| Minority                interest in net income of Merry Fields           |   |   | - |   |   | - |   |   | (101 | ) |   | - |   |
| Net                income (loss)                                         |   | $ | 811 |   | $ | 2,307 |   |   | ($11,160 | ) |   | ($1,346 | ) |
|                                                                     |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Weighted                average shares - basic                           |   |   | 21,414 |   |   | 22,784 |   |   | 21,801 |   |   | 19,792 |   |
| Earnings                (loss) per share - basic                         |   | $ | 0.04 |   | $ | 0.10 |   |   | ($0.51 | ) |   | ($0.07 | ) |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average shares - diluted                         |   |   | 21,589 |   |   | 23,213 |   |   | 21,801 |   |   | 19,792 |   |
| Earnings                (loss) per share - diluted                       |   | $ | 0.04 |   | $ | 0.10 |   |   | ($0.51 | ) |   | ($0.07 | ) |