**For      Further Information Contact:**

**FOR      IMMEDIATE RELEASE**

**TERABEAM      ANNOUNCES SECOND QUARTER 2007 FINANCIAL RESULTS**

*Demonstrates      Sequential Revenue Growth, Improved Focus and Cost Reductions*

**San      Jose, CA, August 13, 2007 – **

**Cost      Structure Outlook**

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**Recent      Achievements**

|   | · | Quarter-on-quarter                revenue growth of 16% in our broadband wireless access products,                consisting of Wi-Fi mesh, pre-WiMAX and WiMAX                products. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Completion                of the sale of two patents for $2.5 million in April. Terabeam has                more                than 120 additional patents remaining, which may provide future                opportunities to monetize the company’s intellectual                property. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Completion                of a $7.5 million private equity placement in July. Note that this                transaction closed after the end of the second quarter, therefore                its                impact is not reflected in the second quarter 2007 financial                statements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Completion                of the sale of Ricochet Networks’ on-going business to Civitas Wireless                Solutions and the shut down of the Ricochet San Diego network in                July. The                divestiture of Ricochet’s ISP operations represents an important milestone                as Terabeam can now focus on Proxim’s core-to-client broadband wireless                equipment business. As with the private placement, this transaction                closed                after the end of the second quarter, therefore its impact is not                reflected                in the second quarter 2007 financial                statements. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Restructuring                of engineering operations to shift additional research and development                activities to Hyderabad, India. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Execution                of programs to reduce freight, warehousing and other manufacturing                costs. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

**Conference      Call Information**

**About      Terabeam**

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**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 uncertainties      about our ability to realize the cost savings contemplated in this release;      the      possibility that any cost savings may be reduced by increased spending in other      areas; the possibilities that the transactions described in this release could      result in increased liabilities and other adverse consequences; difficulties      in      predicting Terabeam’s future financial performance; 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, which difficulties      may      be exacerbated by our recent cost savings initiatives; and the reactions,      positive or negative, of customers, investors, employees, competitors, and      others to the cost savings initiatives described in this press release and      their      ramifications.  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.*

**–**
**–**

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| **TERABEAM,                INC.**                                                                                                                                                                                                                       |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                BALANCE SHEETS**                                                                                                                                                                                                          |   |
| **(in                thousands)**                                                                                                                                                                                                                       |   |
|                                                                                                                                                                                                                                                    |   | **June                30,** |   |   | **December                31,** |   |
|                                                                                                                                                                                                                                                    |   | **2007** |   |   | **2006** |   |
| **Assets**                                                                                                                                                                                                                                              |   | **(unaudited)** |   |   |   |   |
| Current                assets:                                                                                                                                                                                                                          |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                                                |   | $ | 6,175 |   |   | $ | 10,290 |   |
| Investment                securities – available-for-sale                                                                                                                                                                                         |   |   | 233 |   |   |   | 168 |   |
| Accounts                receivable, net                                                                                                                                                                                                                 |   |   | 8,165 |   |   |   | 5,539 |   |
| Inventory                                                                                                                                                                                                                                               |   |   | 9,272 |   |   |   | 10,142 |   |
| Prepaid                expenses                                                                                                                                                                                                                         |   |   | 1,431 |   |   |   | 1,246 |   |
| Total                current assets                                                                                                                                                                                                                     |   |   | 25,276 |   |   |   | 27,385 |   |
|                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Property                and equipment, net                                                                                                                                                                                                              |   |   | 2,548 |   |   |   | 2,660 |   |
| Other                Assets:                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Restricted                cash                                                                                                                                                                                                                          |   |   | 76 |   |   |   | 76 |   |
| Goodwill                                                                                                                                                                                                                                                |   |   | 7,922 |   |   |   | 7,922 |   |
| Intangible                assets, net                                                                                                                                                                                                                   |   |   | 10,440 |   |   |   | 11,545 |   |
| Deposits                and prepaid expenses                                                                                                                                                                                                            |   |   | 298 |   |   |   | 287 |   |
| Total                other assets                                                                                                                                                                                                                       |   |   | 18,736 |   |   |   | 19,830 |   |
| Total                assets                                                                                                                                                                                                                             |   | $ | 46,560 |   |   | $ | 49,875 |   |
| **Liabilities                and Stockholders’ Equity**                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Accounts                payable and accrued expenses                                                                                                                                                                                                    |   | $ | 13,065 |   |   | $ | 13,887 |   |
| Deferred                revenue                                                                                                                                                                                                                         |   |   | 2,293 |   |   |   | 2,198 |   |
| License                agreement payable - current maturities                                                                                                                                                                                           |   |   | 942 |   |   |   | 868 |   |
| Total                current liabilities                                                                                                                                                                                                                |   |   | 16,300 |   |   |   | 16,953 |   |
| License                agreement payable, net of current maturities                                                                                                                                                                                     |   |   | 1,585 |   |   |   | 2,088 |   |
| Total                liabilities                                                                                                                                                                                                                        |   |   | 17,885 |   |   |   | 19,041 |   |
| Commitments                and contingencies                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| **Stockholders’                Equity**                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Preferred                stock, $0.01 par value; authorized 4,500,000, none issued at June                30, 2007                and December 31, 2006                                                                                                 |   |   | - |   |   |   | - |   |
| Common                stock, $0.01 par value, 100,000,000 shares authorized, 21,554,369                issued                and outstanding at June 30, 2007, and 21,552,572 issued and outstanding                at                December 31, 2006 |   |   | 216 |   |   |   | 216 |   |
| Additional                paid-in capital                                                                                                                                                                                                               |   |   | 59,076 |   |   |   | 57,976 |   |
| Retained                earnings  (accumulated deficit)                                                                                                                                                                                       |   |   | (30,610 | ) |   |   | (27,285 | ) |
| Accumulated                other comprehensive income:                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Net                unrealized gain (loss) on available-for-sale securities                                                                                                                                                                              |   |   | (7 | ) |   |   | (73 | ) |
| Total                stockholders’ equity                                                                                                                                                                                                         |   |   | 28,675 |   |   |   | 30,834 |   |
| Total                liabilities and stockholders’ equity                                                                                                                                                                                         |   | $ | 46,560 |   |   | $ | 49,875 |   |

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| **TERABEAM,                INC.**                                     |   |
|-----------------------------------------------------------------------|--------|
| **CONSOLIDATED                STATEMENTS OF OPERATIONS**              |   |
| **(in                thousands, except per share data)**              |   |
|   **(unaudited)**                                           |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | **Three                  Months Ended**   June                30, |   |   | **Six                  Months Ended**   June                30, |   |
|                                                                  |   | **2007** |   |   | **2006** |   |   | **2007** |   |   | **2006** |   |
| Revenues                                                              |   | $ | 19,012 |   |   | $ | 20,750 |   |   | $ | 36,670 |   |   | $ | 39,286 |   |
| Cost                of goods sold                                     |   |   | 10,573 |   |   |   | 12,062 |   |   |   | 20,305 |   |   |   | 22,957 |   |
| Gross                profit                                           |   |   | 8,439 |   |   |   | 8,688 |   |   |   | 16,365 |   |   |   | 16,329 |   |
| Operating                expenses:                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling                costs                                          |   |   | 5,212 |   |   |   | 4,027 |   |   |   | 9,957 |   |   |   | 8,296 |   |
| Restructuring                Charges                                  |   |   | 91 |   |   |   | 116 |   |   |   | 91 |   |   |   | 116 |   |
| General                and administrative                             |   |   | 3,272 |   |   |   | 4,021 |   |   |   | 6,681 |   |   |   | 7,355 |   |
| Research                and development                               |   |   | 2,733 |   |   |   | 3,762 |   |   |   | 5,543 |   |   |   | 8,648 |   |
| Total                operating expenses                               |   |   | 11,308 |   |   |   | 11.926 |   |   |   | 22,272 |   |   |   | 24,415 |   |
| Operating                loss                                         |   |   | (2,869 | ) |   |   | (3,238 | ) |   |   | (5,907 | ) |   |   | (8,086 | ) |
| Other                income (expenses):                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                        |   |   | 28 |   |   |   | 114 |   |   |   | 72 |   |   |   | 202 |   |
| Interest                expense                                       |   |   | (34 | ) |   |   | (68 | ) |   |   | (68 | ) |   |   | (101 | ) |
| Other                income (loss)                                    |   |   | 2,580 |   |   |   | 212 |   |   |   | 2,646 |   |   |   | 543 |   |
| Total                other income (expenses)                          |   |   | 2,574 |   |   |   | 258 |   |   |   | 2,650 |   |   |   | 644 |   |
| Loss                before income taxes                               |   |   | (295 | ) |   |   | (2,980 | ) |   |   | (3,257 | ) |   |   | (7,442 | ) |
| Benefit                (provision) for income taxes                   |   |   | (44 | ) |   |   | (5 | ) |   |   | (68 | ) |   |   | (26 | ) |
| Net                loss                                               |   | $ | (339 | ) |   | $ | (2,985 | ) |   | $ | (3,325 | ) |   | $ | (7,468 | ) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average shares - basic  and diluted |   |   | 21,554 |   |   |   | 21,541 |   |   |   | 21,554 |   |   |   | 21,502 |   |
| Loss                per share, basic and diluted                      |   | $ | (0.02 | ) |   | $ | (0.14 | ) |   | $ | (0.15 | ) |   | $ | (0.35 | ) |