UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C.  20549








FORM
      8-K





CURRENT
      REPORT





Pursuant
      to Section 13 or 15(d) of the


Securities
      Exchange Act of 1934








Date
                of Report (date of earliest event reported):
            July
                31, 2007








TERABEAM,
                INC.(Exact
                name of registrant as specified in its
                charter)








Delaware
            000-29053
            04-2751645(State
                or other jurisdiction of incorporation)
            (Commission
                file number)
            (IRS
                employer identification no.)








2115
                O’Nel Drive, San Jose, CA
            95131(Address
                of principal executive offices)
            (Zip
                code)








Registrant’s
                telephone number, including area code:
            (408)
                731-2700








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








Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):




oWritten
      communications
      pursuant to Rule 425 under the Securities Act (17 CFR 230.425)




o  Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)




o  Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))




o  Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))









Item
      8.01.  Other Events.





Effective
      July 31, 2007, Ricochet Networks, Inc. (“RNI”), a wholly owned subsidiary of
      Terabeam, Inc., entered into an Asset Purchase Agreement (the “APA”) with
      Civitas Wireless Solutions, LLC and Judi A. Evans.  Ms. Evans is the
      President, Chief Executive Officer, and majority equity owner of Civitas and
      had
      been the President of RNI from December 2005 until July 31, 2007.





Pursuant
      to the APA, RNI sold to Civitas generally its assets relating to the operation
      of the Ricochet® wireless network in the Denver, Colorado metropolitan
      area.  In return, RNI received (a) the assumption by Civitas generally
      of obligations relating to the operation of the Ricochet® wireless network in
      the Denver, Colorado metropolitan area, (b) a cash payment of $200,000, (c)
      15%
      equity ownership of Civitas, and (d) potential future payments contingent on
      certain future potential business of Civitas.  RNI generally retained
      the obligations relating to the operation of the Ricochet® network in the San
      Diego, California metropolitan area, the operation of which RNI discontinued
      on
      July 31, 2007. The APA also contemplated the termination of substantially all
      of
      RNI’s employees and the hiring of those employees by Civitas.





In
      December 2006, RNI had transferred substantially all of its patents, trademarks,
      copyrights, service marks, and other intellectual property to Terabeam and
      received a license to use that intellectual property in the conduct of RNI’s
      business.  A condition to closing the transactions contemplated by the
      APA was Terabeam’s entering into two agreements with Civitas, also effective
      July 31, 2007, relating to that former RNI intellectual
      property.  Pursuant to an Intellectual Property Transfer and License
      Agreement, Terabeam transferred to Civitas all of the non-patent intellectual
      property that had been transferred by RNI to Terabeam in December
      2006.  Also in that agreement, Civitas granted back to Terabeam and
      its subsidiaries a transferable license, with right to sublicense, to use that
      transferred intellectual property to the extent necessary to perform any
      remaining obligations of RNI and generally in other manners (with the general
      license not covering any transferred trademarks, trademark applications, domain
      names, or service marks).





Pursuant
      to a License Agreement, Terabeam granted Civitas a license generally to use
      the
      patents and patent applications that had been transferred to Terabeam by RNI
      to
      provide high-speed (data rates below 500 Kbps) wireless Internet connectivity
      service to subscribers using Civitas’ proprietary microcellular digital radio
      communications network in the metropolitan Denver, Colorado geographic area
      and
      in other specified United States metropolitan areas where RNI’s equipment had
      previously been deployed but only as necessary for Civitas to continue and
      conduct the normal business of RNI substantially as previously conducted by
      RNI.





Also
      as a
      condition to closing the transactions contemplated by the APA, Civitas and
      Proxim Wireless Corporation, a different wholly owned subsidiary of Terabeam,
      entered into a Product Purchase Agreement, effective July 31, 2007, pursuant
      to
      which Civitas is authorized to purchase Proxim’s broadband wireless equipment
      for Civitas’ own use and resale in the United States.  In that
      agreement, for a period of six months from July 31, 2007, Civitas agreed to
      purchase from Proxim its entire requirements for wireless broadband products
      with substantially similar functionality as Proxim’s products in return for
      discounted pricing from Proxim.





The
      foregoing description of the Asset Purchase Agreement, the Intellectual Property
      Transfer and License Agreement, and the License Agreement does not purport
      to be
      complete and is qualified in its entirety by reference to the terms and
      conditions of the Asset Purchase Agreement attached hereto as Exhibit 99.1,
      the
      Intellectual Property Transfer and License Agreement attached hereto as Exhibit
      99.2, and the License Agreement attached hereto as Exhibit 99.3, which are
      incorporated herein by reference.





Item
      9.01  Financial Statements and Exhibits.





(d)           Exhibits





See
      Exhibit Index.






2




SIGNATURE





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





TERABEAM,
                INC.Dated:
                August 6, 2007
            By:
            /s/
                David L. RenauldDavid
                L. RenauldVice
                President





EXHIBIT
      INDEX











Number
            Title99.1
            Asset
                Purchase Agreement dated as of July 31, 2007 between Ricochet Networks,
                Inc. and Civitas Wireless Solutions, LLC and joined in by Judi A.
                Evans99.2
            Intellectual
                Property Transfer and License Agreement dated as of July 31, 2007
                between
                Terabeam, Inc. and Civitas Wireless Solutions, LLC99.3
            License
                Agreement dated as of July 31, 2007 between Terabeam, Inc. and Civitas
                Wireless Solutions, LLC


3