**Exhibit      99.1**

**For      Further Information Contact:**

**FOR      IMMEDIATE RELEASE**

**TERABEAM      ANNOUNCES SECOND QUARTER 2006 FINANCIAL RESULTS**

**San      Jose, CA, August 2, 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; time and costs associated with developing and launching new      products; uncertainty about market acceptance of products we introduce;      potential long sales cycles for new products such that there may be extended      periods of time before new products contribute positively to our financial      results; time, costs, political considerations, typical multitude of      constituencies, and other factors involved in evaluating, equipping, installing,      and operating municipal networks; difficulties or delays in developing and      supplying new products with the contemplated or desired features, performance,      compliances, certifications, cost, price, and other characteristics and at      the      times and in the quantities contemplated or desired; the difficulties in      predicting Terabeam’s future financial performance; Terabeam’s 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)**                                                                                                                                                                                                                       |   |
|                                                                                                                                                                                                                                                    |   | **June                30,** |   | **December                31,** |   |
|                                                                                                                                                                                                                                                    |   | **2006** |   | **2005** |   |
| **Assets**                                                                                                                                                                                                                                              |   |  **(unaudited**)**** |   |   |   |   |
| Current                assets:                                                                                                                                                                                                                          |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                                                |   | $ | 13,426 |   | $ | 14,133 |   |
| Investment                securities - available-for-sale                                                                                                                                                                                               |   |   | 181 |   |   | 260 |   |
| Accounts                receivable, net                                                                                                                                                                                                                 |   |   | 5,901 |   |   | 8,378 |   |
| Inventory                                                                                                                                                                                                                                               |   |   | 10,822 |   |   | 10,070 |   |
| Prepaid                expenses                                                                                                                                                                                                                         |   |   | 1,661 |   |   | 1,045 |   |
| Total                current assets                                                                                                                                                                                                                     |   |   | 31,991 |   |   | 33,886 |   |
|                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Property                and equipment, net                                                                                                                                                                                                              |   |   | 3,406 |   |   | 3,924 |   |
| Other                Assets:                                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| Restricted                cash                                                                                                                                                                                                                          |   |   | 76 |   |   | 5,076 |   |
| Goodwill                                                                                                                                                                                                                                                |   |   | 7,923 |   |   | 7,380 |   |
| Intangible                assets, net                                                                                                                                                                                                                   |   |   | 21,881 |   |   | 23,817 |   |
| Deposits                and prepaid expenses                                                                                                                                                                                                            |   |   | 238 |   |   | 675 |   |
| Total                other assets                                                                                                                                                                                                                       |   |   | 30,118 |   |   | 36,948 |   |
| Total                assets                                                                                                                                                                                                                             |   | $ | 65,515 |   | $ | 74,758 |   |
| **Liabilities                and Stockholders’ Equity**                                                                                                                                                                                           |   |   |   |   |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| Accounts                payable and accrued expenses                                                                                                                                                                                                    |   | $ | 12,152 |   | $ | 15,600 |   |
| Deferred                revenue                                                                                                                                                                                                                         |   |   | 4,229 |   |   | 2,503 |   |
| License                agreement payable - current maturities                                                                                                                                                                                           |   |   | 813 |   |   | 981 |   |
| Total                current liabilities                                                                                                                                                                                                                |   |   | 17,194 |   |   | 19,084 |   |
| License                agreement payable, net of current maturities                                                                                                                                                                                     |   |   | 2,527 |   |   | 2,956 |   |
| Total                liabilities                                                                                                                                                                                                                        |   |   | 19,721 |   |   | 22,040 |   |
| Commitments                and contingencies                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| **Stockholders’                Equity**                                                                                                                                                                                                           |   |   |   |   |   |   |   |
| Preferred                stock, $0.01 par value; authorized 4,500,000, none issued at June                30, 2006                and December 31, 2005                                                                                                 |   |   | - |   |   | - |   |
| Common                stock, $0.01 par value, 100,000,000 shares authorized, 21,540,865                issued                and outstanding at June 30, 2006, and 21,446,217 issued and outstanding                at                December 31, 2005 |   |   | 215 |   |   | 214 |   |
| Additional                paid-in capital                                                                                                                                                                                                               |   |   | 57,261 |   |   | 56,638 |   |
| Retained                earnings (accumulated deficit)                                                                                                                                                                                                  |   |   | (11,590 | ) |   | (4,122 | ) |
| Accumulated                other comprehensive income:                                                                                                                                                                                                  |   |   |   |   |   |   |   |
| Net                unrealized gain (loss) on available-for-sale securities                                                                                                                                                                              |   |   | (92 | ) |   | (12 | ) |
| Total                stockholders’ equity                                                                                                                                                                                                         |   |   | 45,794 |   |   | 52,718 |   |
| Total                liabilities and stockholders’ equity                                                                                                                                                                                         |   | $ | 65,515 |   | $ | 74,758 |   |

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| **TERABEAM,                  INC.**                        |
|------------------------------------------------------------|
| **CONSOLIDATED                  STATEMENTS OF OPERATIONS** |
| **(in                  thousands, except per share data)** |
|  **(unaudited)**                                      |

|                                                       |   | **Three                Months Ended** |    | **Six                Months Ended** |   |
|------------------------------------------------------------|--------|---------------------------------------|---------|-------------------------------------|--------|
|                                                       |   | **June                30,**           |    | **June                30,**         |   |
|                                                       |   | **2006**                              |    | **2005**                            |   | **2006** |   | **2005** |   |
| Revenues                                                   |   | $                                     | 20,750  |                                | $      | 7,165 |   | $ | 39,286 |   | $ | 13,762 |   |
| Cost                of goods sold                          |   |                                  | 12,062  |                                |   | 3,687 |   |   | 22,957 |   |   | 7,006 |   |
| Gross                profit                                |   |                                  | 8,688   |                                |   | 3,478 |   |   | 16,329 |   |   | 6,756 |   |
| Operating                expenses:                         |   |                                  |    |                                |   |   |   |   |   |   |   |   |   |
| Selling                costs                               |   |                                  | 4,027   |                                |   | 1,034 |   |   | 8,296 |   |   | 2,031 |   |
| Restructuring                Charges                       |   |                                  | 116     |                                |   | - |   |   | 116 |   |   | - |   |
| General                and administrative                  |   |                                  | 4,021   |                                |   | 2,777 |   |   | 7,355 |   |   | 5,285 |   |
| Research                and development                    |   |                                  | 3,762   |                                |   | 879 |   |   | 8,648 |   |   | 1,650 |   |
| Total                operating expenses                    |   |                                  | 11,926  |                                |   | 4,690 |   |   | 24,415 |   |   | 8,966 |   |
| Operating                loss                              |   |                                  | (3,238  | )                                   |   | (1,212 | ) |   | (8,086 | ) |   | (2,210 | ) |
| Other                income (expenses):                    |   |                                  |    |                                |   |   |   |   |   |   |   |   |   |
| Interest                income                             |   |                                  | 114     |                                |   | 269 |   |   | 202 |   |   | 490 |   |
| Interest                expense                            |   |                                  | (68     | )                                   |   | (70 | ) |   | (101 | ) |   | (136 | ) |
| Other                income (loss)                         |   |                                  | 212     |                                |   | 3 |   |   | 543 |   |   | (116 | ) |
| Total                other income (expenses)               |   |                                  | 258     |                                |   | 202 |   |   | 644 |   |   | 238 |   |
| Loss                before income taxes                    |   |                                  | (2,980  | )                                   |   | (1,010 | ) |   | (7,442 | ) |   | (1,972 | ) |
| Benefit                (provision) for income taxes        |   |                                  | (5      | )                                   |   | 23 |   |   | (26 | ) |   | 14 |   |
| Net                loss                                    |   |                                  | ($2,985 | )                                   |   | ($987 | ) |   | ($7,468 | ) |   | ($1,958 | ) |
|                                                       |   |                                  |         |                                |   |  |   |   |  |   |   |  |   |
| Weighted                average shares - basic and diluted |   |                                  | 21,541  |                                |   | 22,009 |   |   | 21,502 |   |   | 22,204 |   |
| Loss                per share, basic and diluted           |   |                                  | ($0.14  | )                                   |   | ($0.04 | ) |   | ($0.35 | ) |   | ($0.09 | ) |