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
                  19, 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
        1.01. Entry
        into a Material Definitive Agreement.
 
 On
        July
        19, 2007, Terabeam, Inc. entered into a Purchase Agreement (the “Purchase
        Agreement”) with institutional and other accredited investors identified on the
        signature pages to the Purchase Agreement (the “Purchasers”) pursuant to which
        it agreed to sell, for an aggregate purchase price of $7,525,000, an aggregate
        of 4,300,000 shares (the “Shares”) of its common stock, par value $0.01 per
        share (the “Common Stock”), at a price of $1.75 per share and warrants to
        purchase an aggregate of 2,150,000 shares of Common Stock (subject to
        adjustment) at an exercise price of $2.45 per share (subject to adjustment)
        (the
“Warrants”).  The Warrants may be exercised from January 23, 2008
        until July 23, 2012 (subject to adjustment).  In general, the Warrants
        may be exercised by paying the exercise price to Terabeam.  However,
        in specified circumstances, the Warrants may be exercised by cashless exercise
        pursuant to a formula.
 
 The
        closing of the sale of the Shares and Warrants (the “Private Placement”)
        occurred on July 23, 2007.
 
 A
        condition to closing the transactions contemplated by the Purchase Agreement
        was
        Terabeam’s entering into a Registration Rights Agreement, dated as of July 23,
        2007 (the “Registration Rights Agreement”), with the Purchasers.  In
        the Registration Rights Agreement, Terabeam agreed to file a Registration
        Statement on Form S-3 with the Securities and Exchange Commission (the
“Commission”) within thirty days after the closing of the Private Placement
        to register the resale of the Shares and the shares of Common Stock issuable
        upon exercise of the Warrants.  Terabeam has also agreed to use its
        commercially reasonable best efforts to have the Registration Statement declared
        effective as soon as practicable after filing.
  The
        Purchase Agreement, Registration
        Rights Agreement, and Warrants contain various representations, warranties,
        covenants, indemnifications, and other terms relating to the Private
        Placement.  In particular, the Purchasers agreed not to engage in a
        variety of short sale transactions unless the bid price per share of Common
        Stock is greater than $3.00 or Terabeam fails to keep effective the Registration
        Statement when it is required to be so.  Terabeam agreed not to enter
        into a variety of variable rate transactions on or before July 1,
        2009.  For one year after closing, Terabeam granted the Purchasers
        rights of first refusal and participation relating to any subsequent
        capital-raising transaction in which the effective price per share is $2.70
        or
        less.
 
 Each
        of Lloyd I. Miller, III and Milfam
        II L.P., an affiliated entity of Mr. Miller, purchased 925,000 Shares and
        Warrants to purchase 462,500 shares of Common Stock in the Private
        Placement.  In a Schedule 13D filed with the Securities and Exchange
        Commission on April 20, 2007, Mr. Miller disclosed that he is the beneficial
        owner of 1,361,100 shares of Terabeam’s Common Stock, or approximately 6.3% of
        Terabeam’s issued and outstanding Common Stock before the Private
        Placement.  Mr. Miller filed such Schedule 13D to disclose his
        recommendation to the board of directors of Terabeam that Mr. Alan B. Howe
        be
        nominated as a director of Terabeam.  Terabeam disclosed such fact in
        its Schedule 14A filed with the SEC on April 13, 2007, and Terabeam has also
        reported that Mr. Howe has been elected as a director of
        Terabeam.  Terabeam has not previously sold securities to Mr.
        Miller.  Mr. Miller holds no board or management position with
        Terabeam.
 
 The
        foregoing description of the Private Placement, the Purchase Agreement, the
        Registration Rights Agreement, and the Warrants does not purport to be complete
        and is qualified in its entirety by reference to the terms and conditions
        of the
        Purchase Agreement attached hereto as Exhibit 10.1, the Registration Rights
        Agreement attached hereto as Exhibit 10.2, and the form of warrant attached
        hereto as Exhibit 10.3, which are incorporated herein by reference.
 
 
 Item
        2.02.  Results of Operations and Financial
        Condition.
 
 On
        July
        24, 2007, Terabeam issued a press release announcing, among other things,
        preliminary revenue for its second quarter ended June 30, 2007.  A
        copy of that press release is attached hereto as Exhibit 99.1.
 
  2
  Item
        3.02.  Unregistered Sales of Equity Securities.
  The
        Private Placement described under Item 1.01 above resulted in gross proceeds
        to
        Terabeam of $7,525,000.  There were no underwriting discounts or
        commissions.
  The
        Shares and Warrants were offered and sold in the Private Placement to certain
        institutional and other accredited investors without registration under the
        Securities Act, or state securities laws, in reliance on the exemptions provided
        by Section 4(2) of the Securities Act of 1933, as amended, and
        Regulation D promulgated thereunder and in reliance on similar exemptions
        under applicable state laws.  Accordingly, the securities issued in
        the Private Placement have not been registered under the Securities
        Act  and, until so registered, the securities may not be offered or
        sold in the United States absent registration or availability of an applicable
        exemption from registration.
  Additional
        information regarding the Private Placement and the securities issued is
        included under Item 1.01 above and is incorporated herein by
        reference.
 
 
 Item
        8.01  Other Events.
  On
        July
        24, 2007, Terabeam issued a press release announcing it had sold securities
        in
        the Private Placement.  A copy of that press release is attached hereto as
        Exhibit 99.2 and is incorporated herein by reference.
 
 
 Item
        9.01  Financial Statements and Exhibits.
 
 (d)
              Exhibits
 
 See
        Exhibit Index.
 
 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:
                  July 24, 2007
              By:
              /s/
                  David L. RenauldDavid
                  L. RenauldVice
                  President
 
 EXHIBIT
        INDEX
 
 Number
              Title10.1
              Purchase
                  Agreement dated as of July 19, 2007 among Terabeam, Inc. and each
                  investor
                  named therein10.2
              Registration
                  Rights Agreement dated as of July 23, 2007 among Terabeam, Inc.
                  and each
                  investor named therein10.3
              Form
                  of warrant issued July 23, 200799.1
              Press
                  release issued by Terabeam, Inc. on July 24, 200799.2
              Press
                  release issued by Terabeam, Inc. on July 24, 2007 relating to private
                  placement
 
 3