**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**For
                the quarterly period ended June 29, 2008**OR ̈
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934For
                the transition period from ________________ to
                ________________





Commission
      file number: **000-31031**





**AIRSPAN
      NETWORKS INC.**


(Exact
      name of registrant as specified in its charter)





**Washington**
            
            **75-2743995**(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)**777
                Yamato Road, Suite 310**
              **Boca
                Raton, FL**
            
            **33431**(Address
                of principal executive offices)
            
            (Zip
                Code)





**561-893-8670**


(Registrant’s
      telephone number, including area code)





**None**


(Former
      name, former address and former fiscal year, if changed since last
      report)





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.


Yes x No  ̈





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      definitions of “large accelerated filer”, “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.




Large
                accelerated filer ̈
            Accelerated
                filerx
            Non-accelerated
                filer ̈
            Smaller
                reporting companyx





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes  ̈  No x





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date.





Class
            
            Outstanding
                at August 4, 2008Common
                Stock, $.0003 par value per share
            
            58,724,336
                shares





**TABLE
      OF CONTENTS**




**Page**
              **Number****PART
                I. FINANCIAL INFORMATION**Item
                1.
            Financial
                StatementsCondensed
                Consolidated Balance Sheets
            3Condensed
                Consolidated Statements of Operations
            4Condensed
                Consolidated Statements of Cash Flows
            5Notes
                to Condensed Consolidated Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            16Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            24Item
                4.
            Controls
                and Procedures
            25**PART
                II. OTHER INFORMATION**Item
                1.
            Legal
                Proceedings
            26Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            27Item
                6.
            Exhibits
            28Signatures
            28


2


**PART
      I. FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





**AIRSPAN
      NETWORKS INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(in
      thousands, except for share data)**





**June
                29,**
            
            **December
                31,****2008**
            
            **2007****(unaudited)**
            
            **(audited)****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            25,710
            
            $
            30,815Restricted
                cash
            
            
            544
            
            
            393Short-term
                investments
            
            
            6,860
            
            
            5,504Accounts
                  receivable, less allowance for doubtful accounts of $3,167 at June
                  29,
                  2008 and $2,878 at December 31, 2007
            
            
            18,625
            
            
            33,853Inventory
            
            
            13,351
            
            
            16,720Prepaid
                expenses and other current assets
            
            
            3,939
            
            
            5,338Total
                current assets
            
            
            69,029
            
            
            92,623Property,
                plant and equipment, net
            
            
            5,316
            
            
            5,895Goodwill
            
            
            10,231
            
            
            10,231Intangible
                assets, net
            
            
            1,402
            
            
            1,870Other
                non-current assets
            
            
            3,480
            
            
            3,402**Total
                assets**
            
            $
            89,458
            
            $
            114,021**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            7,728
            
            $
            11,938Deferred
                revenue
            
            
            2,858
            
            
            5,125Customer
                advances
            
            
            781
            
            
            892Other
                accrued expenses
            
            
            12,497
            
            
            13,063Short-term
                debt
            
            
            7,500
            
            
            7,500Total
                current liabilities
            
            
            31,364
            
            
            38,518Long-term
                debt
            
            
            1,787
            
            
            1,787Accrued
                interest on long-term debt
            
            
            193
            
            
            191**Total
                liabilities**
            
            
            33,344
            
            
            40,496**Commitments
                and contingencies****Stockholders'
                equity**Preferred
                stock, $0.0001 par value; 250,000 shares authorized at June 29, 2008
                and
                December 31, 2007; 200,690 shares issued at June 29, 2008 and December
                31,
                2007
            
            
            -
            
            
            -Common
                stock, $0.0003 par value; 100,000,000 shares authorized at June 29,
                2008
                and December 31, 2007; 58,683,992 and 58,542,517 shares issued at
                June 29,
                2008 and December 31, 2007, respectively
            
            
            17
            
            
            17Note
                receivable – stockholder
            
            
            (87
            )
            
            (87
            )Additional
                paid-in capital
            
            
            351,179
            
            
            349,718Accumulated
                deficit
            
            
            (294,995
            )
            
            (276,123
            )**Total
                stockholders' equity**
            
            
            56,114
            
            
            73,525**Total
                liabilities and stockholders' equity**
            
            $
            89,458
            
            $
            114,021





*The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.*


3





**AIRSPAN
      NETWORKS INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


(in
      thousands except for share and per share data)





**Quarter
                Ended**
            
            **Year-to-Date****June 29, 2008**
            
            **July 1, 2007**
            
            **June 29, 2008**
            
            **July 1, 2007****(unaudited)**
            
            **(unaudited)**Revenue
            
            $
            21,391
            
            $
            22,073
            
            $
            38,550
            
            $
            48,733Cost
                of revenue
            
            
            (14,647
            )
            
            (20,223
            )
            
            (26,570
            )
            
            (38,632
            )Gross
                profit
            
            
            6,744
            
            
            1,850
            
            
            11,980
            
            
            10,101Operating
                expenses:Research
                and development
            
            
            6,738
            
            
            5,844
            
            
            13,674
            
            
            11,387Sales
                and marketing
            
            
            4,302
            
            
            3,508
            
            
            8,541
            
            
            6,870Bad
                debts
            
            
            426
            
            
            723
            
            
            473
            
            
            955General
                and administrative
            
            
            3,395
            
            
            3,923
            
            
            7,535
            
            
            8,164Amortization
                of intangibles
            
            
            234
            
            
            234
            
            
            468
            
            
            468Restructuring
            
            
            640
            
            
            (525
            )
            
            640
            
            
            (485
            )Total
                operating expenses
            
            
            15,735
            
            
            13,707
            
            
            31,331
            
            
            27,359Loss
                from operations
            
            
            (8,991
            )
            
            (11,857
            )
            
            (19,351
            )
            
            (17,258
            )Interest
                income, net
            
            
            117
            
            
            207
            
            
            233
            
            
            487Other
                income (expense), net
            
            
            71
            
            
            (28
            )
            
            313
            
            
            4Loss
                before income taxes
            
            
            (8,803
            )
            
            (11,678
            )
            
            (18,805
            )
            
            (16,767
            )Income
                tax (provision)/benefit
            
            
            (17
            )
            
            2
            
            
            (67
            )
            
            (37
            )Net
                loss
            
            $
            (8,820
            )
            $
            (11,676
            )
            $
            (18,872
            )
            $
            (16,804
            )Net
                loss per share - basic and diluted
            
            $
            (0.15
            )
            $
            (0.29
            )
            $
            (0.32
            )
            $
            (0.41
            )Weighted
                average shares outstanding- basic and diluted
            
            
            58,682,735
            
            
            40,820,968
            
            
            58,641,218
            
            
            40,674,533





*The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.*


4


**AIRSPAN
      NETWORKS INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(in
      thousands)**





**Year
                to date**
            
            **Year
                to date****June
                29, 2008**
            
            **July
                1, 2007****(unaudited)**
            
            **(unaudited)****Cash
                flows from operating activities**Net
                loss
            
            $
            (18,872
            )
            $
            (16,804
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            2,015
            
            
            1,855Accrued
                interest on long-term debt
            
            
            1
            
            
            53Non-cash
                stock compensation
            
            
            1,374
            
            
            1,252Loss
                on sale of property, plant and equipment
            
            
            -
            
            
            8Bad
                debts
            
            
            473
            
            
            955Changes
                in operating assets and liabilities:Decrease
                in receivables
            
            
            14,754
            
            
            3,618Decrease
                in inventories
            
            
            3,369
            
            
            7,159Decrease
                in other current assets
            
            
            1,399
            
            
            1,445Decrease
                in accounts payables
            
            
            (4,210
            )
            
            (4,248
            )Decrease
                in deferred revenue
            
            
            (2,267
            )
            
            (2,886
            )Decrease/(increase)
                in customer advances
            
            
            (111
            )
            
            191Decrease
                in other accrued expenses
            
            
            (539
            )
            
            (2,850
            )(Increase)/decrease
                in other operating assets
            
            
            (228
            )
            
            565Net
                cash used in operating activities
            
            
            (2,842
            )
            
            (9,687
            )**Cash
                flows from investing activities**Purchase
                of property, plant and equipment
            
            
            (970
            )
            
            (1,271
            )Purchase
                of short-term investments
            
            
            (8,505
            )
            
            (11,275
            )Proceeds
                from sale of short-term investments
            
            
            7,150
            
            
            10,989Net
                cash used in investing activities
            
            
            (2,
                325
            )
            
            (1,557
            )**Cash
                flows from financing activities**Borrowings
                under line of credit
            
            
            -
            
            
            7,500Proceeds
                from the exercise of stock options
            
            
            62
            
            
            1,111Net
                cash provided by financing activities
            
            
            62
            
            
            8,611Decrease
                in cash and cash equivalents
            
            
            (5,105
            )
            
            (2,633
            )**Cash
                and cash equivalents, beginning of period**
            
            
            30,815
            
            
            15,890**Cash
                and cash equivalents, end of period**
            
            $
            25,710
            
            $
            13,257





*The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.*


5







**Airspan
      Networks Inc.**


**Notes
      to Condensed Consolidated Financial Statements******


(Unaudited)





**NOTE
      1 – BUSINESS AND BASIS OF PRESENTATION**





Airspan
      Networks Inc. (“Airspan” or “the Company”) is a global supplier of broadband
      wireless equipment supporting the Worldwide Interoperability for Microwave
      Access (“WiMAX”) protocol standard, which provides a wide area telecommunication
      access network to connect end-users to telecom backbone networks. The WiMAX
      standard is established by the WiMAX Forum®, a self-regulatory, industry
      standards-setting organization. While our main product focus is WiMAX, we
      utilize other supplemental technologies, including Wireless Fidelity (“WiFi”)
      and Voice-over-Internet Protocol (“VoIP”), which allow communications network
      operators and service providers to deliver high-speed data and voice services
      cost-effectively using wireless communications rather than wired
      infrastructure.




Historically,
      the primary market for our wireless systems has been fixed point to multi-point
      applications. Our development of new technology has expanded the market to
      include portable and mobile applications. Today, we produce radio base station
      equipment to transmit radio signals from a central location to the end-user
      who
      is equipped with a subscriber receiving unit. Our WiMAX products now enable
      major network migrations to Internet Protocol, which makes higher transmission
      speeds possible due to more efficient transmission techniques. After the
      expected certification of mobile WiMAX standards, we expect our mobile
      applications will be made available directly to end-user devices such as laptops
      and personal digital assistants to deliver wireless connectivity - at home,
      in
      the office and on the move. Leveraging our experience with WiMAX technology
      and
      our experience gained from 15 years of developing and deploying broadband
      wireless systems, we are focused on developing products for these mobile WiMAX
      applications in addition to our fixed wireless products.




Our
      primary target customers are communications service providers and other network
      operators that deploy WiMAX networks in licensed and unlicensed (license-exempt)
      spectrums worldwide. These customers include incumbent local exchange carriers
      (often referred to as “local exchange carriers”, “ILECs”, or simply telephone
      companies), Internet service providers (often referred to as “ISPs”), Wireless
      Internet Service providers (often referred to as “WISPs”), Mobile Virtual
      Network Operators (often referred to as “MVNOs”), Competitive Local Exchange
      Carriers (“CLECs”), and other telecommunications users, such as utilities and
      other enterprises. As mobile WiMAX products are deployed, we are also targeting
      mobile and cellular carriers, which represent a significant expansion of our
      traditional addressable market. Our broadband wireless systems have been
      installed by more than 500 network operators in more than 100
      countries.




Each
      of
      our wireless systems uses digital radio technologies, which provide wide-area
      or
      local-area coverage, robust security and resistance to fading. Our systems
      synchronize available bandwidth with the specific services being provided,
      thereby facilitating the most efficient use of radio equipment resources and
      spectrum. Our systems are designed as modular solutions enabling the expansion
      of existing deployments as technologies and customer needs evolve. We provide
      a
      wide range of subscriber devices that deliver voice and data connection, or
      a
      combination of both, eliminating the need for multiple access devices in
      customer premises.





Our
      network management systems provide diagnostic and management tools that allow
      our customers to monitor and optimize their installations. To facilitate the
      deployment and operation of our systems, we also offer network installation
      (generally through subcontractors), training, radio planning and support
      services.





In
      2007,
      we announced the introduction of a portable miniature device (the MiMAX
      subscriber terminal) that can be plugged into a standard laptop, enabling WiMAX
      for data services, including VoIP. Our MiMAX USB received WiMAX certification
      by
      the WiMAX Forum® in the second quarter of 2008.





In
      2008,
      we announced the MacroMAXe mobile-WiMAX base station, developed in partnership
      with Fujitsu. MacroMAXe is an all-in-one base station offering the range and
      features typically included in larger base station equipment. In addition,
      the
      MacroMAXe uses new Gallium-Nitride power amplifier technology from Fujitsu
      which
      allows for extremely low power consumption.


6


Our
      corporate headquarters are located in Boca Raton, Florida. Our main operations,
      manufacturing and product development centers are located in Uxbridge, United
      Kingdom and Airport City, Israel. Our telephone number in Boca Raton is (561)
      893-8670. Further contact details and the location of all our worldwide offices
      may be found at *www.airspan.com* .





*Basis
      of Presentation*





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial information and with the
      instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
      do
      not include all of the information and footnotes required by accounting
      principles generally accepted in the United States of America for complete
      financial statements. In the opinion of management, all adjustments considered
      necessary for a fair presentation have been included and are of a normal
      recurring nature. The interim operating results are not necessarily indicative
      of operating results expected in subsequent periods or for the year as a
      whole.





The
      condensed consolidated balance sheet at December 31, 2007 has been derived
      from
      the audited financial statements at that date included in our Form 10-K for
      the
      year ended December 31, 2007 but does not include all of the information and
      footnotes required by accounting principles generally accepted in the United
      States of America for complete financial statements. For further information,
      refer to the consolidated financial statements and footnotes thereto included
      in
      our Annual Report on Form 10-K for the year ended December 31, 2007.





Certain
      prior year amounts have been reclassified to conform to the current year
      classification.





All
      notes
      to the condensed consolidated financial statements are shown in thousands,
      except for share and per share data.




**NOTE
      2 - INVENTORY**





Inventory
      consists of the following:


**June 29,**
              
              **December 31,****2008**
              
              **2007****(unaudited)**
              
              **(audited)**Purchased
                  parts and materials
              
              $
              6,931
              
              $
              6,941Work
                  in progress
              
              
              1,236
              
              
              1,283Finished
                  goods and consumables
              
              
              16,490
              
              
              20,585Inventory
                  provision
              
              
              (11,306
              )
              
              (12,089
              )$
              13,351
              
              $
              16,720





Inventories
      are stated at the lower of cost or market value. Cost includes all costs
      incurred in bringing each product to its present location and condition, as
      follows:




·
            Raw
                materials, consumables and finished goods — average cost·
            Work
                in progress— cost of direct materials and labor.




**NOTE
      3 - ACCRUED RESTRUCTURING CHARGES**





In
      the
      fourth quarter of 2002, the decision was made to completely outsource all of
      our
      manufacturing. As a result, a $1.0 million restructuring charge was recorded
      for
      the closure of our Riverside, Uxbridge facility in 2003. All of this cost
      relates to the excess facility. A further $0.4 million was recognized as
      restructuring in the income statement in the fourth quarter of 2003 as we
      reassessed the ability to sublease the Riverside facility. In
      the
      second quarter of 2007, the lessor completed renovations and incurred actual
      costs of approximately $0.8 million, which it was expecting the Company to
      pay;
      therefore, we reduced the liability to $1.0 million, including the estimated
      legal and other fees we expected to incur. All
      cash
      outflows in connection with this restructuring were paid in February
      2008.


7


In
      the
      third quarter of 2006, the Company commenced a company-wide restructuring
      program to reduce operating expenses. The operating expense reduction was
      accomplished primarily through reductions in worldwide headcount. In 2006,
      the
      Company recorded restructuring charges of $2.2 million. The Company made
      approximately $0.4 million of cash outlays in 2007 related to amounts accrued
      in
      2006. All cash outlays related to this program were completed in the second
      quarter of 2007.




In
      the
      second quarter of 2008, the Company announced its intention to reduce worldwide
      operating expenses by approximately 15%. The operating expense reduction will
      be
      accomplished primarily through reductions in worldwide headcount. In the second
      quarter of 2008, the Company recorded restructuring charges of $0.6 million.
      An
      additional $0.1 million will be recorded as a restructuring charge in the third
      and fourth quarters of 2008.




The
      restructuring charges and their utilization are summarized as follows:





**Total expected**
              **to be**
              **incurred**
            
            **Incurred**
              **during the**
              **quarter ended**
              **June 29,**
              **2008**
            
            **Cumulative**
              **incurred at**
              **June 29, 2008****(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**Termination
                benefits
            
            $
            732
            
            $
            640
            
            $
            640Contract
                termination costs
            
            
            -
            
            
            -
            
            
            -Other
                associated costs
            
            
            -
            
            
            -
            
            
            -$
            732
            
            $
            640
            
            $
            640





**Balance at**
            
            
            
            
            
            **Balance at****Beginning**
            
            **Restructuring**
            
            
            
            **End****of Period**
            
            **Charge**
            
            **Utilized**
            
            **of Period****Six
                months ended June 29, 2008 (unaudited)**Termination
                benefits
            
            $
            -
            
            $
            640
            
            $
            135
            
            $
            505Contract
                termination costs
            
            
            796
            
            
            -
            
            
            796
            
            
            -Other
                associated costs
            
            
            -
            
            
            -
            
            
            -
            
            
            -$
            796
            
            $
            640
            
            $
            931
            
            $
            505**Year
                ended December 31, 2007 (audited)**Termination
                benefits
            
            $
            375
            
            $
            -
            
            $
            (375
            )
            $
            -Contract
                termination costs
            
            
            1,437
            
            
            (639
            )
            
            (2
            )
            
            796Other
                associated costs
            
            
            50
            
            
            (50
            )
            
            -
            
            
            -$
            1,862
            
            $
            (689
            )
            $
            (377
            )
            $
            796





**NOTE
      4 – COMMITMENTS AND CONTINGENCIES**





*Commitments*





As
      of
      June 29, 2008, our material commitments consisted of obligations on operating
      leases, repayment of principal and interest owed on the loans made to us by
      the
      Finnish Funding Agency for Technology and Innovation (the “Tekes Loans”) and
      purchase commitments to our manufacturing subcontractors. These purchase
      commitments totaled $15.9 million at June 29, 2008. We have no material capital
      commitments.


8


*Warranty*





The
      Company provides limited warranties, usually for periods ranging from twelve
      to
      twenty-four months, to all purchasers of its new equipment. Warranty expense
      is
      accrued at the date revenue is recognized on the sale of equipment and is
      recognized as a cost of revenue. The expense is estimated based on analysis
      of
      historic costs and other relevant factors. Management believes that the amounts
      provided are sufficient for all future warranty costs on equipment sold through
      June 29, 2008 but if actual product failure rates, material usage or service
      delivery costs differ from estimates, revisions to the estimated warranty
      liability would be required.




Information
      regarding the changes in our product warranty liabilities was as follows for
      the
      six months ended June 29, 2008.





**Balance at**
              **beginning**
              **of period**
            
            **Accrual**
              **for**
              **warranties**
              **issued**
              **during the**
              **period**
            
            **Changes**
              **in accruals**
              **related to**
              **pre-**
              **existing**
              **warranties**
              **(including**
              **changes in**
              **estimates)**
            
            **Settlements**
              **made (in**
              **cash or in**
              **kind)**
              **during the**
              **period**
            
            **Balance at**
              **end of**
              **period**Six
                months ended June 29, 2008Product
                warranty liability
            
            $
            1,010
            
            $
            168
            
            $
            (24
            )
            $
            (169
            )
            $
            985





*Other
      guarantees*





The
      Company had bank guarantees with its landlords and customers aggregating $1.3
      million at June 29, 2008. The guarantees secure payment or performance of the
      Company’s own obligations under contracts. The Company has pledged cash to the
      banks as collateral for guarantees aggregating $1.3 million, of which $0.1
      million is recorded as restricted cash in current assets and $1.2 million is
      recorded as other non-current assets. The Company has also issued guarantees
      of
      its own obligations to customers under the line of credit provided by Silicon
      Valley Bank for a total of $2.3 million, which does not require any related
      pledge of cash collateral. The Company has not recognized any liability for
      these guarantees. These guarantees will all expire before the end of 2011 with
      the majority expiring in 2009.





In
      addition to the guarantees mentioned above, the Company has issued a guarantee
      to Tekes, the main public funding organization for research and development
      in
      Finland, for the repayment of loans taken out by its fully consolidated
      subsidiary, Airspan Networks (Finland) OY (“Radionet”). These loans total $2.0
      million at June 29, 2008, which includes $0.2 million of accrued interest,
      and
      are recorded in long-term debt. This guarantee expires only when Radionet has
      fulfilled all its obligations to Tekes.





*Legal
      claims*




On
      and
      after July 23, 2001, three Class Action Complaints were filed in the United
      States District Court for the Southern District of New York naming as defendants
      Airspan, and certain current or former officers and directors (referred to
      herein as the “Individual Defendants”) together with certain underwriters of our
      July 2000 initial public offering. A Consolidated Amended Complaint, which
      is
      now the operative complaint, was filed on July 19, 2002. The complaint alleges
      violations of Sections 11 and 15 of the Securities Act of 1933 and Sections
      10(b) and 20(a) of the Securities Exchange Act of 1934 for issuing a
      Registration Statement and Prospectus that contained materially false and
      misleading information and failed to disclose material information. In
      particular, the plaintiffs allege that the underwriter-defendants agreed to
      allocate stock in our initial public offering to certain investors in exchange
      for excessive and undisclosed commissions and agreements by those investors
      to
      make additional purchases of stock in the aftermarket at pre-determined prices.
      The action seeks damages in an unspecified amount.


9




This
      action is being coordinated with approximately three hundred nearly identical
      actions filed against other companies. On October 9, 2002, the Court dismissed
      the Individual Defendants from the case without prejudice. This dismissal
      disposed of the Section 15 and 20(a) control person claims without prejudice.
      On
      February 19, 2003, the Court dismissed the Section 10(b) claim against us,
      but
      allowed the Section 11 claim to proceed. On December 5, 2006, the Second Circuit
      vacated a decision by the district court granting class certification in six
      of
      the coordinated cases, which are intended to serve as test, or “focus,” cases.
 The plaintiffs selected these six cases, which do not include Airspan. The
      district court’s decisions in the six focus cases are intended to provide strong
      guidance for the parties in the remaining cases. On April 6, 2007, the Second
      Circuit denied a petition for rehearing filed by the plaintiffs, but noted
      that
      the plaintiffs could ask the district court to certify more narrow classes
      than
      those that were rejected.




On
      August
      14, 2007, the plaintiffs filed amended complaints in the six focus cases. The
      amended complaints include a number of changes, such as changes to the
      definition of the purported class of investors. On September 27, 2007, the
      plaintiffs moved to certify classes in the six focus cases. The six focus case
      issuers and the underwriters named as defendants in the focus cases filed
      motions to dismiss the amended complaints against them. On March 26, 2008,
      the
      District Court dismissed the Section 11 claims of those members of the putative
      classes in the focus cases who sold their securities for a price in excess
      of
      the initial offering price and those who purchased outside the previously
      certified class period. With respect to all other claims, the motions to dismiss
      were denied. We are awaiting a decision from the Court on the class
      certification motion. Due to the inherent uncertainties of litigation, we cannot
      accurately predict the ultimate outcome of the matter.  We cannot predict
      whether we will be able to renegotiate a settlement that complies with the
      Second Circuit’s mandate, nor can we predict the amount of any such settlement
      and whether that amount would be greater than Airspan’s insurance
      coverage.  If Airspan is found liable, we are unable to estimate or predict
      the potential damages that might be awarded, whether such damages would be
      greater than Airspan’s insurance coverage and whether such damages would have a
      material impact on our results of operations or financial condition in any
      future period.




On
      October 9, 2007, a purported Airspan shareholder filed a complaint for
      violation of Section 16(b) of the Securities Exchange Act of 1934, which
      prohibits short-swing trading, against the Company's initial public offering
      underwriters. The complaint, Vanessa Simmonds v. Credit Suisse Group,
      et al., Case No. C07-01638, filed in the District Court for the Western
      District of Washington, seeks the recovery of short-swing profits. The
      Company is named as a nominal defendant. No recovery is sought from the
      Company.




We
      have
      received letters/communications from Wi-LAN offering licenses of various Wi-LAN
      patents and contending that products complying with 802.11 and 802.16 standards
      are covered by certain patents allegedly owned by Wi-LAN. The Company, in
      consultation with its patent counsel, has been reviewing Wi-LAN's allegations
      and has had extensive correspondence with Wi-LAN regarding those allegations.
      Wi-LAN continues to threaten the Company with litigation unless it negotiates
      a
      license with Wi-LAN with respect to the patents in question. There can be no
      assurance as to the ultimate outcome of this matter.




Except
      as
      set forth above, we are not currently subject to any other material legal
      proceedings. We may from time to time become a party to various other legal
      proceedings arising in the ordinary course of our business.





**NOTE
      5 – STOCK COMPENSATION**




At
      June
      29, 2008, we had three stock option plans as well as the 2004 Omnibus Equity
      Compensation Plan and the 2000 Employee Stock Purchase Plan. Awards under the
      2004 Omnibus Equity Compensation Plan may be made to participants in the form
      of
      Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights,
      Restricted Stock, Deferred Stock, Stock Awards, Performance Shares, Other
      Stock-Based Awards and others forms of equity based compensation as may be
      provided and are permissible under this Plan and the law. Employee stock options
      granted under all of the plans generally vest over a four-year period and expire
      on the tenth anniversary of their issuance. All options granted under the stock
      option plans had an exercise price equal to the market value of the underlying
      common stock on the date of grant. Restricted stock is common stock that is
      subject to a risk of forfeiture or other restrictions that will lapse upon
      satisfaction of specified performance conditions and/or the passage of time.
      Awards of restricted stock that vest only by the passage of time will generally
      fully vest after four years from the date of grant. At June 29, 2008, the
      Company had reserved a total of 12,624,520 shares of its common stock for
      issuance under the above plans.


10


The
      following table summarizes share-based compensation expense under SFAS No.
      123
      (revised 2004), “Share-Based Payment” (“SFAS 123(R)”) for the three and six
      months ended June 29, 2008 and July 1, 2007, which was allocated as follows
      (in
      thousands):





Three
              Months
              Ended
              June 29,
              2008
            
            Three
              Months
              Ended
              July 1,
              2007
            
            SixMonths
              Ended
              June 29,
              2008
            
            SixMonths
              Ended
              July 1,
              2007Research
                and development
            
            $
            205
            
            $
            159
            
            $
            485
            
            $
            324Sales
                and marketing
            
            
            132
            
            
            218
            
            
            279
            
            
            396General
                and administrative
            
            
            280
            
            
            261
            
            
            556
            
            
            515Stock-based
                compensation expense included in operating expense
            
            
            617
            
            
            638
            
            
            1,320
            
            
            1,235Cost
                of sales
            
            
            21
            
            
            10
            
            
            54
            
            
            17Total
                stock-based compensation
            
            $
            638
            
            $
            648
            
            $
            1,374
            
            $
            1,252





SFAS
      123(R) requires companies to estimate the fair value of share-based awards
      on
      the date of grant using an option-pricing model. The value of the portion of
      the
      award that is ultimately expected to vest is recognized as an expense in our
      consolidated statement of operations over the requisite service periods.
      Compensation expense for all share-based awards is recognized using the
      straight-line single-option method. Because share-based compensation expense
      is
      based on awards that are ultimately expected to vest, share-based compensation
      expense has been reduced to account for estimated forfeitures. SFAS 123(R)
      requires forfeitures to be estimated at the time of grant and revised, if
      necessary, in subsequent periods if actual forfeitures differ from those
      estimates.




To
      calculate option-based compensation under SFAS 123(R), we used the Black-Scholes
      option-pricing model. Our determination of fair value of option-based awards
      on
      the date of grant using the Black-Scholes model is affected by our stock price
      as well as assumptions regarding a number of subjective variables. These
      variables include, but are not limited to our expected stock price volatility
      over the term of the awards, and actual and projected employee stock option
      exercise behaviors.





*Fair
      Value and Assumptions Used to Calculate Fair Value under SFAS
      123(R)*





There
      were no restricted stock shares granted during the first six months of 2008.
      The
      weighted average fair value of each restricted stock share granted under our
      equity compensation plans for the first six months of fiscal 2007 was $4.69.
      The
      fair value of each restricted stock award is estimated on the date of grant
      using the intrinsic value method.





The
      weighted average fair value of each option granted during the first six months
      of 2008 and the first six months of 2007 was $0.78 and $2.83, respectively.
      The
      fair value of each option award is estimated on the date of grant using the
      Black-Scholes option pricing model, using the following weighted average
      assumptions:





Six
                Months EndedJune
                29,
              2008
            
            July
                1,
              2007Expected
                volatility
            
            
            83
            %
            
            81
            %Risk-free
                interest rate
            
            
            3.14
            %
            
            4.73
            %Expected
                life (years)
            
            
            5
            
            
            5Expected
                dividend yield
            
            
            0
            %
            
            0
            %




11


*Assumptions
      for Option-Based Awards under SFAS 123(R)*





The
      expected volatility is determined based on historical price changes of our
      common stock over a period of time which approximates the expected option
      term.





The
      risk-free interest rate assumption is based upon observed interest rates
      appropriate for the term of our stock options.




The
      expected term of options is estimated based on our historical data regarding
      exercise behavior.





The
      dividend yield assumption is based on our history and expectation of no dividend
      payouts.





As
      share-based compensation expense recognized in the consolidated statement of
      operations is based on awards ultimately expected to vest, it has been reduced
      for estimated forfeitures. Forfeitures were estimated based on our historical
      experience.





**NOTE
      6 - NET LOSS PER SHARE**





Net
      loss
      attributable to common stockholders per share is computed using the weighted
      average number of shares of common stock outstanding. Shares associated with
      stock options and common stock to be issued on the conversion of Series B
      Preferred stock are not included in the calculation of diluted net loss
      attributable to common stockholders per share as they are
      anti-dilutive.




The
      following table sets forth the computation of basic and diluted net loss per
      share for the periods indicated.





**Quarter
                End**
            
            **Year-to-Date****June
                29,**
              **2008**
            
            **July
                1,**
              **2007**
            
            **June
                29,**
              **2008**
            
            **July
                1,**
              **2007****(unaudited)**
            
            **(unaudited)**Numerator:Net
                loss
            
            $
            (8,820
            )
            $
            (11,676
            )
            $
            (18,872
            )
            $
            (16,804
            )Denominator:Weighted
                average common shares outstanding basic and diluted
            
            
            58,682,735
            
            
            40,820,968
            
            
            58,641,218
            
            
            40,674,533Net
                loss per share- basic and diluted
            
            $
            (0.15
            )
            $
            (0.29
            )
            $
            (0.32
            )
            $
            (0.41
            )




There
      were 6,849,229 stock options outstanding at June 29, 2008 and 5,357,833 stock
      options outstanding at July 1, 2007 that were excluded from the computation
      of
      diluted net loss per share as their effect was anti-dilutive. If the Company
      had
      reported net income, the calculation of these per share amounts would have
      included the dilutive effect of these common stock equivalents using the
      treasury stock method for stock options. There were 200,690 shares of
      convertible preferred stock at June 29, 2008 and July 1, 2007, respectively,
      that were also excluded from the computation of diluted net loss per share
      as
      their effect was anti-dilutive. The 200,690 shares of convertible preferred
      stock would be convertible into 21,630,856 and 20,069,000 common shares as
      of
      June 29, 2008 and July 1, 2007, respectively. There were 107,940 and 133,347
      non-vested shares of restricted stock at June 29, 2008 and July 1, 2007,
      respectively, that were excluded from the computation of diluted net loss per
      share as their effect was anti-dilutive.


12


**NOTE
      7 - GEOGRAPHIC INFORMATION**





As
      a
      developer and supplier of broadband wireless equipment and other technologies,
      the Company has one reportable segment. The revenue of this single segment
      is
      comprised primarily of revenue from products and, to a lesser extent, services.
      In 2008, the majority of the Company’s revenue was generated from products
      manufactured in the United Kingdom, Mexico and Israel, with additional revenue
      generated from sales of original equipment manufacturers’ products.





An
      analysis of revenue by location of the customer is given below:





**Quarter
                End**
            
            **Year-to-Date****June
                29,**
              **2008**
            
            **July
                1,**
              **2007**
            
            **June
                29,**
              **2008**
            
            **July
                1,**
              **2007****(unaudited)**
            
            **(unaudited)**USA
                and Canada
            
            $
            2,839
            
            $
            2,238
            
            
            5,347
            
            $
            4,936Asia
            
            
            1,593
            
            
            5,194
            
            
            3,620
            
            
            14,143Europe
            
            
            5,147
            
            
            8,737
            
            
            8,508
            
            
            15,607Africa
                and the Middle East
            
            
            4,449
            
            
            94
            
            
            9,659
            
            
            1,127Latin
                America and Caribbean
            
            
            7,363
            
            
            5,810
            
            
            11,416
            
            
            12,920$
            21,391
            
            $
            22,073
            
            $
            38,550
            
            $
            48,733





**NOTE
      8 - RECENT ACCOUNTING PRONOUNCEMENTS**





*Adopted
      Accounting Standards*




Effective
      January 1, 2008, the Company adopted SFAS No. 157, “Fair Value
      Measurements”, or SFAS 157, which defines fair value as the exchange price that
      would be received for an asset or paid to transfer a liability (an exit price)
      in the principal or most advantageous market for the asset or liability in
      an
      orderly transaction between market participants at the measurement date.
      SFAS 157 establishes a three-level fair value hierarchy that prioritizes
      the inputs used to measure fair value. This hierarchy requires entities to
      maximize the use of observable inputs and minimize the use of unobservable
      inputs. The three levels of inputs used to measure fair value are as
      follows:





Level
      1 -
      quoted prices in active markets for identical assets or liabilities


Level
      2 -
      inputs other than Level 1 quoted prices that are directly or indirectly
      observable


Level
      3 -
      significant unobservable inputs that are supported by little or no market
      activity





The
      Company’s adoption of SFAS 157 did not have a material impact on its
      consolidated financial statements. The Company has segregated all financial
      assets and liabilities at fair value on a recurring basis into the most
      appropriate level within the fair value hierarchy based on the inputs used
      to
      determine the fair value at the measurement date in the table below. FASB Staff
      Position FSP FAS 157-2—Effective Date of FASB Statement No. 157 (“FSP FAS
      157-2”) delayed the effective date of SFAS 157 for all nonfinancial assets and
      liabilities until January 1, 2009, except those that are recognized or
      disclosed at fair value in the financial statements on a recurring basis. We
      are
      evaluating the impact that FSP
      FAS
      157-2 will
      have on our consolidated financial statements.





As
      of
      June 29, 2008, financial assets and liabilities subject to fair value
      measurements were as follows (in thousands):





As of June
                29, 2008Level 1
                (a)
            
            Level 2
                (b)
            
            Level 3
            
            BalanceAssetsCash
                equivalents
            
            $
            16,980
            
            $
            -
            
            $
            -
            
            $
            16,980Available
                for sale investments
            
            $
            -
            
            $
            6,860
            
            $
            -
            
            $
            6,860





(a)     These
      consist of money market funds that are priced at the market price


(b)     These
      consist of commercial paper with short maturities and infrequent secondary
      market trades and are priced via mathematical calculations; in the event that
      a
      transaction is observed on the same security, the accretion schedule is
      revised


13




In
      February 2007, the FASB issued Statement No. 159, “The Fair Value
      Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows entities the option to measure
      eligible financial instruments at fair value as of specified dates. Such
      election, which may be applied on an instrument-by-instrument basis, is
      typically irrevocable once elected. Upon adoption, we did not elect the fair
      value option for any items within the scope of SFAS 159 and, therefore, the
      adoption of SFAS 159 did not have an impact on our consolidated financial
      statements.





In
      June
      2007, the FASB ratified Emerging Issues Task Force (“EITF”) 07-3, “Accounting
      for Nonrefundable Advance Payments for Goods or Services Received for Use in
      Future Research and Development Activities” (“EITF 07-3”). EITF 07-3 requires
      nonrefundable advance payments for research and development goods or services
      to
      be deferred and capitalized. The adoption of EITF 07-3 did not have a material
      effect on our consolidated financial statements.




***Future
      Adoption of Accounting Standards***




In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
      Combinations” (“SFAS 141R”). SFAS 141R requires the acquiring entity in a
      business combination to recognize the full fair value of assets acquired and
      liabilities assumed in the transaction whether full or partial acquisition,
      establishes the acquisition-date fair value as the measurement objective for
      all
      assets acquired and liabilities assumed, requires expensing of most transaction
      and restructuring costs, and requires the acquirer to disclose all information
      needed to evaluate and understand the nature and financial effect of the
      business combination. SFAS 141R applies to all transactions or other events
      in
      which an entity obtains control of one or more businesses, including
      combinations achieved without transfer of consideration, for example, by
      contract alone or through the lapse of minority veto rights. SFAS 141R applies
      prospectively to business combinations for which the acquisition date is on
      or
      after the beginning of the first fiscal year beginning after December 15, 2008.
      Management expects that the adoption of SFAS 141R will not have a material
      effect on our consolidated financial statements.





In
      December 2007, EITF 07-01, “Accounting for Collaborative Arrangements
      Related to the Development and Commercialization of Intellectual Property”
(“ EITF 07-01”)
      was issued. EITF 07-01
      prescribes the accounting for collaborations. It requires certain transactions
      between collaborators to be recorded in the income statement on either a gross
      or net basis within expenses when certain characteristics exist in the
      collaboration relationship. Based
      on
      the nature of the arrangement, payments to or from collaborators would be
      evaluated and the terms of the arrangement, the nature of the entity's business
      and whether those payments are within the scope of other accounting literature
      would be presented. Companies are also required to disclose the nature and
      purpose of collaborative arrangements along with the accounting policies and
      the
      classification and amounts of significant financial-statement amounts related
      to
      the arrangements. EITF 07-1 is effective for financial statements issued
      for fiscal years beginning after December 15, 2008, and interim periods
      within those fiscal years, and is to be applied retrospectively to all periods
      presented for all collaborative arrangements existing as of the effective date.We
      are
      evaluating the impact this standard will have on our consolidated financial
      statements.




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements, an Amendment
      of ARB No. 51” (“SFAS
      160”) .
      SFAS
      160 will change the accounting and reporting for minority interests, which
      will
      be recharacterized as noncontrolling interests and classified as a separate
      component of equity rather than as a liability.  SFAS 160 is effective for
      fiscal years beginning on or after December 15, 2008. Management
      expects that the adoption of SFAS 160 will not have a material effect on our
      consolidated financial statements.




In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities - an amendment of FASB Statement No. 133” (“SFAS
      161”).  SFAS 161 amends and expands the disclosure requirements of
      SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”
(“SFAS 133”) to provide a better understanding of how and why an entity uses
      derivative instruments, how derivative instruments and related hedged items
      are
      accounted for, and their effect on an entity’s financial position, financial
      performance, and cash flows.  SFAS 161 is effective for fiscal years
      beginning after November 15, 2008. We are currently evaluating the impact that
      the adoption of SFAS 161 will have on our consolidated financial
      statements.


14


In
      April 2008, the FASB issued FSP 142-3, “Determination of the Useful Life of
      Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors that should be
      considered in developing renewal or extension assumptions used to determine
      the
      useful life of a recognized intangible asset under SFAS No. 142, “Goodwill
      and Other Intangible Assets”. FSP 142-3 is effective for fiscal years beginning
      after December 15, 2008. We are currently assessing the impact of FSP 142-3
      on our consolidated financial statements.





In
      May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally
      Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the
      sources of accounting principles and provides entities with a framework for
      selecting the principles used in preparation of financial statements that are
      presented in conformity with generally accepted accounting principles (“GAAP”).
      The current GAAP hierarchy has been criticized because it is directed to the
      auditor rather than the entity, it is complex, and it ranks FASB Statements
      of
      Financial Accounting Concepts, which are subject to the same level of due
      process as FASB Statements of Financial Accounting Standards, below industry
      practices that are widely recognized as generally accepted but that are not
      subject to due process. The FASB believes the GAAP hierarchy should be directed
      to entities because it is the entity (not its auditors) that is responsible
      for
      selecting accounting principles for financial statements that are presented
      in
      conformity with GAAP. The adoption of SFAS 162 is not expected to have a
      material impact on our consolidated financial statements.





In
      June
      2008, the FASB issued an exposure draft of a proposed amendment to SFAS
      133.  As proposed, this amendment would make several significant
      changes to the way in which entities account for hedging activities involving
      derivative instruments.   The FASB currently expects to issue a
      final Statement by December 31, 2008, which would require adoption by the
      Company beginning January 1, 2010. We
      are
      currently evaluating the impact this exposure draft may have on our consolidated
      financial statements.


15





**Item
                2.**
            **MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS**




**The
      following discussion should be read in conjunction with the Company’s Annual
      Report on Form 10-K for** **the
      year ended December 31, 2007, as well as the financial statements and notes
      thereto. Except for historical matters contained herein, statements made in
      this
      quarterly report on Form 10-Q are forward-looking and are made pursuant to
      the
      safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
      Without limiting the generality of the foregoing, words such as “may”, “will”,
“to”, “plan”, “expect”, “believe”, “anticipate”, “intend”, “could”, “would”,
“estimate”, or “continue” or the negative other variations thereof or comparable
      terminology are intended to identify forward-looking statements. Investors
      and
      others are cautioned that a variety of factors, including certain risks, may
      affect our business and cause actual results to differ materially from those
      set
      forth in the forward-looking statements. These risk factors include, without
      limitation, (i) risks to our ability to develop and sell WiMAX certified
      mobile products in a timely fashion; (ii) a slowdown of expenditures by
      communication service providers and failure of the WiMAX market to develop
      as
      anticipated; (iii) increased competition from alternative communication
      systems; (iv) a higher than anticipated rate of decline in our legacy
      business and/or a slower than anticipated rate of growth in the WiMAX business;
      (v) encroachment of large telecommunications carriers and equipment
      suppliers on the WiMAX market; (vi) the failure of our existing or
      prospective customers to purchase products as projected; (vii) our
      inability to successfully implement cost reduction or containment programs;
      (viii) our inability to retain our key customers; (ix) possible
      infringement of third party technologies which may result in lawsuits that
      could
      be costly to defend and prohibit us from selling our products; (x) risks to
      our ability to compensate for declining sales of obsolescent products with
      increased sales of new products; and (xi) disruptions to our operations in
      Israel, including the absence of employees, due to required military service,
      caused by political and military tensions in the Middle East. The Company is
      also subject to the risks and uncertainties described in its filings with the
      Securities and Exchange Commission, including those set forth in its Annual
      Report on Form 10-K for the year ended December 31, 2007 and its quarterly
      report on Form 10-Q for the quarter ended March 30, 2008.**





**Overview**





We
      are a
      global supplier of broadband wireless equipment supporting the WiMAX protocol
      standard, which provides a wide area telecommunication access network to connect
      end users to telecom backbone networks. Our primary target customers are
      communications service providers and other network operators that deploy WiMAX
      networks in licensed and unlicensed (license exempt) spectrums
      worldwide.




Historically,
      our business addressed communications service providers that used fixed,
      non-WiMAX wireless infrastructure to deliver services in those parts of their
      service areas that are difficult or not cost effective to reach using copper
      or
      fiber. We now offer a comprehensive range of WiMAX solutions to support these
      traditional fixed wireless applications as well as the broader market for the
      mobile applications that WiMAX is expected to enable. We are leveraging many
      years of experience in complex radio systems design to provide innovative and
      cost effective products for all types of WiMAX users.




We
      have
      transitioned our company over the last three years to focus on WiMAX product
      development and sales and marketing. As a result, a majority of our resources
      are now dedicated to WiMAX-based products.




Since
      1998 we have evolved from being the supplier of a single product line of
      broadband wireless access (“BWA”) equipment that utilized our proprietary
      technology to a supplier of a highly diversified suite of BWA equipment,
      including certain equipment that has been developed to conform with WiMAX and
      the WiFi standards. The diversification of our product portfolio has been the
      product of both internal research and development and targeted acquisitions.





As
      a
      result of the migration of telecommunications to platforms that operate using
      the Internet protocol, we expect that our BWA equipment which is designed to
      handle communications over the Internet will become increasingly important
      to
      us. Due to the projected popularity of technologies such as WiMAX and WiFi,
      we
      also anticipate that our WiMAX and WiFi products will become increasingly
      important to us. Our WiMAX and WiFi products are designed to be inter-operable
      with any other equipment that is WiMAX or WiFi Certified,
      respectively. ****** Accordingly,
      these relatively new products face certain opportunities and risks that our
      proprietary products did not encounter.


16


The
      market for BWA equipment has been characterized by rapid technological
      developments and evolving industry standards. Our future success will therefore
      depend on our ability to adapt to these new standards and to successfully
      introduce new technologies that meet customer preferences. We anticipate that
      we
      will need to continue to devote considerable resources to research and
      development to maintain and/or improve upon our competitive position.





Since
      July 1, 2003, we have acquired three suppliers of BWA equipment. We intend
      to
      continue our strategy of expanding our business through, among other things,
      acquisitions of other businesses and technologies and joint ventures.
      Accordingly, we anticipate our future results of operation and financial
      condition may be directly or indirectly materially affected by our acquisition
      and joint venture effort. Acquisitions are inherently risky and our future
      growth may depend on our ability to successfully acquire, operate and integrate
      new businesses into our company.





Our
      revenue from the last three years and the first six months of 2008, shown below,
      details the transition from our legacy products to our WiMAX businesses, which
      has caused significant shifts in our revenue stream and fluctuations in revenues
      as the relative contribution of our WiMAX business increases. In addition,
      the
      sales cycle for new WiMAX customers is somewhat longer than for our legacy
      business, resulting in longer periods before revenues can be recognized from
      new
      WiMAX customers.





*Consolidated
                statement of operations data:*
            
            **Year
                ended December 31,**
            
            **Six
                months**
              **to
                June 29,**($
                in thousands except per share data)
            
            **2005**
            
            **2006**
            
            **2007**
            
            **2008****(unaudited)**Revenue –
                WiMAX
            
            $
            4,489
            
            $
            45,753
            
            $
            64,277
            
            $
            26,029Revenue
                - Non-WiMAX
            
            
            106,477
            
            
            82,059
            
            
            30,693
            
            
            12,521Total
                Revenue
            
            
            110,966
            
            
            127,812
            
            
            94,970
            
            
            38,550Cost
                of revenue
            
            
            (79,467
            )
            
            (94,948
            )
            
            (70,134
            )
            
            (26,570
            )Gross
                profit
            
            
            31,499
            
            
            32,864
            
            
            24,836
            
            
            11,980Margin
            
            
            28
            %
            
            26
            %
            
            26
            %
            
            31
            %Total
                operating expenses
            
            
            48,510
            
            
            63,539
            
            
            55,865
            
            
            31,331Loss
                from operations
            
            
            (17,011
            )
            
            (30,675
            )
            
            (31,029
            )
            
            (19,351
            )Net
                interest and other income
            
            
            1,388
            
            
            1,227
            
            
            661
            
            
            546Loss
                before income taxes
            
            
            (15,623
            )
            
            (29,448
            )
            
            (30,368
            )
            
            (18,805
            )Income
                tax benefit/(provision)
            
            
            546
            
            
            246
            
            
            (94
            )
            
            (67
            )Net
                loss before deemed dividend
            
            
            (15,077
            )
            
            (29,202
            )
            
            (30,462
            )
            
            (18,872
            )Deemed
                    dividend associated with preferred stock
            
            
            -
            
            
            (9,179
            )
            
            (4,670
            )
            
            -Net
                loss attributable to common stockholders
            
            
            ($15,077
            )
            
            ($38,381
            )
            
            ($35,132
            )
            
            ($18,872
            )Net
                    loss attributable to common stockholders per share - basic and
                    diluted
            
            
            ($0.39
            )
            
            ($0.96
            )
            
            ($0.77
            )
            
            ($0.32
            )Weighted
                average shares outstanding - basic and diluted
            
            
            38,736,939
            
            
            40,026,411
            
            
            45,387,386
            
            
            58,641,218


17


Cost
      of
      revenue consists of component and material costs, direct labor costs, warranty
      costs, royalties, overhead related to manufacture of our products and customer
      support costs. Our gross margin is affected by changes in our product mix both
      because our gross margin on base stations and related equipment is higher than
      the gross margin on subscriber terminals, and because our different product
      lines generate different margins. In addition, our gross margin is affected
      by
      changes in the average selling price of our systems and volume discounts granted
      to significant customers. We expect to derive an increasing proportion of our
      revenue in the future from the sale of our products through distribution
      channels.




**Critical
      Accounting Policies and Estimates**




Our
      Condensed Consolidated Financial Statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America.
      We review the accounting policies used in reporting our financial results on
      a
      regular basis. The preparation of these financial statements requires us to
      make
      estimates and judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses and related disclosure of contingent assets and
      liabilities. On an ongoing basis, we evaluate our process used to develop
      estimates. We base our estimates on historical experience and on various other
      assumptions that are believed to be reasonable for making judgments about the
      carrying value of assets and liabilities that are not readily apparent from
      other sources. Actual results may differ from these estimates due to actual
      outcomes being different from those on which we based our assumptions.




Our
      significant accounting policies were described in Note 1 to our audited
      Consolidated Financial Statements included in our Annual Report on Form 10-K
      for
      the year ended December 31, 2007. With the exception of the items discussed
      in Note 8 in the accompanying Condensed Consolidated Financial Statements,
      there
      have been no significant changes to these policies and no recent accounting
      pronouncements or changes in accounting pronouncements during the six months
      ended June 29, 2008.




***Comparison
      of the Quarter Ended June 29, 2008 to the Quarter Ended July 1,
      2007***




Revenue




Revenue
      totaled $21.4 million for the quarter ended June 29, 2008, representing a 3%
      decrease from the $22.1 million reported for the quarter ended July 1, 2007.
      The
      decrease compared to the second quarter in 2007 was attributable mainly to
      a 10%
      reduction in WiMAX products. Non-WiMAX revenues increased to $8.7 million
      in the quarter ending June 29, 2008 from $7.9 million in the quarter ending
      July
      1, 2007.





Geographically,
      in the second quarter of 2008, approximately 35% of our revenue was derived
      from
      customers in Mexico, Latin America and the Caribbean, 24% from customers in
      Europe, 21% from customers in Africa and the Middle East, 13% from customers
      in
      the United States and Canada and 7% from customers in Asia.





During
      the second quarter of 2008, more than 90 customers purchased WiMAX equipment
      from us compared with more than 65 customers during the second quarter of 2007;
      however, due to large sales to two customers in the second quarter of 2007,
      the
      average revenue per customer was lower in the second quarter of
      2008.





Cost
      of
      Revenue




Cost
      of
      revenue decreased 28% to $14.6 million in the quarter ended June 29, 2008 from
      $20.2 million in the quarter ended July 1, 2007 primarily due to a charge of
      $5.9 million for inventory provisions on non-WiMAX products in the 2007 period.
      The gross profit for the second quarter of 2008 was $6.7 million (32% of
      revenue) compared to a gross profit of $1.9 million (8% of revenue) for the
      second quarter of 2007.




18





Research
      and Development Expenses




Research
      and development expenses increased 15% to $6.7 million in the quarter ended
      June
      29, 2008 from $5.8 million in the quarter ended July 1, 2007. The increase
      year
      over year is primarily due to increased personnel costs as we continue to invest
      in the development of WiMAX products.




Sales
      and
      Marketing Expenses




Sales
      and
      marketing expenses increased 23% to $4.3 million in the quarter ended June
      29,
      2008 from $3.5 million in the quarter ended July 1, 2007. The increase as
      compared to the second quarter of 2007 is primarily attributable to additional
      headcount in 2008, trade shows and a higher level of agent commissions.




Bad
      Debt
      Provision




In
      the
      second quarter of 2008, we recorded bad debt provisions of $0.4 million relating
      to customer accounts for which management has determined that full recovery
      is
      unlikely. We recorded bad debt provisions of $0.7 million in the second quarter
      of 2007 and $47 thousand in the first quarter of 2008.





General
      and Administrative Expenses




General
      and administrative expenses decreased 14% to $3.4 million in the quarter ended
      June 29, 2008 from $3.9 million in the quarter ended July 1, 2007. The decrease
      from the second quarter of 2007 was primarily attributable to lower headcount
      related costs in the second quarter of 2008.





Amortization
      of Intangibles




We
      recorded amortization of intangibles expense of $0.2 million in the second
      quarter of 2008 compared with amortization of intangibles expense of $0.2
      million for the second quarter of 2007. The amortization expense arises
      primarily as a result of our acquisition of intangible assets in connection
      with
      the ArelNet and Radionet acquisitions in June and November 2005,
      respectively.





Restructuring





In
      the
      second quarter of 2007, we did not record a restructuring charge. In the second
      quarter of 2008, we recorded a restructuring charge of $0.6 million to reflect
      the restructuring program we commenced in May 2008, the goal of which is to
      reduce operating expenses by approximately 15% compared to the level of
      operating expenses recorded in the first quarter of 2008. The cost reduction
      will be accomplished primarily as a result of reduction in worldwide headcount.
      As of the end of the second quarter of 2008, we had given notice of termination
      that will result in reduced headcount by approximately 10% compared to levels
      at
      the end of the first quarter of 2008. The majority of the headcount reduction
      will be completed by the end of third quarter and we expect to complete the
      restructuring by the end of the year. Based on termination notices given in
      the
      second quarter of 2008, we expect an additional restructuring charge of
      approximately $0.1 million in the third quarter of 2008. The restructuring
      will
      result in a direct cash outlay primarily in the third and fourth quarters of
      2008. Once the program is completed, we project we will be able to realize
      annual cost savings of approximately $2 million relative to the cost structure
      that existed in the first quarter of 2008. Despite our efforts to prepare
      reliable projections, we recognize that our forecasts may prove to be imprecise
      due to unforeseen events, including unanticipated expenses or difficulties
      associated with reducing our workforce, requiring retained staff members to
      assume additional responsibilities and/or reorganizing our operations to more
      cost efficiently produce a given level of product revenue. See also “NOTE 3 -
      ACCRUED RESTRUCTURING CHARGES” to our condensed consolidated financial
      statements contained in this quarterly report on Form 10-Q for additional
      information regarding the restructuring.


19


Interest
      Income, Net




At
      June
      29, 2008, the outstanding principal and accrued interest payable on the Tekes
      Loans was $2.0 million. We also had outstanding borrowings under the bank line
      of credit for $7.5 million. In the second quarter of 2008, we incurred interest
      expense of $0.1 million on these loans compared to interest expense of $48
      thousand in the second quarter of 2007. We had interest income of $0.2 million
      in the second quarter of 2008 compared to $0.3 million in the second quarter
      of
      2007.





Other
      Income (Expense), Net




Other
      income (expense), net increased to income of $0.1 million in the second quarter
      of 2008 from an expense of $28 thousand in the second quarter of
      2008.





Net
      Loss




For
      the
      reasons described above, we incurred a net loss of $8.8 million, or $(0.15)
      per
      share, in the quarter ended June 29, 2008, compared to a net loss of $11.7
      million, or $(0.29) per share, for the quarter ended July 1, 2007.




***Comparison
      of the Six Months Ended June 29, 2008 to the Six Months Ended July 1,
      2007***




Revenue




Revenue
      totaled $38.6 million for the six months ended June 29, 2008, representing
      a 21%
      decrease from the $48.7 million reported for the six months ended July 1, 2007.
      The decrease compared to the first six months of 2007 was attributable mainly
      to
      a decline in non-WiMAX products. Non-WiMAX revenues decreased to $12.5
      million in the six months ending June 29, 2008 from $19.9 million in the six
      months ending July 1, 2007. WiMAX revenues for the first six months of 2008
      were
      $26.0 million compared to $28.8 million in the first six months of
      2007.





Cost
      of
      Revenue




Cost
      of
      revenue decreased 31% to $26.6 million in the six months ended June 29, 2008
      from $38.6 million in the six months ended July 1, 2007 primarily due to
      decreased sales. The cost of revenue for the first six months of 2007 included
      a
      charge of $6.3 million for inventory provisions on non-WiMAX products. The
      gross
      profit for the first six months of 2008 was $12.0 million (31% of revenue)
      compared to a gross profit of $10.1 million (21% of revenue) for the first
      six
      months of 2007. The increase in gross margin percentage in the first six months
      of 2008 as compared to the first six months of 2007 is partly attributable
      to the impact of more revenue coming from products with higher product
      margins and the charge for inventory provisions in the first six months of
      2007.





Research
      and Development Expenses




Research
      and development expenses increased 20% to $13.7 million in the six months ended
      June 29, 2008 from $11.4 million in the six months ended July 1, 2007. The
      increase year over year is primarily due to increased personnel costs as we
      continue to invest in the development of WiMAX products.




Sales
      and
      Marketing Expenses




Sales
      and
      marketing expenses increased 24% to $8.5 million in the six months ended June
      29, 2008 from $6.9 million in the six months ended July 1, 2007. The increase
      as
      compared to the first six months of 2007 is primarily attributable to additional
      headcount in 2008 and a higher level of agent commissions.





Bad
      Debt
      Provision




In
      the
      first six months of 2008, we recorded bad debt provisions of $0.5 million
      relating to customer accounts for which management has determined that full
      recovery is unlikely. We recorded bad debt provisions of $1.0 million in the
      first six months of 2007.


20


General
      and Administrative Expenses




General
      and administrative expenses decreased 8% to $7.5 million in the first six months
      ended June 29, 2008 from $8.2 million in the six months ended July 1, 2007.
      The
      decrease from the first six months of 2007 was primarily attributable to lower
      headcount related costs in the first six months of 2008.





Amortization
      of Intangibles




We
      recorded amortization of intangibles expense of $0.5 million in the six months
      of 2008 and for the first six months of 2007. The amortization expense arises
      primarily as a result of our acquisition of intangible assets in connection
      with
      the ArelNet and Radionet acquisitions in June and November 2005,
      respectively.





Restructuring





In
      the
      first six months of 2007, we did not record a restructuring charge. In the
      second quarter of 2008, we recorded a restructuring charge of $0.6 million
      to
      reflect the restructuring program we commenced in May 2008, the goal of which
      is
      to reduce operating expenses by approximately 15% compared to the level of
      operating expenses recorded in the first quarter of 2008. The cost reduction
      will be accomplished primarily as a result of reduction in worldwide headcount.
      As of the end of the second quarter of 2008, we had given notice of termination
      that will result in reduced headcount by approximately 10% compared to levels
      at
      the end of the first quarter of 2008. The majority of the headcount reduction
      will be completed by the end of third quarter and we expect to complete the
      restructuring by the end of the year. Based on termination notices given in
      the
      second quarter of 2008, we expect an additional restructuring charge of
      approximately $0.1 million in the third quarter of 2008. The restructuring
      will
      result in a direct cash outlay primarily in the third and fourth quarters of
      2008. Once the program is completed, we project we will be able to realize
      annual cost savings of approximately $2 million relative to the cost structure
      that existed in the first quarter of 2008. Despite our efforts to prepare
      reliable projections, we recognize that our forecasts may prove to be imprecise
      due to unforeseen events, including unanticipated expenses or difficulties
      associated with reducing our workforce, requiring retained staff members to
      assume additional responsibilities and/or reorganizing our operations to more
      cost efficiently produce a given level of product revenue. See also “NOTE 3 -
      ACCRUED RESTRUCTURING CHARGES” to our condensed consolidated financial
      statements contained in this quarterly report on Form 10-Q for additional
      information regarding the restructuring.





Interest
      Income, Net




At
      June
      29, 2008, the outstanding principal and accrued interest payable on the Tekes
      Loans was $2.0 million. We also had outstanding borrowings under the bank line
      of credit for $7.5 million. In the first six months of 2008, we incurred
      interest expense of $0.2 million on these loans compared to interest expense
      of
      $0.1 million in the first six months of 2007.  Interest
      income decreased to $0.4 million in the first six months of 2008 compared to
      $0.6 million in the first six months of 2007.





Other
      Income (Expense), Net





Other
      income (expense), net increased to $0.3 million of income in 2008 from $4
      thousand in 2007, primarily due to foreign exchange gains in the first six
      months of 2008 on assets in currencies other than the US dollar and a reversal
      of accrued US franchise taxes.





Net
      Loss




For
      the
      reasons described above, we incurred a net loss of $18.9 million, or $(0.32)
      per
      share, in the six months ended June 29, 2008, compared to a net loss of $16.8
      million, or $(0.41) per share, for the six months ended July 1, 2007.




**Liquidity
      and Capital Resources**




As
      of
      June 29, 2008 we had cash, cash equivalents, short-term investments and current
      restricted cash of $33.1 million, as compared to $36.7 million at December
      31,
      2007. As of June 29, 2008, this consisted of cash and cash equivalents totaling
      $25.7 million, short-term investments totaling $6.9 million and $0.5 million
      of
      restricted cash in current assets. In addition, we had restricted cash of $1.2
      million in other non-current assets. We have no material capital
      commitments.


21


Since
      inception, we have financed our operations through private sales of convertible
      preferred stock, public offerings of common stock and a secured bank line of
      credit.





On
      August
      7, 2007, we and our wholly-owned subsidiary, Airspan Communications Limited,
      entered into an amendment to our August 1, 2006 Loan and Security Agreement
      (the
“Loan and Security Agreement”) with Silicon Valley Bank (“SVB”), with respect to
      a revolving credit line. For the term of the credit line, which expires on
      December 31, 2008, we may, subject to certain adjustments, borrow up to the
      lesser of (i) $20 million and (ii) 80% of eligible accounts receivable. As
      of
      June 29, 2008, the Company did not have any unused available credit. We are
      currently using the credit line and we expect to continue to use it for the
      remainder of 2008. Although we believe the credit facility will increase our
      financial resources and financial flexibility, our use of the credit facility
      does present certain risks. Our ability to borrow under the credit facility
      is a
      function of, among other things, our base of eligible accounts receivable and
      the rate at which advances are made against eligible receivables (the “Advance
      Rate”). If the amount or quality of our accounts receivable deteriorates or the
      Advance Rate or eligibility criteria are adjusted adversely by SVB, our ability
      to borrow under the credit facility will be directly, negatively affected.
      If
      there is an adverse adjustment in the borrowing base at a time when we are
      unable to, within three business days, repay SVB the amount by which the
      borrowing base has been decreased, we will likely be in default under the Loan
      and Security Agreement. In addition, the credit facility requires us to satisfy
      certain financial covenants, including the maintenance of tangible net worth.
      As
      of June 29, 2008, the tangible net worth requirement was $44.0 million and
      the
      Company’s actual tangible net worth was $44.5 million. The Company was in
      compliance with all of the financial covenants at June 29, 2008. There is no
      assurance the Company will be able to meet this covenant in future quarters
      as
      required by the Loan and Security Agreement. In the event the Company is unable
      to meet this test in the future, we would plan to seek an amendment or waiver
      of
      this covenant. There can be no assurance that any such waiver or amendment
      would
      be granted. As a result, we
      may be
      required to repay any or all of our existing borrowings andwe cannot
      provide any assurance that we will be able to borrow under the Loan and Security
      Agreement at a time when we most need money to fund working capital or other
      needs and prohibit us from paying dividends on our capital stock. The credit
      facility also contains various provisions that restrict our use of cash and
      operating flexibility. These provisions could have important consequences for
      us, including (i) causing us to use a portion of our cash flow from operations
      for debt repayment and/or service rather than other perceived needs, (ii)
      precluding us from incurring additional debt financing for future working
      capital or capital expenditures and (iii) impacting our ability to take
      advantage of significant, perceived business opportunities, such as acquisition
      opportunities or to react to market conditions. Our failure to meet financial
      and other covenants could give rise to a default under the Loan and Security
      Agreement. In the event of an uncured default, the Loan and Security Agreement
      provides that all amounts owed to SVB are immediately due and payable and that
      SVB has the right to enforce its security interest in our assets. The Loan
      and
      Security Agreement is secured by collateral, including all of our rights and
      interests in substantially all of our personal property, including accounts
      receivable, inventory, equipment, general intangibles, intellectual property,
      books and records, contract rights and proceeds of the above items. At June
      29,
      2008, $7.5 million of indebtedness was outstanding under the Loan and Security
      Agreement. Advances under the Loan and Security Agreement bear interest at
      SVB's
      prime rate plus a percentage ranging from 0.0% to 1.75%, depending on certain
      financial and collateral tests. The monthly interest is calculated based on
      the
      higher amount of outstanding borrowings or $7.5 million. We have issued $2.3
      million of letters of credit under the facility, which were still outstanding
      at
      June 29, 2008.




The
        Company is in discussions with SVB to increase the borrowing availability
        under
        the Loan and Security Agreement and make other amendments thereto including
        amending the tangible net worth covenant. However no definitive
        agreements have been executed to date.


For
      the
      six months ended June 29, 2008, we used $2.8 million of cash for operating
      activities, compared with an operating cash outflow of $9.7 million for the
      six
      months ended July 1, 2007. The operating cash outflow for the first six months
      of 2008 was primarily a result of the:





·
            net
                loss of $18.9 million;


·
            decrease
                of $4.2 million in accounts payable;
                and


·
            decrease
                of $2.3 million in deferred
                revenue.




The
      cash
      outflow was offset by:


·
            decrease
                of $14.8 million in receivables;
                and


·
            decrease
                of $3.4 million in inventory.


22


Days
      sales outstanding were at 67 days at the end of the second quarter of 2008,
      down
      from 108 days at the end of the first quarter of 2008. The change from the
      end
      of the first quarter of 2008 to the end of the second quarter of 2008 reflects
      the lower revenue level in the most recent period and the collection of larger
      amounts of receivables in the second quarter;
      including, among other things, $4.7 million of receivables collected as a result
      of the settlement of a dispute with Deutsche Breitband Dienste
      GmbH. Inventory turns were 4.8 for the second quarter of 2008,
      compared with 3.6 for the first quarter of 2008. The change in inventory turns
      is primarily attributable to the higher cost of sales in the second quarter.





The
      net
      cash used in investing activities for the six months ended June 29, 2008 was
      $2.3 million. The investing cash outflow for the first six months of 2008
      resulted from $1.3 million of net purchases of investment securities and $1.0
      million of fixed asset purchases.





Our
      net
      cash provided by financing activities for the six months ended June 29, 2008
      was
      $0.1 million from the exercise of stock options.





As
      of
      June 29, 2008, our material commitments consisted of obligations on operating
      leases, repayment of principal and interest owed on the Tekes Loans and purchase
      commitments to our manufacturing subcontractors. These purchase commitments
      totaled $15.9 million at June 29, 2008 and $27.0 million at July 1,
      2007.





We
      have
      explored and may in the future explore and pursue other perceived opportunities
      to acquire wireless access and related businesses. We may seek to acquire such
      businesses through a variety of different legal structures and may utilize
      cash,
      common stock, preferred stock, other securities or some combination thereof
      to
      finance the acquisition. In connection with such activities, we are subject
      to a
      variety of risks, a number of which are described further in the Company’s Form
      10-K for the fiscal year ended December 31, 2007 and in its Form 10-Q for the
      quarter ended March 30, 2008. There can be no assurances that our efforts to
      acquire other businesses will be successful.





We
      have
      raised equity in the past and may in the future seek to raise additional equity
      or debt capital to assist us in financing an acquisition and/or our on-going
      business operations or those of any business that we may in the future acquire.
      Among other securities, we may seek to sell additional shares of common stock,
      or shares of an existing or newly designated class of preferred stock or debt
      securities. We have not, as of the date of this report, entered into any
      definitive financing arrangements other than those described above. There can
      be
      no assurances that we will be able to secure equity or debt capital in amounts
      and on terms acceptable to us. Although we will seek to secure financing on
      terms and conditions favorable to the Company and its existing shareholders,
      we
      may seek to raise capital by issuing securities, which, under certain
      circumstances, enjoy certain preferences and/or priorities relative to the
      common stock.





Until
      we
      are able to generate positive cash flow from operations, if ever, we intend
      to
      use our existing cash resources and the Loan and Security Agreement, if
      available, together with, depending on market conditions and opportunities,
      the
      net proceeds of equity financings to finance our operations. We currently
      believe we will have sufficient cash resources to finance our operations for
      at
      least the next twelve months.




On
      April 25, 2008, the Company received a letter from the Nasdaq Stock Market
      (the “Notice”) notifying the Company that for the 30 consecutive trading days
      preceding the date of the Notice, the bid price of the Company’s common stock
      had closed below the $1.00 per share minimum required for continued listing
      on
      The Nasdaq Global Market pursuant to Nasdaq Marketplace Rule 4450(a)(5). The
      Notice also stated that pursuant to Nasdaq Marketplace Rule 4450(e)(2), the
      Company has been provided 180 calendar days, or until October 22, 2008, to
      regain compliance. To do so, the bid price of the Company’s common stock must
      close at or above $1.00 per share for a minimum of ten consecutive trading
      days
      prior to that date. The Company intends to monitor the bid price for its common
      stock and consider options available to the Company to achieve compliance with
      the continued listing standards of Nasdaq.




23


**Item
              3.**
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURE ABOUT MARKET
                RISK**




Interest
      Rate Risk




The
      Company’s earnings are affected by changes in interest rates. As of June 29,
      2008 and December 31, 2007, we had cash, cash equivalents, short term
      investments and restricted cash of $33.1 million and $36.7 million,
      respectively. These amounts consisted of highly liquid investments, with more
      than 71% having purchase to maturity terms of 90 days or less. The balance
      has
      maturity terms of between 244 to 361 days. These investments are exposed to
      interest rate risk, but a hypothetical increase or decrease in market interest
      rates by two percentage points from June 29, 2008 rates would cause the fair
      market value of these short-term investments to change by an insignificant
      amount. Due to the short duration of these investments, a short-term increase
      in
      interest rates would not have a material effect on our financial condition
      or
      results of operations. Declines in interest rates over time would, however,
      reduce our interest income. Due to the uncertainty of the specific actions
      that
      would be taken to mitigate this, and their possible effects, the sensitivity
      analysis does not take into account any such action.




Foreign
      Currency Exchange Rate Risk




For
      the
      six months ended June 29, 2008, 93% of our sales were denominated in US dollars,
      3% were denominated in pounds sterling, 2% were denominated in Australian
      dollars, 1% were denominated in euro and 1% were denominated in the New Israeli
      Shekel. Comparatively, for the six months ended July 1, 2007, 76% of our sales
      were denominated in US dollars, 18% were denominated in euro, 3% were
      denominated in pounds sterling and 3% were denominated in Australian dollars.
      Our total pounds sterling denominated sales for the six months ended June 29,
      2008 were $1.0 million, which were recorded at an average exchange rate of
      $1US
      = GBP £0.50495. Our total Australian dollar denominated sales for the six months
      ended June 29, 2008 were $0.9 million, which were recorded at an average
      exchange rate of $1US = AUS$1.08537. Our total euro denominated sales for the
      six months ended June 29, 2008 were $0.5 million, which were recorded at an
      average exchange rate of $1US = €0.65690. Our total New Israeli Shekel
      denominated sales for the six months ended June 29, 2008 were $0.3 million,
      which were recorded at an average exchange rate of $1US = 3.5473 Shekels. If
      the
      average exchange rates used had been higher or lower during the six month period
      ended June 29, 2008 by 10%, they would have decreased or increased the total
      pounds sterling, Australian dollar, euro and New Israeli Shekel-denominated
      sales value by a total of $0.2 million. We expect the proportions of sales
      in
      euro and Australian dollars to fluctuate over time. The Company’s sensitivity
      analysis for changes in foreign currency exchange rates does not take into
      account changes in sales volumes.




For
      the
      six months ended June 29, 2008, we incurred the majority of our cost of revenue
      in US dollars.




The
      Company’s operating results are affected by movements in foreign currency
      exchange rates against the US dollar, particularly the UK pound sterling and
      New
      Israeli Shekel. This is because most of our operating expenses, which may
      fluctuate over time, are incurred in pounds sterling and New Israeli Shekels.




During
      the six months ended June 29, 2008, we paid expenses in local currency of
      approximately 8.0 million pounds sterling, at an average exchange rate of $1US
      =
      0.50553 pounds sterling. During the six months ended June 29, 2008, we paid
      expenses in local currency of approximately 10.3 million New Israeli Shekels,
      at
      an average exchange rate of $1US = 3.5473 Shekels. If the average exchange
      rates
      for pounds sterling and New Israeli Shekels had been higher or lower for the
      six
      month period ended June 29, 2008 by 10%, the total pounds sterling and New
      Israeli Shekel-denominated operating expenses would have decreased or increased
      by $2.3 million and $0.7 million, respectively.





We
      expect
      the proportions of operating expenses paid in pounds sterling and New Israeli
      Shekels to fluctuate over time.




We
      do not
      enter into any currency hedging activities for speculative purposes.


24




*Equity
      Price Risk*




We
      do not
      own any equity investments, other than the shares of our subsidiaries. As a
      result, we do not currently have any direct equity price risk.




*Commodity
      Price*




We
      do not
      enter into contracts for the purchase or sale of commodities. As a result,
      we do
      not currently have any direct commodity price risk.




**Item
              4.**
            **CONTROLS
                AND PROCEDURES**




As
      of the
      end of the period covered by this quarterly report, an evaluation was performed
      under the supervision and with the participation of our management, including
      our Chief Executive Officer and Chief Financial Officer, of the effectiveness
      of
      the design and operation of our disclosure controls and procedures (as defined
      in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
      as
      amended). Based on that evaluation, and the similar evaluation undertaken at
      the
      end of 2007, the Chief Executive Officer and Chief Financial Officer concluded
      that as of June 29, 2008, our disclosure controls and procedures were
      effective.





There
      have been no changes in the Company’s internal controls over financial reporting
      that occurred during the Company’s second quarter of 2008 that have materially
      affected, or are reasonably likely to materially affect, the Company’s internal
      control over financial reporting.





As
      of the
      last business day of our second fiscal quarter (June 29, 2008), our public
      float, as calculated in accordance with Rule 12b-2 under the Securities Exchange
      Act of 1934, as amended ("Rule 12b-2"), was less than $50 million. As such,
      in
      addition to our being an accelerated filer (as defined in Rule 12b-2),
      we also became a smaller reporting company (as defined in Rule 12b-2)
      on such date.  At the end of our fiscal year, we will cease to be an
      accelerated filer and will only be a smaller reporting company.


25


**PART
      II.**  **OTHER
      INFORMATION**




**Item
              1.**
            **LEGAL
                PROCEEDINGS**




On
      and
      after July 23, 2001, three Class Action Complaints were filed in the United
      States District Court for the Southern District of New York naming as defendants
      Airspan, and certain current or former officers and directors (referred to
      herein as the “Individual Defendants”) together with certain underwriters of our
      July 2000 initial public offering. A Consolidated Amended Complaint, which
      is
      now the operative complaint, was filed on July 19, 2002. The complaint alleges
      violations of Sections 11 and 15 of the Securities Act of 1933 and Sections
      10(b) and 20(a) of the Securities Exchange Act of 1934 for issuing a
      Registration Statement and Prospectus that contained materially false and
      misleading information and failed to disclose material information. In
      particular, the plaintiffs allege that the underwriter-defendants agreed to
      allocate stock in our initial public offering to certain investors in exchange
      for excessive and undisclosed commissions and agreements by those investors
      to
      make additional purchases of stock in the aftermarket at pre-determined prices.
      The action seeks damages in an unspecified amount.




This
      action is being coordinated with approximately three hundred nearly identical
      actions filed against other companies. On October 9, 2002, the Court dismissed
      the Individual Defendants from the case without prejudice. This dismissal
      disposed of the Section 15 and 20(a) control person claims without prejudice.
      On
      February 19, 2003, the Court dismissed the Section 10(b) claim against us,
      but
      allowed the Section 11 claim to proceed. On December 5, 2006, the Second Circuit
      vacated a decision by the district court granting class certification in six
      of
      the coordinated cases, which are intended to serve as test, or “focus,” cases.
 The plaintiffs selected these six cases, which do not include Airspan. The
      district court’s decisions in the six focus cases are intended to provide strong
      guidance for the parties in the remaining cases. On April 6, 2007, the Second
      Circuit denied a petition for rehearing filed by the plaintiffs, but noted
      that
      the plaintiffs could ask the district court to certify more narrow classes
      than
      those that were rejected.




On
      August
      14, 2007, the plaintiffs filed amended complaints in the six focus cases. The
      amended complaints include a number of changes, such as changes to the
      definition of the purported class of investors. On September 27, 2007, the
      plaintiffs moved to certify classes in the six focus cases. The six focus case
      issuers and the underwriters named as defendants in the focus cases filed
      motions to dismiss the amended complaints against them. On March 26, 2008,
      the
      District Court dismissed the Section 11 claims of those members of the putative
      classes in the focus cases who sold their securities for a price in excess
      of
      the initial offering price and those who purchased outside the previously
      certified class period. With respect to all other claims, the motions to dismiss
      were denied. We are awaiting a decision from the Court on the class
      certification motion. Due to the inherent uncertainties of litigation, we cannot
      accurately predict the ultimate outcome of the matter.  We cannot predict
      whether we will be able to renegotiate a settlement that complies with the
      Second Circuit’s mandate, nor can we predict the amount of any such settlement
      and whether that amount would be greater than Airspan’s insurance
      coverage.  If Airspan is found liable, we are unable to estimate or predict
      the potential damages that might be awarded, whether such damages would be
      greater than Airspan’s insurance coverage and whether such damages would have a
      material impact on our results of operations or financial condition in any
      future period.




On
      October 9, 2007, a purported  Airspan  shareholder
      filed a complaint for violation of Section 16(b) of the Securities Exchange
      Act of 1934, which prohibits short-swing trading, against the Company's initial
      public offering underwriters. The complaint, Vanessa
      Simmonds v.  Credit
      Suisse Group, et al., Case No. C07-01638, filed in the District Court for
      the Western District of Washington, seeks the recovery of short-swing
      profits. The Company is named as a nominal defendant. No recovery is
      sought from the Company.




We
      have
      received letters/communications from Wi-LAN offering licenses of various Wi-LAN
      patents and contending that products complying with 802.11 and 802.16 standards
      are covered by certain patents allegedly owned by Wi-LAN. The Company, in
      consultation with its patent counsel, has been reviewing Wi-LAN's allegations
      and has had extensive correspondence with Wi-LAN regarding those allegations.
      Wi-LAN continues to threaten the Company with litigation unless it negotiates
      a
      license with Wi-LAN with respect to the patents in question. There can be no
      assurance as to the ultimate outcome of this matter.




Except
      as
      set forth above, we are not currently subject to any other material legal
      proceedings. We may from time to time become a party to various other legal
      proceedings arising in the ordinary course of our business.


26


**Item
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





The
      Annual Meeting of Shareholders (the “Annual Meeting”) was held at Airspan’s
      offices in Boca Raton, Florida, on May 29, 2008 for the following
      purposes:





·
            To
                elect nine members to the Company’s Board of Directors to hold office
                until the next Annual Meeting of Shareholders or until their successors
                are duly elected and qualified;





·
            To
                consider and vote upon a proposal to approve an amendment to the
                Omnibus
                Equity Compensation Plan to increase the shares available for issuance
                from 5,000,000 to 9,500,000; and





·
            To
                consider and vote upon a proposal to approve of and ratify the selection
                of Grant Thornton, LLP as the Company's independent registered public
                accounting firm for the fiscal year ending December 31, 2008.





The
      number of outstanding shares of the Company’s Common Stock and Series B
      Preferred Stock as of April 17, 2008, the record date for the Annual Meeting,
      was 58,683,534 and 200,690, respectively. 48,613,076 shares of Common Stock
      and
      200,690 shares of Series B Preferred Stock were represented in person or by
      proxy at the Annual Meeting.





Pursuant
      to the Company’s Articles of Incorporation, shareholders are entitled to one
      vote for each share of Common Stock and 81 votes for each share of Series B
      Preferred Stock.





The
      following directors were elected at the Annual Meeting: (i) Matthew J. Desch,
      (ii) Eric D. Stonestrom, (iii) Julianne M. Biagini, (iv) Bandel L. Carano,
      (v)
      Michael T. Flynn, (vi) Frederick R. Fromm, (vii) Guillermo Heredia, (viii)
      Thomas S. Huseby and (ix) David A. Twyver.





The
      following table sets forth the number of votes cast for, against, or withheld
      for each director nominee, as well as the number of abstentions and broker
      non-votes as to each such director nominee:





Director
                Nominee
            
            Votes
                Cast
              For
            
            Votes
                Cast
              Against
            
            Votes
                Withheld
            
            Abstentions
            
            Broker
              Non-VotesMatthew
                J. Desch
            
            63,604,718
            
            -
            
            1,264,248
            
            -
            
            -Eric
                D. Stonestrom
            
            63,589,689
            
            -
            
            1,279,277
            
            -
            
            -Julianne
                M. Biagini
            
            63,385,326
            
            -
            
            1,483,640
            
            -
            
            -Bandel
                L. Carano
            
            63,360,253
            
            -
            
            1,508,713
            
            -
            
            -Michael
                T. Flynn
            
            63,633,797
            
            -
            
            1,235,169
            
            -
            
            -Frederick
                R. Fromm
            
            63,602,601
            
            -
            
            1,266,365
            
            -
            
            -Guillermo
                Heredia
            
            47,099,890
            
            -
            
            17,769,076
            
            -
            
            -Thomas
                S. Huseby
            
            63,219,899
            
            -
            
            1,649,067
            
            -
            
            -David
                A. Twyver
            
            63,597,690
            
            -
            
            1,279.277
            
            -
            
            -





With
      respect to the proposal to approve an amendment to the Omnibus Equity
      Compensation Plan to increase the shares available for issuance from 5,000,000
      to 9,500,000: (i) 25,369,151 votes were cast for such proposal, (ii) 19,639,308
      votes were cast against such proposal and (iii) 55,410 shares abstained from
      voting on such proposal. No votes were withheld and there were 19,805,097 broker
      non-votes with respect to such proposal. All outstanding shares of Series B
      Preferred Stock voted in favor of such proposal. Accordingly, the proposal
      to
      approve an amendment to the Omnibus Equity Compensation Plan to increase the
      shares available for issuance from 5,000,000 to 9,500,000, was approved by
      the
      shareholders.





With
      respect to the proposal to approve of and ratify the selection of Grant
      Thornton, LLP as the Company’s independent registered public accounting firm for
      the fiscal year ending December 31, 2008: (i) 64,105,785 votes were cast for
      such proposal, (ii) 567,454 votes were cast against such proposal and (iii)
      195,726 shares abstained from voting on such proposal. No votes were withheld
      nor were there any broker non-votes with respect to such proposal. Accordingly,
      the proposal to approve of and ratify Grant Thornton, LLP as the Company’s
      independent registered public accounting firm for the fiscal year ending
      December 31, 2008, was approved by the shareholders.


27


**Item
      6. EXHIBITS**




**31.1**
            **Certification
                of the Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002*****31.2**
            **Certification
                of the Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002*****32.1**
            **Certification
                of the Chief Executive Officer pursuant to section 906 of the
                Sarbanes-Oxley Act of 2002******32.2**
            **Certification
                of the Chief Financial Officer pursuant to section 906 of the
                Sarbanes-Oxley Act of 2002****





*****
            **Filed
                herewith********
            **Furnished
                herewith**




**SIGNATURES**




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




**AIRSPAN
                NETWORKS INC.**Date: August
                6, 2008
            By:
            /s/ DAVID
                BRANTName:  
                David BrantTitle:    
                Chief Financial Officer


28