**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934





**For
      the quarterly period ended September 30, 2007**





OR





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934





For
      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, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.





Non-accelerated
      filer  ̈   Large
      accelerated filer  ̈   Accelerated
      filer x





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 November 5, 2007Common
                Stock, $.0003 par value per share
            
            58,501,796
                shares








**TABLE
      OF CONTENTS**




**Page****Number**PART
                1.
            FINANCIAL
                INFORMATION
            2Item
                1.
            FINANCIAL
                STATEMENTS
            2CONDENSED
                CONSOLIDATED BALANCE SHEETS
            2CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS
            3CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS
            4Notes
                to Condensed Consolidated Financial Statements
            5Item
                2.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            17Item
                3.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
            26Item
                4.
            CONTROLS
                AND PROCEDURES
            27Part
                II.
            OTHER
                INFORMATION
            28Item
                1.
            LEGAL
                PROCEEDINGS
            28Item
                1A.
            RISK
                FACTORS
            30Item
                6.
            EXHIBITS
            33SIGNATURES
            33EXHIBIT
                INDEX
            34





i




**PART
      1.**  **FINANCIAL
      INFORMATION**




**Item
      1.**  **FINANCIAL
      STATEMENTS**




**AIRSPAN
      NETWORKS INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


(in
      thousands, except for share data)





**December 31,**
              **2006**
            
            **September 30,2007****(Audited)**
            
            **(Unaudited)****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            15,890
            
            $
            38,300Restricted
                cash
            
            
            1,111
            
            
            237Short-term
                investments
            
            
            10,233
            
            
            10,513Accounts
                receivable, less allowance for doubtful accounts of$5,489
                at December 31, 2006 and $6,932 at September 30, 2007
            
            
            31,063
            
            
            26,796Unbilled
                accounts receivable
            
            
            711
            
            
            274Inventory
            
            
            23,624
            
            
            17,490Prepaid
                expenses and other current assets
            
            
            5,935
            
            
            5,363Total
                current assets
            
            
            88,567
            
            
            98,973Property,
                plant and equipment, net
            
            
            5,705
            
            
            5,483Goodwill
            
            
            10,231
            
            
            10,231Intangible
                assets, net
            
            
            2,806
            
            
            2,103Other
                non-current assets
            
            
            3,245
            
            
            3,186**Total
                assets**
            
            $
            110,554
            
            $
            119,976**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            15,940
            
            $
            15,687Accrued
                taxes
            
            
            687
            
            
            681Deferred
                revenue
            
            
            6,656
            
            
            5,113Customer
                advances
            
            
            1,665
            
            
            1,233Other
                accrued expenses
            
            
            16,197
            
            
            11,302Short-term
                debt
            
            
            —
            
            
            7,500Total
                current liabilities
            
            
            41,145
            
            
            41,516Long-term
                debt
            
            
            1,554
            
            
            1,597Accrued
                interest on long-term debt
            
            
            153
            
            
            142**Total
                liabilities**
            
            
            42,852
            
            
            43,255**Commitments
                and contingencies****Stockholders’
                equity**Preferred
                stock, $0.0001 par value; 250,000 shares authorized at December 31,
                2006
                and September 30, 2007; 200,690 shares issued at December 31, 2006
                and
                September 30, 2007
            
            
            -
            
            
            -Common
                stock, $0.0003 par value; 100,000,000 shares authorized at
                December 31, 2006 and September 30, 2007; 40,380,910 and 56,245,872
                issued at December 31, 2006 and September 30, 2007,
                respectively
            
            
            12
            
            
            17Note
                receivable –
                stockholder
            
            
            (87
            )
            
            (87
            )Additional
                paid-in capital
            
            
            308,768
            
            
            344,493Accumulated
                deficit
            
            
            (240,991
            )
            
            (267,702
            )**Total
                stockholders’ equity**
            
            
            67,702
            
            
            76,721T**otal
                liabilities and stockholders’ equity**
            
            $
            110,554
            
            $
            119,976




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




2




**AIRSPAN
      NETWORKS INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


(in
      thousands except for share and per share data)





**Quarter
                Ended**
            
            **Year-to-Date****October 1,2006**
            
            **September 30,2007**
            
            **October 1,2006**
            
            **September 30,2007****(unaudited)**
            
            **(unaudited)**Revenue
            
            $
            27,303
            
            $
            22,470
            
            $
            96,538
            
            $
            71,203Cost
                of revenue
            
            
            (20,047
            )
            
            (14,680
            )
            
            (74,119
            )
            
            (53,311
            )Gross
                profit
            
            
            7,256
            
            
            7,790
            
            
            22,419
            
            
            17,892Operating
                expenses:Research
                and development
            
            
            6,065
            
            
            6,186
            
            
            18,850
            
            
            17,573Sales
                and marketing
            
            
            4,051
            
            
            3,521
            
            
            13,582
            
            
            10,391Bad
                debt
            
            
            297
            
            
            632
            
            
            1,548
            
            
            1,587General
                and administrative
            
            
            4,072
            
            
            3,010
            
            
            12,154
            
            
            11,184Amortization
                of intangibles
            
            
            276
            
            
            234
            
            
            826
            
            
            702Restructuring
            
            
            1,528
            
            
            —
            
            
            1,528
            
            
            (485
            )Total
                operating expenses
            
            
            16,289
            
            
            13,583
            
            
            48,488
            
            
            40,952Loss
                from operations
            
            
            (9,033
            )
            
            (5,793
            )
            
            (26,069
            )
            
            (23,060
            )Interest
                expense
            
            
            (78
            )
            
            (175
            )
            
            (162
            )
            
            (246
            )Interest
                and other income
            
            
            5
            
            
            223
            
            
            885
            
            
            794Loss
                before income taxes
            
            
            (9,106
            )
            
            (5,745
            )
            
            (25,346
            )
            
            (22,512
            )Income
                tax credits/(charge)
            
            
            (17
            )
            
            (24
            )
            
            262
            
            
            (61
            )Net
                loss before deemed dividend
            
            
            (9,123
            )
            
            (5,769
            )
            
            (25,084
            )
            
            (22,573
            )Deemed
                dividend associated withpreferred
                stock
            
            
            (9,179
            )
            
            (4,138
            )
            
            (9,179
            )
            
            (4,138
            )Net
                loss attributable to common stockholders
            
            $
            (18,302
            )
            $
            (9,907
            )
            $
            (34,263
            )
            $
            (26,711
            )Net
                loss attributable to common stockholders per share - basic and
                diluted
            
            $
            (0.46
            )
            $
            (0.24
            )
            $
            (0.86
            )
            $
            (0.65
            )Weighted
                average shares outstanding- basic and diluted
            
            
            40,137,526
            
            
            41,905,579
            
            
            39,924,492
            
            
            41,084,881




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




3


**AIRSPAN
      NETWORKS INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(in
      thousands)**




**Year-to-date**
            
            **Year-to-date****October 1, 2006**
            
            **September 30, 2007****(unaudited)**
            
            **(unaudited)****Cash
                flows from operating activities**Net
                loss
            
            $
            (25,084
            )
            $
            (22,573
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            2,793
            
            
            2,835Accrued
                interest on long-term debt
            
            
            (101
            )
            
            31Non-cash
                stock compensation
            
            
            1,829
            
            
            1,846Revaluation
                of long-term debt
            
            
            200
            
            
            —Loss
                on sale of property, plant and equipment
            
            
            —
            
            
            10Changes
                in operating assets and liabilities:(Increase)/decrease
                in receivables
            
            
            (74
            )
            
            4,705(Increase)/decrease
                in inventories
            
            
            (6,515
            )
            
            6,135(Increase)/decrease
                in other current assets
            
            
            (4,207
            )
            
            572Decrease
                in accounts payables
            
            
            (703
            )
            
            (253
            )Increase/(decrease)
                in deferred revenue
            
            
            1,206
            
            
            (1,543
            )Decrease
                in customer advances
            
            
            (9,359
            )
            
            (432
            )Increase/(decrease)
                in other accrued expenses
            
            
            1,183
            
            
            (4,901
            )Decrease
                in other operating assets
            
            
            995
            
            
            933Net
                cash used in operating activities
            
            
            (37,837
            )
            
            (12,635
            )**Cash
                flows from investing activities**Purchase
                of property, plant and equipment
            
            
            (2,744
            )
            
            (1,921
            )Purchase
                of short-term investments
            
            
            (2,005
            )
            
            (12,274
            )Proceeds
                from sale of short-term investments
            
            
            7,017
            
            
            11,994Net
                cash provided by (used in) investing activities
            
            
            2,268
            
            
            (2,201
            )**Cash
                flows from financing activities**Borrowings
                under line of credit
            
            
            -
            
            
            7,500Proceeds
                from public offering, net of issuance costs
            
            
            -
            
            
            28,022Proceeds
              from the exercise of stock options
            
            
            583
            
            
            1,122Proceeds
              from sale of common stock
            
            
            332
            
            
            602Proceeds
                from sale of Series “B” preferred stock, net of issuance
                costs
            
            
            28,692
            
            
            -Net
                cash provided by financing activities
            
            
            29,607
            
            
            37,246(Decrease)
                increase in cash and cash equivalents
            
            
            (5,962
            )
            
            22,410**Cash
                and cash equivalents, beginning of period**
            
            
            44,140
            
            
            15,890**Cash
                and cash equivalents, end of period**
            
            $
            38,178
            
            $
            38,300




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




4





**Airspan
      Networks Inc.**


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


(Unaudited)




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





*Business*




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 R ,
      a
      self-regulatory, industry standards-setting organization. While our main product
      focus is WiMAX, we utilize other supplemental technologies, including Wireless
      Fidelity (“Wi-Fi”) 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 (“IP”), 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 PDAs 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 400 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. We recently announced the introduction of a portable
      miniature device that can be plugged into a standard laptop and can provide
      VoIP
      capability, thereby optimizing the use of WiMAX for voice services.




Our
      products include software products that enable our customers to perform ongoing
      network management. The 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, training, radio planning and support
      services.




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




5




*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, 2006 has been derived
      from
      the audited financial statements at that date included in our Form 10-K for
      the
      year ended December 31, 2006 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,
      2006.




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




**NOTE
      2 - COMMITMENTS AND CONTINGENCIES**




*Commitments*




As
      of
      September 30, 2007, 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 $25.0 million at September 30, 2007. We have no material
      capital commitments.




*Warranty*




We
      provide limited warranties, usually for periods ranging from twelve to
      twenty-four months, to all purchasers of our 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, including “back to back” warranty
      coverage provided by our contract manufacturers. Management believes that the
      amounts provided are sufficient for all future warranty costs on equipment
      sold
      through September 30, 2007 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
      nine months ended September 30, 2007.




*Nine
                months endedSeptember 30, 2007*
            
            **Balance atbeginning ofperiod**
            
            **Accrual forwarrantiesissuedduring theperiod**
            
            **Changes inaccrualsrelated topre-existingwarranties(includingchanges inestimates)**
            
            **Settlements**
              **made (incash or inkind) duringthe period**
            
            **Balance at**
              **end ofperiod**Product
                warranty liability
            
            $
            985
            
            $
            377
            
            $
            (109
            )
            $
            (324
            )
            $
            929




6




*Other
      guarantees*




We
      had
      delivered to landlords and customers bank guarantees aggregating $2,134 at
      September 30, 2007 and $6,434 at December 31, 2006. The foregoing figures
      represent the maximum potential amount of future payments the Company could
      be
      required to make under these guarantees. The guarantees secure payment or
      performance obligations of the Company under contracts. The Company has pledged
      cash to the banks as collateral for $1,478 of the guarantees. Where the cash
      has
      been pledged for guarantees that expire in less than one year, we have
      classified these pledges as restricted cash ($237 in aggregate). Where the
      guarantees have maturities greater than one year, the cash pledged as collateral
      has been classified as other non-current assets ($1,240). A total of $656 in
      guarantees has been issued under the line of credit provided by Silicon Valley
      Bank, which does not require any related pledge of cash collateral. These
      guarantees will all expire before the end of 2010.




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 the Company’s fully
      consolidated subsidiary, Airspan Networks (Finland) OY. These loans total $1,739
      at September 30, 2007, which includes $142 of accrued interest, and are recorded
      in long-term debt. This guarantee expires only when Airspan Networks (Finland)
      OY has fulfilled all of 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 Eric D. Stonestrom (our President and Chief Executive Officer),
      Joseph J. Caffarelli (our former Senior Vice President and Chief Financial
      Officer), Matthew Desch (our Chairman) and Jonathan Paget (our former Executive
      Vice President and Chief Operating Officer) (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 April 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, since these claims were asserted only against the Individual
      Defendants. 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. 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.




Prior
      to
      the Second Circuit’s December 5, 2006 ruling, the majority of issuers, including
      Airspan, and their insurers had submitted a settlement agreement to the district
      court for
      approval. In light of the Second Circuit opinion, the parties agreed that the
      settlement could no longer be approved because the defined settlement class,
      like the litigation class, could
      not be
      certified. On June 25, 2007, the district
      court approved
      a stipulation filed by the plaintiffs and the issuers terminating the
      proposed settlement. 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, and the elimination of the
      individual defendants as defendants. On September 27, 2007, the plaintiffs
      filed
      a motion for
      class certification in
      the
      six focus cases. If the plaintiffs are successful in obtaining class
      certification, they are expected to amend the complaint against Airspan and
      the
      other non-focus case issuers in the same manner that they amended the complaints
      against the focus case issuers and to seek certification of a class in Airspan’s
      case. **** 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.




7




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 IPO
      underwriters. The complaint, Vanessa Simmonds v.  Credit
      Suisse Group, et al., Case No. C07-01638, filed in 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
      received a letter dated November 9, 2006 from Wi-LAN Inc. raising various
      patent infringement claims relating to certain of the Company’s WiMAX products
      and offering us a license of various Wi-LAN patents. After reviewing Wi-LAN’s
      claims, on February 1, 2007, we sent a
      letter
      to Wi-LAN notifying them that we did not believe that we require a license
      from
      Wi-LAN. On May 29, 2007 we received a follow up letter and materials from
      Wi-LAN which continued to assert those claims. The Company is currently
      reviewing this matter in consultation with its patent counsel. Since the matter
      is still being evaluated, no estimate of damages, if any, can be made at this
      time.




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
      3 - STOCK COMPENSATION**




At
      September 30, 2007, we had three stock option plans as well as the 2004 Omnibus
      Equity Compensation plan and the 2000 Employee Stock Purchase Plan (“ESPP”).
      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 have 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
      September 30, 2007, the Company had remaining a total of 8,443,312 shares
      authorized but unissued under the above plans.




The
      following table summarizes share-based compensation expense under SFAS 123(R)
      for the three and nine months ended September 30, 2007 and October 1, 2006,
      which was allocated as follows (in thousands):




ThreeMonthsEndedOctober 1,2006
            
            ThreeMonthsEndedSeptember
                30,
              2007
            
            Nine MonthsEndedOctober 1,2006
            
            Nine MonthsEndedSeptember 30,2007Research
                and development
            
            $
            145
            
            $
            277
            
            $
            511
            
            $
            601Sales
                and marketing
            
            
            171
            
            
            152
            
            
            635
            
            
            548General
                and administrative
            
            
            265
            
            
            179
            
            
            667
            
            
            694Stock-based
                compensation expense included in operating expense
            
            
            581
            
            
            608
            
            
            1,813
            
            
            1,843Cost
                of sales
            
            
            4
            
            
            16
            
            
            30
            
            
            33Total
                stock-based compensation
            
            $
            585
            
            $
            624
            
            $
            1,843
            
            
            1,876




8




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.




The
      summary of the
      changes in stock options outstanding under the Company’s stock based
      compensation plans during
      the nine months ended September 30, 2007 is presented below:




**Weighted****Average****Number of**
            
            **Exercise****Shares**
            
            **Price**Outstanding,
                beginning of period
            
            
            5,570,009
            
            $
            4.10Granted
            
            
            974,400
            
            
            3.89Forfeited
            
            
            (610,526
            )
            
            4.32Exercised
            
            
            (470,318
            )
            
            2.39Outstanding,
                end of period
            
            
            5,463,565
            
            
            4.18Exercisable,
                end of period
            
            
            3,427,628
            
            $
            4.11


9




The following table
      summarizes the ranges of the exercise prices of outstanding and exercisable
      options as of September 30, 2007:




**Outstanding
                Options**
            
            **Options
                Exercisable****Weighted**
            
            
            
            
            
            **Weighted****Number of**
            
            **Average**
            
            **Remaining**
            
            **Number of**
            
            **Average****Outstanding**
            
            **Exercise**
            
            **Contractual**
            
            **Exercisable**
            
            **Exercise****Exercise
                Price Ranges**
            
            **Options**
            
            **Price**
            
            **Life in Years**
            
            **Options**
            
            **Price**$0.30
                - 2.00
            
            
            970,298
            
            $
            1.16
            
            
            4.04
            
            
            970,298
            
            $
            1.162.20-3.67
            
            
            1,015,987
            
            
            2.83
            
            
            7.95
            
            
            383,939
            
            
            2.803.84-4.28
            
            
            927,780
            
            
            4.23
            
            
            8.72
            
            
            205,021
            
            
            4.124.37-4.94
            
            
            943,702
            
            
            4.55
            
            
            5.17
            
            
            795,603
            
            
            4.484.97-6.00
            
            
            1,039,116
            
            
            5.58
            
            
            5.34
            
            
            709,928
            
            
            5.506.01-15.00
            
            
            566,682
            
            
            8.54
            
            
            6.15
            
            
            362,839
            
            
            9.885,463,565
            
            $
            4.18
            
            
            6.22
            
            
            3,427,628
            
            $
            4.11




As
      of
      September 30, 2007, the weighted average remaining contractual life of options
      exercisable was 4.98 years and their aggregate intrinsic value was $1,339.
      The
      total intrinsic value of options exercised during the nine months ended
      September 30, 2007 was $1,718. Cash received from stock option exercises
      for the nine months ended September 30, 2007 was $1,122. Because we maintained
      a
      full valuation allowance on our U.S. deferred tax assets, we did not recognize
      any tax benefit related to stock based compensation expense
      for the nine months ended September 30, 2007.




During
      the first nine months of 2007, a total of 56,000 restricted shares were granted
      to employees, all of which vest based on the passage of time. A total expense
      of
      $78 was recorded for the nine months ended September 30, 2007 related to these
      shares and those issued in prior years. No expense has been recognized for
      performance based shares given management’s assessment of the probability of
      reaching the performance conditions. The summary of the changes in restricted
      stock outstanding during the nine months ended September 30, 2007 is presented
      below:




10




**Nine Months Ended**
              **September 30, 2007****Number of**
              **Shares**
            
            **Weighted-Average**
              **Grant Date Fair Value**Nonvested
                balance at beginning of period
            
            
            105,592
            
            $
            4.54Granted
            
            
            56,000
            
            
            4.69Forfeited
            
            
            (27,245
            )
            
            3.87Vested
            
            
            (24,407
            )
            
            4.61Nonvested
                balance at end of period
            
            
            109,940
            
            $
            4.76




As
      of
      September 30, 2007, $3,842 of total unrecognized compensation expense, net
      of
      estimated forfeitures, related to stock options will be recognized over the
      weighted average period of 2.55 years. Also, as of September 30, 2007, there
      was
      $266 of total unrecognized compensation expense related to restricted stock
      awards that will be recognized over the weighted average period of
      2.52 years. A total of 109,940 nonvested restricted shares are scheduled to
      vest based on passage of time and up to an additional 84,000 of restricted
      shares will be issued in the beginning of 2008 if certain performance conditions
      are achieved.




Under
      our
      ESPP, eligible employees may purchase shares of common stock through payroll
      deductions. 358,211 shares were issued during the nine months ended September
      30, 2007.




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




The
      weighted average fair value of each restricted stock share granted under our
      equity compensation plans for the first nine months of fiscal 2006 was $5.67
      and
      for the first nine months of 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 nine months
      of fiscal 2006 and the first nine months of fiscal 2007 was $2.63 and $2.64,
      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 for the first nine months of fiscal 2006 and of fiscal
      2007:




Nine Months EndedOctober 1,
              2006
            
            September 30,2007Expected
                volatility
            
            
            85
            %
            
            80
            %Risk-free
                interest rate
            
            
            4.74
            %
            
            4.59
            %Expected
                life (years)
            
            
            5
            
            
            5Expected
                dividend yield
            
            
            0
            %
            
            0
            %




*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.




11




**NOTE
      4 - INVENTORY**




Inventory
      consists of the following:




**December 31,**
            
            **September
                30,****2006**
            
            **2007****(audited)**
            
            **(unaudited)**Purchased
                parts and materials
            
            $
            14,826
            
            $
            10,603Work
                in progress
            
            
            1,329
            
            
            1,410Finished
                goods and consumables
            
            
            21,413
            
            
            18,724Inventory
                reserve
            
            
            (13,944
            )
            
            (13,247
            )$
            23,624
            
            $
            17,490




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
      5 - 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. During the second
      quarter of 2005, we recognized an additional restructuring charge of $1.2
      million for additional costs expected to be incurred related to certain facility
      charges in respect of buildings in the UK. The lessor has already completed
      renovations and incurred actual costs for approximately $0.8 million, which
      it
      is expecting the Company to pay. Although there may be some opportunity to
      reduce the amount of our ultimate liability, we believe $1.0 million, including
      legal and other fees we expect to incur, is the most likely scenario. For this
      reason, we lowered the restructuring reserve at the end of the second quarter
      of
      2007 by $0.5 million. All cash outflows in connection with this restructuring
      are expected to occur by the end of March 2008.




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 $0.3 million of cash outlays in the first nine months of 2007
      related to amounts accrued in 2006. All cash outlays related to this program
      were completed in the second quarter of 2007.




12





**Total expected**
              **to be**
              **incurred**
            
            **Incurred during thenine months endedSeptember 30,2007**
            
            **Cumulativeincurred atSeptember 30, 2007****(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**One
                time termination benefits
            
            $
            2,183
            
            $
            37
            
            $
            2,183Contract
                termination costs
            
            
            1,440
            
            
            3
            
            
            1,440Other
                associated costs
            
            
            50
            
            
            —
            
            
            50$
            3,673
            
            $
            40
            
            $
            3,673





**Balance at**
            
            
            
            
            
            **Balance at****Beginning**
            
            **Restructuring**
            
            
            
            **End****of Period**
            
            **Charge**
            
            **Utilized**
            
            **of Period****Nine
                months ended September 30, 2007 (unaudited)**One
                time termination benefits
            
            $
            375
            
            $
            —
            
            $
            (375
            )
            $
            —Contract
                termination costs
            
            
            1,437
            
            
            (435
            )
            
            (2
            )
            
            1,000Other
                associated costs
            
            
            50
            
            
            (50
            )
            
            —
            
            
            —$
            1,862
            
            $
            (485
            )
            $
            (377
            )
            $
            1,000**Year
                ended December 31, 2006 (audited)**One
                time termination benefits
            
            $
            —
            
            $
            2,183
            
            $
            (1,808
            )
            $
            375Contract
                termination costs
            
            
            1,436
            
            
            163
            
            
            (162
            )
            
            1,437Other
                associated costs
            
            
            50
            
            
            
            
            
            
            
            
            50$
            1,486
            
            $
            2,346
            
            $
            (1,970
            )
            $
            1,862




**NOTE
      6 - GEOGRAPHIC INFORMATION**




As
      a
      developer and supplier of broadband wireless communications access systems
      and
      solutions, Airspan has one reportable segment. The revenue of this single
      segment is comprised primarily of revenue from products and, to a lesser extent,
      services. The majority of our revenue is generated from products manufactured
      in
      the United Kingdom, Mexico, Israel and Finland, with minor additional revenue
      generated from sales of equipment manufactured by other vendors.




A n
      analysis of revenue by location of the customer is given below:




**Quarter
                End**
            
            **Year-to-Date****October 1,**
              **2006**
            
            **September 30,2007**
            
            **October 1,2006**
            
            **September 30,2007****(unaudited)**
            
            **(unaudited)**USA
                and Canada
            
            $
            2,646
            
            $
            1,954
            
            $
            6,753
            
            $
            6,890Asia
            
            
            5,830
            
            
            1,892
            
            
            30,408
            
            
            16,035Europe
            
            
            3,783
            
            
            7,439
            
            
            18,042
            
            
            23,046Africa
                and the Middle East
            
            
            1,451
            
            
            3,050
            
            
            3,109
            
            
            4,177Latin
                America and Caribbean
            
            
            13,593
            
            
            8,135
            
            
            38,226
            
            
            21,055$
            27,303
            
            $
            22,470
            
            $
            96,538
            
            $
            71,203


13


**NOTE
      7 - COMPREHENSIVE LOSS**




Total
      comprehensive loss was as follows:




**Quarter
                End**
            
            **Year-to-Date****October 1,2006**
            
            **September 30,2007**
            
            **October 1,2006**
            
            **September 30,2007****(unaudited)**
            
            **(unaudited)**Net
                loss
            
            $
            (9,123
            )
            $
            (5,769
            )
            $
            (25,084
            )
            $
            (22,573
            )Other
                comprehensive income/(loss):-
                reclassification of adjustment for gains realized in net
                loss
            
            
            —
            
            
            —
            
            
            130
            
            
            —Comprehensive
                loss
            
            $
            (9,123
            )
            $
            (5,769
            )
            $
            (24,954
            )
            $
            (22,573
            )




**NOTE
      8 - NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS**




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****October 1,2006**
            
            **September 30,2007**
            
            **October 1,2006**
            
            **September 30,2007****(unaudited)**
            
            **(unaudited)**Numerator:Net
                loss attributable to common stockholders
            
            $
            (18,302
            )
            $
            (9,907
            )
            $
            (34,263
            )
            $
            (26,711
            )Denominator:Weighted
                average common shares outstanding basic and diluted
            
            
            40,137,526
            
            
            41,905,579
            
            
            39,924,492
            
            
            41,084,881Net
                loss attributable to common stockholders per share- basic and diluted
            
            $
            (0.46
            )
            $
            (0.24
            )
            $
            (0.86
            )
            $
            (0.65
            )




There
      were 5,849,275 stock options outstanding at October 1, 2006 and 5,463,565 stock
      options outstanding at September 30, 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 October 1, 2006 and September 30, 2007 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 20,069,000 common shares and 21,453,030 common shares as of
      October 1, 2006 and September 30, 2007, respectively.  There were 122,592
      nonvested shares of restricted stock at October 1, 2006 and 109,940 nonvested
      shares at September 30, 2007 that were excluded from the computation of diluted
      net loss per share as their effect was anti-dilutive.




14




**NOTE
      9 - DEEMED DIVIDEND**





In
      the
      third quarter of 2006, we recognized a non-cash charge of $9.2 million for
      a
      deemed dividend to preferred stockholders and other related costs associated
      with our issuance of Series B Preferred Stock (the “Private Placement”) in the
      quarter to Oak Investment Partners XI, Limited Partnership (“Oak”) in exchange
      for $29.0 million in cash and Oak’s transfer to us of all 73,000 shares of
      Series A Preferred Stock owned by Oak as of the closing of the transaction.
      Of
      this charge, $8.3 million was related to the shares of Series B Preferred Stock
      issued to Oak in exchange of its Series A Preferred Stock and $0.9 million
      of
      this charge is related to the shares of Series B Preferred Stock issued in
      respect of Oak’s cash investment. $8.3 million of the charge was calculated by
      multiplying 2,769,000, the number of additional common shares that were issuable
      upon conversion of the 100,690 shares issued to Oak in exchange for the 73,000
      shares of Series A Preferred Stock, by $2.99, the closing price of the Company’s
      common stock on the NASDAQ on September 25, 2006, the date of the closing of
      the
      Private Placement. In addition, the issuance of the 100,000 shares of Series
      B
      Preferred Stock in respect of Oak’s cash investment with a conversion price of
      $2.90 compared to the closing price of $2.99 represents a beneficial conversion
      and resulted in an additional deemed dividend of $0.9 million on the 10,000,000
      common shares that are potentially issuable. The total deemed dividend was
      $9,179.




On
      September 26, 2007, the Company issued 15,000,000 shares of common stock in
      an
      underwritten public offering at
      a
      price of $2.00 per share. All of the shares were sold by the Company. The net
      proceeds of $28.0 million (after underwriting discount of $1.8 million and
      other
      costs of $0.2 million) will be used to fund the continued expansion of the
      Company's WiMAX business and for general corporate purposes. The offering was
      made under the Company's effective shelf registration statement covering up
      to
      $50.0 million of equity securities previously filed with the Securities and
      Exchange Commission. As
      the
      sale price of these shares to the underwriters on a per share basis was less
      than $2.90 per share, there was an anti-dilution adjustment to the number of
      shares of common stock issuable on conversion of the Series B Preferred Stock.
      As a result of the anti-dilution adjustment, we recorded a deemed dividend
      of
      $4.1 million, calculated by multiplying the number of additional shares to
      be
      received on conversion (1.38 million shares) by $2.99, the closing price of
      the
      Company’s common stock on the NASDAQ on September 25, 2006, the date of the
      closing of the Private Placement.




The
      underwriters were granted a 30 day option to purchase up to an additional
      2,250,000 shares of common stock from the Company to cover over-allotments,
      if
      any. On
      October 10, 2007, the Company issued 2,250,000 shares of common stock as a
      result of the exercise by the Underwriters of their over allotment provision.
      As
      the sale price of these shares to the underwriters on a per share basis was
      less
      than $2.90 there will be an anti-dilution adjustment in the fourth quarter
      to
      the number of shares of common stock issuable on conversion of the Series B
      Preferred Stock. As a result of this anti-dilution adjustment, we will record
      a
      deemed dividend in the fourth quarter of approximately $0.6 million, calculated
      by multiplying the number of additional shares to be received on conversion
      (approximately 0.2 million shares) by $2.99, the closing price of the Company’s
      common stock on the NASDAQ on September 25, 2006, the date of the closing of
      the
      Private Placement.




**NOTE
      10 - RECENT ACCOUNTING PRONOUNCEMENTS**




The
      Company adopted the provisions of Financial Accounting Standards Board (FASB)
      Interpretation Number 48 (FIN 48), “ *Accounting
      for Uncertainty in Income Taxes* ”,
      on
      January 1, 2007. Previously, the Company had accounted for tax contingencies
      in
      accordance with Statement of Financial Accounting Standards 5, “Accounting for
      Contingencies”. As required by FIN 48, which clarifies FASB Statement 109,
“Accounting for Income Taxes”, the first step is to evaluate the tax position
      for recognition by determining if the weight of available evidence indicates
      it
      is more likely than not that the position will be sustained on audit, including
      resolution of related appeals or litigation processes, if any. The second step
      is to measure the tax benefit as the largest amount which is more than 50%
      likely of being realized upon ultimate settlement. At the adoption date, the
      Company applied FIN 48 to all tax positions for which the statute of limitations
      remained open.  As a
      result of the implementation, the Company did not have to recognize any
      liability for unrecognized tax benefits. In
      May
      2007, the FASB issued FASB Staff Position (FSP) 48-1, which provides guidance
      on
      how an enterprise should determine whether a tax position is effectively settled
      for the purpose of recognizing previously unrecognized tax benefits. FSP 48-1
      did not impact the adoption of FIN 48.




15




The
      Company is subject to federal and various state income taxes in the US as well
      as income taxes in certain foreign jurisdictions. Tax regulations within each
      jurisdiction are subject to the interpretation of the related tax laws and
      regulations and require significant judgment to apply. The Company is no longer
      subject to US federal tax examinations for years through 2003. In addition,
      the
      statute of limitations for years through 2004 in the UK and 2002 in Israel
      has
      expired.




The
      Company recognizes interest accrued related to unrecognized tax benefits in
      interest expense and penalties in operating expenses. There were no such amounts
      recorded at January 1, 2007.




In
      June 2006, the Emerging Issues Task Force (“EITF”) issued EITF Issue
      No. 06-3, “How Taxes Collected from Customers and Remitted to Government
      Authorities Should Be Presented in the Income Statement (That Is, Gross Versus
      Net Presentation)”. The scope of EITF 06-3 includes any tax that is assessed by
      a governmental authority that is directly imposed on a revenue-producing
      transaction between a seller and a customer and provides that a company may
      adopt a policy of presenting taxes either gross within revenue or an a net
      basis. Taxes on the sale of products and services to customers are collected
      by
      us as an agent and recorded as a liability until remitted to the respective
      taxing authority. These taxes have been presented on a net basis in the
      consolidated financial statements. EITF 06-3 was effective for the first quarter
      of 2007 and its adoption did not have a material impact on the Company’s
      financial position or results of operations.




In
      September 2006, the FASB issued SFAS No. 157,
      “Fair Value Measurements” (“SFAS No. 157”),
      which defines fair value of certain assets and liabilities, establishes a
      framework for measuring fair value, and expands disclosures about fair value
      measurements.  This statement does not require any new fair value
      measurements, but may change current practice for certain entities.  This
      statement is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those years.
      We
      are currently assessing the impact of SFAS No. 157
      on
      our consolidated financial statements.




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. SFAS
      159
      is effective for fiscal years beginning after November 15, 2007, and early
      application is allowed under certain circumstances. We are currently evaluating
      the impact SFAS 159 will have on our consolidated financial
      statements.




In
      June
      2007, the FASB ratified Emerging Issues Task Force 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. Expense is recognized as the services are performed
      or goods are delivered. EITF 07-3 is effective for fiscal years beginning after
      December 15, 2007. Management expects that the adoption of EITF 07-3 will not
      have a material effect on our consolidated financial statements.




**NOTE
      11 - SUBSEQUENT EVENT**




On
      October 10, 2007, the Company issued 2,250,000 shares of common stock as a
      result of the exercise by the Underwriters of their over allotment provision
      provided for in the terms of the public offering, resulting in net cash proceeds
      of approximately $4.2 million. We expect that a non-cash charge for a deemed
      dividend to holders of our Series B Preferred Stock will be recorded in the
      fourth quarter of 2007 for approximately $0.6 million related to an
      anti-dilution adjustment resulting from the additional share
      issuance.




16





**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, 2006, 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 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 Axtel,
      S.A. de C.V. (“Axtel”) and other 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
      under “Part II -- Item 1A. Risk Factors” in this quarterly report on Form 10-Q
      for the quarter ended September 30, 2007.**




*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 substantial majority of
      our
      resources are now dedicated to WiMAX-based products.




Our
      revenues for the last three years and the first nine months of 2006 and 2007,
      shown below, detail the transition of our revenue base as our WiMAX revenues
      trend upwards and our non-WiMAX revenues trend down over the periods. This
      transition from our legacy to our WiMAX businesses has caused significant shifts
      in our revenue stream and quarterly fluctuations in revenues as the relative
      contribution of our WiMAX business increases. Our total revenues have declined
      each quarter since the fourth quarter of 2006 as revenues from our non-WiMAX
      businesses declined more quickly than the growth of our WiMAX sales. 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. Overall margins in the first nine months
      of
      2007 were also adversely affected by an inventory provision relating to the
      wind
      down of our legacy products.




17




*Consolidated
                statement of operations data:*
            
            **Year ended December 31,**
            
            **Ninemonths toSeptember
                30,**($
                in thousands except per share data)
            
            **2004**
            
            **2005**
            
            **2006**
            
            **2007****(unaudited)**Revenue
                –
                WiMAX
            
            $
            -
            
            $
            4,489
            
            $
            45,753
            
            $
            44,946Revenue
                - Non-WiMAX
            
            
            94,647
            
            
            106,477
            
            
            82,059
            
            
            26,257Total
                Revenue
            
            
            94,647
            
            
            110,966
            
            
            127,812
            
            
            71,203Cost
                of revenue
            
            
            (67,243
            )
            
            (79,467
            )
            
            (94,948
            )
            
            (53,311
            )Gross
                profit
            
            
            27,404
            
            
            31,499
            
            
            32,864
            
            
            17,892Margin
            
            
            29
            %
            
            28
            %
            
            26
            %
            
            25
            %Total
                operating expenses
            
            
            42,534
            
            
            48,510
            
            
            63,539
            
            
            40,952Loss
                from operations
            
            
            (15,130
            )
            
            (17,011
            )
            
            (30,675
            )
            
            (23,060
            )Net
                interest and other income
            
            
            3,217
            
            
            1,388
            
            
            1,227
            
            
            548Loss
                before income taxes
            
            
            (11,913
            )
            
            (15,623
            )
            
            (29,448
            )
            
            (22,512
            )Income
                tax credits/(charge)
            
            
            1,938
            
            
            546
            
            
            246
            
            
            (61
            )Net
                loss before deemed dividend
            
            
            (9,975
            )
            
            (15,077
            )
            
            (29,202
            )
            
            (22,573
            )Deemed
                  dividend associated withpreferred
                  stock
            
            
            (10,439
            )
            
            -
            
            
            (9,179
            )
            
            (4,138
            )Net
                loss attributable to common stockholders
            
            $
            (20,414
            )
            $
            (15,077
            )
            $
            (38,381
            )
            $
            (26,711
            )Net
                  loss attributable to commonstockholders
                  per share - basic and diluted
            
            $
            (0.56
            )
            $
            (0.39
            )
            $
            (0.96
            )
            $
            (0.65
            )




During
      the first nine months of 2007, WiMAX continued to gain market acceptance and
      we
      had growth in the number of our WiMAX customers. Also during the period, we
      announced the introduction of new WiMAX products and frequencies. During the
      first nine months of 2007, more than 110 customers purchased WiMAX equipment
      compared with more than 70 customers during the first nine months of 2006.




Geographically
      in the first nine months of 2007, 22% of our revenue was derived from customers
      in Asia, 30% from customers in Latin America and the Caribbean, and 32% from
      customers in Europe. Customers in the United States and Canada, and Africa
      and
      the Middle East accounted for 10% and 6% of revenues, respectively.




Our
      gross
      profit is tied primarily to revenue except for period operating costs related
      to
      manufacturing and customer service. We incur certain costs on a quarterly basis
      related to the management of our supply chain and product distribution, and
      to
      customer maintenance activities regardless of the level of revenue that we
      record. Our gross margin varies to the extent of the overall revenue we record,
      the mix of products we deliver, and the composition of base station revenue,
      that usually has a higher margin, over lower margin customer premise equipment.
      A large proportion of our non-WiMAX revenues was customer premise equipment
      to
      Axtel that was sold at a lower than average gross margin.




Our
      operating expenses increased until the second quarter of 2006 as a result of
      acquisitions made in the second half of 2005 and increasing expenses of WiMAX
      development and marketing. In the second half of 2006, we commenced a
      company-wide expense reduction and restructuring program to reduce expenses
      primarily relating to our non-WiMAX products. In addition, we recorded a
      $6.3 million inventory provision in the first nine months of 2007 related
      to the wind down of our legacy businesses. We will continue to invest in our
      Mobile WiMAX technology and marketing activities.




18




***Comparison
      of the quarter ended September 30, 2007 to the quarter ended October 1,
      2006***




*Revenue*




Revenue
      totaled $22.5 million for the quarter ended September 30, 2007, representing
      an
      18% decrease from the $27.3 million reported for the quarter ended October
      1,
      2006 and a 2% increase from the second quarter of 2007. The year over year
      decrease in revenues was attributable to lower non-WiMAX revenues, which
      decreased from $21.1 million in the quarter ended October 1, 2006 to $6.4
      million in the quarter ended September 30, 2007. WiMAX revenues increased from
      $6.1 million in the third quarter of 2006 to $16.1 million in the third quarter
      of 2007. In the third quarter of 2007, 70 customers purchased WiMAX
      products compared to 47 customers in the third quarter of 2006.




Geographically,
      in the third quarter of 2007, 8% of our revenue was derived from customers
      in
      Asia, 36% from customers in Latin America and the Caribbean, and 33% from
      customers in Europe. Customers in the United States and Canada, and Africa
      and
      the Middle East accounted for 9% and 14% of revenues, respectively.




*Cost
      of Revenue*




Cost
      of
      revenue decreased 27% to $14.7 million in the quarter ended September 30, 2007
      from $20.0 million in the quarter ended October 1, 2006 primarily as a result
      of
      lower revenues. The gross profit for the third quarter of 2007 was $7.8 million
      (35% of revenue) compared to a gross profit of $7.3 million (27% of revenue)
      for
      the third quarter of 2006. The increase in gross margin is primarily
      attributable to a favorable product mix and a reduction of period related
      charges included in cost of sales.




*Research
      and Development Expenses*




Research
      and development expenses increased 2% to $6.2 million in the quarter ended
      September 30, 2007 from $6.1 million in the quarter ended October 1, 2006.
      The
      increase year over year is primarily due to increased personnel costs as we
      continue to invest in development of WiMAX products.




*Sales
      and Marketing Expenses*




Sales
      and
      marketing expenses decreased 13% to $3.5 million in the quarter ended September
      30, 2007 from $4.1 million in the quarter ended October 1, 2006. The decrease
      compared to the third quarter of 2006 is primarily attributable to lower agent
      commissions and sales support costs related to our Yozan contract than in 2006.




*Bad
      Debt Provision*




In
      the
      third quarter of 2007, we recorded bad debt provisions of $0.6 million relating
      to customer accounts for which management has determined that full recovery
      was
      unlikely. We recorded bad debt provisions of $0.3 million in the third quarter
      of 2006.




*General
      and Administrative Expenses*




General
      and administrative expenses decreased 26% to $3.0 million in the quarter ended
      September 30, 2007 from $4.1 million in the quarter ended October 1, 2006.
      The
      decrease primarily relates to a shift from foreign exchange losses in 2006
      to
      gains in 2007 arising from the revaluation of non-cash foreign currency balances
      which accounted for $0.6 million of the reduction, and, to a lesser extent,
      to
      lower professional services costs and headcount related costs.




*Amortization
      of Intangibles*




We
      recorded amortization of intangibles expense of $0.2 million in the third
      quarter of 2007 compared with amortization of intangibles expense of $0.3
      million for the third quarter of 2006. The amortization expense arises primarily
      as a result of our acquisition of intangible assets in connection with the
      acquisition of the Proximity business from Nortel in 2003, and the acquisitions
      of ArelNet Limited and Airspan Networks (Finland) OY acquisitions in June and
      November 2005, respectively.




19




*Restructuring*




There
      was
      no restructuring charge for the third quarter 2007. In the third quarter of
      2006, we recorded a restructuring charge of $1.5 million in relation to a
      company-wide restructuring program commenced in July 2006.




*Interest
      Expense*




At
      September 30, 2007, the outstanding principal and accrued interest payable
      on
      loans made to us by the Finnish Funding Agency for Technology and Innovation,
      (the “Tekes Loans”) was $1.7 million. During the third quarter of 2007, we
      maintained our borrowing under the Silicon Valley Bank Loan and Security
      Agreement at $7.5 million. Interest expense for the third quarter of 2007 was
      $0.2 million compared to $0.1 million in the third quarter of 2006.




*Interest
      and Other Income*




Interest
      and other income for the third quarter of 2007 increased to $0.2 million from
      $5
      thousand primarily due to foreign exchange gains arising from the revaluation
      of
      cash balances in the third quarter of 2007.




*Income
      Taxes*




The
      income tax charge for the third quarter of 2007 was $24 thousand compared to
      $17
      thousand in the third quarter of 2006.




*Deemed
      Dividend Upon Issuance of Stock*





In
      the
      third quarter of 2007, we recognized a non-cash charge of $4.1 million for
      a
      deemed dividend to our Series B preferred stockholders.





On
      September 26, 2007, we issued 15,000,000 shares of common stock in a public
      offering. As the sale price of these shares to the underwriters on a per share
      basis was less than $2.90 per share, there was an anti-dilution adjustment
      to
      the number of shares of common stock issuable on conversion of the Series B
      Preferred Stock. As a result of the anti-dilution adjustment, we recorded a
      deemed dividend of $4.1 million, calculated by multiplying the number of
      additional shares to be received on conversion (1.38 million shares) by $2.99,
      the closing price of the Company’s common stock on the NASDAQ on September 25,
      2006, the date of the closing of the Private Placement.





On
      October 10, 2007, we issued 2,250,000 shares of common stock as a result of
      the
      underwriters over allotment provision in a public offering. As the sale price
      of
      these shares to the underwriters on a per share basis was less than $2.90 there
      will be an anti-dilution adjustment in the fourth quarter to the number of
      shares of common stock issuable on conversion of the Series B Preferred Stock.
      As a result of this anti-dilution adjustment, we will record a deemed dividend
      in the fourth quarter of approximately $0.6 million, calculated by multiplying
      the number of additional shares to be received on conversion (0.2 million
      shares) by $2.99, the closing price of the Company’s common stock on the NASDAQ
      on September 25, 2006, the date of the closing of the Private Placement.





In
      the
      third quarter of 2006, we recognized a non-cash charge of $9.2 million for
      a
      deemed dividend to preferred stockholders and other related costs associated
      with our issuance of Series B preferred stock (the “Private Placement”) in the
      quarter to Oak Investment Partners XI, Limited Partnership (“Oak”) in exchange
      for $29.0 million in cash and Oak’s transfer to us of all 73,000 shares of
      Series A Preferred Stock owned by Oak as of the closing of the transaction.
      Of
      this charge, $8.3 million of this charge was related to the shares of Series
      B
      Preferred Stock issued to Oak in exchange of its Series A Preferred Stock and
      $0.9 million of this charge is related to the shares of Series B Preferred
      Stock
      issued in respect of Oak’s cash investment. $8.3 million of the charge was
      calculated by multiplying the closing price of the Company’s common stock on the
      NASDAQ on September 25, 2006, the date of the closing of the Private Placement
      ($2.99), by 2,769,000, the number of additional common shares that were issuable
      upon conversion of the 100,690 shares issued to Oak in exchange for the 73,000
      shares of Series A Preferred Stock by $2.99, the closing price of the Company’s
      common stock on NASDAQ on September 25, 2006, the date of the closing of the
      Private Placement.




20




In
      addition, the issuance of the 100,000 shares of Series B Preferred Stock in
      respect of Oak’s cash investment with a conversion price of $2.90 compared to
      the closing price of $2.99 represents a beneficial conversion and resulted
      in an
      additional deemed dividend of $0.9 million on the 10,000,000 common shares
      that
      are potentially issuable. The total deemed dividend was $9,179.




*Net
      Loss attributable to common stockholders*




For
      the
      reasons described above, we incurred a net loss of $9.9 million, or ($0.24)
      per
      share, in the quarter ended September 30, 2007, compared to a net loss of $18.3
      million, or ($0.46) per share, for the quarter ended October 1,
      2006.




***Comparison
      of the Nine months Ended September 30, 2007 to the Nine months Ended October
      1,
      2006***




*Revenue*




Revenues
      for the nine months ended September 30, 2007 totaled $71.2 million representing
      a 26% decrease from the $96.5 million reported for the nine months ended October
      1, 2006. The year over year decrease in revenues was attributable primarily
      to
      lower sales of our non-WiMAX products offset in part by increased sales of
      our
      WiMAX products. WiMAX revenue in the first nine months of 2007 was $44.9 million
      compared to $32.9 million in the first nine months of 2006, representing an
      increase of 37%. Yozan represented 25% of our WiMAX revenue in the first nine
      months of 2007 compared with 59% of our revenue in the first nine months of
      2006. Non-WiMAX revenues decreased 59%, at a higher rate than originally
      anticipated, to $26.2 million in the nine months ended September 30, 2007 from
      $63.7 million for the nine months ended October 1, 2006.




*Cost
      of Revenue*




Cost
      of
      revenue decreased 28% to $53.3 million in the nine months ended September 30,
      2007 from $74.1 million in the nine months ended October 1, 2006 primarily
      as a
      result of lower revenues. The cost of revenue for the first nine months of
      2007
      included a charge of $6.3 million for inventory provisions, recorded as a result
      of the decline of our non-WiMAX revenues in 2007 from 2006 levels and a
      subsequent reduced outlook for revenues of these products. In the first nine
      months of 2006, we recorded a provision of approximately $4.3 million related
      to
      the reduction of certain deliveries under our contract with Yozan. Gross profit
      for the first nine months of 2007 was $17.9 million or 25% of revenues, compared
      to $22.4 million or 23% of revenues for the first nine months of
      2006.




*Research
      and Development Expenses*




Research
      and development expenses decreased 7% to $17.6 million in the nine months ended
      September 30, 2007 from $18.9 million in the nine months ended October 1, 2006.
      The year-over-year decrease was due primarily to headcount reductions from
      the
      restructuring activity the Company commenced in July 2006 to focus development
      activity on WiMAX. The Company intends to continue to invest in the further
      development and enhancement of WiMAX products, in particular products that
      will
      support both fixed and mobile connectivity.




*Sales
      and Marketing Expenses*




Sales
      and
      marketing expenses decreased to $10.4 million for the first nine months of
      2007,
      down from $13.6 million for the first nine months of 2006. The decrease of
      23%
      is primarily attributable to fewer employees and lower travel costs as a result
      of our restructuring program and lower agent commissions.




*Bad
      Debt Provision*




In
      the
      first nine months of 2007, we recorded bad debt provisions of $1.6 million
      relating to customer accounts for which management has determined that full
      recovery was unlikely. We recorded bad debt provisions of $1.5 million in the
      corresponding period of 2006.




21




*General
      and Administrative Expenses*




General
      and administrative expenses decreased to $11.2 million in the nine months ended
      September 30, 2007 compared to $12.2 million in the nine months ended October
      1,
      2006. The decrease of 8% for the first nine months of 2007 relative to the
      first
      nine months of 2006 is primarily attributable to exchange gains resulting from
      the revaluation of our accounts receivable balances denominated in currencies
      other than US dollars.




*Amortization
      of Intangibles*




We
      recorded an expense of $0.7 million for the amortization of intangible assets
      in
      the first nine months of 2007 compared with an expense of $0.8 million for
      the
      first nine months of 2006.




*Restructuring*




In
      the
      second quarter of 2007, we recorded a credit for restructuring of $0.5 million
      relating to the reduction of a provision held for certain liabilities related
      to
      a leased property in the UK. There was a restructuring charge of $1.5 million
      for the nine months ended October 1, 2006 due to a company-wide restructuring
      program commenced in July 2006 to reduce operating expenses.




*Interest
      Expense*




In
      the
      first nine months of 2007, we incurred interest expense of $0.2 million compared
      to a total interest expense of $0.1 million in the first nine months of 2006.
      The increase resulted primarily from an increase in borrowings under our bank
      line of credit.




*Interest
      and Other Income*




Total
      interest and other income decreased to $0.8 million for the first nine months
      of
      2007 compared to $0.9 million for the first nine months of 2006 primarily due
      to
      lower foreign exchange gains in 2007 arising from the revaluation of cash
      balances.




*Income
      Taxes*




We
      were
      not subject to material income taxes charges in either 2006 or 2007 as a result
      of the loss for the periods and the brought forward losses from prior periods.
      In the first nine months of 2007, we recorded a tax charge of $60 thousand
      relating to income taxes in certain foreign subsidiaries. In the first nine
      months of 2006, we recorded an income tax credit of $0.3 million obtained from
      the U.K tax authorities in lieu of carrying forward tax losses related to
      research and development costs. We are no longer eligible to receive tax credits
      from the U.K. taxing authorities in lieu of our carry-forward of tax losses
      and
      therefore do not expect any further credits. There was no income tax credit
      in
      the first nine months of 2007.




*Deemed
      Dividend Upon Issuance of Stock*





In
      the
      third quarter of 2007, we recognized a non-cash charge of $4.1 million for
      a
      deemed dividend to our Series B preferred stockholders as a result of an
      anti-dilution adjustment to our Series B Preferred Stock. An additional dividend
      charge in the amount of approximately $0.6 million for an anti-dilution
      adjustment will be incurred in the fourth quarter of 2007.





In
      the
      third quarter of 2006, we recognized a non-cash charge of $9.2 million for
      a
      deemed dividend to preferred stockholders and other related costs associated
      with our issuance of Series B preferred stock (the “Private Placement”) in the
      quarter to Oak Investment Partners XI, Limited Partnership (“Oak”) in exchange
      for $29 million in cash and Oak’s transfer to us of all 73,000 shares of Series
      A Preferred Stock owned by Oak as of the closing of the transaction.




*Net
      Loss attributable to common stockholders*




For
      the
      reasons described above, we incurred a net loss of $26.7 million, or $0.65
      per
      share, in the nine months ended September 30, 2007 compared to a net loss of
      $34.3 million, or $0.86 per share, for the nine months ended October 1, 2006,
      a
      decrease of $7.6 million, or 22%. Comparing the first nine months of 2007 and
      2006, the decrease in operating expenses of $7.5 million, a decrease in the
      amount of deemed dividend of $5.0 million, were partially offset by the decrease
      in gross profit of $4.5 million, a decrease in net interest and other income
      of
      $0.1 million and an increase in income tax of $0.3 million.




22




**Liquidity
      and Capital Resources**




We
      have
      incurred net losses and negative cash flows since we became an independent
      company, and as of September 30, 2007, we had an accumulated deficit of $268
      million. Since inception, we have financed our operations through private sales
      of convertible preferred stock, through public offerings of common stock and
      a
      secured bank line of credit. We
      have
      used the proceeds of the sale of all securities for working capital and other
      general corporate purposes.




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. We
      are
      currently using the credit line and we expect to continue to use it in 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 defined in the
      Agreement) of at least $28 million at the end of our second fiscal quarter
      of 2007, with such required amount to be increased for each fiscal quarter
      after
      our second fiscal quarter of 2007 by 50% of (i) our positive net income, (ii)
      proceeds of stock issuances, and (iii) proceeds of indebtedness which is
      subordinated to our obligations to SVB. As of September 30, 2007, the tangible
      net worth requirement was $42.0 million as a result of the additional share
      issuance. The Company was in compliance with all of the financial covenants
      at
      September 30, 2007. There is no assurance the Company will be able to meet
      this
      covenant as required by the Loan and Security Agreement. As a result, we 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 our all of 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 September
      30, 2007, $7.5 million of indebtedness was outstanding under the Loan and
      Security Agreement.




On
      September 26, 2007, the Company issued 15,000,000 shares of common stock in
      an
      underwritten public offering at
      a
      price of $2.00 per share. All of the shares were sold by the Company. The net
      proceeds will be used to fund the continued expansion of the Company's WiMAX
      business and for general corporate purposes. The offering was made under the
      Company's effective shelf registration statement covering up to $50 million
      of
      equity securities previously filed with the Securities and Exchange Commission.
      The underwriters were granted a 30 day option to purchase up to an additional
      2,250,000 shares of common stock from the Company to cover over-allotments,
      if
      any. On
      October 10, 2007, the Company issued 2,250,000 shares of common stock as a
      result of the exercise in full by the Underwriters of their over allotment
      provision provided for in the terms of the public offering.




23


As
      of
      September 30, 2007 we had cash, cash equivalents, short-term investments and
      current restricted cash of $49.0 million, as compared to $27.2 million at
      December 31, 2006. This consisted of cash and cash equivalents totaling $38.3
      million, short-term investments totaling $10.5 million and $0.2 million of
      restricted cash in current assets. In addition, we had restricted cash of $1.2
      million in other non-current assets.




For
      the
      nine months ended September 30, 2007, we used $12.6 million of cash for
      operating activities, compared with a cash outflow of $37.8 million for the
      nine
      months ended October 1, 2006. The operating cash outflow for the first nine
      months of 2007 was primarily a result of the:




·
            net
                loss of $22.6 million; and


·
            decrease
                of $4.9 million in other accrued
                expenses.




The
      cash
      outflow was partially offset by:




·
            decrease
                of $4.7 million in receivables; and


·
            decrease
                of $6.1 million in inventories.




Days
      sales outstanding were at 89 days at the end of the third quarter of 2007,
      down
      from 96 days at the end of the second quarter of 2007. The decrease reflects
      stronger collections during the third quarter. Inventory turns were 4.2 for
      the
      third quarter of 2007, compared with 4.3 for the second quarter of 2007. The
      change in inventory turns is primarily attributable to the lower inventory
      balance following the $5.9 million inventory charge in the second quarter of
      2007.




The
      net
      cash used in investing activities for the nine months ended September 30, 2007
      was $2.2 million. The investing cash outflow for the first nine months of 2007
      resulted from $0.3 million net purchases of investment securities and $1.9
      million of fixed asset purchases.




The
      net
      cash provided by financing activities for the nine months ended September 30,
      2007 was $37.2 million, consisting primarily of $28.0 million from proceeds
      of
      the public offering, $7.5 million in borrowings under the line of credit and
      $1.1 million from the exercise of stock options.




As
      of
      September 30, 2007, our material commitments consisted of purchase commitments
      to our manufacturing subcontractors and other suppliers which totaled $25.0
      million at September 30, 2007. In addition we also had obligations on operating
      leases, the repayment of principal and interest owed on the Tekes loans and
      the
      repayment of our borrowings under the Silicon Valley Bank Loan and Security
      Agreement. We have no material capital commitments.




We
      anticipate that we will continue to experience negative cash flows over the
      remainder of 2007. Our operating losses have been due in part to the commitment
      of significant resources to our research and development and other operating
      expenses. We expect to continue to devote resources to these areas and, as
      a
      result, we will need to substantially increase our quarterly revenues to achieve
      and maintain profitability. We cannot be certain that we will achieve sufficient
      revenues for profitability. If we do achieve profitability, we cannot be certain
      that we can sustain or increase profitability on a quarterly or annual basis
      in
      the future. Continuous cash outflows can lead to the need for new financing,
      which may not be available on favorable terms, or at all.




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, 2006, our Form 10-Q for the quarter
      ended July 1, 2007 and this Form 10-Q for the quarter ended September 30, 2007.
      There can be no assurances that our efforts to acquire other businesses will
      be
      successful.




We
      have
      raised equity in the past and in this quarter, 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.




24




As
      of the
      date of this report, we have not entered into any definitive financing
      arrangements other than those described above.  There
      can
      be no assurances that we will be able to secure additional 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.





25




**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 September
      30, 2007 and December 31, 2006, we had cash, cash equivalents, short term
      investments and restricted cash of $49.0 million and $27.2 million,
      respectively. These amounts consisted of highly liquid investments, with more
      than 89% having purchase to maturity terms of less than 90 days. The balance
      has
      maturity terms of between 90 to 360 days. These investments are exposed to
      interest rate risk, but a hypothetical increase or decrease in market interest
      rates by two percentage points from the rates effective September 30, 2007
      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
      nine months ended September 30, 2007, 79% of our sales were denominated in
      U.S.
      dollars, 17% were denominated in euros, 1% were denominated in pounds sterling
      and 3% were denominated in Australian dollars. Comparatively, for the nine
      months ended October 1, 2006, 85% of our sales were denominated in U.S. dollars,
      12% were denominated in euros and 2% were denominated in Australian dollars.
      Our
      total euros denominated sales for the nine months ended September 30, 2007
      were
      $11.8 million, which were recorded at an average exchange rate of $1US =
€0.7456. Our total pounds sterling denominated sales for the nine months ended
      September 30, 2007 were $1.0 million, which were recorded at an average exchange
      rate of $1US = GBP £0.5021. Our total Australian dollar denominated sales for
      the nine months ended September 30, 2007 were $2.1 million, which were recorded
      at an average exchange rate of $1US = AUS$1.2538. If the average exchange rates
      used had been higher or lower by 10% during the nine month period ended
      September 30, 2007,, they would have decreased or increased the total pounds
      sterling, Australian dollar and euros-denominated sales value by a total of
      $1.3
      million. We expect the proportions of sales in pounds sterling, euros 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
      nine months ended September 30, 2007, 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 U.S. 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 nine months ended September 30, 2007, we paid expenses in local currency
      of
      approximately 13.1 million pounds sterling, at an average rate of $1US = GBP
      £0.50154. During the nine months ended September 30, 2007, we paid expenses
      in
      local currency of approximately 45.8 million Israeli Shekels, at an average
      rate
      of $1US = 4.15482 Shekels. If the average exchange rates for pounds sterling
      and
      Israeli Shekels had been higher or lower by 10% for the nine month period ended
      September 30, 2007, the total pounds sterling and Israeli Shekel denominated
      operating expenses would have decreased or increased by $2.4 million and $1.0
      million, respectively.




To
      manage
      our pound foreign currency risk we have, at various times from 2004 through
      2006, forecast our likely net spending in non U.S. dollars and, based on these
      forecasts, we have entered into forward exchange contracts to cover a percentage
      of the projected exposure. At December 31, 2006 we had no forward exchange
      contracts outstanding and we did not enter into any new contracts during the
      nine month period ended September 30, 2007.




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




26




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




*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 Section 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934,
      as
      amended). Based on that evaluation, and the similar evaluation undertaken at
      the
      end of 2006, the Chief Executive Officer and Chief Financial Officer concluded
      that as of September 30, 2007, our disclosure controls and procedures were
      effective.




There
      have been no changes in Airspan’s internal controls over financial reporting
      that occurred during Airspan’s third quarter of 2007 that have materially
      affected or are reasonably likely to materially affect, Airspan’s internal
      control over financial reporting.




27


**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 Eric D. Stonestrom (our President and Chief Executive Officer),
      Joseph J. Caffarelli (our former Senior Vice President and Chief Financial
      Officer), Matthew Desch (our Chairman) and Jonathan Paget (our former Executive
      Vice President and Chief Operating Officer) (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 April 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, since these claims were asserted only against
      the Individual Defendants. 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. 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.




Prior
      to
      the Second Circuit’s December 5, 2006 ruling, the majority of issuers, including
      Airspan, and their insurers had submitted a settlement agreement to the district
      court for approval. In light of the Second Circuit opinion, the parties agreed
      that the settlement could no longer be approved because the defined settlement
      class, like the litigation class, could not be certified. On June 25, 2007,
      the
      district court approved a stipulation filed by the plaintiffs and the issuers
      terminating the proposed settlement. 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, and the elimination of the individual defendants as defendants.
      On
      September 27, 2007, the plaintiffs filed a motion for class certification in
      the
      six focus cases. If the plaintiffs are successful in obtaining class
      certification, they are expected to amend the complaint against Airspan and
      the
      other non-focus case issuers in the same manner that they amended the complaints
      against the focus case issuers and to seek certification of a class in Airspan’s
      case. **** 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 IPO
      underwriters. The complaint, Vanessa Simmonds v.  Credit
      Suisse Group, et al., Case No. C07-01638, filed in 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.




28




We
      received a letter dated November 9, 2006 from Wi-LAN Inc. raising various
      patent infringement claims relating to certain of the Company’s WiMAX products
      and offering us a license of various Wi-LAN patents. After reviewing Wi-LAN’s
      claims, on February 1, 2007, we sent a
      letter
      to Wi-LAN notifying them that we did not believe that we require a license
      from
      Wi-LAN. On May 29, 2007 we received a follow up letter and materials from
      Wi-LAN which continued to assert those claims. The Company is currently
      reviewing this matter in consultation with its patent counsel. Since the matter
      is still being evaluated, no estimate of damages, if any, can be made at this
      time.




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.




29


**Item
      1A.**  **RISK
      FACTORS**




Except
      for the risk factors set forth below, there have been no material changes to
      the
      risk factors disclosed in Item 1A of Part 1 of the Company’s Annual Report on
      Form 10-K for the fiscal year ended December 31, 2006, as such risk factors
      were
      updated and replaced as set forth in Item 1A of Part II of the Company’s
      Quarterly Report on Form 10-Q for the fiscal quarter ended July 1,
      2007.





***If
      we are unable to compensate for declining sales of obsolescent products with
      sales of new WiMAX products, our revenues will continue to
      decline.***





As
      certain of our current products become obsolescent, growth in sales of our
      new
      WiMAX products will be needed to compensate for this decline in revenues. As
      WiMAX is now regarded as likely to become a principal standard for the broadband
      wireless industry, we are facing the risk of obsolescence of our non-WiMAX
      products. As a result, we expect our sales to continue to be materially
      adversely affected until increasing sales of WiMAX products compensate for
      the
      decline in sales of non-WiMAX products. While our WiMAX sales have been
      increasing, those increases have not yet been sufficient to offset the decline
      in sales of our non-WiMAX products. In the course of committing to research
      and
      development, enhancing our existing products and developing the WiMAX product
      line, we have made projections and assumptions about the potential demand for
      our various product lines. If our projections or assumptions are incorrect
      for
      any reason, and our product lines do not sell as projected, our results of
      operations will be materially adversely affected.





***Our
      products may infringe on the intellectual property rights of third parties,
      which may result in lawsuits that could be costly to defend and prohibit us
      from
      selling our products.***





Third
      parties could assert exclusive patent, copyright, trademark and other
      intellectual property infringement claims against us, our products or the
      technologies that are important to us. If any inquiry from a third party
      relating to patents or trademarks leads to a proceeding against us and we are
      unable to defend ourselves successfully, our ability to sell our products may
      be
      adversely affected and our business would be harmed. In addition, third parties
      may assert claims, or initiate litigation against us or our manufacturers,
      suppliers or customers with respect to existing or future products, trademarks
      or other proprietary rights. Any claims against us, or customers that we
      indemnify against intellectual property claims, with or without merit, may:




•
            be
                time-consuming, costly to defend and harm our reputation;





•
            divert
                management’s attention and resources;





•
            cause
                delays in the delivery of our products;





•
            require
                the payment of monetary damages;





•
            result
                in an injunction, which would prohibit us from using these technologies
                and require us to stop shipping our systems until they could be
                redesigned, if possible; and





•
            require
                us to enter into license or royalty agreements, which may not be
                available
                on acceptable terms or require payment of substantial sums.




The
      status of intellectual property directed to or covering WiMAX technology is
      currently unclear and developing. It is difficult to determine what parties,
      if
      any, hold patents or other rights with respect to intellectual property that
      is
      used in WiMAX products, including ours. In addition, Mobile WiMAX technology
      is
      a new technology with greater uncertainty regarding the status of relevant
      intellectual property and could involve greater patent licensing issues and
      more
      potential for intellectual property disputes than fixed WiMAX technology. A
      September 2006 patent survey commissioned by the WiMAX Forum® suggest that there
      are more than 1,550 existing patents that may be deemed to cover some portion
      of
      WiMAX technology. We believe that the number of patents that may be deemed
      to
      cover WiMAX technology is increasing. We cannot be certain that holders of
      some
      of these patents or other patent holders will not assert claims against us
      in
      the future, including after we begin to sell mobile WiMAX products. From time
      to
      time, we have received, and expect to continue to receive, correspondence from
      various other parties offering licenses to patents or providing notice of claims
      of infringement, misappropriation or misuse of other parties’ proprietary
      rights. Some of these claims may lead to litigation.




30




For
      example, we received a letter dated November 9, 2006 from Wi-LAN Inc. (“Wi-LAN”)
      raising various patent infringement claims and offering us a license of various
      Wi-LAN patents relating to technology used in all of our WiMAX and WiFi based
      products. After reviewing Wi-LAN’s Claims, on February 1, 2007, we sent a letter
      to Wi-LAN notifying them that we did not believe that we require a license
      from
      Wi-LAN. On May 29, 2007, we received a follow up letter and materials from
      Wi-LAN which continued to assert those claims. The Company has reviewed this
      matter in consultation with its patent counsel, and believes it has meritorious
      defenses against these claims. If Wi-LAN decides to pursue claims against us
      for
      patent infringement, we might not be able to defend such claims successfully.
      Even if we were to prevail in such litigation, the associated costs could
      deplete our financial resources, and our management’s attention and resources
      could be diverted. Alternatively, we may be required to seek a license to use
      certain technology from Wi-LAN. We cannot be certain that Wi-LAN would provide
      such a license or, if it did, what the economic or other terms of the license
      would be. Such a license could require us to make significant payments with
      respect to past and/or future sales of our products, and such payments might
      significantly reduce the margins on sales of our products.





***We
      may not be able to establish or expand our relationships with major system
      integrators and telecommunications equipment OEMs, which would harm our ability
      to generate revenue.***





We
      believe that our future success, particularly with respect to WiMAX, will
      increasingly depend upon our ability to establish and expand our relationships
      with major system integrators and telecommunications equipment OEMs. Some of
      our
      products are sold to and through system integrators for integration into their
      systems, rather than directly to carriers. As a result, the level of our sales
      depends on the success, quality and market acceptance of the products of these
      system integrators and OEMs, as well as their sales and marketing efforts,
      all
      of which are not within our control. Adverse events affecting these system
      integrators and OEMs, such as financial difficulties or technical problems
      with
      their products could have a material adverse effect on our results of
      operations. In addition, the termination of any existing or future relationships
      with systems integrators or OEMs could result in our selling fewer products.
      Furthermore, systems integrators and OEMs may choose to integrate, market and
      sell the products of competitors or to use competing technologies instead of
      or
      in addition to our products. If we are not able to establish and expand
      relationships with system integrators and OEMs to market and sell our products
      over competing products and technologies, there may be a material adverse effect
      on our ability to generate revenue.





***We
      may not have adequate protection for our intellectual property, which may make
      it easier for others to misappropriate our technology and enable our competitors
      to sell competing products at lower prices and harm our business.***





Our
      success has historically relied in part on proprietary technology. We have
      used
      a combination of patent, copyright, trademark and trade secret laws and
      contractual restrictions on disclosure to protect our intellectual property
      rights associated with our products other than our WiMAX products. Despite
      our
      efforts to protect our proprietary rights, we cannot be certain that the steps
      we have taken will prevent misappropriation of our technology, and we may not
      be
      able to detect unauthorized use or take appropriate steps to enforce our
      intellectual property rights. The laws of some foreign countries, particularly
      in Asia, do not protect our proprietary rights to the same extent as the laws
      of
      the U.S. and the UK, and we may encounter substantial infringement problems
      in
      those countries. In addition, we do not file for patent protection in every
      country where we conduct business. In some countries where we do file for patent
      protection, we may choose not to maintain patent protection. In addition, we
      may
      not file for or maintain patent protection in a country from which we derive
      significant revenue. In instances where we have licensed intellectual property
      from third parties, we may have limited rights to institute actions against
      third parties for infringement of the licensed intellectual property or to
      defend any suit that challenges the validity of the licensed intellectual
      property. If we fail to protect adequately our intellectual property rights,
      or
      fail to do so under applicable law, it would be easier for our competitors
      to
      copy our products and sell competing products at lower prices, which would
      harm
      our business.




***Our
      projected demand for capital in future periods may increase and our ability
      to
      access capital on acceptable terms could decrease significantly and may
      adversely affect our results of operations and/or business prospects.***





We
      recognize that our projected demand for capital in future periods may increase
      due to a variety of factors, estimates and assumptions. If our projected demand
      for capital materially increases and our then current and/or projected cash
      resources have not increased a comparable amount, we may need to modify our
      existing business plan or seek new capital which may be available only on terms
      that may not be acceptable to the Company. If we are compelled to adopt measures
      to conserve cash resources due to the lack of availability of capital, such
      measures may adversely affect our results of operations and our short term
      and/or long term prospects for growth and profitability.





31




**Item
      6.**  **EXHIBITS**


**3.1**
              **Second
                  Amended and Restated Articles of Incorporation of Airspan
                  (1)****3.2**
              **Articles
                  of Amendment to the Articles of Incorporation of Airspan
                  (2)****3.3**
              **Articles
                  of Amendment to the Articles of Incorporation of Airspan
                  (3)****3.4**
              **Amended
                  and Restated Bylaws of Airspan (4)****4.1**
              **Form
                  of Airspan's common stock certificate (5)****4.2**
              **Preferred
                  Stock Purchase Agreement, dated July 28, 2006, among Airspan and
                  Oak
                  Investment Partners XI, Limited Partnership, including exhibits
                  thereto
                  (6)****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**1
              Incorporated
                  by reference to Airspan's Form 10-Q for the quarter ended April
                  4,
                  20042
              Incorporated
                  by reference to Airspan's report on Form 8-K filed on September
                  15,
                  20043
              Incorporated
                  by reference to Airspan's report on Form 8-K filed on September
                  26,
                  20064
              Incorporated
                  by reference to Airspan’s Form 10-K for the year ended December 31,
                  20065
              Incorporated
                  by reference to Airspan's Registration Statement on Form S-1 (333-34514)
                  filed April 11, 20006
              Incorporated
                  by reference to Airspan's report on Form 8-K filed on August 1,
                  2006




**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: November
                  8, 2007
              By:
              /s/ DAVID
                  BRANTName:  
                  David BrantTitle:    
                  Chief Financial Officer




32