**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




ý
            
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934**For
                the quarterly period ended April 1, 2007**ORo
            
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the transition period from ________________ to
                ________________





Commission
      file number: **000-31031**





**AIRSPAN
      NETWORKS INC.**


(Exact
      name of registrant as specified in its charter)





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





**561-893-8670**


(Registrant’s
      telephone number, including area code)





**None**


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





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x  No  ̈





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, 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 May 7, 2007Common
                Stock, $.0003 par value per share
            
            40,778,651
                shares








**TABLE
      OF CONTENTS**




**Page**
              **Number****PART****I.****FINANCIAL
                INFORMATION**Item
                1.
            Financial
                StatementsCondensed
                Consolidated Balance Sheets
            2Condensed
                Consolidated Statements of Operations
            3Condensed
                Consolidated Statement of Cash Flows
            4Notes
                to Condensed Consolidated Financial Statements
            5Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            19Item
                4.
            Controls
                and Procedures
            20**PART
                II. OTHER INFORMATIO****N**Item
                1.
            Legal
                Proceedings
            21Item
                6.
            Exhibits
            22Signatures
            22







1


**PART
      1. FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





**AIRSPAN
                NETWORKS INC.****CONDENSED
                CONSOLIDATED BALANCE SHEETS****(in
                thousands, except for share
                data)**





**December
                31,**
            
            **April
                1,****2006**
            
            **2007****(audited)**
            
            **(unaudited)****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            15,890
            
            $
            19,032Restricted
                cash
            
            
            1,111
            
            
            500Short-term
                investments
            
            
            10,233
            
            
            9,357Accounts
                receivable, less allowance for doubtful accounts of$5,489
                at December 31, 2006 and $6,013 at April 1, 2007
            
            
            31,063
            
            
            24,368Unbilled
                accounts receivable
            
            
            711
            
            
            801Inventory
            
            
            23,624
            
            
            23,044Prepaid
                expenses and other current assets
            
            
            5,935
            
            
            5,252Total
                current assets
            
            
            88,567
            
            
            82,354Property,
                plant and equipment, net
            
            
            5,705
            
            
            5,628Goodwill
            
            
            10,231
            
            
            10,231Intangible
                assets, net
            
            
            2,806
            
            
            2,572Other
                non-current assets
            
            
            3,245
            
            
            3,126**Total
                assets**
            
            $
            110,554
            
            $
            103,911**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            15,940
            
            $
            11,946Accrued
                taxes
            
            
            687
            
            
            728Deferred
                revenue
            
            
            6,656
            
            
            1,864Customer
                advances
            
            
            1,665
            
            
            4,236Other
                accrued expenses
            
            
            16,197
            
            
            16,203Short-term
                debt
            
            
            -
            
            
            3,000Total
                current liabilities
            
            
            41,145
            
            
            37,977Long-term
                debt
            
            
            1,554
            
            
            1,611Accrued
                interest on long-term debt
            
            
            153
            
            
            147**Total
                liabilities**
            
            
            42,852
            
            
            39,735**Commitments
                (Note 11)****Stockholders'
                equity**Preferred
                stock, $0.0001 par value; 250,000 shares authorized atDecember
                31, 2006 and April 1, 2007; 200,690 shares issued atDecember
                31, 2006 and April 1, 2007Common
                stock, $0.0003 par value; 100,000,000 shares authorizedat
                December 31, 2006 and 2006; 40,380,910 and 40,762,820 issued
                atDecember
                31, 2006 and April 1, 2007, respectively
            
            
            12
            
            
            12Note
                receivable - stockholder
            
            
            (87
            )
            
            (87
            )Additional
                paid-in capital
            
            
            308,768
            
            
            310,370Accumulated
                deficit
            
            
            (240,991
            )
            
            (246,119
            )**Total
                stockholders' equity**
            
            
            67,702
            
            
            64,176**Total
                liabilities and stockholders' equity**
            
            $
            110,554
            
            $
            103,911





*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**
            
            **Quarter
                ended****April
                2, 2006**
            
            **April
                1, 2007****(unaudited)**
            
            **(unaudited)**Revenue
            
            $
            23,800
            
            $
            26,660Cost
                of revenue
            
            
            (17,362
            )
            
            (18,409
            )Gross
                profit
            
            
            6,438
            
            
            8,251Operating
                expenses:Research
                and development
            
            
            6,110
            
            
            5,606Sales
                and marketing
            
            
            4,505
            
            
            3,362Bad
                debt
            
            
            536
            
            
            232General
                and administrative
            
            
            3,762
            
            
            4,192Amortization
                of intangibles
            
            
            275
            
            
            234Restructuring
            
            
            -
            
            
            40Total
                operating expenses
            
            
            15,188
            
            
            13,666Loss
                from operations
            
            
            (8,750
            )
            
            (5,415
            )Interest
                expense
            
            
            (12
            )
            
            (23
            )Interest
                and other income
            
            
            191
            
            
            349Loss
                before income taxes
            
            
            (8,571
            )
            
            (5,089
            )Income
                tax credits (charge)
            
            
            284
            
            
            (39
            )Net
                loss
            
            
            (8,287
            )
            
            (5,128
            )Net
                loss per share - basic and diluted
            
            $
            (0.21
            )
            $
            (0.13
            )Weighted
                average shares outstanding - basic and diluted
            
            
            39,733,291
            
            
            40,528,097





*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****April
                2, 2006**
            
            **April
                1, 2007****(unaudited)**
            
            **(unaudited)****Cash
                flows from operating activities**Net
                loss
            
            $
            (8,287
            )
            $
            (5,128
            )Adjustments
                to reconcile net loss to net cash used inoperating
                activities:Depreciation
                and amortization
            
            
            622
            
            
            915Accrued
                interest on long-term debt
            
            
            -
            
            
            51Non-cash
                stock compensation
            
            
            623
            
            
            605Changes
                in operating assets and liabilities:Decrease
                in receivables
            
            
            4,437
            
            
            6,605Decrease/(increase)
                in inventories
            
            
            (5,679
            )
            
            580Decrease/(increase)
                in other current assets
            
            
            (4,540
            )
            
            683Decrease
                in accounts payables
            
            
            (6,320
            )
            
            (3,994
            )Increase/(decrease)
                in deferred revenue
            
            
            4,094
            
            
            (4,792
            )Increase
                in customer advances
            
            
            1,702
            
            
            2,571Decrease
                in other accrued expenses
            
            
            (572
            )
            
            47Decrease/(increase)
                in other operating assets
            
            
            (3,847
            )
            
            738Net
                cash used in operating activities
            
            
            (17,767
            )
            
            (1,119
            )**Cash
                flows from investing activities**Purchase
                of property, plant and equipment
            
            
            (691
            )
            
            (602
            )Purchase
                of investment securities
            
            
            (17,871
            )
            
            (4,399
            )Proceeds
                from sale of investment securities
            
            
            6,893
            
            
            5,274Net
                cash provided by (used in) investing activities
            
            
            (11,669
            )
            
            273**Cash
                flows from financing activities**Borrowings
                under line of credit
            
            
            -
            
            
            3,000Proceeds
                from the exercise of stock options
            
            
            77
            
            
            988Net
                cash provided by financing activities
            
            
            77
            
            
            3,988Increase/(decrease)
                in cash and cash equivalents
            
            
            (29,359
            )
            
            3,142**Cash
                and cash equivalents, beginning of period**
            
            
            44,140
            
            
            15,890**Cash
                and cash equivalents, end of period**
            
            $
            14,781
            
            $
            19,032





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


4





**Airspan
      Networks Inc.**


**Notes
      to Condensed Consolidated Financial Statements**


(Unaudited)





**BUSINESS**





We
      are a
      global supplier of Broadband Wireless equipment and other technologies,
      including Voice-over-Internet Protocol (“VoIP”) switching that allow
      communications service providers (often referred to as “local exchange
      carriers,” or simply telephone companies), Internet service providers (often
      referred to as “ISPs”) and other telecommunications users, such as utilities and
      enterprises, to cost-effectively deliver high-speed data and voice services
      using radio frequencies rather than wires. We call this transmission method
      “Broadband Wireless”. Historically, the primary market for our systems was a
      subset of the fixed broadband wireless access systems market - the fixed
      point-to-multipoint market in radio frequencies below 6.0GHz. In the future,
      we
      expect the market to include fixed, portable and mobile broadband wireless
      access systems markets, in the same frequencies.




Each
      of
      our wireless systems utilizes digital radio technology, which provides either
      wide- or local-area coverage, robust security and resistance to fading. These
      systems can be deployed rapidly and cost effectively, providing an attractive
      alternative or complement to traditional copper wire, cable, or fiber-optic
      communications access networks. Our products also include software tools that
      optimize geographic coverage of our systems and provide ongoing network
      management. To facilitate the deployment and operation of our systems, we also
      offer network installation, training and support services. A more complete
      description of our various wireless access systems is provided below. Our
      broadband wireless systems have been installed by more than 400 network
      operators in more than 100 countries.





Our
      product portfolio is comprised of a variety of products which operate based
      on
      (i) proprietary technologies we or others have developed and patented, (ii)
      WiMAX standards or (iii) WiFi standards. Our product portfolio also includes
      VoIP products.





Our
      corporate headquarters are located in Boca Raton, Florida. Our main operations,
      manufacturing and product development centers are located in Uxbridge, UK,
      Airport City, Israel, and in 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* .





**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.  Certain reclassifications have been made to prior period amounts to
      conform to the current period presentation.





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.






5




**CONTINGENCIES**





*Warranty*





We
      provide a limited warranty for periods, usually 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 for are sufficient for all future warranty costs on equipment
      sold through April 1, 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
      three months ended April 1, 2007.





**Balance
                at beginning of period**
            
            **Accrual
                for warranties issued during the period**
            
            **Changes
                in accruals related to pre-existing warranties (including changes
                in
                estimates)**
            
            **Settlements
                made (in cash or in kind) during the period**
            
            **Balance
                at end of period**Three
                months ended April 1, 2007Product
                warranty liability
            
            $
            985
            
            $
            134
            
            $
            (74
            )
            $
            (51
            )
            $
            994





*Other
      guarantees*





We
      had
      delivered to landlords and customers bank guarantees aggregating $2,330 at
      April
      1, 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 $1,315 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 ($121 in aggregate). Where the guarantees
      have
      maturities greater than one year, the cash pledged as collateral has been
      classified as Other non-current assets ($1,194). A total of $1,015 in guarantees
      have been issued under the line of credit provided by Silicon Valley Bank,
      which
      does not require any related pledge of cash collateral.





For
      further discussion regarding our restricted cash balance, see “Management’s
      Discussion & Analysis - Liquidity and Capital Resources. We have not
      recognized any liability for these guarantees as in management’s opinion the
      likelihood of having to make payments under the guarantees is remote. 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 its fully consolidated
      subsidiary, Airspan Networks (Finland) OY. These loans total $1,758 at April
      1,
      2007, which includes $147 of accrued interest, and are recorded in long-term
      debt. This guarantee expires only when Radionet has fulfilled all its
      obligations to Tekes.





*Legal
      claims*




On
      and
      after July 23, 2001, three Class Action Complaints were filed in the United
      States District Court for the Southern District of New York naming as defendants
      Airspan, and 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) (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, 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.






6




This
      action is being coordinated with approximately three hundred other nearly
      identical actions filed against other companies. On July 15, 2002, the Company
      moved to dismiss all claims against it and the Individual Defendants. On October
      9, 2002, the Court dismissed the Individual Defendants from the case without
      prejudice based upon Stipulations of Dismissal filed by the Plaintiffs and
      the
      Individual Defendants. 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
      October 13, 2004, the Court certified a class in six of the approximately 300
      other nearly identical actions (the "focus cases"). In her Opinion, Judge
      Scheindlin noted that the decision is intended to provide strong guidance to
      all
      parties regarding class certification in the remaining cases. Judge Scheindlin
      determined that the class period for Section 11 claims is the period between
      the
      IPO and the date that unregistered shares entered the market. Judge Scheindlin
      also ruled that a proper class representative of a Section 11 class must (1)
      have purchased shares during the appropriate class period; and (2) have either
      sold the shares at a price below the offering price or held the shares until
      the
      time of suit. In two of the six cases, the class representatives did not meet
      the above criteria and therefore, the Section 11 cases were not certified.
      The
      Underwriter Defendants appealed the decision and the Second Circuit vacated
      the
      District Court’s decision granting class certification in those six cases on
      December 5, 2006. Plaintiffs filed a petition for rehearing. On January 5,
      2007,
      the Second Circuit denied the petition, but noted that Plaintiffs could ask
      the
      District Court to certify a more narrow class than the one that was rejected.
      Plaintiffs have not yet moved to certify a class in the Airspan
      case.




Airspan
      has approved a settlement agreement and related agreements which set forth
      the
      terms of a settlement between Airspan, the Individual Defendants, the Plaintiff
      class and the vast majority of the other approximately 300 issuer defendants
      and
      the individual defendants currently or formerly associated with those companies.
      It is unclear what impact the Second Circuit’s decision vacating class
      certification in the six focus cases will have on the settlement, which has
      not
      yet been finally approved by the District Court, because Airspan’s settlement
      with the plaintiffs involves the certification of the case as a class action
      as
      part of the approval process. The District Court has stayed all proceedings,
      including a decision on final approval of the settlement and any amendments
      of
      the complaints, pending the Second Circuit’s decision on Plaintiffs’ petition
      for rehearing.




Pursuant
      to the settlement and related agreements, if the settlement receives final
      approval by the District Court, it provides for a release of Airspan and the
      individual defendants for the conduct alleged in the action to be wrongful.
      Airspan would agree to undertake certain responsibilities, including agreeing
      to
      assign away, not assert, or release certain potential claims Airspan may have
      against its underwriters. It is anticipated that any potential financial
      obligation of Airspan to Plaintiffs pursuant to the terms of the issuers’
settlement agreement and related agreements will be covered by existing
      insurance. The Company currently is not aware of any material limitations on
      the
      expected recovery of any potential financial obligation to Plaintiffs from
      its
      insurance carriers. Its carriers are solvent, and the company is not aware
      of
      any uncertainties as to the legal sufficiency of an insurance claim with respect
      to any recovery by Plaintiffs. Therefore, we do not expect that the settlement
      will involve any payment by Airspan.




There
      is
      no assurance that the court will grant final approval to the issuers’
settlement. If the settlement agreement is not approved and 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.




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.




7





**STOCK
      COMPENSATION**




At
      April
      1, 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 had an exercise price equal to the market
      value of the underlying common stock on the date of grant. Restricted stock
      is
      common stock that is subject to a risk of forfeiture or other restrictions
      that
      will lapse upon satisfaction of specified performance conditions and/or the
      passage of time. Awards of restricted stock that vest only by the passage of
      time will generally fully vest after four years from the date of grant. At
      April
      1, 2007, the Company had reserved a total of 8,902,118 shares of its common
      stock for issuance under the above plans.





The
      following table summarizes share-based compensation expense under SFAS 123(R)
      for the three months ended April 1, 2007 and April 2, 2006, which was allocated
      as follows (in thousands):





Three
                months endedApril
                2,
            
            April
                1,2006
            
            2007Research
                and development
            
            $
            261
            
            $
            165Sales
                and marketing
            
            
            211
            
            
            178General
                and administrative
            
            
            129
            
            
            254Stock-based
                compensation expense included in operating expense
            
            
            601
            
            
            597Cost
                of sales
            
            
            22
            
            
            7Total
                stock-based compensation
            
            $
            623
            
            $
            604




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.




8




The summary of the changes in stock options outstanding
      under
      the Company’s stock based compensation plansduring
      the three months ended April 1, 2007 is presented below:





**Weighted****Average****Number
                of**
            
            **Exercise****Shares**
            
            **Price**Outstanding,
                beginning of period
            
            
            5,570,009
            
            $
            4.10Granted
            
            
            639,800
            
            
            4.28Forfeited
            
            
            (354,455
            )
            
            3.15Exercised
            
            
            (379,240
            )
            
            2.60Outstanding,
                end of period
            
            
            5,476,114
            
            $
            4.28Exercisable,
                end of period
            
            
            3,360,612
            
            $
            4.16




The
      following table summarizes the ranges of the exercise prices of outstanding
      and
      exercisable options as of April 1, 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 - 1.04
            
            
            564,045
            
            $
            0.55
            
            
            4.24
            
            
            564,003
            
            $
            0.551.09-2.20
            
            
            716,250
            
            
            1.99
            
            
            6.35
            
            
            488,599
            
            
            1.902.21-4.12
            
            
            825,590
            
            
            3.41
            
            
            6.74
            
            
            463,430
            
            
            3.444.22-4.26
            
            
            4,500
            
            
            4.24
            
            
            7.45
            
            
            2,802
            
            
            4.234.28-4.28
            
            
            639,800
            
            
            4.28
            
            
            9.92
            
            
            0
            
            
            0.004.37-4.38
            
            
            661,552
            
            
            4.37
            
            
            4.28
            
            
            660,552
            
            
            4.374.55-5.08
            
            
            746,167
            
            
            5.00
            
            
            7.25
            
            
            423,324
            
            
            5.025.14-6.00
            
            
            670,258
            
            
            5.86
            
            
            5.12
            
            
            381,273
            
            
            5.836.01-9.60
            
            
            494,619
            
            
            6.64
            
            
            7.17
            
            
            223,296
            
            
            7.2115.00-15.00
            
            
            153,333
            
            
            15.00
            
            
            2.87
            
            
            153,333
            
            
            15.005,476,114
            
            
            4.28
            
            
            6.31
            
            
            3,360,612
            
            
            4.16




As
      of
      April 1, 2007, the weighted average remaining contractual life of options
      exercisable was 4.94 years and their aggregate intrinsic value was $2,990.
      The
      total intrinsic value of options exercised during the three months ended April
      1, 2007 was $415. Cash received from stock option exercises for the three
      months ended April 1, 2007 was $988. 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 three months ended April 1, 2007.




9




During
      the first quarter 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 $34 was recorded for the three months ended
      April 1, 2007 related to these shares and those issued in prior years. The
      summary of the changes in restricted stock outstanding during the three months
      ended April 1, 2007 is presented below:





**Three
                Months Ended**
              **April
                1, 2007****Number of**
              **Shares**
            
            **Weighted-Average**
              **Grant Date
                Fair Value**Nonvested
                balance at beginning of period
            
            
            105,592
            
            $
            4.54Granted
            
            
            56,000
            
            $
            4.69Forfeited
            
            
            (25,158
            )
            $
            3.78Vested
            
            
            -
            
            $
            -Nonvested
                balance at end of period
            
            
            136,434
            
            $
            4.74





As
      of
      April 1, 2007, $5,059 of total unrecognized compensation expense was recorded,
      net of estimated forfeitures, related to stock options that will be recognized
      over the weighted average period of 2.70 years. Also, as of April 1, 2007,
      there
      was $437 of total unrecognized compensation expense related to restricted stock
      awards that will be recognized over the weighted average period of
      2.84 years. A total of 136,434 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. No shares were issued during the three months ended April 1,
      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 three months of fiscal 2006 was $6.15
      and for the first three 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 three months
      of fiscal 2006 and the first three months of fiscal 2007 was $4.00 and $2.91,
      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 three months of fiscal 2005 and of fiscal
      2006:





Three
                Months EndedApril
                2,
              2006
            
            April
                1,
              2007Expected
                volatility
            
            
            75
            %
            
            82
            %Risk-free
                interest rate
            
            
            4.62
            %
            
            4.74
            %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.


.




10




**INVENTORY**





Inventory
      consists of the following:




**December
                31,**
            
            **April
                1,****2006**
            
            **2007****(audited)**
            
            **(unaudited)**Purchased
                parts and materials
            
            $
            14,826
            
            $
            13,213Work
                in progress
            
            
            1,329
            
            
            896Finished
                goods and consumables
            
            
            21,413
            
            
            20,842Inventory
                provision
            
            
            (13,944
            )
            
            (11,907)
            )$
            23,624
            
            $
            23,044





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.





**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 final cost of these
“dilapidations” will depend on the lessor’s intended use for this facility, and
      the estimates will be revised accordingly once this intention is disclosed
      to
      us. Currently, the lessor expects us to refurbish the facility, and accordingly,
      we have accrued the total cost of this refurbishment. However, if the lessor
      should subsequently decide to demolish the building and completely rebuild
      on
      this site, our costs could be materially lower. All cash outflows in connection
      with this restructuring are expected to occur by the end of 2007.





In
      the
      third quarter of 2006, the Company commenced a company-wide restructuring
      program to reduce operating expenses. In 2006, the Company recorded
      restructuring charges of $2.2 million and in the first quarter of 2007 a charge
      of $40 thousand was recorded. The cost reduction was accomplished primarily
      as a
      result of reductions in worldwide headcount. The Company expects to incur
      approximately $0.1 million of cash outlays in the second quarter of 2007 related
      to amounts accrued. Once the program is completed, the Company projects it
      will
      be able to realize annual cost savings of approximately $7-8 million relative
      to
      the cost structure that existed at the end of the second quarter of 2006.
      Despite the Company’s efforts to prepare reliable projections, it recognizes
      that forecasts may prove to be imprecise due to unforeseen events, including
      unanticipated expenses or difficulties associated with reducing its workforce,
      requiring retained staff members to assume additional responsibilities and/or
      reorganizing its operations to more cost efficiently produce a given level
      of
      product revenue.


11





**Total
                expected**
              **to
                be**
              **incurred**
            
            **Incurred
                during the quarter ended April 1,**
              **2007**
            
            **Cumulative
                incurred at April 1, 2007****(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**One
                time termination benefits
            
            $
            2,124
            
            $
            37
            
            $
            2,124Contract
                termination costs
            
            
            1,440
            
            
            3
            
            
            1,440Other
                associated costs
            
            
            50
            
            
            -
            
            
            50$
            3,614
            
            $
            40
            
            $
            3,614





**Balance
                at**
            
            
            
            
            
            **Balance
                at****Beginning**
            
            **Restructuring**
            
            
            
            **End****of
                Period**
            
            **Charge**
            
            **Utilized**
            
            **of
                Period****Three
                months ended April 1, 2007 (unaudited)**One
                time termination benefits
            
            $
            375
            
            
            37
            
            
            (297
            )
            
            115Contract
                termination costs
            
            
            1,437
            
            
            3
            
            
            
            
            
            1,440Other
                associated costs
            
            
            50
            
            
            
            
            
            
            
            
            50$
            1,862
            
            $
            40
            
            $
            (297
            )
            $
            1,605**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




**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 additional revenue
      generated from sales of original equipment manufacturer’s (OEM) products.





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





**Quarter
                Ended****April
                2, 2006**
            
            **April
                1, 2007****(unaudited)**USA
                and Canada
            
            $
            1,927
            
            $
            2,698Asia
            
            
            2,603
            
            
            8,949Europe
            
            
            4,245
            
            
            6,870Africa
                and the Middle East
            
            
            939
            
            
            1,033Latin
                America and Caribbean
            
            
            14,086
            
            
            7,110$
            23,800
            
            $
            26,660





12





**COMPREHENSIVE
      LOSS**





Total
      comprehensive loss was $(8,287) for the quarter ended April 2, 2006 and $(5,128)
      for the quarter ended April 1, 2007 comprising:





**Quarter
                Ended****April
                2, 2006**
            
            **April
                1, 2007****(unaudited)**Net
                loss
            
            $
            (8,287
            )
            $
            (5,128
            )Other
                comprehensive income/(loss)
            
            
            -
            
            
            -Comprehensive
                loss
            
            $
            (8,287
            )
            $
            (5,128
            )





**NET
      LOSS PER SHARE**





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





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




**Quarter
                Ended****April
                2,**
              **2006**
            
            **April
                1, 2007****(unaudited)**Numerator:Net
                loss
            
            $
            (8,287
            )
            $
            (5,128
            )Denominator:Weighted
                average common shares outstanding basic and diluted
            
            
            39,733,291
            
            
            40,528,097Net
                loss per share- basic and diluted
            
            $
            (0.21
            )
            $
            (0.13
            )





There
      were 5,511,764 stock options outstanding at April 2, 2006 and 5,476,114 stock
      options outstanding at April 1, 2007 that were excluded from the computation
      of
      diluted net loss per share as their effect was antidilutive. 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 73,000 shares of convertible
      preferred stock at April 2, 2006 and 200,690 shares at April 1, 2007 that were
      also excluded from the computation of diluted net loss per share as their effect
      was antidilutive. There were 140,000 nonvested shares of restricted stock at
      April 2, 2006 and 136,434 nonvested shares at April 1, 2007 that were excluded
      from the computation of diluted net loss per share as their effect was
      antidilutive.





**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.




13




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 prior to 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)” (“EITF 06-3”), which is effective for interim and annual
      reporting periods beginning after December 15, 2006. EITF 06-3 addresses
      which taxes assessed by a government authority should be considered and how
      these taxes should be presented in the income statement (i.e., gross versus
      net). This EITF was effective for the first quarter of 2007 and 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
      position.


14





**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) a slowdown of expenditures by communication service providers and failure
      of
      the WiMAX market to develop as anticipated; (ii) increased competition from
      alternative communication systems; (iii) a higher than anticipated rate of
      decline in our legacy business and/or a slower than anticipated rate of growth
      in the WiMAX business; (iv) encroachment of large telecommunications
      carriers on the WiMAX market; (v) the failure of our existing or
      prospective customers to purchase products as projected; (vi) our inability
      to
      successfully implement cost reduction or containment programs; (vii) our
      inability to retain Axtel, S.A. de C.V. (“Axtel”), Yozan Inc. (“Yozan”), and
      other key customers; (viii) possible infringement of third party technologies
      which may result in lawsuits that could be costly to defend and prohibit us
      from
      selling our products, (ix)** **the
      possibility that Yozan will not meet its obligations to purchase additional
      equipment in the quantities anticipated;** **** **(x) our
      inability to use or sell any excess inventory we accumulate as a result of
      the
      Yozan contract amendments, 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 its Annual Report
      on Form 10-K for the year ended December 31, 2006 and this quarterly report
      on
      Form 10-Q for the quarter ended April 1, 2006.**




**COMPARISON
      OF THE QUARTER ENDED APRIL 1, 2007 TO THE QUARTER ENDED APRIL 2,
      2006**





Revenue




Revenue
      totaled $26.7 million for the quarter ended April 1, 2007, representing a 12%
      increase from the $23.8 million reported for the quarter ended April 2, 2006
      and
      a 15% decrease from the fourth quarter of 2006. The year over year increase
      in
      revenues was attributable primarily to increased sales of the WiMAX product
      line, recorded at $14.7 million of revenue, offset in part by lower sales of
      our
      Proximity and WipLL products. The decline compared to the fourth quarter in
      2006
      was attributable mainly to a decline in Proximity and WipLL sales, offset by
      an
      increase in sales of the WiMAX product line. Non-WiMAX revenues decreased
      from $21.7 million in the quarter ending April 2, 2006 to $12.0 million in
      the
      quarter ending April 1, 2007.





Geographically,
      34% of our revenue was derived from customers in Asia, 27% from customers in
      Mexico, Latin America and the Caribbean, and 25% from customers in Europe.
      Customers in the United States and Canada, and Africa and the Middle East
      accounted for 10% and 4% of revenues, respectively.





In
      the
      first quarter, WiMAX continued to gain market acceptance. During the quarter,
      we
      announced the introduction of new WiMAX products and frequencies. Since the
      beginning of 2006 we have seen growth in the number of our WiMAX customers.
      During the first quarter, more than 80 customers purchased WiMAX equipment
      from
      us and 5 customers placed orders in excess of $1,000,000.










Cost
      of
      Revenue




Cost
      of
      revenue increased 6% to $18.4 million in the quarter ended April 1, 2007 from
      $17.4 million in the quarter ended April 2, 2006 primarily due to increased
      sales. The gross profit for the first quarter of 2007 was $8.3 million (31%
      of
      revenue) compared to a gross profit of $6.4 million (27% of revenue) for the
      first quarter of 2006 and decreased as compared to a gross profit for the fourth
      quarter of 2006 of $10.4 million (33% of revenue). The increase in gross margin
      in the first quarter of 2007 as compared to the first quarter of 2006 is
      primarily attributable to the impact of more revenue coming from products
      with higher product margins and from a reduction in other charges (mainly
      freight and inventory provisions) included in cost of sales.






15


Research
      and Development Expenses




Research
      and development expenses decreased 8% to $5.6 million in the quarter ended
      April
      1, 2007 from $6.1 million in the quarter ended April 2, 2006, and decreased
      by
      6% from the $5.9 million incurred in the fourth quarter 2006. The year-over-year
      decrease was due primarily to the reductions in headcount that we achieved
      through the restructuring we commenced in July. The decrease as compared to
      the
      period ending December 31, 2006 reflects primarily a reduction in material
      usage.





Sales
      and
      Marketing Expenses




Sales
      and
      marketing expenses decreased 25% to $3.4 million in the quarter ended April
      1,
      2007 from $4.5 million in the quarter ended April 2, 2006. Sales and marketing
      expenses for the first quarter 2007 decreased 7% relative to the $3.6 million
      of
      sales and marketing expenses incurred in the fourth quarter of 2006. The
      decrease as compared to the first quarter of 2006 is primarily attributable
      to a
      lower level of agent commissions and reduced travel costs. The decrease as
      compared to the fourth quarter of 2006 also reflects primarily decreased
      commissions.





Bad
      Debt
      Provision




In
      the
      first quarter 2007, we recorded bad debt provisions of $0.2 million relating
      to
      customer accounts for which management has determined that full recovery was
      unlikely. We recorded bad debt provisions of $0.5 million in the first quarter
      of 2006 and $0.7 million in the fourth quarter of 2006.





General
      and Administrative Expenses




General
      and administrative expenses increased 11% to $4.2 million in the quarter ended
      April 1, 2007 from $3.8 million in the quarter ended April 2, 2006 and from
      $3.9
      million in the fourth quarter of 2006. The increase in these expenses in the
      first quarter was primarily due to executive severance charges, an increase
      in
      certain facility related costs and the weakening of the US Dollar against both
      the British Pound Sterling and the New Israeli Shekel, offset by a reduction
      in
      audit and tax fees.





Amortization
      of Intangibles




We
      recorded amortization of intangibles expense of $0.2 million in the first
      quarter 2007 compared with amortization of intangibles expense of $0.3 million
      for the first quarter of 2006. The amortization expense arises primarily as
      a
      result of our acquisition of intangible assets in connection with the ArelNet
      and Radionet acquisitions in June and November 2005, respectively.





Restructuring




In
      the
      first quarter of 2006, we recorded no restructuring charges or provisions.
      In
      the third quarter of 2006, the Company commenced a company-wide restructuring
      program to reduce operating expenses. In 2006, the Company recorded
      restructuring charges of $2.2 million, to reflect the total cost of this
      restructuring program and in the first quarter of 2007, we recorded
      restructuring charges of $40 thousand. The cost reduction was accomplished
      primarily as a result of reductions in worldwide headcount. The restructuring
      resulted in direct cash outlays in the third and fourth quarters of 2006, and
      in
      the first quarter of 2007. See also “Item 1 - Financial Statements - ACCRUED
      RESTRUCTURING CHARGES” for additional information regarding the
      restructuring.





Interest
      Expense and Interest and Other Income




At
      April
      1, 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 $1.8 million. During the first quarter of 2007, we also borrowed
      $3.0 million under the Silicon Valley Bank Loan and Security Agreement. In
      the
      quarter, we incurred interest expense on that loan of $23 thousand. We had
      total
      interest expense of $12 thousand in the first quarter of 2006. Total interest
      and other income increased compared to the first quarter of 2006 and decreased
      compared to the fourth quarter of 2006 primarily due to interest earned on
      average cash balances.





Income
      Taxes




An
      income
      tax credit of $0.3 million was recorded in the quarter ended April 2, 2006,
      related to losses we incurred in 2004. This tax credit was 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.






16




Net
      Loss




For
      the
      reasons described above, we incurred a net loss of $5.1 million, or $(0.13)
      per
      share, in the quarter ended April 1, 2007, compared to a net loss of $8.3
      million, or $(0.21) per share, for the quarter ended April 2, 2006.




**Liquidity
      and Capital Resources**





As
      of
      April 1, 2007 we had cash, cash equivalents, short-term investments and current
      restricted cash of $28.9 million, as compared to $27.2 million at December
      31,
      2006. As of April 1, 2007, this consisted of cash and cash equivalents totaling
      $19.0 million, short-term investments totaling $9.4 million and $0.5 million
      of
      restricted cash in current assets. In addition, we had restricted cash of $1.2
      million in other non-current assets. We have no material capital
      commitments.




Since
      inception, we have financed our operations through private sales of convertible
      preferred stock, an initial public offering of common stock, which we completed
      on July 25, 2000, and a secured bank line of credit.





In
      the
      initial public offering, we issued 6,325,000 shares of common stock for
      approximately $86 million in cash (net of
      underwriting discounts, commission and other expenses). In our most recent
      private sale of convertible preferred stock, which we closed in September 2006,
      we raised approximately $28.7 million (net of expenses) through the issuance
      of
      Series B preferred stock to Oak Investment Partners XI, Limited Partnership.
      We
      have used the proceeds of the sale of all securities for working capital and
      other general corporate purposes.





On
      August
      1, 2006, we entered into the Loan and Security Agreement with Silicon Valley
      Bank ("SVB"), with respect to a revolving credit line. For the two year term
      of
      the credit line, we may, subject to certain adjustments, borrow up to the lesser
      of (i) $10,000,000 and (ii) 80% of eligible accounts receivable. A certain
      portion of the credit available to us under the credit facility may also be
      utilized to issue letters of credit through, or enter into foreign exchange
      contracts with, SVB. We have issued $1.0 million of letters of credit under
      the
      facility, which were still outstanding at April 1, 2007. We also borrowed $3.0
      million in the first quarter of 2007, which was outstanding at the end of the
      quarter. We have classified this borrowing as a current liability in the balance
      sheet at April 1, 2007 because the agreement contains both a lockbox arrangement
      and a subjective acceleration clause. Although no agreements have been reached,
      we have engaged in discussions with SVB regarding the possibility of increasing
      the amount of available borrowings under this facility. The SVB Loan and
      Security Agreement contains various financial covenants and operating
      restrictions and requires us, among other things, to maintain specified levels
      of tangible net worth and a liquidity coverage ratio. Without the consent of
      SVB, the Loan and Security Agreement also prohibits us from making certain
      asset
      sales, or merging or consolidating with any person, or acquiring all or
      substantially all the assets or capital stock of any person, and restricts
      our
      ability to make investments, incur indebtedness or liens, pay dividends and
      enter into transactions with affiliates.





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. However, we are exploring opportunities for
      additional debt or equity financing.





For
      the
      three months ended April 1, 2007, we used $1.1 million of cash for operating
      activities, compared with a cash outflow of $17.8 million for the three months
      ended April 2, 2006. The operating cash outflow for the first three months
      of
      2007 was primarily a result of the:





· net
      loss
      of $5.1 million;


· decrease
      of $4.0 million in accounts payable; and


· decrease
      of $4.8 million in deferred revenue.





The
      cash
      outflow was partially offset by:


·  increase
      of $6.6 million in receivables; and


·  increase
      of $2.6 million in customer advances.






17




Days
      sales outstanding were at 80 days at the end of the first quarter 2007, up
      from
      73 days at the end of 2006. The change from the end of 2006 to the end of the
      first quarter of 2007 reflects the lower revenue level in the more recent period
      and the lengthening of payment terms for certain customers. Inventory turns
      were
      3.2 for the first quarter of 2007, compared with 3.5 for the fourth quarter
      of
      2006. The change in inventory turns is primarily attributable to the reduction
      in cost of sales.





The
      net
      cash provided by investing activities for the three months ended April 1, 2007
      was $0.3 million. The investing cash inflow for the first three months of 2007
      resulted from $0.9 million net sales of investment securities less $0.6 million
      of fixed asset purchases.





Our
      net
      cash provided by financing activities for the three months ended April 1, 2007
      was $4.0 million, consisting of $3.0 million in borrowings under the line of
      credit and $1.0 million from the exercise of stock options.





As
      of
      April 1, 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 $25.4 million at April 1, 2007 and $39.6 million at April 2,
      2006.





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





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


18





**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 April 1,
      2007 and December 31, 2006, we had cash, cash equivalents, short term
      investments and restricted cash of $28.9 million and $27.2 million,
      respectively. These amounts consisted of highly liquid investments, with more
      than 92% 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 April 1, 2007 rates would cause the fair
      market value of these short-term investments to change by an insignificant
      amount. Due to the short duration of these investments, a short-term increase
      in
      interest rates would not have a material effect on our financial condition
      or
      results of operations. Declines in interest rates over time would, however,
      reduce our interest income. Due to the uncertainty of the specific actions
      that
      would be taken to mitigate this, and their possible effects, the sensitivity
      analysis does not take into account any such action.




Foreign
      Currency Exchange Rate Risk




For
      the
      three months ended April 1, 2007, 82% of our sales were denominated in U.S.
      dollars, 13% were denominated in euro and 5% were denominated in Australian
      dollars. Comparatively, for the three months ended April 2, 2006, 85% of our
      sales were denominated in U.S. dollars, 12% were denominated in euro and 3%
      were
      denominated in Australian dollars. Our total euro denominated sales for the
      three months ended April 1, 2007 were $3.4 million, which were recorded at
      an
      average exchange rate of $1US = €0.76326. Our total Australian dollar
      denominated sales for the three months ended April 1, 2007 were $1.4 million,
      which were recorded at an average exchange rate of $1US = AUS$1.27271. If the
      average exchange rates used had been higher or lower during the three month
      period ended April 1, 2007 by 10%, they would have decreased or increased the
      total Australian dollar and euro-denominated sales value by a total of $0.4
      million. We expect the proportions of sales in euro and Australian dollars
      to
      fluctuate over time. The Company’s sensitivity analysis for changes in foreign
      currency exchange rates does not take into account changes in sales volumes.




For
      the
      three months ended April 1, 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 US dollar, particularly the UK pound sterling and
      New
      Israeli Shekel. This is because most of our operating expenses, which may
      fluctuate over time, are incurred in pounds sterling and New Israeli Shekels.




During
      the three months ended April 1, 2007, we paid expenses in local currency of
      approximately 4.2 million pounds sterling, at an average rate of $1US = 0.51176
      pounds sterling. During the three months ended April 1, 2007, we paid expenses
      in local currency of approximately 13.5 million Israeli Shekels, at an average
      rate of $1US = 4.2204 Shekels. If the average exchange rates for pounds sterling
      and Israeli Shekels had been higher or lower for the three month period ended
      April 1, 2007 by 10%, the total pounds sterling and Israeli Shekel denominated
      operating expenses would have decreased or increased by $0.75 million and $0.3
      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 US 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
      three month period ended April 1, 2007.




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




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.






19




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 April 1, 2007, our disclosure controls and procedures were
      effective.





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


20


**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) (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, 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 other nearly
      identical actions filed against other companies. On July 15, 2002, the Company
      moved to dismiss all claims against it and the Individual Defendants. On October
      9, 2002, the Court dismissed the Individual Defendants from the case without
      prejudice based upon Stipulations of Dismissal filed by the Plaintiffs and
      the
      Individual Defendants. 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
      October 13, 2004, the Court certified a class in six of the approximately 300
      other nearly identical actions (the "focus cases"). In her Opinion, Judge
      Scheindlin noted that the decision is intended to provide strong guidance to
      all
      parties regarding class certification in the remaining cases. Judge Scheindlin
      determined that the class period for Section 11 claims is the period between
      the
      IPO and the date that unregistered shares entered the market. Judge Scheindlin
      also ruled that a proper class representative of a Section 11 class must (1)
      have purchased shares during the appropriate class period; and (2) have either
      sold the shares at a price below the offering price or held the shares until
      the
      time of suit. In two of the six cases, the class representatives did not meet
      the above criteria and therefore, the Section 11 cases were not certified.
      The
      Underwriter Defendants appealed the decision and the Second Circuit vacated
      the
      District Court’s decision granting class certification in those six cases on
      December 5, 2006. Plaintiffs filed a petition for rehearing. On January 5,
      2007,
      the Second Circuit denied the petition, but noted that Plaintiffs could ask
      the
      District Court to certify a more narrow class than the one that was rejected.
      Plaintiffs have not yet moved to certify a class in the Airspan
      case.




Airspan
      has approved a settlement agreement and related agreements which set forth
      the
      terms of a settlement between Airspan, the Individual Defendants, the Plaintiff
      class and the vast majority of the other approximately 300 issuer defendants
      and
      the individual defendants currently or formerly associated with those companies.
      It is unclear what impact the Second Circuit’s decision vacating class
      certification in the six focus cases will have on the settlement, which has
      not
      yet been finally approved by the District Court, because Airspan’s settlement
      with the plaintiffs involves the certification of the case as a class action
      as
      part of the approval process. The District Court has stayed all proceedings,
      including a decision on final approval of the settlement and any amendments
      of
      the complaints, pending the Second Circuit’s decision on Plaintiffs’ petition
      for rehearing.




Pursuant
      to the settlement and related agreements, if the settlement receives final
      approval by the District Court, it provides for a release of Airspan and the
      individual defendants for the conduct alleged in the action to be wrongful.
      Airspan would agree to undertake certain responsibilities, including agreeing
      to
      assign away, not assert, or release certain potential claims Airspan may have
      against its underwriters. It is anticipated that any potential financial
      obligation of Airspan to Plaintiffs pursuant to the terms of the issuers’
settlement agreement and related agreements will be covered by existing
      insurance. The Company currently is not aware of any material limitations on
      the
      expected recovery of any potential financial obligation to Plaintiffs from
      its
      insurance carriers. Its carriers are solvent, and the company is not aware
      of
      any uncertainties as to the legal sufficiency of an insurance claim with respect
      to any recovery by Plaintiffs. Therefore, we do not expect that the settlement
      will involve any payment by Airspan.






21




There
      is
      no assurance that the court will grant final approval to the issuers’
settlement. If the settlement agreement is not approved and 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.




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.





**Item
      6. EXHIBITS**




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







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




**SIGNATURES**




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




**AIRSPAN
                NETWORKS, INC.**Date: May
                10, 2007
            By:
            /s/ DAVID
                BRANTName:   David BrantTitle:    
                Chief Financial Officer




22