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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|                                             |  |                                                                                          
|-------------------------------------------- |  | -----------------------------------------------------------------------------------------
|[X]                                          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. 
|                                            
|For the quarterly period ended June 28, 2002
|                                            
|OR                                          
|                                            
|[   ]                                        |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the transition period from ______________ to ________________

Commission file number 000-30993

PROXIM CORPORATION

(formerly Western Multiplex Corporation)
(Exact name of registrant as specified in its charter)


|                                  |                                                
|--------------------------------- | -----------------------------------------------
|Delaware
(State of Incorporation) | 52-2198231
(I.R.S. Employer
Identification No.)

935 Stewart Drive
Sunnyvale, California 94085
(408) 731-2700
(Address, including zip code, and telephone number,
including area code, of registrants principal executive offices)

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  [   ]

The number of shares outstanding of the Companys Class A common stock, par
value $.01 per share, as of August 12, 2002 was 119,623,635. No shares of the
Companys Class B common stock, par value $.01 per share, are outstanding.



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TABLE OF CONTENTS



|                              |                                                                                               |                                                                  |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                           
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                 
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                 
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION   
|                              | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 10-Q                                                    
|SIGNATURE                    
|EXHIBIT INDEX                
|EXHIBIT 99.1                 
|EXHIBIT 99.2                 



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TABLE OF CONTENTS

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|        |  |                                                                                                                           |  | Page
|        |  |                                                                                                                           |  |     
|PART I  |  | FINANCIAL INFORMATION                                                                                                     |  |      |    | 
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|Item 1  |  | Financial Statements                                                                                                      |  |      |    | 
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|        |  | Condensed Consolidated Balance Sheets at June 28, 2002 and December 31, 2001                                              |  |      | 3  | 
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|        |  | Condensed Consolidated Statements of Operations for the three months and six months
ended June 28, 2002 and June 29, 2001 |  |      | 4  | 
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|        |  | Condensed Consolidated Statements of Cash Flows for the three months and six months
ended June 28, 2002 and June 29, 2001 |  |      | 5  | 
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|        |  | Notes to Condensed Consolidated Financial Statements                                                                      |  |      | 6  | 
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|Item 2  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                     |  |      | 17 | 
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|Item 3  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                |  |      | 40 | 
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|PART II |  | OTHER INFORMATION                                                                                                         |  |      |    | 
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|Item 1  |  | Legal Proceedings                                                                                                         |  |      | 40 | 
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|Item 4  |  | Submission of Matters to a vote of Security Holders                                                                       |  |      | 41 | 
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|Item 6  |  | Exhibits and Reports on Form 8-K                                                                                          |  |      | 42 | 
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|        |  | Signature                                                                                                                 |  |      | 44 | 

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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

PROXIM CORPORATION




CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)
(Unaudited)


|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |              |         |  |  | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- | -------- | ------- | ------------ | ------- |  |  | 
|                                                |                                                                                                                                                                                     |                                            |         |         |         | June 28, |         | December 31,
|                                                |                                                                                                                                                                                     |                                            |         |         |         | 2002     |         | 2001        
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                               
|                                               
|                                               
|                                               
|ASSETS                                          |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|Current assets:                                 |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                                | Cash and cash equivalents                                                                                                                                                           |                                            | $       | 36,091  |         |          | $       | 16,552       |        
|                                                | Short-term investments                                                                                                                                                              |                                            |         | 3,058   |         |          |         | 6,738        |        
|                                                | Accounts receivable, net                                                                                                                                                            |                                            |         | 50,398  |         |          |         | 27,396       |        
|                                                | Inventory, net                                                                                                                                                                      |                                            |         | 22,396  |         |          |         | 19,906       |        
|                                                | Other current assets                                                                                                                                                                |                                            |         | 11,533  |         |          |         | 2,413        |        
|                                                | Deferred tax assets                                                                                                                                                                 |                                            |         |        |         |          |         | 8,224        |        
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                                | Total current assets                                                                                                                                                                |                                            |         | 123,476 |         |          |         | 81,229       |        
|Property and equipment, net                     |                                                                                                                                                                                     |                                            | 10,841  |         |         |          | 8,776   |             
|Goodwill and other intangible assets, net       |                                                                                                                                                                                     |                                            | 144,703 |         |         |          | 36,613  |             
|Deferred tax assets, net of current portion     |                                                                                                                                                                                     |                                            |        |         |         |          | 3,125   |             
|Restricted cash and long-term investments       |                                                                                                                                                                                     |                                            | 1,596   |         |         |          | 2,084   |             
|Other long-term assets                          |                                                                                                                                                                                     |                                            | 4,600   |         |         |          | 2,571   |             
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|Total assets                                    |                                                                                                                                                                                     | $                                          | 285,216 |         |         | $        | 134,398 |             
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|LIABILITIES AND STOCKHOLDERS EQUITY            |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|Current liabilities:                            |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                                | Accounts payable                                                                                                                                                                    |                                            | $       | 19,611  |         |          | $       | 7,549        |        
|                                                | Accrued liabilities                                                                                                                                                                 |                                            |         | 23,123  |         |          |         | 8,597        |        
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                                |                                                                                                                                                                                     | Total current liabilities                  |         |         | 42,734  |          |         |              | 16,146  | 
|Long-term debt                                  |                                                                                                                                                                                     |                                            | 302     |         |         |          |        |             
|Restructuring accruals, long-term portion       |                                                                                                                                                                                     |                                            | 28,257  |         |         |          |        |             
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                                |                                                                                                                                                                                     | Total liabilities                          |         |         | 71,293  |          |         |              | 16,146  | 
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|Commitments and contingencies (notes 10 and 11) |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|Stockholders equity:                           |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                                | Common stock, Class A, par value $.01;
authorized 200,000,000 shares: 59,218,105 and 119,234,918 shares issued and outstanding at
December 31, 2001 and June 28, 2002, respectively |                                            |         | 1,608   |         |          |         | 1,013        |        
|                                                | Common stock, Class B, par value $.01;
authorized 100,000,000 shares: no shares issued and outstanding at
December 31, 2001 and June 28, 2002, respectively                         |                                            |         |        |         |          |         |             |        
|                                                | Additional paid-in capital                                                                                                                                                          |                                            |         | 319,705 |         |          |         | 159,626      |        
|                                                | Notes receivable from employees                                                                                                                                                     |                                            |         | (898    | )       |          |         | (918         | )      
|                                                | Treasury stock                                                                                                                                                                      |                                            |         | (21,400 | )       |          |         | (21,400      | )      
|                                                | Deferred stock compensation                                                                                                                                                         |                                            |         | (189    | )       |          |         | (614         | )      
|                                                | Unrealized gain (loss) on investments                                                                                                                                               |                                            |         | (98     | )       |          |         | 75           |        
|                                                | Accumulated deficit                                                                                                                                                                 |                                            |         | (84,805 | )       |          |         | (19,530      | )      
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                                |                                                                                                                                                                                     | Total stockholders equity                 |         |         | 213,923 |          |         |              | 118,252 | 
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             
|                                                |                                                                                                                                                                                     | Total liabilities and stockholders equity |         | $       | 285,216 |          |         | $            | 134,398 | 
|                                                |                                                                                                                                                                                     |                                            |         |         |         |          |         |             

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

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PROXIM CORPORATION




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)(Unaudited)


|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |        |        | 
|------------------------------------------------------------- | ---------------------------------------------- | ------------------------ | ----------- | ------------------ | ------ | ---------------- | ---------- | -------- | ------ | -------- | ---------- | ------ | ------ | - | ---------- | ------ | ------ | 
|                                                              |                                                |                          |             | Three Months Ended |        | Six Months Ended
|                                                              |                                                |                          |             |                    |        |                 
|                                                              |                                                |                          |             | June 28,           |        | June 29,         |            | June 28, |        | June 29,
|                                                              |                                                |                          |             | 2002               |        | 2001             |            | 2002     |        | 2001    
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |         
|                                                             
|                                                             
|                                                             
|                                                             
|Revenue                                                       |                                                | $                        | 45,177      |                    |        | $                | 22,295     |          |        | $        | 70,591     |        |        | $ | 59,880     |       
|Cost of revenue                                               |                                                |                          | 25,977      |                    |        |                  | 12,085     |          |        |          | 40,639     |        |        |   | 30,984     |       
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|                                                              |                                                | Gross profit             |             |                    | 19,200 |                  |            |          | 10,210 |          |            |        | 29,952 |   |            |        | 28,896 | 
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|Operating expenses:                                           |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|                                                              | Research and development                       |                          |             | 7,295              |        |                  |            | 5,054    |        |          |            | 11,844 |        |   |            | 9,131  |       
|                                                              | Selling, general and administrative            |                          |             | 11,647             |        |                  |            | 9,488    |        |          |            | 20,397 |        |   |            | 19,477 |       
|                                                              | Amortization of goodwill and intangible assets |                          |             | 2,209              |        |                  |            | 1,414    |        |          |            | 2,353  |        |   |            | 2,236  |       
|                                                              | Amortization of deferred stock compensation    |                          |             | 180                |        |                  |            | 315      |        |          |            | 425    |        |   |            | 2,256  |       
|                                                              | Impairment of goodwill and intangible assets   |                          |             |                   |        |                  |            |         |        |          |            |       |        |   |            | 4,331  |       
|                                                              | Restructuring charges                          |                          |             | 3,582              |        |                  |            | 312      |        |          |            | 51,619 |        |   |            | 1,420  |       
|                                                              | In-process research and development            |                          |             | 1,200              |        |                  |            |         |        |          |            | 5,736  |        |   |            |       |       
|                                                              | Merger costs                                   |                          |             |                   |        |                  |            |         |        |          |            |       |        |   |            | 30     |       
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|                                                              |                                                | Total operating expenses |             |                    | 26,113 |                  |            |          | 16,583 |          |            |        | 92,374 |   |            |        | 38,881 | 
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|Loss from operations                                          |                                                |                          | (6,913      | )                  |        |                  | (6,373     | )        |        |          | (62,422    | )      |        |   | (9,985     | )     
|Interest income, net                                          |                                                |                          | 240         |                    |        |                  | 444        |          |        |          | 371        |        |        |   | 916        |       
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|Loss before taxes                                             |                                                |                          | (6,673      | )                  |        |                  | (5,929     | )        |        |          | (62,051    | )      |        |   | (9,069     | )     
|Income tax provision (benefit)                                |                                                |                          |            |                    |        |                  | (1,797     | )        |        |          | 3,224      |        |        |   | (451       | )     
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|Net loss                                                      |                                                | $                        | (6,673      | )                  |        | $                | (4,132     | )        |        | $        | (65,275    | )      |        | $ | (8,618     | )     
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|Net loss per share  basic and diluted                        |                                                | $                        | (0.06       | )                  |        | $                | (0.07      | )        |        | $        | (0.72      | )      |        | $ | (0.15      | )     
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       
|Shares
used to compute net loss per share 
basic and diluted |                                                |                          | 119,214,939 |                    |        |                  | 57,509,224 |          |        |          | 90,230,245 |        |        |   | 56,791,902 |       
|                                                              |                                                |                          |             |                    |        |                  |            |          |        |          |            |        |        |   |            |       

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

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PROXIM CORPORATION




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)


|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |          |        |         |         |  
|---------------------------------------------------- | ---------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ---------------------------------------- | --------------------------------------------------- | ------ | ---------------- | ------- | -------- | ------ | ------- | ------- | -
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        | Six Months Ended
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                 
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        | June 28,         |         | June 29,
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        | 2002             |         | 2001    
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                    
|                                                    
|                                                    
|                                                    
|Cash flows from operating activities:                |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     | Net loss                                                                           |                                                                            | $                                        | (65,275                                             | )      |                  | $       | (8,618   | )     
|                                                     | Adjustments to reconcile net loss to net cash used in operating
activities:        |                                                                            |                                          |                                                     |        |                  |         |          |       
|                                                     |                                                                                    | Deferred tax assets                                                        |                                          |                                                     | 12,624 |                  |         |          | (1,499 | )      
|                                                     |                                                                                    | Depreciation and amortization                                              |                                          |                                                     | 4,478  |                  |         |          | 5,859  |        
|                                                     |                                                                                    | Impairment of goodwill and other intangible assets                         |                                          |                                                     |       |                  |         |          | 4,331  |        
|                                                     |                                                                                    | In-process research and development                                        |                                          |                                                     | 5,736  |                  |         |          |       |        
|                                                     |                                                                                    | Provision for bad debts, sales returns and price protection                |                                          |                                                     |       |                  |         |          | 767    |        
|                                                     |                                                                                    | Provision for restructuring charges                                        |                                          |                                                     | 51,619 |                  |         |          |       |        
|                                                     |                                                                                    | Changes in assets and liabilities, net of effect of business
combinations: |                                          |                                                     |        |                  |         |          |        |        
|                                                     |                                                                                    |                                                                            | Accounts receivable, net                 |                                                     |        | (14,088          | )       |          |        | 932     |        
|                                                     |                                                                                    |                                                                            | Inventory, net                           |                                                     |        | 2,658            |         |          |        | (12,897 | )      
|                                                     |                                                                                    |                                                                            | Other assets                             |                                                     |        | (7,999           | )       |          |        | 2,978   |        
|                                                     |                                                                                    |                                                                            | Accounts payable and accrued liabilities |                                                     |        | 2,130            |         |          |        | (558    | )      
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     |                                                                                    |                                                                            |                                          | Net cash used in operating activities               |        |                  | (8,117  | )        |        |         | (8,705  | )
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|Cash flows from investing activities:                |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     | Purchase of property and equipment                                                 |                                                                            |                                          | (2,259                                              | )      |                  |         | (3,875   | )     
|                                                     | Sale of short-term investments                                                     |                                                                            |                                          | 4,986                                               |        |                  |         | 3,337    |       
|                                                     | Net cash provided by (used in) acquisitions                                        |                                                                            |                                          | 24,547                                              |        |                  |         | (10,146  | )     
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     |                                                                                    |                                                                            |                                          | Net cash provided by (used in) investing activities |        |                  | 27,274  |          |        |         | (10,684 | )
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|Cash flows from financing activities:                |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     | Repayment of long-term debt                                                        |                                                                            |                                          |                                                    |        |                  |         | (1,703   | )     
|                                                     | Proceeds from repayments of notes receivable from employees                        |                                                                            |                                          | 20                                                  |        |                  |         | 130      |       
|                                                     | Issuance of common stock, net                                                      |                                                                            |                                          | 362                                                 |        |                  |         | 1,769    |       
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     |                                                                                    |                                                                            |                                          | Net cash provided by financing activities           |        |                  | 382     |          |        |         | 196     |  
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|Net increase (decrease) in cash and cash equivalents |                                                                                    |                                                                            | 19,539                                   |                                                     |        |                  | (19,193 | )       
|Cash and cash equivalents at beginning of period     |                                                                                    |                                                                            | 16,552                                   |                                                     |        |                  | 31,094  |         
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|Cash and cash equivalents at end of period           |                                                                                    | $                                                                          | 36,091                                   |                                                     |        | $                | 11,901  |         
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|Supplemental disclosures:                            |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     | Cash paid (received) during the period for:                                        |                                                                            |                                          |                                                     |        |                  |         |          |       
|                                                     |                                                                                    |                                                                            | Income taxes                             |                                                     | $      | (403             | )       |          | $      | 506     |        
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|Non-cash transactions:                               |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     | Issuance of common stock and stock options assumed in
connection with acquisitions |                                                                            | $                                        | 159,039                                             |        |                  | $       | 15,300   |       
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         
|                                                     | Restructuring charges                                                              |                                                                            | $                                        | 10,136                                              |        |                  | $       | 226      |       
|                                                     |                                                                                    |                                                                            |                                          |                                                     |        |                  |         |         

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

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##### Table of Contents



PROXIM CORPORATION




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1  The Company

Proxim Corporation (the Company) is the company created by the merger of
Proxim, Inc. and Western Multiplex Corporation on March 26, 2002. The first six
months of 2002 results include the financial results of the former Western
Multiplex Corporation for the period from January 1, 2002 to June 28, 2002, and
the results of the former Proxim, Inc. for the period from March 27, 2002 to
June 28, 2002, in accordance with accounting principles generally accepted in
the United States of America. The Company was founded in 1979 in Sunnyvale,
California, as a vendor of radio components and related services. In 1992, the
Company changed its strategy, and became a designer and manufacturer of
broadband wireless systems and launched its Lynx broadband wireless systems.
These point-to-point systems are primarily used by wireless operators to
connect their base stations to other base stations and to existing wire line
networks. In 1999, the Company introduced its Tsunami point-to-point broadband
wireless systems, which primarily enable service providers, businesses and
other enterprises to expand or establish private networks by bridging Internet
traffic among multiple facilities. Based on the Companys core technologies and
the technology acquired through its purchase of WirelessHome Corporation
(WirelessHome) in March 2001, the Company has developed point-to-multipoint
systems designed to enable service providers, businesses and other enterprises
to connect multiple facilities within a geographic area to a central hub. The
Company began shipping its first generation of these products at the end of the
fourth quarter of 2001. In March 2002, the Company merged with Proxim, Inc.
located in Sunnyvale, California which designs, manufactures and markets high
performance wireless local area networking, or LAN, and building-to-building
network products based on radio frequency, or RF, technology.

Basis of Presentation

The accompanying unaudited 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. The condensed consolidated balance sheet
as of June 28, 2002, condensed consolidated statements of operations for the
three and six months ended June 28, 2002 and June 29, 2001 and condensed
consolidated statements of cash flows for the six months ended June 28, 2002
and June 29, 2001 are unaudited, but include all adjustments (consisting of
normal recurring adjustments) which the Company considers necessary for a fair
presentation of the financial position, operating results and cash flows for
the periods presented.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements as well as the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates, and such differences may be material to the
financial statements.

The balance sheet at December 31, 2001 has been derived from audited
financial statements. Certain information and footnote information normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission. Results for any interim period are not necessarily
indicative of results for any future interim period or for the entire year. The
accompanying condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2001.

Principles of Consolidation

The consolidated financial statements include the accounts of Proxim
Corporation and all of its subsidiaries. The financial condition and results of
operations for the three and six months ended June 28, 2002 and June 29, 2001
include the results of acquired subsidiaries from their effective dates. All
significant intercompany transactions and balances are eliminated in
consolidation.

Note 2  Summary of Significant Accounting Policies

The preparation of financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets,
liabilities, stockholders equity, revenues, cost of revenue and expenses,
charges and related disclosure of contingent assets and

6



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liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to customer programs and incentives, product returns,
bad debts, inventories, investments, intangible assets, income taxes, financing
operations, warranty obligations, excess component order cancellation costs,
restructuring, long-term service contracts and contingencies and litigation.
The Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that may not be readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions.

The Company records estimated reductions to revenue for customer programs
and incentive offerings including special pricing agreements, price protection,
promotions, historical returns for sales of its wide area network
(WAN) products, the inventory
levels at distributors and other volume-based incentives. If market conditions
were to decline, the Company may take actions to increase customer incentive
offerings possibly resulting in an incremental reduction of revenue at the time
the incentive is offered. Revenue generated from the LAN product line is
deferred until shipments to end customers by the distributors.

The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
If the financial condition of the Companys customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.

The Company provides for the estimated cost of product warranties at the
time revenue is recognized. While the Company engages in extensive product
quality programs and processes, including actively monitoring and evaluating
the quality of its component suppliers, the Companys warranty obligation is
affected by product failure rates and material usage and service delivery costs
incurred in correcting a product failure. Should actual product failure rates,
material usage or service delivery costs differ from the Companys estimates,
revisions to the estimated warranty liability would be required.

The Company writes down its inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory
and the estimated market value based upon assumption about future demand and
market conditions. If actual market conditions are less favorable than those
projected by management, additional inventory write-downs may be required.

The Company holds minority interest investments in companies having
operations or technology in areas within its strategic focus, one of which is
publicly traded and has highly volatile share prices. The Company records an
investment impairment charge when it believes an investment has experienced a
decline in value that is other than temporary. Future adverse changes in market
conditions or poor operating results of an investee could result in losses or
an inability to recover the carrying value of the investments that may not be
reflected in an investments current carrying value, thereby possibly requiring
an impairment charge in the future.

The Company records a valuation allowance to reduce its deferred tax
assets to the amount that is more likely than not to be realized. While the
Company has considered future taxable income and ongoing prudent and feasible
tax planning strategies in assessing the need for the valuation allowance, in
the event the Company were to determine that it would be able to realize its
deferred tax assets in the future in excess of its net recorded amount, an
adjustment to the deferred tax asset would increase income in the period such
determination was made. Likewise, should the Company determine that it would
not be able to realize all or part of its net deferred tax asset in the future,
an adjustment to the deferred tax asset would decrease income in the period
such determination was made.

Note 3  Business Combinations

Acquisition of nBand Communications, Inc.

On April 18, 2002, the Company acquired nBand Communication, Inc.
(nBand), a California corporation. nBand is a startup developer of advanced
application specific integrated circuits (ASICs) designs that the Company
intends to use in the development of next generation ASICs. The purchase price
was $1.2 million and comprised of $550,000 in cash, 180,144 shares of Class A
common stock valued at approximately $450,000 and transaction expenses of
approximately $200,000. In the second quarter of 2002, the Company assigned
the entire purchase price of $1.2 million to purchased in-process research and
development (IPR&D) as the acquired technology had not reached technological
feasibility.

Merger with Proxim, Inc.

On March 26, 2002, the merger between Western Multiplex Corporation and
Proxim Inc. was completed, resulting in Proxim Corporation as the combined
company. The combined company provides broadband, or high speed, wireless
access products to

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service providers, businesses and other enterprises as well as high
performance wireless LAN products based on RF technology. Total consideration
of $172.6 million for the acquisition comprised of:



| |  |  | 59,506,503 shares of Class A common stock valued at approximately $133.3 million;
| | - |  | ---------------------------------------------------------------------------------
|
| |  |  | options and warrants having an assumed value of approximately $25.3 million; and 
|
| |  |  | transaction expenses of approximately $14.0 million.                             

The total purchase price was allocated to the tangible and identifiable
intangible assets, goodwill acquired and liabilities assumed on the basis of
their relative fair values as follows (in thousands):

|                                             |  |   |         |  
|-------------------------------------------- |  | - | ------- | -
|Cash and cash equivalents                    |  | $ | 35,961  |  
|Marketable securities                        |  |   | 991     |  
|Accounts receivable, net                     |  |   | 8,914   |  
|Inventory, net                               |  |   | 12,834  |  
|Other current assets                         |  |   | 1,150   |  
|Other long-term assets                       |  |   | 2,000   |  
|Property, plant and equipment                |  |   | 3,958   |  
|Core technology                              |  |   | 18,010  |  
|Developed technology                         |  |   | 12,042  |  
|Patents                                      |  |   | 3,210   |  
|Liabilities assumed                          |  |   | (8,199  | )
|Acquired in-process research and development |  |   | 4,536   |  
|Goodwill                                     |  |   | 77,182  |  
|                                             |  |   |         |  
|                                             |  | $ | 172,589 |  
|                                             |  |   |         |  

The liabilities assumed consist principally of accounts payable, accrued
compensation and benefits and other current liabilities.

The core and developed technology acquired include 900MHz, RangeLAN,
Harmony, 802.11a and Skyline products for the Enterprise/Commercial markets;
Symphony HomeRF, HomeRF 2.0 and Netline products for the Home/SOHO markets; and
Stratum and Stratum MP products for the building-to-building markets. These
products have already achieved technological feasibility in the marketplace.
The fair value assigned to the core technology and developed technology totaled
$18.0 million and $12.0 million respectively, and is being amortized over the
expected life of its cash flows.

As of the valuation date, it was assumed that there was some value
attributable to patents and patent applications of Proxim, Inc. The Company
assumed that the patents and patent applications will continue to be used but
will be phased out over time as new technology is developed. To value the
patents and patent applications, we utilized the relief from royalty
methodology. The relief from royalty methodology assumes that the value of the
asset equals the amount a third party would pay to use the asset and capitalize
on the related benefits of the asset. Therefore, a revenue stream for the asset
is estimated, and then an estimated royalty rate is applied to the forecasted
revenue to estimate the pre-tax income associated with the asset. The pre-tax
income is then tax-affected to estimate the after-tax net income associated
with the asset. Finally, the after tax net income is discounted to the present
value using an appropriate rate of return that considers both the risk of the
asset and the associated cash flow estimates. The resulting cash flows were
then discounted back to their present value using a discount rate of 25%. The
fair value assigned to the patents totaled $3.2 million and is being amortized
over the expected life of its cash flows.

IPR&D consisted of 802.11a and HomeRF 2.0 wireless networking products
under development, which had not yet reached technological feasibility and had
no alternative future use as of the date of acquisition. As of the valuation
date, Proxim, Inc. was developing 802.11a wireless LAN adapter in PCI and Mini
PCI form factors and a connectorized access point as well as a HomeRF 2.0 voice
data module, voice data gateway and voice data gateway and answer machine.
These products are under development and require additional software
development including NT 4.0 and Macintosh drivers along with additional
functional testing. The value of the IPR&D was determined by estimating the net
cash flows from potential sales of the products resulting from completion of
this project, reduced by the portion of net cash flows from the revenue
attributable to core and developed technology. The resulting cash flows were
then discounted back to their present value using a discount rate of 30%. The
fair value assigned to the IPR&D totaled $4.5 million and was expensed at the
time of the acquisition.

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Core technology, developed technology and patents are being amortized on a
straight-line basis over the following estimated periods of benefit:

|                     |  |         |  | 
|-------------------- |  | ------- |  | 
|Core technology      |  | 5 years
|Developed technology |  | 3 years
|Patents              |  | 5 years

Acquisition of WirelessHome

On March 22, 2001, the Company acquired WirelessHome located in Long
Beach, California in a cash and stock transaction. WirelessHome is a
development stage company that designs and develops point-to-multipoint
systems. The acquisition was accounted for as a purchase. The Company acquired
WirelessHome for a total consideration of $28.2 million comprised of:



| |  |  | 1,649,324 shares of Class A common stock valued at $12.1 million;            
| | - |  | -----------------------------------------------------------------------------
|
| |  |  | $10.5 million in cash;                                                       
|
| |  |  | options and warrants having an assumed value of $0.7 million;                
|
| |  |  | a stock price protection contingent consideration valued at $2.5 million; and
|
| |  |  | transaction expenses of $2.4 million.                                        

As part of the transaction the Company assumed $2.0 million of net
liabilities, which consisted of $0.4 million of current assets, $0.9 million of
other assets and $3.3 million of current liabilities. In March 2001, the
Company issued an initial consideration of $23.0 million. As a result, the
Company recorded the initial purchase price allocation as follows: $24.7
million to goodwill and $0.3 million to deferred compensation.

The initial purchase price, as well as the initial allocation, were
subject to adjustments upon WirelessHome meeting certain development milestones
and other considerations as defined in the agreement to acquire WirelessHome.

On October 7, 2001, WirelessHome met the development milestones in
accordance with the acquisition agreement. This resulted in additional purchase
consideration of $5.2 million. We then evaluated and recorded the final
purchase price and stock compensation expense arising from the achievement of
those milestones. The total purchase price allocation, which consisted of $28.2
million of purchase price and $2.0 million of net liabilities assumed, was as
follows: $1.0 million to assembled workforce, $6.4 million to in-process
research and development, $22.5 million to goodwill, and $0.3 million to
deferred compensation. In addition, we recorded $2.2 million of stock
compensation expense as a result of releasing and issuing 558,950 shares, which
were previously held in escrow, to individuals who were directly involved in
the completion of the development milestones.

The purchase price allocation and intangible assets valuation were based
on managements estimates of the after-tax net cash flows and gave
consideration to the following: (i) the employment of a fair market value
premise excluding any consideration specific to the Company which could result
in estimates of investment value for the subject assets; (ii) comprehensive due
diligence concerning all potential intangible assets including trademarks,
tradename, patents, copyrights, non-compete agreements, assembled work force,
customer relationships and sales channel; and (iii) the value of existing
technology was specifically addressed, with a view toward ensuring that the
relative allocations to existing technology and in-process research and
development were consistent with the relative contributions of each final
product.

In making its purchase price allocation, management considered present
value calculations of income, an analysis of project accomplishments and
remaining outstanding items and an assessment of overall contributions, as well
as project risks. The value assigned to purchased in-process technology was
determined by estimating the costs to develop the acquired technology into
commercially viable products, estimating the resulting net cash flows from the
projects, and discounting the net cash flows to their present value. The
revenue projection used to value the in-process research and development was
based on estimates of relevant market sizes and growth factors, expected trends
in technology, and the nature and expected timing of new product introductions
by the Company and its competitors. The resulting net cash flows from such
projects are based on managements estimates of cost of revenue, operating
expenses, and income taxes from such projects.

9



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Acquisition of Ubiquity Communication, Inc.

On March 24, 2000, we acquired Ubiquity Communication, Inc. (Ubiquity),
located in Petaluma, California. Through the acquisition, we acquired
technology for use in the development of our point-to-multipoint systems. At
the time of the acquisition, Ubiquity had seven employees, including six
engineers. In connection with the acquisition, we issued 692,772 shares of our
Class A common stock to its former owners and reserved 137,727 shares of our
Class A common stock for issuance upon the exercise of the Ubiquity options we
assumed. The value of the consideration paid for the acquisition of Ubiquity
was $6.4 million. We accounted for the transaction using the purchase method of
accounting. In March 2001, the Ubiquity operations were closed due to the
acquisition of WirelessHome.

Pro Forma Financial Information

The following table represents unaudited pro forma financial information
for the three and six months ended June 28, 2002 and June 29, 2001 had Proxim
Corporation, Proxim, Inc., WirelessHome and nBand been combined as of January
1, 2001. The pro forma financial information is presented for illustrative
purposes only and is not necessarily indicative of the combined financial
position or results of operations of future periods or the results that
actually would have resulted had Proxim Corporation, Proxim, Inc. and
WirelessHome been a combined company during the specified periods. The pro
forma results include the effects of the amortization of identifiable
intangible assets and goodwill and adjustments to the income tax provision or
benefits. The pro forma combined results exclude the $4.5 million, $6.4 million
and $1.2 million charges for acquired in-process technology from Proxim, Inc.,
WirelessHome and nBand, acquisitions, respectively (in thousands except per
share amounts).

|                                     |  |                  |         |               |  |   |         |  
|------------------------------------ |  | ---------------- | ------- | ------------- |  | - | ------- | -
|                                     |  | Six Months Ended
|                                     |  |                 
|                                     |  | June 28, 2002    |         | June 29, 2001
|                                     |  |                  |         |              
|                                    
|                                    
|                                    
|                                    
|Revenue                              |  | $                | 73,742  |               |  | $ | 112,631 |  
|Net loss from continuing operations  |  | $                | (93,121 | )             |  | $ | (83,631 | )
|Basic and diluted net loss per share |  | $                | (0.78   | )             |  | $ | (0.78   | )
|                                     |  |                  |         |               |  |   |         |  

Goodwill and Other Intangible Assets

In July 2001, the Financial Accounting Standards Board, or FASB, issued,
Statement of Financial Accounting Standards, or SFAS, No.s 141 and 142,
Business Combinations and Goodwill and Other Intangibles, respectively.
SFAS No. 141 requires all business combinations initiated after June 30, 2001
to be accounted for using the purchase method. Under SFAS No. 142, effective
January 1, 2002, goodwill is no longer subject to amortization over its
estimated useful life. Rather, goodwill is subject to at least an annual
assessment for impairment, applying a fair-value based test. Additionally, an
acquired intangible asset should be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented, or exchanged,
regardless of the acquirers intent to do so. The Company adopted these new
statements to account for the merger with Proxim, Inc and the acquisition of
nBand.

Goodwill represents the excess of cost over the fair market value of net
assets acquired. Goodwill pushed down from the 1995 acquisition of the Company
by GTI totals $22.0 million. Prior to December 31, 2001 this goodwill was
amortized on a straight-line basis over its estimated useful life of 30 years,
or $0.7 million per year. As a result of the Companys adoption of SFAS 142, as
of January 1, 2002, the Company no longer amortizes goodwill.

Goodwill and other intangible assets related to the acquisition of
Ubiquity totaled $6.8 million. In March 2001, the Company recorded an
impairment of the Ubiquity goodwill and other intangible assets of $4.3 million
as a result of closing the Ubiquity operations. The amount of the charge equals
the unamortized amount of these intangible assets as of the date of closure of
the Ubiquity operations as no future benefit is anticipated, since Ubiquity was
replaced by WirelessHome as the developer of point-to-multipoint systems. The
Ubiquity intangible asset of $229,000 is being amortized on a straight-line
basis over its estimated useful life of three years, or $76,000, per year.

Goodwill related to the acquisition of WirelessHome totaled $24.7 million.
Prior to December 31, 2001 this goodwill was amortized on a straight-line basis
over its estimated useful life of 5 years. As a result of the Companys
adoption of SFAS 142, as of January 1, 2002, the Company no longer amortizes
goodwill. This goodwill was subject to subsequent adjustments upon WirelessHome
meeting certain development milestones and other considerations. After
WirelessHome met those development milestones, the goodwill was adjusted to
$22.5 million in the fourth quarter of 2001.

Goodwill related to the merger with Proxim, Inc. totaled $77.2 million.

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Core technology, developed technology and patents related to the merger
with Proxim, Inc. totaled $18.0 million, $12.0 million and $3.2 million
respectively, and are being amortized on a straight-line basis over an
estimated useful life of 5 years, 3 years and 5 years, respectively.

The Company assesses long-lived assets for impairment under SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of. Under those rules, the Company reviews long-lived assets
and certain identifiable intangibles to be held and used for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. The Company evaluates any possible
impairment of long-lived assets using estimates of undiscounted future cash
flows. If an impairment loss is to be recognized, it is measured as the amount
by which the carrying amount of the asset exceeds the fair value of the asset.
Management evaluates the fair value of its long-lived assets and intangibles
using primarily the estimated discounted future cash flows method. Management
uses other alternative valuation techniques whenever the estimated discounted
future cash flows method is not applicable.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Asset. SFAS No. 144 clarifies and further
defines the provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. SFAS No. 144
does not apply to goodwill and other intangible assets that are not amortized.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
The Company adopted SFAS No. 144 in the year ending December 31, 2002. The
effect of adopting this statement did not have a material effect on the
Companys condensed consolidated financial statements.

Goodwill and other intangible assets, net, consist of the following (in
thousands):

|                            |              |   |          |        |              |   |        |        | 
|--------------------------- | ------------ | - | -------- | ------ | ------------ | - | ------ | ------ | 
|                            |              |   | June 28, |        | December 31,
|                            |              |   | 2002     |        | 2001        
|                            |              |   |          |        |             
|                           
|                           
|                           
|                           
|Goodwill:                   |              |   |          |        |              |   |        |       
|                            | GTI          |   | $        | 17,126 |              |   | $      | 17,126 | 
|                            | WirelessHome |   |          | 18,775 |              |   |        | 18,775 | 
|                            | Proxim, Inc. |   |          | 77,182 |              |   |        |       | 
|                            |              |   |          |        |              |   |        |       
|                            |              | $ | 113,083  |        |              | $ | 35,901 |       
|                            |              |   |          |        |              |   |        |       
|Acquired intangible assets: |              |   |          |        |              |   |        |       
|                            | Ubiquity     |   | $        | 57     |              |   | $      | 95     | 
|                            | WirelessHome |   |          | 367    |              |   |        | 617    | 
|                            | Proxim, Inc. |   |          | 31,196 |              |   |        |       | 
|                            |              |   |          |        |              |   |        |       
|                            |              | $ | 31,620   |        |              | $ | 712    |       
|                            |              |   |          |        |              |   |        |       

Purchased In-Process Research and Development

Purchased in-process research and development consist primarily of
acquired technology that has not reached technological feasibility.

The amount expensed to purchased in-process research and development in
the second quarter of 2002 related to technology for next generation ASICs
acquired in the nBand acquisition. The amount expensed to purchased in-process
research and development in the first quarter of 2002 related to 802.11a and
HomeRF 2.0 wireless networking products acquired in relations to the Proxim,
Inc. merger.

The following table summarizes the key assumptions underlying the
valuation for the Companys purchase acquisition completed in the six months
ended June 28, 2002 and June 29, 2001 (in thousands):

|             |  |      |      |                     |  |                        |       |                     |  |                        |      |  
|------------ |  | ---- | ---- | ------------------- |  | ---------------------- | ----- | ------------------- |  | ---------------------- | ---- | -
|             |  |      |      |                     |  |                        |       |                     |  | Risk-Adjusted Discount
|             |  |      |      |                     |  | Estimated Cost to      |       | Rate for In-Process
|             |  |      |      |                     |  | complete Technology at |       | Research and       
|             |  | Year |      | Time of Acquisition |  | Development           
|             |  |      |      |                     |  |                       
|            
|            
|            
|            
|Proxim, Inc. |  |      | 2002 |                     |  | $                      | 2,387 |                     |  |                        | 30.0 | %
|WirelessHome |  |      | 2001 |                     |  | $                      | 1,425 |                     |  |                        | 35.0 | %

The Company does not expect to achieve a material amount of expense
reductions or synergies as a result of integrating the acquired in-process
technology. Therefore, the valuation assumptions do not include any anticipated
synergies or cost saving

11



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associated with the transaction. The Company expects that products
incorporating the acquired technology will be completed and begin to generate
cash flows between six to nine months after integration. Actual results have
been consistent in all material respects, with its assumptions at the time of
acquisitions.

Development of this technology remains a significant risk due to the
remaining effort to achieve technological feasibility, rapidly changing
customer markets, uncertain standards for new products, and significant
competitive threats. The nature of the efforts to develop the acquired
technology into commercially viable products consists principally of developing
a new operating system, developing a new processor and interface, planning and
testing activities necessary to determine that the product can meet market
expectations, including functionality and technical requirements. Failure to
bring these products to market in a timely manner could result in a loss of
market share, or a lost opportunity to capitalize on emerging markets, and
could have a material adverse impact on the value of assets acquired.

Note 4  Balance Sheet Components

|                                           |                                                          |                                |                                                                    |        |         |                |        |              |        |        |   | 
|------------------------------------------ | -------------------------------------------------------- | ------------------------------ | ------------------------------------------------------------------ | ------ | ------- | -------------- | ------ | ------------ | ------ | ------ | - | 
|                                           |                                                          |                                |                                                                    |        |         | June 28,       |        | December 31,
|                                           |                                                          |                                |                                                                    |        |         | 2002           |        | 2001        
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          |                                |                                                                    |        |         | (in thousands)
|                                          
|                                          
|                                          
|                                          
|Marketable securities:                     |                                                          |                                |                                                                    |        |         |                |        |             
|                                           | Corporate bonds and time deposits                        |                                | $                                                                  | 3,921  |         |                | $      | 8,192        |       
|                                           | Auction rate securities                                  |                                |                                                                    | 630    |         |                |        | 630          |       
|                                           | Equity investment in a wireless company listed in Canada |                                |                                                                    | 103    |         |                |        |             |       
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          |                                | 4,654                                                              |        |         |                | 8,822  |             
|                                           | Less: long-term portion                                  |                                |                                                                    | (1,596 | )       |                |        | (2,084       | )     
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           | Current portion                                          |                                | $                                                                  | 3,058  |         |                | $      | 6,738        |       
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|Accounts receivable, net:                  |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          |                                | Gross accounts receivable                                          |        | $       | 58,784         |        |              | $      | 32,802 |  
|                                           |                                                          |                                | Less: allowances for bad debts, sales returns and price protection |        |         | (8,386         | )      |              |        | (5,406 | )
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          | $                              | 50,398                                                             |        |         | $              | 27,396 |             
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|Inventories, net:                          |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          |                                | Raw materials                                                      |        | $       | 42,604         |        |              | $      | 12,214 |  
|                                           |                                                          |                                | Work-in-process                                                    |        |         | 7,057          |        |              |        | 675    |  
|                                           |                                                          |                                | Finished goods                                                     |        |         | 17,387         |        |              |        | 10,038 |  
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          |                                | 67,048                                                             |        |         |                | 22,927 |             
|                                           |                                                          |                                | Less: reserve for excess and obsolete inventory                    |        |         | (44,652        | )      |              |        | (3,021 | )
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          | $                              | 22,396                                                             |        |         | $              | 19,906 |             
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|Property and equipment, net:               |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          | Computer and test equipment    |                                                                    | $      | 17,369  |                |        | $            | 6,191  |       
|                                           |                                                          | Furniture and fixtures         |                                                                    |        | 1,253   |                |        |              | 6,850  |       
|                                           |                                                          | Leasehold improvements         |                                                                    |        | 56      |                |        |              | 1,871  |       
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          |                                | 18,678                                                             |        |         |                | 14,912 |             
|                                           |                                                          | Less: accumulated depreciation |                                                                    |        | (7,837  | )              |        |              | (6,136 | )     
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          | $                              | 10,841                                                             |        |         | $              | 8,776  |             
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|Goodwill and other intangible assets, net: |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          | Goodwill                       |                                                                    | $      | 122,681 |                |        | $            | 44,500 |       
|                                           |                                                          | Core technology                |                                                                    |        | 18,010  |                |        |              |       |       
|                                           |                                                          | Developed technology           |                                                                    |        | 12,042  |                |        |              |       |       
|                                           |                                                          | Acquired workforce             |                                                                    |        |        |                |        |              | 1,000  |       
|                                           |                                                          | Patents                        |                                                                    |        | 3,439   |                |        |              | 229    |       
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          |                                | 156,172                                                            |        |         |                | 45,729 |             
|                                           |                                                          | Less: Accumulated amortization |                                                                    |        | (11,469 | )              |        |              | (9,116 | )     
|                                           |                                                          |                                |                                                                    |        |         |                |        |             
|                                           |                                                          | $                              | 144,703                                                            |        |         | $              | 36,613 |             
|                                           |                                                          |                                |                                                                    |        |         |                |        |             

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|                           |                                         |   |        |        |   |   |       |       | 
|-------------------------- | --------------------------------------- | - | ------ | ------ | - | - | ----- | ----- | 
|Other current liabilities: |                                         |   |        |        |   |   |       |      
|                           | Restructuring accruals, current portion |   | $      | 6,847  |   |   | $     | 430   | 
|                           | Accrued merger costs                    |   |        | 3,336  |   |   |       |      | 
|                           | Accrued compensation                    |   |        | 5,273  |   |   |       | 3,129 | 
|                           | Accrued warranty costs                  |   |        | 1,146  |   |   |       | 869   | 
|                           | Other accrued liabilities               |   |        | 5,323  |   |   |       | 4,009 | 
|                           |                                         |   |        |        |   |   |       |      
|                           |                                         |   | 21,925 |        |   |   | 8,437 |      
|                           | Deferred revenue                        |   |        | 2,996  |   |   |       | 160   | 
|                           | Less: deferred cost of revenue          |   |        | (1,798 | ) |   |       |      | 
|                           |                                         |   |        |        |   |   |       |      
|                           | Deferred revenue, net                   |   |        | 1,198  |   |   |       | 160   | 
|                           |                                         |   |        |        |   |   |       |      
|                           |                                         | $ | 23,123 |        |   | $ | 8,597 |      
|                           |                                         |   |        |        |   |   |       |      

Note 5  Revenue Information and Concentration of Credit Risks:

The Companys products are grouped into two product lines: Wide Area
Network, or WAN, product line, and; Local Area Network, or LAN, product line.
The WAN product line includes point-to-point Lynx, Tsunami and Stratum products
and point-to-multipoint Tsunami and Stratum products. The LAN product line
includes 900 MHz, RangeLAN, Harmony, 802.11b, 802.11a and Skyline products for
the Enterprise/Commercial markets; and Symphony HomeRF and HomeRF 2.0 products
and Netline products for the Home/SOHO markets. Prior to the merger the
Company did not have a LAN product line. Historical LAN revenue prior to March
26, 2002 of the former Proxim, Inc. are not reported in the table below.
Revenue information by product line is as follows (in thousands):

|             |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |        | 
|------------ | ------------- | ---- | ------------------ | ------ | ---------------- | ---- | -------- | ------ | -------- | - | ------ | ------ |  | - | ------ | ------ | 
|             |               |      | Three Months Ended |        | Six Months Ended
|             |               |      |                    |        |                 
|             |               |      | June 28,           |        | June 29,         |      | June 28, |        | June 29,
|Product Line |               | 2002 |                    | 2001   |                  | 2002 |          | 2001  
|             |               |      |                    |        |                  |      |          |       
|            
|            
|            
|            
|WAN          |               | $    | 29,100             |        |                  | $    | 22,295   |        |          | $ | 53,450 |        |  | $ | 59,880 |       
|LAN          |               |      | 16,077             |        |                  |      |         |        |          |   | 17,141 |        |  |   |       |       
|             |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |       
|             | Total revenue |      | $                  | 45,177 |                  |      | $        | 22,295 |          |   | $      | 70,591 |  |   | $      | 59,880 | 
|             |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |       

The Company sells its products worldwide through a direct sales force,
independent distributors, and value-added resellers. It currently operates in
two geographic regions: North America and International. Revenue outside of the
United States are primarily export sales denominated in United States dollars.
Disaggregated financial information regarding the Companys revenue by
geographic region is as follows (in thousands):

|                  |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |        | 
|----------------- | ------------- | ---- | ------------------ | ------ | ---------------- | ---- | -------- | ------ | -------- | - | ------ | ------ |  | - | ------ | ------ | 
|                  |               |      | Three Months Ended |        | Six Months Ended
|                  |               |      |                    |        |                 
|                  |               |      | June 28,           |        | June 29,         |      | June 28, |        | June 29,
|Geographic Region |               | 2002 |                    | 2001   |                  | 2002 |          | 2001  
|                  |               |      |                    |        |                  |      |          |       
|                 
|                 
|                 
|                 
|North America     |               | $    | 25,815             |        |                  | $    | 18,727   |        |          | $ | 39,947 |        |  | $ | 50,299 |       
|International     |               |      | 19,362             |        |                  |      | 3,568    |        |          |   | 30,644 |        |  |   | 9,581  |       
|                  |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |       
|                  | Total revenue |      | $                  | 45,177 |                  |      | $        | 22,295 |          |   | $      | 70,591 |  |   | $      | 59,880 | 
|                  |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |       

One customer
accounted for 29.0% of total revenue for the first six months
of 2002, and three customers accounted for 27.9%, 12.7% and 10.2% of total
revenue in the first six months of 2001.

Note 6  Restructuring Charges

The Company accounts for restructuring charges under the provisions of
Emerging Issues Task Force (EITF) No. 94-3 Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring) and Staff Accounting Bulletin
(SAB) No. 100 regarding the accounting for and disclosure of certain expenses
commonly reported in connection with exit activities and business combinations.

During 2001, the Company recorded $1.8 million of restructuring charges
related to the closure of its former Ubiquity operations and employee
severance. The charges include $1.6 million of cash provisions, which include
severance of $1.4 million for 26 employees and $0.2 million for future lease
commitments and exit costs related to the Petaluma office facility. The charge
also includes $0.2 million of non-cash provisions primarily related to fixed
assets and other assets that will no longer be used at the facility.

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As a result of the merger with Proxim, Inc. during the three months ended
June 28, 2002, the Company recorded $3.6 million of restructuring charges
related to closure of certain facilities and severance pay. The charges include
$3.3 million of cash provisions, which include severance of $2.4 million for 56
employees and $0.9 million for future lease commitments and exit costs related
to the closure of two facilities. The charge also includes $245,000 related to
fixed assets that will no longer be used at the facilities. For the six
months ended June 28, 2002, the Company recorded $51.6 million restructuring
charges, including a $48.0 million restructuring charge in the first quarter of
2002, related to closure of certain facilities, discontinued product lines and
severance pay. The charges include $41.5 million of cash provisions, which
include severance of $3.8 million for 61 employees, $32.7 million for future
lease commitments and exit costs related to the closure of four facilities and
$5.0 million related to purchase order commitments. The charge also includes
$10.1 million of non-cash provisions of which $7.7 million relates to an
additional reserve for excess and obsolete inventory on hand and $2.4 million
relates to fixed assets that will no longer be used at the facilities.

Included in the restructuring charge during the six months ended June 28,
2002 was an increase in the reserve for excess and obsolete inventory of $7.7
million and purchase commitments of $5.0 million. Inventory purchases and
commitments are based upon future sales forecast. To mitigate the component
supply constraints that have existed in the past, the Company built inventory
levels for certain components with long lead times and entered into longer-term
commitments for certain components. The excess inventory charges were due to
the following factors:



| |  |  | A sudden and significant decrease in demand for certain Lynx and Tsunami license-exempt point-to-point products;                                                                  
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Notification from customers that they would not be ordering as much as they had previously indicated;                                                                             
|
| |  |  | Managements strategy to discontinue the Lynx and Tsunami
point-to-point licensed products in order to concentrate on the
license-exempt products; and                            
|
| |  |  | Managements strategy to discontinue certain Lynx and Tsunami
License-exempt products in order to concentrate on selling next
generation Lynx and Tsunami License-exempt products.

Due to these factors inventory levels exceeded the Companys requirements
based on current 12-month sales forecasts. The additional excess and obsolete
inventory charge was calculated based on the inventory levels in excess of
12-month demand for each specific product family. The Company does not
currently anticipate that the excess inventory subject to this reserve will be
used at a later date based on our current 12-month demand forecast. The Company
uses a 12-month demand forecast because the wireless communications industry is
characterized by rapid technological changes such that if the Company has not
sold a product after a 12-month period it is unlikely that the product will be
sold. The following is a summary of the movements in the reserve for excess and
obsolete inventory during the period ended June 28, 2002:

|                                                     |  |   |         |  
|---------------------------------------------------- |  | - | ------- | -
|Balance as of December 31, 2001                      |  | $ | 3,021   |  
|Additional reserve for excess and obsolete inventory |  |   | 7,686   |  
|Balance acquired with Proxim, Inc.                   |  |   | 45,114  |  
|Inventory scrapped                                   |  |   | (11,169 | )
|                                                     |  |   |         |  
|Balance as of June 28, 2002                          |  | $ | 44,652  |  
|                                                     |  |   |         |  

The following table summarizes the restructuring activity in 2001 and the
first six months of 2002 (in thousands):

|                                   |  |            |        |            |  |           |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|---------------------------------- |  | ---------- | ------ | ---------- |  | --------- | ------ | ----- |  | ----- | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                   |  | Severances |        | Facilities |  | Inventory |        | Other |  | Total
|                                   |  |            |        |            |  |           |        |       |  |      
|                                  
|                                  
|                                  
|                                  
|Balance as of December 31, 2000    |  | $          |       |            |  | $         |       |       |  | $     |        |   |  | $ |       |   |  | $ |        |  
|Provision charged to operations    |  |            | 1,382  |            |  |           | 388    |       |  |       |        |   |  |   | 46     |   |  |   | 1,816   |  
|Charges utilized                   |  |            | (1,184 | )          |  |           | (156   | )     |  |       |        |   |  |   | (46    | ) |  |   | (1,386  | )
|                                   |  |            |        |            |  |           |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Balance as of December 31, 2001    |  |            | 198    |            |  |           | 232    |       |  |       |        |   |  |   |       |   |  |   | 430     |  
|Balance acquired with Proxim, Inc. |  |            |       |            |  |           | 1,066  |       |  |       |        |   |  |   |       |   |  |   | 1,066   |  
|Provision charged to operations    |  |            | 3,811  |            |  |           | 32,699 |       |  |       | 12,659  |   |  |   | 2,450  |   |  |   | 51,619  |  
|Charges utilized                   |  |            | (3,904 | )          |  |           | (1,452 | )     |  |       | (10,205 | ) |  |   | (2,450 | ) |  |   | (18,011 | )
|                                   |  |            |        |            |  |           |        |       |  |       |         |   |  |   |        |   |  |   |         |  
|Balance as of June 28, 2002        |  | $          | 105    |            |  | $         | 32,545 |       |  | $     | 2,454   |   |  | $ |       |   |  | $ | 35,104  |  
|                                   |  |            |        |            |  |           |        |       |  |       |         |   |  |   |        |   |  |   |        

Note 7  Income Taxes

The income tax provision for the six months ended June 28, 2002 is
primarily due to establishing a valuation allowance to offset deferred tax
assets brought forward from December 31, 2001. As a result of the losses
incurred, there is significant uncertainty

14



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whether a benefit of the deferred tax assets would be realized. The
Company will carry back losses to prior years and claim income tax refunds
totaling $10.4 million, which was recorded in other current assets in the first
quarter of 2002. Accordingly, the Company believes that it is necessary to
establish a full valuation allowance of approximately $11.3 million.

Note 8  Loss Per Share

Basic and diluted net loss per share are presented in conformity with SFAS
No. 128, Earnings Per Share. Basic earnings per share under SFAS 128 were
computed using the weighted average number of shares outstanding of 119,214,939
and 57,509,224 for the three months ended June 28, 2002 and June 29, 2001,
respectively, and weighted average number of shares outstanding of 90,230,245
and 56,791,902 for the six months ended June 28, 2002 and June 29, 2001,
respectively. Diluted earnings per share is determined in the same manner as
basic earnings per share except that the number of shares is increased assuming
dilutive stock options and warrants using the treasury stock method. For the
three and six months ended June 28, 2002 and June 29, 2001, the incremental
shares from the assumed exercise of stock options and warrants were not
included in computing diluted per share amounts as the effect would be
antidilutive.

Note 9  Stockholders Equity

Stock Plans

As part of the merger with Proxim, Inc., the Company assumed certain
vested and unvested options that when converted would result in approximately
8.7 million and 7.3 million shares of common stock outstanding. These options
have a weighted average exercise price of $5.75 per share. Additionally,
approximately 10.8 million shares were available under Proxim, Inc. plans.

Note 10  Commitments and Contingencies

The company occupies its facilities under several non-cancelable operating
lease agreements expiring at various dates through November 2010, and
requiring payment of property taxes, insurance, maintenance and utilities. Future minimum
lease payments under non-cancelable operating leases at June 28, 2002 were as
follows (in thousands):

|                                    |  |   |        | 
|----------------------------------- |  | - | ------ | 
|Six months ending December 31, 2002 |  | $ | 4,347  | 
|Year ending December 31:            |  |   |        | 
|2003                                |  |   | 8,920  | 
|2004                                |  |   | 9,561  | 
|2005                                |  |   | 9,416  | 
|2006                                |  |   | 7,921  | 
|Thereafter                          |  |   | 25,047 | 
|                                    |  |   |        | 
|Total minimum lease payments        |  | $ | 65,212 | 
|                                    |  |   |        | 

During the six months ended June 28, 2002 the Company recorded a
restructuring charge relating to the committed future lease payment for closed
facilities, net of estimated future sublease receipt, of $32.7 million, which
are included in the above disclosures.

Note 11  Legal Proceedings

Proxim, Inc.s involvement in patent and International Trade Commission
litigation with respect to alleged infringement of certain of its United States
patent rights related to direct sequence wireless local area networking
technology has resulted in, and could in the future continue to result in,
substantial costs and diversion of management resources of the combined
company. In addition, this litigation, if determined adversely to us, could
result in the payment of substantial damages and/or royalties or prohibitions
against utilization of essential technologies, and could materially and
adversely affect our business, financial condition and operating results.

On March 8, 2001, Proxim, Inc. filed two lawsuits for infringement of
three United States Patents for wireless networking technology: one suit in the
U.S. District Court for the District of Massachusetts against Cisco Systems,
Incorporated and Intersil Corporation; and one suit in the U.S. District Court
for the District of Delaware against 3Com Corporation, SMC, Symbol Technologies
and Wayport. These suits sought an injunction against continued infringement,
damages resulting from the infringement and the defendants conduct, interest
on the damages, attorneys fees and costs, and such further relief as the
respective courts deem just and appropriate.

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On March 9, 2001, Proxim, Inc. filed suit with the International Trade
Commission (ITC) in Washington, D.C. asking the ITC to stop the importation of
products that infringe its patented wireless networking technology. Eight
companies are identified in this action; Acer, Addtron, Ambicom, Compex,
D-Link, Enterasys, Linksys and Melco. Proxim, Inc. notified these and other
companies that it believed to have been infringing its patents. On May 9, 2001,
Proxim, Inc. filed to remove Compex from the ITC complaint as Compex entered
into an agreement with Proxim, Inc. to license these patents. Intersil and
Agere Systems have filed motions to intervene in the proceedings before the ITC
and these motions have been approved by the ITC.

On or about April 24, 2001, Intersil Corporation and Cisco Systems,
Incorporated filed suit in the U.S. District Court for the District of Delaware
seeking that Proxim, Inc.s patents be found invalid, unenforceable and not
infringed. Intersil and Cisco sought damages and attorneys fees from Proxim,
Inc. based upon alleged breach of contract and unfair competition.

On or about May 1, 2001, Symbol Technologies filed patent infringement
counterclaims in the U.S. District Court for the District of Delaware alleging
that Proxim, Inc. infringed four Symbol wireless LAN patents. Symbol is seeking
unspecified damages and a permanent injunction against Proxim, Inc. related to
these infringement claims.

On or about May 31, 2001, Agere Systems filed suit in the U.S. District
Court for the District of Delaware alleging that Proxim, Inc. infringed three
Agere patents. Agere sought unspecified damages and a permanent injunction
against Proxim, Inc. related to its infringement claims. On July 9, 2001,
Proxim, Inc. filed an amended answer and counterclaim to the Agere Systems
suit. Proxim, Inc. sought declaratory judgment for non-infringement, invalidity
and unenforceability of certain Agere Systems patents, as well as damages for
violation of the antitrust laws of the United States.

On August 8, 2001, Proxim, Inc. filed an amended answer and counterclaim,
further sought damages for violation of the antitrust laws of the United
States. On December 13, 2001, Proxim, Inc. filed a second
amended answer and counterclaim, and sought to add Ageres parent, Agere Systems, Inc., as a party.

On December 4, 2001, Symbol filed suit in the U.S. District Court for the
District of Delaware alleging that Proxim, Inc. infringed four Symbol patents
related to systems for packet data transmission. Symbol sought an award for
unspecified damages and a permanent injunction against Proxim, Inc. based on
alleged patent infringement counterclaims. On December 18, 2001 Proxim, Inc.
filed an answer and counterclaims seeking declaratory judgments for
non-infringement, invalidity and unenforceability of the four asserted Symbol
patents, injunctive and monetary relief for Symbols infringement of a Proxim,
Inc. patent, monetary relief for Symbols false patent marking, and injunctive
and monetary relief for Symbols unfair competition under the Lanham Act,
common law unfair competition and tortious interference.

On August 5,
2002, Proxim and Agere Systems announced that they had settled the
pending patent related litigation between the two companies in
conjunction with Proxims acquisition of Agere Systems 802.11
wireless local area network equipment business, including the ORiNOCO
product line.

The results of any litigation matter are inherently uncertain. In the
event of any adverse decision in the described legal actions or any other
related litigation with third parties that could arise in the future with
respect to patents or other intellectual property rights relevant to our
products, we could be required to pay damages and other expenses, to cease the
manufacture, use and sale of infringing products, to expend significant
resources to develop non-infringing technology, or to obtain licenses to the
infringing technology. These matters are in the early stages of litigation and,
accordingly, we can not make any assurance that these matters will not
materially and adversely affect our business, financial condition or operating
results.

Note 12  Supplemental Cash Flow Data

The Company acquired cash of $35,961,000 and paid cash of $10,428,000 in
connection with its merger with Proxim, Inc., nBand and WirelessHome in the six
months ended June 28, 2002 and June 29, 2001, respectively, described below (in
thousands):

|                                                        |  |                  |          |          |  |   |         |  
|------------------------------------------------------- |  | ---------------- | -------- | -------- |  | - | ------- | -
|                                                        |  | Six months ended
|                                                        |  |                 
|                                                        |  | June 28,         |          | June 29,
|                                                        |  | 2002             |          | 2001    
|                                                        |  |                  |          |         
|                                                       
|                                                       
|                                                       
|                                                       
|Purchase price                                          |  | $                | 173,789  |          |  | $ | 28,200  |  
|Common stock issued                                     |  |                  | (159,039 | )        |  |   | (15,300 | )
|Accrued transactions costs                              |  |                  | (3,336   | )        |  |   | (2,682  | )
|                                                        |  |                  |          |          |  |   |         |  
|Cash paid                                               |  |                  | 11,414   |          |  |   | 10,218  |  
|Less: cash acquired                                     |  |                  | (35,961  | )        |  |   | (72     | )
|                                                        |  |                  |          |          |  |   |         |  
|Net cash (received) paid from acquisition of businesses |  | $                | (24,547  | )        |  | $ | 10,146  |  
|                                                        |  |                  |          |          |  |   |         |  

16



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Note 13  Subsequent Event:

On June 17, 2002, the Company entered into a definitive acquisition
agreement with Agere Systems. On August 5, 2002, the Company
completed the transaction, acquiring the 802.11 LAN
equipment business of Agere Systems, including its ORiNOCO product line, for
$65 million in cash. To finance the acquisition, Warburg Pincus and
Broadview Capital Partners have agreed to collectively invest $75 million in
the Company. The two investors will receive convertible preferred stock in the
amount of approximately $41 million, with a conversion price of $3.06 per
share. The remaining $34 million of the investment will be in the form of a
note that will convert, upon stockholder approval, into additional shares of
the convertible preferred stock. Additionally, the investors will be granted
warrants to acquire 12,271,345 shares of common stock for $3.06 per share. A
portion of the warrants will be conditioned upon receipt of stockholder
approval. Upon stockholder approval, the preferred stock and warrants issued to
Warburg Pincus and Broadview are expected to represent approximately 28% of
Proxims outstanding common stock on an as-converted and as-exercised basis.
In addition, in connection with the transaction with Agere, the
Company has entered
into a patent cross-license agreement with Agere and settled all outstanding
litigation with Agere, and has entered into a three-year strategic
supply agreement with Agere, pursuant to which Agere will provide
802.11 chips, modules and cards to Proxim at specified prices.




ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Except for any historical information contained herein, the matters
discussed in this Quarterly Report on Form 10-Q contain certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to the Companys financial
condition, results of operations, cash flows, revenues, financing plans,
business strategies and market acceptance of its products. The words
anticipate, believe, estimate, expect, plan, intend, and similar
expressions, are intended to identify these forward-looking statements. These
forward-looking statements are found at various places throughout this
Quarterly Report. We caution you not to place undue reliance on these
forward-looking statements, which speak only as of the date they were made. We
do not undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this Quarterly Report or to reflect the occurrence of unanticipated events.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to those discussed below under Risk Factors and elsewhere
in this Report.

The following discussion should be read together with our financial
statements, notes to those financial statements included elsewhere in this Form
10-Q, our financial statements, notes to those financial statements and
Managements Discussion and Analysis of Financial Condition and Results of
Operations in the Companys Form 10-K filed with the Securities and Exchange
Commission.

Overview

Proxim Corporation is the company created by the March 26, 2002 merger of
Proxim, Inc. and Western Multiplex Corporation. The results for the six months
ending June 28, 2002 include the financial results of the former Western
Multiplex Corporation for the period from January 1, 2002 to June 28, 2002, and
the results of the former Proxim, Inc. for the period from March 27, 2002 to
June 28, 2002, in accordance with generally accepted accounting principles for
accounting for business combinations. We were founded in 1979 in Sunnyvale,
California as a vendor of radio components and related services. In 1992, we
changed our strategy, became a designer and manufacturer of broadband wireless
systems and launched our Lynx broadband wireless systems. These point-to-point
systems are primarily used by wireless operators to connect their base stations
to other base stations and to existing wire line networks. In 1999, we
introduced our Tsunami point-to-point broadband wireless systems, which
primarily enable service providers, businesses and other enterprises to expand
or establish private networks by bridging Internet traffic among multiple
facilities. Based on our core technologies and the technology acquired through
our purchase of WirelessHome Corporation in March 2001, we have developed
point-to-multipoint systems that enable service providers, businesses and other
enterprises to connect multiple facilities within a geographic area to a
central hub. We began shipping our first generation of these products at the
end of the fourth quarter of 2001. In March 2002, we merged with Proxim, Inc.
located in Sunnyvale, California which designs, manufactures and markets high
performance wireless LAN and building-to-building network products based on RF
technology. In April we acquired nBand a startup developer of ASICs technology
that the Company intends to use in the development of next-generation ASICs.

On June 17, 2002, the Company entered into a definitive acquisition
agreement with Agere Systems. On August 5, 2002, the Company
completed the transaction, acquiring the 802.11 LAN
equipment business of Agere Systems, including its ORiNOCO product line, for
$65 million in cash. To finance the acquisition, Warburg Pincus and
Broadview Capital Partners have agreed to collectively invest $75 million in
the Company. The two investors will receive convertible preferred stock in the
amount of approximately $41 million, with a conversion price of $3.06 per
share. The remaining $34 million of the investment will be in the form of a
note that will convert, upon stockholder approval, into additional shares of
the convertible preferred stock. Additionally, the investors will be granted
warrants to acquire 12,271,345 shares of common stock for $3.06 per share. A
portion of the warrants will be conditioned upon receipt of stockholder
approval. Upon stockholder approval, the preferred stock and warrants issued to
Warburg Pincus and Broadview are expected to represent approximately 28% of
Proxims outstanding common stock on an as-converted and as-exercised basis.
In addition, in connection with the transaction with Agere, the
Company has entered
into a patent cross-license agreement with Agere and settled all outstanding
litigation with Agere, and has entered into a three-year strategic
supply agreement with Agere, pursuant to which Agere will provide
802.11 chips, modules and cards to Proxim at specified prices.

Revenue.We primarily generate revenue from the sale of our Lynx and
Tsunami systems for our WAN product line, and 802.11a and HomeRF 2.0 standards
based products, acquired in the Proxim, Inc. acquisition, for our LAN product
line. We introduced the Tsunami products at the end of the fourth quarter of
1999. While our Tsunami products and Lynx products have similar pricing for

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comparable models, our Lynx product line contributes the largest part of
our revenue. We began selling our Tsunami point-to-multipoint systems in the
last month of 2001. We also generate a small percentage of our revenue from the
sale of services and parts and rentals of our systems. We sell worldwide to
service providers, businesses and other enterprises directly through our sales
force and indirectly through distributors, value added resellers and system
integrators. Sales to certain distributors are made under terms allowing
certain rights of return, protection against subsequent price declines on our
products held by our distributors and co-op marketing programs.

We recognize revenue from the sale of our systems and products when all
the following conditions are met: the system or product has been shipped for
our WAN products, evidence of an arrangement exists and we have the right to
invoice the customer, the collection of the receivable is probable, and we have
no post-delivery obligations remaining. Revenue from services, such as
preinstallation diagnostic testing and product repair services, is recognized
over the period for which the services are performed, which is typically less
than one month. Revenue from product rentals is recognized over the period of
the rental. Revenue generated from our LAN products is deferred until
shipments to end customers by the distributors.

Revenue consists of product revenues reduced by estimated sales returns
and allowances. Provisions for estimated sales returns and allowances, which
are based on historical trends, contractual terms and other available
information, are recorded at the time of sale.

Our sales force focuses on key strategic accounts and also develops
relationships with end-users that purchase through distributors and value-added
resellers. Distributors sell our products, and value-added resellers not only
sell our products, but also assist end-users in network design, installation
and testing. We also market our products through strategic relationships we
have with systems integrators, which design and install networks that
incorporate our systems. Additionally, we sell directly to OEM customers. We
sell both design-in products for integration into their wireless computing
platforms, and branded products as private label models. Any significant
decline in direct sales to end-users or in sales to our distributors or
value-added resellers, or the loss of any of our distributors or value-added
resellers or OEM customers, could materially adversely affect our revenue.

During the six months ended June 28, 2002, we sold our products to
approximately 170 customers in 45 countries. In the six months ended June 28,
2002, international sales accounted for approximately 43.4% of our total sales.
We expect international sales to vary but remain significant as a percentage of
overall sales in the future. Currently, all of our sales are denominated in
U.S. dollars. Accordingly, we are not exposed to currency exchange risks other
than the risk that exchange rate fluctuations may make our products more
expensive for customers outside the United States and, as a result, could
decrease international sales. In addition, we face risks inherent in conducting
global business. These risks include extended collection time for receivables,
reduced ability to enforce obligations and reduced protection for our
intellectual property.

As we have increased sales through our distributors and value-added
resellers, we have experienced a decline in the average selling prices of our
products. This is because the prices of the products that we sell indirectly
through distributors and value-added resellers are lower than the prices of the
products we sell directly through our sales force to end-users. We have also
lowered our prices for older products as we introduce additional products that
provide faster data rates. These newer products have higher prices than our
older products. Our international sales also have lower average selling prices
when compared to our United States and Canadian sales. This is primarily due to
our higher reliance on distributors and value-added resellers for international
sales, and also because our lower speed products, with significantly lower
prices, are being sold in larger quantities internationally than domestically.
As indirect sales and sales in our international markets increase, we expect
that our average selling prices will further decrease.

Cost of revenue.Cost of revenue consists primarily of outsourced
manufacturing costs, component costs, labor and overhead costs, costs of
acquiring finished parts from original equipment manufacturers, customer
service and accrued warranty costs. We currently outsource the majority of our
manufacturing and supply chain management to a limited number of independent
contract manufacturers, who obtain components for our products from suppliers.
Accordingly, a significant portion of our cost of revenue consists of payments
to these contract manufacturers and component suppliers. The remainder of our
cost of revenue is related to our in-house manufacturing operations, which
consist primarily of quality control, final assembly, testing and product
integration. We expect to realize lower per unit product costs as we continue
to outsource more of our in-house manufacturing as well as have our products
produced at lower cost off-shore locations. However, we cannot assure you when
or if cost reductions will occur. The failure to achieve these cost reductions
could materially adversely affect our gross margins and operating results.

Gross profit.Our gross profit is affected by both the average selling
prices of our systems and our cost of revenue. Historically, decreases in our
average selling prices have generally been offset by reductions in our per unit
product cost. We cannot assure you, however, that we will achieve any
reductions in per unit product cost in the future or that any reductions will
offset a reduction in our

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average selling prices. Gross profit will be affected by a variety of
factors, including manufacturing efficiencies, the degree to which our
manufacturing is outsourced, the location of manufacturing, future
manufacturing licenses of our products, product mix, competitive pricing
pressures, the degree of customization of individual products required by OEM
customers and component and assembly costs.

Research and development.Research and development expenses consist
primarily of salaries and related personnel expenses, prototype development
expenses, consultant fees and allocated overhead related to the design,
development, testing and enhancement of our products and underlying
technologies. We expense all research and development expenses as incurred. We
expect to increase our research and development expenses as we continue to
develop new products and improve our core technologies.

Selling, general
and administrative.Selling, general and administrative
expenses consist of salaries, commissions, product marketing, sales support
functions, advertising, trade show and other promotional expenses and allocated
overhead. We intend to increase our selling, general and administrative
expenditures as we add sales and marketing personnel, increase the number of
distributors and value-added resellers that sell our products and increase
marketing programs. In particular, we expect selling, general and
administrative expenses to increase as we expand our sales operations to
support and develop leads for our distributors and value-added resellers,
increase spending on our information systems and incur additional costs related
to the growth of our business and operation as a public company.

Stock option programs.We have implemented stock option programs for
employees and members of our board of directors to attract and retain highly
skilled and qualified business and technical personnel. Prior to our initial
public offering, we recorded deferred stock compensation on certain options for
the difference between the exercise price and the deemed fair value of our
common stock on the date the stock options were granted. This amount is
included as a reduction of stockholders equity and is being amortized by
charges to operations over the vesting period. The amortization expense relates
to options awarded to employees in all operating expense categories.

Critical Accounting Policies, Judgments and Estimates

Our discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related to customer programs and incentives, product returns, bad debts,
inventories, equity investments, goodwill, intangible assets, income taxes,
financing operations, warranty obligations, excess component order cancellation
costs, restructuring, long-term service contracts, pensions and other
post-retirement benefits, and contingencies and litigation. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our financial
statements.

We record estimated reductions to revenue for customer programs and
incentive offerings including special pricing agreements, price protection,
promotions, historical returns for sales of our WAN products, the inventory
levels at distributors and other volume-based incentives. If market conditions
were to decline, we may take actions to increase customer incentive offerings
possibly resulting in an incremental reduction of revenue at the time the
incentive is offered. Revenue generated from the LAN product line is deferred
until shipment to end customers by the distributors.

We maintain allowances for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. If the
financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.

We provide for the estimated cost of product warranties at the time
revenue is recognized. While we engage in extensive product quality programs
and processes, including actively monitoring and evaluating the quality of our
component suppliers, our warranty obligation is affected by product failure
rates and material usage and service delivery costs incurred in correcting a
product failure. Should actual product failure rates, material usage or service
delivery costs differ from our estimates, revisions to the estimated warranty
liability would be required.

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We write down our inventory for estimated obsolescence or unmarketable
inventory equal to the difference between the cost of inventory and the
estimated market value based upon assumptions about future demand and market
conditions. If actual market conditions are less favorable than those projected
by management, additional inventory write-downs may be required.

We hold minority interests in companies having operations or technology in
areas within our strategic focus, one of which is publicly traded and has
highly volatile share prices. We record an investment impairment charge when we
believe an investment has experienced a decline in value that is other than
temporary. Future adverse changes in market conditions or poor operating
results of underlying investments could result in losses or an inability to
recover the carrying value of the investments that may not be reflected in an
investments current carrying value, thereby possibly requiring an impairment
charge in the future.

We record a valuation allowance to reduce our deferred tax assets to the
amount that is more likely than not to be realized. While we have considered
future taxable income and ongoing prudent and feasible tax planning strategies
in assessing the need for the valuation allowance, in the event we were to
determine that we would be able to realize our deferred tax assets in the
future in excess of our recorded amount, an adjustment to the deferred tax
asset would increase income in the period such determination was made.
Likewise, should we determine that we would not be able to realize all or part
of our net deferred tax asset in the future, an adjustment to the deferred tax
asset would be charged to income in the period such determination was made.

Results of Operations

The following table provides results of operations data as a percentage of
revenue for the periods presented.

|                                                     |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |      |       |   
|---------------------------------------------------- | ------------ | ------------------------ | ----- | ------------------ | ----- | ---------------- | ----- | -------- | ----- | -------- | ----- | ---- | ----- | -- | ----- | ---- | ----- | --
|                                                     |              |                          |       | Three Months Ended |       | Six Months Ended
|                                                     |              |                          |       |                    |       |                 
|                                                     |              |                          |       | June 28,           |       | June 29,         |       | June 28, |       | June 29,
|                                                     |              |                          |       | 2002               |       | 2001             |       | 2002     |       | 2001    
|                                                     |              |                          |       |                    |       |                  |       |          |       |         
|                                                    
|                                                    
|                                                    
|                                                    
|Revenue                                              |              |                          | 100.0 | %                  |       |                  | 100.0 | %        |       |          | 100.0 | %    |       |    | 100.0 | %   
|Cost of revenue                                      |              |                          | 57.5  |                    |       |                  | 54.2  |          |       |          | 57.6  |      |       |    | 51.8  |     
|                                                     |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |     
|                                                     | Gross profit |                          |       | 42.5               |       |                  |       | 45.8     |       |          |       | 42.4 |       |    |       | 48.2 |      
|                                                     |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |     
|Operating expenses:                                  |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |     
|Research and development                             |              |                          | 16.1  |                    |       |                  | 22.7  |          |       |          | 16.8  |      |       |    | 15.3  |     
|Selling, general and administrative                  |              |                          | 25.8  |                    |       |                  | 42.6  |          |       |          | 28.9  |      |       |    | 32.5  |     
|Amortization of goodwill and other intangible assets |              |                          | 4.9   |                    |       |                  | 6.3   |          |       |          | 3.3   |      |       |    | 3.7   |     
|Amortization of deferred stock compensation          |              |                          | 0.4   |                    |       |                  | 1.4   |          |       |          | 0.6   |      |       |    | 7.2   |     
|Impairment of goodwill and other intangible assets   |              |                          |      |                    |       |                  |      |          |       |          |      |      |       |    | 3.8   |     
|Restructuring charges                                |              |                          | 7.9   |                    |       |                  | 1.4   |          |       |          | 73.1  |      |       |    | 2.4   |     
|In-process research and development                  |              |                          | 2.7   |                    |       |                  |      |          |       |          | 8.1   |      |       |    |      |     
|Merger costs                                         |              |                          |      |                    |       |                  |      |          |       |          |      |      |       |    |      |     
|                                                     |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |     
|                                                     |              | Total operating expenses |       |                    | 57.8  |                  |       |          | 74.4  |          |       |      | 130.8 |    |       |      | 64.9  |   
|                                                     |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |     
|                                                     |              | Loss from operations     |       |                    | (15.3 | )                |       |          | (28.6 | )        |       |      | (88.4 | )  |       |      | (16.7 | ) 
|Interest income, net                                 |              |                          | 0.5   |                    |       |                  | 2.0   |          |       |          | 0.5   |      |       |    | 1.5   |     
|                                                     |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |     
|                                                     |              | Loss before taxes        |       |                    | (14.8 | )                |       |          | (26.6 | )        |       |      | (87.9 | )  |       |      | (15.2 | ) 
|Income tax provision (benefit)                       |              |                          |      |                    |       |                  | (8.1  | )        |       |          | 4.6   |      |       |    | (0.8  | )   
|                                                     |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |     
|                                                     |              | Net loss                 |       |                    | (14.8 | )%               |       |          | (18.5 | )%       |       |      | (92.5 | )% |       |      | (14.4 | )%
|                                                     |              |                          |       |                    |       |                  |       |          |       |          |       |      |       |    |       |     

Comparison of Three and Six Months Ended June 28, 2002 and June 29, 2001

Revenue

We classify our products into two product lines: Wide Area Network, or
WAN, product line, and; Local Area Network, or LAN, product line. The WAN
product line includes point-to-point Lynx, Tsunami and Stratum products and
point-to-multipoint Tsunami and Stratum products. The LAN product line includes
900 MHz, RangeLAN, Harmony, 802.11b, 802.11a and Skyline products for the
Enterprise/Commercial markets; and Symphony HomeRF and HomeRF 2.0 products and
Netline products for the Home/SOHO markets. Prior to the merger the Company
did not have a LAN product line. Historical LAN revenue prior to March 26,
2002 of the former Proxim, Inc. is not reported in the table below. Revenue
information by product line is as follows (in thousands):

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|             |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |        | 
|------------ | ------------- | ---- | ------------------ | ------ | ---------------- | ---- | -------- | ------ | -------- | - | ------ | ------ |  | - | ------ | ------ | 
|             |               |      | Three Months Ended |        | Six Months Ended
|             |               |      |                    |        |                 
|             |               |      | June 28,           |        | June 29,         |      | June 28, |        | June 29,
|Product Line |               | 2002 |                    | 2001   |                  | 2002 |          | 2001  
|             |               |      |                    |        |                  |      |          |       
|            
|            
|            
|            
|WAN          |               | $    | 29,100             |        |                  | $    | 22,295   |        |          | $ | 53,450 |        |  | $ | 59,880 |       
|LAN          |               |      | 16,077             |        |                  |      |         |        |          |   | 17,141 |        |  |   |       |       
|             |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |       
|             | Total revenue |      | $                  | 45,177 |                  |      | $        | 22,295 |          |   | $      | 70,591 |  |   | $      | 59,880 | 
|             |               |      |                    |        |                  |      |          |        |          |   |        |        |  |   |        |       

Revenue increased 102.6% from $22.3 million in the second quarter of 2001
to $45.2 million in the second quarter of 2002. Revenue increased primarily
due to the contribution of sales of LAN products totaling $16.1 million
acquired in the merger with Proxim, Inc. on March 26, 2002 and a $5.1 million
increase in sales of point-to-multipoint Tsunami products as well as a $1.7
million increase in point-to-point Lynx and Tsunami products.

Revenue increased 17.9% from $59.9 million in the six months ended June
29, 2001 to $70.6 million in the six months ended June 28, 2002. Revenue
increased primarily due to the contribution of sales of LAN products and a $9.1
million increase in sales of point-to-multipoint Tsunami products partially
offset by a $15.5 million decrease in sales of point-to-point Lynx and Tsunami
products.

Cost of revenue

Cost of revenue increased 115.0% from $12.1 million in the second quarter
of 2001 to $26.0 million in the second quarter of 2002. As a percentage of
revenue, cost of revenue increased from 54.2% in the second quarter of 2001 to
57.5% in the second quarter of 2002. Cost of revenue increased 31.0% from $31.0
million in the six months ended June 29, 2001 to $40.6 million in the six
months ended June 28, 2002. As a percentage of revenue, cost of revenue
increased from 51.8% in the six months ended June 29, 2001 to 57.6% in the six
months ended June 28, 2002. The increases in cost of revenue for both
comparable periods were primarily attributable to increased revenue. The
increases in cost of revenue as a percentage of revenue for both comparable
periods were primarily attributable to manufacturing inefficiencies related to
point-to-multipoint Tsunami products and a higher contribution of lower margin
LAN products acquired in the merger with Proxim, Inc.

Research and development

Research and development expenses increased 43.1% from $5.1 million in the
second quarter of 2001 to $7.3 million in the second quarter of 2002. Research
and development expenses increased 29.7% from $9.1 million in the six months
ended June 29, 2001 to $11.8 million in the six months ended June 28, 2002. The
increases in research and development expenses for both periods were primarily
attributable to the cost of increased personnel, including employees added as a
result of the Proxim, Inc. merger, prototype spending for the development of
new products and enhancements to existing products. As a percentage of revenue,
research and development expenses decreased from 22.7% in the second quarter of
2001 to 16.1% in the second quarter of 2002. This percentage decrease was
primarily due to higher revenue offset by increased personnel expense. As a
percentage of revenue, research and development expenses increased from 15.3%
in the six months ended June 29, 2001 to 16.8% in the six months ended June 28,
2002. This percentage increase was primarily due to higher personnel expense,
including employees added as a result of the Proxim, Inc. merger.

Selling, general and administrative

Selling, general and administrative expenses increased 22.1% from $9.5
million in the second quarter of 2001 to $11.6 million in the second quarter of
2002. Selling, general and administrative expenses increased 4.6% from $19.5
million in the six months ended June 29, 2001 to $20.4 million in the six
months ended June 28, 2002. The increase in selling, general and administrative
expenses for both comparable periods was primarily attributable to increases in
sales and marketing personnel expenses, including employees added as a result
of the Proxim, Inc. merger, advertising, tradeshow, and public relations
expenses. As a percentage of revenue, selling, general and administrative
expenses decreased from 42.6% in the second quarter of 2001 to 25.8% in the
second quarter of 2002 and from 32.5% in the six months ended June 29, 2001 to
28.9% in the six months ended June 29, 2001. The percentage decreases for both
comparable periods were primarily due to increased revenue offset by increased
personnel expense including employees added as a result of the Proxim, Inc.
merger.

Amortization of goodwill and other intangible assets

Amortization of goodwill and other intangible assets increased from $1.4
million in the second quarter of 2001 to $2.2 million in the second quarter of
2002. Amortization of goodwill increased from $2.2 million in the six months
ended June 29, 2001 to $2.4 million in the six months ended June 28, 2002.
Amortization of goodwill and other intangible assets for both comparable
periods increased primarily due to the increased intangible assets from the
merger with Proxim, Inc. on March 26, 2002 offset by the cessation

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of amortization of goodwill subsequent to the adoption of SFAS 142 beginning in
January 1, 2002.

Amortization of deferred stock compensation

Amortization of deferred stock compensation was $315,000 in the second
quarter of 2001 and $180,000 in the second quarter of 2002. Amortization of
deferred stock compensation was $2.3 million in the six months ended June 29,
2001 and $425,000 in the six months ended June 28, 2002. As a result of
closing the Ubiquity operations in March 2001, we reversed in the first quarter
of 2001 both a portion of the deferred stock compensation associated with the
Ubiquity employees expensed in previous quarters and the remaining unamortized
portion of the deferred stock compensation associated with those employees.
Amortization of deferred stock compensation for both comparable periods
decreased primarily due to the closing of the Ubiquity operations in 2001.

Impairment of goodwill and other intangible assets

We recorded $4.3 million of impairment for goodwill related to our former
Ubiquity operations during the first quarter of 2001. The amount of the charge
equaled the unamortized amount of the goodwill as of the date of the closure of
the Ubiquity facilities as no future benefit is anticipated since Ubiquity has
been replaced by WirelessHome as the developer of the Companys
point-to-multipoint systems.

Restructuring charges

During the six months ended June 29, 2001, the Company recorded $1.8
million of restructuring charges related to the closure of its former Ubiquity
operations and employee severance. The charges included $1.6 million of cash
provisions, which included severance of $1.4 million for 26 employees and $0.2
million for future lease commitments and exit costs related to the Petaluma
office facility. The charge also included $0.2 million of non-cash provisions
primarily related to fixed assets and other assets that will no longer be used
at the facility.

As a result of the merger with Proxim, Inc. during the three months ended
June 28, 2002, the Company recorded $3.6 million of restructuring charges
related to closure of certain facilities and severance pay. The charges include
$3.3 million of cash provisions, which included severance of $2.4 million for
56 employees and $0.9 million for future lease commitments and exit costs
related to the closure of two facilities. The charge also includes $245,000
related to fixed assets that will no longer be used at the facilities. For
the six months ended June 28, 2002, the Company recorded $51.6 million
restructuring charges, including a $48.0 million restructuring charge in the
first quarter of 2002, related to closure of certain facilities, discontinued
product lines and severance pay. The charges include $41.5 million of cash
provisions, which included severance of $3.8 million for 61 employees, $32.7
million for future lease commitments and exit costs related to the closure of
four facilities and $5.0 million related to purchase order commitments. The
charge also includes $10.1 million of non-cash provisions of which $7.7 million
relates to an additional reserve for excess and obsolete inventory on hand and
$2.4 million relates to fixed assets that will no longer be used at the
facilities.

In-process research and development

Purchased in-process research and development consist primarily of
acquired technology that has not reached technological feasibility and had no
alternative future use as of the date of acquisition.

The amount expensed to purchased in-process research and development in
the second quarter of 2002 related to technology for next generation ASICs
acquired in the nBand acquisition.

The amount expensed to purchased in-process research and development in
the first quarter of 2002 related to 802.11a and HomeRF 2.0 wireless networking
products acquired in relation to the Proxim, Inc. merger. As of the valuation
date, Proxim, Inc. was developing 802.11a wireless LAN adapter in PCI and Mini
PCI form factors and a connectorized access point along with HomeRF 2.0 voice
data module, voice data gateway and voice data gateway and answer machine.
These products are under development and require additional software
development including NT 4.0 and Macintosh drivers along with additional
functional testing. The value of the IPR&D was determined by estimating the net
cash flows from potential sales of the products resulting from completion of
this project, reduced by the portion of net cash flows from the revenue
attributable to core and developed technology. The resulting cash flows were
then discounted back to their present value using a discount rate of 30%. At
the time of the acquisition, the fair value assigned to the IPR&D totaled $4.5
million and was expensed at the time of the acquisition.

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Interest income, net

Interest income, net decreased from $444,000 in the second quarter of 2001
to $240,000 in the second quarter of 2002. Interest income, net decreased from
$916,000 in the first half of 2001 to $371,000 in the first half of 2002. The
decrease in interest income for both comparable periods is primarily due lower
yields on cash balances.

Income tax provision

The income tax provision for the six months ended June 28, 2002 was
primarily due to establishing a valuation allowance to offset deferred tax
assets brought forward from December 31, 2001. As a result of the losses
incurred there was significant uncertainty whether a benefit of the deferred
tax assets would be realized. We will carry back losses to prior years and
claim income tax refunds totaling $10.4 million, which was recorded in other
current assets as of June 28, 2002. Accordingly, we believe that it is
necessary to establish a full valuation allowance of $11.3 million.

Liquidity and Capital Resources

Cash and cash equivalents increased by $19.5 million from $16.6 million at
December 31, 2001 to $36.1 million at June 28, 2002. Cash and cash equivalents
decreased by $19.2 million from $31.1 million at December 31, 2000 to $11.9
million at June 29, 2001.

Net cash used in operating activities was $8.1 million in the six months
ended June 28, 2002 primarily due to net loss after the effect of non cash
charges, an increase in accounts receivable and other current assets, partially
offset by a decrease in inventory and an increase in accounts payable and
accrued liabilities. Net cash used in operating activities was $8.7 million in
the six months ended June 29, 2001 primarily due to net loss after the effect
of non cash charges, an increase in inventory and other current assets,
partially offset by a decrease in accounts receivable, accounts payable and
accrued liabilities.

Net cash provided by investing activities was $27.3 million in the six
months ended June 28, 2002 due to $24.5 million in cash provided by merger with
Proxim, Inc. and $5.0 million in net proceeds from the sale of investment
securities, partially offset by $2.2 million in capital spending. Net cash used
in investing activities was $10.7 million in the six months ended June 29, 2001
due to capital spending of $3.9 million and $10.1 million of spending
associated with the acquisition of WirelessHome, partially offset by the net
proceeds from the sale of investment securities of $3.4 million.

Net cash provided by financing activities was $382,000 in the six months
ended June 28, 2002 due to issuance of common stock as a result of the exercise
of employee stock options and employee stock purchase plan purchases. Net cash
provided by financing activities was $196,000 in the six months ended June 29,
2001 due to issuance of common stock as a result of the exercise of employee
stock options and the employee stock purchase plan purchases offset by
repayment of long-term debt.

We occupy our facilities under several non-cancelable operating lease
agreements expiring at various dates through November 2010, and require payment
of property taxes, insurance, maintenance and utilities. Future minimum lease
payments under non-cancelable operating leases at June 28, 2002 were as follows
(in thousands):

|                                    |  |   |        | 
|----------------------------------- |  | - | ------ | 
|Six months ending December 31, 2002 |  | $ | 4,347  | 
|Year ending December 31:            |  |   |        | 
|2003                                |  |   | 8,920  | 
|2004                                |  |   | 9,561  | 
|2005                                |  |   | 9,416  | 
|2006                                |  |   | 7,921  | 
|Thereafter                          |  |   | 25,047 | 
|                                    |  |   |        | 
|Total minimum lease payments        |  | $ | 65,212 | 

As of June 28, 2002 we had unconditional purchase order commitments of
$2.5 million, which were accrued for as restructuring charges.

On November 1,
1999, the Company entered into a credit agreement with Credit Suisse
First Boston, as agent. The credit agreement included two term notes
and a $10 million revolving credit facility maturing in November
2000. The Company had the option to prepay the term notes at any time
upon adequate notice to the lender. In August 2000, subsequent to the
Company having completed its initial public offering, the Company
repaid the term notes and all borrowings outstanding under the
revolving credit facility. As of June 28, 2002, the Company had
no borrowings outstanding under the revolving credit facility.

We believe that our current available cash and investments combined with
our available borrowings will be sufficient to finance our working capital and
capital expenditure requirements for at least the next 12 months. Our
management intends to invest any cash in excess of current operating
requirements in interest-bearing investment-grade securities. Our future
capital requirements will

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depend upon many factors, including management of working capital, the
success of marketing, sales and distribution efforts, the timing of research
and product development efforts and expansion of our marketing efforts.

There can be no
assurance that additional capital beyond the amounts currently
forecasted by the Company will not be required nor that any such
required additional capital will be available on reasonable terms, if
at all, at such time or times as required by the Company. We may need
to raise additional funds if our estimates change or prove inaccurate
or in order for us to take advantage of unanticipated opportunities
or to strengthen our financial position. Our ability to raise funds
may be adversely affected by a number of factors relating to Proxim,
as well as factors beyond our control, including the continued
weakness of the wireless communications industry, volatility and
uncertainty in the capital markets as well as increased market
uncertainty following the terrorist attacks of September 11,
2001 and the ongoing U.S. war on terrorism. There can be no
assurance that any financing will be available on terms acceptable to
us, if at all, and any need to raise additional capital through the
issuance of equity or convertible debt securities may result in
additional, and perhaps significant dilution.

Recent Accounting Pronouncements

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Asset. SFAS No. 144 clarifies and further
defines the provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. SFAS No. 144
does not apply to goodwill and other intangible assets that are not amortized.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
We adopted SFAS No. 144 in the year ending December 31, 2002. The effect of
adopting this statement did not have a material effect on our financial
statements.

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.

If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline and you could
lose all or part of your investment.

This Form 10-Q also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this Form
10-Q.

We may not achieve certain benefits and synergies expected from the March 26,
2002 merger between Proxim, Inc. and Western Multiplex Corporation, or the
August 5, 2002 acquisition of the 802.11 wireless LAN equipment business of
Agere Systems, either of which may have a material adverse effect on our
business, financial condition and operating results and/or could result in the
loss of key personnel.

We will need to overcome significant challenges in order to realize any
benefits or synergies from the Proxim/Western Multiplex merger and the Agere
asset purchase, including the timely, efficient and successful execution of a
number of post-transaction events, including:



| |  |  | integrating the operations of these businesses, particularly geographically dispersed operations;
| | - |  | -------------------------------------------------------------------------------------------------
|
| |  |  | retaining and assimilating the key personnel of each company;                                    
|
| |  |  | retaining existing customers of each company and attracting additional customers;                
|
| |  |  | retaining strategic partners of each company and attracting new strategic partners; and          
|
| |  |  | creating uniform standards, controls, procedures, policies and information systems.              

The execution of these post-transaction events will involve considerable risks and may not be successful. These risks include:



| |  |  | the potential disruption of our ongoing business and distraction of our management;                                                    
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | unanticipated expenses and potential delays related to integration of technology and other resources of these companies;               
|
| |  |  | the impairment of relationships with employees, suppliers and
customers as a result of any integration of new management personnel;
and
|
| |  |  | potential unknown liabilities associated with the transactions and
the combined operations.                                            

The combined company may not succeed in addressing these risks or any
other problems encountered in connection with the merger.

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The market price of our common stock may decline as a result of the
Proxim/Western Multiplex merger or Agere asset purchase.

The market price of our common stock may decline as a result of these
transactions for a number of reasons, including if:



| |  |  | the integration of the these businesses is not completed in a timely
and efficient manner;                                                                                          
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the combined company does not achieve the perceived benefits of these
transactions as rapidly or to the extent anticipated by financial
analysts, industry analysts or investors; or
|
| |  |  | the effect of these transactions on our financial results is not
consistent with the expectations of financial analysts, industry
analysts or investors.                            

The merger and asset purchase may adversely affect our financial results.

We have incurred transaction costs of approximately $14 million in
connection with the merger. We expect to incur transaction costs of
approximately $5 million in connection with the asset purchase. If the benefits of
these transactions do not exceed the associated costs, including costs
associated with integrating these businesses and dilution to our stockholders
resulting from the issuance of shares in connection with the merger and the
asset purchase, our financial results, including earnings per share, could be
materially harmed.

Products sales could decline if customer relationships are disrupted by the
merger or the asset purchase.

The merger or the asset purchase may have the effect of disrupting
customer relationships. Former customers of Western Multiplex, Proxim, Inc. and
Agere may not continue their current buying patterns following these
transactions. Customers may defer purchasing decisions as they evaluate the
likelihood of successful integration of the combined company or may instead
purchase products of competitors. Any significant delay or reduction in orders
for our products could cause our products sales to decline.

The combined company is not profitable on a pro forma basis and may not be
profitable in the future.

For the six months ended June 28, 2002 we had a $65.3 million net loss. We
cannot assure you that our revenue will increase or continue at current levels
or growth rates or that we will achieve profitability or generate cash from
operations in future periods. In view of the rapidly evolving nature of our
business and the limited histories of Western Multiplex, Proxim, Inc. and Agere
in producing many of their products, period-to-period comparisons of operating
results are not necessarily meaningful and you should not rely on them as
indicating what our future performance will be.

We expect that we will continue to incur significant sales, marketing,
product development and administrative expenses. As a result, we will need to
generate significant revenue to achieve profitability and we cannot assure you
that we will achieve profitability in the future. Any failure to significantly
increase our revenue as we implement our product and distribution strategies
would harm our business, operating results and financial condition.

We have a limited operating history with some of our current product lines,
which makes your evaluation of our business difficult and will affect many
aspects of our business.

Proxim, Inc. produced its 802.11a and HomeRF 2.0 products for a limited
amount of time and Western Multiplex had just began production of its Tsunami
point-to-multipoint product. Agere also had a limited operating history with
its 802.11 wireless LAN equipment. Our prospects must be considered in light
of the risks, expenses and difficulties frequently encountered by companies in
developing industries, particularly companies in relatively new and rapidly
evolving markets. These risks include:



| |  |  | an evolving and unpredictable business model;     
| | - |  | --------------------------------------------------
|
| |  |  | uncertain acceptance of new products and services;
|
| |  |  | competition; and                                  

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| |  |  | challenges in managing growth.
| | - |  | ------------------------------

We cannot assure you that we will succeed in addressing these risks. If we
fail to do so, our revenue and operating results could be materially harmed.

We may experience fluctuations in operating results and may not be able to
adjust spending in time to compensate for any unexpected revenue shortfall
which may cause operating results to fall below expectations of securities
analysts and investors.

Our operating results may fluctuate significantly in the future as a
result of a variety of factors, many of which will be outside our control. We
may be unable to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall. Accordingly, any significant shortfall in
revenues in relation to planned expenditures could materially harm our
operating results and financial condition, and may cause our operating results
to fall below the expectations of securities analysts and investors. If this
happens, the trading price of our common stock could decline significantly.

Factors that may harm operating results include:



| |  |  | the effectiveness of our distribution channels and the success in
maintaining our current distribution channels and developing new
distribution channels;              
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to effectively manage the development of new business segments and markets;                                                                                
|
| |  |  | our ability to successfully manage the integration of operations;                                                                                                      
|
| |  |  | the sell-through rate of our
Symphony HomeRF and ORiNOCO products (acquired in the Agere asset
purchase) through consumer retail channels;                             
|
| |  |  | market adoption of radio frequency, or RF, standards-based products
(such as those compliant with the HomeRF, IEEE 802.11b, IEEE 802.11a, or
Bluetooth specifications);
|
| |  |  | market demand for our point-to-point Lynx and Tsunami systems;                                                                                                         
|
| |  |  | market demand for our point-to-multipoint systems;                                                                                                                     
|
| |  |  | technical difficulties, system downtime or other similar failures;                                                                                                     
|
| |  |  | our ability to upgrade and develop our systems and infrastructure;                                                                                                     
|
| |  |  | difficulties in expanding and conducting international operations; and                                                                                                 
|
| |  |  | general economic conditions and economic conditions specific to the wireless communications industry.                                                                  

Historically, Proxim, Inc. and Western Multiplex did not operate with a
significant order backlog and a substantial portion of their revenues in any
quarter were derived from orders booked and shipped in that quarter.
Accordingly, a significant component of our revenue expectations will be based
almost entirely on internal estimates of future demand and not on firm customer
orders. Planned operating expense levels are relatively fixed in the short term
and are based in large part on these estimates. If orders and revenue do not
meet expectations, our operating results could be materially adversely
affected.

Our future operating results could be adversely affected as a result of
purchase accounting treatment and the impact of amortization and impairment of
intangible assets relating to the merger and the Agere asset purchase.

In accordance with generally accepted accounting principles, we have
accounted for the merger of Proxim, Inc. and Western Multiplex using the
purchase method of accounting. Under the purchase method of accounting, we have
recorded the market value of our common stock issued in connection with the
merger, the fair value of the options to purchase Proxim, Inc. common stock
that became options to purchase Proxim Corporation common stock and the amount
of direct transaction costs as the cost of combining with Proxim, Inc. We have
allocated the cost of the individual assets acquired and liabilities assumed,
including various identifiable intangible assets (such as acquired technology
and acquired trademarks and trade names) and in-process research and
development, based on their respective fair values at the date of the
completion of the merger. Intangible assets will be required to be amortized

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prospectively over their estimated useful lives. The purchase price will
also be allocated to deferred compensation, based on the portion of the
intrinsic value of the unvested Proxim, Inc. options we have assumed to the
extent that service is required after completion of the merger in order to
vest. Any excess of the purchase price over those fair market values will be
accounted for as goodwill. We are not required to amortize goodwill against
income but goodwill will be subject to periodic reviews for impairment. If we
are required to recognize an impairment charge, the charge will negatively
impact reported earnings in the period of the charge. We will account for the
Agere asset purchase using the purchase method of accounting, which also may
adversely affect our future operating results.

Shares eligible for future sale, including shares owned by our principal
stockholders, may cause the market price of our common stock to drop
significantly, even if our business is doing well.

The potential for sales of substantial amounts of our common stock into
the public market may adversely affect the market price of our common stock.
To finance the Agere asset purchase, we entered into a securities purchase
agreement with Warburg Pincus Private Equity VIII, L.P. and Broadview Capital
Partners L.P. and affiliated entities. In connection with the closing of the
Agere asset purchase, we issued shares of Series A preferred stock and warrants
to purchase common stock to these investors. The Marketplace Rules of the
National Association of Securities Dealers, which apply to us as Nasdaq-listed
company, require the approval of our stockholders prior to our issuance of
additional shares of Series A preferred stock and warrants to purchase common
stock pursuant to the securities purchase agreement. Upon receipt of approval
of our stockholders at a special meeting, notes issued to these investors will
convert into additional shares of Series A preferred stock and additional
warrants will be issued to them. Following these issuances, and assuming
conversion and exercise, these investors initially will collectively represent
approximately 24% of our outstanding common stock. We have
agreed to file a registration statement with the Securities and Exchange
Commission to register the capital stock held by these investors. Upon the
effectiveness of the registration statement, the investors will have the right
to resell their equity holdings.

In addition, approximately 32.1 million of our outstanding shares are held
by affiliates of Ripplewood Investments L.L.C. and an aggregate of
approximately 6.0 million are held by Jonathan Zakin, who is our Chairman and
Chief Executive Officer, and his affiliates. The shares of common stock held by
these stockholders are restricted securities within the meaning of Rule 144
under the Securities Act and are eligible for resale subject to the volume,
manner of sale, holding period and other limitations of Rule 144 or in a
registered offering. In the event that the affiliates of Ripplewood Investments
L.L.C. distribute shares that they hold to their members and partners that are
not affiliates of the Company, those distributed shares could be immediately
sold without regard to any volume limitations. In connection with the execution
of the merger agreement between Proxim, Inc. and Western Multiplex, the
affiliates of Ripplewood Investments L.L.C. that now hold shares of Proxim
Corporation common stock entered into a stockholders agreement that set
limitations on their ability to transfer their shares, including distributions
to members and partners, for a limited period of time and provides registration
rights with respect to their shares. In exchange for a voting agreement in
connection with the Agere asset purchase, and effective as of the record date
of our special meeting of stockholders to approve the issuance of additional
shares of Series A preferred stock and warrants to purchase common stock to the
financing investors, we have agreed to release the affiliates of Ripplewood
Investments L.L.C. from the resale restrictions set forth in the stockholders
agreement. If affiliates of Ripplewood Investments L.L.C. distribute all or a
significant number of our shares, the market price of our common stock may
decline significantly.

In addition to outstanding shares eligible for sale, as of June 28, 2002,
options and warrants to acquire 33.7 million shares of common stock of Proxim
Corporation were outstanding. Also, as of June 28, 2002, approximately an
additional 15.9 million shares of Proxim Corporation common stock were reserved
for issuance to employees of Proxim Corporation under existing and/or assumed
stock option plans.

Competition within the wireless networking industry is intense and is expected
to increase significantly. Our failure to compete successfully could materially
harm our prospects and financial results.

The market for broadband wireless systems and wireless local area
networking and building-to-building markets are extremely competitive and we
expect that competition will intensify in the future. Increased competition
could adversely affect our business and operating results through pricing
pressures, the loss of market share and other factors. The principal
competitive factors affecting wireless local area networking and fixed wireless
markets include the following: data throughput; effective RF coverage area;
interference immunity; network security; network scalability; price;
integration with voice technology; wireless networking protocol sophistication;
ability to support industry standards; roaming capability; power consumption;
product miniaturization; product reliability; ease of use; product costs;
product features and applications; product time to market; product
certifications; changes to

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government regulations with respect to each country served and related to
the use of radio spectrum; brand recognition; OEM partnerships; marketing
alliances; manufacturing capabilities and experience; effective distribution
channels; and company reputation.

We could be at a disadvantage to competitors, particularly Alcatel,
Business Networks AB, Cisco Systems, Ericsson, Linksys and Nortel Networks
Corporation, that have broader distribution channels, brand recognition,
extensive patent portfolios and more diversified product lines. We have several
competitors in our commercial wireless business, including without limitation,
Alvarion (the merger of Breezecom and Floware), Cisco Systems (which acquired
Aironet Wireless Communications), Enterasys, Intersil, Nokia, Symbol
Technologies and 3Com.

We also face competition from a variety of companies that offer different
technologies in the emerging home networking market, including several
companies developing competing wireless networking products. Additionally,
numerous companies have announced their intention to develop competing products
in both the commercial wireless and home networking markets, including several
Asia-based companies offering low-price IEEE 802.11b products. We could also
face future competition from companies that offer products which replace
network adapters or offer alternative communications solutions, or from large
computer companies, PC peripheral companies, as well as other large networking
equipment companies. Furthermore, we could face competition from certain of our
OEM customers, which have, or could acquire, wireless engineering and product
development capabilities, or might elect to offer competing technologies. We
can offer no assurance that we will be able to compete successfully against
these competitors or those competitive pressures we face will not adversely
affect our business or operating results.

Many of our present and potential competitors have substantially greater
financial, marketing, technical and other resources with which to pursue
engineering, manufacturing, marketing, and distribution of their products.
These competitors may succeed in establishing technology standards or strategic
alliances in the wireless LAN and building-to-building markets, obtain more
rapid market acceptance for their products, or otherwise gain a competitive
advantage. We can offer no assurance that we will succeed in developing
products or technologies that are more effective than those developed by our
competitors. Furthermore, we compete with companies that have high volume
manufacturing and extensive marketing and distribution capabilities, areas in
which we have only limited experience. We can offer no assurance that the we
will be able to compete successfully against existing and new competitors as
wireless markets evolve and the level of competition increases.

Wireless networking markets are subject to rapid technological change and to
compete, we must continually introduce new products that achieve broad market
acceptance.

We have expended substantial resources in developing products that are
designed to conform to the IEEE 802.11 standards and the HomeRF specification.
There can be no assurance, however, that the IEEE 802.11 compliant products and
Symphony HomeRF products will have a meaningful commercial impact. In 1999, the
IEEE approved a new 2.4 GHz wireless LAN standard, designated as 802.11b. Based
on direct sequence spread spectrum technology, this new standard increased the
nominal data rate from 2 Mbps to 11 Mbps. There can be no assurance that the
802.11b products will be competitive in the market. In addition, we have
developed higher-speed frequency hopping technology based on the FCC Part 15
rule change adopted in August 2000, that allows for wider band hopping channels
and increases the data rate from 1.6 Mbps to up to 10 Mbps. There can be no
assurance that any such new products will compete effectively with IEEE 802.11b
standard compliant products.

In 1999, a group of computer and telecommunications industry leaders, led
by Ericsson, began developing a short range RF method to connect mobile devices
without cables called Bluetooth. Based on low power 2.4 GHz frequency hopping
spread spectrum technology, numerous organizations are planning to deploy
Bluetooth technology in a wide variety of mobile devices such as cellular
telephones, notebook computers and handheld computers. We have not developed
products that comply with Bluetooth. While Bluetooth technology is available to
develop or acquire in the market, there can be no assurance that we will
develop or acquire such technology, or that if it does develop or acquire such
technology, that such products will be competitive in the market.

In 2000, the IEEE approved a new 5 GHz wireless LAN standard designated as
802.11a. This new standard is based on Orthogonal Frequency Division
Multiplexing, or OFDM, technology with multiple data rates ranging from below
10 Mbps to approximately 50 Mbps. In 1999, the European Telecommunications
Standards Institute Project BRAN (Broadband Radio Access Networks) committee
approved a new 5 GHz wireless LAN standard designated as HiperLAN2, also based
on OFDM technology. We are currently shipping commercial units of 802.11a
products, and certain competitors have announced their intention to ship
802.11a products during the first quarter of 2002. In August 2001, Proxim, Inc.
acquired Card Access, Inc. a developer of 802.11a wireless networking products.
We are working to develop products based on the 802.11a standard, but there can
be no assurance that the 802.11a products will have a meaningful commercial
impact.

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The IEEE is evaluating a number of improvements and enhancements to the
802.11a at 5 GHz and 802.11b at 2.4 GHz standards. The 802.11g proposal is a
high speed extension of 802.11b, offering up to 54 Mbps of throughput, that is
expected to be approved during 2002 and commercial products are expected to be
available by early 2003. The 802.11e proposal is a quality of service
enhancement to the 802.11a and 802.11b protocol for streaming multimedia
support. The 802.11i proposal addresses enhanced security for both 802.11a and
802.11b. The 802.11h proposal addresses dynamic frequency selection and
transmit power control for worldwide radio regulation.

In addition, we are a core member of the HomeRF Working Group, an industry
consortium that is establishing an open industry standard, called the HomeRF
specification, for wireless digital communications between PCs and consumer
electronic devices, including a common interface specification that supports
wireless data and voice services in and around the home. There can be no
assurance that our HomeRF specification, or the Symphony HomeRF products
developed to comply with the specification, will have a meaningful commercial
impact. Further, given the emerging nature of the wireless LAN market, there
can be no assurance that the RangeLAN2 and Symphony products and technology, or
our other products or technology, will not be rendered obsolete by alternative
or competing technologies. If we are unable to enter a particular market in a
timely manner with internally developed products, we may license technology
from other businesses or acquire other businesses as an alternative to internal
research and development.

To remain competitive, we will need to expand our operations. Failure to
effectively manage growth could result in an inability to support and maintain
our operations.

We anticipate that we will need to expand our operations in order to
address new market opportunities for our products. This expansion could place a
significant strain on our management, operational and financial resources. We
cannot assure you that:



| |  |  | our personnel, systems, procedures and controls will be adequate to support our future operations;           
| | - |  | -------------------------------------------------------------------------------------------------------------
|
| |  |  | our management will be able to identify, hire, train, motivate or manage required personnel; or              
|
| |  |  | our management will be able to successfully identify and exploit existing and potential market opportunities.

In addition, we could experience lower earnings as a result of expenses
associated with growing our operations, whether through internal development or
through acquisitions.

We will depend on international sales and our ability to sustain or expand
international sales is subject to many risks, which could adversely affect our
operating results.

During the six months ending June 28, 2002, international sales accounted
for approximately 43% of our total sales. Revenue from shipments by Western
Multiplex to customers outside of the United States, principally to a limited
number of distributors, represented 24%, 33% and 23% of total revenue during
the calendar years 2001, 2000 and 1999, respectively. Revenue from shipments by
Proxim, Inc. to customers outside the United States, principally to a limited
number of distributors and OEM customers, represented 33%, 18% and 21% of total
revenue during the calendar years 2001, 2000 and 1999, respectively.
Ageres sales of its ORiNOCO products included sales to a number
international customers, and we expect that we will continue to sell
these products to a significant percentage of international
customers. We expect
that our revenue from shipments to international customers will vary as a
percentage of total revenue.

There are certain risks inherent in doing business in international
markets, including the following:



| |  |  | uncertainty of product acceptance by customers in foreign countries;                                        
| | - |  | ------------------------------------------------------------------------------------------------------------
|
| |  |  | difficulty in assessing the ability to collect on orders to be shipped in an uncertain economic environment;
|
| |  |  | difficulty in collecting accounts receivable;                                                               
|
| |  |  | export license and documentation requirements;                                                              
|
| |  |  | unforeseen changes in regulatory requirements;                                                              
|
| |  |  | difficulties in staffing and managing multinational operations;                                             
|
| |  |  | governmental restrictions on the repatriation of funds into the United States;                              

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| |  |  | foreign currency fluctuations;                                          
| | - |  | ------------------------------------------------------------------------
|
| |  |  | longer payment cycles for international distributors;                   
|
| |  |  | tariffs, duties taxes and other trade barriers;                         
|
| |  |  | difficulties in finding foreign licensees or joint venture partners; and
|
| |  |  | potential political and economic instability.                           

There is a risk that such factors will harm our ability to continue to
successfully operate internationally and our efforts to expand international
operations. In this regard, our revenue levels have been affected, in part, by
reduced ability to ship our products to international customers in cases where
collectibility, based on a number of factors, could not be reasonably assured.

While we may extend limited credit terms, fluctuations in currency
exchange rates could cause our products to become relatively more expensive to
customers in a particular country, leading to a reduction in sales or
profitability in that country. There can be no assurance that foreign markets
will continue to develop or that we will receive additional orders to supply
our products to foreign customers. Our business and operating results could be
materially adversely affected if foreign markets do not continue to develop or
if we do not receive additional orders to supply our products for use by
foreign customers.

To successfully expand international sales, we will need to recruit
additional international sales and support personnel and expand our
relationships with international distributors and value-added resellers. This
expansion will require significant management attention and financial
resources. We may incur these additional costs and add these management burdens
without successfully expanding sales. This failure would harm our operating
results.

Our revenue may decline and our ability to achieve profitability may be
threatened if the demand for wireless services in general and broadband
wireless access systems in particular does not continue to grow.

Our success is dependent on the continued trend toward wireless
telecommunications and data communications services. If the rate of growth
slows and service providers reduce their capital investments in wireless
infrastructure or fail to expand into new geographic markets, our revenue may
decline. Unlike some competitors such as Alcatel, Cisco, Intel, Linksys and
Nortel, among others, our principal product offerings rely on wireless
technologies. Accordingly, we would experience a greater impact from a decline
in the demand for wireless services than some of our most important
competitors. In addition, wireless access solutions are unproven in the
marketplace and some of the wireless technologies, such our Tsunami
point-to-multipoint technology and 802.11a and HomeRF 2.0 technologies in which
we are currently investing substantial capital, have only been commercially
introduced in the last few years. If wireless access technology turns out to be
unsuitable for widespread commercial deployment, it is unlikely we could
generate enough sales to achieve and sustain profitability. We have listed
below, in order of importance, the factors that we believe are key to the
success or failure of broadband wireless access technology:



| |  |  | its reliability and security and the perception by end-users of its reliability and security;                                        
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | its capacity to handle growing demands for faster transmission of increasing amounts of data, voice and video;                       
|
| |  |  | the availability of sufficient frequencies for network service providers to deploy products at commercially reasonable rates;        
|
| |  |  | its cost-effectiveness and performance compared to other forms of
broadband access, whose prices and performance continue to improve;
|
| |  |  | its suitability for a sufficient number of geographic regions; and                                                                   
|
| |  |  | the availability of sufficient site locations for network service
providers to install products at commercially reasonable rates.    

We have experienced the effects of many of the factors listed above in
interactions with customers selecting wireless versus wire line technology. For
example, because of the frequency with which individuals using cellular phones
experience fading or a loss of

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signal, customers often hold the perception that all broadband wireless
technologies will have the same reliability constraints even though the
wireless technology we use does not have the same problems as cellular phones.
In some geographic areas, because of adverse weather conditions that affect
wireless transmissions, but not wire line technologies, we are not able to sell
products as successfully as competitors with wire line technology. In addition,
future legislation, legal decisions and regulation relating to the wireless
telecommunications industry may slow or delay the deployment of wireless
networks. We may also lose customers to different types of wireless
technologies. For example, we have only a limited offering of products that
operate in licensed radio spectrums. Some customers, however, may want to
operate in licensed radio spectrums because they sometimes offer less
interference than license free radio spectrums or have other advantages.

Our business will depend on rapidly evolving telecommunications and Internet
industries.

Our future success is dependent upon the continued growth of the data
communications and wireless industries, particularly with regard to Internet
usage. The global data communications and Internet industries are evolving
rapidly and it is difficult to predict potential growth rates or future trends
in technology development. We cannot assure you that the
deregulation, privatization and economic globalization of the worldwide telecommunications
market that has resulted in increased competition and escalating demand for new
technologies and services will continue in a manner favorable to us or our
business strategies. In addition, there can be no assurance that the growth in
demand for wireless and Internet services, and the resulting need for high
speed or enhanced data communications products and wireless systems, will
continue at its current rate or at all.

The combined company may be dependent on and receive a significant percentage
of its revenue from a limited number of OEM customers.

A limited number of OEM customers may contribute a significant percentage
of our pro forma revenue. Sales to one Proxim, Inc. customer in calendar years
2000 and 1999 represented approximately 12% and 30% of total revenue,
respectively. Ageres sales of its ORiNOCO products included sales
to OEM customers. We expect that sales to a limited number of OEM customers will continue to account for a substantial portion of our revenue for the
foreseeable future. Proxim, Inc. also experienced quarter to quarter
variability in sales to each of its major OEM customers. Sales of many of
Proxim, Inc.s wireless networking products depended upon the decision of a
prospective OEM customer to develop and market wireless solutions which
incorporated Proxim, Inc.s wireless technology. OEM customers orders are
affected by a variety of factors, including the following:



| |  |  | new product introductions;                                   
| | - |  | -------------------------------------------------------------
|
| |  |  | end-user demand for OEM customers products;                 
|
| |  |  | OEM customers product life cycles;                          
|
| |  |  | inventory levels;                                            
|
| |  |  | market and OEM customers adoption of new wireless standards;
|
| |  |  | manufacturing strategies;                                    
|
| |  |  | lengthy design-in cycles;                                    
|
| |  |  | pricing;                                                     
|
| |  |  | regulatory changes;                                          
|
| |  |  | contract awards; and                                         
|
| |  |  | competitive situations.                                      

Proxim, Inc.s agreements with OEM customers typically did not require
minimum purchase quantities. The loss of one or more of, or a significant
reduction in orders from, our major OEM customers could materially and
adversely affect our operating results or stock price. In this regard, in the
first quarter of 2001, Intel Corporation, a HomeRF OEM customer, announced that
it would offer

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competing IEEE 802.11b products for its next generation of consumer
wireless networking devices. This announcement resulted in a decrease in the
market price of Proxim, Inc.s common stock. In addition, there can be no
assurance that we will become a qualified supplier for new OEM customers or
that we will remain a qualified supplier for existing OEM customers.

Western Multiplex derived a substantial portion of its revenue from a limited
number of distributors. Therefore, a decrease or loss in business from any of
them may cause a significant delay or decline in our revenue and could harm our
reputation.

Western Multiplex generated a significant amount of revenue from a limited
number of distributors. The loss of business from any of these distributors or
the delay of significant orders from any of them, even if only temporary, could
significantly reduce our revenue, delay recognition of revenue, harm our
reputation or reduce our ability to accurately predict cash flow. One customer
accounted for approximately 26% of our total revenue in the first quarter of
2002. For the year ended December 31, 2001, approximately 52% of Western
Multiplexs revenue was derived from three distributors, and approximately 30%
of its revenue was derived from one of the three distributors. Western
Multiplex did not have long-term contracts with any of these distributors.
While we will have a more diversified and expansive customer base, the future
success of our business will depend significantly on the timing and size of
future purchase orders, if any, from a limited number of distributors.

We depend on limited suppliers for key components that are difficult to
manufacture, and because we may not have long-term arrangements with these
suppliers, we could experience disruptions in supply that could decrease or
delay the recognition of revenues.

We depend on single or limited source suppliers for several key components
used in our products. Proxim, Inc. and Agere depended on single sources for its
proprietary application specific integrated circuits, or ASICs, and assembled
circuit boards. Any disruptions in the supply of these components or assemblies
could delay or decrease our revenues. In addition, even for components with
multiple sources, there have been, and may continue to be, shortages due to
capacity constraints caused by high demand. We have entered into a three-year
strategic supply agreement with Agere, pursuant to which Agere will provide us
with 802.11 chips, modules and cards. Other than this agreement, we do not
have any long-term arrangements with our suppliers. If, for any reason, a
supplier fails to meet our quantity or quality requirements, or stops selling
components to us or our contract manufacturers at commercially reasonable
prices, we could experience significant production delays and cost increases,
as well as higher warranty expenses and product reputation problems. Because
the key components and assemblies of our products are complex, difficult to
manufacture and require long lead times, we may have difficulty finding
alternative suppliers to produce our components and assemblies on a timely
basis. We have experienced shortages of some of these components in the past,
which delayed related revenue, and we may experience shortages in the future.
In addition, because the majority of our products have a short sales cycle of
between 30 and 90 days, we may have difficulty in making accurate and reliable
forecasts of product needs. As a result, we could experience shortages in
supply, which could delay or decrease revenue because our customers may cancel
their orders or choose a competitor for their future needs.

We have limited manufacturing capabilities and we will need to increasingly
depend on contract manufacturers for our manufacturing requirements.

We have limited manufacturing capability and limited experience in large
scale or foreign manufacturing. There can be no assurance that we will be able
to develop or contract for additional manufacturing capacity on acceptable
terms on a timely basis. In addition, in order to compete successfully, we will
need to achieve significant product cost reductions. Although we intend to
achieve cost reductions through engineering improvements, production economies,
and manufacturing at lower cost locations including outside the United States,
there can be no assurance that we will be able to do so. In order to remain
competitive, we must continue to introduce new products and processes into our
manufacturing environment, and there can be no assurance that any such new
products will not create obsolete inventories related to older products. For
example, as a part of our restructuring charge for the first quarter, we
increased our provision for obsolete and excess inventory, including purchase
commitments, totaling $12.7 million, of which $7.7 million related to excess
inventory and $5.0 million related to purchase commitments. The charges related
to a decrease in demand for certain products as well as our strategy to
discontinue certain products in order to concentrate on selling next generation
products.

Proxim, Inc. relied on contract and subcontract manufacturers for turnkey
manufacturing and circuit board assemblies which subjects us to additional
risks, including a potential inability to obtain an adequate supply of finished
assemblies and assembled circuit boards and reduced control over the price,
timely delivery and quality of such finished assemblies and assembled circuit
boards. If our Sunnyvale facility were to become incapable of operating, even
temporarily, or were unable to operate at or near our current or full capacity
for an extended period, our business and operating results could be materially
adversely affected.

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Proxim, Inc. outsourced manufacturing for its HomeRF products with
Flextronics International, Inc., a turnkey contract manufacturer. Western
Multiplex depended on three contract manufacturers to produce the majority of
its products, and it depended on one of these manufacturers for the entire
production of its Tsunami point-to-multipoint product. Changes in our
manufacturing operations to incorporate new products and processes, or to
manufacture at lower cost locations outside the United States, could cause
disruptions, which, in turn, could adversely affect customer relationships,
cause a loss of market opportunities and negatively affect our business and
operating results. In addition, our reliance on a limited number of
manufacturers involves a number of risks, including the risk that these
manufacturers may terminate their relationship with us, may choose not to
devote adequate capacity to produce our products or may delay production of our
products. If any of these risks are realized, we could experience an
interruption in supply, which could have an adverse impact on the timing and
amount our revenues.

Each of Western Multiplex and Proxim, Inc. experienced higher than
expected demand for its products. This resulted in delays in the delivery of
certain products due to temporary shortages of certain components, particularly
components with long lead times, and insufficient manufacturing capacity. Due
to the complex nature of our products and manufacturing processes, including products manufactured by our licensing partners, the worldwide demand
for some wireless technology components and other factors, there can be no
assurance that delays in the delivery of products will not occur in the future.

We may be unable to achieve the manufacturing cost reductions and improvements
required in order to achieve or maintain profitability.

The average selling prices of Western Multiplexs and Proxim, Inc.s
products declined in recent years. If we do not reduce production costs and
other expenses, we may not be able to offset this continuing decline and
achieve or maintain profitability. We must also develop and introduce on a
timely basis new systems that can be sold at higher average selling prices.

Failure to develop new systems would cause our revenue to decline or to
increase more slowly.

We expect that average selling prices of our products will continue to
decrease because one of our strategies is to increase the percentage of
domestic and international sales being made through distributors and
value-added resellers, and to OEM customers, which involve lower prices than
our direct sales. This risk from declining average selling prices may also
intensify because we expect that market conditions, particularly falling prices
for competing broadband solutions, will force us to reduce prices over time.
Under some circumstances, we may be forced to reduce prices even if it causes
us to decrease gross profit or to take a loss on our products. We may also be
unable to reduce sufficiently the cost of our products to enable us to compete
with other broadband access technologies with lower product costs. In order to
remain competitive, we will need to design our products so that they can be
manufactured with low-cost, automated manufacturing, assembly and testing
techniques. We cannot assure you that we will be successful in designing our
products to allow contract manufacturers to use lower-cost, automated
techniques. In addition, any redesign may fail to result in sufficient cost
reductions to allow us to significantly reduce the price of our products or
prevent our gross profit from declining as prices decline.

Because many of our current and planned products are or will be highly complex,
they may contain defects or errors that are detectable only after deployment in
complex networks and which, if detected, could harm our reputation and result
in a decrease in revenue or in difficulty collecting accounts receivable.

Many of our complex products can only be fully tested when deployed in
commercial networks. As a result, end-users may discover defects or errors or
experience breakdowns in their networks after the products have been deployed.
The occurrence of any defects or errors in these products could result in:



| |  |  | failure to achieve market acceptance and loss of market share;       
| | - |  | ---------------------------------------------------------------------
|
| |  |  | cancellation of orders;                                              
|
| |  |  | difficulty in collecting accounts receivable;                        
|
| |  |  | increased service and warranty costs;                                
|
| |  |  | diversion of resources, legal actions by customers and end-users; and

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| |  |  | increased insurance costs and other losses to our business or to end-users.
| | - |  | ---------------------------------------------------------------------------

End-users have discovered errors in the products of Proxim, Inc. and
Western Multiplex in the past and may discover errors in products of the
combined company in the future. Because customers often delay deployment of a
full system until the products have been tested by them and any defects have
been corrected, we expect these revisions to cause delays in orders by our
customers for our systems. Because our strategy is to introduce more complex
products in the future, this risk will intensify over time.

To compete effectively, we will need to establish and expand new distribution
channels for Proxim, Inc.s home networking products and Western Multiplexs
point-to-point and point-to-multipoint products and Ageres 802.11 wireless local area networking
products.

Western Multiplex
sold its point-to-point and point-to-multipoint products, Proxim, Inc.
sold its branded RangeLAN2 and Harmony products, and Agere sold its
ORiNOCO products through domestic and
international distributors. We intend to add new distributors and value added
resellers for the Symphony HomeRF family of cordless home and small office
networking products and the Tsunami point-to-multipoint products. Symphony
HomeRF products are currently sold through computer retailers, leading computer
catalogs and numerous on-line retail sites over the Internet. In general,
distributors, value added resellers and retailers offer products of several
different companies, including products that may compete with our products.
Accordingly, they may give higher priority to products of other suppliers, thus
reducing our efforts to sell our products. In addition they often focus on
specific markets and we will need to add new distributors and value added
resellers as we expand our sales to new markets. Agreements with distributors
and retailers are generally terminable at their option. Any reduction in sales
efforts or termination of a relationship may materially and adversely affect
our business and operating results. Use of distributors and retailers also
entails the risk that they will build up inventories in anticipation of
substantial growth in sales. If such growth does not occur as anticipated, they
may substantially decrease the amount of products ordered in subsequent
quarters. Such fluctuations could contribute to significant variations in our
future operating results.

Broadband wireless access solutions have some disadvantages and limitations as
compared to other alternative broadband access solutions that may prevent
widespread adoption, which could hurt our prospects.

Broadband wireless access solutions, including point-to-point and
point-to-multipoint systems, compete with other high-speed access solutions
such as digital subscriber lines, cable modem technology, fiber optic cable and
other high-speed wire line and satellite technologies. If the market for our
point-to-point and point-to-multipoint solutions fails to develop or develops
more slowly than we expect due to this competition, our sales opportunities
will be harmed. Many of these alternative technologies can take advantage of
existing installed infrastructure and are generally perceived to be reliable
and secure. As a result, they have already achieved significantly greater
market acceptance and penetration than point-to-point and point-to-multipoint
broadband wireless access technologies. Moreover, current point-to-point and
point-to-multipoint broadband wireless access technologies have inherent
technical limitations that may inhibit their widespread adoption in many areas,
including the need for line-of-sight installation and, in the case of operating
frequencies above 11 GHz, reduced communication distance in bad weather.

We expect point-to-point and point-to-multipoint broadband wireless access
technologies to face increasing competitive pressures from both current and
future alternative technologies. In light of these factors, many service
providers may be reluctant to invest heavily in broadband wireless access
solutions.

Broadband wireless access products require a direct line-of-sight, which may
limit the ability of service providers to deploy them in a cost-effective
manner and could harm our sales.

Because of line-of-sight limitations, service providers often install
broadband wireless access equipment on the rooftops of buildings and on other
tall structures. Before undertaking these installations, service providers must
generally secure roof rights from the owners of each building or other
structure on which the equipment is to be installed. The inability to easily
and cost-effectively obtain roof rights may deter customers from choosing to
install broadband wireless access equipment, which could have an adverse effect
on our sales.

Inability to attract and retain key personnel could hinder our ability to
operate.

Our success depends to a large extent on the continued services of Mr.
Jonathan N. Zakin, Chairman and Chief Executive Officer, Mr. David C. King,
President and Chief Operating Officer and Keith E. Glover, Executive Vice
President and Chief Financial Officer and other members of the combined
companys senior management team. The loss of the services of any of these
management members could harm our business because of the crucial role each of
them is expected to play in our operations and strategic development. In order
to be successful, we must also retain and motivate key employees, including
those in managerial, technical,

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marketing and sales positions. In particular, our product generation
efforts depend on hiring and retaining qualified engineers. Experienced
management and technical, sales, marketing and support personnel in the
wireless networking industry are in high demand and competition for their
talents is intense. This is particularly the case in Silicon Valley, where our
headquarters are located. In particular, our employees may experience
uncertainty about their future role with the combined company until or after
strategies with regard to the combined company are
announced or executed. This circumstance may adversely affect our ability to
attract and retain key management, technical, sales and marketing personnel. We
must also continue to motivate employees and keep them focused on the
strategies and goals of the combined company, which may be particularly
difficult due to the potential distractions of the merger and morale challenges
posed by any workforce reduction that may be implemented.

We may have difficulties with our acquisitions and investments, which could
adversely affect our growth and financial condition.

From time to time, we may consider new business opportunities and
ventures, including acquisitions, in a broad range of areas. Any decision to
pursue a significant business expansion or new business opportunity would be
accompanied by risks, including, among others:



| |  |  | requiring to invest a substantial amount of capital, which could
materially harm our financial condition and ability to implement our
existing business strategy;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | requiring to issue additional equity interests, which would be dilutive to our stockholders;                                                                     
|
| |  |  | placing additional and substantial burdens on our management personnel and financial and operational systems;                                                    
|
| |  |  | the difficulty of assimilating the operations, technology and personnel of the acquired companies;                                                               
|
| |  |  | the potential disruption of our ongoing business;                                                                                                                
|
| |  |  | the possible inability to retain key technical and managerial personnel;                                                                                         
|
| |  |  | potential additional expenses associated with amortization of purchased intangible assets or the impairment of goodwill;                                         
|
| |  |  | additional expenses associated with the activities and expansion of the acquired businesses; and                                                                 
|
| |  |  | the possible impairment of relationships with existing employees, customers, suppliers and investors.                                                            

In addition, we cannot assure you that we will be successful in overcoming
these risks or any other problems encountered in connection with any
acquisitions or other investments that we may make in the future.

Several of our stockholders beneficially own a significant percentage of our
common stock, which will allow them to significantly influence matters
requiring shareholder approval and could discourage potential acquisitions of
our company.

Following the issuances of Series A preferred stock and warrants to
purchase common stock to Warburg Pincus and Broadview Capital Partners, and
assuming approval of our stockholders at a special meeting for the issuances of
additional shares of Series A preferred stock and warrants to purchase common
stock, and conversion and exercise of these securities, these investors will
collectively hold approximately 24% of our outstanding common stock.
Affiliates of Ripplewood Investments L.L.C. will control
approximately 26.9%
of our outstanding common stock. These stockholders will be able to exert
significant influence over actions requiring the approval of our stockholders,
including many types of change of control transactions and any amendments to
our certificate of incorporation. The interests of these stockholders may be
different than those of other stockholders of our company. In addition, the
significant ownership percentage of these stockholders could have the effect of
delaying or preventing a change of control of our company or otherwise
discouraging a potential acquiror from obtaining control of our company.

Holders of our Series A preferred stock have rights that are senior to those of
our common stock.

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Holders of our Series A preferred stock are entitled to receive certain
benefits not available to holders of our common stock. In particular:

   from
August 2005 through August 2007, shares of Series A preferred
stock will be entitled to dividends equal to 8% of their liquidation preference
per year, payable, at our election, in cash or shares of our common stock
valued at the then-market price;

   each share of Series A preferred stock will have an initial liquidation
preference of $25.00 and the liquidation preference will bear interest at 8%,
compounded semi-annually, for three years. The liquidation preference is
subject to adjustments in the event we undertake a business combination or
other extraordinary transaction, or we are liquidated or dissolved;

   in
August 2007, we will be required to redeem all outstanding shares of
Series A preferred stock, if any, for cash equal to their liquidation
preference plus accrued and unpaid dividends;

   in the event of a change of control of our company, we will have the
right to convert the Series A preferred into common stock if upon such
conversion the holders of Series A preferred stock would receive liquid
securities or cash with a fair market value equal to or greater than 110% of
the liquidation preference then in effect. If the consideration is less than
110% of the liquidation preference, we may either modify the conversion price
so that the consideration will equal 110% of the liquidation preference then in
effect or repurchase the Series A preferred stock for cash at 101% of the
liquidation preference then in effect. In addition, in the event of a change
of control that occurs prior to August 2005, the liquidation preference will
increase to include three years of accretion;

   holders of Series A preferred stock have rights to acquire additional
shares of our capital stock or rights to purchase property in the event of
certain grants, issuance or sales;

   the conversion price of the Series A preferred stock, which initially
shall be approximately $3.06 per share, will be subject to customary weighted
average anti-dilution adjustments and other customary adjustments;

   the approval of holders of a majority of the Series A preferred is
separately required to approve changes to our certificate of incorporation or
bylaws that adversely affect these holders rights, any offer, sale or issuance
of our equity or equity-linked securities ranking senior to or equally with the
Series A preferred stock, and any repurchase or redemption of our equity
securities (other than from an employee, director or consultant following
termination), or the declaration or payment of any dividend on our common
stock; and

   for so long as Warburg Pincus owns at least 25% of its shares of Series
A preferred stock or the common stock issuable on conversion of its Series A
preferred stock, Warburg Pincus will have the right to nominate for election
one member of our board of directors, who will sit on all major board
committees.

The terms of the notes issued to Warburg Pincus and Broadview Capital Partners
in connection with the closing of the Agere asset purchase may adversely affect
our business and financial results.

In connection with the financing of the Agere asset purchase, we have
issued notes with an aggregate principal amount of $34 million. The notes
generally become due and payable upon the occurrence of an event of default or
at the earlier of:

   any
time after 120 days following the date of such stockholder vote,
at the request of the noteholders, if the
proposal is not approved by our stockholders at the special meeting and

   December 31, 2002.

If our stockholders approve the proposal to issue additional Series A
preferred and warrants to purchase common stock at our special meeting, all
outstanding notes will immediately and automatically be converted into shares
of our Series A preferred stock. If our stockholders do not approve the
transaction, we will be required to pay the principal and accrued interest on
the notes, which would reduce the cash available for other business purposes.
In addition, while the notes are outstanding, we may not generally, without the
prior written consent of the investors holding a majority of the principal
amount of the notes:

   incur any indebtedness for money borrowed other than indebtedness not in
excess of $20 million (under existing lines of credit) and indebtedness the net
proceeds of which are used to repay the notes in their entirety;

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   grant or permit any liens, pledges or encumbrances on any of our assets;

   sell any material assets for consideration in excess of $10 million in
the aggregate, other than sales of inventory in the ordinary course of
business; or

   pay or declare any dividend or distribution.

If we fail to protect our intellectual property rights or if such rights are
not adequately protected under current law, competitors may be able to use our
technology or trademarks and this could weaken our competitive position, reduce
our revenue and increase costs.

We rely on intellectual property laws to protect our products,
developments and licenses. We also rely on confidentiality agreements with some
of our licensees and other third parties and confidentiality agreements and
policies covering our employees.

We cannot assure you that such laws and measures will provide sufficient
protection, that other companies will not develop technologies that are similar
or superior or that third parties will not copy or otherwise obtain and use our
technologies without authorization.

Possible third-party claims of infringement of proprietary rights against us
could have a material adverse effect on our business, results of operation and
financial condition.

The communications industry is characterized by a relatively high level of
litigation based on allegations of infringement of proprietary rights. There
can be no assurance that third parties will not assert infringement claims
against us, that any such assertion of infringement will not result in
litigation or that we would prevail in such litigation. Furthermore, any such
claims, with or without merit, could result in substantial cost to our business
and diversion of our personnel, require us to develop new technology or enter
into royalty or licensing arrangements. Such royalty or licensing agreements,
if required, may not be available on terms acceptable to us, or at all. In the
event of a successful claim of infringement or misappropriation against us, and
our failure or inability to develop non-infringing technology or to license the
infringed, misappropriated or similar technology at a reasonable cost, our
business, results of operations and financial condition would be materially
adversely affected. In addition, we may be obligated to indemnify our customers
against claimed infringement of patents, trademarks, copyrights and other
proprietary rights of third parties. Any requirement to indemnify our customers
could have a material adverse effect on our business, results of operations and
financial condition.

Prior to the completion of the merger, Proxim, Inc. commenced United States
patent infringement and International Trade Commission legal actions against a
number of its competitors, and legally remains the subject of counter suits and
patent infringement counterclaims. Should the outcome of this patent, trade
commission or any related litigation be unfavorable, we may be required to pay
damages and other expenses, or we could be enjoined from selling certain
products, which could materially and adversely affect our business, financial
condition and operating results.

Proxim, Inc.s involvement in patent and International Trade Commission
litigation with respect to alleged infringement of certain of its United States
patent rights related to direct sequence wireless local area networking
technology has resulted in, and could in the future continue to result in,
substantial costs and diversion of management resources of the combined
company. In addition, this litigation, if determined adversely to us, could
result in the payment of substantial damages and/or royalties or prohibitions
against utilization of essential technologies, and could materially and
adversely affect our business, financial condition and operating results.

On March 8, 2001, Proxim, Inc. filed two lawsuits for infringement of
three United States Patents for wireless networking technology: one suit in the
U.S. District Court for the District of Massachusetts against Cisco Systems,
Incorporated and Intersil Corporation; and one suit in the U.S. District Court
for the District of Delaware against 3Com Corporation, SMC, Symbol Technologies
and Wayport. These suits sought an injunction against continued infringement,
damages resulting from the infringement and the defendants conduct, interest
on the damages, attorneys fees and costs, and such further relief as the
respective courts deem just and appropriate.

On March 9, 2001, Proxim, Inc. filed suit with the International Trade
Commission (ITC) in Washington, D.C. asking the ITC to stop the importation of
products that infringe its patented wireless networking technology. Eight
companies are identified in this action; Acer, Addtron, Ambicom, Compex,
D-Link, Enterasys, Linksys and Melco. Proxim, Inc. notified these and other
companies

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that it believed to have been infringing its patents. On May 9, 2001,
Proxim, Inc. filed to remove Compex from the ITC complaint as Compex entered
into an agreement with Proxim, Inc. to license these patents. Intersil and
Agere Systems have filed motions to intervene in the proceedings before the ITC
and these motions have been approved by the ITC.

On or about April 24, 2001, Intersil Corporation and Cisco Systems,
Incorporated filed suit in the U.S. District Court for the District of Delaware
seeking that Proxim, Inc.s patents be found invalid, unenforceable and not
infringed. Intersil and Cisco sought damages and attorneys fees from Proxim,
Inc. based upon alleged breach of contract and unfair competition.

On or about May 1, 2001, Symbol Technologies filed patent infringement
counterclaims in the U.S. District Court for the District of Delaware alleging
that Proxim, Inc. infringed four Symbol wireless LAN patents. Symbol is seeking
unspecified damages and a permanent injunction against Proxim, Inc. related to
these infringement claims.

On or about May 31, 2001, Agere Systems filed suit in the U.S. District
Court for the District of Delaware alleging that Proxim, Inc. infringed three
Agere patents. Agere sought unspecified damages and a permanent injunction
against Proxim, Inc. related to its infringement claims. On July 9, 2001,
Proxim, Inc. filed an amended answer and counterclaim to the Agere Systems
suit. Proxim, Inc. sought declaratory judgment for non-infringement, invalidity
and unenforceability of certain Agere Systems patents, as well as damages for
violation of the antitrust laws of the United States.

On August 8, 2001, Proxim, Inc. filed an amended answer and counterclaim,
further sought damages for violation of the antitrust laws of the United
States. On December 13, 2001, Proxim, Inc. filed a second amended answer and
counterclaim, and sought to add Ageres parent, Agere Systems, Inc., as a
party.

On December 4, 2001, Symbol filed suit in the U.S. District Court for the
District of Delaware alleging that Proxim, Inc. infringed four Symbol patents
related to systems for packet data transmission. Symbol sought an award for
unspecified damages and a permanent injunction against Proxim, Inc. based on
alleged patent infringement counterclaims. On December 18, 2001 Proxim, Inc.
filed an answer and counterclaims seeking declaratory judgments for
non-infringement, invalidity and unenforceability of the four asserted Symbol
patents, injunctive and monetary relief for Symbols infringement of a Proxim,
Inc. patent, monetary relief for Symbols false patent marking, and injunctive
and monetary relief for Symbols unfair competition under the Lanham Act,
common law unfair competition and tortious interference.

On August 5,
2002, Proxim and Agere Systems announced that they had settled the
pending patent related litigation between the two companies in
conjunction with Proxims acquisition of Agere Systems 802.11
wireless local area network equipment business, including the ORiNOCO
product line.

The results of any litigation matter are inherently uncertain. In the
event of any adverse decision in the described legal actions or any other
related litigation with third parties that could arise in the future with
respect to patents or other intellectual property rights relevant to our
products, we could be required to pay damages and other expenses, to cease the
manufacture, use and sale of infringing products, to expend significant
resources to develop non-infringing technology, or to obtain licenses to the
infringing technology. These matters are in the early stages of litigation and,
accordingly, we cannot make any assurance that these matters will not
materially and adversely affect our business, financial condition or operating
results.

Compliance with governmental regulations in multiple jurisdictions where we
sell our products is difficult and costly.

In the United States, we are subject to various Federal Communications
Commission, or FCC, rules and regulations. Current FCC regulations permit
license-free operation in certain FCC-certified bands in the radio spectrum.
Our spread spectrum wireless products are certified for unlicensed operation in
the 902  928 MHz, 2.4  2.4835 GHz, 5.15  5.35 GHz and 5.725  5.825 GHz
frequency bands. Operation in these frequency bands is governed by rules set
forth in Part 15 of the FCC regulations. The Part 15 rules are designed to
minimize the probability of interference to other users of the spectrum and,
thus, accord Part 15 systems secondary status in the frequency. In the event
that there is interference between a primary user and a Part 15 user, a higher
priority user can require the Part 15 user to curtail transmissions that create
interference. In this regard, if users of our products experience excessive
interference from primary users, market acceptance of our products could be
adversely affected, which could materially and adversely affect our business
and operating results. The FCC, however, has established certain standards that
create an irrefutable presumption of noninterference for Part 15 users and we
believe that our products comply with such requirements. There can be no
assurance that the occurrence of regulatory changes, including changes in the
allocation of available frequency spectrum, changes in the use of allocated
frequency spectrum, or modification to the standards establishing an
irrefutable presumption for unlicensed Part 15 users, would not significantly
affect our operations by rendering current products obsolete, restricting the
applications and markets served by our products or increasing the opportunity
for additional competition.

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Our products are also subject to regulatory requirements in international
markets and, therefore, we must monitor the development of spread spectrum and
other radio frequency regulations in certain countries that represent potential
markets for our products. While there can be no assurance that we will be able
to comply with regulations in any particular country, we will design our
RangeLAN2, RangeLAN-DS, Harmony, Symphony and Symphony HomeRF products to
minimize the design modifications required to meet various 2.4 GHz
international spread spectrum regulations. In addition, we will seek to obtain
international certifications for the Symphony and Symphony HomeRF product line
in countries where there is a substantial market for home PCs and Internet
connectivity. Changes in, or the failure by us to comply with, applicable
domestic and international regulations could materially adversely affect our
business and operating results. In addition, with respect to those countries
that do not follow FCC regulations, we may need to modify our products to meet
local rules and regulations.

Regulatory changes by the FCC or by regulatory agencies outside the United
States, including changes in the allocation of available frequency spectrum,
could significantly affect our operations by restricting our development
efforts, rendering current products obsolete or increasing the opportunity for
additional competition. Several changes by the FCC were approved within the
last eight years including changes in the allocation and use of available
frequency spectrum, as well as the granting of an interim waiver. These
approved changes could create opportunities for other wireless networking
products and services. There can be no assurance that new regulations will not
be promulgated, that could materially and adversely affect our business and
operating results.

It is possible that the United States and other jurisdictions will adopt
new laws and regulations affecting the pricing, characteristics and quality of
broadband wireless systems and products. Increased government regulations
could:



| |  |  | decrease the growth of the broadband wireless industry;
| | - |  | -------------------------------------------------------
|
| |  |  | hinder our ability to conduct business internationally;
|
| |  |  | reduce our revenues;                                   
|
| |  |  | increase the costs and pricing of our products;        
|
| |  |  | increase our operating expenses; and                   
|
| |  |  | expose us to significant liabilities.                  

Any of these events or circumstances could seriously harm our business and
results of operations.

The price of our common stock may be subject to wide fluctuation, and you may
lose all or part of your investment in our common stock.

The trading prices of Proxim, Inc. common stock and Western Multiplex
common stock having been subject to wide fluctuations, such trend is likely to
continue with respect to the trading price of our common stock. The trading
price of our common stock may fluctuate in response to a number of events and
factors, including:



| |  |  | quarterly variations in revenues and operating results;                               
| | - |  | --------------------------------------------------------------------------------------
|
| |  |  | announcements of innovations and new products;                                        
|
| |  |  | strategic developments or business combinations by us or our competitors;             
|
| |  |  | changes in our expected operating expense levels;                                     
|
| |  |  | changes in financial estimates and recommendations of financial and industry analysts;
|
| |  |  | the operating and securities price performance of comparable companies; and           
|
| |  |  | news reports relating to trends in the wireless communications industry.              

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In addition, the stock market in general, and the market prices for
wireless-related companies in particular, have experienced extreme volatility
that often has been unrelated to the operating performance of these companies.
These broad market and industry fluctuations may influence the trading price of
our common stock. These trading price fluctuations may make it more difficult
to use our common stock as currency to make acquisitions that might otherwise
be advantageous, or to use stock options as a means to attract and retain
employees. In addition, you may lose all or part of your investment in our
common stock.

Provisions of our certificate of incorporation, bylaws and Delaware law could
deter takeover attempts.

Some provisions in our certificate of incorporation and bylaws could
delay, prevent or make more difficult a merger, tender offer, proxy contest or
change of control of our company despite the possibility that such transactions
may be viewed to be in the best interest of our stockholders since such
transactions could result in a higher stock price than the then-market price of
our common stock. Among other things, our certificate of incorporation and
bylaws:



| |  |  | authorize our board of directors to issue preferred stock with the
terms of each series to be fixed by the board of directors;              
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | divide our board of directors into three classes so that only
approximately one-third of the total number of directors is elected each
year;
|
| |  |  | permit directors to be removed only for cause; and                                                                                          
|
| |  |  | specify advance notice requirements for stockholder proposals and director nominations.                                                     

In addition, with some exceptions, the Delaware General Corporation Law
will restrict or delay mergers and other business combinations between the
Company and any stockholder that acquires 15% or more of our voting stock.




ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk for changes in interest rates relates
primarily to the Companys investment portfolio. We place our investments with
high credit quality issuers and, by policy, limit the amount of the credit
exposure to any one issuer. Our general policy is to limit the risk of
principal loss and ensure the safety of invested funds by limiting market and
credit risk.

Currently, all sales to international customers are denominated in U.S.
dollars and, accordingly, we are not currently exposed to foreign currency
exchange rate risks other than the risk that conversion to U.S. dollars at a
high cost may cause some customers to search for a lower priced competitive
product.




PART II.   OTHER INFORMATION




ITEM 1.   LEGAL PROCEEDINGS

Proxim, Inc.s involvement in patent and International Trade Commission
litigation with respect to alleged infringement of certain of its United States
patent rights related to direct sequence wireless local area networking
technology has resulted in, and could in the future continue to result in,
substantial costs and diversion of management resources of the combined
company. In addition, this litigation, if determined adversely to us, could
result in the payment of substantial damages and/or royalties or prohibitions
against utilization of essential technologies, and could materially and
adversely affect our business, financial condition and operating results.

On March 8, 2001, Proxim, Inc. filed two lawsuits for infringement of
three United States Patents for wireless networking technology: one suit in the
U.S. District Court for the District of Massachusetts against Cisco Systems,
Incorporated and Intersil Corporation; and one suit in the U.S. District Court
for the District of Delaware against 3Com Corporation, SMC, Symbol Technologies
and Wayport. These suits sought an injunction against continued infringement,
damages resulting from the infringement and the defendants conduct, interest
on the damages, attorneys fees and costs, and such further relief as the
respective courts deem just and appropriate.

On March 9, 2001, Proxim, Inc. filed suit with the International Trade
Commission (ITC) in Washington, D.C. asking the ITC to stop the importation of
products that infringe its patented wireless networking technology. Eight
companies are identified in this action; Acer, Addtron, Ambicom, Compex,
D-Link, Enterasys, Linksys and Melco. Proxim, Inc. notified these and other
companies that it believed to have been infringing its patents. On May 9, 2001,
Proxim, Inc. filed to remove Compex from the ITC complaint as

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Compex entered into an agreement with Proxim, Inc. to license these
patents. Intersil and Agere Systems have filed motions to intervene in the
proceedings before the ITC and these motions have been approved by the ITC.

On or about April 24, 2001, Intersil Corporation and Cisco Systems,
Incorporated filed suit in the U.S. District Court for the District of Delaware
seeking that Proxim, Inc.s patents be found invalid, unenforceable and not
infringed. Intersil and Cisco sought damages and attorneys fees from Proxim,
Inc. based upon alleged breach of contract and unfair competition.

On or about May 1, 2001, Symbol Technologies filed patent infringement
counterclaims in the U.S. District Court for the District of Delaware alleging
that Proxim, Inc. infringed four Symbol wireless LAN patents. Symbol is seeking
unspecified damages and a permanent injunction against Proxim, Inc. related to
these infringement claims.

On or about May 31, 2001, Agere Systems filed suit in the U.S. District
Court for the District of Delaware alleging that Proxim, Inc. infringed three
Agere patents. Agere sought unspecified damages and a permanent injunction
against Proxim, Inc. related to its infringement claims. On July 9, 2001,
Proxim, Inc. filed an amended answer and counterclaim to the Agere Systems
suit. Proxim, Inc. sought declaratory judgment for non-infringement, invalidity
and unenforceability of certain Agere Systems patents, as well as damages for
violation of the antitrust laws of the United States.

On August 8, 2001, Proxim, Inc. filed an amended answer and counterclaim,
further sought damages for violation of the antitrust laws of the United
States. On December 13, 2001, Proxim, Inc. filed a second amended answer and
counterclaim, and sought to add Ageres parent, Agere Systems, Inc., as a
party.

On December 4, 2001, Symbol filed suit in the U.S. District Court for the
District of Delaware alleging that Proxim, Inc. infringed four Symbol patents
related to systems for packet data transmission. Symbol sought an award for
unspecified damages and a permanent injunction against Proxim, Inc. based on alleged patent
infringement counterclaims. On December 18, 2001 Proxim, Inc. filed an answer
and counterclaims seeking declaratory judgments for non-infringement,
invalidity and unenforceability of the four asserted Symbol patents, injunctive
and monetary relief for Symbols infringement of a Proxim, Inc. patent,
monetary relief for Symbols false patent marking, and injunctive and monetary
relief for Symbols unfair competition under the Lanham Act, common law unfair
competition and tortious interference.

On August 5,
2002, Proxim and Agere Systems announced that they had settled the
pending patent related litigation between the two companies in
conjunction with Proxims acquisition of Agere Systems 802.11
wireless local area network equipment business, including the ORiNOCO
product line.

The results of any litigation matter are inherently uncertain. In the
event of any adverse decision in the described legal actions or any other
related litigation with third parties that could arise in the future with
respect to patents or other intellectual property rights relevant to our
products, we could be required to pay damages and other expenses, to cease the
manufacture, use and sale of infringing products, to expend significant
resources to develop non-infringing technology, or to obtain licenses to the
infringing technology. These matters are in the early stages of litigation and,
accordingly, we can make any assurance that these matters will not materially
and adversely affect our business, financial condition or operating results.




ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On June 13, 2002, the Annual Meeting of Stockholders of Proxim Corporation
was held at 10:00 am, local time, at the Companys headquarters at 935 Stewart
Drive, Sunnyvale, California.

An election of directors was held with the following individuals being
elected to the Board of Directors of Proxim Corporation as
Class II directors:

Michael J. Boskin
     Merle L. Gilmore
     Jonathan N. Zakin

David C. King
and Kenneth E. Westrick continued to serve as Class I
directors, and Jeffrey D. Saper and Joseph R. Wright, Jr.
continued to serve as Class III directors. Other matters voted upon at the meeting and the number of affirmative and
negative votes cast with respect to each such matter were as follows:



|1. |  | To ratify the proposed amendments to the Proxim Corporation 2000 stock
option plan for Non-employee Directors. The number of affirmative votes
for this proposal was 87,180,210, the number of negative votes was
4,580,865 and the number of abstained votes was 238,744.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|2. |  | To ratify the proposed amendment to the Proxim Corporation 1999 Stock
Incentive Plan. The number of affirmative votes for this proposal was
89,987,803, the number of negative votes was 1,774,716 and the number of
abstained votes was 237,600.                                                         
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|3. |  | To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending December 31, 2002.
The number of affirmative votes for this proposal was 90,788,089, the
number of negative votes was 1,136,173 and the number of abstained votes was
75,857.




ITEM 6.   EXHIBITS AND REPORTS ON FORM 10-Q

A.   Exhibits:

| |        |  |                                                                                                                                                                                                                                   
| | ------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.1(1) |  | Asset Purchase Agreement, dated as of June 14, 2002, by and between Proxim Corporation and Agere
Systems, Inc.                                                                                                                    
|
|
|
|
| | 2.2(1) |  | Securities Purchase Agreement, dated as of June 16, 2002, by and among Proxim Corporation, Warburg
Pincus Private Equity VIII, L.P., Broadview Capital Partners L.P. and Broadview Capital Partners
Qualified Purchasers Fund L.P.
|
|
|
|
| | 99.1   |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to the Sarbanes-Oxley Act of 2002.                                                                                               
|
|
|
|
| | 99.2   |  | Certification of Chief
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to the Sarbanes-Oxley Act of 2002.                                                                                               



---

|(1) |  | Incorporated by reference to
the Registrants Report on Form 8-K
filed with the Securities and Exchange Commission on June 19, 2002.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------

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B.   Reports on Form 8-K:

| |               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Date          |  | Item Reported On                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
|
|
|
| | April 5, 2002 |  | Amendment No. 1 to Current Report on Form 8-K filed on March
28, 2002: changes in Registrants Certifying Accountant. On
March 26, 2002, the Board of Directors of the Company engaged
PricewaterhouseCoopers LLP to serve as the Companys
independent public accountants for fiscal year 2002.                                                                                                                                                                                               
|
| | May 30, 2002  |  | Amendment No. 1 to Current Report on Form 8-K filed on March
26, 2002 with respect to financial statements, pro forma
financial information and exhibits in connection with the
announced Agreement and Plan of Reorganization between Proxim,
Inc. and Western Multiplex Corporation.                                                                                                                                                                                                         
|
| | June 16, 2002 |  | On June 17, 2002, the Registrant and Agere Systems, Inc.
(Agere) issued a joint press release announcing that they had
entered into an Asset Purchase Agreement (the Asset Purchase
Agreement), as of June 14, 2002. Pursuant to the terms of the
Asset Purchase Agreement, the Registrant will acquire all
assets primarily relating to the 802.11 wireless local area
network (LAN) equipment business of Agere, including its
ORiNOCO product line, in exchange for $65 million in cash.

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SIGNATURE

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

|                      |     |                                                                                                                                                  
|--------------------- | --- | -------------------------------------------------------------------------------------------------------------------------------------------------
|Date: August 12, 2002 |     | Proxim Corporation                                                                                                                               
|                     
|                      | By: | /s/    Keith E. GloverKeith E. Glover
Executive Vice President
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)

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EXHIBIT INDEX

| |               |  |                                                                                                                                                                                                                                   
| | ------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ExhibitNumber |  | Description                                                                                                                                                                                                                       
| |               |  |                                                                                                                                                                                                                                   
|
|
|
|
| | 2.1(1)        |  | Asset Purchase Agreement, dated as of June 14, 2002, by and between Proxim Corporation and Agere
Systems, Inc.                                                                                                                    
|
|
|
|
| | 2.2(1)        |  | Securities Purchase Agreement, dated as of June 16, 2002, by and among Proxim Corporation, Warburg
Pincus Private Equity VIII, L.P., Broadview Capital Partners L.P. and Broadview Capital Partners
Qualified Purchasers Fund L.P.
|
|
|
|
| | 99.1          |  | Certification of Chief Executive
Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to the Sarbanes-Oxley Act of 2002.                                                                                               
|
|
|
|
| | 99.2          |  | Certification of Chief
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to the Sarbanes-Oxley Act of 2002.                                                                                               



---

|(1) |  | Incorporated by reference to
the Registrants Report on Form 8-K
filed with the Securities and Exchange Commission on June 19, 2002.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------