**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
                D.C. 20549****FORM
                10-Q**





**ý**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30,
                2007**


**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 000-29053**





**PROXIM
      WIRELESS CORPORATION**


**(Exact
      name of registrant as specified in its charter)**





**DELAWARE**
              **(State
                or other jurisdiction**
              **of
                incorporation or organization)**
            **04-2751645**
              **(I.R.S.
                Employer Identification
                No.)**





**2115
      O’NEL DRIVE**


**SAN
      JOSE, CA  95131**


**(Address
      of principal executive offices)**





**(408)
      731-2700**


**(Registrant’s
      telephone number, including area code**)





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 ý No o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.  (Check one):




Large
                accelerated filer o
            Accelerated
                filer o
            Non-accelerated
                filer ý


Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes o  No ý




As
      of
      November 12, 2007, there were 23,519,069 shares of the registrant’s common stock
      outstanding.  In calculating this number, the registrant has treated
      the 2,335,300 shares the registrant agreed to repurchase in early November
      2007
      as treasury shares rather than outstanding.



















**PROXIM
      WIRLESS CORPORATION**





**INDEX**




**PAGE
                NO.****PART
                I.**
            **FINANCIAL
                INFORMATION**Item
                1.
            Financial
                Statements
            3Consolidated
                Balance Sheets as of September 30, 2007
                (unaudited) and December 31, 2006
            4Consolidated
                Statements of Operations for the nine months ended
                September 30, 2007 and 2006 (unaudited)
            5Consolidated
                Statement of Changes in Stockholders’ Equity for
                the nine months ended September 30, 2007 (unaudited)
            6Consolidated
                Statements of Cash Flows for the nine months ended
                September 30, 2007 and 2006 (unaudited)
            7Notes
                to Consolidated Financial Statements
                (unaudited)
            8Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and
                Results of Operations
            16Item
                3.
            Quantitative
                and Qualitative Disclosures about Market
                Risk
            22Item
                4.
            Controls
                and Procedures
            23**PART
                II.**
            **OTHER
                INFORMATION**Item
                1.
            Legal
                Proceedings
            24Item
                1A.
            Risk
                Factors
            25Item
                2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            29Item
                6.
            Exhibits
            29SIGNATURE
            29











2





**PART
      I – FINANCIAL INFORMATION**




This
      Quarterly Report on Form 10-Q contains forward-looking statements as defined
      by
      federal securities laws.  Forward-looking statements are predictions
      that relate to future events or our future performance and are subject to known
      and unknown risks, uncertainties, assumptions, and other factors that may cause
      actual results, outcomes, levels of activity, performance, developments, or
      achievements to be materially different from any future results, outcomes,
      levels of activity, performance, developments, or achievements expressed,
      anticipated, or implied by these forward-looking
      statements.  Forward-looking statements should be read in light of the
      cautionary statements and important factors described in this Form 10-Q,
      including Part II, Item 1A — Risk Factors.  We undertake no obligation
      to update or revise any forward-looking statement to reflect events,
      circumstances, or new information after the date of this Form 10-Q or to reflect
      the occurrence of unanticipated or any other subsequent events.




**Item
      1.  Financial Statements.**







3





**PROXIM
      WIRELESS CORPORATION**


**CONSOLIDATED
      BALANCE SHEETS**


**(In
      thousands, except share data)**








**September
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006****Assets**
            
            **(unaudited)**Current
                assets:Cash
                and cash equivalents
            
            $
            11,528
            
            
            $
            10,290Investment
                securities – available-for-sale
            
            
            -
            
            
            
            168Accounts
                receivable, net
            
            
            8,123
            
            
            
            5,539Inventory
            
            
            8,786
            
            
            
            10,142Prepaid
                expenses
            
            
            1,575
            
            
            
            1,246Total
                current assets
            
            
            30,012
            
            
            
            27,385Property
                and equipment, net
            
            
            2,557
            
            
            
            2,660Other
                Assets:Restricted
                cash
            
            
            76
            
            
            
            76Goodwill
            
            
            7,922
            
            
            
            7,922Intangible
                assets, net
            
            
            9,762
            
            
            
            11,545Deposits
                and prepaid expenses
            
            
            256
            
            
            
            287Total
                other assets
            
            
            18,016
            
            
            
            19,830Total
                assets
            
            $
            50,585
            
            
            $
            49,875**Liabilities
                and Stockholders’ Equity**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            12,455
            
            
            $
            13,887Deferred
                revenue
            
            
            1,920
            
            
            
            2,198License
                agreement payable - current maturities
            
            
            1,002
            
            
            
            868Total
                current liabilities
            
            
            15,377
            
            
            
            16,953License
                agreement payable, net of current maturities
            
            
            1,307
            
            
            
            2,088Total
                liabilities
            
            
            16,684
            
            
            
            19,041Commitments
                and contingencies**Stockholders’
                Equity**Preferred
                stock, $0.01 par value; authorized 4,500,000, none issued at September
                30,
                2007 and December 31, 2006
            
            
            -
            
            
            
            -Common
                stock, $0.01 par value, 100,000,000 shares authorized, 25,854,369
                issued
                and outstanding at September  30, 2007, and 21,552,572 issued
                and outstanding at December 31, 2006
            
            
            258
            
            
            
            216Additional
                paid-in capital
            
            
            66,989
            
            
            
            57,976Retained
                earnings  (accumulated deficit)
            
            
            (33,346
            )
            
            
            (27,285
            )Accumulated
                other comprehensive income:Net
                unrealized gain (loss) on available-for-sale securities
            
            
            -
            
            
            
            (73
            )Total
                stockholders’ equity
            
            
            33,901
            
            
            
            30,834Total
                liabilities and stockholders’ equity
            
            $
            50,585
            
            
            $
            49,875




See
      accompanying notes




4




**PROXIM
      WIRELESS CORPORATION**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(In
      thousands, except per share data)**


**(Unaudited)**








**Three
                Months Ended**
              **September
                30,**
            
            
            **Nine
                Months Ended**
              **September
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Revenues
            
            $
            16,902
            
            
            $
            17,321
            
            
            $
            51,693
            
            
            $
            55,006Cost
                of goods sold
            
            
            8,616
            
            
            
            9,317
            
            
            
            27,524
            
            
            
            31,079Restructuring
                provision for E&O inventory
            
            
            -
            
            
            
            1,502
            
            
            
            -
            
            
            
            1,502Gross
                profit
            
            
            8,286
            
            
            
            6,502
            
            
            
            24,169
            
            
            
            22,425Operating
                expenses:Selling
                costs
            
            
            5,385
            
            
            
            5,041
            
            
            
            15,134
            
            
            
            13,156Restructuring
                Charges
            
            
            
            
            
            
            8,874
            
            
            
            91
            
            
            
            8,990General
                and administrative
            
            
            2,964
            
            
            
            2,981
            
            
            
            8,855
            
            
            
            9,358Research
                and development
            
            
            1,602
            
            
            
            2,729
            
            
            
            6,954
            
            
            
            11,190Total
                operating expenses
            
            
            9,951
            
            
            
            19,625
            
            
            
            31,034
            
            
            
            42,694Operating
                loss
            
            
            (1,665
            )
            
            
            (13,123
            )
            
            
            (6,865
            )
            
            
            (20,269
            )Other
                income (expenses):Interest
                income
            
            
            89
            
            
            
            102
            
            
            
            161
            
            
            
            303Interest
                expense
            
            
            (29
            )
            
            
            (50
            )
            
            
            (98
            )
            
            
            (150
            )Other
                income (loss)
            
            
            4
            
            
            
            10
            
            
            
            2,604
            
            
            
            157Gain
                (loss) on sale of assets
            
            
            -
            
            
            
            -
            
            
            
            23
            
            
            
            155Total
                other income (expenses)
            
            
            64
            
            
            
            62
            
            
            
            2,690
            
            
            
            465Income
                (loss) before income taxes
            
            
            (1,601
            )
            
            
            (13,061
            )
            
            
            (4,175
            )
            
            
            (19,804
            )Benefit
                (provision) for income taxes
            
            
            57
            
            
            
            17
            
            
            
            125
            
            
            
            (42
            )Net
                income (loss) from continuing operation
            
            $
            (1,658
            )
            
            $
            (13,078
            )
            
            $
            (4,300
            )
            
            $
            (19,846
            )Income
                (loss)  from discontinued operations
            
            $
            (1,078
            )
            
            $
            (585
            )
            
            $
            (1,760
            )
            
            $
            (1,286
            )Net
                Income (loss)
            
            $
            (2,736
            )
            
            $
            (13,663
            )
            
            $
            (6,060
            )
            
            $
            (21,132
            )Weighted
                average number of shares - basic  and diluted used in computing
                net earnings (loss) per share
            
            
            25,241
            
            
            
            21,541
            
            
            
            22,703
            
            
            
            21,515Basic
                net earnings (loss) per share:Continuing
                operations
            
            $
            (0.07
            )
            
            $
            (0.60
            )
            
            $
            (0.19
            )
            
            $
            (0.92
            )Discontinued
                operations
            
            $
            (0.04
            )
            
            $
            (0.03
            )
            
            $
            (0.08
            )
            
            $
            (0.06
            )Total
            
            $
            (0.11
            )
            
            $
            (0.63
            )
            
            $
            (0.27
            )
            
            $
            (0.98
            )








See
      accompanying notes






5




**PROXIM
      WIRELESS CORPORATION**


**CONSOLIDATED
      STATEMENT OF CHANGES IN STOCKHOLDERS’
EQUITY**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**(In
      thousands, except share data)**


**(Unaudited)**








**Common
                Stock**
            
            
            **Additional**
              **Paid-in**
            
            
            **Retained**
              **Earnings**
            
            
            **Accumulated**
              **Other**
              **Comprehensive****Shares**
            
            
            **Amount**
            
            
            **Capital**
            
            
            **(Deficit)**
            
            
            **Income
                (Loss)**
            
            
            **Total****Balances,
                January 1, 2007**
            
            
            21,552,572
            
            
            $
            216
            
            
            $
            57,976
            
            
            $
            (27,286
            )
            
            $
            (73
            )
            
            $
            30,833Exercise
                of stock options and warrants
            
            
            1,797
            
            
            
            -
            
            
            
            3
            
            
            
            -
            
            
            
            -
            
            
            
            3Employee
                stock option amortization
            
            
            -
            
            
            
            -
            
            
            
            1,585
            
            
            
            -
            
            
            
            -
            
            
            
            1,585Common
                stock and warrants issued
            
            
            4,300,000
            
            
            
            42
            
            
            
            7,425
            
            
            
            -
            
            
            
            -
            
            
            
            7,467Comprehensive
                income:Net
                income (loss)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (6,060
            )
            
            
            -
            
            
            
            (6,060
            )Unrealized
                gain (loss) on investments
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            73
            
            
            
            73Total
                comprehensive income (loss)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (6,060
            )
            
            
            73
            
            
            
            (5,987
            )**Balances,  September  30,
                2007**
            
            
            25,854,369
            
            
            $
            258
            
            
            $
            66,989
            
            
            $
            (33,346
            )
            
            $
            -
            
            
            $
            33,901













See
      accompanying notes




6




**PROXIM
      WIRELESS CORPORATION**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**





**(In
      thousands)**


**(Unaudited)**








**Nine
                Months Ended September 30,****2007**
            
            
            **2006**Cash
                flows from  operating activities:Net
                income (loss) from continuing operations
            
            $
            (4,300
            )
            
            $
            (19,846
            )Net
                Income (loss) from discontinued operations
            
            
            (1,760
            )
            
            
            (1,286
            )Depreciation
                and amortization
            
            
            2,824
            
            
            
            4,136Gain
                on sale of available for sale securities
            
            
            (99
            )
            
            
            -Bad
                debt allowance (recovery)
            
            
            174
            
            
            
            (179
            )Employee
                stock option amortization
            
            
            1,585
            
            
            
            1,004Inventory
                allowance
            
            
            (166
            )
            
            
            107Loss
                related to disposition of Ricochet assets
            
            
            675
            
            
            
            -Restructuring
                Charge for impairment of intangible assets
            
            
            -
            
            
            
            8,874Restructuring
                Provision for excess and obsolete inventory
            
            
            -
            
            
            
            1,502Changes
                in assets and liabilities affecting operations:Accounts
                receivable, net
            
            
            (2,758
            )
            
            
            3,298Inventory
            
            
            2,230
            
            
            
            (1,722
            )Deposits
            
            
            -
            
            
            
            104Prepaid
                expenses
            
            
            (412
            )
            
            
            (393
            )Accounts
                payable and accrued expenses
            
            
            (2,630
            )
            
            
            (1,686
            )License
                agreement payable
            
            
            (647
            )
            
            
            (770
            )Deferred
                revenue
            
            
            (278
            )
            
            
            435Net
                cash provided by (used in) operating activities
            
            
            (5,562
            )
            
            
            (6,422
            )Cash
                flows from investing activities:Release
                of restricted cash
            
            
            -
            
            
            
            5,000Sale
                of available for sale securities
            
            
            340
            
            
            
            -Purchase
                of property and equipment
            
            
            (558
            )
            
            
            (379
            )Investment
                in capitalized software
            
            
            (652
            )
            
            
            -Proceeds
                from sale of Ricochet
            
            
            200
            
            
            
            -Net
                cash provided by (used in) investing activities
            
            
            (670
            )
            
            
            4,621Cash
                flows from financing activities:Exercise
                of stock options
            
            
            3
            
            
            
            55Sale
                of common stock
            
            
            7,467
            
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            7,470
            
            
            
            55Net
                increase (decrease) in cash and cash equivalents
            
            
            1,238
            
            
            
            (1,746
            )Cash
                and cash equivalents, beginning of period
            
            
            10,290
            
            
            
            14,133Cash
                and cash equivalents, end of period
            
            $
            11,528
            
            
            $
            12,387Supplemental
                disclosure of cash flow information:Cash
                paid for interest
            
            $
            98
            
            
            $
            79Income
                taxes paid
            
            $
            208
            
            
            $
            42








See
      accompanying notes






7




**PROXIM
      WIRELESS CORPORATION**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**1.           Basis
      of Presentation**




The
      consolidated financial statements of Proxim Wireless Corporation (the “Company”
or “Proxim Wireless”) for the three month and nine month periods
      ended  September 30, 2007 and 2006 are unaudited and include all
      adjustments which, in the opinion of management, are necessary to present fairly
      the financial position and results of operations for the periods then
      ended.  All such adjustments are of a normal recurring nature except
      for the reporting of discontinued operations related to Ricochet Networks,
      Inc.
      (see Note 12).  These consolidated financial statements should be read
      in conjunction with the consolidated financial statements and notes thereto
      included in the Company’s Annual Report on Form 10-K for the year ended December
      31, 2006 filed with the Securities and Exchange Commission.




The
      Company provides high-speed wireless communications equipment in the United
      States and internationally.  Its systems enable service providers,
      enterprises, and governmental organizations to deliver high-speed data
      connectivity enabling a broad range of applications.  The Company
      provides wireless solutions for the mobile enterprise, security and
      surveillance, last mile access, voice and data backhaul, and municipal
      networks.  The Company believes its fixed wireless systems address the
      growing need of our customers and end-users to rapidly and cost effectively
      deploy high-speed communication networks.




The
      Company changed its corporate name to “Proxim Wireless Corporation” from
“Terabeam, Inc.” effective September 10, 2007.  Effective that same
      date, the Company’s stock ticker symbol was changed to “PRXM” from
“TRBM.”




Proxim
      Wireless operates in the broadband wireless equipment market
      place.  Proxim Wireless is a designer, manufacturer, and seller of
      wireless telecommunications equipment (“Equipment”) which generated the
      substantial majority of the Company’s revenues and expenses during the first
      nine months of 2007.




Prior
      to
      the third quarter of 2007, Proxim Wireless and its subsidiaries also operated
      in
      the services business.  This services business (“Services”) was
      acquired with the acquisition of Ricochet Networks, Inc. during the second
      quarter of 2004 and was conducted through that Ricochet Networks
      subsidiary.  The Company announced the sale on July 31, 2007 of the
      Ricochet wireless network and operations for greater Denver metropolitan area
      to
      Civitas Wireless Solutions, LLC (“Civitas”). In addition, we announced that
      Ricochet Networks, Inc. ceased operations of the San Diego network and is no
      longer in the business of providing wireless internet services.  There
      are no significant inter-company transactions which affect the revenue or
      expenses of either segment.  As a result, the Services business was
      classified as discontinued operations effective in the third quarter of 2007,
      and the financial results of the Services business has been excluded from the
      historical financial results of the Company’s continuing business beginning in
      the third quarter of 2007.




Summarized
      information for the business segments as of September 30, 2007 and 2006 and
      for
      the quarters then ended is as follows (in thousands):




**Three
      Months Ended September 30:**




**2007**
            
            
            **2006****Equipment**
            
            
            **Services**
            
            
            **Total**
            
            
            **Equipment**
            
            
            **Services**
            
            
            **Total**Assets
            
            $
            50,271
            
            
            $
            314
            
            
            $
            50,585
            
            
            $
            50,659
            
            
            $
            2,002
            
            
            $
            52,661Revenue
            
            $
            16,902
            
            
            $
            286
            
            
            $
            17,188
            
            
            $
            17,322
            
            
            $
            554
            
            
            $
            17,876Operating
                income (loss)
            
            $
            (1,658
            )
            
            $
            (1,078
            )
            
            $
            (2,736
            )
            
            $
            (13,123
            )
            
            $
            (585
            )
            
            $
            (13,708
            )








8





**Nine
      Months Ended September 30:**





**2007**
            
            
            **2006****Equipment**
            
            
            **Services**
            
            
            **Total**
            
            
            **Equipment**
            
            
            **Services**
            
            
            **Total**Assets
            
            $
            50,271
            
            
            $
            314
            
            
            $
            50,585
            
            
            $
            50,659
            
            
            $
            2,002
            
            
            $
            52,661Revenue
            
            $
            51,693
            
            
            $
            2,166
            
            
            $
            53,859
            
            
            $
            55,006
            
            
            $
            2,156
            
            
            $
            57,162Operating
                income (loss)
            
            $
            (4,300
            )
            
            $
            (1,760
            )
            
            $
            (6,060
            )
            
            $
            (20,269
            )
            
            $
            (1,525
            )
            
            $
            (21,794
            )





The
      results of operations for any interim period are not necessarily indicative
      of
      the results of operations for any other interim period or for a full fiscal
      year.




**2.**
            **Stock
                Based Compensation**




Prior
      to
      2006, the Company accounted for its stock-based compensation under the
      recognition and measurement principles of APB Opinion No. 25, Accounting
      for Stock Issued to Employees and related interpretations (“APB 25”). Under APB
      25, no stock-based compensation cost was reflected in net income for grants
      of
      stock prior to fiscal year 2006 because the Company grants stock options with
      an
      exercise price equal to or greater than the market value of the underlying
      common stock on the date of grant.




Effective
      January 1, 2006 the Company adopted Statement of Financial Accounting Standards
      No. 123 (Revised 2004) Share-Based Payment (“SFAS 123R”), which requires
      the measurement and recognition of compensation cost at fair value for all
      share-based payments, including stock options. Stock-based compensation for
      2006
      and 2007 includes compensation expense, recognized over the applicable vesting
      periods, for new share-based awards and for share-based awards granted prior
      to,
      but not yet vested, as of December 31, 2005 (modified prospective application).
      Stock-based compensation for the three-month periods ended September 30, 2007
      and September 30, 2006 totaled approximately $488,000 and $435,000,
      respectively.  Stock-based compensation for the nine-month periods
      ended September 30, 2007 and September 30, 2006 totaled approximately $1,585,000
      and $1,004,000, respectively.




For
      the
      quarter and nine months ended September 30, 2007, the operating loss from
      continuing operations was $488,000 and $1,585,000 higher, respectively, and
      the
      basic and diluted loss per share were $.02 and $.07, respectively, higher due
      to
      the adoption of SFAS 123R.  Net cash used in operating activities and
      net cash provided by financing activities were not changed by the adoption
      of
      SFAS 123R.




The
      fair
      value of each option grant has been estimated as of the date of grant using
      the
      Black-Scholes options pricing model with the following weighted average
      assumptions for 2007 and 2006:  risk-free interest rate of 4.26% -
      4.81% and 4.51% - 5.02%, expected life of four years and four years, volatility,
      calculated using historical volatility, of 157% - 240% and 260% - 284% and
      dividend rate of zero percent, respectively.  Using these assumptions,
      the weighted average fair value of the stock options granted in the quarter
      and
      nine months ended September 30, 2007 was $1.51, and the weighted average fair
      value of the stock options granted in the same time periods in 2006 was $1.87
      and 2.55, respectively. The fair value of the stock options granted will be
      amortized as compensation expense over the vesting period of the
      options.  Estimates of fair value are not intended to predict actual
      future events or the value ultimately realized by employees who receive equity
      awards, and subsequent events are not indicative of the reasonableness of the
      original estimates of fair value made by the Company under SFAS
      No. 123R.




No
      tax
      effects are recognized currently for the granting of share-based compensation
      arrangements as the Company currently cannot estimate the realizability of
      related tax benefits as the Company is in a net operating tax loss position
      with
      tax NOL as described in the Company’s Annual Report on Form 10-K for the fiscal
      year ended December 31, 2006, as filed with the SEC.




**3.**
            **Comprehensive
                Loss**




The
      Company reports comprehensive income in accordance with SFAS No. 130, “Reporting
      Comprehensive Income.”  During the nine months ended September 30,
      2007 and 2006, the Company had comprehensive losses from continuing operations
      of $4.2 million and $20.0 million, respectively, including







9





approximately
      $0 and $95,000, respectively, of unrealized (losses) gains on available-for-sale
      investments, net of income taxes of $0 and $0, respectively.




**4.**
            **Inventory**




Inventory
      consisted of the following at the indicated dates (in thousands):




**September
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006****(unaudited)**Raw
                materials
            
            $
            6,674
            
            
            $
            8,247Work
                in process
            
            
            701
            
            
            
            480Finished
                goods
            
            
            7,398
            
            
            
            11,06814,773
            
            
            
            19,795Allowance
                for excess and obsolescence
            
            
            (5,987
            )
            
            
            (9,653
            )Net
                Inventory
            
            $
            8,786
            
            
            $
            10,142





**5.**
            **Goodwill**




Goodwill
      consisted of the following (in thousands):




**September
                30,**
            
            
            **December
                31,****Acquisition**
            
            **2007**
            
            
            **2006**KarlNet
            
            $
            2,491
            
            
            $
            2,491Terabeam
            
            
            3,322
            
            
            
            3,322Old
                Proxim
            
            
            2,109
            
            
            
            2,109Goodwill
            
            $
            7,922
            
            
            $
            7,922





Goodwill
      is tested for impairment at least annually at the reporting unit level, and
      more
      frequently if an event occurs or circumstances change that would more likely
      than not reduce the fair value of a reporting unit below its carrying
      amount.




**6.**
            **Intangibles**




*Schedule
      of Non-Amortizable Assets*




**September
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006****(in
                thousands)**Trade
                names – indefinite useful life
            
            $
            1,000
            
            
            $
            1,150$
            1,000
            
            
            $
            1,150





*Schedule
      of Amortizable Assets*




**September
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006****(in
                thousands)**Patents,
                customer relationships and other technologies with identifiable useful
                lives
            
            $
            14,521
            
            
            $
            14,521Less:  accumulated
                amortization
            
            
            (5,759
            )
            
            
            (4,126
            )Amortizable
                intangible assets, net
            
            $
            8,762
            
            
            $
            10,395





Amortization
      is computed using the straight-line method over the estimated useful life,
      based
      on the Company’s assessment of technological obsolescence of the respective
      assets.  Amortization expense for the three months and nine months
      ended September 30, 2007 totaled approximately $0.5 million and $1.6 million,
      respectively.  The weighted average estimated useful life is 5
      years.  There is no estimated residual value.







10





**7.**
            **Restructuring
                Charges**




The
      Company accounts for restructuring charges under the provisions of Statement
      of
      Financial Accounting Standards No. 146 (“FAS 146”), Accounting for Costs
      Associated with Exit or Disposal Activities.




During
      the nine months ended September 30, 2007, the Company recorded restructuring
      charges of approximately $91,000.  These charges consisted of one-time
      termination benefits related to a reduction in force at its San Jose, California
      headquarters implemented in an effort to streamline operations.




**8.           Earnings
      per share**




**Three
                Months Ended**
              **September
                30,**
            
            
            **Nine
                Months Ended**
              **September
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****(unaudited)**
            
            
            **(unaudited)**NumeratorNet
                income (loss) from continuing operations
            
            $
            (1,658
            )
            
            $
            (13,078
            )
            
            $
            (4,300
            )
            
            $
            (19,846
            )Net
                income (loss) from discontinued  operations
            
            
            (1,078
            )
            
            
            (585
            )
            
            
            (1,760
            )
            
            
            (1,286
            )Net
                Income (loss)
            
            $
            (2,736
            )
            
            $
            (13,663
            )
            
            $
            (6,060
            )
            
            $
            (21,132
            )Denominator-
                weighted average shares:Denominator
                for basic earnings per share for continuing and discontinued
                operations
            
            
            25,241
            
            
            
            21,541
            
            
            
            22,703
            
            
            
            21,515Denominator
                for diluted earnings per share
            
            
            25,241
            
            
            
            21,541
            
            
            
            22,703
            
            
            
            21,515Basic
                & diluted earnings (loss) per share  from continuing
                operations
            
            $
            (0.07
            )
            
            $
            (0.60
            )
            
            $
            (0.19
            )
            
            $
            (0.92
            )Basic
                & diluted  earnings (loss) per share continuing from
                continuing operations
            
            $
            (0.04
            )
            
            $
            (0.03
            )
            
            $
            (0.08
            )
            
            $
            (0.06
            )Basic
                & diluted  earnings (loss) per share
            
            $
            (0.11
            )
            
            $
            (0.63
            )
            
            $
            (0.27
            )
            
            $
            (0.98
            )





At
      September 30, 2007 and 2006, stock options and warrants to purchase shares
      of
      common stock were outstanding but not included in the computation of diluted
      earnings for the three and nine month periods ended September 30, 2007 and
      2006
      because there was a net loss for each of the applicable periods, and the effect
      would have been anti-dilutive.




**9.**
            **Concentrations**




During
      nine months ended September 30, 2007, there were two customers who accounted
      for
      approximately 26% and 19%, respectively, of consolidated sales, and in the
      corresponding nine months of 2006 these same customers accounted for 15%, and
      11%, respectively, of consolidated sales.




The
      Company maintains the majority of its cash, cash equivalent, and restricted
      cash
      balances at two major US banks.  The balances are insured by the
      Federal Deposit Insurance Corporation up to $100,000 per bank.  At
      September 30, 2007 and 2006, the uninsured portion totaled approximately $12.2
      million and $13.5 million, respectively.




**10.**
            **Patent
                License Agreement – License Agreement
                Payable**




In
      February 2006, the Company entered into a settlement agreement with Symbol
      Technologies, Inc. and its subsidiaries (“Symbol”) resolving all outstanding
      litigation between the companies.




The
      Company recorded an intangible asset related to the license at December 31,
      2005
      based on the present value of the scheduled payments, and will amortize the
      intangible asset over the useful life of the patents through
      2014.  The amortization expense recorded for the three and nine months
      ended September 30, 2007 totaled







11





approximately
                $105,000, and $ 314,000, respectively.  The Company also
                recorded a license payable equal to the present value of the scheduled
                payments.  License agreements payable consisted (in
                thousands):




**September
                30,**
              **2007**
            
            
            **December
                31,**
              **2006**License
                Agreement Payable
            
            $
            2,309
            
            
            $
            2,956Current
                portion
            
            
            (1,002
            )
            
            
            (868
            )Long
                term portion
            
            $
            1,307
            
            
            $
            2,088





**11.           Allowance
      for Product Warranty Costs**




Warranty****costs
      were significantly reduced for the nine months ended September 30,
      2007****versus the comparable period ended September 30,
      2006. This reduction was due to an analysis performed by the Company of
      allowance for product warranty costs utilizing updated information of actual
      warranty costs and changes that have been made to the Company’s warranty policy.
      The company booked a change in the estimate of allowance for product warranty
      costs as an adjustment to cost of goods sold during the quarter ended March
      31,
      2007.




**September
                30,**
              **2007**
            
            
            **December
                31,**
              **2006**Balance
                at January 1, 2007
            
            $
            1,102
            
            
            $
            1,366Settlements
            
            
            (141
            )
            
            
            (839
            )Other
                Provision Adjustments
            
            
            (362
            )
            
            
            575Balance
                at September 30, 2007
            
            $
            599
            
            
            $
            1,102





**12.**
            **Discontinued
                Operations**




The
      Company’s Services business was discontinued in the third quarter of
      2007.  That business was acquired with the acquisition of Ricochet
      Networks, Inc. during the second quarter of 2004 and was conducted through
      that
      Ricochet Networks subsidiary.  The Company announced the sale on July
      31, 2007 of the Ricochet wireless network and operations for greater Denver
      metropolitan area to Civitas Wireless Solutions, LLC (“Civitas”). RNI received
      (a) the assumption by Civitas generally of obligations relating to the operation
      of the Ricochet® wireless network in the Denver, Colorado metropolitan area, (b)
      a cash payment of $200,000, (c) 15% equity ownership in Civitas, and (d)
      potential future payments contingent on certain future potential business of
      Civitas.  Ricochet Networks generally retained the obligations
      relating to the operation of the Ricochet network in the San Diego, California
      metropolitan area, the operation of which Ricochet Networks discontinued on
      July
      31, 2007.  In addition, substantially all of Ricochet
      Networks’  employees were terminated effective July 31, 2007 and
      subsequently re-hired by Civitas.




As
      a
      result, Ricochet Networks is no longer in the business of providing wireless
      internet services.  The sale of the Denver metropolitan business to
      Civitas, as well as reserve for closure of the San Diego network, was recorded
      during the third quarter of 2007, and amounted to a loss of $1.1 million for
      the
      quarter, and a loss of $1.8 million for the first nine months of 2007.
      Accordingly, the Services business segment is being accounted for as a
      discontinued operation and the results of the operations of the Services segment
      have been removed from the Company’s financial statements for its continuing
      operations for all periods and is being presented as a separate line item in
      the
      consolidated statement of operations for discontinued operations.




**(in
                thousands)**
            
            **Three
                Months**
              **Ended**
              **September
                30,**
              **2007**
            
            
            **Nine
                Months**
              **Ended**
              **September
                30,**
              **2007**Revenue
                from discontinued operations
            
            $
            286
            
            
            $
            2,166Loss
                on disposal of assets
            
            
            (675
            )
            
            
            (675
            )Loss
                from discontinued operations
            
            
            (403
            )
            
            
            (1,085
            )Net
                loss from discontinued operations
            
            $
            (1,078
            )
            
            $
            (1,760
            )








12





**13.           Recent
      Accounting Pronouncements**





In
      June
      2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. (FIN) 48, Accounting for Uncertainty in Income Taxes — An Interpretation of
      FASB Statement No. 109, which prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and measurement
      of
      a tax position taken or expected to be taken in a tax return. FIN 48 is
      effective beginning Q1 2007.The Company has performed a preliminary analysis
      under FIN 48 and believes that any unrecognized benefits or potential interest
      and penalties are not material to the financial statements. The Company files
      income tax returns in the U.S. federal jurisdictions and in various state
      jurisdictions. Generally, the Company is no longer subject to income tax
      examinations by tax authorities in these jurisdictions for years before
      2003.




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No. 157 (“SFAS 157”), “Fair Value Measurements.” SFAS No. 157 defines
      fair value, establishes a framework for measuring fair value in generally
      accepted accounting principles (“GAAP”), and expands disclosures about fair
      value measurements. SFAS 157 does not require any new fair value measurements
      in
      financial statements, but standardizes its definition and guidance in GAAP.
      Thus, for some entities, the application of this statement may change current
      practice. SFAS 157 is effective for the Company beginning on January 1,
      2008. The Company is currently evaluating the impact that the adoption of this
      statement may have on its financial position and results of
      operations.




In
      September 2006, the FASB issued SFAS No. 158 (“SFAS 158”), “Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans.” SFAS 158
      requires employers to fully recognize the obligations associated with
      single-employer defined benefit pension, retiree healthcare, and other
      postretirement plans in their financial statements. The provisions of SFAS
      158
      are effective for fiscal years ending after December 15, 2006. The
      provisions of SFAS 158 did not have a material impact on the Company’s financial
      position, results of operations, or cash flows.




In
      September 2006, the SEC staff issued Staff Accounting Bulletin 108 (“SAB 108”)
“Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements.” SAB 108 requires that
      public companies utilize a “dual-approach” to assessing the quantitative effects
      of financial misstatements. This dual approach includes both an income statement
      focused assessment and a balance sheet focused assessment. The guidance in
      SAB
      108 must be applied to annual financial statements for fiscal years ending
      after
      November 15, 2006. The adoption of SAB 108 did not have a material effect
      on our consolidated financial position or results of operations.




In
      February 2007, the FASB issued SFAS 159 (“SFAS 159”) “The Fair Value Option for
      Financial Assets and Financial Liabilities”. SFAS 159 permits entities to choose
      to measure many financial assets and financial liabilities at fair value.
      Unrealized gains and losses on items for which the fair value option has been
      elected are reported in earnings. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007. The Company is currently assessing the
      impact of SFAS 159 on its consolidated financial position and results of
      operations.




**14.**
            **Commitments
                and Contingencies**




**IPO
      Litigation**




During
      the period from June 12 to September 13, 2001, four purported securities class
      action lawsuits were filed against Telaxis Communications Corporation, a
      predecessor company to Proxim Wireless Corporation, in the U.S. District Court
      for the Southern District of New York: Katz v. Telaxis Communications
      Corporation et al., Kucera v. Telaxis Communications Corporation et al.,
      Paquette v. Telaxis Communications Corporation et al., and Inglis v. Telaxis
      Communications Corporation et al.  The lawsuits also named one or more
      of the underwriters in the Telaxis initial public offering and certain of its
      officers and directors.  On April 19, 2002, the plaintiffs filed a
      single consolidated amended complaint which supersedes the individual complaints
      originally filed.  The amended complaint alleges, among other things,
      violations of the registration and antifraud provisions of the federal
      securities laws due to alleged statements in and omissions from the Telaxis
      initial public offering registration statement concerning the underwriters’
alleged activities in connection with the underwriting of Telaxis’ shares to the
      public.  The amended complaint seeks, among other things, unspecified
      damages and costs associated with the litigation.  These lawsuits have
      been assigned along with, we understand, approximately 1,000 other lawsuits
      making





13





substantially
      similar allegations against approximately 300 other publicly-traded companies
      and their public offering underwriters to a single federal judge in the U.S.
      District Court for the Southern District of New York for consolidated pre-trial
      purposes.  We believe the claims against us are without merit and have
      defended the litigation vigorously.  The litigation process is
      inherently uncertain, however, and there can be no assurance that the outcome
      of
      these claims will be favorable for us.




On
      July
      15, 2002, together with the other issuer defendants, Telaxis filed a collective
      motion to dismiss the consolidated amended complaint against the issuers on
      various legal grounds common to all or most of the issuer
      defendants.  The underwriters also filed separate motions to dismiss
      the claims against them.  In October 2002, the court approved a
      stipulation dismissing without prejudice all claims against the Telaxis
      directors and officers who had been defendants in the litigation.  On
      February 19, 2003, the court issued its ruling on the separate motions to
      dismiss filed by the issuer defendants and the underwriter
      defendants.  The court granted in part and denied in part the issuer
      defendants’ motions.  The court dismissed, with prejudice, all claims
      brought against Telaxis under the anti-fraud provisions of the securities
      laws.  The court denied the motion to dismiss the claims brought under
      the registration provisions of the securities laws (which do not require that
      intent to defraud be pleaded) as to Telaxis and as to substantially all of
      the
      other issuer defendants.  The court denied the underwriter defendants’
motion to dismiss in all respects.




In
      June
      2003, along with virtually all of the other non-bankrupt issuer defendants,
      we
      elected to participate in a proposed settlement agreement with the plaintiffs
      in
      this litigation.  If the proposed settlement had been approved by the
      court, it would have resulted in the dismissal, with prejudice, of all claims
      in
      the litigation against us and against the other issuer defendants who elected
      to
      participate in the proposed settlement, together with the current or former
      officers and directors of participating issuers who were named as individual
      defendants.  This proposed settlement was conditioned on, among other
      things, a ruling by the court that the claims against us and against the other
      issuers who had agreed to the settlement would be certified for class action
      treatment for purposes of the proposed settlement, such that all investors
      included in the proposed classes in these cases would be bound by the terms
      of
      the settlement unless an investor opted to be excluded from the settlement.




On
      December 5, 2006, the U.S. Court of Appeals for the Second Circuit issued a
      decision in *In re Initial Public Offering Securities Litigation* that
      six purported class action lawsuits containing allegations substantially similar
      to those asserted against us may not be certified as class actions due, in
      part,
      to the Appeals Court’s determination that individual issues of reliance and
      knowledge would predominate over issues common to the proposed
      classes.  On January 8, 2007, the plaintiffs filed a petition seeking
      rehearing *en banc* of the Second Circuit Court of Appeals’ decision. On
      April 6, 2007 the Court of Appeals denied the plaintiffs’ petition for rehearing
      of the Court’s December 5, 2006 ruling but noted that the plaintiffs remained
      free to ask the District Court to certify classes different from the ones
      originally proposed which might meet the standards for class certification
      that
      the Court of Appeals articulated in its December 5, 2006
      decision.  The plaintiffs have since moved for certification of
      different classes in the District Court, and that motion remains
      pending.




In
      light
      of the Court of Appeals’ December 5, 2006 decision regarding certification of
      the plaintiffs’ claims, the District Court entered an order on June 25, 2007
      terminating the proposed settlement between the plaintiffs and the issuers,
      including us. Because it is expected that any possible future settlement with
      the plaintiffs, if such a settlement were ever to be agreed to, would involve
      the certification of a class action for settlement purposes, the impact of
      the
      Court of Appeals’ class certification-related rulings on the possible future
      settlement of the claims against us cannot now be predicted.




With
      the
      termination of the proposed settlement, we intend to continue to defend the
      litigation vigorously.  The litigation process is inherently uncertain
      and unpredictable, however, and there can be no guarantee as to the ultimate
      outcome of this pending lawsuit.  Moreover, we believe that the
      underwriters may have an obligation to indemnify us for the legal fees and
      other
      costs of defending these suits.  While there can be no assurance as to
      the ultimate outcome of these proceedings, we currently believe that the final
      result of these actions will have no material effect on our consolidated
      financial condition, results of operations, or cash flows.





14




**Linex
                Technologies, Inc. Litigation**
  On
                June
                1, 2007, Linex Technologies, Inc. filed suit against Proxim Wireless
                Corporation
                for alleged patent infringement in the United States District Court
                for the
                Eastern District of Texas, Marshall Division.  Other named defendants
                in this lawsuit are Belair Networks, Inc., Cisco Systems, Inc., Firetide,
                Inc.,
                and Skypilot Networks, Inc.  This lawsuit generally alleges that
                Proxim’s mesh products infringe two United States patents purportedly owned
                by
                Linex.  Linex is seeking damages allegedly caused by the alleged
                infringement of its two patents.  This matter is at an extremely early
                stage.  We believe the claims against us are without merit and intend
                to defend the litigation vigorously.  The litigation process is
                inherently uncertain, however, and there can be no assurance that
                the outcome of
                these claims will be favorable for us.


**KarlNet**




On
      May
      13, 2004, Proxim Wireless Corporation acquired KarlNet.  The
      definitive acquisition agreement contained provisions that provided for certain
      contingent consideration after the initial acquisition date.  Proxim
      Wireless Corporation may pay up to an additional $2.5 million over the two
      years
      following closing based on achievement of certain milestones and compliance
      with
      other conditions.  Although the Company has received a letter from
      sellers demanding payment of the first $1.0 million contingent payment, it
      is
      the Company’s position that, as of September 30, 2007, no events have occurred
      that have triggered the obligation to pay any of the contingent
      consideration.




**General**




We
      are
      subject to potential liability under contractual and other matters and various
      claims and legal actions which are pending or may be asserted against us or
      our
      subsidiaries, including claims arising from the termination of the operations
      of
      Ricochet Networks, Inc. in the San Diego metropolitan area and the transfer
      of
      the operations of Ricochet Networks, Inc. in the Denver metropolitan area to
      Civitas Wireless Solutions, LLC.  These matters may arise in the
      ordinary course and conduct of our business.  While we cannot predict
      the outcome of such claims and legal actions with certainty, we currently
      believe that such matters should not result in any liability which would have
      a
      material adverse affect on our business.




**15.**
            **Subsequent
                Events**




On
      July
      24, 2007, Proxim announced a private placement involving the issuance of 4.3
      million shares of common stock at $1.75 per share and warrants to purchase
      an
      additional 2.15 million shares of common stock at an exercise price of $2.45
      per
      share.




Subsequent
      to September 30, 2007, Proxim rescaled this private placement by agreeing to
      repurchase an aggregate of 2,335,300 shares of its common stock at a price
      of
      $1.70 per share from certain participants in the private placement. As part
      of
      this transaction, those selling participants will also surrender to Proxim
      for
      cancellation warrants to purchase an aggregate of 1,225,000 shares of common
      stock of Proxim.  These repurchases and cancellations are expected to
      be completed by November 16, 2007.







15








**Item
      2.  Management’s Discussion and Analysis of Financial
      Condition and Results of Operations.**




**Overview**




We
      provide high-speed wireless communications equipment in the United States and
      internationally.  Our systems enable service providers, enterprises,
      and municipal and other governmental organizations to deliver high-speed data
      connectivity enabling a broad range of voice and data
      applications.  These applications include security, surveillance,
      mobile communications, and backhaul.  We provide wireless solutions
      for the mobile enterprise, security and surveillance, last mile access, voice
      and data backhaul, and municipal networks.  We believe our fixed
      wireless systems address the growing need of our customers and end-users to
      rapidly and cost effectively deploy high-speed broadband communication
      networks.




We
      changed our corporate name to “Proxim Wireless Corporation” from “Terabeam,
      Inc.” effective September 10, 2007.  This name change was effected by
      means of merging Proxim Wireless Corporation, which was a wholly owned
      subsidiary of Terabeam, Inc., with and into Terabeam, Inc. with Terabeam, Inc.
      being the surviving company but with a corporate name of “Proxim Wireless
      Corporation.”  Effective that same date, our stock ticker symbol was
      changed to “PRXM” from “TRBM.”




Proxim
      Wireless operates in the broadband wireless equipment market
      place.  Proxim Wireless is a designer, manufacturer, and seller of
      wireless telecommunications equipment (“Equipment”) which generated the
      substantial majority of the Company’s revenues and expenses during the first
      nine months of 2007.




Prior
      to the third quarter of 2007,
      Proxim Wireless and its subsidiaries also operated in the services
      business.  This services business (“Services”) was acquired with the
      acquisition of Ricochet Networks, Inc. during the second quarter of 2004 and
      was
      conducted through that Ricochet Networks subsidiary.  The Company
      announced the sale on July 31, 2007 of the Ricochet wireless network and
      operations for greater Denver metropolitan area to Civitas Wireless Solutions,
      LLC (“Civitas”). In addition, we announced that Ricochet Networks, Inc. ceased
      operations of the San Diego network and is no longer in the business of
      providing wireless internet services.  As a result, the Services
      business was classified as discontinued operations effective in the third
      quarter of 2007, and the financial results of the Services business has been
      excluded from the historical financial results of the Company’s continuing
      business beginning in the third quarter of 2007.




**Critical
      Accounting Policies**




The
      preparation of our consolidated financial statements in accordance with
      accounting principles generally accepted in the United States of America
      requires us to make estimates and assumptions that affect:  the
      reported amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of the financial statements; and the reported
      amounts of revenues and expenses during the reporting periods.  We are
      required to make judgments and estimates about the effect of matters that are
      inherently uncertain.  Actual results could differ from our
      estimates.  The most significant areas involving our judgments and
      estimates are described below.




*Revenue
      Recognition*




Product
      revenue is generally recognized upon shipment when persuasive evidence of an
      arrangement exists, the price is fixed or determinable, and collectibility
      is
      reasonably assured. The Company grants certain distributors limited rights
      of
      return and price protection on unsold products.  The company has
      historically deferred revenue on a limited number of major distributors based
      on
      grounds that it did not satisfy all of the conditions outlined in SFAS 48
      Revenue Recognition When Right of Return Exists.  Generally, the
      Company has no obligation to provide any modification or customization upgrades,
      enhancements or other post-sale customer support.  Revenue from
      services, such as pre-installation 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 enhanced service
      contracts is recognized over the contract period, which ranges from one to
      three
      years.







16





For
      our
      services business, prior to discontinuing the service operations on July 31,
      2007, we recognize revenue when the customer pays for and then has access to
      our
      network for the current fiscal period.  Any funds the customer pays
      for future fiscal periods are treated as deferred revenue and recognized in
      the
      future fiscal periods for which the customer has access to our
      network.




*Asset
      Impairment*




The
      Company periodically evaluates the carrying value of long-lived assets when
      events and circumstances warrant such a review.  The carrying value of
      a long-lived asset is considered impaired when the anticipated undiscounted
      cash
      flow from such asset is separately identifiable and is less than the carrying
      value.  In that event, a loss is recognized based on the amount by
      which the carrying value exceeds the fair market value of the long-lived
      asset.  Fair market value is determined primarily using the
      anticipated cash flows discounted at a rate commensurate with the risk
      involved.




*Accounts
      Receivable Valuation*




We
      maintain an allowance for doubtful accounts for estimated losses resulting
      from
      the inability or unwillingness 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.




*Inventory
      Valuation*




Inventory
      is stated at the lower of cost or market, cost being determined on a first-in,
      first-out basis.  Provisions are made to reduce excess or obsolete
      inventory to its estimated net realizable value.  The process for
      evaluating the value of excess and obsolete inventory often requires us to
      make
      subjective judgments and estimates concerning future sales levels, quantities,
      and prices at which such inventory will be able to be sold in the normal course
      of business, particularly where we have made last-time-buys of
      components.  Accelerating the disposal process or incorrect estimates
      of future sales may necessitate future adjustments to these
      provisions.




*Goodwill*




Goodwill
      is the excess of the cost of an acquired entity over the net amounts assigned
      to
      assets acquired and liabilities assumed.  Goodwill is not amortized
      but is tested for impairment at least annually at the reporting unit level,
      and
      more frequently if an event occurs or circumstances change that would more
      likely than not reduce the fair value of a reporting unit below its carrying
      amount.




*Intangible
      Assets*




Intangible
      assets are accounted for in accordance with SFAS No. 142 “Goodwill and Other
      Intangible Assets.”  Intangible assets with finite lives are amortized
      over the estimated useful lives using the straight-line method.  An
      impairment loss on such assets is recognized if the carrying amount of an
      intangible asset is not recoverable and its carrying amount exceeds its fair
      value.  Intangible assets with indefinite useful lives are not
      amortized but are tested for impairment at least annually or more frequently
      if
      there are indications that the asset is impaired.  The impairment test
      for these assets consists of a comparison of the fair value of the asset with
      its carrying amount.  If the carrying amount of an intangible asset
      with an indefinite useful life exceeds its fair value, an impairment loss is
      recognized in an amount equal to that excess.  For either type of
      intangible asset, after an impairment loss is recognized, the adjusted carrying
      amount of the intangible asset becomes its new accounting
      basis.  Subsequent reversal of a previously recognized impairment loss
      is prohibited.




Our
      intangible assets include purchased technology and various assets acquired
      in
      business combination transactions.  Assets acquired in business
      combination transactions include existing hardware technologies, trade names,
      existing software technologies, customer relationships, and
      patents.  Some of these assets have finite useful lives, and some have
      indefinite useful lives.







17





**Results
      of Operations**




**For
      the three months ended September 30, 2007 and 2006**




The
      following table provides statement of operations data as a percentage of sales
      for the periods presented.




**Three
                Months Ended September 30,****2007**
            
            
            **2006**Sales
            
            
            100
            %
            
            
            100
            %Cost
                of goods sold
            
            
            51
            
            
            
            62Gross
                profit
            
            
            49
            
            
            
            38Operating
                expensesSelling
                costs
            
            
            32
            
            
            
            29Restructuring
                charges
            
            
            -
            
            
            
            51General
                and administrative
            
            
            18
            
            
            
            18Research
                and development
            
            
            9
            
            
            
            16Total
                operating expenses
            
            
            59
            
            
            
            114Operating
                (loss) income
            
            
            (10
            )
            
            
            (76
            )Other
                income (expenses)
            
            
            -
            
            
            
            -Income
                taxes
            
            
            -
            
            
            
            -Net
                loss from continuing operations
            
            
            (10
            )%
            
            
            (76
            )%Net
                loss from discontinued operations
            
            
            (6
            )%
            
            
            (3
            )%Net
                loss
            
            
            (16
            )%
            
            
            (79
            )%





*Sales*




Sales
      for
      continuing operations for the three months ended September 30, 2007 were $16.9
      million as compared to $17.3 million for the same period in 2006 for a decrease
      of $0.4 million or 2%.  Revenues from our broadband wireless access
      business continue to grow as a percentage of revenue when compared to the
      comparable quarter in 2006.




For
      the
      quarters ending September 30, 2007 and 2006, international sales, excluding
      Canada, approximated 50% and 45%, respectively, of total sales.




*Cost
      of goods sold and gross profit*




Cost
      of
      goods sold and gross profit for the three months ended September 30, 2007 were
      $8.6 million and $8.3 million, respectively.  For the same period in
      2006, costs of goods sold and gross profit were $10.8 million and $6.5 million,
      respectively.  This includes a special charge of $1.5 million taken in
      the third quarter of 2006 for excess and obsolete inventories.  Gross
      profit margin, as a percentage of sales, for the three months ended September
      30, 2007 and 2006 was 49% and 46% (excluding the effects of the $1.5 million
      charge taken in the third quarter of 2006 for excess and obsolete inventories),
      respectively,.  The increase in gross margin percentage was primarily
      due to the product mix in the current quarter compared to the third quarter
      of
      the prior year and various initiatives to streamline operations and reduce
      manufacturing overhead.




*Sales
      and Marketing Expenses*




Sales
      and
      marketing expenses consist primarily of employee salaries and associated costs
      for selling, marketing, customer and technical support as well as field
      support.  Sales and marketing expenses for the three months ended
      September 30, 2007 were $5.4 million, an increase of $0.3 million over $5.0
      million for the same period in 2006.  In order to drive various sales
      initiatives in our multi-tier distribution model, we have increased our selling
      and marketing expenses by adding additional headcount in the areas of sales
      management, technical and inside sales personnel, and related marketing expenses
      due to increased trade show presence.  A key focus of the additional
      sales and marketing efforts has been to expand our presence in the municipal
      security and surveillance,







18





mobile
      communications, last mile access, voice and backhaul market
      applications.  We continue to monitor the effectiveness of our selling
      and marketing expenses as a percentage of our overall operating
      expense.




*Restructuring
      Charges*




During
      the quarter ended September 30, 2007 there were no restructuring charges
      recorded. During the corresponding quarter of 2006, we recorded $8.9 million
      for
      impairment of certain intangible assets and $1.5 million for excess and obsolete
      inventory totaling $10.4 million.




*General
      and Administrative Expenses*




General
      and administrative expenses consist primarily of employee salaries, benefits
      and
      associated costs for information systems, finance, legal, amortization of
      intangible assets, and administration, insurance, and auditing of a public
      company.  General and administrative expenses of continuing operations
      were $3.0 million for both the three months ended September 30, 2007 and for
      the
      three months ended September 30, 2006.




*Research
      and Development Expenses*




Research
      and development expenses consist primarily of personnel salaries and fringe
      benefits and related costs associated with our product development
      efforts.  These include costs for development of software and
      components, test equipment and related facilities.  Research and
      development expenses decreased to $1.6 million for the three months ended
      September 30, 2007 from $2.7 million for the three months ended September 30,
      2006, an approximate decrease of $1.1 million or 41%.  The decrease in
      research and development expenses was primarily due to reduction in headcount
      costs as significant R&D activities were transitioned from San Jose,
      California to Hyderabad, India combined with a $0.1 million reduction in expense
      related to software capitalization.




*Discontinued
      Operations*




During
      the third quarter 2007, Ricochet Networks, Inc. sold the Ricochet® network
      operations for the Denver, Colorado metropolitan market to Civitas Wireless
      Solutions, LLC and ceased operations of the San Diego network.  The
      net loss from discontinued operations in the third quarter of fiscal 2007 was
      $1.1 million.  This compares to a net loss generated by discontinued
      operations of $0.6 million in the comparable quarter of 2006.  The
      increase was primarily attributable to the one-time asset write-down for the
      sale of Denver network to Civitas and a restructuring reserve for closure of
      San
      Diego network recorded in the third quarter of 2007.







19





**For
      the nine months ended September 30, 2007 and 2006.**







**Nine
                Months Ended September 30,****2007**
            
            
            **2006**Sales
            
            
            100
            %
            
            
            100
            %Cost
                of goods sold
            
            
            53
            
            
            
            59Gross
                profit
            
            
            47
            
            
            
            41Operating
                expensesSelling
                costs
            
            
            29
            
            
            
            25Restructuring
                charges
            
            
            -
            
            
            
            16General
                and administrative
            
            
            17
            
            
            
            17Research
                and development
            
            
            13
            
            
            
            20Total
                operating expenses
            
            
            59
            
            
            
            78Operating
                (loss) income
            
            
            (12
            )
            
            
            (37
            )Other
                income (expenses)
            
            
            -
            
            
            
            1Income
                taxes
            
            
            -
            
            
            
            -Net
                loss from continuing operations
            
            
            (8
            )%
            
            
            (36
            )%Net
                loss from discontinued operations
            
            
            (4
            )%
            
            
            (2
            )%Net
                loss
            
            
            (12
            )%
            
            
            (38
            )%





*Sales*




Sales
      for
      the nine months ended September 30, 2007 were $51.7 million as compared to
      $55.0
      million for the same period in 2006 for a decrease of $3.3 million or
      6%.  This decrease was primarily due to a reduction in demand for
      mature products such as wireless LAN equipment and shipments of significant
      quantities of our wireless LAN equipment to a single customer in 2006 that
      were
      not repeated in 2007. This was partially offset by growth in sales of our
      broadband wireless access products which continues to grow as a percentage
      of
      revenue when compared to the comparable period in 2006.




In
      the
      first nine months of 2007, our service business made up less than 5% of our
      total consolidated revenue.   Effective July 31, 2007, Ricochet
      Networks, Inc. sold the Denver metropolitan service business to Civitas Wireless
      Solutions, LLC, and Ricochet Networks also announced its plan to discontinue
      wireless network service to the San Diego metropolitan area.




For
      the
      nine months ending September 30, 2007 and 2006, international sales, excluding
      Canada, approximated 50% and 51%, respectively, of total sales.




*Cost
      of goods sold and gross profit*




Cost
      of
      goods sold and gross profit for the nine months ended September 30, 2007 were
      $27.5 million and $24.2 million, respectively.  For the same period in
      2006 (which included a special charge of $1.5 million for excess and obsolete
      inventories), costs of goods sold and gross profit were $32.6 million and $22.4
      million, respectively.  Gross profit margin, as a percentage of sales,
      for the nine months ended September 30, 2007 and 2006 was 47% and 41% (including
      the special charge), respectively.  The increase in gross margin
      percentage for the nine months ended September 30, 2007 was primarily due to
      the
      shift in product mix to higher margin broadband wireless access products
      compared to the first nine months of the prior year.  In addition, we
      have reduced our warranty reserve rates which resulted in a one-time reduction
      of warranty reserves in the first quarter of fiscal 2007 and completed various
      other cost reduction initiatives to reduce manufacturing and operational
      overhead.




*Sales
      and Marketing Expenses*




Sales
      and
      marketing expenses consist primarily of employee salaries and associated costs
      for selling, marketing, customer and technical support as well as field
      support.  Sales and marketing expenses for the nine months ended
      September 30, 2007 were $15.1 million, an increase of $2.0 million, or 15%
      over
      the $13.2 million







20





for
      the same period in 2006.  This increase was due primarily to increased
      domestic sales headcount to focus on vertical markets such as municipal and
      large enterprise customers combined with higher marketing expenses related
      to
      increased tradeshow participation compared to the same period in fiscal
      2006.  In addition, we also have experienced a significant increase in
      the cost of selling products internationally due to the deterioration of the
      US
      dollar, our functional currency, versus the euro and other international
      currencies in countries where we maintain a sales presence.




*General
      and Administrative Expenses*




General
      and administrative expenses consist primarily of employee salaries, benefits
      and
      associated costs for information systems, finance, legal, amortization of
      intangible assets, and administration, insurance, and auditing of a public
      company.  General and administrative expenses were $8.9 million for
      the nine months ended September 30, 2007 compared to $9.4 million for the nine
      months ended September 30, 2006 resulting in a decrease of about 10% or over
      $0.9 million from the prior year’s reporting period.  The decrease is
      principally a result of decreased headcount and lower legal and outside services
      expense versus the comparable 9 months ended September 30, 2006. General and
      administrative expenses as a percentage of sales during the first nine months
      of
      2007 were 17% which was comparable to the first nine months of
      2006.




*Research
      and Development Expenses*




Research
      and development expenses consist primarily of personnel salaries and fringe
      benefits and related costs associated with our product development
      efforts.  These include costs for development of products and
      components, test equipment and related facilities.  Research and
      development expenses decreased to $7.0 million for the nine months ended
      September 30, 2007 from $11.2 million for the nine months ended September 30,
      2006, an approximate decrease of $4.2 million or 38%.  The decrease in
      research and development expenses was due to reduction in headcount at our
      San
      Jose, California location and certain other engineering functions that were
      transitioned to our facility in Hyderabad, India. This was combined with a
      $0.7
      million reduction in expense for the first nine months of 2007 related to
      software capitalization for projects related to future anticipated product
      releases.  We did not capitalize any software development expense in
      the corresponding period of 2006.




*Other
      income (expenses)*




Other
      income and expenses totaled approximately $2.7 million in the first nine months
      of 2007 compared to $465,000 for the corresponding nine months of
      2006.   The majority of this increase of approximately $2.2
      million in the first 9 months was the sale of intellectual property in the
      form
      of two patents to a third party for $2.5 million completed in the second quarter
      of 2007.




*Discontinued
      Operations*




During
      the third quarter 2007, Ricochet Networks, Inc. sold the Ricochet® network
      operations for the Denver, Colorado metropolitan market to Civitas Wireless
      Solutions, LLC and ceased operations of the San Diego network.  The
      net loss from discontinued operations was $1.8 million for the first nine months
      of 2007 versus $1.3 million for the comparable period in 2006.  The
      increase was primarily attributable to the one-time asset write-down for the
      sale of Denver network to Civitas and a restructuring reserve for closure of
      San
      Diego network recorded in the third quarter of 2007.





**Liquidity
      and Capital Resources**




At
      September 30, 2007, we had cash, cash equivalents, and investments
      available-for-sale of $11.5 million. This excludes restricted cash of $0.1
      million.  For the nine months ended September 30, 2007, cash used by
      operations was approximately $5.6 million.  We currently are meeting
      our working capital needs through cash on hand as well as internally generated
      cash from operations and other activities.







21





For
      the
      nine months ended September 30, 2007, cash used in investing activities was
      approximately $0.7 million which was principally related to the purchase of
      property plant and equipment and investment of capitalized
      software.




During
      the quarter ended September 30, 2007 we realized net cash proceeds from a
      private placement of approximately $7.5 million, which is included in results
      for the quarter ended September 30, 2007 as cash received from financing
      activities.  The private placement involved the issuance of 4.3
      million shares of our common stock at $1.75 per share and accompanying warrants
      to purchase 2.15 million shares of our common stock at $2.45 per
      share.




Subsequent
      to the end of the third quarter, we rescaled the private placement with certain
      participants by agreeing to repurchase an aggregate of approximately 2.3 shares
      of our common stock at $1.70 per share and agreeing to cancel warrants to
      purchase approximately 1.2 million shares of our common stock.  We
      expect these transactions to be completed in the fourth quarter of 2007 and
      to
      reduce the cash proceeds from the private placement by approximately $4.0
      million.




We
      believe that cash flow from operations, along with our cash on hand, should
      be
      sufficient to meet the operating cash requirements over the next twelve month
      period as currently contemplated.  Our long-term financing
      requirements depend upon our growth strategy, which relates primarily to our
      desire to increase revenue both domestically as well as
      internationally.  However, although the acquisition of Old Proxim’s
      operations in 2005 significantly increased both our domestic and international
      revenue, we incurred operating losses totaling $6.9 million in the first nine
      months of 2007, a reduction of $3.0 million in the same period of 2006
      (excluding restructuring charges).  During the last quarter of 2007,
      we must continue our efforts to increase revenues and adjust operating expenses
      to levels that will produce positive cash flows and return us to operating
      profitability.




Due
      to
      the fluctuations in quarterly revenue we have experienced since the Old Proxim
      acquisition in 2005, management is closely following revenue trends and
      operating expenses, and reviewing its long term business strategy to evaluate
      whether there will be a requirement for external financing to fund our
      operations.  One significant constraint to our equipment business
      growth is the rate of new product introduction.  New products or
      product lines may be designed and developed internally or acquired from existing
      suppliers to reduce the time to market and inherent risks of new product
      development.  Our current resources may have to be supplemented
      through new bank debt financing, public debt or equity offerings, product line
      or asset sales, or other means due to a number of factors, including our ability
      to replace revenues lost through the discontinuation of our services business
      and our desired rate of future growth.  See Item 1A – Risk Factors
      below and the more detailed discussion of risk factors described in our Annual
      Report on Form 10-K for the year ended December 31, 2006 filed with the
      Securities and Exchange Commission.




**Item
      3.  Quantitative and Qualitative Disclosures about
      Market Risk.**




**Disclosures
      About Market Risk**




The
      following discusses our exposure to market risks related to changes in interest
      rates, equity prices and foreign currency exchange rates.  This
      discussion contains forward-looking statements that are exposed to risks and
      uncertainties, many of which are out of our control.  Actual results
      could vary materially as a result of a number of factors, including those
      discussed below in Item 1A – Risk Factors.




As
      of
      September 30, 2007, we had cash and cash equivalents of $11.5
      million.  The majority of total cash and cash equivalents were on
      deposit in short-term accounts with two major US banking
      organizations.  Therefore, we do not expect that an increase in
      interest rates would materially reduce the value of these funds.  The
      primary risk to loss of principal is the fact that these balances are only
      insured by the Federal Deposit Insurance Corporation up to $100,000 per
      bank.  At September 30, 2007, the uninsured portion totaled
      approximately $11.2 million.  Although an immediate increase in
      interest rates would not have a material effect on our financial condition
      or
      results of operations, declines in interest rates over time would reduce our
      interest income.




In
      the
      past three years, all sales to international customers were denominated in
      United States dollars and, accordingly, we were not exposed to foreign currency
      exchange rate risks.  However, we may make sales







22





denominated
      in foreign currencies in the future.  Additionally, we import from
      other countries.  Our sales and product supply may therefore be
      subject to volatility because of changes in political and economic conditions
      in
      these countries.




We
      presently do not use any derivative financial instruments to hedge our exposure
      to adverse fluctuations in interest rates, foreign exchange rates, and
      fluctuations in commodity prices or other market risks; nor do we invest in
      speculative financial instruments.




Due
      to
      the nature of our liabilities and our short-term investments, we have concluded
      that there is no material market risk exposure and, therefore, no quantitative
      tabular disclosures are required.




**Item
      4.  Controlsand Procedures.**




*Disclosure
      controls and procedures*




Based
      on
      their evaluation as of September 30, 2007, our Chief Executive Officer and
      Chief
      Financial Officer concluded that our disclosure controls and procedures (as
      defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
      of
      1934, as amended) were effective as of that date to ensure that information
      required to be disclosed by us in reports that we file or submit under the
      Exchange Act is recorded, processed, summarized and reported within the time
      periods specified in SEC’s rules and forms.  In coming to this
      conclusion, our Chief Executive Officer and Chief Financial Officer considered
      the matters described under the next heading and elsewhere in this Form
      10-Q.




*Internal
      control over financial reporting*




Under
      current SEC regulations, we are not currently required to evaluate or provide
      a
      report on our internal control over financial reporting.  However, we
      continue our analysis and action plans on that subject to better prepare us
      for
      the time when we will be required to evaluate and provide a report on our
      internal control over financial reporting.  In connection with its
      2006 annual audit and review procedures, our independent auditors considered
      and
      provided input to us relating to our internal control over financial reporting,
      and reported no material weaknesses in our internal control over financial
      reporting.




We
      acquired the Old Proxim business, including the related accounting and financial
      systems, during the third quarter of 2005.  We have moved our
      corporate headquarters to the Old Proxim offices in San Jose, CA, and during
      the
      quarter ended June 30, 2006 we substantially completed the process of
      integrating the accounting and financial systems of the two
      companies.   The acquisition of Proxim and integration of the
      accounting and financial systems has caused us to review our internal control
      processes.  We are in the process of completing this review, and we
      will determine and implement any necessary revisions to our internal controls
      resulting from the integration of the two company’s accounting and financial
      systems.




*Changes
      in internal control over financial reporting*




There
      was
      no change in our internal control over financial reporting during the quarter
      ended September 30, 2007 that has materially affected, or is reasonably likely
      to materially affect, our internal control over our financial reporting other
      than the changes described above under the preceding heading “Internal Control
      over Financial Reporting.”  We expect we will continue to make
      revisions and improvements to our internal control over financial reporting,
      particularly as we complete the final phase of reviewing the integration of
      the
      accounting and financial systems of Old Proxim and Proxim Wireless
      Corporation.







23





**PART
      II – OTHER INFORMATION**





**Item
      1.  Legal Proceedings.**




IPO
      Litigation




During
      the period from June 12 to September 13, 2001, four purported securities class
      action lawsuits were filed against Telaxis Communications Corporation, a
      predecessor company to Proxim Wireless Corporation, in the U.S. District Court
      for the Southern District of New York: Katz v. Telaxis Communications
      Corporation et al., Kucera v. Telaxis Communications Corporation et al.,
      Paquette v. Telaxis Communications Corporation et al., and Inglis v. Telaxis
      Communications Corporation et al.  The lawsuits also named one or more
      of the underwriters in the Telaxis initial public offering and certain of its
      officers and directors.  On April 19, 2002, the plaintiffs filed a
      single consolidated amended complaint which supersedes the individual complaints
      originally filed.  The amended complaint alleges, among other things,
      violations of the registration and antifraud provisions of the federal
      securities laws due to alleged statements in and omissions from the Telaxis
      initial public offering registration statement concerning the underwriters’
alleged activities in connection with the underwriting of Telaxis’ shares to the
      public.  The amended complaint seeks, among other things, unspecified
      damages and costs associated with the litigation.  These lawsuits have
      been assigned along with, we understand, approximately 1,000 other lawsuits
      making substantially similar allegations against approximately 300 other
      publicly-traded companies and their public offering underwriters to a single
      federal judge in the U.S. District Court for the Southern District of New York
      for consolidated pre-trial purposes.  We believe the claims against us
      are without merit and have defended the litigation vigorously.  The
      litigation process is inherently uncertain, however, and there can be no
      assurance that the outcome of these claims will be favorable for
      us.




On
      July
      15, 2002, together with the other issuer defendants, Telaxis filed a collective
      motion to dismiss the consolidated amended complaint against the issuers on
      various legal grounds common to all or most of the issuer
      defendants.  The underwriters also filed separate motions to dismiss
      the claims against them.  In October 2002, the court approved a
      stipulation dismissing without prejudice all claims against the Telaxis
      directors and officers who had been defendants in the litigation.  On
      February 19, 2003, the court issued its ruling on the separate motions to
      dismiss filed by the issuer defendants and the underwriter
      defendants.  The court granted in part and denied in part the issuer
      defendants’ motions.  The court dismissed, with prejudice, all claims
      brought against Telaxis under the anti-fraud provisions of the securities
      laws.  The court denied the motion to dismiss the claims brought under
      the registration provisions of the securities laws (which do not require that
      intent to defraud be pleaded) as to Telaxis and as to substantially all of
      the
      other issuer defendants.  The court denied the underwriter defendants’
motion to dismiss in all respects.




In
      June
      2003, along with virtually all of the other non-bankrupt issuer defendants,
      we
      elected to participate in a proposed settlement agreement with the plaintiffs
      in
      this litigation.  If the proposed settlement had been approved by the
      court, it would have resulted in the dismissal, with prejudice, of all claims
      in
      the litigation against us and against the other issuer defendants who elected
      to
      participate in the proposed settlement, together with the current or former
      officers and directors of participating issuers who were named as individual
      defendants.  This proposed settlement was conditioned on, among other
      things, a ruling by the court that the claims against us and against the other
      issuers who had agreed to the settlement would be certified for class action
      treatment for purposes of the proposed settlement, such that all investors
      included in the proposed classes in these cases would be bound by the terms
      of
      the settlement unless an investor opted to be excluded from the settlement.




On
      December 5, 2006, the U.S. Court of Appeals for the Second Circuit issued a
      decision in *In re Initial Public Offering Securities Litigation* that
      six purported class action lawsuits containing allegations substantially similar
      to those asserted against us may not be certified as class actions due, in
      part,
      to the Appeals Court’s determination that individual issues of reliance and
      knowledge would predominate over issues common to the proposed
      classes.  On January 8, 2007, the plaintiffs filed a petition seeking
      rehearing *en banc* of the Second Circuit Court of Appeals’ decision. On
      April 6, 2007 the Court of Appeals denied the plaintiffs’ petition for rehearing
      of the Court’s December 5, 2006 ruling but noted that the plaintiffs remained
      free to ask the District Court to certify classes different from the ones
      originally proposed which might meet the standards for class certification
      that
      the Court of Appeals articulated in its December 5, 2006
      decision.  The plaintiffs have since moved for certification of
      different classes in the District Court, and that motion remains
      pending.







24






In
      light
      of the Court of Appeals’ December 5, 2006 decision regarding certification of
      the plaintiffs’ claims, the District Court entered an order on June 25, 2007
      terminating the proposed settlement between the plaintiffs and the issuers,
      including us. Because it is expected that any possible future settlement with
      the plaintiffs, if such a settlement were ever to be agreed to, would involve
      the certification of a class action for settlement purposes, the impact of
      the
      Court of Appeals’ class certification-related rulings on the possible future
      settlement of the claims against us cannot now be predicted.




With
      the
      termination of the proposed settlement, we intend to continue to defend the
      litigation vigorously.  The litigation process is inherently uncertain
      and unpredictable, however, and there can be no guarantee as to the ultimate
      outcome of this pending lawsuit.  Moreover, we believe that the
      underwriters may have an obligation to indemnify us for the legal fees and
      other
      costs of defending these suits.  While there can be no assurance as to
      the ultimate outcome of these proceedings, we currently believe that the final
      result of these actions will have no material effect on our consolidated
      financial condition, results of operations, or cash flows.




Linex
      Technologies Litigation




On
      June
      1, 2007, Linex Technologies, Inc. filed suit against Proxim Wireless Corporation
      for alleged patent infringement in the United States District Court for the
      Eastern District of Texas, Marshall Division.  Other named defendants
      in this lawsuit are Belair Networks, Inc., Cisco Systems, Inc., Firetide, Inc.,
      and Skypilot Networks, Inc.  This lawsuit generally alleges that
      Proxim’s mesh products infringe two United States patents purportedly owned by
      Linex.  Linex is seeking damages allegedly caused by the alleged
      infringement of its two patents.  This matter is at an extremely early
      stage.  We believe the claims against us are without merit and intend
      to defend the litigation vigorously.  The litigation process is
      inherently uncertain, however, and there can be no assurance that the outcome
      of
      these claims will be favorable for us.




General




We
      are
      subject to potential liability under contractual and other matters and various
      claims and legal actions which are pending or may be asserted against us or
      our
      subsidiaries, including claims arising from the termination of the operations
      of
      Ricochet Networks, Inc. in the San Diego metropolitan area and the transfer
      of
      the operations of Ricochet Networks, Inc. in the Denver metropolitan area to
      Civitas Wireless Solutions, LLC.  These matters may arise in the
      ordinary course and conduct of our business.  While we cannot predict
      the outcome of such claims and legal actions with certainty, we currently
      believe that such matters should not result in any liability which would have
      a
      material adverse affect on our business.




**Item
      1A.  Risk Factors.**




*General
      Overview*




This
      Quarterly Report on Form 10-Q contains forward-looking statements as defined
      by
      federal securities laws that are made pursuant to the safe harbor provisions
      of
      the Private Securities Litigation Reform Act of 1995.  Forward-looking
      statements include statements concerning plans, objectives, goals, strategies,
      expectations, intentions, projections, developments, future events, performance
      or products, underlying assumptions, and other statements, which are other
      than
      statements of historical facts.  In some cases, you can identify
      forward-looking statements by terminology such as “may,” “will,” “should,”
“could,” “expects,” “intends,” “plans,” “anticipates,” “contemplates,”
“believes,” “estimates,” “predicts,” “projects,” and other similar terminology
      or the negative of these terms.  From time to time, we may publish or
      otherwise make available forward-looking statements of this
      nature.  All such forward-looking statements, whether written or oral,
      and whether made by us or on our behalf, are expressly qualified by the
      cautionary statements described in this Form 10-Q, including those set forth
      below, and any other cautionary statements which may accompany the
      forward-looking statements.  In addition, we undertake no obligation
      to update or revise any forward-looking statement to reflect events,
      circumstances, or new information after the date of this Form 10-Q or to reflect
      the occurrence of unanticipated or any other subsequent events, and we disclaim
      any such obligation.







25






You
      should read forward-looking statements carefully because they may discuss our
      future expectations, contain projections of our future results of operations
      or
      of our financial position, or state other forward-looking
      information.  However, there may be events in the future that we are
      not able to accurately predict or control.  Forward-looking statements
      are only predictions that relate to future events or our future performance
      and
      are subject to substantial known and unknown risks, uncertainties, assumptions,
      and other factors that may cause actual results, outcomes, levels of activity,
      performance, developments, or achievements to be materially different from
      any
      future results, outcomes, levels of activity, performance, developments, or
      achievements expressed, anticipated, or implied by these forward-looking
      statements.  As a result, we cannot guarantee future results,
      outcomes, levels of activity, performance, developments, or achievements, and
      there can be no assurance that our expectations, intentions, anticipations,
      beliefs, or projections will result or be achieved or
      accomplished.  In summary, you should not place undue reliance on any
      forward-looking statements.




*Cautionary
      Statements of General Applicability*




In
      addition to other factors and matters discussed elsewhere in this Form 10-Q,
      in
      our other periodic reports and filings made from time to time with the
      Securities and Exchange Commission, and in our other public statements from
      time
      to time (including, without limitation, our press releases), some of the
      important factors that, in our view, could cause actual results to differ
      materially from those expressed, anticipated, or implied in the forward-looking
      statements include, without limitation, the downturn and continuing uncertainty
      in the telecommunications industry and global economy; the intense competition
      in the broadband wireless equipment industry and resulting pressures on our
      pricing, gross margins, and general financial performance; our limited capital
      resources and uncertain prospects for obtaining additional financing; the
      possibility that we may raise additional capital on terms that we or our
      stockholders find onerous; possible better terms of any equity, debt, or
      convertible securities we may issue in the future than the terms of our common
      stock; the possibility that we may sell or otherwise dispose of portions of
      our
      business and assets for strategic reasons or to raise capital; possible negative
      reactions from investors, customers, employees, and others to any business
      or
      assets dispositions we may effect; difficulties in differentiating our products
      from competing broadband wireless products and other competing technologies;
      the
      impact, availability, pricing, and success of competing technologies and
      products; possible delays in our customers making buying decisions due to the
      actual or potential availability of new broadband connectivity technologies;
      difficulties in developing products that will address a sufficiently broad
      market to be commercially viable; our developing products for portions of the
      broadband connectivity and access markets that do not grow; our inability to
      keep pace with rapid technological changes and industry standards; expected
      declining prices for our products over time; our inability to offset expected
      price declines with cost savings or new product introductions; our inability
      to
      recover capital and other investments made in developing and introducing new
      products; lack of or delay in market acceptance and demand for our current
      and
      contemplated products; difficulties or delays in developing, manufacturing,
      and
      supplying products with the contemplated or desired features, performance,
      price, cost, and other characteristics; difficulties in estimating costs of
      developing and supplying products; difficulties in developing, manufacturing,
      and supplying products in a timely and cost-effective manner; difficulties
      or
      delays in developing improved products when expected or desired and with the
      additional features contemplated or desired; decisions we may make to delay
      or
      discontinue efforts to develop and introduce certain new products; negative
      reactions to any such decisions; costs and accounting impacts from any such
      decisions; our fluctuating financial results, which may be caused at times
      by
      receipt of large orders from customers; our limited ability to predict our
      future financial performance; our possible desire to make limited or no public
      predictions as to our expected future financial performance; the expected
      fluctuation in customer demand and commitments; difficulties in predicting
      our
      future financial performance, in part due to our past and possible future
      acquisition activity; our inability to achieve the contemplated benefits of
      our
      July 2005 acquisition of Proxim Corporation’s operations and any other
      acquisitions we may contemplate or consummate; management distraction due to
      those acquisitions; the ability of the companies to integrate in a
      cost-effective, timely manner without material liabilities or loss of desired
      employees or customers; the risk that the expected synergies and other benefits
      of the transactions will not be realized at all or to the extent expected;
      the
      risk that cost savings from the transactions may not be fully realized or may
      take longer to realize than expected; reactions, either positive or negative,
      of
      investors, competitors, customers, suppliers, employees, and others to the
      transactions; the risk that those transactions will, or could, expose us to
      lawsuits or other liabilities; obligations arising from contractual obligations
      of Proxim Corporation that we assumed; litigation risks, obligations, and
      expenses arising from contractual obligations of Proxim Corporation that we
      assumed; management and other employee distraction due to any litigation arising
      from contractual obligations of Proxim Corporation that we assumed; adverse
      impacts of purchase accounting treatment and amortization and impairment of
      intangible assets







26




acquired
      in any acquisitions; our general lack of receiving long-term purchase
      commitments from our customers; cancellation of orders without penalties; the
      ability of our customers to return to us some or all of the products they had
      previously purchased from us with the resulting adverse financial consequences;
      costs, administrative burdens, risks, and obligations arising from terms and
      conditions that we find onerous but that are imposed upon us by certain
      customers as a condition of buying products from us; our not selling products
      to
      certain customers due to our refusal to accept their terms and conditions of
      sale that we find onerous; difficulties or delays in obtaining raw materials,
      subassemblies, or other components for our products at the times, in the
      quantities, and at the prices we desire or expect, particularly those that
      are
      sole source or available from a limited number of suppliers; inability to
      achieve and maintain profitability; purchases of excess inventory that
      ultimately may not be used; difficulties or delays in developing alternative
      sources for limited or sole source components; our having to reconfigure our
      products due to our inability to receive sufficient quantities of limited or
      sole source components; adverse impact of stock option and other accounting
      rules; our reliance on third party distributors and resellers in our indirect
      sales model; our dependence on a limited number of significant distributors;
      our
      inability to obtain larger customers; dependence on continued demand for
      broadband connectivity and access; difficulties in attracting and retaining
      qualified personnel; our dependence on key personnel; competition from companies
      that hire some of our former personnel; lack of key man life insurance on our
      executives or other employees; lack of a succession plan; inability of our
      limited internal manufacturing capacity to meet customers’ desires for our
      products; our substantial reliance on contract manufacturers to obtain raw
      materials and components for our products and to manufacture, test, and deliver
      our products; interruptions in our manufacturing operations or the operations
      of
      our contract manufacturers or other suppliers; interruptions or delays in
      obtaining products in sufficient quantities and with acceptable quality from
      our
      contract manufacturers due to changes in the country, the factory, or the
      assembly line where our products are manufactured or other factors; additional
      costs resulting from changes in the country, the factory, or the assembly line
      where our contract manufacturers manufacture our products or other factors;
      customer dissatisfaction resulting from increased costs or delays in our
      products due to changes in the country, the factory, or the assembly line where
      our contract manufacturers manufacture our products or other factors; possible
      adverse impacts on us of the directive on the restriction of the use of certain
      hazardous substances in electrical and electronic equipment (the RoHS
      directive), including, without limitation, adverse impacts on our ability to
      supply our products in the quantities desired and adverse impacts on our costs
      of supplying products; possible adverse impacts on us of the waste electrical
      and electronic equipment directive (the WEEE directive), including, without
      limitation, adverse impacts on our ability to supply our products in the
      quantities desired and adverse impacts on our costs of supplying products;
      our
      failing to maintain adequate levels of inventory; costs and accounting impacts
      associated with purchasing inventory that is later determined to be excess
      or
      obsolete; our failure to effectively manage our growth; difficulties in reducing
      our operating expenses; adverse impacts of the war in Iraq and the war on
      terrorism generally; the potential for intellectual property infringement,
      warranty, product liability, and other claims; risks, obligations, and expenses
      arising from litigating or settling any such intellectual property infringement,
      warranty, product liability, and other claims; management and other employee
      distraction due to any such intellectual property infringement, warranty,
      product liability, and other claims; risks associated with foreign sales such
      as
      collection, currency, and political risk; limited ability to enforce our rights
      against customers in foreign countries; lack of relationships in foreign
      countries which may limit our ability to expand our international sales and
      operations; difficulties in complying with existing governmental regulations
      and
      developments or changes in governmental regulation; difficulties or delays
      in
      obtaining any necessary Federal Communications Commission and other governmental
      or regulatory certifications, permits, waivers, or approvals; possible adverse
      consequences resulting from marketing, selling, or supplying products without
      any necessary Federal Communications Commission or other governmental or
      regulatory certifications, permits, waivers, or approvals; changes in
      governmental regulations which could adversely impact our competitive position;
      our maintaining tight credit limits which could adversely impact our sales;
      difficulties in our customers or ultimate end users of our products obtaining
      sufficient funding; difficulties in collecting our accounts receivable; failure
      or inability to protect our proprietary technology and other intellectual
      property; possible decreased ability to protect our proprietary technology
      and
      other intellectual property in foreign jurisdictions; ability of third parties
      to develop similar and perhaps superior technology without violating our
      intellectual property rights; the costs and distraction of engaging in
      litigation to protect our intellectual property rights, even if we are
      ultimately successful; adverse impacts resulting from our settlement of
      litigation initiated by Symbol Technologies, Inc.; time, costs, political
      considerations, typical multitude of constituencies, and other factors involved
      in evaluating, equipping, installing, and operating municipal networks; costs
      of
      complying with governmental regulations such as Section 404 and other provisions
      of the Sarbanes-Oxley Act; the expense of defending and settling and the outcome
      of pending and any future stockholder litigation; the expense of defending
      and
      settling and the outcome of pending and any future litigation against us; the
      expected volatility and possible




27




stagnation
      or decline in our stock price, particularly due to the relatively low number
      of
      shares that trade on a daily basis and public filings regarding sales of our
      stock by one or more of our significant stockholders; future stock sales by
      our
      current stockholders, including our current and former directors and management;
      future actual or potential sales of our stock that we issue upon exercise of
      stock options or stock warrants; possible dilution of our existing stockholders
      if we issue stock to acquire other companies or product lines or to raise
      additional capital; possible better terms of any equity securities we may issue
      in the future than the terms of our common stock; investment risk resulting
      in
      the decrease in value of our investments; and risks, impacts, and effects
      associated with any acquisitions, investments, or other strategic transactions
      we may evaluate or in which we may be involved.  Many of these and
      other risks and uncertainties are described in more detail in our annual report
      on Form 10-K for the year ended December 31, 2006 filed with the Securities
      and
      Exchange Commission.




*Specific
      Cautionary Statements Relating to Recent Equity Issuance*




In
      July
      2007, we issued 4,300,000 shares of our common stock and warrants to purchase
      an
      additional 2,150,000 shares of our common stock in a private placement to
      institutional and other accredited investors.  We have filed a
      registration statement covering those shares which enables the public resale
      of
      that stock.  We believe approximately 115,000 shares of our stock
      issued in this private placement transaction have been publicly
      resold.  Taking into account the 2,335,300 shares of our stock we
      agreed to repurchase and related cancellation of warrants to purchase 1,225,000
      shares of our common stock, we believe this registration statement now covers
      1,850,000 shares of our outstanding common stock and 925,000 shares of our
      common stock which may be acquired upon the exercise of
      warrants.  This registration could cause our stock price to fall or
      prevent it from increasing.  Also, a substantial amount of this common
      stock being sold or becoming available (or being perceived to become available)
      for sale in the public market could cause the market price of our common stock
      to fall or prevent it from increasing, particularly given the relatively low
      trading volumes of our stock.  Customers, investors, employees,
      competitors, and others may react negatively to this stock sale and warrant
      issuance, the price at which the stock was sold and warrants may be exercised,
      the dilution resulting from the sale and issuance, and other ramifications
      of
      these transactions.  Our stock price has declined since this
      transaction was announced and may decline further.




*Specific
      Cautionary Statements Relating to Recent Equity Repurchase*




In
      November 2007, we agreed to repurchase 2,335,300 shares of our common stock
      that
      had been issued in the July 2007 private placement at a price of $1.70 per
      share, which price was higher than the then-current market value of our common
      stock.  As part of this repurchase transaction, those selling
      participants will also surrender to Proxim Wireless for cancellation warrants
      to
      purchase an aggregate of 1,225,000 shares of our common stock.  These
      repurchases and cancellations are expected to be completed by November 16,
      2007.  We will use approximately $4.0 million of our cash on hand for
      this repurchase, out of approximately $11.5 million cash as of September 30,
      2007.  This reduced level of cash could increase our need or desire to
      raise additional capital through business line or asset dispositions, bank
      financings, equity issuances, or other means.  This reduced level of
      cash may change the terms on which third parties, including suppliers, may
      want
      to do business with us.  Investors, suppliers, employees, customers,
      competitors, and others may react negatively this stock repurchase and other
      ramifications of these transactions.  These transactions could result
      in increased liabilities and other adverse consequences for us.




*Specific
      Cautionary Statements relating to Ricochet Actions*




In
      August
      2007, Ricochet Networks, Inc., a subsidiary of Proxim Wireless Corporation,
      announced that it had discontinued operation of the Ricochet® network in the San
      Diego metropolitan area and sold the operations of the Ricochet network in
      the
      Denver metropolitan area.  There can be no assurance whatsoever that
      we will realize the expected benefits of these actions at all or to the extent
      anticipated.  Other risks associated with these actions include the
      risk that cost savings from these actions may not be fully realized or may
      take
      longer to realize than expected; the possibilities that these actions could
      result in increased liabilities and other adverse consequences; reactions,
      positive or negative, of customers, investors, employees, contract
      counterparties, competitors, and others to these actions; the uncertain impact
      of these actions on the trading market, volume, and price of Proxim Wireless
      Corporation’s stock; the time and costs of discontinuing the operations of the
      Ricochet network in the San Diego metropolitan area; legal, financial statement,
      and accounting ramifications resulting from these actions; and management and
      board interest in and distraction due to these actions.






28




*Specific
      Cautionary Statements relating to Intellectual Property
      Litigation*




On
      June
      1, 2007, Linex Technologies, Inc. filed suit against Proxim Wireless Corporation
      for alleged patent infringement in the United States District Court for the
      Eastern District of Texas, Marshall Division.  Other named defendants
      in this lawsuit are Belair Networks, Inc., Cisco Systems, Inc., Firetide, Inc.,
      and Skypilot Networks, Inc.  This lawsuit generally alleges that
      Proxim’s mesh products infringe two United States patents purportedly owned by
      Linex.  Linex is seeking damages allegedly caused by the alleged
      infringement of its two patents.  This matter is at an extremely early
      stage.  We believe the claims against us are without merit and intend
      to defend the litigation vigorously.  The litigation process is
      inherently uncertain, however, and there can be no assurance that the outcome
      of
      these claims will be favorable for us.  Even if we are completely
      successful in defending the claims asserted against us in this lawsuit, we
      expect we will incur significant defense costs and that management, technical,
      and other personnel will be distracted and diverted by this
      lawsuit.




*Possible
      Implications of Cautionary Statements*




The
      items
      described above, either individually or in some combination, could have a
      material adverse impact on our reputation, business, need for additional
      capital, ability to obtain additional debt or equity financing, current and
      contemplated products gaining market acceptance, development of new products
      and
      new areas of business, sales, cash flow, results of operations, financial
      condition, stock price, viability as an ongoing company, results, outcomes,
      levels of activity, performance, developments, or achievements.  Given
      these uncertainties, investors are cautioned not to place undue reliance on
      any
      forward-looking statements.




**Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds.**




Subsequent
      to the end of the third quarter 2007, in early November 2007, Proxim Wireless
      Corporation agreed to repurchase an aggregate of 2,335,300 shares of its
      outstanding common stock at a price of $1.70 per share.  This stock
      had been issued to the selling stockholders in a private placement announced
      by
      Proxim Wireless on July 24, 2007, in which investors purchased an aggregate
      of
      4.3 million shares of common stock at $1.75 per share and warrants to purchase
      an additional 2.15 million shares of common stock at an exercise price of $2.45
      per share.  As part of this repurchase transaction, those selling
      participants will also surrender to Proxim Wireless for cancellation warrants
      to
      purchase an aggregate of 1,225,000 shares of common stock of Proxim
      Wireless.  These repurchases and cancellations are expected to be
      completed by November 16, 2007.  On November 6, 2007, Proxim Wireless
      filed a Current Report on Form 8-K with the Securities and Exchange Commission
      containing more details about these transactions.




**Item
      6.  Exhibits.**




See
      Exhibit Index.




**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.




Proxim
                Wireless CorporationDate:  November
                14, 2007
            By:
            /s/  Brian
                J. SeredaBrian
                J. Sereda,Chief
                Financial Officer*(principal
                financial and accounting officer)*





29





**EXHIBIT
      INDEX**




**Exhibit**
              **Number**
            **Description**3.1
            Certificate
                of Ownership and Merger as filed with the Delaware Secretary of State
                on
                September 4, 2007 (1)10.1
            Purchase
                Agreement dated as of July 19, 2007 among  Proxim Wireless
                Corporation and each investor named therein (2)10.2
            Registration
                Rights Agreement dated as of July 23, 2007 among Proxim Wireless
                Corporation, and each investor named therein (2)10.3
            Form
                of warrant issued July 23, 2007 (2)10.4
            Purchase
                and Release Agreement dated as of November 1, 2007 among Proxim Wireless
                Corporation and SRB Greenway Capital (Q.P.), L.P., SRB Greenway Capital,
                L.P., and SRB Greenway Offshore Operating Fund, L.P. and Steven R.
                Becker
                (3)10.5
            Purchase
                and Release Agreement dated as of November 2, 2007 among Proxim Wireless
                Corporation and Clarion Capital Corporation, Clarion World Offshore
                Fund,
                Ltd., The Amended & Restated Declaration of Trust of Morton A. Cohen,
                Dated May 9, 2005, and Shaker Investments Tower, L.P. and Morton
                A. Cohen
                and Edward Hemmelgarn (3)10.6
            Amended
                and Restated Employment Agreement between Proxim Wireless Corporation
                and
                David L. Renauld (4)31.1
            Certification
                of Chief Executive Officer Pursuant to Rule 13a-14(a).31.2
            Certification
                of Chief Financial Officer Pursuant to Rule 13a-14(a).32.1
            Certification
                Pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley
                Act of
                2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title
                18 of
                the United States Code).99.1
            Asset
                Purchase Agreement dated as of July 31, 2007 between Ricochet Networks,
                Inc. and Civitas Wireless Solutions, LLC and joined in by Judi A.
                Evans
                (5)99.2
            Intellectual
                Property Transfer and License Agreement dated as of July 31, 2007
                between
                Proxim Wireless Corporation (formerly Terabeam, Inc.) and Civitas
                Wireless
                Solutions, LLC (5)99.3
            License
                Agreement dated as of July 31, 2007 between Proxim Wireless Corporation
                (formerly Terabeam, Inc.) and Civitas Wireless Solutions, LLC
                (5)


______________


All
      non-marked exhibits are filed herewith.





(1)
            Incorporated
                herein by reference to the exhibits to Form 8-K filed with the SEC
                on
                September 6, 2007.(2)
            Incorporated
                herein by reference to the exhibits to Form 8-K filed with the SEC
                on July
                24, 2007.(3)
            Incorporated
                herein by reference to the exhibits to Form 8-K filed with the SEC
                on
                November 6, 2007.(4)
            Incorporated
                herein by reference to the exhibits to Form 8-K filed with the SEC
                on
                October 25, 2007.(5)
            Incorporated
                herein by reference to the exhibits to Form 8-K filed with the SEC
                on
                August 6, 2007.




30