UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Mark one)

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2004

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period _________________to_________________

Commission file number 000-31031

AIRSPAN NETWORKS INC.

(Exact name of registrant as specified in its charter)

Washington	75-2743995
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
777 Yamato Road, suite 105 Boca Raton, FL (561) 893-8670	33431
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (561) 893-8670

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.0003 par value

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to the Form 10-K/A o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No o

Aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of July 4, 2004: $141,159,336

Number of shares outstanding of the registrant’s class of common stock as of April 15, 2005: 38,000,253

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of registrant’s definitive Proxy Statement for its 2005 Annual Meeting of Shareholders are incorporated herein by reference into Part III.

AIRSPAN NETWORKS INC

FORM 10-K/A

For the Year Ended

December 31, 2004

This amendment on Form 10-K/A reflects the restatement of the consolidated financial statements of Airspan Networks Inc., as discussed in Item 7 Managements Discussion and Analysis and Note 17 to the consolidated financial statements. Management of the Company identified a material weakness in the Company's internal control over financial reporting, as discussed in Item 9A and have reissued their assessment of the effectiveness of the Company's internal control over financial reporting.

All of the information in this Form 10-K/A is as of March 16, 2005, the filing date of the original Form 10-K for the year ended December 31, 2004, and has not been updated for events subsequent to that date other than for the matter discussed above.

TABLE OF CONTENTS

ITEM		Page No.

	PART I
1	Business	1

	PART II
5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
6	Selected Financial Data	26
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
8	Financial Statements and Supplementary Data	39
9A	Controls and Procedures	40

	PART IV
15	Exhibits, Financial Statement Schedules	42

SIGNATURES

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

FOR THE PURPOSE OF THE SAFE HARBOR PROVISIONS OF THE

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Some of the discussion under the captions “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and elsewhere in this Form 10-K/A may include certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements with respect to anticipated future operations and financial performance, growth and acquisition opportunity and other similar forecasts and statements of expectation. These statements involve known and unknown risks and uncertainties, such as our plans, objectives, expectations and intentions, and other factors that may cause our, or our industry’s, actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. These factors are listed under “Risk Factors” and elsewhere in this Form 10-K/A.

In some cases, you can identify forward-looking statements by terminology such as “expects”, “anticipates”, “intends”, “may”, “should”, “plans”, “believes”, “seeks”, “estimates” or other comparable terminology.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, we do not guarantee future results, levels of activity, performance or achievements. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements. We disclaim any obligation to update or review any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

PART I

ITEM 1. BUSINESS

Business Overview

We are a global supplier of Broadband Wireless Access (“BWA”) equipment that allows communications service providers (often referred to as “local exchange carriers,” or simply telephone companies), internet service providers (often referred to as “ISPs”) and other telecommunications users, such as utilities and enterprises, to cost effectively deliver high-speed data and voice services using radio frequencies rather than wires. We call this transmission method “Broadband Wireless”. The primary market for our systems has historically been a subset of the fixed and broadband wireless access systems market, which is the fixed point-to-multipoint market in radio frequencies below 6.0GHz. On March 10, 2005, we announced the introduction of products that also provide BWA to nomadic and portable applications.

Each of our wireless access systems utilizes digital wireless techniques, which provide wide area coverage, security and resistance to fading. Our systems can be deployed rapidly and cost effectively, providing an attractive alternative or complement to traditional copper wire, cable, or fiber-optic communications access networks. Our products also include software tools that optimize geographic coverage of our systems and provide ongoing network management. To facilitate the deployment and operation of our systems, we also offer network installation, training and support services. A more complete description of our various wireless access systems is provided below. Our BWA systems (the “Airspan BWA Solutions”) have been installed by more than 300 network operators in more than 90 countries and are being tested by numerous other service providers.

Our initial products were developed and sold originally to provide wireless voice connections between network operators and their end customers. Product enhancements introduced in 1998 enabled us to offer both voice and data connectivity over a single wireless link. We have continued to develop the capabilities and features of the original products, and today we sell them as the AS4000 and AS4020 products, in systems capable of delivering high-capacity broadband data with carrier-quality voice connections to operators globally.

In October 2002, we strengthened our position in the BWA equipment market with the acquisition of the WipLL (Wireless Internet Protocol in the Local Loop) business from Marconi (“Marconi WipLL”) pursuant to a stock purchase agreement, and renamed the business Airspan Networks (Israel) Limited (“Airspan Israel”). The products and services produced by Airspan Israel enable operators in licensed and unlicensed wireless bands to offer high-speed, low cost, wireless broadband connections for data and voice over IP. We acquired all of the issued and outstanding capital stock and debt of Marconi WipLL in exchange for $3 million of cash.

In October 2003, we began marketing our AS4030 and AS3030 product range of Airspan branded high-end point-to-multipoint and point-to-point products suitable for operators wishing to deliver service offerings to medium and large businesses and multi-tenant dwellings that require considerable bandwidth for their end users. These products, based on 802.16 Orthogonal Frequency Division Multiplexing (“OFDM”) technology, can also be used for a wide range of backhaul applications, for example connecting remote base stations to a central office.

In December, 2003, we acquired the fixed wireless access business of Nortel Networks known as “Proximity” in accordance with the terms and conditions of a contemporaneously executed and delivered Purchase and Sale Agreement. The Proximity products enable operators to provide carrier class circuit switched voice and data services, based on a Time Division Multiple Access (“TDMA”) technology. We acquired inventory relating to the Proximity business as well as existing assets associated with the manufacture, development and support of the Proximity product line. We also assumed the product supply obligations associated with customer contracts and certain other liabilities and obligations along with the workforce of 26 persons directly employed in the Proximity business. The final purchase price was $13.1 million.

On December 28, 2004 we signed a letter of intent to acquire ArelNet Limited (TASE: ARNT), an Israeli company providing Voice over IP (“VoIP”) network infrastructure equipment and solutions, including soft switches and gateways supporting major VoIP standards. In accordance with the letter of intent, we expect to acquire all of the outstanding securities of ArelNet for an aggregate purchase price of $8.7 million, of which $4.0 million would be paid in cash and $4.7 million in shares of Airspan.

On March 9, 2005 we announced the introduction of a new product line known as “AS.MAX”. AS.MAX is a full portfolio of WiMAX systems, Base Stations and Customer Premise Equipment (“CPEs”), based on the 802.16 standard. The AS.MAX product range is designed to serve both:

·	our traditional fixed point-to-multipoint BWA market; and

·	new markets, such as the BWA market for nomadic and portable applications.

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

This Form 10-K/A and the restated financial statements included herein reflect a correction of the Company’s accounting treatment of its September 13, 2004 issuance of 73,000 shares of Series A Preferred Stock and a restatement of the Company's fourth quarter 2004 earnings per share. As described further in “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Restatement” and “Note 17 of the Notes to the Consolidated Financial Statements”, this Form 10-K/A amends the Company’s previously filed Form 10-K for the year ended December 31, 2004 to reflect a $10.4 million, non cash, deemed dividend from the embedded beneficial conversion feature relating to the Series A Preferred Stock and the effect of participating convertible securities on the computation of basic earnings per share in the fourth quarter 2004.

Except as otherwise expressly noted herein, this Form 10-K/A does not reflect events occurring after the March 16, 2005 filing of our Annual Report on Form 10-K in any way, except those required to reflect the effects of this restatement of our financial statements for the periods presented or as deemed necessary in connection with the completion of restated financial statements.

The remaining Items required by Form 10-K are not amended hereby and have been omitted. In order to preserve the nature and character of the disclosures set forth in such Items as originally filed, except as expressly noted herein, this report continues to speak as of the date of the original filing, and we have not updated the disclosures in this report to speak as of a later date.

While this report primarily relates to the historical periods covered, events may have taken place since the original filing that might have been reflected in this report if they had taken place prior to the original filing.

A copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available, free of charge, on our Web site, www.airspan.com, as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (SEC). The information found on our website is not part of this or any other report we file with or furnish to the SEC.

Industry Overview

The Global Need for Broadband Access

We believe there has been continued growth in the number of end users of broadband wireless access equipment throughout the world for the last five years. Although the aggregate number of users increased during that period, such growth was not matched every year by an increase in purchases of BWA equipment by network operators. The high-growth in spending on telecommunications and broadband infrastructure in the late 1990s was followed by declines in such spending at the start of this decade, and it is only in the past twelve months that we believe we have seen evidence of renewed growth in spending on new wireless broadband infrastructure. The market for BWA equipment is expected to grow from $0.5 billion in 2004 to $3 billion in 2009 with 50% of the market in 2009 to be derived from WiMAX certified product (source: Skylight Research). We anticipate that as the Internet continues to gain acceptance as a global communications tool, end-users worldwide will increasingly demand reliable broadband access in addition to traditional voice services to take advantage of communications over the Internet.

We believe that much of the growth in the number of broadband end-users has been generated in developing countries with a historically limited supply and penetration of telecom services, including broadband access. Although mobile operators are often selected to satisfy the demand for basic telephony in low teledensity regions, we believe BWA systems are often selected in many areas to provide the broadband access solution due to a superior set of features such as higher data speeds and availability of frequencies not serviced by traditional cellular networks.

Global Deregulation and the Need for Reliable, Cost-Effective and Rapid Network Deployments

The worldwide deregulation of the telecommunications industry created the opportunity for many new competitors, including Competitive Local Exchange Carriers (“CLECs”) and Internet Service Providers (“ISPs”), to provide local access connections that were historically only offered by a single incumbent provider, an Incumbent Local Exchange Carrier (“ILEC”). Even though some of the CLECs and ISPs that grew out of deregulation have failed, those that have survived are now striving to differentiate their service offerings on the basis of their range of services, quality and reliability, customer service, provisioning and pricing.

CLECs and ISPs have expanded their focus beyond large business customers to serving small and medium-sized businesses, high-end residential and small-office/home-office customers as well as providing services outside of the major urban areas. To serve these markets, CLECs and ISPs require more cost-effective network deployment solutions to compensate for lower average customer spending on communications services and larger coverage area requirements. We believe wireless broadband can provide these solutions.

Enterprises have found that it may be more cost effective or secure to use private BWA networks for their own corporate communications networks than to rely on public networks; and utilities have been able to create additional sources of revenue using BWA equipment linked to their existing transmission and access networks.

Many countries have existing networks that are unable to provide reliable data, voice and fax services while many others lack the network infrastructure to make basic telephone services broadly available. Both ILECs and CLECs in these markets need cost-effective, rapidly deployable alternatives to traditional copper based networks. Again, we believe that BWA solutions can provide these alternatives.

The Access Network

While the communications transport network and Internet backbone are capable of transporting data at extremely high speeds, data can only be delivered from those parts of the network through the access portion to the end user as fast as the end-user’s connection to the network will permit. Many traditional access connections that use copper wires are inadequate to address the rapidly expanding bandwidth requirements. To address these requirements a number of alternative solutions have emerged. We have identified below the solutions that are perceived to have, for a variety of technological and economic reasons, competed most directly with BWA solutions we offer.

• Wired Digital Subscriber Line. Digital subscriber line (“DSL”) technology improves the data transmission rate of existing copper networks. DSL transmission rates and service availability, however, are limited in all networks and countries by both the quality of the available copper, which for many providers is a large percentage of their copper network and by the maximum transmission distance (5.5 kilometers from the subscriber to the service provider’s switching equipment in many instances) of wired DSL technology. In many instances, a substantial portion of an operator’s copper network is unsuitable for DSL transmission.

• Cable Networks. Two-way cable modems using coaxial cable enable data services to be delivered over a network originally designed to provide television service to residential subscribers. Coaxial cable has greater transmission capacity than copper wires, but is often costly to upgrade for two-way data services. The data rate available to each subscriber on a cable link decreases as the number of subscribers using the link increases. Cable coverage, which is not available in many countries, may limit the growth of this segment.

• Fiber Networks. Fiber technology allows an operator to deliver video, voice and data capabilities over an optical fiber medium that can deliver very high capacity to end users. Fiber access, however, has a very high cost of deployment in residential networks.

• Cellular Networks. Mobile wireless networks (“Cellular networks”) are now capable of delivering both voice and limited broadband data connectivity to fixed, nomadic, portable and mobile applications. Cellular networks may provide a competitive solution in markets where the operator is seeking to only product low-quality voice and limited data rates at a low cost.

• Broadband Wireless Access. Broadband wireless access systems enable high-speed access to data and telephone networks without requiring a cabled connection, such as copper wire or fiber, between the subscriber and the base station. A fixed wireless system can be more rapidly and cheaply deployed than wire or cable. To provide high quality service, it is necessary to plan the deployment of radio equipment to maximize coverage and availability, and the technology employed must resist fading. In addition, fixed wireless services work best in those regions where a suitable frequency band is available.

The introduction of WiMAX-compliant products will create additional deployment opportunities for Broadband Wireless systems. With WiMAX, Broadband Wireless access will be deliverable to nomadic, portable and, when the WiMAX 802.16e standard has been developed, to mobile applications, in addition to our traditional fixed applications.

For a variety of technological and economic reasons, we do not believe that satellite technologies have presented the most direct competitive challenge to the fixed wireless access systems offered by us. Cellular networks are now capable of delivering both voice and limited broadband data connectivity that can compete in our market where the customer driver is for low cost, low quality voice and limited data rates.

Increased Availability of Licensed, Unlicensed (or License Exempt) Spectrum

Government competition policy and other political pressures to make broadband available in underserved areas has led to the creation of new licensed spectrum, especially in 3.5GHz, in many areas. During 2004, 3.5GHz spectrum was licensed for the first time in a number of countries with additional licenses given in China. Further, plans are underway for the allocation of additional spectrum at 3.5GHz in Hong Kong and other frequencies are being allocated in a number of other countries. Other frequencies are also being licensed in the sub 6GHz spectrum particularly 700MHz in the USA and within the 2GHz band in India. Additional spectrum for unlicensed applications was added in many areas during 2004. Most notably, additional parts of the 5GHz band have been made available to network operators for broadband wireless applications.

The greater availability of license-exempt spectrum has been of particular benefit to many smaller carriers and ISPs, where a significant market has developed around the deployment of broadband in rural communities using license-exempt wireless access systems. We believe the increased availability of licensed and unlicensed spectrum may increase the demand for BWA solutions, including our WipLL products, by various small carriers and ISPs.

WiFi Networks and Nomadic Broadband Access

We believe that there has been a significant growth in the numbers of applications and service providers utilizing WiFi technology under the IEEE (“Institute of Electrical and Electronics Engineers”) 802.11 standards to provide wireless broadband access. With rapidly falling WiFi technology prices, large chip vendors have started to integrate WiFi capabilities into chip sets used in laptop computers, personal digital assistants and other WiFi-enabled products, giving their users Broadband Access in areas (“WiFi Hotspots”) where a service provider or end user has installed a WiFi transceiver and the WiFi transceiver is connected to a broadband access network. Under the 802.11 standards, WiFi-enabled products must be within approximately 200 meters of a WiFi transceiver to operate as designed. It is our hope that WiFi systems will generate a greater level of demand for our BWA equipment, which in turn will be used to provide the required connectivity between the WiFi transceiver and the backbone and transport networks. To facilitate this connectivity, we have incorporated a WiFi access point into a variant of our AS4020 subscriber terminals and plan to continue to offer other products, including our WIMAX products, which support WiFi tranceivers.

The Development of WiMAX Standards

In 2001, a small group of BWA system and component manufactures, including Intel Corporation and us, formed the WiMAX Forum. The goal of the Forum was to create global standards to ensure true interoperability between BWA systems. The founding members believed that interoperability was essential to the future growth of the broadband wireless market. Since its establishment, the Forum members, working together with the IEEE, have established the first two of the WiMAX standards on which fixed BWA systems will operate, the IEEE 802.16a and the IEEE 802.16-2004 (formerly the 802.16d) standards. These standards fully support all broadband wireless applications and provide a framework for the evolution of our products to higher performance and lower cost.

During 2004, participation in the Forum grew significantly. At the beginning of the year the organization had approximately 60 members, growing to approximately 220 by the end of 2004. During the year the Forum also changed its focus from purely fixed broadband wireless applications to a wider range of deployment scenarios, including networks that will support nomadic, portable and eventually mobile users.

We anticipate that standardization in the BWA industry will increase the availability of low-cost components for inclusion in BWA equipment, including our Customer Premises Equipment (“CPE”). As a result, assuming no other economic factors change, we anticipate the cost of BWA equipment to decrease over time and the aggregate number of BWA solutions sold per annum to increase.

We have developed and continue to develop some of our products in accordance with existing, emerging and anticipated wireless-industry standards. In particular, we develop products and product features that are designed to conform to the IEEE 802.16-2004 and the IEEE 802.16e standards. See “Risk Factors- If we are not able to implement a program to conform our products to industry standards…”

The Need for Fixed Wireless Access and Broadband Wireless Solutions

The limitations and high costs of other existing access solutions have led many network operators to consider deployment of fixed wireless access networks. Fixed and BWA technology permits fast, flexible and cost-effective network rollouts. Many varieties of wireless access systems exist, some offering only basic voice telephony services, others delivering only IP data and data-derived services. Airspan’s technologies provide a platform for delivery of either or both high quality voice and high-speed data.

Each type of wireless system operates within assigned frequency bands that can be segmented by the bandwidth of data that can be carried, the effective range of a single cell and the cost of deployment. Currently available wireless technologies include cellular, fixed point-to-multipoint wireless, fixed point-to-nomadic and portable wireless applications, cordless, wireless local area networks (“Wireless LANs”, networks that cover a building or a small geographic area), radio systems using frequencies between 10GHz and 100GHz, or millimeter wave, as well as various “next generation” mobile wireless technologies.

Each of these technologies is best suited to specific applications. Systems based on millimeter wave technologies (“LMDS Systems”), for example, provide high bandwidth services. However the LMDS Systems have high costs that make them suitable only for large users of data, have significant range limitations, require line-of-sight to provide services and are adversely affected by weather conditions. These systems are generally targeted at large business customers in major cities.

Lower frequency cordless and mobile cellular technologies have been widely deployed to deliver wireless voice and limited data services. Cellular technologies typically have a wider geographic range than our system and provide various forms of nomadic, portable and mobile connectivity. Systems with lower frequencies of operation are able to propagate further, while cordless technologies have a more limited geographic range than our system. The lower bandwidth of cordless and cellular technologies today makes them unsuitable for delivering reliable, high-speed Internet access on a broad scale. The deployment of third generation mobile wireless systems in the future may, however, narrow the gap in data transmission rates between mobile technologies and our BWA systems.

Wireless LANs have greater bandwidth than our systems, but like cordless technologies, have been generally more expensive to deploy in large geographic areas because of their limited geographic range. Again, future developments of LAN products using the IEEE802.16 standard and/or WiMAX may narrow the gap in range in the future. Wireless LAN technologies are not currently optimized, however, for delivery of high-quality voice services.

Our systems are designed to provide a range of communications services in the 700MHz to 6.0GHz frequency bands, in both licensed and unlicensed spectrum allocations. The performance characteristics of these frequency bands make them ideal for broader market applications for service providers. These bands are less sensitive to line-of-sight obstructions and weather conditions than the millimeter wave technologies described above, even though they offer lower capacity for data transmission. The availability of our technology at attractive prices in these frequencies makes it easier for operators and ISPs to develop viable business cases for their services. We therefore believe that our products are often more suitable than mobile, cordless or Wireless LAN technologies for enabling network operators and ISPs to provide fixed, high-speed data and voice services using both licensed and unlicensed radio frequencies.

We believe our systems deliver these services reliably and cost effectively and provide the following benefits:

Data and Voice Services. Our AS4000, Proximity and AS4020 Wireless DSL solutions provide network operators with combined and simultaneous optimized delivery of both high-speed packet data and wire-quality voice services. Our WipLL Solution gives network operators and ISPs a relatively low cost data and voice-over-Internet-Protocol (“VoIP”) solution. Our Airspan branded AS4030 solution provides high-speed data rates that can be used for cellular backhaul or, corporate or public sector high-speed Internet access. Collectively, we refer to these solutions as the Airspan BWA Solutions. Our systems flexibly allocate the available bandwidth to the services required, thereby permitting the radio resources and spectrum to be used most efficiently. Our systems are designed as modular solutions to enable deployments to be expanded as our technologies and customers’ needs evolve. We provide a single subscriber unit that delivers the voice or data connection, or a combination of both, to a subscriber, thus eliminating a need for multiple access devices in customer premises. During 2005 we will supplement this capability with our AS.MAX product line that will support both voice and data applications using Voice-over-IP technology.

Quality of Service and Reliability. Our AS4000 and AS4020 solutions are based on DS-CDMA technology (defined below), which allows network operators to offer high-quality data and voice services with the same level of reliability that traditional telephone networks provide. Our field proven Proximity solution is based on a TDMA (defined below) technology that also provides high quality data and voice services to network operators at levels of reliability that are better than many wireline based networks. Our WipLL Solution is based on FH-CDMA technology (defined below), which allows operators and ISPs to offer a high-quality data and voice services using the VoIP solution. The Airspan branded AS.MAX product line is based on the 802.16 standard and will initially use 256 OFDM (defined below) technology to provide excellent non line of sight characteristics. These solutions provide wide-area coverage, security and resistance to fading. In addition, our systems allow alternative service providers to bypass the incumbent’s network, enabling them to monitor on a real time basis an end-user’s network access connection. Our products are successfully deployed and operated in a wide range of demanding environments throughout the world.

Rapid, Cost-Effective Deployment. Our wireless solutions are generally less expensive to deploy than fiber or copper wire networks or other high-speed fixed wireless networks. Our systems’ wide area coverage requires fewer base stations, allowing faster deployment with lower initial capital outlays. A single AS4020 or Proximity base station can cover up to 70 square miles in an urban setting and as much as 700 square miles in a rural setting, on a near line of sight basis. A single WipLL solution base station can cover up to 175 square miles. The AS.MAX Product line supports similar near line-of-sight distances, but also supports non line-of-sight operation over 50 square miles. Network operators and ISPs can quickly begin generating new subscriber revenues due to the reduced time for up-front planning and the relative ease and speed of installation of our base stations. Our systems allow our customers to rapidly add new subscribers, who can be brought online in hours once the basic infrastructure is in place. Network operators and ISPs have the advantage of a lower up-front infrastructure cost, adding extra network equipment to increase capacity only when they have demand from their customers.

Flexibility and Expandability. Our systems can be easily and quickly configured to meet specific customer requirements for capacity and frequency allocations. The modular design of our systems permits customization and expansion as customer requirements increase. The point-to-multipoint design of the Airspan BWA Solutions also facilitates expansion by permitting multiple subscribers to be connected to a single base station. In addition, multiple types of service, including data and voice, can be delivered over a single radio channel enabling network operators and ISPs to differentiate and customize their service offerings. Our products use technology that allocates bandwidth upon subscriber demand and allows a single Base Station to accommodate from 100 to 3,000 subscribers, depending upon the solution deployed.

Comprehensive Implementation and Support Solutions. We offer our customers a range of software tools that provide system-wide analysis for optimizing geographic coverage and identifying and solving potential sources of interference. Our software tools also can be used to provide service qualification and initiate service activation for new customers. The tools also provide alarm, maintenance and testing functions. In addition, to facilitate deployment and operation of our systems, we offer network installation, training and support services. The network operator is generally responsible for site preparation and installation of the subscriber terminals. We have developed a worldwide network of regional offices and subcontractors that allows us to provide local technical and operational support for our customers wherever our products are deployed. We also operate a 24-hour technical help line providing additional support and troubleshooting for all our customers.

Our Strategy

Our goal is to be the world’s leading provider of broadband wireless access systems to local exchange carriers, other network operators and enterprises seeking to use fixed broadband wireless access systems for their communications. Key elements of our strategy include the following:

Capitalize on existing deployments of our systems to attract new customers. Our numerous installations with operators and enterprises worldwide serve both as proof that our technology concept works and as a reference point when we sell to others. We intend to continue to leverage our existing relationships with customers to attempt to become their primary provider of broadband fixed wireless access systems. We are particularly focused on expanding our existing customer relationships to our customers’ subsidiaries and affiliates worldwide.

Maintain our technology position. We believe that we have established a strong technology position in the market for fixed wireless access solutions, and we seek to maintain this position by continuing to make substantial investments in research and development and by strategic acquisitions. Our research and development efforts are particularly focused on increasing the speed and capacity of data transmission and operational coverage area, while reducing the cost of our infrastructure equipment. We are also focused on reducing the installation time and costs of our subscriber terminals. We are actively involved in the development of standards through our membership in or participation with leading standards organizations such as the IEEE’s 802.16 group, the WiMAX Forum and ETSI (European Telecommunications Standards Institute). We believe our leadership role in WiMAX may give us a lead in the development and sale of WiMAX Certified^TM compliant products. We also expect to continue to seek to acquire new businesses, products and technologies to accelerate the development of our products and our time-to-market with new advanced products.

Target key growth market opportunities globally. Our broadband wireless solutions find their strongest competitive advantage in areas where there is a growing demand for high-speed data or for combined high-speed data and voice services, and where cost considerations make traditional solutions impracticable. As a result, in a developed market like the United States, we focus on service providers that are targeting small and medium sized businesses, small office/home office users and high-end consumers as well as end users in suburban and rural areas. We believe our WipLL product is especially attractive to service providers in such markets. Additionally in the United States we have sold our AS4000 and AS4020 solutions to customers who have had a federally imposed requirement to use the PCS wireless spectrum they have acquired by auction or risk losing that spectrum. In the developing world, we believe our opportunities are generally much broader due to the general inadequacy of the existing communications infrastructure. In these markets, wireless solutions can be the basis for a new national telecommunications infrastructure.

Develop and expand our strategic relationships. We intend to develop and expand our strategic relationships with large communications equipment manufacturers to help us market our products to network operators deploying large-scale turnkey networks. These relationships facilitate broader deployments of our systems worldwide, through stronger sales presence and additional integration services and support capabilities provided by those manufacturers. We also intend to form strategic relationships with communications companies situated within certain countries where there are competitive advantages to having a local presence.

Expand sales, marketing and customer support presence in key markets. We are constantly in the process of seeking key areas of marketing opportunities. Accordingly, we often refocus our direct sales, marketing and customer support presence in key markets to drive additional deployments and increase awareness of our products among network operators. We intend to continue to hire sales and marketing personnel in new sales and customer-support offices in key strategic markets globally where we have perceived strong demand for our product. We also intend to continue to develop a network of resellers and distributors of the WipLL product line for the enterprise and ISP markets.

Expand the product range that we have to offer. We are seeking to continue to expand our range and effectiveness of offered BWA solutions through both internal growth and acquisition.

Products

General

We supply BWA systems that connect residential and business customers to a communications or Internet service provider’s network, or that connect various subscriber terminals in an enterprise network.

Below is a diagram of our wireless systems that illustrates the relationship between subscriber terminal equipment, base station equipment and a communication service provider’s network

The service provider installs base stations at various locations within its geographical area of operation that are linked to the rest of the telecommunications network at the central office (“CO site”). Voice traffic is routed to the public switched telecommunications network (“PSTN”) via a switch whilst data traffic can be connected directly to the Internet or to leased line data networks, typically via a router. Each base station in turn transmits and receives voice and high-speed data and Internet traffic via a wireless link from subscriber terminals located at residential and business premises.

Our products consist of the following broadband access platforms operating in licensed and unlicensed frequencies between 700 MHz and 6.0GHz:

Broadband Access Platforms

• AS4000 and AS4020 Solution. Our AS4000 and AS4020 Solution is a multi-service platform supporting carrier-class voice, IP data, leased line services and Integrated Services Digital Network (“ISDN”) solutions. The product range includes a wide variety of Subscriber Terminal (“ST”) types to deliver flexible combinations of voice and data services to end-users at speeds of up to 2 Mbit/s.

• Proximity Solution. Our Proximity Solution is a low cost, multi-service platform supporting carrier-class voice, modem and packet data. The product range includes a variety of ST types to deliver combinations of voice and data services at speeds up to 100 Kbit/s to end-users and base stations with variable capacities.

• WipLL Solution. Our WipLL Solution is a low cost, high-performance IP data platform, supporting high-speed data, high-speed Internet access, VoIP services and multimedia services in a multitude of frequencies at speeds of up to 1.5 Mbit/s. The product range includes a variety of ST types, including an indoor model with built-in antenna, which does not require line of site to a base station receiver and which can be installed by the end user.

• AS4030 Solution. Our Airspan branded AS4030 Solution is an IEEE 802.16a compliant high performance, high end product operating in the 3.5GHz frequency band, suitable for the transmission of data at speeds up to 36 Mbit/s and, accordingly, compatible for use with applications requiring E1 or T1 circuits. The solution has been designed to handle backhaul and high-speed Internet connections for corporate customers, schools and hospitals.

• AS3030 Solution. Our Airspan branded AS3030 Solution is a proprietary high performance, high end product operating in the 5.4GHz and 5.8GHz frequency bands, suitable for the transmission of data at speeds up to 50 Mbit/s and, accordingly, compatible for use with applications requiring E1 or T1 circuits. This solution, like the AS4030 solution, has been designed to handle backhaul and high-speed Internet connections for corporate customers, schools and hospitals.

• AS.MAX Solutions. Our AS.MAX product line of WiMAX solutions will deliver high performance at low cost and can support IP services, such as voice and video, at speeds up to 10 Mbit/s. The AS.MAX solution has been designed to deliver robust, high quality IP service to residential and enterprise users in the developed and developing world. The AS.MAX product line includes new CPE types that allow the end-user to self-install the CPE.

Network Management Systems

Our product platforms are supported by network management systems (“NMS”) that perform configuration, alarm, test and performance management activities that help ensure that the services provided over a network are uninterrupted and of high quality. All of our NMS systems are flexible and can be expanded to suit a range of different networks. They permit network operators to remotely manage a geographically dispersed set of network elements. They also all feature intuitive graphical user interfaces, and allow remote software upgrades for all deployed equipment. Our NMS systems are marketed under the names AS8100 (Sitespan), AS8200 (Netspan), AS8300 (AirspanAccess) REM (Remote Element Manager) and WipManage.

Installation tools

Our installation tools are designed to assist our customers with installation or troubleshooting of customer premises equipment installations in an efficient and effective manner. Our installation tools include the following:

• AS7020 (STMon) — a PC-based software application for AS4000 and AS4020 subscriber installations

• AS7010 (STMeter) — a self-contained handheld tool for AS4000 and AS4020 subscriber installations

• WipConfig — a PC or PDA-based software application for WipLL subscriber installations

• Proximity RIS — a handheld tool for Proximity subscriber installations

Radio Planning

Our planning and configuration tool, the AS9000 (“AS9000”), is a sophisticated software solution that enables operators to plan and deploy our wireless systems. This product is based on third-party software customized for use with our systems. The main task of the planning tool is to find the optimal location and configuration for base station deployment. The system provides a powerful prediction engine that can generate coverage maps for multiple scenarios until the best-case scenario is found. From these data detailed predictions of service availability can be made allowing service providers to accurately target markets.

Once the locations of the base stations have been determined, AS9000 can be used to compare the way the radio signals fade as they spread out from a base station transmitter and the extent of coverage. The four key aspects of the predictive tool are the terrain (altitude) databases, clutter (natural terrain features and man-made obstructions) information, antenna information and system configuration, which are used to predict transmission coverage.

New Products and Enhancements

During 2004 we introduced a number of new products and product enhancements.

·	The addition of a number of additional frequency variants in the WipLL product line, including 700 MHz and 1.5 GHz.

·	An enhancement to the AS4020 high-speed data and voice platform to provide increased capacity.

·	Improvements to the Netspan NMS enabling the use of distributed servers.

·	The development of a higher performance, lower cost integrated Subscriber Terminal for the AS 4000 and AS4020 platforms

We are seeking to introduce further new products in 2005, including:

·	New, Customer Premise Equipment for our Proximity product line which supports both voice and packet data more efficiently.

·	A new WiMAX product line, called AS.MAX consisting of four types of Base Stations and two types of Customer Premise Equipment.

o	Base Stations:

§	HiperMAX - a high-end product enabling indoor coverage,

§	MacroMAX - a mid-range product for indoor and outdoor coverage,

§	MicroMAX - a low-end range product for low density outdoor deployments and in-fill applications,

§	PrimeMAX - an update of our AS4030 product for Backhaul Applications

o	Customer Premise Equipment:

§	EasyST - an indoor, self-install WiMAX CPE,

§	ProST - a professionally installed outdoor CPE

·	Netspan NMS to manage all AS.MAX products using the 802.16 MIB.

Technology

As of March 1, 2005, we had 75 people engaged in research and development located in Uxbridge (UK) and Airport City (Israel). Our technologies have been under continuous development since 1992, deliver high performance and are resilient in a very wide range of deployment conditions.

Frequency Choice

We recognized early that no single fixed wireless spectrum would be made available for access services around the world. Consequently, our solutions are designed to easily change radio frequency subsystems to match a customer’s specific spectrum allocation. We believe our wireless solutions provide our customers with the widest choice of radio subsystems in the industry within the 700MHz to 6.0GHz bands, encompassing both licensed and unlicensed spectrum.

Technology - Existing Product lines

Our AS4000 and AS4020 products are based on well-established Direct Sequence Code Division Multiple Access (“DS-CDMA”) technology that allows multiple users to simultaneously share a single radio channel while providing a high degree of security between channels and other users.

Our WipLL product line utilizes Frequency Hopping Code Division Multiple Access (“FH-CDMA”), which also provides a high level of immunity to interference and a robust performance.

Our Proximity product line employs a Time Division Multiple Access (“TDMA”) technology that provides a high link budget and robust reliability.

Our Airspan branded AS4030 utilizes 256-FFT (“Fast Fourier Transforms”) Orthogonal Frequency Division Multiplexing (“OFDM”) air interface technology in accordance with the IEEE 802.16a standard. Our AS3030 products utilize a proprietary, 64-FFT OFDM technology. OFDM is an air interface technology enabling non line of sight operation as well as high data capacity and robust reliability.

Technology - New Product lines

We are investing in the development of a line of products known as AS.MAX for the WiMAX/IEEE 802.16 market. AS.MAX products will be based on an air interface that employs OFDM and Orthogonal Frequency Division Multiple Access (“OFDMA”). This interface has characteristics that permits broadband wireless signals to penetrate objects more effectively than the interfaces used in our earlier products, and thereby creates significant opportunity for the installation of CPE in non-line of sight (“NLOS”) environments. AS.MAX products are expected to comply with the IEEE’s 802.16.

Standard. Through our leadership in the WiMAX Forum, we participate in the development of the IEEE 802.16 standards and WiMAX Forum technical activities. As a part of our development of the AS.MAX portfolio, we are working closely with key technology partners. These include:

·	Intel - ASICs (“Application Specific Integrated Circuit”) for CPE equipment

·	Picochip - High performance parallel processors for Software Defined Radio basestations

We are also investing in the development of technologies and techniques that will provide further performance benefits. These include the development of multi-channel radio transceivers and smart antenna technology.

Intellectual Property

During the development of our CDMA-based systems (AS4000, AS4020 and WipLL) we generated a significant patent portfolio. As of March 1, 2005, our development efforts have resulted in 46 separate U.S. patents granted (together with various foreign counterparts), with a further 6 pending U.S. applications. We do not license CDMA technology from or pay royalties to any other companies that have developed CDMA-based wireless technologies. To improve system performance and reduce costs, we have developed software and custom integrated circuits that incorporate much of our IP, and which are the key elements of our wireless solutions.

In connection with our acquisition of the Proximity business from Nortel, Nortel assigned to us all of its rights, title and interest in the Proximity trademarks and service marks and certain of its copyrights used exclusively with the Proximity products. In addition, Nortel has granted us a non-exclusive, world-wide license to use its U.S. patents that relate to the Proximity products for the term of the patents. Nortel has also granted us a non-exclusive word-wide license to use certain of its copyrights, which were not assigned to us and its trade secrets relating to the Proximity Products. The copyright and trade secrets licenses are perpetual.

We market the AS4030 and AS3030 products under the Airspan trade name pursuant to a manufacturing and license agreement with a third party.

Extensive testing and integration facilities

The performance and coverage area of a BWA system is dependent on a number of factors including: the strength of the radio signal transmitted, the sensitivity of the radio receiving apparatus, the radio frequency used and the clutter (natural terrain features and man-made obstructions). The ability of an operator to use a BWA system is predominantly dependent on the environment in which the BWA system is deployed and base stations and customer premise equipment are installed. Our process of radio planning considers these important factors to maximize performance, coverage and availability.

We continue to operate live multi-cell test networks that provide always-on high-speed Internet access and voice services to a number of volunteer end-users. The AS4020 test network operates in and around the town of Stratford upon-Avon, U.K., and the WipLL network operates in the vicinity of Airport City, Israel. In addition to providing valuable long-term system reliability, availability and other performance data, these unique facilities permit us to empirically investigate radio transmission and reception and interference behavior for existing and emerging products.

Research and development expenditures

We incur Research and Development expenditures in an effort to reduce manufacturing costs, develop new products or product enhancements and to maintain the functionality of existing products as integrated components are required to be replaced. During the years ended December 31, 2004, 2003, and 2002, we spent $18.8 million, $14.4 million and $13.6 million, respectively, on research and development of our products.

Customers

We believe our existing and target customers are principally comprised of network operators, looking to provide their customers with fixed, nomadic and portable access solutions, as well as backhaul and bridging solutions that can be generally described as follows:

• CLECs and ILECs that operate in areas of relatively low tele-density or in areas where the installation of copper lines or coaxial cables is cost prohibitive, or where their existing copper lines cannot effectively deliver broadband data connectivity;

• mobile carriers that use their excess or under-utilized spectrum to offer broadband access services to their customers;

• cable TV operators, who use BWA systems to extend the reach of their networks, and/or who offer telephone services in addition to their basic TV services;

• ISPs that operate in areas where other carriers cannot offer broadband access services; and

• enterprises that operate private, closed loop networks.

We began shipping our products in 1996. By the end of December 2004, we had shipped to over 300 customers in more than 90 countries. With the addition of the Proximity product line our customer base expanded and our customers include large fixed wireless access carriers including Axtel S.A. de C.V., Mexico (“Axtel”). Axtel is the world’s largest broadband fixed wireless operator whose network is not based on mobile technology.

We currently derive, and expect to continue to derive, a substantial percentage of our net sales from fewer than ten customers. In fiscal 2004 Axtel S.A. de C.V., Mexico (“Axtel”) accounted for approximately 70% of our annual revenue and was the only customer that individually accounted for more than 10% of our annual revenue. In fiscal 2004 82% of our revenue was derived from our top ten customers. It is possible that in fiscal 2005 one customer, Axtel, could account for greater than 50% of our projected annual revenue. Our business relationship with Axtel is summarized below.

Our contracts with our customers typically provide for delivery of product and services, including installation and commissioning, training and maintenance. In addition, we generally also agree to provide warranty for the equipment and software for a limited period of time.

Our contracts are generally non-exclusive and may contain provisions allowing our customers to terminate the agreement without significant penalties. Our contracts also may specify the achievement of shipment, delivery and service commitments. We are generally able to meet these commitments or negotiate extensions with our customers.

Our largest customer is Axtel. As a result of the acquisition of the Proximity business from Nortel Networks, Airspan has assumed the right and obligation to supply products and services to Axtel pursuant to agreements (the “Axtel Agreement”) signed between Nortel Networks and Axtel. The Axtel Agreement was amended in April, 2004 and December, 2004. Pursuant to our existing agreements with Axtel, Axtel has committed to purchase a minimum of $38 million of product from us during the period from January 1, 2005 until December 2006.

The Axtel Agreement contains terms and conditions typical for supply and support agreements of this type, including the requirements for minimum annual non-cancelable orders to be placed by Axtel, for Axtel to make certain cash down-payments with orders placed and for lead times for delivery of products. We have agreed to provide technical assistance and support services related to the products used in Axtel’s network, including emergency recovery and remote technical assistance, as well as other services at agreed upon prices. The Axtel Agreement gives Axtel a non-exclusive and perpetual license to use the Proximity software, subject to certain events of default, and a one-year, limited warranty with respect to the delivered products. The Axtel agreements may be terminated by either party in the event of the other party’s failure to cure a breach of any term or condition of the agreement. The Axtel agreements state that either party may terminate the agreement in the event the other party encounters various forms of financial difficulty, insolvency or bankruptcy and where the other party has materially failed to perform any term under the Agreement that has not been cured within 30 days of notification.

Sales, Marketing and Customer Service

We sell our systems and solutions through our direct sales force, independent agents, resellers and original equipment manufacturer (“OEM”) partners. Our direct sales force targets network operators, ISPs and enterprises in both developed and developing markets. Currently we have direct sales offices in the U.S., U.K., Australia, China, Czech Republic, Indonesia, Japan, New Zealand, the Philippines, Poland, Russia, South Africa and Sri Lanka. In markets where we do not have a direct sales presence, we also sell through independent agents, resellers and system integrators who target network operators and other customers. In certain countries we also sell to OEMs who may sell our products under their names.

Our marketing efforts are focused on network operators and ISPs that provide voice and data or data-only communications services to their customers, and on enterprises. Through our marketing activities we provide technical and strategic sales support including in-depth product presentations, network design and analysis, bid preparation, contract negotiation and support, technical manuals, sales tools, pricing, marketing communications, marketing research, trademark administration and other support functions.

A high level of ongoing service and support is critical to our objective of developing long-term customer relationships. To facilitate the deployment of our systems, we offer our customers a wide range of implementation and support services including spectrum planning and optimization, installation, commissioning, post-sales support, training, helpline and a variety of other support services.

Our subcontractors, who have the expertise and ability to professionally install our products, perform most major installations. This enables us to efficiently manage fluctuations in volume of installation work.

As of March 1, 2005, we had 68 employees dedicated to sales, marketing and customer service.

Manufacturing

We subcontract all of our manufacturing to subcontractors, who provide full service manufacturing solutions, including assembly, systems integration and test procedures. Except as noted below, our finished products are shipped directly from the manufacturing subcontractor to customers.

We currently outsource the manufacturing of our AS4000, AS4020 and Proximity products directly to a global subcontract manufacturer, Solectron Corporation (“Solectron”). In addition to providing full service manufacturing solutions, Solectron provides a range of manufacturing services including prototyping, and new product introduction

Solectron manufactures our AS4000 and AS4020 subscriber and base station products and Proximity base station products in Scotland. Solectron Milpitas USA manufactures our Proximity base station circuit boards and Solectron Guadalajara Mexico manufactures our Proximity subscriber terminals. Finished AS4000, AS4020 and Proximity products are stored, prior to dispatch to end customers, at third-party logistics companies based in the UK.

Manufacture of our WipLL products is outsourced to an Israeli manufacturing subcontractor named Racamtech Limited, which is part of the CAM Group (“CAM”), based in Israel.

A third party based in Canada manufactures our Airspan branded AS3030 and AS4030 products pursuant to a three year contract ending September, 2006, which is cancelable upon twelve months notice.

Our agreements with our manufacturing subcontractors are all non-exclusive and may, except as noted above, be terminated by either party with six months notice without significant penalty. Other than agreeing to purchase the materials we request in the forecasts we regularly provide, we do not have any agreements with our manufacturing subcontractors to purchase any minimum volumes. Our manufacturing support activities consist primarily of prototype development, new product introduction, materials planning and procurement and quality control.

Some of the key components of our products are purchased from single vendors for which alternative sources are generally not readily available in the short to medium term. If these vendors fail to supply us with components because they do not have them in stock when we need them, if they reduce or eliminate their manufacturing capacity for these components or if they enter into exclusive relationships with other parties which prevents them from selling to us, we could experience and have experienced significant delays in shipping our products while we seek other sources. During the third quarter of 2004, as a result of a temporary shortage of components, we experienced temporary difficulty manufacturing enough Proximity products to meet existing orders in a timely manner. See “Risk Factors — Our dependence on key suppliers and contract manufacturers.”

Our operation and manufacturing strategies enable us to configure our products to meet a wide variety of customer requirements and facilitate technology transfer between our research and development group and our contract manufacturers. We are ISO 9001 certified.

Competition

We compete in a relatively new, rapidly evolving and highly competitive and fragmented market. We compete with companies that are producing access systems for fixed wireless networks, cellular networks, wired DSL networks, cable networks and occasionally fiber optic cable and satellite networks.

We believe the primary competitive challenges our business faces include:

• competing with established, traditional wired network equipment providers and their wired solutions, and

• convincing service providers that our solutions are superior to competing wireless solutions.

We face, or believe that we will face, competition from various other providers of wireless communications products and services and, while we believe our industry to be competitive, we do not believe there is a single dominant competitor. Competitors vary in size and scope, in terms of products and services offered. With respect to the broadband fixed wireless solutions we offer to serve in licensed and unlicensed frequencies, we believe we compete directly with Motorola, Siemens, Alvarion, Proxim, SR Telecom, and with a number of smaller privately-held companies. We also believe we compete indirectly with a number of large telecommunication equipment suppliers such as Harris and Alcatel.

We believe we encounter, any may increasingly encounter, competition from competing wireless technologies such as cellular technology. Cellular networks are not capable of delivering both voice and limited broadband data connectivity to fixed, mobile, nomadic and portable applications. In addition, our technology competes with other high-speed solutions, such as wired DSL, cable networks, and occasionally fiber optic cable and satellite technologies. The performance and coverage area of our wireless systems are dependent on some factors that are outside of our control, including features of the environment in which the systems are deployed such as the amount of clutter (natural terrain features and man-made obstructions) and the radio frequency available. Any inability to overcome these obstacles may make our technology less competitive in comparison with other technologies and make other technologies less expensive or more suitable. Our business may also compete in the future with products and services based on other wireless technologies and other technologies that have yet to be developed.

Many of our competitors are substantially larger than we are and have significantly greater financial, sales and marketing, technical, manufacturing and other resources and more established distribution channels. These competitors may be able to respond more rapidly to new or emerging technologies and changes in customer requirements or to devote greater resources to the development, promotion, sale and financing of their products than we can. Furthermore, some of our competitors may make strategic acquisitions or establish cooperative relationships among themselves. See “Risk Factors — Competition from alternative communications systems.”

Employees

As of March 1, 2005, we had a total of 221 full-time employees, including contract personnel, of which 104 were based in the UK and 49 were based in Israel. Our employees are not presently represented by a labor union. We have not experienced any work stoppages and consider our relations with our employees to be good.

Executive Officers and Directors

The names, ages and positions of our executive officers and directors as of March 1, 2005 are listed below along with their business experience during the past five years.

Name	Age	Title
Matthew J. Desch	47	Chairman of the Board of Directors
Eric D. Stonestrom	43	President and Chief Executive Officer, Director
Jonathan Paget	58	Executive Vice President and Chief Operating Officer
Peter Aronstam	52	Senior Vice President and Chief Financial Officer
Henrik Smith-Petersen	41	President, Asia Pacific
David Brant	41	Vice President, Finance and Controller
H. Berry Cash	64	Director
Randall E. Curran	50	Director
Michael T. Flynn	56	Director
Guillermo Heredia	63	Director
Thomas S. Huseby	57	Director
David A. Twyver	58	Director

Matthew J. Desch became Chairman of the Board of Directors of Airspan on July 1, 2000. Mr. Desch has been serving as the Chief Executive Officer of Telcordia Technologies, a private communications software and services supplier since July 2002. Since November 2003, Mr. Desch has served as a member of the Board of Directors of SAIC, Inc., a publicly-traded research and engineering firm. Telcordia is a supplier of operations support systems and services for service providers around the world. Since January 2003, Mr. Desch has served as a member of the Compensation Committee and a member of the Board of Directors of Flarion, Inc. Flarion is a privately held company that manufactures mobile wireless broadband access equipment. From 1987 through May 2000, Mr. Desch served in a variety of management positions with Nortel Networks, a global supplier of networking solutions and services that support voice, data, and video transmission over wireless and wireline technologies. From 1996 through May 2000, he served as Executive Vice President and President of Nortel's Wireless Networks division, responsible for Nortel's global wireless infrastructure business. Mr. Desch also has a B.S. from Ohio State University and an M.B.A. from the University of Chicago.

Eric D. Stonestrom joined Airspan at its inception in January 1998 as Executive Vice President and Chief Operating Officer. In May 1998, he was named President and Chief Executive Officer as well as a member of the Board of Directors. From 1995 to January 1998, Mr. Stonestrom was employed by DSC Communications Corporation as a Vice President of operating divisions, including the Airspan product line. From 1984 until 1995, Mr. Stonestrom worked at Bell Laboratories and AT&T in a variety of positions. He received B.S., M.S. and M. Eng. degrees in 1982, 1983 and 1984, respectively, from the College of Engineering at the University of California at Berkeley.

Jonathan Paget joined Airspan in April 1999 as Vice President, Product Operations. In June 2000, Mr. Paget was named Executive Vice President and Chief Operating Officer. Prior to joining Airspan, from 1997 to October 1998, he served as Group Chief Executive of Telspec Plc, a company specializing in the development, manufacture and sale of advanced wireline telecommunications equipment. From 1992 to 1996, Mr. Paget served as Vice President and General Manager of the European Radio Networks Solutions Group of Motorola, a provider of trunked radio systems. He holds a Masters Degree in Engineering Science from Cambridge University.

Peter Aronstam joined Airspan in March 2001 as Senior Vice President and Chief Financial Officer. From 1983 to 2001, Mr. Aronstam served in a variety of positions at Nortel Networks Limited, the last as Vice President, Customer Financing of Nortel’s Caribbean and Latin America region. From 1978 to 1980, he worked at Bank of Montreal in its international banking division and from 1981 to 1983 at Bank of America in its Canadian corporate banking group. He received B.Com., LLB and PhD. degrees in 1971, 1973 and 1978, respectively, from the University of the Witwatersrand in Johannesburg, South Africa.

Henrik Smith-Petersen joined Airspan in February 1998 as Senior Director in Sales. He became Regional Vice President for Asia Pacific and later President, Asia Pacific in February 2001. Prior to joining Airspan, he was with DSC Communications Corporation, a United States based telecommunications company, from July 1997, as Director of Business Development. While with DSC he gained extensive experience developing new business and partnerships worldwide in the wireless telecommunication market. Before joining DSC, he worked for four years for AT&T’s Network Systems Group in Italy, where he developed AT&T’s operation systems business and later became Key Account Manager for Italtel, AT&T’s local partner in Milan, developing the Telecom Italia business. He received his B.Sc. in Business Economics degree from Copenhagen School of Economics in Denmark in 1990, and a M.B.A. from SDA BOCCONI University in Milan in 1992.

David Brant joined Airspan at its inception in January 1998 as Finance Director and in July 2000 was named Vice President, Finance and Controller. From 1990 to January 1998, Mr. Brant was employed by DSC Communications Corporation, a United States based telecommunications company in various financial roles, the last post as Director of European Accounting. He received a B.A. in Mathematical Economics in 1984 from Essex University and is a Fellow of the Association of Chartered Certified Accountants.

H. Berry Cash has served as a director of Airspan since January 1998. He has been a general partner with InterWest Partners, a venture capital fund focused on technology and healthcare, since 1986. Mr. Cash currently serves as a member of the Board of Directors, a member of the Compensation Committee, and a member of the Audit Committee of i2 Technologies, Inc., a public company which is a provider of software and services that help customers achieve measurable value through improvements in coordination and collaboration and Staktek Holdings, Inc., a public company providing high-density packaged memory stacking solutions for systems and applications. Mr. Cash is also a member of the Board of Directors and a member of the Compensation Committee for the following public companies: Silicon Laboratories, Inc., a developer of mixed-signal integrated circuits for products such as cell phones, set-top boxes, and computer modems, CIENA Company, a provider of next generation intelligent optical networking equipment. and First Acceptance Corporation, a public company which provides non-standard automobile insurance. Mr. Cash received a B.S. in Electrical Engineering from Texas A&M University and a M.B.A. from Western Michigan University.

Randall E. Curran joined the Board of Directors of the Company in October 2004. In February 2005, Mr. Curran was appointed Chief Executive Officer of ITC^DeltaCom, Inc., a provider of full-service, integrated telecommunications and technology solutions to customers in the southeastern United States. From August 2004 to February 2005, Mr. Curran was a Senior Managing Director in the Interim Management Practice of FTI Consulting, Inc., a publicly-traded company which provides corporate finance/restructuring, forensic and litigation consulting, and economic consulting. At FTI Consulting, Inc., Mr. Curran specialized in the telecommunications sector. From September 2000 until November 2003, Mr. Curran held the position of Chairman and Chief Executive Officer of ICG Communications, Inc., a publicly-traded facilities-based communications provider of Internet and voice communication services. From 1987 through June 2000, he held several positions, including the position of Chairman, President, Chief Executive Officer, Chief Operating officer, and Chief Financial Officer, of Thermadyne Holdings Corporation, a leading welding equipment manufacturer which was traded on NASDAQ until its sale in 1998. Mr. Curran served as Vice President of Finance from 1983 until 1986 at Clarke Industries, a division of Cooper Industries, a manufacturer of floor maintenance equipment. From 1981 to 1983 he served as Director of Finance at McGraw-Edison Co., a manufacturer of electrical products. Mr. Curran was a Senior Auditor of Arthur Andersen & Co. in the Manufacturing Audit Division from 1976 until 1981. Mr. Curran earned his B.A. degree in Economics from DePauw University in 1976 and an M.B.A. from Loyola University of Chicago in 1982.

Michael T. Flynn has served as a director of Airspan since July 2001. From June 1994 until March 31, 2004, Mr. Flynn served as an officer of ALLTEL Corporation, a publicly-traded integrated telecommunications provider of wireless, local telephone, long-distance, competitive local exchange, Internet and high-speed data services. From May 2003 until March 31, 2004, he held the position of Assistant to the Chief Executive Officer. From April 1997 to May 2003, Mr. Flynn served as Group President of Communications at ALLTEL. From June 1994 to April 1997, Mr. Flynn was President of the Telephone Group of ALLTEL. Since January 2004, Mr. Flynn has served on the Board of Directors, the Audit Committee and the Compensation Committee of WebEx Communications, a publicly-traded company providing real time worldwide media access and conferencing services. He also serves as a member of the Board of Directors of Bay Packets, a privately held provider of next generation telecommunications application services, and Calix, a privately held leading provider of integrated voice, data and video loop and transport access technology. Mr. Flynn earned his B.S. degree in Industrial Engineering from Texas A&M University in 1970. He attended the Dartmouth Institute in 1986 and the Harvard Advanced Management Program in 1988.

Guillermo Heredia joined the Board of Directors of Airspan in January 2001. Since September 1999, Mr. Heredia has served as the managing partner of Consultores en Inversiones Aeronauticas, a provider of consulting services to airline operators and investors. Mr. Heredia has served in the senior management of three major Mexican corporations: as President and Chief Operating Officer of Aeromexico from 1989 to 1992, as President and Chief Operating Officer of Grupo Iusacell, Mexico’s number two wireless carrier from 1992 to 1994, and as President and Chief Executive Officer of Previnter, a joint venture of AIG, Bank Boston and Bank of Nova Scotia from 1995 to 1999. Mr. Heredia currently serves as a member of the Board of Directors for W L Comunicaciones, a private telecommunications company involved in developing a wide band fiber optic network in Mexico City and throughout Mexico and for Jalisco Tequilana Internacional, a private distiller and distributor of Tequila. Mr. Heredia holds a degree in Mechanical Engineering from the Universidad de las Americas and in Business Administration from Universidad Iberoamericana.

Thomas S. Huseby has served as a Director of Airspan since January 1998, serving as Chairman of the Board from January 1998 until July 2000. Mr. Huseby also served as the Chief Executive Officer of Airspan from January 1998 until May 1998. Since August 1997, Mr. Huseby has served as the Managing Partner of SeaPoint Ventures, a venture capital fund focused on communications infrastructure. Prior to his employment with SeaPoint Ventures, from 1994 to 1997, Mr. Huseby was the Chairman and Chief Executive Officer of Metawave Communications, a previously public corporation which manufactured cellular infrastructure equipment. Previously he was President and Chief Executive Officer of Innova Corporation, a previously public manufacturer of millimeter wave radios. Mr. Huseby currently serves as a member of the Board and member of the Compensation Committee of Entomo, Inc., a private corporation pioneering in Closed Loop Integrated Communications Services (a fee-based service that facilitates business-to-business communications), Qpass, Inc., a private corporation which offers software that facilitates the sale of digital content for wireless carriers, Wireless Services Company, a private corporation which provides services for wireless networks, SNAPin Software, Inc., a privately held company that develops handset-based wireless customer care and diagnostic products for mobile network operators, Telecom Transport Management, Inc., a privately held company providing comprehensive backhaul transport solutions for wireless carriers in the United States and Vayusa, Inc., a privately held company that provides loyalty and payment merchant services utilizing mobile networks. Mr. Huseby holds a B.A. in Economics from Columbia College, a B.S.I.E. from the Columbia School of Engineering and a M.B.A. from Stanford University.

David A. Twyver joined the Board of Directors of Airspan in May 1999. Mr. Twyver served as Chairman of the Board of Directors of Ensemble Communications Inc., a supplier of LMDS wireless equipment from January 2002 until December 2003 and as a director until April 2004. He served as the President and Chief Executive Officer of Ensemble from January 2000 until September, 2002. Mr. Twyver served as a director of Metawave Communications, Inc, a manufacturer of cellular infrastructure equipment, from March 1998 until February 2003 and as a member of Metawave Communications, Inc.’s Audit Committee from June 2000 until February 2003. From 1996 to 1997, Mr. Twyver served as Chief Executive Officer of Teledesic Corporation, a satellite telecommunications company. From 1974 to 1996, Mr. Twyver served in several management positions at Nortel Networks Limited, a leading global supplier of data and telephone network solutions and services, most recently as president of Nortel Wireless Networks from 1993 to 1996. He received his B.S. in Mathematics and Physics from the University of Saskatchewan.

RISK FACTORS

In addition to other information in this Form 10-K/A, the following risk factors should be carefully considered in evaluating the Company and its business.

If we continue to incur substantial losses and negative operating cash flows, we may not succeed in achieving or maintaining profitability in the future.

We have incurred net losses since we became an independent company, and as of December 31, 2004 we had an accumulated deficit of $188 million. We anticipate that we will continue to experience negative cash flows over the next 12 months. Our operating losses have been due in part to the commitment of significant resources to our research and development and sales and marketing organizations. We expect to continue to devote resources to these areas and, as a result, we will need to continue increasing our quarterly revenues to achieve and maintain profitability. We cannot be certain that we will achieve sufficient revenues for profitability. If we do achieve profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis in the future.

The reduction in expenditures by communications service providers has had, and could continue to have a negative impact on our results of operations.

We believe telecommunications carriers and service providers continue to spend less annually on capital investments and network expansions than they did at the end of the prior decade. Many new and small service providers and wireless companies have failed, and existing service providers have been reducing or delaying expenditures on new equipment and applications. We believe it is possible that this reduced level of spending could continue for the foreseeable future. A further global long-term decline in capital expenditures may reduce our sales, increase the need for inventory write-offs and could result in downward pressure on the price of our products, all of which would have a material adverse effect on our results of operations and stock price.

Since a significant percentage of our expenses are fixed and do not vary with revenues, our quarterly operating results are volatile and difficult to predict, and our stock price could decline.

We believe that period-to-period comparisons of our operating results are not necessarily meaningful. Since our customers are not typically required to purchase a specific number of our products in any given quarter, we may not be able to accurately forecast our quarterly revenues. Revenues are further affected if major deployments of our products do not occur in any particular quarter as we anticipate and/or our customers delay shipments or payments due to their inability to obtain licenses or for other reasons. As a result, our quarterly operating results have fluctuated in the past and will likely vary in the future. This could cause the market price of our common stock to decline. Other factors that may affect our quarterly operating results and our stock price include the loss of a major customer, our ability to react quickly to new competing technologies, products and services which may cause us to lose our customers, or if our suppliers and manufacturers are not able to fulfill our orders as a result of a shortage of key components that leads to a delay in shipping our products. We incur expenses in significant part based on our expectations of future revenue, and we expect our operating expense, in particular salaries and lease payments, to be relatively fixed in the short run. Accordingly, any unanticipated decline in revenue for a particular quarter could have an immediate negative effect on results for that quarter, possibly resulting in a change in financial estimates or investment recommendations by securities analysts, which could result in a fall in our stock price. You should not rely on the results of any one quarter as an indication of future performance.

Competition from alternative communications systems, as well as larger, better-capitalized or emerging competitors for our products, could result in price reductions, reduced gross margins and loss of or inhibit growth of market share.

We compete in a relatively new, rapidly evolving and highly competitive and fragmented market. We compete with companies that are producing fixed wireless communications systems, wired DSL, cable networks and occasionally fiber optic cable and satellite technologies and other new entrants to this industry, as well as traditional communications companies.

Competitors vary in size and scope, in terms of products and services offered. With respect to the fixed broadband wireless solutions we offer to serve in licensed and unlicensed frequencies, we believe we compete directly with Siemens Motorola, Alvarion, Proxim, SR Telecom, with a number of smaller privately-held companies and with the divisions of a number of institutional telecommunication equipment companies. We also believe we compete indirectly with a number of large telecommunication equipment suppliers such as Alcatel and Harris.

We believe we encounter, and may increasingly encounter, competition from competing wireless technologies such as cellular technology. Cellular networks are now capable of delivering both voice and limited broadband data connectivity to fixed, mobile, nomadic and portable applications. These technologies such as 1XRTT, a single carrier (1x) technology has the capability of transmitting data at ISDN like speeds, up to 144 Kbps. It is our further understanding that one technology provides for multiple voice channels and medium rate data services at maximum transmission rates of 200 Kbps on the uplink and 2.4 Mbps on the down link. In addition, our technology competes with other high-speed solutions, such as wired DSL, cable networks, and occasionally fiber optic cable and satellite technologies. The performance and coverage area of our wireless systems are dependent on certain factors that are outside of our control, including features of the environment in which the systems are deployed, such as the amount of clutter (natural terrain features and man-made obstructions) and the radio frequency available. Any inability to overcome these obstacles may make our technology less competitive in comparison with other technologies and make other technologies less expensive or more suitable. Our business may also compete in the future with products and services based on other wireless technologies and other technologies that have yet to be developed.

Many of our competitors are substantially larger than we are and have significantly greater financial, sales and marketing, technical, manufacturing and other resources and more established distribution channels. These competitors may be able to respond more rapidly to new or emerging technologies and changes in customer requirements, or to devote greater resources to the development, promotion, sale and financing of their products than we can. Furthermore, some of our competitors have made or may make strategic acquisitions or establish cooperative relationships among themselves or with third parties to increase their ability to gain customer market share rapidly. These competitors may enter our existing or future markets with systems that may be less expensive, provide higher performance or contain additional features.

We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that may supplant or provide lower-cost alternatives to our systems. This or other factors may result in changes in the market valuations of our competitors, which have been volatile recently, and could cause our stock price to fall. To remain competitive, we must continue to invest significant resources in research and development, sales and marketing and customer support. We cannot be certain that we will have sufficient resources to make these investments or that we will be able to make the technological advances necessary to remain competitive.

If our stock price falls below $1.00 per share, our common stock may be de-listed from the Nasdaq National Market.

The National Association of Securities Dealers, Inc. has established certain standards for the continued listing of a security on the Nasdaq National Market. These standards require, among other things, that the minimum bid price for a listed security be at least $1.00 per share. Under Nasdaq’s listing maintenance standards, if the closing bid price of our common stock remains below $1.00 per share for 30 consecutive trading days, Nasdaq will issue a deficiency notice to us. If the closing bid price subsequently does not reach $1.00 per share or higher for a minimum of ten consecutive trading days during the 180 calendar days following the issuance of the deficiency notice from Nasdaq, Nasdaq may de-list our common stock from trading on the Nasdaq National Market.

If our common stock is to be de-listed from the Nasdaq National Market, we may apply to have our common stock listed on the Nasdaq SmallCap Market. In the event that such application is accepted, of which there can be no assurance, we anticipate the change in listings may result in a reduction in some or all of the following, each of which could have a material adverse effect on our investors:

• the liquidity of our common stock;

• the market price of our common stock;

• the number of institutional investors that will consider investing in our common stock;

• the number of investors in general that will consider investing in our common stock;

• the number of market makers in our common stock;

• the availability of information concerning the trading prices and volume of our common stock;

• the number of broker-dealers willing to execute trades in shares of our common stock; and

• our ability to obtain financing for the continuation of our operations.

Should our application to the Nasdaq SmallCap Market be rejected or if we fail to continue to satisfy the Nasdaq SmallCap Market’s continued listing requirements, our common stock could be delisted entirely or relegated to trading on the over-the-counter-market.

Our customer contracts vary widely in terms and duration, with a many of our customers executing only short-term purchase orders, and allow our customers to terminate without significant penalties.

Our contracts and purchase orders are separately negotiated with each of our customers and the terms vary widely. A majority of our customers may only execute short-term purchase orders for a single or a few systems at one time instead of long-term contracts for large-scale deployment of our systems. These contracts and purchase orders do not ensure that they will purchase any additional products beyond that specifically listed in the order.

Moreover, since we believe that these purchase orders may represent the early portion of longer-term customer programs, we expend significant financial, personnel and operational resources to fulfill these orders. If our customers fail to purchase additional products to fulfill their programs as we hope, we may be unable to recover the costs we incur and our business could suffer.

In addition, our general framework contracts are generally non-exclusive and contain provisions allowing our customers to terminate the agreement without significant penalties. Our contracts also may specify the achievement of shipment, delivery and installation commitments. If we fail to meet these commitments or negotiate extensions in a timely manner, our customers may choose to terminate their contracts with us or impose monetary penalties.

Changes in telecommunications regulation or delays in receiving licenses could adversely affect many of our customers and may lead to lower sales.

Many of our customers are subject to extensive regulation as communications service providers. Changes in legislation or regulation that adversely affect those existing and potential customers could lead them to delay, reduce or cancel expenditures on communications access systems, which actions would harm our business. In the past, we have suffered the postponement of anticipated customer orders because of regulatory issues. The resolution of those issues can be lengthy and the outcome can be unpredictable. We have also received orders in the past from customers that were contingent upon their receipt of licenses from regulators, the timing of which were uncertain. The receipt of licenses by our customers may occur a year or more after they initially seek those licenses, or even after they place orders with us.

At present there are few laws or regulations that specifically address our business of providing communications access equipment. However, future regulation may include access or settlement charges or tariffs that could impose economic burdens on our customers and us. We are unable to predict the impact, if any, that future legislation, judicial decisions or regulations will have on our business.

Our sales cycle is typically long and unpredictable, making it difficult to accurately predict inventory requirements, forecast revenues and control expenses.

Typically our sales cycle can range from one month to two years and varies by customer. The length of the sales cycle with a particular customer may be influenced by a number of factors, including:

• the particular communications market that the customer serves;

• the testing requirements imposed by the customer on our systems;

• the customer’s experience with sophisticated communications equipment including fixed wireless technology; and

• the cost of purchasing our systems, including the cost of converting to our products from previously-installed equipment, which may be significant.

Before we receive orders, our customers typically test and evaluate our products for a period that can range from a month to more than a year. In addition, the emerging and evolving nature of the communication access market may cause prospective customers to delay their purchase decisions as they evaluate new and/or competing technologies or, wait for new products or technologies to come to market. As the average order size for our products increases, our customers’ processes for approving purchases may become more complex, leading to a longer sales cycle. We expect that our sales cycle will continue to be long and unpredictable. Accordingly, it is difficult for us to anticipate the quarter in which particular sales may occur, to determine product shipment schedules and to provide our manufacturers and suppliers with accurate lead-time to ensure that they have sufficient inventory on hand to meet our orders. In addition, our sales cycle impairs our ability to forecast revenues and control expenses.

Our sales in Asia, Latin America and Africa may be difficult and costly as a result of the political, economic and regulatory risks in those regions.

Sales to customers based outside the U.S. have historically accounted for a substantial majority of our revenues. In 2004, our international sales (sales to customers located outside the U.S. which includes a small percentage of U.S. customers where the final destination of the equipment is outside of the U.S.) accounted for 97% of our total revenue, with sales to customers in Latin America, particularly Mexico, accounting for 74% of total revenue, and sales to customers in Europe, Asia and Africa accounting for 12%, 9% and 2%, respectively, of total revenue. As a result of our acquisition of the Proximity business the sales to customers in Latin America materially increased in fiscal 2004 over fiscal 2003 primarily as a result of sales to Axtel. Sales in Asia, Latin America and Africa in particular expose us to risks associated with international operations including:

• longer payment cycles and customers seeking extended payment terms, particularly since our customers in Asia and Latin America have difficulty borrowing money or receiving lines of credit, especially if there is political and economic turmoil in their countries;

• tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers imposed by foreign countries may have made or may make our systems expensive and uncompetitive for local operators;

• import or export licensing or product-certification requirements;

• unexpected changes in regulatory requirements and delays in receiving licenses to operate;

• political and economic instability, including the impact of economic recessions;

• our reluctance to staff and manage foreign operations as a result of political unrest even though we have business opportunities in a country; and

• limited ability to enforce agreements in regions where the judicial systems may be less developed.

Our operations in Israel may be disrupted by political and military tensions in Israel and the Middle East.

We conduct various activities related to the WipLL product in Israel, including: research and development; design; raw material procurement; and manufacturing through a manufacturing subcontractor based in Israel. Our operations could be negatively affected by the political and military tensions in Israel and the Middle East. Israel has been involved in a number of armed conflicts with its neighbors since 1948 and a state of hostility, varying in degree and intensity, has led to security and economic problems in Israel. Since September 2000, a continuous armed conflict with the Palestinian Authority has been taking place. While these conflicts have had no material adverse effect on our operations in the past, conditions in Israel could, in the future, disrupt our development, manufacture or distribution of WipLL products.

We may not be able to expand our sales and distribution capabilities, including establishing relationships with distributors and major system integrators and telecommunications equipment OEMs, which would harm our ability to generate revenue.

We believe that our future success, particularly with respect to WiMAX, will depend upon our ability to expand our direct and indirect sales operations, including establishing relationships with distributors and major system integrators and telecommunications equipment OEMs. While we have been at times successful in signing country-specific OEM agreements with major suppliers such as Siemens and L.M. Ericsson, we cannot be certain that we will be successful in maintaining or expanding these agreements.

We are dependent on our lines of fixed wireless communications systems and our future revenue depends on their commercial success and our ability to adapt to evolving industry standards and new technologies.

The market for communications systems has been characterized by rapid technological developments and evolving industry standards. Our ability to increase revenue in the future depends on the commercial success of our lines of fixed wireless communications systems and our ability to adapt to and to successfully introduce new standards and technologies, to meet customer preferences in a timely and cost-effective manner. To date we have been marketing AS4000, AS4020, WipLL and Proximity products. all of which are based on proprietary technologies we own. Along with software tools, network management systems and planning and configuration tools, these are the only products we have shipped to customers, and we expect that revenue from these products will account for a significant proportion of our revenue for the next 12 to 24 months. However, with the expected introduction of our new WiMAX Certified^TMAS.MAX product line in 2005, we expect to begin generating a portion of our revenues from the new products commencing in the second half of fiscal 2005. In the course of enhancing our existing products and developing the AS.MAX product line, we have made assumptions about potential demand for both new and existing products. If our assumptions are incorrect or new industry standards emerge, both our existing products and the AS.MAX product range may not sell as expected. For instance, if the IEEE 802.16 does become the principal standard for the BWA industry, our existing products, other than our ASMAX products, could be rendered obsolete in the near future. We cannot assure you that we will be successful in developing and introducing the new AS.MAX product range or enhancements to existing products or new products to meet evolving standards in the future.

Our dependence on key suppliers and contract manufacturers may result in product delivery delays if they do not have components in stock or terminate their non-exclusive arrangements with us.

Some of the key components of our products are purchased from single vendors, including printed circuit board assemblies application specific integrated circuits and radio frequency filters, for which alternative sources are generally not readily available in the short to medium term. If our vendors fail to supply us with components because they do not have them in stock when we need them, if the supply of the components in the market is limited, or if our vendors reduce or eliminate their manufacturing capacity for these components or enter into exclusive relationships with other parties which prevent them from selling to us, we could experience significant delays in shipping our products while we seek other supply sources, which may result in our customers claiming damages for delays. At times we have been forced to purchase these components from distributors instead of from the manufacturers, which has significantly increased our costs. During the third quarter of 2004, as a result of a temporary shortage of components, we experienced temporary difficulty manufacturing enough Proximity products to meet existing orders in a timely manner. We do not have long-term contracts with all of our suppliers. Instead, we execute purchase orders approximately three to six months in advance of when we believe we may need the components. These purchase orders are non-exclusive, and we are generally not required to purchase any minimum volume of components from any of these suppliers. In those instances in which we do not have a long-term contract with a supplier, the supplier may terminate our relationship upon six months’ prior notice.

In addition, we generally outsource our manufacturing processes to subcontractors, primarily Solectron Corporation for our AS4000, AS4020 and Proximity products and Racamtech Limited for our WipLL products, who rely on our forecasts of future orders to make purchasing and manufacturing decisions. We provide them with forecasts on a regular basis. If a forecast turns out to be inaccurate, it may lead either to excess inventory that would increase our costs or a shortage of components that would delay shipments of our systems. Our contracts with our major manufacturing subcontractors are non-exclusive and most contracts may be terminated with six months notice by either party without significant penalty. Other than agreeing to purchase the materials we request in the forecasts, we do not have any agreements with them to purchase any minimum volume.

We currently depend on a few key customers for substantially all of our sales. A loss of one or more of those customers could cause a significant decrease in our net revenue.

We currently derive, and expect to continue to derive, a substantial percentage of our net sales from fewer than ten customers. In fiscal 2004, 82% of our revenue was derived from our top ten customers. In fiscal 2004, Axtel accounted for approximately 70% of our annual revenue and was the only customer that individually accounted for more than 10% of our annual revenue. It is possible that in fiscal 2005 one customer, Axtel, may account for greater than 50% of our projected annual revenue. We believe that there are certain economies of scale inherent in our industry. Accordingly, the loss of Axtel as a customer or the loss of any large percentage of our supply contracts could negatively impact our gross profit margins, our profitability and efforts to preserve cash resources.

Axtel has the right to terminate the Axtel supply agreement if we fail to comply with the terms and conditions of the agreement and such breach is not cured. For instance, if we fail to meet delivery schedules or if we fail to deliver products and services that meet the contract specifications, Axtel may claim we breached the agreement. Even if such failures are solely attributable to the acts or failures to act of third parties, Axtel may have the right to terminate the agreement. Additionally, Axtel itself has a limited operating history having only commenced operations in 1999, and is subject to its own competitive pressures and operating constraints in the Mexican economy. If Axtel should fail for any reason, or fail to have access to debt and equity markets for liquidity, it may not be able to honor its purchase commitments under our supply agreement.

The amount of revenue we derive from a specific customer is likely to vary from period to period, and a major customer in one period may not produce significant additional revenue in a subsequent period. We anticipate that our operating results will continue to depend on sales to a small number of key customers in the foreseeable future. In general, our contracts with our customers involve major deployments that require several months to fulfill, so our results may depend on the same major customers for consecutive quarters. Once a contract is fulfilled, we cannot assure you that the customer will continue to purchase upgrades or services from us, or possibly new products. It is necessary therefore for us to continually seek new customers in order to increase our revenue. To the extent that any major customer terminates its relationship with us, our revenues could decline significantly.

If we lose Eric Stonestrom or any of our other executive officers, we may encounter difficulty replacing their expertise, which could impair our ability to implement our business plan successfully.

We believe that our ability to implement our business strategy and our future success depends on the continued employment of our senior management team, in particular our president and chief executive officer, Eric Stonestrom. Our senior management team, who have extensive experience in our industry and are vital to maintaining some of our major customer relationships, may be difficult to replace. The loss of the technical knowledge and management and industry expertise of these key employees could make it difficult for us to execute our business plan effectively, could result in delays in new products being developed, lost customers and diversion of resources while we seek replacements.

If we are not able to implement a program to reduce costs over time, introduce new products or increase sales volume to respond to declines in the average selling prices of our products, our gross margin may decline.

We expect the average selling prices of our products to decline due to a number of factors, including competitive pricing pressures, rapid technological change, industry standardization and volume sales discounts. Accordingly, to maintain or increase our gross margin, we must develop and introduce new products or product enhancements with higher gross margins and implement cost reductions. If our average selling prices continue to decline and we are not able to maintain or increase our gross margin, our results of operations could be harmed.

If we are not able to implement a program to conform our products to industry standards or to successfully market and sell our standards-based products, our revenues may decline

We have developed and continue to develop certain of our products in accordance with existing, emerging and anticipated wireless-industry standards. In particular, we develop products and product features that are designed to conform to IEEE 802.16-2004 and IEEE 802.16e standards. If our products fail to comply with these standards, we may not be able to sell them. Industry standards are subject to change from time to time by their regulatory bodies. If, as a result of any changes, the products we have developed fail to meet industry standards, as revised, we may not be able to sell such products.

Our future success depends in part on the successful adoption by our customers of products that meet these industry standards. If the wireless broadband market does not adopt these standards or if our customers are unable to successfully deploy products based on these standards, we will not be successful selling these products.

In developing products that conform to defined wireless-industry standards, we recognize that, by diminishing product differentiation, standardization may lower the barriers to entry by other manufacturers in the markets in which we seek to sell our products. If companies with greater resources than us choose to manufacture any standards-based products to compete with us, this may cause competition to be based on criteria such as the relative size, resources, marketing skills and financial incentives provided by our competitors, where we may be weaker than if competition is based on product differentiation alone.

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

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

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

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

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

• divert management’s attention and resources;

• cause delays in the delivery of our products;

• require the payment of monetary damages;

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

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

Since we incur most of our expenses and a portion of our cost of goods sold in foreign currencies, fluctuations in the values of foreign currencies could have a negative impact on our profitability.

Although 96% of our sales in 2004 and a majority of our cost of goods sold were denominated in U.S. dollars, we incur most of our operating expenses in British pounds and, to a lesser extent, Israeli shekels for the WipLL business. We expect these percentages to fluctuate over time. Fluctuations in the value of foreign currencies could have a negative impact on the profitability of our global operations and our business and our currency hedging activities may not limit these risks. The value of foreign currencies may also make our products more expensive than local products.

A material defect in our products that either delays the commencement of services or affects customer networks could seriously harm our credibility and our business, and we may not have sufficient insurance to cover any potential liability.

Fixed wireless devices are highly complex and frequently contain undetected software or hardware errors when first introduced or as new versions are released. We have detected and are likely to continue to detect errors and product defects in connection with new product releases and product upgrades. In the past, some of our products have contained defects that delayed the commencement of service by our customers.

If our hardware or software contains undetected errors, we could experience:

• delayed or lost revenues and reduced market share due to adverse customer reactions;

• higher costs and expenses due to the need to provide additional products and services to a customer at a reduced charge or at no charge;

• claims for substantial damages against us, regardless of our responsibility for any failure, which may lead to increased insurance costs;

• negative publicity regarding us and our products, which could adversely affect our ability to attract new customers; and

• diversion of management and development time and resources.

Our general liability insurance coverage may not continue to be available on reasonable terms or in sufficient amounts to cover one or more large claims or our insurer may disclaim coverage as to any future claim. The successful assertion of any large claim against us could adversely affect our business.

Our failure to manage future acquisitions and joint ventures effectively may divert management attention from our core business and cause us to incur additional debt, liabilities, or costs.

Our strategy of expanding our business through, among other things, acquisitions of other businesses and technologies and joint ventures presents special risks. We expect to continue to expand our business in certain areas through the acquisition of businesses, technologies, products, and/or services from other businesses that may complement our product and service offerings. We also may consider joint ventures and other collaborative projects. However, we may not be able to:

• identify appropriate acquisition or joint venture candidates;

• successfully negotiate, finance, or integrate any businesses, products, or technologies that we acquire; and/or

• successfully manage any joint venture or collaboration.

Furthermore, the integration of any acquisition or joint venture may divert management attention in connection with both negotiating the acquisitions and integrating the acquired assets. In addition, any acquisition may strain managerial and operational resources as management tries to oversee larger operations. We also face exposure to unforeseen liabilities of acquired companies and run the increased risk of costly and time-consuming litigation, including stockholder lawsuits. Moreover, in connection with any acquisition or joint venture, we may issue securities that are superior to the right of holders of our common stock, or which may have a dilutive effect on the common stockholders and/or we may incur additional debt. If we fail to manage these acquisitions or joint ventures effectively, we may incur debts or other liabilities or costs that could harm our operating results or conditions.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the Nasdaq National Market under the symbol “AIRN”. The price range per share, reflected in the table below, is the highest and lowest sale price for our stock as reported by the Nasdaq National Market during each quarter of the last two fiscal years.

	High		Low
2004 Fourth Quarter	$	6.69	$	4.23
2004 Third Quarter		6.00		3.39
2004 Second Quarter		6.84		4.55
2004 First Quarter		6.11		3.36
2003 Fourth Quarter		3.55		2.05
2003 Third Quarter		2.82		1.52
2003 Second Quarter		2.05		0.78
2003 First Quarter		1.16		0.72

At April 15, 2005 the price per share of our common stock was $4.75 and, based upon the number of record holders, we believe we had approximately 7,878 beneficial shareholders.

DIVIDENDS

We have never paid any dividends on our common stock and we do not anticipate paying cash dividends on our common stock in the foreseeable future. Pursuant to Washington law, we are prohibited from paying dividends or otherwise distributing funds to our shareholders, except out of legally available funds. The declaration and payment of dividends on our common stock and the amount thereof will be dependent upon our results of operations, financial condition, cash requirements, future prospects and other factors deemed relevant by the Board of Directors. No assurance can be given that we will pay any dividends on our common stock in the future.

In the third quarter 2004, we recognized a non cash charge of $10.4 million as a deemed dividend to preferred stockholders associated with the beneficial conversion feature of the preferred stock issued in the third quarter 2004. The full intrinsic value of the embedded beneficial conversion feature of $10.4 million was recognized on issuance as the Preferred Stock was immediately convertible to common stock on the commitment date.

Securities Authorized for Issuance Under Equity Compensation Plans as of December 31, 2004

The following table sets forth information as of December 31, 2004 with respect to compensation plans under which our equity securities are authorized for issuance.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for issuance under equity compensation plans
Equity compensation plans approved by security holders(1)		4,239,389	$	3.4316		4,362,194
Equity compensation plans not approved by security holders(2)		755,231	$	3.0124		—
Total		4,994,620	$	3.3682		4,362,194

(1) In 1998 and 2000, the Company’s shareholders approved the 1998 Employee Stock Option Plan and the 2000 Employee Stock Purchase Plan, respectively. In 2004, the Company’s shareholders approved the Omnibus Equity Compensation Plan.

(2) Issued pursuant to the Company’s 2001 Supplemental Stock Option Plan (the “2001 Plan”) and the Company’s 2003 Supplemental Stock Option Plan (the “2003 Plan”).

The 2001 Supplemental Stock Option Plan

The 2001 Plan provides for the grant to our non-officer employees and consultants of non-statutory stock options. The 2001 Plan provides for the grant of options for up to 901,465 shares of common stock, all of which options have been granted as of the date hereof. The Compensation Committee administers the 2001 Plan. The Compensation Committee determines the terms of options granted under the 2001 Plan, including the number of shares subject to the option, exercise price, term, and exercisability. The exercise price may be equal to, more than or less than 100% of fair market value on the date the option is granted, as determined by the Compensation Committee. The Compensation Committee has the authority to amend or terminate the 2001 Plan, provided that shareholder approval shall be required if such approval is necessary to comply with any tax or regulatory requirement. If not terminated earlier, the 2001 Plan will terminate February 7, 2011.

The 2003 Supplemental Stock Option Plan

The 2003 Plan provides for the grant to our non-officer employees, new hires, and consultants of non-statutory stock options. The 2003 Plan provides for the grant of options for up to 241,500 shares of common stock, all of which options have been granted as of the date hereof. The Compensation Committee administers the 2003 Plan. The Compensation Committee determines the terms of options granted under the 2003 Plan, including the number of shares subject to the option, exercise price, term, and exercisability. The exercise price may be equal to, more than or less than 100% of fair market value on the date the option is granted, as determined by the Compensation Committee. The Compensation Committee has the authority to amend or terminate the 2003 Plan, provided that shareholder approval shall be required if such approval is necessary to comply with any tax or regulatory requirement. If not terminated earlier, the 2003 Plan will terminate September 1, 2013.

RELATED SHAREHOLDER MATTERS

Issuer Purchase of Equity Securities

On November 12, 2002, Airspan announced that its Board of Directors has authorized the repurchase of up to four million shares of its common stock. Repurchases may be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market, subject to market conditions and at the discretion of management. Airspan is under no obligation to purchase any or all of the shares under this repurchase program and may terminate the program at any time.

Airspan did not repurchase any shares of common stock in 2004. The total number of shares repurchased was 834,560 and the Board terminated the repurchase plan and authorized the Company to sell the shares. On November 10, 2004 Airspan sold all 834,560 shares realizing net proceeds of $4.4 million.

Recent Sales of Unregistered Securities

Effective as of September 10, 2004, the Company entered into a Preferred Stock Purchase Agreement with Oak Investment Partners XI Limited Partnership (“Oak”) pursuant to which the Company sold 73,000 shares of Series A Preferred Stock to Oak for $29,200,000. These shares of Series A Preferred Stock are initially convertible into 7.3 million shares of Common Stock. The transaction, approved by the Company’s Board of Directors on September 9, 2004 and September 12, 2004 and by the Company’s Audit Committee on September 9, 2004, closed on September 13, 2004. The shares of Series A Preferred Stock were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read together with our consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report. The consolidated statement of operations data and balance sheet data for the years ended December 31, 2000, 2001, 2002, 2003 and 2004 are derived from our audited consolidated financial statements, which have been audited by Ernst & Young LLP, independent registered public accounting firm.

	Year ended December 31, 2000			Year ended December 31, 2001			Year ended December 31, 2002 (2)			Year ended December 31, 2003 (3)			Year ended December 31, 2004
	(in thousands, except for share data)
Consolidated Statement of Operations Data:													Restated
Revenue	$	30,279		$	37,422		$	25,930		$	30,651		$	94,647
Cost of revenue including inventory provision		18,782			24,708			21,242			27,691			67,243
Gross profit		11,497			12,714			4,688			2,960			27,404
Research and development		16,746			14,667			13,642			14,395			18,794
Sales and marketing including bad debts		14,358			16,711			13,821			11,335			11,562
General and administrative		9,368			10,735			8,969			8,741			11,042
Amortization of intangibles		595			425			44			172			723
Restructuring provisions		—			1,235			1,420			750			413
Total operating expenses		41,067			43,773			37,896			35,393			42,534
Loss from operations		(29,570	)		(31,059	)		(33,208	)		(32,433	)		(15,130	)
Interest and other income, net		3,928			2,726			2,208			2,983			3,217
Income taxes (charge) / credit		5			3,018			2,862			(5	)		1,938
Loss before extraordinary items		(25,637	)		(25,315	)		(28,138	)		(29,455	)		(9,975	)
Extraordinary item
Gain on extinguishment of debt		—			9,244			—			—			—
Income tax charge on gain		—			(2,773	)		—			—			—

Net loss		(25,367	)		(18,844	)		(28,138	)		(29,455	)		(9,975	)
Deemed dividend associated with beneficial conversion of preferred stock (4)		—			—			—			—			(10,439	)
Net loss attributable to common stockholders	$	(25,637	)	$	(18,844	)	$	(28,138	)	$	(29,455	)	$	(20,414	)
Net loss attribute to common stockholders per share-basic and diluted	$	(1.44	)	$	(0.54	)	$	(0.80	)	$	(0.84	)	$	(0.56	)
Shares used to compute net loss attributable to common stockholders per share basic and diluted		17,797,899			34,810,311			35,258,645			35,073,315			36,441,932
Pro forma net loss attributable to common stockholders per share-basic and diluted (1)	$	(0.82	)	$	(0.54	)	$	(0.80	)	$	(0.84	)	$	(0.56	)
Shares used to compute pro forma net loss attributable to common stockholders per share - basic and diluted		31,163,574			34,810,311			35,258,645			35,073,315			36,441,932

	December 31, 2000		December 31, 2001		December 31, 2002		December 31, 2003		December 31, 2004
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and short term investments	$	115,340	$	70,260	$	53,241	$	33,926	$	66,296
Working capital		131,100		98,680		71,647		36,603		65,476
Total assets		157,334		119,694		97,861		83,272		115,198
Long term debt		15,754		1,250		—		—		—
Stockholders’ equity		123,655		105,253		78,100		49,013		73,165

(1) Pro forma basic and diluted per share calculations reflect the pro forma conversion of all outstanding preferred stock in 2000, at the date of issuance of common stock.

(2) On October 4, 2002 we acquired Airspan Israel and, accordingly, the Consolidated Statement of Operations for the year ended December 31, 2002 includes the results of operations of Airspan Israel from that date up to December 31, 2004 and the Consolidated Balance Sheets of December 31, 2002, 2003 and 2004 includes the consolidated accounts of Airspan Israel.

(3) On December 23, 2003 we acquired the fixed wireless access business of Nortel Networks (“Proximity”) and, accordingly, the Consolidated Statement of Operations for the year ended December 31, 2003 and 2004 includes the results of operations of Proximity from that date up to December 31, 2004 and the Consolidated Balance Sheets of December 31, 2003 and 2004 includes the assets and liabilities related to Proximity.

(4) As described further in “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Restatement” and “Note 1 of the Notes to the Financial Statements”, this Form 10-K/A amends the Company’s previously filed Form 10-K for the year ended December 31, 2004 to reflect a $10.4 million, non cash, embedded beneficial conversion feature relating to the Series A Preferred Stock. As a result of the discount to fair market value at the commitment date, the Company recognized the intrinsic value of the embedded beneficial conversion feature relating to the issuance of the Preferred Stock of $10.4 million as a deemed dividend to preferred stockholders. The Preferred Stock was immediately convertible to common stock on the date of issue and, as a result, the embedded beneficial conversion feature was immediately debited to the Consolidated Statement of Operations in the third quarter 2004 as a “deemed dividend to preferred stockholders associated with beneficial conversion of preferred stock” and credited to “additional paid in capital”. The deemed dividend is included in the net loss attributable to common stockholders and the per share amounts accordingly.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this report.

Restatement

This Form 10-K/A and the restated consolidated financial statements included herein reflect a correction of the Company’s accounting and disclosure treatment of its September 13, 2004 issuance of 73,000 shares of Series A Preferred Stock and a restatement of the Company's third quarter, fourth quarter and annual 2004 earnings per share. This Form 10-K/A amends the Company’s previously filed Form 10-K for the year ended December 31, 2004 to reflect a $10.4 million, non cash, deemed dividend from the embedded beneficial conversion feature relating to the Series A Preferred Stock and the effect of participating convertible securities on the computation of basic earnings per share in the fourth quarter 2004.

Embedded beneficial conversion feature relating to the Series A Preferred Stock

In accordance with EITF 00-27 Application of Issue No. 98-5 to Certain Convertible Instruments and EITF 98-5 Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, the Company has accounted for the embedded beneficial conversion as a deemed dividend to the preferred stockholders of $10.4 million and a credit to additional paid in capital. The deemed dividend is included in the net loss attributable to common stockholders and the per share amounts accordingly.

As a result of the correction of the Company’s accounting treatment of the issuance of the Series A Preferred Stock, the Company has amended the following Items and sections of its Form 10-K, among others:

·	Item 1. Business, including “ - Risk Factors: If we continue to incur substantial losses…”

·	Item 5. Market for registrant’s common equity…

·	Item 6. Selected Financial Data

·	Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

·	Item 8. Financial Statements and Supplementary Data

·	Item 9A. Controls and Procedures

Item 15, Exhibits, Financial Statement Schedules, including the Company’s restated Consolidated Balance Sheet of December 31, 2004, Consolidated Statement of Operations for the year ended December 31, 2004, Consolidated Statement of Changes in Stockholders Equity, and including the following revised Notes to the Financial Statements:

·	Note 1 The Business and Summary of Significant Accounting Policies, Stock based compensation,.

·	Note 13 Net Loss Per Share,

·	Note 14 Convertible Preferred Stock,

·	Note 16 Quarterly Financial Data (Unaudited) and

·	Note 17 Restatements.

The effect on the Consolidated Balance Sheet

As a result of the restatement, as at December 31, 2004 additional paid in capital increased from the previously reported $249.9 million to $260.4 million and the accumulated deficit increased from the previously reported $177.1 million to $187.5 million as restated as a result of the deemed dividend to the preferred stockholders of $10.4 million.

The effect on the Consolidated Statements of Operations

For the year ended December 31, 2004 net loss attributable to common stockholders increased by $10.4 million (or $0.29 per share) from $10.0 million as previously reported (or $0.27 per share) to $20.4 million (or $0.56 per share) as a result of the deemed dividend to the preferred stockholders.

The impact of the restatement for the year ended December 31, 2004 is summarized as follows:

Impact Summary	As originally reported			As restated			Change

	(In thousands, except for per share data)
Year ended December 31, 2004

Additional Paid in Capital	$	249,917		$	260,356		$	10,439
Accumulated deficit		(177,094	)		(187,533	)		(10,439	)
Deemed dividend associated with beneficial conversion of preferred stock		—			(10,439	)		(10,439	)
Net loss attributable to common stockholders		(9,975	)		(20,414	)		(10,439	)
Net loss attributable to common stockholders per share	$	(0.27	)	$	(0.56	)	$	(0.29	)

The effect on Note 16 Quarterly Financial Data (Unaudited) for the quarter ended October 3, 2004

For the quarter ended October 3, 2004 net loss attributable to common stockholders increased by $10.4 million (or $0.29 per share) from $3.5 million as previously reported (or $0.9 per share) to $13.9 million (or $0.38 per share) as a result of the deemed dividend to the preferred stockholders.

The impact of the restatement for the quarter ended October 3, 2004 is summarized as follows:


Note 16 Quarterly Financial Data (Unaudited)	As originally reported			As restated			Change

	Quarter ended
	Oct 3, 2004			Oct 3, 2004
	(In thousands, except per share data)

Net (loss)/profit	$	(3,457	)	$	(3,457	)		—

Deemed dividend associated with beneficial conversion of preferred stock		—			(10,439	)	$	(10,439	)

Net (loss)/profit attributable to common stockholders	$	(3,457	)	$	(13,896	)	$	(10,439	)

Net (loss)/profit attributable to common stockholders per share - basic	$	(0.09	)	$	(0.38	)	$	(0.29	)
Net (loss)/profit attributable to common stockholders per share - diluted	$	(0.09	)	$	(0.38	)	$	(0.29	)

The Effect of participating convertible securities on the computation of basic earnings per share.

In accordance with EITF 03-6 Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings Per Share, the Series "A" Preferred Stock have been included in the computation of basic earnings per share for the fourth quarter 2004, as disclosed Note 16: Quarterly Financial Data (Unaudited) in the Company’s Form 10K. We have computed that the basic EPS for the fourth quarter is $0.07 and not $0.09 as previously filed in our Form 10-K.

As a result of the correction of the Company’s accounting treatment for the effect of participating convertible securities on the computation of basic earnings per share, the Company has amended Note 16 in the Notes to the Financial Statements.

The impact of the restatement for the year ended December 31, 2004 is summarized as follows:


Note 16 Quarterly Financial Data (Unaudited)	As originally reported		As restated		Change

	Quarter ended
	Dec 31, 2004		Dec 31, 2004
	(In thousands, except per share data)

Net (loss)/profit	$	3,275	$	3,275		—

Deemed dividend associated with beneficial conversion of preferred stock		—		—		—

Net (loss)/profit attributable to common stockholders	$	3,275	$	3,275		—

Net (loss)/profit attributable to common stockholders per share - basic	$	0.09	$	0.07	$	(0.02	)
Net (loss)/profit attributable to common stockholders per share - diluted	$	0.07	$	0.07		—

Overview

	Percentage of Revenue
Geographic Area	Year ended December 31, 2002		Year ended December 31, 2003		Year ended December 31, 2004
United States		11.3%		3.1%		3.2%
Asia Pacific		22.0		35.9		8.5
Europe		11.1		19.2		11.8
Africa and Middle East		49.0		27.1		2.0
South and Central America and Caribbean		6.6		14.7		74.5


	Year ended December 31, 2002			Year ended December 31, 2003			Year ended December 31, 2004
							Restated
Revenue		100.0	%		100.0	%		100.0	%
Cost of revenue		74.2			74.9			69.8
Inventory provision		7.7			15.5			1.2
Gross profit		18.1			9.7			29.0
Operating expenses:
Research and development		52.6			47.0			19.9
Sales and marketing		39.1			33.9			11.6
Bad debt expense		14.2			3.1			0.6
General and administrative		34.6			28.5			11.7
Amortization of intangibles		0.2			0.6			0.8
Restructuring provision		5.5			2.4			0.4
Total operating expenses		146.1			115.5			45.0
Loss from operations		(128.1	)		(105.8	)		(16.0	)
Interest and other income, net		8.5			9.8			3.5
Income taxes		11.0			0.0			2.0
Net loss		(108.5	)		(96.1	)		(10.5	)
Deemed dividend associated with beneficial conversion of preferred stock		—			—			(11.0	)
Net loss attributable to common stockholders		(108.5	)%		(96.1	)%		(21.6	)%

All figures in US$ thousands		Accrued at acquisition			Paid in 2004			Revision to preliminary fair value adjustments			Accrued at December 31, 2004
Office closure — other associated costs		$	520		$	(181	)	$	(339	)	$	—

All figures in US$ thousands	Balance at beginning of period		Restructuring charge		Accrued on acquisition			Utilized			Balance at end of period

Year ended December 31, 2004
One-time termination benefits	$	—	$	413		—		$	(413	)	$	—
Contract termination costs		947		—		—			(348	)		599
Other associated costs		592		—	$	(339	)		(192	)		61
	$	1,539	$	413	$	(339	)	$	(953	)	$	660
Year ended December 31, 2003
One-time termination benefits	$	79	$	342		—		$	(421	)	$	—
Contract termination costs		825		397		—			(275	)		947
Other associated costs		150		11	$	520			(89	)		592
	$	1,054	$	750	$	520		$	(785	)	$	1,539
Year ended December 31, 2002
Facility related	$	307	$	1,142		—		$	(474	)	$	975
Severance and other		234		278		—			(433	)		79
	$	541	$	1,420		—		$	(907	)	$	1,054

	Payments due by period
All figures in US$ thousands	Total		2005		2006 - 2007		2008 - 2009		2010 & thereafter
Contractual obligations
Operating lease obligations	$	6,497	$	1,781	$	2,580	$	1,950	$	186
Purchase obligations (1)		21,178		21,178		—		—		—
	$	27,675	$	22,959	$	2,580	$	1,950	$	186

	Page
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2003 and 2004	F-2
Consolidated Statements of Operations for the years ended December 31, 2002, 2003 and 2004	F-3
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2002, 2003 and 2004	F-4
Consolidated Statements of Cash Flows for the years ended December 2002, 2003 and 2004	F-5
Notes to the Financial Statements	F-6

3.1		Amended and Restated Articles of Incorporation of Airspan (1)

3.2		Articles of Amendment to the Articles of Incorporation (2)

3.3		Amended and Restated Bylaws of Airspan (3)

4.1		Form of Airspan’s common stock certificate (4)

10.1		1998 Stock Option and Restricted Stock Plan (4)

10.2		2000 Employee Stock Purchase Plan, as amended (2)

10.3		Employment Agreement with Eric Stonestrom (4), (5)

10.4		Employment Agreement with Jonathan Paget (4), (5)

10.5		Employment Agreement with Peter Aronstam, as amended (5), (6), (7)

10.6		2001 Supplemental Stock Option Plan (6)

10.7		Employment Agreement with Henrik Smith-Petersen (5), (7)

10.8		Employment Agreement with David Brant (5), (7)

10.9		2003 Supplemental Stock Option Plan (3)

10.10		Airspan Omnibus Equity Compensation Plan (1)

10.11		Purchase and License Agreement, dated as of December 28, 2004, by and among Airspan Communications Limited and Axtel, S.A. de C.V.(11), (12)

10.12		Technical Assistance Support Services Agreement for FWA Equipment, dated as of February 14, 2003, by and between Nortel Networks UK Limited and Axtel, S.A. de C.V. (8)**

10.13		Preferred Stock Purchase Agreement, dated as of September 10, 2004 among Airspan Networks, Inc. and Oak Investment Partners XI, Limited Partnership (9)

10.14		Amendment to Preferred Stock Purchase Agreement (10)

10.15		Amendment Agreement No. 3 to FWA TASS dated as of December 28, 2004 between Airspan Communications Limited and Axtel, S.A. de C.V.(11), (12)

21		Subsidiaries of registrant (12)

23.1		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm *

31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1		Certification of the Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002***

32.2		Certification of the Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002***

**	Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
***	Furnished herewith

1		Incorporated by reference to Airspan’s Form 10-Q for the quarter ended April 4, 2004.
2		Incorporated by reference to the Company’s report on Form 8-K filed on September 15, 2004.
3		Incorporated by reference to Company’s report on Form 8-K/A filed in February 22, 2005.
4		Incorporated by Reference to Airspan’s Registration Statement on Form S-1 (333-34514) filed July 18, 2000
5		Management Agreement or Compensatory Plan or Arrangement
6		Incorporated by Reference to Airspan’s Form 10-K for the year ended December 31, 2000
7		Incorporated by Reference to Airspan’s Form 10-K for the year ended December 31, 2002
8.		Incorporated by reference by the Company’s report on Form 8-K/A filed on July 6, 2004.
9		Incorporated by reference to the Company’s report on Form 8-K filed on September 13, 2004.
10		Incorporated by reference to the Company’s report on Form 8-K filed on September 27, 2004.
11		Portions of this document have been omitted and were filed separately with the SEC on March 16, 2005 pursuant to a request for confidential treatment.
12		Incorporated by reference to the Company's Form 10-K for the year ended December 31, 2004.


	Airspan Networks Inc

	By:	/s/ Eric D. Stonestrom
		Eric D. Stonestrom,
		President and Chief Executive Officer

Signature	Title	Dated

/s/ Eric D. Stonestrom	Chief Executive Officer,	April 27, 2005
Eric D. Stonestrom	Director (Principal Executive Officer)


/s/ Matthew J. Desch	Chairman of the Board of Directors	April 27, 2005
Matthew J. Desch


/s/ Peter Aronstam	Senior Vice President, Finance;	April 27, 2005
Peter Aronstam	Chief Financial Officer (Principal Financial and Accounting Officer)

/s/ H. Berry Cash	Director	April 27, 2005
H. Berry Cash


/s/ Randall E. Curran	Director	April 27, 2005
Randall E. Curran


/s/ Michael T. Flynn	Director	April 27, 2005
Michael T. Flynn


/s/ Guillermo Heredia	Director	April 27, 2005
Guillermo Heredia


/s/ Thomas S. Huseby	Director	April 27, 2005
Thomas S. Huseby


/s/ David Twyver	Director	April 27, 2005
David Twyver

	December 31, 2003			December 31, 2004
ASSETS				Restated
Current assets
Cash and cash equivalents	$	33,926		$	66,296
Restricted cash		1,588			1,687
Accounts receivable, less allowance for doubtful accounts of $5,207 in 2003 and $2,814 in 2004		12,509			20,947
Unbilled accounts receivable		54			43
Inventory		18,215			12,834
Prepaid expenses and other current assets		4,570			5,702
Total current assets		70,862			107,509
Property, plant and equipment, net		3,736			3,707
Goodwill		3,136			789
Intangible assets, net		4,554			1,672
Long term accounts receivable		—			305
Other non current assets		984			1,216
Total assets	$	83,272		$	115,198
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	7,751		$	24,615
Accrued taxes		449			653
Deferred revenue		989			627
Customer advances		15,070			4,789
Other accrued expenses		10,000			11,349
Total current liabilities		34,259			42,033
Commitments (see note 10)		—			—
Stockholders’ equity
Preferred stock. $0.0001 par value; nil shares authorized at December 31, 2003 and 74,200 authorized at December 31, 2004: nil issued at December 31, 2003 and 73,000 issued at December 31, 2004		—			—
Common stock, $0.0003 par value; 50,000,000 shares authorized at December 31 2003 and 100,000,000 authorized at December 31 2004: 36,314,410 issued at December 31, 2003 and 37,644,627 issued at December 31, 2004		11			11
Note receivable — stockholder		(130	)		(87	)
Additional paid in capital		215,209			260,356
Treasury Stock; 834,560 shares held at December 31, 2003		(797	)		—
Accumulated other comprehensive income		1,839			418
Accumulated deficit		(167,119	)		(187,533	)
Total stockholders’ equity		49,013			73,165
Total liabilities and stockholders’ equity	$	83,272		$	115,198

	Preferred Stock					Common Stock
	Shares	Par value	Shares			Par value		Restated Additional paid in capital		Treasury stock			Note receivable stockholder			Accumulated other comprehensive income			Restated Accumulated deficit			Total
At January 1, 2002			35,120,199		$	10	$	214,491		—		$	(180	)	$	458		$	(109,526	)	$	105,253
Comprehensive Loss:
Net loss								—		—			—			—			(28,138	)		(28,138	)
Other Comprehensive Income:
Movement in the fair value of cash flow hedges
Unrealized gains on foreign currency cash flow hedges								—		—			—			2,041			—
Less: reclassification of adjustment for gains realized in net income								—		—			—			(937	)		—
																1,104						1,104
Comprehensive loss								—		—			—			—			—			(27,034	)
Decrease in notes receivable													50			—			—			50
Issuance of common stock under the employee share purchase plan			274,411			—		193		—			—			—			—			193
Exercise of stock options			143,872			—		43		—			—			—			—			43
Purchase of own shares			(412,486	)		—		—	$	(405	)											(405	)
At December 31, 2002			35,125,996		$	10	$	214,727	$	(405	)	$	(130	)	$	1,562		$	(137,664	)	$	78,100
Comprehensive Loss:
Net loss								—		—			—			—			(29,455	)		(29,455	)
Other Comprehensive Income:
Movement in the fair value of cash flow hedges
Unrealized gains on foreign currency cash flow hedges								—		—			—			1,952			—
Less: reclassification of adjustment for gains realized in net income								—		—			—			(1,675	)		—
																277						277
Comprehensive loss								—		—			—			—			—			(29,178	)
Issuance of common stock under the employee share purchase plan			531,164			1		369		—			—			—			—			370
Exercise of stock options			244,765			—		112		—			—			—			—			112
Purchase of own shares			(422,074	)		—		—		(392	)		—			—			—			(392	)
At December 31, 2003	—	—	35,479,851		$	11	$	215,209	$	(797	)	$	(130	)	$	1,839		$	(167,119	)	$	49,013
Comprehensive Loss:
Net loss								—		—			—			—			(9,975	)		(9,975	)
Other Comprehensive Income:
Movement in the fair value of cash flow hedges
Unrealized gains on foreign currency cash flow hedges								—		—			—			590			—
Less: reclassification of adjustment for gains realized in net income								—		—			—			(2,011	)		—
																(1,421	)					(1,421	)
Comprehensive loss								—		—			—			—			—			(11,396	)
Decrease in notes receivable													43									43
Issuance of Series A Preferred shares	73,000	—						29,132														29,132
Deemed dividend associated with beneficial conversion of preferred stock								10,439		—			—			—			(10,439	)		—
Issuance of common stock under the employee share purchase plan			211,754			—		373		—			—			—			—			373
Exercise of stock options			1,118,462			—		1,577		—			—			—			—			1,577
Sale of own shares			834,560			—		3,626		797			—			—			—			4,423
At December 31, 2004	73,000	—	37,644,627		$	11	$	260,356		—		$	(87	)	$	418		$	(187,533	)	$	73,165

	December 31, 2003		December 31, 2004
Bank Guarantees - with Landlords	$	1,421	$	1,488
- with Customers		15		14
Employee cash held under the Employee Share Purchase Plan		152		185
	$	1,588	$	1,687

	Balance at beginning of period		Accrual for warranties issued during the period		Accruals related to pre-existing warranties (including changes in estimates)			Settlements made (in cash or in kind) during the period			Balance at end of period
Year ended December 31, 2004
Product warranty liability	$	652	$	1,003	$	(299	)	$	(752	)	$	604

	Cash Consideration		Accrued costs		Revisions to original accrued costs			Total

Initial purchase price	$	12,850		—		—		$	12,850
Working capital adjustment		241		—		—			241
Acquisition costs		—	$	800	$	(41	)		759
Total purchase price	$	13,091	$	800	$	(41	)	$	13,850

	Preliminary Fair value Dec 31, 2003			Revisions to preliminary purchase price allocation/fair value adjustments			Allocation of negative goodwill			Final Fair value Dec 31, 2004

Cash	$	14,946			—			—		$	14,946
Inventory		8,550		$	4,695			—			13,245
Prepaid expenses and other current assets		393			—			—			393
Property, plant and equipment, net		419			—		$	(221	)		198
Intangible assets, net:
Patents		1,500			—			(790	)		710
Customer contracts		2,600			—			(1,362	)		1,238
Accounts payable		(8	)		—			—			(8	)
Deferred revenue		(93	)		—			—			(93	)
Customer advances		(14,946	)		—			—			(14,946	)
Other accrued expenses		(1,817	)		(16	)		—			(1,833	)
Goodwill		2,347			(4,720	)		2,373			—
Total purchase price	$	13,891		$	(41	)	$	—		$	13,850

Country	Net operating loss carry-forwards	Expiry terms
U.K.	$125,500	Does not expire
U.S.	14,700	Expires in 17 to 20 years
Australia	3,700	Does not expire
Israel	27,800	Does not expire
Other	3,100	Does not expire

	December 31, 2003			December 31, 2004
Net operating loss carry-forwards	$	44,130		$	44,811
Accruals and reserves		774			1,038
Fixed assets		1,602			2,920
		46,506			48,769
Valuation allowance		(46,506	)		(48,769	)
	$	—		$	—

	December 31, 2003			December 31, 2004
Plant, machinery and equipment	$	15,920		$	13,714
Furniture and fixtures		705			611
Leasehold improvements		3,001			3,464
		19,626			17,789
Accumulated depreciation		(15,861	)		(14,082	)
	$	3,735		$	3,707

		December 31, 2003			December 31, 2004
Goodwill		$	3,136		$	789

	December 31, 2003 gross carrying amount		Accumulated amortization			Net		December 31, 2004 gross carrying amount		Accumulated amortization			Net		Weighted average amortization period in years
Intangibles
Customer contracts	$	4,691	$	(2,091	)	$	2,600	$	1,240	$	(366	)	$	874		4.00
Patent/developed technology		4,181		(2,226	)		1,954		1,371		(573	)		798		2.73
	$	8,872	$	(4,317	)	$	4,554	$	2,611	$	(939	)	$	1,672		3.27

For the year ended December 31,
2005	$	510
2006		470
2007		346
2008		346
2009		—

		Goodwill

Balance as of January 1, 2004	$	3,136
Fair value adjustment on the Proximity acquisition		(2,347	)
Balance as of December 31, 2004	$	789

	December 31, 2003		December 31, 2004
Purchased parts and materials	$	10,688	$	4,419
Work in progress		1,084		1,214
Finished goods and consumables		6,443		7,201
	$	18,215	$	12,834

	December 31, 2003			December 31, 2004
Amounts due within one year	$	17,716		$	23,761
Allowance for doubtful debts		(5,207	)		(2,814	)
	$	12,509		$	20,947

	December 31, 2003		December 31, 2004
Warranty	$	652	$	604
Restructuring		1,539		660
Acquisition costs		549		—
Other		7,260		10,084
	$	10,000	$	11,349

	As at December 31,
2005	$	1,781
2006		1,396
2007		1,184
2008		1,126
2009		824
Thereafter		186
	$	6,497

	December 31, 2003		December 31, 2004
Long-lived assets:
Property, plant and equipment, net:
United States	$	104	$	97
United Kingdom and Ireland		3,209		2,977
Israel		289		518
Rest of the world		134		115
		3,736		3,707
Goodwill and Intangible assets, net:
United States		789		789
Mexico		2,600		874
United Kingdom and Ireland		3,847		509
Israel		454		289
		7,690		2,461
Other non current assets and long term accounts receivable:
United States		—		—
United Kingdom and Ireland		—		305
Israel		983		1,216
		983		1,521
Total long-lived assets	$	12,409	$	7,689

Total assets, net:
United States	$	28,216	$	55,703
United Kingdom and Ireland		44,212		39,088
Mexico		3,915		12,008
Israel		6,353		7,624
Rest of the world		577		775
	$	83,272	$	115,198

	Number of Shares			Weighted average exercise price
Outstanding, January 1, 2002		4,954,346		$	5.47
Granted		2,116,792			0.64
Forfeited		(1,450,313	)		9.53
Exercised		(143,872	)		0.30
Outstanding, December 31, 2002		5,476,953		$	2.67
Granted		397,800			2.30
Forfeited		(139,041	)		2.25
Exercised		(244,765	)		0.53
Outstanding, December 31, 2003		5,490,947		$	2.74
Granted		741,450			5.03
Forfeited		(119,315	)		3.43
Exercised		(1,118,462	)		1.40
Outstanding, December 31, 2004		4,994,620		$	3.37

	Outstanding options		Weighted average				Exercisable options		Weighted average
	Number		Exercise price		Remaining contractual life in years		Number		Exercise price
Exercise Price ranges
$0.30		131,802	$	0.30		3.12		131,795	$	0.30
0.45-0.49		946,527		0.46		7.74		362,600		0.46
0.54-1.039		333,722		0.87		6.41		297,652		0.88
1.09-1.85		590,906		1.83		6.84		473,698		1.83
1.94-3.02		804,882		2.60		7.35		564,525		2.60
3.14-4.38		886,616		4.26		6.49		738,127		4.25
4.55-5.08		498,050		5.08		9.39		0		0.00
5.19-6.18		532,449		5.97		6.53		235,082		5.99
7.50-9.60		99,666		8.52		5.31		99,665		8.52
15.00		170,000		15.00		5.58		170,000		15.00
Total		4,994,620	$	3.37		7.05		3,073,144	$	3.50

Plan reserved under	Number of options
2000 Employee Stock Purchase Plan		1,825,577
1998, 2001, 2003 and 2004 Stock Option plans: — options still to be granted		4,362,194
— options outstanding		4,994,620
		11,182,391

	Quarter Ended
	Mar. 30, 2003			June 29, 2003			Sept. 28, 2003			Dec. 31, 2003			Apr. 4, 2004			July 4, 2004			Oct. 3, 2004			Dec. 31, 2004
	($ in thousands, except per share data)
Consolidated statement of operations data:																			Restated			Restated
Revenue	$	7,811		$	7,524		$	6,293		$	9,023		$	12,420		$	18,252		$	26,452		$	37,523
Cost of revenue		5,253			5,704			5,656			6,332			8,693			12,182			18,294			26,975
Inventory provision		—			4,398			—			348			—			—			1,099			—
Gross profit /(loss)		2,558			(2,578	)		637			2,343			3,727			6,070			7,059			10,548
Operating expenses:
Research and development		3,719			3,670			3,413			3,593			5,046			4,743			4,495			4,510
Sales and marketing		2,604			2,656			2,269			2,860			2,560			2,752			2,782			2,919
Bad debt reserve		—			—			—			946			—			300			249			—
General and administration		2,386			2,252			2,037			2,066			2,051			2,828			3,342			2,821
Amortization of intangibles		43			44			44			41			246			158			175			144
Restructuring provision		—			273			46			431			—			397			16			—
Total operating expense		8,752			8,895			7,809			9,937			9,903			11,178			11,059			10,394
(Loss) /profit from operations		(6,194	)		(11,473	)		(7,172	)		(7,594	)		(6,176	)		(5,108	)		(4,000	)		154
Other income/(expense):
Interest expense		(38	)		—			—			—			—			—			—			—
Interest and other income		645			1,070			385			921			807			686			591			1,133
(Loss) /profit before income taxes		(5,587	)		(10,403	)		(6,787	)		(6,673	)		(5,369	)		(4,422	)		(3,409	)		1,287
Income tax (charge)/credit		—			(4	)		—			(1	)		(16	)		14			(48	)		1,988

Net (loss)/profit		(5,587	)		(10,407	)		(6,787	)		(6,674	)		(5,385	)		(4,408	)		(3,457	)		3,275
Deemed dividend associated with beneficial conversion of preferred stock		—			—			—			—			—			—			(10,439	)		—
Net (loss)/profit attributable to common stockholders	$	(5,587	)	$	(10,407	)	$	(6,787	)	$	(6,674	)	$	(5,385	)	$	(4,408	)	$	(13,896	)	$	3,275
Net (loss)/profit attributable to common stockholders per share - basic (1)	$	(0.16	)	$	(0.30	)	$	(0.19	)	$	(0.19	)	$	(0.15	)	$	(0.12	)	$	(0.38	)	$	0.07
Net (loss)/profit attributable to common stockholders per share - diluted	$	(0.16	)	$	(0.30	)	$	(0.19	)	$	(0.19	)	$	(0.15	)	$	(0.12	)	$	(0.38	)	$	0.07

	Airspan Networks Inc. Valuation and Qualifying Accounts
			Additions				Deductions
	Balance at beginning of period		Charged to expenses		Written back to provision		Credit to expenses			Charged against provision			Balance at end of period
	(in thousands of U.S. Dollars)
Allowance for doubtful debts:
Year ended December 31, 2004	$	5,207	$	985	$	—	$	(436	)	$	(2,942	)	$	2,814
Year ended December 31, 2003		4,531		1,212		—		(266	)		(270	)		5,207
Year ended December 31, 2002		2,601		3,794		150		(114	)		(1,900	)		4,531