Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

o		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
		SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 30, 2008

		OR

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

		For the transition period from ________________ to ________________

Commission file number: 000-31031

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 310 Boca Raton, FL	33431
(Address of principal executive offices)	(Zip Code)

561-893-8670

(Registrant’s telephone number, including area code)

None

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class		Outstanding at May 5, 2008
Common Stock, $.0003 par value per share		58,683,992 shares

TABLE OF CONTENTS

		Page Number
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statement of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	22

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	22

Item 6.	Exhibits	26

Signatures		26

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

AIRSPAN NETWORKS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data)

	March 30, 2008			December 31, 2007
	(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	30,789		$	30,815
Restricted cash		525			393
Short-term investments		2,663			5,504
Accounts receivable, less allowance for doubtful accounts of $3,003 at March 30, 2008 and $2,878 at December 31, 2007		23,654			33,853
Inventory		16,055			16,720
Prepaid expenses and other current assets		4,607			5,338
Total current assets		78,293			92,623
Property, plant and equipment, net		5,722			5,895
Goodwill		10,231			10,231
Intangible assets, net		1,636			1,870
Other non-current assets		3,309			3,402
Total assets	$	99,191		$	114,021

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	9,008		$	11,938
Deferred revenue		3,072			5,125
Customer advances		1,504			892
Other accrued expenses		11,796			13,063
Short-term debt		7,500			7,500
Total current liabilities		32,880			38,518
Long-term debt		1,787			1,787
Accrued interest on long-term debt		229			191
Total liabilities		34,896			40,496

Commitments and contingencies

Stockholders' equity
Preferred stock, $0.0001 par value; 250,000 shares authorized at March 30, 2008 and December 31, 2007; 200,690 shares issued at March 30, 2008 and December 31, 2007
Common stock, $0.0003 par value; 100,000,000 shares authorized at March 30, 2008 and December 31, 2007; 58,657,798 and 58,542,517 issued at March 30, 2008 and December 31, 2007, respectively		17			17
Note receivable – stockholder		(87	)		(87	)
Additional paid-in capital		350,540			349,718
Accumulated deficit		(286,175	)		(276,123	)
Total stockholders' equity		64,295			73,525
Total liabilities and stockholders' equity	$	99,191		$	114,021

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

AIRSPAN NETWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for share and per share data)

	Quarter ended March 30, 2008			Quarter ended April 1, 2007
	(unaudited)			(unaudited)

Revenue	$	17,159		$	26,660
Cost of revenue		(11,923	)		(18,409	)
Gross profit		5,236			8,251
Operating expenses:
Research and development		6,936			5,606
Sales and marketing		4,239			3,362
Bad debts		47			232
General and administrative		4,140			4,178
Amortization of intangibles		234			234
Restructuring		-			40
Total operating expenses		15,596			13,652
Loss from operations		(10,360	)		(5,401	)
Interest income, net		116			280
Other income, net		242			32
Loss before income taxes		(10,002	)		(5,089	)
Income tax provision		(50	)		(39	)
Net loss	$	(10,052	)	$	(5,128	)

Net loss per share - basic and diluted	$	(0.17	)	$	(0.13	)
Weighted average shares outstanding - basic and diluted		58,599,702			40,528,097

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

AIRSPAN NETWORKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year to date March 30, 2008			Year to date April 1, 2007
	(unaudited)			(unaudited)
Cash flows from operating activities
Net loss	$	(10,052	)	$	(5,128	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		996			915
Accrued interest on long-term debt		38			51
Non-cash stock compensation		736			605
Bad debts		47			232
Changes in operating assets and liabilities:
Decrease in receivables		10,151			6,373
Decrease in inventories		665			580
Decrease in other current assets		732			683
Decrease in accounts payables		(2,931	)		(3,994	)
Decrease in deferred revenue		(2,053	)		(4,792	)
Increase in customer advances		613			2,571
(Decrease)/increase in other accrued expenses		(1,244	)		47
(Increase)/decrease in other operating assets		(39	)		738
Net cash used in operating activities		(2,341	)		(1,119	)

Cash flows from investing activities
Purchase of property, plant and equipment		(590	)		(602	)
Purchase of investment securities		(1,657	)		(4,399	)
Sale of investment securities		4,500			5,274
Net cash provided by investing activities		2,253			273

Cash flows from financing activities
Borrowings under line of credit		-			3,000
Proceeds from the exercise of stock options		62			988
Net cash provided by financing activities		62			3,988
(Decrease)/increase in cash and cash equivalents		(26	)		3,142
Cash and cash equivalents, beginning of period		30,815			15,890
Cash and cash equivalents, end of period	$	30,789		$	19,032

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

Airspan Networks Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – BUSINESS AND BASIS OF PRESENTATION

Airspan Networks Inc. (“Airspan” or “the Company”) is a global supplier of broadband wireless equipment supporting the Worldwide Interoperability for Microwave Access (“WiMAX”) protocol standard, which provides a wide area telecommunication access network to connect end-users to telecom backbone networks. The WiMAX standard is established by the WiMAX Forum®, a self-regulatory, industry standards-setting organization. While our main product focus is WiMAX, we utilize other supplemental technologies, including Wireless Fidelity (“Wi-Fi”) and Voice-over-Internet Protocol (“VoIP”), which allow communications network operators and service providers to deliver high-speed data and voice services cost-effectively using wireless communications rather than wired infrastructure.

Historically, the primary market for our wireless systems has been fixed point to multi-point applications. Our development of new technology has expanded the market to include portable and mobile applications. Today, we produce radio base station equipment to transmit radio signals from a central location to the end-user who is equipped with a subscriber receiving unit. Our WiMAX products now enable major network migrations to Internet Protocol (“IP”), which makes higher transmission speeds possible due to more efficient transmission techniques. After the expected certification of mobile WiMAX standards, we expect our mobile applications will be made available directly to end-user devices such as laptops and PDAs to deliver wireless connectivity - at home, in the office and on the move. Leveraging our experience with WiMAX technology and our experience gained from 15 years of developing and deploying broadband wireless systems, we are focused on developing products for these mobile WiMAX applications in addition to our fixed wireless products.

Our primary target customers are communications service providers and other network operators that deploy WiMAX networks in licensed and unlicensed (license-exempt) spectrums worldwide. These customers include incumbent local exchange carriers (often referred to as “local exchange carriers”, “ILECs”, or simply telephone companies), Internet service providers (often referred to as “ISPs”), Wireless Internet Service providers (often referred to as “WISPs”), Mobile Virtual Network Operators (often referred to as “MVNOs”), Competitive Local Exchange Carriers (“CLECs”), and other telecommunications users, such as utilities and other enterprises. As mobile WiMAX products are deployed, we are also targeting mobile and cellular carriers, which represent a significant expansion of our traditional addressable market. Our broadband wireless systems have been installed by more than 500 network operators in more than 100 countries.

Each of our wireless systems uses digital radio technologies, which provide wide-area or local-area coverage, robust security and resistance to fading. Our systems synchronize available bandwidth with the specific services being provided, thereby facilitating the most efficient use of radio equipment resources and spectrum. Our systems are designed as modular solutions enabling the expansion of existing deployments as technologies and customer needs evolve. We provide a wide range of subscriber devices that deliver voice and data connection, or a combination of both, eliminating the need for multiple access devices in customer premises. In 2007, we announced the introduction of a portable miniature device that can be plugged into a standard laptop and can provide VoIP capability, thereby optimizing the use of WiMAX for voice services.

Our network management systems provide diagnostic and management tools that allow our customers to monitor and optimize their installations. To facilitate the deployment and operation of our systems, we also offer network installation (generally through subcontractors), training, radio planning and support services.

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

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. The interim operating results are not necessarily indicative of operating results expected in subsequent periods or for the year as a whole. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

The condensed consolidated balance sheet at December 31, 2007 has been derived from the audited financial statements at that date included in our Form 10-K for the year ended December 31, 2007 but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2007.

Certain prior year amounts have been reclassified to conform to the current year classification.

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

NOTE 2 - INVENTORY

Inventory consists of the following:

	March 30, 2008			December 31, 2007
	(unaudited)			(audited)
Purchased parts and materials	$	6,515		$	6,941
Work in progress		1,138			1,283
Finished goods and consumables		18,305			20,585
Inventory provision		(9,903	)		(12,089	)
	$	16,055		$	16,720

Inventories are stated at the lower of cost or market value. Cost includes all costs incurred in bringing each product to its present location and condition, as follows:

Raw materials, consumables and finished goods — average cost

Work in progress— cost of direct materials and labor.

NOTE 3 - ACCRUED RESTRUCTURING CHARGES

In the fourth quarter of 2002, the decision was made to completely outsource all of our manufacturing. As a result, a $1.0 million restructuring charge was recorded for the closure of our Riverside, Uxbridge facility in 2003. All of this cost relates to the excess facility. A further $0.4 million was recognized as restructuring in the income statement in the fourth quarter of 2003 as we reassessed the ability to sublease the Riverside facility. The lessor completed renovations and incurred actual costs for approximately $0.8 million, which the Company paid in February 2008 in final settlement. All cash outflows in connection with this restructuring were paid in February 2008.

In the third quarter of 2006, the Company commenced a company-wide restructuring program to reduce operating expenses. The operating expense reduction was accomplished primarily through reductions in worldwide headcount. In 2006, the Company recorded restructuring charges of $2.2 million. The Company made approximately $0.4 million of cash outlays in 2007 related to amounts accrued in 2006. All cash outlays related to this program were completed in the second quarter of 2007.

The restructuring charges and their utilization are summarized as follows:

	Total expected to be incurred		Incurred during the quarter ended March 30, 2008		Cumulative incurred at March 30, 2008
	(unaudited)		(unaudited)		(unaudited)

One time termination benefits	$	2,124	$	-	$	2,124
Contract termination costs		1,437		-		1,437
Other associated costs		50		-		50
	$	3,611	$	-	$	3,611

	Balance at Beginning of Period		Restructuring Charge			Utilized			Balance at End of Period

Three months ended March 30, 2008 (unaudited)
One time termination benefits	$	-	$	-		$	-		$	-
Contract termination costs		796		-			796			-
Other associated costs		-		-			-			-
	$	796	$	-		$	796		$	-

Year ended December 31, 2007 (audited)
One time termination benefits	$	375	$	-		$	(375	)	$	-
Contract termination costs		1,437		(639	)		(2	)		796
Other associated costs		50		(50	)		-			-
	$	1,862	$	(689	)	$	(377	)	$	796

NOTE 4 – COMMITMENTS AND CONTINGENCIES

Commitments

As of March 30, 2008, our material commitments consisted of obligations on operating leases, repayment of principal and interest owed on the Tekes loans and purchase commitments to our manufacturing subcontractors. These purchase commitments totaled $11.9 million at March 30, 2008. We have no material capital commitments.

Warranty

The Company provides limited warranties, usually for periods ranging from twelve to twenty-four months, to all purchasers of its new equipment. Warranty expense is accrued at the date revenue is recognized on the sale of equipment and is recognized as a cost of revenue. The expense is estimated based on analysis of historic costs and other relevant factors. Management believes that the amounts provided are sufficient for all future warranty costs on equipment sold through March 30, 2008 but if actual product failure rates, material usage or service delivery costs differ from estimates, revisions to the estimated warranty liability would be required.

Information regarding the changes in our product warranty liabilities was as follows for the three months ended March 30, 2008.

	Balance at beginning of period		Accrual for warranties issued during the period		Changes in accruals related to pre-existing warranties (including changes in estimates)			Settlements made (in cash or in kind) during the period		Balance at end of period
Three months ended March 30, 2008
Product warranty liability	$	1,010	$	49	$	(97	)	$	1	$	963

Other guarantees

The Company had bank guarantees with its landlords and customers aggregating $1.3 million at March 30, 2008 and at December 31, 2007. The guarantees secure payment or performance obligations of the Company under contracts. The Company has pledged cash to the banks as collateral for guarantees aggregating $1.3 million, of which $0.1 million is recorded as restricted cash in current assets and $1.2 million is recorded as other non-current assets. The Company has also issued guarantees to customers under the line of credit provided by Silicon Valley Bank for a total of $2.3 million, which does not require any related pledge of cash collateral. The Company has not recognized any liability for these guarantees as in management’s opinion the likelihood of having to make payments under the guarantees is remote. These guarantees will all expire before the end of 2011 with the majority expiring in 2009.

In addition to the guarantees mentioned above, the Company has issued a guarantee to Tekes, the main public funding organization for research and development in Finland, for the repayment of loans taken out by its fully consolidated subsidiary, Airspan Networks (Finland) OY (“Radionet”). These loans total $2.0 million at March 30, 2008, which includes $0.2 million of accrued interest, and are recorded in long-term debt. This guarantee expires only when Radionet has fulfilled all its obligations to Tekes.

Legal claims

On and after July 23, 2001, three Class Action Complaints were filed in the United States District Court for the Southern District of New York naming as defendants Airspan, and certain current or former officers and directors (referred to herein as the “Individual Defendants”) together with certain underwriters of our July 2000 initial public offering. A Consolidated Amended Complaint, which is now the operative complaint, was filed on April 19, 2002. The complaint alleges violations of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus that contained materially false and misleading information and failed to disclose material information. In particular, the plaintiffs allege that the underwriter-defendants agreed to allocate stock in our initial public offering to certain investors in exchange for excessive and undisclosed commissions and agreements by those investors to make additional purchases of stock in the aftermarket at pre-determined prices. The action seeks damages in an unspecified amount.

This action is being coordinated with approximately three hundred nearly identical actions filed against other companies. On October 9, 2002, the Court dismissed the Individual Defendants from the case without prejudice. This dismissal disposed of the Section 15 and 20(a) control person claims without prejudice. On February 19, 2003, the Court dismissed the Section 10(b) claim against us, but allowed the Section 11 claim to proceed. On December 5, 2006, the Second Circuit vacated a decision by the district court granting class certification in six of the coordinated cases, which are intended to serve as test, or “focus,” cases. The plaintiffs selected these six cases, which do not include Airspan. The district court’s decisions in the six focus cases are intended to provide strong guidance for the parties in the remaining cases. On April 6, 2007, the Second Circuit denied a petition for rehearing filed by the plaintiffs, but noted that the plaintiffs could ask the district court to certify more narrow classes than those that were rejected.

On August 14, 2007, the plaintiffs filed amended complaints in the six focus cases. The amended complaints include a number of changes, such as changes to the definition of the purported class of investors. On September 27, 2007, the plaintiffs moved to certify classes in the six focus cases. The six focus case issuers and the underwriters named as defendants in the focus cases filed motions to dismiss the amended complaints against them. On March 26, 2008, the District Court dismissed the Section 11 claims of those members of the putative classes in the focus cases who sold their securities for a price in excess of the initial offering price and those who purchased outside the previously certified class period. With respect to all other claims, the motions to dismiss were denied. We are awaiting a decision from the Court on the class certification motion. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of the matter. We cannot predict whether we will be able to renegotiate a settlement that complies with the Second Circuit’s mandate, nor can we predict the amount of any such settlement and whether that amount would be greater than Airspan’s insurance coverage. If Airspan is found liable, we are unable to estimate or predict the potential damages that might be awarded, whether such damages would be greater than Airspan’s insurance coverage and whether such damages would have a material impact on our results of operations or financial condition in any future period.

On October 9, 2007, a purported Airspan shareholder filed a complaint for violation of Section 16(b) of the Securities Exchange Act of 1934, which prohibits short-swing trading, against the Company's IPO underwriters. The complaint, Vanessa Simmonds v. Credit Suisse Group, et al., Case No. C07-01638, filed in District Court for the Western District of Washington, seeks the recovery of short-swing profits. The Company is named as a nominal defendant. No recovery is sought from the Company.

We and other WiMAX manufacturers have received letters from Wi-LAN raising various patent infringement claims and offering licenses of various Wi-LAN patents. We received a letter, dated November 9, 2006, offering us licenses of various Wi-LAN patents. After reviewing Wi-LAN’s claims, on February 1, 2007, we sent a letter to Wi-LAN notifying them that we did not believe that we require a license from Wi-LAN. On May 29, 2007, we received a follow up letter and materials from Wi-LAN which continued to assert those claims. Once again the Company has carefully reviewed this matter, and in consultation with its patent counsel sent a further letter on January 30, 2008 declining Wi-LAN’s offer to license their patents. However, Wi-LAN continues to assert its claims and there can be no assurance as to the ultimate outcome of this matter.

Except as set forth above, we are not currently subject to any other material legal proceedings. We may from time to time become a party to various other legal proceedings arising in the ordinary course of our business.

NOTE 5 - STOCK COMPENSATION

At March 30, 2008, we had three stock option plans as well as the 2004 Omnibus Equity Compensation plan and the 2000 Employee Stock Purchase Plan (“ESPP”). Awards under the 2004 Omnibus Equity Compensation Plan may be made to participants in the form of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Awards, Performance Shares, Other Stock-Based Awards and others forms of equity based compensation as may be provided and are permissible under this Plan and the law. Employee stock options granted under all of the plans generally vest over a four-year period and expire on the tenth anniversary of their issuance. All options granted under the stock option plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Restricted stock is common stock that is subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified performance conditions and/or the passage of time. Awards of restricted stock that vest only by the passage of time will generally fully vest after four years from the date of grant. At March 30, 2008, the Company had reserved a total of 8,124,979 shares of its common stock for issuance under the above plans.

The following table summarizes share-based compensation expense under SFAS 123(R) for the three months ended March 30, 2008 and April 1, 2007, which was allocated as follows (in thousands):

	Three months ended
	March 30,		April 1,
	2008		2007
Research and development	$	280	$	165
Sales and marketing		147		178
General and administrative		276		254
Stock-based compensation expense included in operating expense		703		597
Cost of sales		33		7
Total stock-based compensation	$	736	$	604

SFAS 123(R) requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in our consolidated statement of operations over the requisite service periods. Compensation expense for all share-based awards is recognized using the straight-line single-option method. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense has been reduced to account for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

To calculate option-based compensation under SFAS 123(R), we used the Black-Scholes option-pricing model. Our determination of fair value of option-based awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

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

There were no restricted stock shares granted during the first three months of 2008. The weighted average fair value of each restricted stock share granted under our equity compensation plans for the first three months of fiscal 2007 was $4.69. The fair value of each restricted stock award is estimated on the date of grant using the intrinsic value method.

The weighted average fair value of each option granted during the first three months of 2008 and the first three months of 2007 was $0.78 and $2.91, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model, using the following weighted average assumptions:

	Three Months Ended
	March 30, 2008			April 1, 2007

Expected volatility		80	%		82	%
Risk-free interest rate		2.77	%		4.74	%
Expected life (years)		5			5
Expected dividend yield		0	%		0	%

Assumptions for Option-Based Awards under SFAS 123(R)

The expected volatility is determined based on historical price changes of our common stock over a period of time which approximates the expected option term.

The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our stock options.

The expected term of options is estimated based on our historical data regarding exercise behavior.

The dividend yield assumption is based on our history and expectation of no dividend payouts.

As share-based compensation expense recognized in the consolidated statement of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures were estimated based on our historical experience.

NOTE 6 - NET LOSS PER SHARE

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

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

	Quarter Ended
	March 30, 2008			April 1, 2007
	(unaudited)
Numerator:
Net loss	$	(10,052	)	$	(5,128	)
Denominator:
Weighted average common shares outstanding basic and diluted		58,599,702			40,528,097
Net loss per share- basic and diluted	$	(0.17	)	$	(0.13	)

There were 6,907,538 stock options outstanding at March 30, 2008 and 5,476,114 stock options outstanding at April 1, 2007 that were excluded from the computation of diluted net loss per share as their effect was anti-dilutive. If the Company had reported net income, the calculation of these per share amounts would have included the dilutive effect of these common stock equivalents using the treasury stock method for stock options. There were 200,690 shares of convertible preferred stock at March 30, 2008 and April 1, 2007, respectively, that were also excluded from the computation of diluted net loss per share as their effect was anti-dilutive. The 200,690 shares of convertible preferred stock would be convertible into 21,630,856 and 20,069,000 common shares as of March 30, 2008 and April 1, 2007, respectively. There were 107,940 and 136,434 nonvested shares of restricted stock at March 30, 2008 and April 1, 2007, respectively, that were excluded from the computation of diluted net loss per share as their effect was anti-dilutive.

NOTE 7 - GEOGRAPHIC INFORMATION

As a developer and supplier of broadband wireless equipment and other technologies, the Company has one reportable segment. The revenue of this single segment is comprised primarily of revenue from products and, to a lesser extent, services. In 2008, the majority of the Company’s revenue was generated from products manufactured in the United Kingdom, Mexico and Israel, with additional revenue generated from sales of original equipment manufacturers’ ("OEM") products.

An analysis of revenue by location of the customer is given below:

	Quarter Ended
	March 30, 2008		April 1, 2007
	(unaudited)
USA and Canada	$	2,508	$	2,698
Asia		2,027		8,949
Europe		3,361		6,870
Africa and the Middle East		5,210		1,033
Latin America and Caribbean		4,053		7,110
	$	17,159	$	26,660

NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS

Adopted Accounting Standards

Effective January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements”, or SFAS 157, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – inputs other than Level 1 quoted prices that are directly or indirectly observable

Level 3 – significant unobservable inputs that are supported by little or no market activity

The Company’s adoption of SFAS 157 did not have a material impact on its consolidated financial statements. The Company has segregated all financial assets and liabilities at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. FASB Staff Position (FSP FAS 157-2—Effective Date of FASB Statement No. 157), or FSP FAS 157-2, delayed the effective date for all nonfinancial assets and liabilities until January 1, 2009, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis.

As of March 30, 2008, financial assets and liabilities subject to fair value measurements were as follows (in thousands):

	As of March 30, 2008
	Level 1		Level 2		Level 3		Balance
Assets
Cash and cash equivalents (1)	$	16,168	$	6,371	$	-	$	22,539
Available for sale investments (2)	$	-	$	2,663	$	-	$	2,663

(1)

These consist of money market funds that are priced at the expected market price

(2)

These consist of commercial paper with short maturities and infrequent secondary market trades and are priced via mathematical calculations; in the event that a transaction is observed on the same security, the accretion schedule is revised

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows entities the option to measure eligible financial instruments at fair value as of specified dates. Such election, which may be applied on an instrument-by-instrument basis, is typically irrevocable once elected. Upon adoption, we did not elect the fair value option for any items within the scope of SFAS 159 and, therefore, the adoption of SFAS 159 did not have an impact on our consolidated financial statements.

In June 2007, the FASB ratified Emerging Issues Task Force 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities” (EITF 07-3). EITF 07-3 requires nonrefundable advance payments for research and development goods or services to be deferred and capitalized. The adoption of EITF 07-3 did not have a material effect on our consolidated financial statements.

Future Adoption of Accounting Standards

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations, (“SFAS 141R”). SFAS 141R requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction whether full or partial acquisition, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, requires expensing of most transaction and restructuring costs, and requires the acquirer to disclose all information needed to evaluate and understand the nature and financial effect of the business combination. SFAS 141R applies to all transactions or other events in which an entity obtains control of one or more businesses, including combinations achieved without transfer of consideration, for example, by contract alone or through the lapse of minority veto rights. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first fiscal year beginning after December 15, 2008. We are currently evaluating the impact SFAS 141R may have on our consolidated financial statements.

In December 2007, EITF 07-01, Accounting for Collaborative Arrangements Related to the Development and Commercialization of Intellectual Property (“EITF 07-01) was issued. EITF 07-01 prescribes the accounting for collaborations. It requires certain transactions between collaborators to be recorded in the income statement on either a gross or net basis within expenses when certain characteristics exist in the collaboration relationship. Based on the nature of the arrangement, payments to or from collaborators would be evaluated and the terms of the arrangement the nature of the entity's business and whether those payments are within the scope of other accounting literature would be presented. Companies are also required to disclose the nature and purpose of collaborative arrangements along with the accounting policies and the classification and amounts of significant financial-statement amounts related to the arrangements. EITF 07-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, and is to be applied retrospectively to all periods presented for all collaborative arrangements existing as of the effective date. We are evaluating the impact this standard will have on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51(“SFAS 160”). SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a separate component of equity rather than as a liability. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. We are currently evaluating the impact of adopting SFAS 160 on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 amends and expands the disclosure requirements of Statement 133 to provide a better understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and their effect on an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years beginning after November 15, 2008. We are currently evaluating the impact that the adoption of SFAS 161 will have on our consolidated financial statements.

Item 2.

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

The following discussion should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as well as the financial statements and notes thereto. Except for historical matters contained herein, statements made in this quarterly report on Form 10-Q are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Without limiting the generality of the foregoing, words such as “may”, “will”, “to”, “plan”, “expect”, “believe”, “anticipate”, “intend”, “could”, “would”, “estimate”, or “continue” or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. Investors and others are cautioned that a variety of factors, including certain risks, may affect our business and cause actual results to differ materially from those set forth in the forward-looking statements. These risk factors include, without limitation, (i) risks to our ability to develop and sell WiMAX certified mobile products in a timely fashion; (ii) a slowdown of expenditures by communication service providers and failure of the WiMAX market to develop as anticipated; (iii) increased competition from alternative communication systems; (iv) a higher than anticipated rate of decline in our legacy business and/or a slower than anticipated rate of growth in the WiMAX business; (v) encroachment of large telecommunications carriers and equipment suppliers on the WiMAX market; (vi) the failure of our existing or prospective customers to purchase products as projected; (vii) our inability to successfully implement cost reduction or containment programs; (viii) our inability to retain our key customers; (ix) possible infringement of third party technologies which may result in lawsuits that could be costly to defend and prohibit us from selling our products; (x) risks to our ability to compensate for declining sales of obsolescent products with increased sales of new products; and (xi) disruptions to our operations in Israel, including the absence of employees, due to required military service, caused by political and military tensions in the Middle East. The Company is also subject to the risks and uncertainties described in its filings with the Securities and Exchange Commission, including those set forth under “Part II — Item 1A. Risk Factors” in this quarterly report on Form 10-Q for the quarter ended March 30, 2008.

Overview

We are a global supplier of broadband wireless equipment supporting the WiMAX protocol standard, which provides a wide area telecommunication access network to connect end users to telecom backbone networks. Our primary target customers are communications service providers and other network operators that deploy WiMAX networks in licensed and unlicensed (license exempt) spectrums worldwide.

Historically, our business addressed communications service providers that used fixed, non-WiMAX wireless infrastructure to deliver services in those parts of their service areas that are difficult or not cost effective to reach using copper or fiber. We now offer a comprehensive range of WiMAX solutions to support these traditional fixed wireless applications as well as the broader market for the mobile applications that WiMAX is expected to enable. We are leveraging many years of experience in complex radio systems design to provide innovative and cost effective products for all types of WiMAX users.

We have transitioned our company over the last three years to focus on WiMAX product development and sales and marketing. As a result, a majority of our resources are now dedicated to WiMAX-based products.

Since 1998 we have evolved from being the supplier of one line of broadband wireless access (“BWA”) equipment that utilized our proprietary technology to a supplier of a highly diversified suite of BWA equipment, including certain equipment that has been developed to conform with WiMAX and the WiFi standards. The diversification of our product portfolio has been the product of both internal research and development and targeted acquisitions.

As a result of the migration of telecommunications to platforms that operate using the Internet protocol, we expect that our BWA equipment which is designed to handle communications over the Internet will become increasingly important to us. Due to the projected popularity of technologies such as WiMAX and WiFi, we also anticipate that our WiMAX and WiFi products will become increasingly important to us. Our WiMAX and WiFi products are designed to be inter-operable with any other equipment that is WiMAX or WiFi Certified, respectively. Accordingly, we believe these relatively new products will face certain opportunities and risks that our proprietary products did not encounter.

The market for BWA equipment has been characterized by rapid technological developments and evolving industry standards. Our future success will therefore depend on our ability to adapt to these new standards and to successfully introduce new technologies that meet customer preferences. We anticipate that we will need to continue to devote considerable resources to research and development to maintain and/or improve upon our competitive position.

Since July 1, 2003, we have acquired three suppliers of BWA equipment. We intend to continue our strategy of expanding our business through, among other things, acquisitions of other businesses and technologies and joint ventures. Accordingly, we anticipate our future results of operation and financial condition may be directly or indirectly materially affected by our acquisition and joint venture effort. Acquisitions are inherently risky and our future growth may depend on our ability to successfully acquire, operate and integrate new businesses into our company.

Our revenue from the last three years and the first three months of 2008, shown below, details the transition from our legacy products to our WiMAX businesses, which has caused significant shifts in our revenue stream and fluctuations in revenues as the relative contribution of our WiMAX business increases. In addition, the sales cycle for new WiMAX customers is somewhat longer than for our legacy business, resulting in longer periods before revenues can be recognized from new WiMAX customers.

Consolidated statement of operations data:	Year ended December 31,									Three months to March 30,
($ in thousands except per share data)	2005			2006			2007			2008
										(unaudited)
Revenue – WiMAX	$	4,489		$	45,753		$	64,277		$	13,356

Revenue - Non-WiMAX		106,477			82,059			30,693			3,803

Total Revenue		110,966			127,812			94,970			17,159

Cost of revenue		(79,467	)		(94,948	)		(70,134	)		(11,923	)

Gross profit		31,499			32,864			24,836			5,236

Margin		28	%		26	%		26	%		31	%

Total operating expenses		48,510			63,539			55,865			15,596

Loss from operations		(17,011	)		(30,675	)		(31,029	)		(10,360	)

Net interest and other income		1,388			1,227			661			358

Loss before income taxes		(15,623	)		(29,448	)		(30,368	)		(10,002	)

Income tax benefit/(provision)		546			246			(94	)		(50	)

Net loss before deemed dividend		(15,077	)		(29,202	)		(30,462	)		(10,052	)

Deemed dividend associated with
preferred stock		-			(9,179	)		(4,670	)		-

Net loss attributable to common stockholders	$	(15,077	)	$	(38,381	)	$	(35,132	)	$	(10,052	)

Net loss attributable to common
stockholders per share - basic and diluted	$	(0.39	)	$	(0.96	)	$	(0.77	)	$	(0.17	)

Weighted average shares outstanding - basic and diluted		38,736,939			40,026,411			45,387,386			58,599,702

Cost of revenue consists of component and material costs, direct labor costs, warranty costs, royalties, overhead related to manufacture of our products and customer support costs. Our gross margin is affected by changes in our product mix both because our gross margin on base stations and related equipment is higher than the gross margin on subscriber terminals, and because our different product lines generate different margins. In addition, our gross margin is affected by changes in the average selling price of our systems and volume discounts granted to significant customers. We expect to derive an increasing proportion of our revenue in the future from the sale of our products through distribution channels.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. We review the accounting policies used in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our process used to develop estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions.

Our significant accounting policies were described in Note 1 to our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2007. With the exception of the items discussed in Note 8 in the accompanying Condensed Consolidated Financial Statements, there have been no significant changes to these policies and no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 30, 2008.

Comparison of the quarter ended March 30, 2008 to the quarter ended April 1, 2007

Revenue

Revenue totaled $17.2 million for the quarter ended March 30, 2008, representing a 36% decrease from the $26.7 million reported for the quarter ended April 1, 2007 and a 28% decrease from the fourth quarter of 2007. The decline compared to the first quarter in 2007 was attributable mainly to a decline in non-WiMAX products. Non-WiMAX revenues decreased to $3.9 million in the quarter ending March 30, 2008 from $12.0 million in the quarter ending April 1, 2007. The decrease in the first quarter of 2008 compared to the fourth quarter of 2007 was attributable primarily to decreased sales of the WiMAX product line, recorded at $13.4 million of revenue in the quarter ended March 30, 2008, compared to $19.2 million in the quarter ended December 31, 2007. The first quarter historically has seasonally lower revenue than other quarters.

Geographically, in the first three months of 2008, approximately 30% of our revenue was derived from customers in Africa and the Middle East, 24% from customers in Mexico, Latin America and the Caribbean, 20% from customers in Europe, 14% from customers in the United States and Canada and 12% from customers in Asia.

During the first quarter 2008, more than 90 customers purchased WiMAX equipment from us compared with more than 80 customers during the first three months of 2007.

Cost of Revenue

Cost of revenue decreased 35% to $11.9 million in the quarter ended March 30, 2008 from $18.4 million in the quarter ended April 1, 2007 primarily due to decreased sales. The gross profit for the first quarter of 2008 was $5.2 million (31% of revenue) compared to a gross profit of $8.3 million (31% of revenue) for the first quarter of 2007 and decreased as compared to a gross profit for the fourth quarter of 2007 of $6.9 million (29% of revenue). The increase in gross margin percentage in the first quarter of 2008 as compared to the fourth quarter of 2007 is primarily attributable to the impact of more revenue coming from products with higher product margins.

Research and Development Expenses

Research and development expenses increased 25% to $6.9 million in the quarter ended March 30, 2008 from $5.6 million in the quarter ended April 1, 2007, and remained flat from the fourth quarter of 2007. The increase year over year is primarily due to increased personnel costs as we continue to invest in development of WiMAX products.

Sales and Marketing Expenses

Sales and marketing expenses increased 26% to $4.2 million in the quarter ended March 30, 2008 from $3.4 million in the quarter ended April 1, 2007. Sales and marketing expenses for the first quarter of 2008 increased 10% relative to the $3.8 million of sales and marketing expenses incurred in the fourth quarter of 2007. The increase as compared to the first quarter of 2007 is primarily attributable to additional headcount in 2008 and a higher level of agent commissions. The increase as compared to the fourth quarter of 2007 also reflects primarily increased headcount, trade show expenses and higher agent commissions in 2008.

Bad Debt Provision

In the first quarter of 2008, we recorded bad debt provisions of $47 thousand relating to customer accounts for which management has determined that full recovery was unlikely. We recorded bad debt provisions of $0.2 million in the first quarter of 2007 and $0.2 million in the fourth quarter of 2007.

General and Administrative Expenses

General and administrative expenses decreased 2% to $4.1 million in the quarter ended March 30, 2008 from $4.2 million in the quarter ended April 1, 2007 and increased 11% from $3.7 million in the fourth quarter of 2007. The decrease from the first quarter of 2007 was primarily attributable to severance costs included in 2007. The increase in these expenses over the last quarter of 2007 was primarily due to audit and other professional fees which were incurred in the first quarter of 2008.

Amortization of Intangibles

We recorded amortization of intangibles expense of $0.2 million in the first quarter of 2008 compared with amortization of intangibles expense of $0.2 million for the first quarter of 2007. The amortization expense arises primarily as a result of our acquisition of intangible assets in connection with the ArelNet and Radionet acquisitions in June and November 2005, respectively.

Interest Income, Net

At March 30, 2008, the outstanding principal and accrued interest payable on loans made to us by the Finnish Funding Agency for Technology and Innovation, (the “Tekes Loans”) was $2.0 million. We also had outstanding borrowings under the bank line of credit for $7.5 million. In the first quarter of 2008, we incurred interest expense of $0.1 million on these loans compared to interest expense of $23 thousand in the first quarter of 2007. Interest income did not change materially in the first quarter of 2008 compared to 2007.

Other Income, Net

Other income, net increased primarily due to foreign exchange gains in 2008 on assets in currencies other than the US dollar.

Net Loss

For the reasons described above, we incurred a net loss of $10.1 million, or $(0.17) per share, in the quarter ended March 30, 2008, compared to a net loss of $5.1 million, or $(0.13) per share, for the quarter ended April 1, 2007.

Liquidity and Capital Resources

As of March 30, 2008 we had cash, cash equivalents, short-term investments and current restricted cash of $34.0 million, as compared to $36.7 million at December 31, 2007. As of March 30, 2008, this consisted of cash and cash equivalents totaling $30.8 million, short-term investments totaling $2.7 million and $0.5 million of restricted cash in current assets. In addition, we had restricted cash of $1.2 million in other non-current assets. We have no material capital commitments.

Since inception, we have financed our operations through private sales of convertible preferred stock, public offerings of common stock and a secured bank line of credit.

On August 7, 2007, we and our wholly-owned subsidiary, Airspan Communications Limited, entered into an amendment to our August 1, 2006 Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank (“SVB”), with respect to a revolving credit line. For the term of the credit line, which expires on December 31, 2008, we may, subject to certain adjustments, borrow up to the lesser of (i) $20 million and (ii) 80% of eligible accounts receivable. As of March 30, 2008, $4.0 million of available credit was unused. We are currently using the credit line and we expect to continue to use it for the remainder of 2008. Although we believe the credit facility will increase our financial resources and financial flexibility, our use of the credit facility does present certain risks. Our ability to borrow under the credit facility is a function of, among other things, our base of eligible accounts receivable and the rate at which advances are made against eligible receivables (the “Advance Rate”). If the amount or quality of our accounts receivable deteriorates or the Advance Rate or eligibility criteria are adjusted adversely by SVB, our ability to borrow under the credit facility will be directly, negatively affected. If there is an adverse adjustment in the borrowing base at a time when we are unable to, within three business days, repay SVB the amount by which the borrowing base has been decreased, we will likely be in default under the Loan and Security Agreement. In addition, the credit facility requires us to satisfy certain financial covenants, including the maintenance of tangible net worth. As of March 30, 2008, the tangible net worth requirement was $44.0 million. The Company was in compliance with all of the financial covenants at March 30, 2008. There is no assurance the Company will be able to meet this covenant in future quarters as required by the Loan and Security Agreement. In the event the Company is unable to meet this test in the future, we would plan to seek an amendment or waiver of this covenant. There can be no assurance that any such waiver or amendment would be granted. As a result, we cannot provide any assurance that we will be able to borrow under the Loan and Security Agreement at a time when we most need money to fund working capital or other needs and prohibit us from paying dividends on our capital stock. The credit facility also contains various provisions that restrict our use of cash and operating flexibility. These provisions could have important consequences for us, including (i) causing us to use a portion of our cash flow from operations for debt repayment and/or service rather than other perceived needs, (ii) precluding us from incurring additional debt financing for future working capital or capital expenditures and (iii) impacting our ability to take advantage of significant, perceived business opportunities, such as acquisition opportunities or to react to market conditions. Our failure to meet financial and other covenants could give rise to a default under the Loan and Security Agreement. In the event of an uncured default, the Loan and Security Agreement provides that all amounts owed to SVB are immediately due and payable and that SVB has the right to enforce its security interest in our assets. The Loan and Security Agreement is secured by collateral, including all of our rights and interests in substantially all of our personal property, including accounts receivable, inventory, equipment, general intangibles, intellectual property, books and records, contract rights and proceeds of the above items. At March 30, 2008, $7.5 million of indebtedness was outstanding under the Loan and Security Agreement. Advances under the Loan and Security Agreement bear interest at SVB's prime rate plus a percentage ranging from 0.0% to 1.75%, depending on certain financial and collateral tests. The monthly interest is calculated based on the higher amount of outstanding borrowings or $7.5 million. We have issued $2.3 million of letters of credit under the facility, which were still outstanding at March 30, 2008.

For the three months ended March 30, 2008, we used $2.3 million of cash for operating activities, compared with an operating cash outflow of $1.1 million for the three months ended April 1, 2007. The operating cash outflow for the first three months of 2008 was primarily a result of the:

·	net loss of $10.1 million;

·	decrease of $2.1 million in deferred revenue; and

·	decrease of $2.9 million in accounts payable.

The cash outflow was offset by:

·	decrease of $10.2 million in receivables.

Days sales outstanding were at 108 days at the end of the first quarter 2008, down from 111 days at the end of 2007. The change from the end of 2007 to the end of the first quarter of 2008 reflects the lower revenue level in the most recent period and the collection of larger amounts of receivables in the first quarter. Inventory turns were 3.6 for the first quarter of 2008, compared with 5.3 for the fourth quarter of 2007. The change in inventory turns is primarily attributable to the lower cost of sales in the first quarter.

The net cash provided by investing activities for the three months ended March 30, 2008 was $2.3 million. The investing cash inflow for the first three months of 2008 resulted from $2.9 million of net sales of investment securities less $0.6 million of fixed asset purchases.

Our net cash provided by financing activities for the three months ended March 30, 2008 was $0.1 million from the exercise of stock options.

We have explored and may in the future explore and pursue other perceived opportunities to acquire wireless access and related businesses. We may seek to acquire such businesses through a variety of different legal structures and may utilize cash, common stock, preferred stock, other securities or some combination thereof to finance the acquisition. In connection with such activities, we are subject to a variety of risks, a number of which are described further in the Company’s Form 10-K for the fiscal year ended December 31, 2007 and this Form 10-Q for the quarter ended March 30, 2008. There can be no assurances that our efforts to acquire other businesses will be successful.

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

On April 25, 2008, the Company received a letter from the Nasdaq Stock Market (the “Notice”) notifying the Company that for the 30 consecutive trading days preceding the date of the Notice, the bid price of the Company’s common stock had closed below the $1.00 per share minimum required for continued listing on The Nasdaq Global Market pursuant to Nasdaq Marketplace Rule 4450(a)(5) (the "Rule"). The Notice also stated that pursuant to Nasdaq Marketplace Rule 4450(e)(2), the Company has been provided 180 calendar days, or until October 22, 2008, to regain compliance. To do so, the bid price of the Company’s common stock must close at or above $1.00 per share for a minimum of ten consecutive trading days prior to that date. The Company intends to monitor the bid price for its common stock and consider options available to the Company to achieve compliance with the continued listing standards of Nasdaq.

Until we are able to generate positive cash flow from operations, if ever, we intend to use our existing cash resources and the Loan and Security Agreement, if available, together with, depending on market conditions and opportunities, the net proceeds of equity financings to finance our operations. We currently believe we will have sufficient cash resources to finance our operations for at least the next twelve months.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

The Company’s earnings are affected by changes in interest rates. As of March 30, 2008 and December 31, 2007, we had cash, cash equivalents, short term investments and restricted cash of $34.0 million and $36.7 million, respectively. These amounts consisted of highly liquid investments, with more than 89% having purchase to maturity terms of 90 days or less. The balance has maturity terms of between 94 to 230 days. These investments are exposed to interest rate risk, but a hypothetical increase or decrease in market interest rates by two percentage points from March 30, 2008 rates would cause the fair market value of these short-term investments to change by an insignificant amount. Due to the short duration of these investments, a short-term increase in interest rates would not have a material effect on our financial condition or results of operations. Declines in interest rates over time would, however, reduce our interest income. Due to the uncertainty of the specific actions that would be taken to mitigate this, and their possible effects, the sensitivity analysis does not take into account any such action.

Foreign Currency Exchange Rate Risk

For the three months ended March 30, 2008, 91% of our sales were denominated in U.S. dollars, 4% were denominated in pounds sterling, 3% were denominated in Australian dollars and 2% were denominated in euros. Comparatively, for the three months ended April 1, 2007, 82% of our sales were denominated in U.S. dollars, 13% were denominated in euro and 5% were denominated in Australian dollars. Our total pounds sterling denominated sales for the three months ended March 30, 2008 were $0.6 million, which were recorded at an average exchange rate of $1US = GBP £0.50437. Our total Australian dollar denominated sales for the three months ended March 30, 2008 were $0.5 million, which were recorded at an average exchange rate of $1US = AUS$1.1059. Our total euro denominated sales for the three months ended March 30, 2008 were $0.3 million, which were recorded at an average exchange rate of $1US = €0.6725. If the average exchange rates used had been higher or lower during the three month period ended March 30, 2008 by 10%, they would have decreased or increased the total pounds sterling, Australian dollar and euro-denominated sales value by a total of $0.1 million. We expect the proportions of sales in euro and Australian dollars to fluctuate over time. The Company’s sensitivity analysis for changes in foreign currency exchange rates does not take into account changes in sales volumes.

For the three months ended March 30, 2008, we incurred the majority of our cost of revenue in US dollars.

The Company’s operating results are affected by movements in foreign currency exchange rates against the US dollar, particularly the UK pound sterling and New Israeli Shekel. This is because most of our operating expenses, which may fluctuate over time, are incurred in pounds sterling and New Israeli Shekels.

During the three months ended March 30, 2008, we paid expenses in local currency of approximately 5.0 million pounds sterling, at an average rate of $1US = 0.50437 pounds sterling. During the three months ended March 30, 2008, we paid expenses in local currency of approximately 15.7 million Israeli Shekels, at an average rate of $1US = 3.6969 Shekels. If the average exchange rates for pounds sterling and Israeli Shekels had been higher or lower for the three month period ended March 30, 2008 by 10%, the total pounds sterling and Israeli Shekel denominated operating expenses would have decreased or increased by $0.9 million and $0.4 million, respectively.

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

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

Equity Price Risk

We do not own any equity investments, other than the shares of our subsidiaries. As a result, we do not currently have any direct equity price risk.

Commodity Price

We do not enter into contracts for the purchase or sale of commodities. As a result, we do not currently have any direct commodity price risk.

Item 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this quarterly report, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Section 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on that evaluation, and the similar evaluation undertaken at the end of 2007, the Chief Executive Officer and Chief Financial Officer concluded that as of March 30, 2008, our disclosure controls and procedures were effective.

There have been no changes in the Company’s internal controls over financial reporting that occurred during the Company’s first quarter of 2008 that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Item 1A. RISK FACTORS

Except for the risk factors set forth below, there have been no material changes to the risk factors disclosed in Item 1A of Part 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

The holders of our Series B preferred stock are entitled to a liquidation preference $290.00 per share of Series B preferred stock on any liquidation or sale of the Company before holders of our common stock receive any cash or other distribution (in such a liquidation or sale).

There are currently outstanding 200,690 shares of Series B preferred stock. The holders of our Series B preferred stock are entitled to a liquidation preference of $290.00 per share of Series B preferred stock on voluntary or involuntary liquidation of our Company before any payment of cash or distribution of other property may be made to the holders of our common stock, or any other class or series of stock subordinate in liquidation preference to the Series B preferred stock. However, if the holders of the Series B preferred stock would receive a greater return in a liquidation by converting their shares of Series B preferred stock into common stock, then the Series B preferred stock will be deemed to be automatically converted into common stock immediately before the effectiveness of the liquidation. For this purpose a “liquidation” is deemed to include the following transactions unless our shareholders approve a proposal that such transaction shall not be treated as a liquidation: (i) any liquidation, dissolution, or winding-up of the affairs of the Company, or (ii) unless, at the request of the Company, the holders of at least a majority of the Series B preferred stock then outstanding determine otherwise, (a) the merger, reorganization or consolidation of the Company into or with another entity, unless, as a result of such transaction the holders of our outstanding securities immediately preceding such merger, reorganization or consolidation own (in approximately the same proportions, relative to each other, as immediately before such transaction) at least a majority of the voting securities of the surviving or resulting entity or the direct or indirect parent of such entity, (b) the sale, transfer or lease of all or substantially all the assets of the Company, (c) the sale, transfer or lease (but not including a transfer or lease by pledge or mortgage to a bona fide lender), of all or substantially all the assets of any of the Company’s subsidiaries the assets of which constitute all or substantially all of the assets of the Company and such subsidiaries taken, as a whole, or the liquidation, dissolution or winding-up of such of the Company’s subsidiaries the assets of which constitute all or substantially all of the assets of the Company and such subsidiaries taken as a whole, or (d) any transaction or series of related transactions in which securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding voting securities are acquired by any person, entity or group.

Therefore, upon any liquidation of the Company, certain mergers, reorganizations and/or consolidations of the Company into or with another corporation, the sale by us of all or substantially all of our assets or any transaction or series of related transactions in which a person, entity or group acquires 50% or more of the combined voting power of our then-outstanding securities, the holders of the Series B preferred stock will have a claim against our assets senior to the claim of the holders of common stock in an amount equal to $290.00 per share of Series B preferred stock (as appropriately adjusted for any combinations, divisions, or similar recapitalizations affecting the Series B preferred stock after issuance).

For example, if the Company were to be acquired in a merger, acquisition, consolidation or sale of assets, the holders of the Series B preferred stock would be entitled to receive $290.00 per share of Series B preferred stock in the acquisition transaction unless they (i) determined to convert their shares into common stock or (ii) the Series B shareholders approve a proposal that the acquisition transaction not be treated as a liquidation. There are currently 200,690 shares of Series B preferred stock outstanding. As a result, the holders of the Series B preferred stock would be entitled to receive $58.2 million before the holders of common stock receive any amounts in such a transaction (assuming no conversion of Series B preferred stock prior to the transaction). This could result in the holders of the Series B preferred stock receiving substantially more, on a common share equivalent basis, than holders of our common stock in such a transaction.

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

On April 25, 2008, Airspan Networks Inc. (the “Company”) received a letter from the Nasdaq Stock Market (the “Notice”) notifying the Company that for the 30 consecutive trading days preceding the date of the Notice, the bid price of the Company’s common stock had closed below the $1.00 per share minimum required for continued listing on The Nasdaq Global Market pursuant to Nasdaq Marketplace Rule 4450(a)(5) (the "Rule"). The Notice also stated that pursuant to Nasdaq Marketplace Rule 4450(e)(2), the Company has been provided 180 calendar days, or until October 22, 2008, to regain compliance. To do so, the bid price of the Company’s common stock must close at or above $1.00 per share for a minimum of ten consecutive trading days prior to that date.

If compliance with the minimum bid requirement cannot be demonstrated by October 22, 2008, the Company may apply to transfer its securities to the Nasdaq Capital Market provided the Company meets the initial listing criteria as set forth in Marketplace Rule 4310(c). If the Company meets the other initial listing criteria and the Company’s application is approved, it will be notified that it has been granted an additional 180 calendar day compliance period. If the Company is not eligible for an additional compliance period, the Nasdaq Capital Market will provide written notification that the Company’s securities will be delisted.

The Company intends to monitor the bid price for its common stock and consider options available to the Company to achieve compliance with the continued listing standards of Nasdaq.

If our common stock is to be de-listed from the NASDAQ Global Market, we may apply to have our common stock listed on the NASDAQ Capital 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 Capital Market be rejected when made or if we fail to continue to satisfy the NASDAQ Capital Market’s continued listing requirements, our common stock could be delisted entirely or relegated to trading on the over-the-counter-market.

An inability to overcome competition from alternative communication systems could adversely affect our results of operations.

We already face, and may increasingly encounter, competition from competing wireless technologies, such as cellular technology, that are constantly improving. Cellular networks are now capable of delivering both voice and broadband data connectivity to fixed, mobile, nomadic and portable applications. These technologies, such as 1XRTT and EVDO, have the ability to provide for multiple voice channels and rate data services at transmission rates of 512Kbps on the uplink and 2.4 Mbps on the down link. Their data rates speeds continue to improve as they are modified. In addition, our technology competes with other high-speed solutions, such as wired DSL, cable networks, fiber optic cable and occasionally satellite technologies. Our products compete with alternative communications systems on the basis of reliability, price and functionality. For example, 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. Depending on specific customer needs, 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, including LTE (Third Generation Partnership Project: Long Term Evolution) an OFDM cellular technology, and other technologies that have yet to be developed.

Item 6. EXHIBITS

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

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

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

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

*	Filed herewith
**	Furnished herewith

SIGNATURES

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

	AIRSPAN NETWORKS, INC.

Date: May 7, 2008	By:	/s/ DAVID BRANT
		Name: David Brant
		Title: Chief Financial Officer