Falls Church, VA — August 3, 2004 – YDI Wireless, Inc. (NASDAQ:YDIW), a leading developer and supplier of broadband wireless solutions, today reported its financial results for the second quarter ended June 30, 2004.

Summary of Financial Results

YDI’s balance sheet dramatically improved in the second quarter 2004. Cash and cash equivalents (including restricted cash) along with current investment securities increased 558% from $9.8 million on March 31, 2004 to $54.7 million on June 30, 2004. During the same period, working capital increased 285% from $13.7 million to $52.7 million and aggregate stockholders’ equity increased 348% from $16.4 million (approximately $1.15 per share) to $73.4 million (approximately $2.75 per share).

Revenue for the quarter ended June 30, 2004 was $4.7 million, a decrease of approximately 22% from the revenue of $6.0 million for the quarter ended March 31, 2004 and a decrease of approximately 35% from the revenue of $7.2 million for the quarter ended June 30, 2003. The decreases resulted from a number of factors, including significant orders from a single customer in 2003 that were not repeated in 2004, increased competition, a general softness in the United States wireless market where YDI currently sells most of its products, the uncertainty that resulted from YDI engaging in significant strategic transactions, and senior management’s focus on the three strategic transactions that were completed in the second quarter of 2004.

Revenue for the six months ended June 30, 2004 was $10.8 million, a decrease of 21% from the revenue of $13.7 million for the six months ended June 30, 2003. The decreases resulted from a number of factors, including significant orders from a single customer in 2003 that were not repeated in 2004, increased competition, a general softness in the United States wireless market where YDI currently sells most of its products, the uncertainty that resulted from YDI engaging in significant strategic transactions, and senior management’s focus on the three strategic transactions that were completed in the second quarter of 2004.

The net loss for the quarter ended June 30, 2004 was $1.6 million ($0.10 per share) compared to net income of $303 thousand ($0.02 per share) for the quarter ended March 31, 2004 and net income of $3.5 million ($0.26 per share) for the quarter ended June 30, 2003. The second quarter 2004 loss per share is based on the weighted average number of shares outstanding during the second quarter 2004. This weighted average number is significantly lower than the number of shares outstanding at the end of the quarter because YDI issued shares in the latter part of the quarter as it completed acquisitions. Much of the net income for quarter ended March 31, 2004 resulted from the sale of intellectual property in the amount of $500,000. The net income for the second quarter 2003 resulted from the immediate recognition of the negative goodwill from the Young Design-Telaxis transaction. This recognition resulted in a one-time gain of $4.3 million.

The net loss for the six months ended June 30, 2004 was $1.3 million ($0.09 per share) compared to net income of $3.6 million or $0.32 per share for the six months ended June 30, 2003. The six month 2004 loss per share is based on the weighted average number of shares outstanding during the six months ended June 30, 2004. This weighted average number is significantly lower than the number of shares outstanding at the end of the second quarter because YDI issued shares in the latter part of that quarter as it completed acquisitions. As described in the preceding paragraph, the net income for the 2003 period included a one-time gain of $4.3 million resulting from the immediate recognition of the negative goodwill from the Young Design-Telaxis transaction.

Other Second Quarter 2004 Activities

During the second quarter 2004, YDI completed three strategic acquisitions. First, on May 13, 2004, YDI acquired KarlNet, Inc., a well-established software company which had been a critical supplier to YDI as well as having other customers. On June 22, 2004, YDI merged with Terabeam Corporation which greatly strengthened YDI’s balance sheet and provided additional millimeter wave product capabilities and customer opportunities. On June 25, 2004, YDI acquired Ricochet Networks, Inc., a wireless internet service provider with over 7,000 paying subscribers utilizing proprietary wireless “Mesh” network technology. YDI’s management spent considerable time during the second quarter negotiating, closing, and integrating these strategic acquisitions. While these acquisitions are expected to benefit YDI going forward, YDI did not recognize any significant revenue contribution from these acquisitions in the second quarter.

In addition to its strategic acquisition efforts, YDI increased its senior management capabilities to better position the company for long-term growth.

Comments from Management

Robert Fitzgerald, YDI’s Chief Executive Officer, stated, “It has been both a very challenging and extremely exciting first six months for us in 2004, especially the second quarter. We are very pleased with the strategic acquisitions we completed in this recent quarter and the personnel we added. However, we are disappointed with the results of our core business. We have taken actions to address these issues and expect to take further actions in the future, as necessary. We anticipate seeing the positive impact of our actions in the coming quarters. As we move through the second half of 2004, our results will speak louder than our words…. and that is our challenge now.”