UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549








FORM
10-K





 ̈           ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE


ACT
OF 1934 FOR THE FISCAL YEAR ENDED _____________





x          TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD JULY 1, 2009 TO DECEMBER 31,
2009





Commission
File Number 0-28579





BERLINER
COMMUNICATIONS, INC.


(Exact
Name of Registrant as Specified in Its Charter)





DELAWARE
              75-2233445(State
      or Other Jurisdiction of
              (I.R.S.
      EmployerIncorporation
      or Organization)
              Identification
      No.)





1777
Sentry Parkway West, Blue Bell, PA 19422


(Address
of Principal Executive Offices)





267-464-1700


(Registrant’s
Telephone Number, Including Area Code)





Securities
      Registered Pursuant to Section 12(b) of the Act:
                NONE
              
              Name
      of Each Exchange on Which Registered:
                NONE





Securities
Registered Pursuant to Section 12(g) of the Act:


COMMON
STOCK, PAR VALUE $0.00002 PER SHARE


(Title of
Class)


Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  ̈  No
x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section15(d) of the Act.


Yes  ̈  No
x





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes  ̈ No
 ̈





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
 ̈




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 the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  x





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
definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of
the Exchange Act.





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







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




The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant based on the last reported sale price
on  June 30, 2009 was approximately $4,913,547.




As of
March 25, 2010, 70,523,230  shares of the registrant’s common stock,
par value $0.00002, were outstanding.




DOCUMENTS
INCORPORATED BY REFERENCE





None.





TABLE OF CONTENTS





PageNOTE
      REGARDING FORWARD-LOOKING STATEMENTS
                      iiPART
      I
                      1ITEM
      1.
                      BUSINESS
                      1ITEM
      1A
                      10ITEM
      2.
                      PROPERTIES
                      18ITEM
      3.
                      LEGAL
      PROCEEDINGS
                      18ITEM
      4.
                      (REMOVED
      AND RESERVED)
                      18PART
      II
                      19ITEM
      5.
                      MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
                      19ITEM
      6.
                      SELECTED
      FINANCIAL DATA
                      20ITEM
      7.
                      MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                      20ITEM
      7A.
                      QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                      32ITEM
      8.
                      FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                      32ITEM
      9.
                      CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                      32ITEM 9A(T).CONTROLS
      AND PROCEDURES
                      32ITEM
      9B.
                      OTHER
      INFORMATION
                      33PART
      III
                      35ITEM
      10.
                      DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE
    REGISTRANT
                      35ITEM
      11.
                      EXECUTIVE
      COMPENSATION
                      39ITEM
      12.
                      SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                      44ITEM
      13.
                      CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
                      48ITEM
      14.
                      PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                      50PART
      IV
                      52ITEM
      15.
                      EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES
                      52


-i-


Note
Regarding Forward-Looking Statements




“Forward-looking”
statements appear throughout this Transition Report on form 10-K. We have based
these forward-looking statements on our current expectations and projections
about future events. It is important to note that the occurrence of the events
described in these statements and elsewhere in this Transition Report on Form
10-K, including, without limitation, those risks identified in Item 1A – Risk
Factors set forth elsewhere in this Transition Report on Form 10-K, could have
an adverse effect on the business, results of operations or financial condition
of the Company.





Forward-looking
statements in this Transition Report on Form 10-K include, without limitation,
the following statements concerning:





·
            our
      financial condition and strategic
direction;


·
            our
      future capital requirements and our ability to satisfy our capital
      needs;


·
            the
      potential generation of future revenues and/or
  earnings;


·
            our
      ability to adequately staff our service
  offerings;


·
            opportunities
      for us from new and emerging technologies in our
    industries;


·
            our
      ability to obtain additional
financing;


·
            our
      growth strategy;


·
            trends
      in the satellite, cable and telecommunications
  industries;


·
            key
      drivers of change in our business, as identified in “Item 1. Business,” in
      this Transition Report;


·
            our
      competitive position and the competitive landscape;
  and


·
            other
      statements that contain words like “believe”, “anticipate”, “expect” and
      similar expressions that are also used to identify forward-looking
      statements.





It is
important to note that all of our forward-looking statements are subject to a
number of risks, assumptions and uncertainties, such as:





·
            risks
      related to a concentration in revenues from a small number of
      customers;


·
            risks
      associated with competition in the satellite, cable and telecommunications
      industries;


·
            risks
      that we will not be able to generate positive cash
  flow;


·
            risks
      that we may not be able to obtain additional financing;
  and


·
            risks
      that we will be unable to adequately staff our service
      offerings.





This list
is only an example of the risks that may affect the forward-looking statements.
If any of these risks or uncertainties materialize or fail to materialize, or if
the underlying assumptions are incorrect, then actual results may differ
materially from those projected in the forward-looking statements.





Additional
factors that could cause actual results to differ materially from those
reflected in the forward-looking statements include, without limitation, those
discussed elsewhere in this Transition Report on Form 10-K. It is important not
to place undue reliance on these forward-looking statements, which reflect our
analysis, judgment, belief or expectation only as of the date of this Transition
Report on Form 10-K. We undertake no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date of this Transition Report on Form 10-K.


ii


PART
I




ITEM
      1.
            BUSINESS




General




We
are a premier provider of permanently outsourced infrastructure services,
including engineering, construction management and installation fulfillment
services to companies in the wireless telecommunications, wireline
telecommunications, broadband cable and satellite television
industries.






History





Berliner
Communications, Inc. was originally incorporated in Delaware in 1987 as Adina,
Inc. (“Adina”). Adina’s corporate existence was permitted to lapse in February
of 1996 and in August of 1999 was reinstated as eVentures Group, Inc.
(“eVentures”).  In December of 2000, eVentures changed its name to
Novo Networks, Inc. (“Novo”).





On
February 18, 2005, Novo entered into an asset purchase agreement with the former
Berliner Communications, Inc., which subsequently changed its name to Old
Berliner, Inc.  (“Old Berliner”) and BCI Communications, Inc. (“BCI”),
a Delaware corporation and Novo’s wholly-owned subsidiary.  As part of
this transaction, BCI acquired (the “Acquisition”) the operations and
substantially all of the assets and liabilities of Old Berliner. On September
16, 2005, Novo changed its name to Berliner Communications, Inc.
(“Berliner”).





Prior to
the Acquisition, Old Berliner provided wireless carriers with comprehensive site
acquisition, construction and zoning services. Old Berliner was founded in 1995,
and over the course of the following years, its service offerings were expanded
to include radio frequency and network design and engineering, infrastructure
equipment construction and installation, radio transmission base station
modification and project management services. With the consummation of the
Acquisition, BCI carried on the operations of Old Berliner.





The
Merger





On
January 27, 2010, Berliner, BCI East, Inc., a Delaware corporation and a wholly
owned subsidiary of Berliner (“Merger Sub”), and Unitek Holdings, Inc., a
Delaware corporation (“Unitek”), entered into an Agreement and Plan of Merger
(the “Merger Agreement”), pursuant to which Merger Sub merged (the “Merger”)
with and into Unitek and Unitek became a wholly owned subsidiary of
Berliner.  Berliner plans to file a charter amendment whereby Berliner
will be known as UniTek Global Services, Inc. (“UNTK”).





From its
inception in 2004 through the Merger, UniTek delivered an array of specialized
services to its customers in the satellite, wireline communications, and
broadband cable industries, including engineering and design, construction
management, network repair and maintenance, comprehensive installation and
fulfillment, material management and warehousing, and job tracking and closure
services.





UNTK is
now the public reporting entity.  Prior to the Merger, Berliner had a
June 30 fiscal year end.  After the Merger, the fiscal year for
Berliner, soon to be UNTK, was changed by the Board of Directors to end on
December 31.  The financial presentation set forth in this Transition
Report on Form 10-K relates to the historic financials of Berliner for the
six-month period ending December 31, 2009.  We have added relevant
information about UniTek and its various other subsidiaries where we have deemed
it helpful or informative.  We intend to file a Form 8-K/A on or
before April 12, 2010, which will present historical financial information for
UniTek as well as pro forma financial information for the combined
entity.





Unless
the context otherwise requires, references below to “we”, “us”, “our” and “the
Company” refer to Berliner and its consolidated subsidiary BCI Communications,
Inc. as these businesses existed during the six month period ended December 31,
2009.  The combined public company post-Merger will be referred to
UNTK throughout this Transition Report on Form 10-K.


1


An
Overview of Berliner’s Markets and Products





As of
December 31, 2009, Berliner reported its financial results on the basis of two
reportable segments: (1) infrastructure construction and technical services and
(2) site acquisition and zoning. Berliner’s infrastructure construction and
technical services segment consists of the following service lines:
infrastructure equipment construction and installation, radio frequency and
network design and engineering, radio transmission base station modification,
in-building network design, engineering and construction, project management,
and specialty communication services. Berliner’s site acquisition and zoning
segment stands as a separate service line. Each of these lines, as well as the
business of our site acquisition and zoning segment, is described
below.





Infrastructure Equipment
Construction and Installation.Infrastructure equipment construction and
installation services are important drivers of our business, and the majority of
our revenue comes from this service offering.  We construct and
install the communications equipment that is necessary to make wireless networks
work.  Depending on our customers’ needs, we could be involved in all
aspects of site acquisition, construction and installation. Installation
of  towers could involve clearing sites, laying foundations, bringing
in utility lines and installing shelters and towers. Installation of a rooftop
site could include installing shelters and antennae, bringing in power or
installing power systems, and related construction and electrical
work.  Once we finish this part of the process, we install any
remaining technical equipment and, if it is a tower build, landscape and perhaps
fence the site. We manage everything from “one-off” projects involving a single
site to “long-range” installation projects involving hundreds or possibly
thousands of sites. These large projects involve significant financial and
operational resources and planning and project management skills that we believe
distinguish us from many of our competitors, particularly our smaller
competitors.





Radio Transmission Base Station
Modification.We currently perform cellular base station upgrades and
modifications for wireless telecommunications carriers. This work involves
upgrades to existing hardware as well as adding new hardware such as radios,
duplexers, power systems and site controllers. This work is essential for
enhancing network capacity and paving the way to the deployment of new networks
using new technologies, including third generation, or 3G, and fourth
generation, or 4G, systems.





In-Building Network Design,
Engineering and Construction.We offer complete in-building solutions
that involve distributed antennae for wireless coverage in malls, shopping
centers, casinos, office buildings and airports.





Project Management.We also
supervise all of the efforts associated with a project, whether it involves one
or more of the foregoing services or a “turn-key” solution, so the carrier can
ultimately broadcast from the newly configured site. Project management includes
vendor management, project planning and preparation, budget tracking, and
engineering and construction coordination. A single project may involve
thousands of individual sites, and we believe our ability to manage projects of
this size and complexity distinguishes us from some of our competitors who do
not have our experience or resources in this area.





Specialty Communication Services.Our specialty communication services provide enhancements to existing
wireless and wired telephone and computer networks designed to improve
productivity for a specified application.  We provide microwave
systems where voice or video over land lines is not feasible.  We also
provide “structured cabling services” to provide voice, data and video over
traditional copper and fiber networks.





Site Acquisition and Zoning.We provide site acquisition services that generally involve acting as an
intermediary between telecommunications companies and owners of real estate and
other facilities. In order to build and expand their networks, such companies
require locations that have direct access to highways and roads to mount their
antennae and equipment. We generate fees by introducing telecommunications
companies and real estate managers. We identify appropriate properties,
negotiate the transactions and handle the administrative details. We also use
our accumulated knowledge and relationships to assist in the planning and
installation of the telecommunication facilities, and offer customers assistance
in acquiring the necessary permits, entitlements and approvals that are required
by various municipalities. We also prepare all zoning applications that may be
needed, attend any necessary hearings and obtain any required land use permits
to begin installation.


2


An
Overview of UniTek’s Markets and Products





UNTK, a
combination of UniTek and Berliner, is a premier provider of permanently
outsourced infrastructure services to the satellite, cable, wired
telecommunications and now, with the closing of the Merger, wireless
telecommunications industries.  UNTK’s services include technical
services, engineering, installation, construction and
fulfillment.  UNTK’s fulfillment business includes two operating
subsidiaries servicing the cable and satellite industries,
respectively.  Its construction business includes two operating
subsidiaries servicing the wireless and wired telecommunications
industries.





The end
markets served by UNTK today are characterized by attractive industry dynamics
that provide what we believe to be compelling market opportunities for the
Company.  The satellite television, wireline telecom, broadband cable
and wireless industries are undergoing an unprecedented convergence as
technological advances and deregulation have given the U.S. consumers more
options in their selection of video, voice and data services.  This
competition has resulted in increasing levels of capital spending to increase
network bandwidth and facilitate the launch of additional advanced video, data
and voice services.    For example, in 2008 approximately
$20 billion was invested in U.S. wireless infrastructure, led by AT&T,
Verizon Wireless and T-Mobile, and this investment is expected to increase over
the next five years.   UNTK’s business strategy positions it at
the center of these trends, and its technology agnostic approach enables it to
benefit regardless of which technology prevails with consumers.





UniTek is
a platform company whose operating model and core competencies allow for rapid
and effective entrance, either organically or through acquisition, into new
markets for infrastructure services.  Such target
markets  include those in which service providers manage the
recruitment, technical training, scheduling, service quality and safety of a
high volume outsourced labor force.  Major service providers in
UniTek’s markets (satellite television, wireline telecom and broadband cable)
have permanently outsourced much of the build-out and maintenance of their
networks.  Today, in order to remain competitive, these providers are
under tremendous pressure to make significant capital investments to provide
customers with the most advanced video, data and voice services, while (i)
maintaining a focus on core competencies, and (ii) minimizing fixed cost
structures to maximize flexibility.





Outsourced
service providers, such as UniTek, compete primarily on customer
satisfaction.  The companies that achieve the highest and most
consistent customer satisfaction performance have been continually awarded
additional business (including exclusive contracts for specific regional
markets).  In UniTek’s existing markets, this has ultimately led to
consolidation of weaker competitors.  Consequently, outsourced service
providers with the scalable processes and operations to consistently deliver the
highest level of performance, like UniTek, have a distinct competitive advantage
over our competition.  The ability to scale is a significant barrier
to entry for potential new competitors.  For example, UNTK manages a
fleet of over 3,000 vehicles and a workforce of over 5,000 people in 111 offices
in the U.S. and Canada.  We have developed a robust and
technology-driven operating platform to manage these resources effectively,
which we believe cannot be copied without a significant commitment of time and
money, if at all.





Service
Offerings





Historically,
UniTek delivered an array of specialized services to its customers, including
engineering and design, construction management, network repair and maintenance,
comprehensive installation and fulfillment, material management and warehousing,
and job tracking and closure services.  Importantly, a substantial
portion of UniTek’s revenue is generated from services related to long-term
master agreements.  These agreements are highly predictable, often
provide exclusivity in a market, and the revenue we generate from them is
recurring in nature.  We believe UniTek, and now UNTK, distinguishes
itself from its competitors in the infrastructure services industry because of
its ability to manage complex projects through effective deployment of human
capital and technology.


3


Key
service offerings include:





·
            Installation
      and Fulfillment Services.  UniTek is a full service provider of
      residential and commercial installation services to the wireline,
      broadband cable and satellite television industries.  Since
      2004, UniTek companies have completed approximately ten million
      residential work orders.


·
            Engineering
      and Design Services.  UniTek provides turn-key engineering
      services to industries that require underground plant construction, aerial
      infrastructure and multi-dwelling content delivery.  UniTek has
      a team of  design, walk-out and CAD personnel operating in
      Texas, Florida, California and Pennsylvania.  UniTek’s team has
      designed over 250,000 miles of plant since 2004, and since inception has
      engineered approximately 3,000,000 and structurally wired over 500,000
      multi-dwelling units (“MDUs”).


·
            Broadband
      Network Construction.  UniTek is a full service provider to the
      cable and wireline telecom industries of project management and
      construction services, including systems engineering, aerial and
      underground construction and project management.  Since 2004,
      UniTek has installed over 3,200 miles of fiber optic cable plant
      throughout the U.S.





UniTek
provides these services through distinct operating subsidiaries, allowing the
company to be highly responsive to unique industry and customer
needs.  Each subsidiary relies upon centralized shared services for
basic business functions and general and administrative support, allowing field
management to focus exclusively on customer service.  UniTek’s
existing subsidiaries are outlined below. With the consummation of the Merger,
UniTek and Berliner have combined, and now BCI Communications, Inc. serves as
the wireless subsidiary, and it will fit seamlessly into the shared services
model.





·
            Telecom.  UniTek’s
      telecommunications subsidiary provides end-to-end services for
      fiber-to-the-premises (“FTTP”) networks including engineering, design,
      construction and project management services.  This division
      maintains 22 field offices primarily in California, Texas, Florida and the
      Mid-Atlantic and Northeast regions, and has a workforce of over 750
      engineers and construction personal.  UniTek provides services
      to some of the largest telecommunications companies in the U.S., with
      specific focus on their fiber initiatives.  This subsidiary’s
      customers include Verizon, Comcast Cable, Cox Communications, AT&T and
      Florida Power & Light.  UniTek serves as a prime contractor
      to Verizon’s FTTP network construction project through a multi-year master
      service agreement.  This subsidiary also maintains plant
      maintenance contracts with its telecom customers.  We believe we
      are one of the few companies in the industry with the capability to manage
      a project from initial architecture through construction and installation
      to the end user.





·
            Cable.  UniTek’s
      cable subsidiary provides engineering, design, field mapping, new plant
      construction, network maintenance and service, and installation and
      fulfillment services to cable multiple system operators.  This
      subsidiary maintains 27 field offices in the Southeast and Texas,
      California and Canada, and has a workforce of over
      1,000.  Through this subsidiary, UniTek deploys over 1,000
      technicians who provide a comprehensive suite of technical labor
      services.  Our fulfillment and installation resources cover all
      facets of cable services including video, high speed data and Voice over
      Internet Protocol, or VoIP.  This subsidiary’s customers include
      Comcast Cable, Cox Communications, Time Warner Cable, Charter
      Communications, and, in Canada, Rogers Cable, Cogeco Cable and other
      Canadian service providers.





·
            Satellite.  UniTek’s
      satellite subsidiary provides installation, upgrades and other services to
      satellite television providers in certain operational territories,
      primarily in the Midwest and Northeastern United States. The subsidiary
      maintains 40 field offices, and two U.S. based call centers, and a
      workforce of over 3,000 people.  Through this subsidiary, UniTek
      provides regional fulfillment services to the country’s largest satellite
      television provider, DirecTV.  UniTek manages all operational
      activities in specific territories that include customer operations,
      warehousing, equipment installation, call center operations, new customer
      installations, upgrades, customer satisfaction compliance, and service and
      maintenance.  UniTek has worked with DirecTV since UniTek’s
      inception in 2004, and has market exclusivity in several key designated
      market areas.


4


Industry
Background





Consistent
with historical practices, wireless, wireline, cable and satellite television
providers have continually outsourced a significant portion of their
engineering, construction, and maintenance requirements in order to reduce their
investment in capital equipment, provide flexibility in workforce sizing, reduce
exposure to unions, expand product offerings without large increases in
incremental hiring and focus on those competencies they consider core to
business success.





Wireline
Telecommunications Industry





The
telecommunications industry continues to undergo significant changes due to
governmental deregulation, advances in broadband technology, and increased
competition as telecom and cable industries converge.  Several of the
largest telephone companies in the U.S. have begun fiber to the home (FTTH) and
fiber to the node (FTTN) initiatives as a means to begin to actively compete
with cable operators, operators’ “triple
play” of bundled services (voice, internet and cable).  In addition,
the rapid deployment of data services through DSL technology has begun to
exhaust the capacity of existing networks.





Cable
Industry





Cable
broadband infrastructure provides the industry with a significant advantage in
the intermediate term in its ability to bundle analog video service with
expanded digital video services, two-way high speed internet access, and
telephone services on a large-scale basis.  In 2009, there was
approximately $14.4 billion in cable industry capital expenditures in the U.S.,
according to the National Cable & Telecommunications
Association.  The introduction of the broadband “triple play”—bundled
voice, video and data services—has been well received by consumers.





According
to the National Cable & Telecommunications Association, the four largest
U.S. cable companies, Comcast Corporation, Time Warner Cable, Cox Communications
and Charter Communications, have approximately 46.8 million
subscribers.  All of these cable companies are customers of
ours.





Satellite
Television Industry





Satellite
digital television providers are engaged in acquiring, promoting, selling,
and/or distributing digital entertainment programming via satellite to
residential and commercial subscribers.  The two largest providers of
digital television entertainment in the U.S. today are DirecTV and EchoStar
Communications.  According to public filings for these two companies,
at the end of 2009, they had an aggregate of approximately 33 million
subscribers to their direct broadcast satellite television services in the
U.S.  Within the broader satellite television industry, the satellite
broadband segment is experiencing significant growth.





Wireless
Telecommunications Industry





Worldwide
use of wireless telecommunications has grown rapidly, driven by the dramatic
increase in wireless telephone usage, as well as strong demand for wireless
Internet and other data services.  According to the Cellular
Telecommunications and Internet Association, or CTIA, there were approximately
276.6 million wireless subscribers in the United States as of June 2009, up from
194.4  million as of June 2005.  These subscribers used 2.3
trillion minutes, up from 1.3 trillion as of June 2005 and 195 billion as of
June 2000.  This usage accounted for approximately $151.2 billion in
wireless service revenue as of June 2009, up from $108.5 billion as of June
2005.  Also according to the CTIA, there were 245,912 cell sites in
the U.S. in June 2009, up from 178,025 in 2005 and 95,733 in
2000.  Clearly the wireless industry continues to be in a strong
growth mode, and we expect that to continue in 2010 and beyond.


5


Demand
for wireless Internet access and other data services is accelerating the
adoption of new technologies, such as those embodied in 3G and 4G, to enable
wireless networks to deliver enhanced data capabilities. Examples of wireless
data services include e-mail, messaging services, Wi-Fi, WiMax, music on-demand,
mobile-banking, locations-based services and interactive games.  Text
messaging alone has increased dramatically over the past several years, with
1.36 trillion text messages sent every year as of June 2009, up from 57.2
billion per year as of June 2005, according to CTIA. We believe that the
industry’s commitment to adopt LTE or WiMax equipment, both of which will
generate significant capital expenditures by the major carriers, will provide
the potential for significant opportunities for us over the next several
years.  Our company is a significant beneficiary of cell site
modification work in the wireless business, particularly because we are
technology neutral.  In other words, we can service our customers
regardless of the technology they adopt.





Stimulus
Funds





In
February of 2009, the American Recovery and Reinvestment Act was
passed.  This act provides for stimulus funds and other tax and
related incentives that we believe will benefit our business.  Under
the act, local governments and municipalities and others will receive funds for
construction activities, many of which are directly related to our areas of
experitise, such as engineering and constructing communications
networks.  $7.2 billion of the funds to be issued under the act are to
be used to build broadband facilities throughout the U.S.  We have
already bid and won projects that will be funded under the act, and we believe
this will be a growing area for our business in the near term.





Key
Drivers of Change in the Wireless Business





The introduction of new services or
technologies.The rapid introduction of new services or technologies in
the wireless market and the need to reduce operating costs in many cases have
resulted in wireless service providers and equipment vendors outsourcing an
increasing portion of their network services development work to companies such
as ours. For example, new technologies such as text messaging, Internet access
and video streaming to cellular telephones have driven wireless carriers to
continually expand and enhance their networks.  Such efforts involve
providing both additional network capacity and expanded geographic coverage to
address wireless customers’ expectation of network quality, speed and service.
Therefore, wireless service providers have retained firms such as Berliner that
have the technical expertise, experience and resources to assist with this
network development and enhancement.





The increase in the number of
wireless subscribers served by wireless providers.The number of
wireless subscribers in the United States continues to increase
rapidly.  This creates an increase in usage by those subscribers and a
scarcity of wireless spectrum, which requires carriers to expand and optimize
system coverage and capacity to maintain network quality.  The
wireless carriers have engaged companies such as ours to increase the coverage
and capacity of their networks.  The wireless system also must be
continually updated and optimized to address changes in traffic patterns and
interference from neighboring or competing networks or other radio
sources.  Berliner’s customers also need companies such as ours to
supplement their internal resources to address these developments.





The increasing complexity of
wireless systems in operation.As new technologies are developed,
wireless service providers must determine whether to upgrade their existing
networks or deploy new networks utilizing the latest available technologies in
order to maintain their market share. For example, overlaying new technologies,
such as WiMax or 4G, with an existing network or deploying a new network
requires wireless service providers to reengage in the strategic planning,
design, deployment, expansion, operations and maintenance phases of a new cycle
in the life of an existing or new network.  If the wireless carrier
elects to upgrade an existing network, Berliner can provide the services
necessary to implement such an upgrade.  If the carrier elects to
deploy a new network, Berliner can also provide the services necessary to
implement this new development.  For companies such as Berliner, the
type of technology that its customers deploy or their decisions on whether to
build new or upgrade existing networks is not critical. The driver for this
business is the rapid growth of technology and increasing complexity of the
networks that requires carriers to hire companies such as Berliner on an ongoing
basis.


6


Continuing mergers, acquisitions and
divestitures in the telecommunications sector.In light of recent
consolidation in the telecommunications sector, wireless service providers are
faced with issues regarding the integration of separate telecommunications
networks. This may provide us with the opportunity to provide services relating
to performing network compatibility testing and resolving integration issues.
Berliner provides significant modification work to existing networks besides the
construction of new wireless sites. In addition, when companies divest
themselves of divisions or business units, this also provides opportunities and
potential new customers for us. For example, in May 2008, our then-largest
customer, Sprint Nextel, announced an agreement with Clearwire Corporation to
form a new wireless communications company called
Clearwire.  Clearwire is building the first nationwide mobile WiMAX
network, which, according to Clearwire, will offer enhanced speed and access to
the Internet, among other things, for Clearwire customers.  This type
of transaction provides an excellent opportunity for us to participate in the
build-out of the WiMAX networks by Clearwire, and Berliner has begun to do this
work in various markets across the country.





The issuance of new or additional
licenses to wireless service providers. The Federal Communications
Commission (the “FCC”) has issued, and Berliner expects it will continue to
issue, new licenses to wireless service providers that it believes will present
new opportunities. For example, in the first few months of 2008, the FCC
auctioned a significant number of licenses in the 700 MHz
spectrum.  This introduction of new licenses allows new entrants into
the industry who will need to develop new networks.  After receiving
new or additional licenses necessary to build out their wireless systems,
wireless service providers must make decisions about what type of technology and
equipment will be used, where it will be deployed and how it will be configured.
In addition, detailed site location designs must be prepared and radio frequency
engineers must review interference to or from co-located antennae. Construction
and equipment installation must then be performed and professional technicians
must install and commission the new radio equipment, test and integrate it with
existing networks and tune the components to optimize performance.  We
believe Berliner is well positioned to service these needs.





The increase in spending to rebuild
and improve other communications networks, such as Public Safety Networks.There has been, and we believe there will continue to be, increased
spending on rebuilding and improving other communications networks,
including wireless and wired data, video and
voice networks, particularly those dedicated to the expansion of
broadband access to rural regions of the United States, public safety, and
homeland security communications.  Berliner services this growing market,
and it plans on developing further expertise and adding resources to this area,
specifically through the growth of our Specialty Communications Services
division.  The FCC has recently announced that in 2010 it will once
again attempt to sell certain “D-Block” licenses to support public safety
networks across the country.  Berliner believes the D-Block licenses
will ultimately be purchased, additional networks will be developed to support
these frequencies, and this will lead to additional opportunities for network
development and installation companies such as ours.





Plan
of Operation





UNTK’s  business
plan is based upon executing to the highest performance standards for our
customers, achieving end market diversification, customer diversification and
continuing to grow and scale its business units.




·
              Performance:  UNTK
      from its inception has continued to differentiate itself through
      performance.  UNTK deploys world class technology tools to
      create a competitive advantage.  For example, UniTek utilizes
      GPS, Intermec Hand Held Devices and other web based data collection and
      reporting tools, some of which are proprietary, to create a competitive
      advantage for the company.  By creating visibility into our
      performance through detailed real-time, daily and weekly monitoring, UNTK
      is able to deliver considerable value to our clients and their
      customers.  UNTK will continue to invest in technology tools to
      drive business, operational, financial reporting and real-time management
      objectives.


7




·
              End
      Market Diversification:  UNTK is focused on growing its business
      by entering growth industries that can leverage our back office support
      and scalable business platform.  UNTK provides an array of
      specialized wireless services, engineering and design services,
      construction management services, broadband
      network  construction, repair and maintenance, and comprehensive
      residential and commercial installation and fulfillment services to its
      customers.  Our strategy includes growth within these four
      industries while we explore strategic opportunities in other near neighbor
      industries that can benefit from our demonstrated ability to scale,
      organically grow and manage business units in multiple industries
      leveraging our shared services
platform.
 ·
                  Customer
      Diversification:   UNTK will continue to diversify its
      customer base and will continue to do this through organic business
      development efforts and strategic acquisitions.  From 2007 to
      2010, UNTK has grown from 5 customers in two industries to over 100
      customers in 4 industries.  Our primary customer base consists
      of blue-chip, fortune 100 companies in the media and telecommunications
      industry, including such customers as DirecTV, Comcast Cable, Verizon,
      Time Warner, Cox Communications, Charter Communications, Clearwire
      Communications, Sprint, T-Mobile and AT&T.  UNTK also serves
      significant Canadian customers, such as Rogers Cable and Cogeco
      Cable.
 ·
                      Focus
      on Profitability:  UNTK is committed to profitability at every
      level of our organization.  We intend to leverage our
      outstanding performance, commitment to technology and our shared service
      platform to grow our profitably.  Our shared services platform
      consists of all of our corporate resources at our headquarters in Blue
      Bell, PA.  All of our operating subsidiaries utilize the
      accounting, administrative, fleet management, insurance, safety, legal and
      other service organizations we call “Shared Services”.  By
      maintaining a central shared services function, we believe we can better
      manage our business, control costs, and better apply universal financial
      and operational controls and procedures.  This model also allows
      our operating personnel in the field to devote more time to customer
      service and business development, and less time to administrative
      functions.  We believe this model will allow us to improve
      profitability, while at the same time creates a platform to seamlessly
      integrate new acquisitions as we continue to grow our
      business.
  Competition





The
permanently outsourced specialized infrastructure services industry is
characterized by a relatively large number of participants, including several
large companies, as well as a number of small, privately held
competitors.  There are meaningful barriers to scaling an outsourced
specialty technical service provider, including management customer
relationships, financial and working capital strength, and operational expertise
to profitably run an operationally complex business.





UNTK
competes with MasTec, Quanta Services, Dycom Industries, Inc. and Volt
Telecom.   UNTK  distinguishes itself from these
competitors by being large enough to provide the resources customers need on a
nation-wide, self-performing basis, while still maintaining its ability to be
responsive, on a local level, to customer specific tasks that arise during any
given engagement for services.





Our
wireless subsidiary competes with several companies, public and private,
including WFI and Nsoro, LLC.   Our wireless subsidiary also
competes at a local market level with a variety of smaller installation,
construction and site acquisition companies, particularly on small projects that
do not require the resources we bring to bear on larger scale or nation-wide
projects.


8


Government
Regulation





Although
UNTK is not directly subject to any FCC or similar government regulations, the
wireless networks that it designs, deploys and manages are subject to these
requirements. Those requirements dictate that the networks meet certain radio
frequency emission standards, not cause unallowable interference to other
services, and in some cases, accept interference from other services. Those
networks are also subject to certain state and local government regulations and
requirements.  Other FCC regulations could impact UNTK’s divisions by
driving customers to pay for additional services to meet these requirements,
which UNTK can provide.





Major Suppliers and
Vendors





Historically,
we have relied upon our own employees and subcontractors to perform services in
order to fulfill our contractual obligations.   We are not
reliant on any one supplier or vendor for materials or supplies and have not
experienced any significant difficulty in obtaining adequate materials or
supplies.





Major
Customers





Berliner




As of and
for the six months ended December 31, 2009, Berliner derived 53% of its total
revenue from four customers, and those customers represented 51% of its accounts
receivable. During the year ended December 31, 2009, Clearwire US LLC represented 22%,
T-Mobile (and its subsidiaries) and Ericsson, Inc. each represented 13% of its
total revenue.





As of and
for the year ended June 30, 2009, Berliner derived 43% of its total revenue from
three customers, and those customers represented 28% of its accounts receivable.
During the year ended June 30, 2009, Metro PCS, Inc. (and its subsidiaries)
represented 19%, T-Mobile (and its subsidiaries) represented 13%, Clearwire
represented 11% of its total revenue.





UniTek





As of and
for the year ended December 31, 2009, UniTek derived 85% of its total revenue
from three customers, and those customers represented 69% of its accounts
receivable.  During the year ended December 31, 2009, UniTek’s top
customer represented 64%, and its second largest customer represented 13% of its
total revenue.





Safety
and Insurance/Risk Management





UNTK
takes safety seriously at every level of the organization, and it is an
operational priority.  UNTK requires operational employees to
participate in internal safety training, and, depending on their duties,
external safety training as well.  Part of the evaluation process for
employees and their managers includes a review of their safety
records.  UNTK has a company-wide safety program that is led by its
risk management group, which is designed to monitor and improve safety
compliance.  UNTK’s risk management group meets weekly with the Chief
Executive Officer of the Company, and includes a Director of Risk Management,
Director of Safety, Fleet Manager, and other key employees.





Seasonality





Incidents
of inclement weather, particularly in the winter months in the northern parts of
the country, can hinder the ability of UNTK technicians and construction
personal to complete certain outdoor activities, or travel to required
locations, relating to the provision of certain of our services. Demand for many
of UNTK’s services are typically higher in July through October, due primarily
to pay television offerings and subscribers’ viewing habits and the acceleration
of customers’ capital expenditures, with a corresponding decrease in activity
during the first few months of the following calendar year, typically because
customers are evaluating their plans for such capital expenditures for the
coming year during that period.


9


Backlog





As of
December 31, 2009, June 30, 2009 and 2008, Berliner’s backlog was approximately
$28.1 million ($12.0 million in infrastructure construction and $16.1 million in
site acquisition and zoning), $24.8 million ($6.5 million in infrastructure
construction and technical services and $18.3 million in site acquisition and
zoning) and $15.2 million ($11.1 million in infrastructure construction and
technical services and $4.1 million in site acquisition and zoning),
respectively. We believe substantially all of Berliner’s backlog at December 31,
2009 will be filled within the fiscal year ending December 31,
2010.





As of
December 31, 2009, Berliner and UniTek had a pro forma combined backlog of $841
million extending over four years, 41% of which is expected to be completed in
fiscal 2010.  Approximately 94% of our backlog at December 31, 2009
was comprised of services to be performed under existing master service
agreements and long term contracts.  The balance of our work is to be
completed on other service agreements.  See “Item 1A. Risk Factors -
UNTK’s backlog is subject to reduction and potential cancellation.”





Employees





As of
December 31, 2009, Berliner employed 513 full-time and 18 part-time
employees.  We anticipate the need to increase our work force as
additional contracts for projects are received. None of our employees are
represented by labor unions.





As of
December 31, 2009, Unitek employed in total 3,161 full-time and no part-time
employees.





ITEM
1A.  RISK FACTORS




The
following “risk factors” contain important information about UNTK and our
business and should be read in their entirety.  Additional risks and
uncertainties not known to us or that we now believe to be immaterial could also
impair our business.  If any of the following risks actually occur,
our business, results of operations and financial condition could suffer
significantly. As a result, the market price of our common stock, par value
$0.00002 per share (“Common Stock”), could decline and you could lose all of
your investment.  The following risk factors disclosure addresses the
risks related to UniTek Global Services as a combined company after the
Merger.  In this Section, the terms the “UNTK”, “Company,” “we”, “our”
and “us” refer to UniTek Global Services.





Risks
Related to Our Industry and Our Customers' Industry





Competition
in the industries UNTK serves could reduce its market share and impact operating
results.





UNTK
serves markets that are highly competitive and fragmented and in which a large
number of multinational companies compete for large, national projects, and an
even greater number of small, local businesses compete for smaller, one-time
projects.   Competition may place downward pressure
on  contract prices and profit margins.  Intense competition
is expected to continue in these markets and, if UNTK is unable to meet these
competitive challenges, it could lose market share to its competitors and
experience an overall reduction in its operating performance and financial
results.




UNTK
is vulnerable to the cyclical nature of the telecommunications industry and,
specifically, the capital expenditures of the major telecommunications
providers.





The
demand for UNTK’s services and products is dependent upon the existence of
projects with engineering, procurement, construction and management
needs.  The wireless telecommunications market, where Berliner
principally competes, is particularly cyclical in nature and vulnerable to
downturns in the telecommunications industry.  During times of
economic slowdown, some of UNTK’s customers reduce their capital
expenditures.  Further, customers, primarily in our wired and
wireless communications subsidiaries, sometimes defer or cancel pending
projects.  As a result, demand for our services may decline during
periods of economic downturns and could adversely affect our operations and
financial performance.


10


Risks
Related to Our Business





UNTK
generates a substantial portion of our revenue from a limited number of
customers and, if our relationships with such customers were harmed, the
business would suffer.





As of and
for the year ended December 31, 2009, UniTek derived 85% of our total revenue
from 3 customers and those customers represented 69% of its accounts
receivable.





As of and
for the six months ended December 31, 2009, Berliner derived 53% of its total
revenue from four customers and those customers represented 51% of its accounts
receivable. During the six months ended December 31, 2009, Clearwire represented
22%, T-Mobile (and its subsidiaries) and Ericsson, Inc. each represented 13% of
Berliner’s revenue.





UNTK
believes that a limited number of clients will continue to be the source of a
substantial portion of its revenue for the foreseeable future.  A key
factor in maintaining relationships with such customers is performance on
individual contracts and the strength of our professional
reputation.  To the extent that UNTK’s performance does not meet
client expectations, or our reputation or relationships with one or more key
customers are impaired due to another reason, a significant decrease in our
revenue may result. This would negatively impact UNTK’s ability to generate
income.  In addition, key customers, due to increased difficulty in
the credit markets as a result of the recent economic crisis or other reasons,
could slow or stop spending on initiatives related to projects UNTK is
performing for them.  This may materially impair our operating
results.





UNTK
maintains a workforce based upon current and anticipated
workloads.  If it does not receive future contract awards or if these
awards are delayed, it may incur significant costs in meeting workforce
demands.





UNTK’s
estimates of future performance depend on, among other matters, whether and when
it will receive certain new contract awards.  While its estimates are
based upon good faith judgment, they can be unreliable and may frequently change
based on newly available information.  In the case
of  larger projects, where timing is often uncertain, it is
particularly difficult to project whether and when UNTK will receive a contract
award.  The uncertainty of contract award timing can present
difficulties in matching workforce size with contractual needs.  If an
expected contract award is delayed or not received, UNTK could incur significant
costs resulting from reductions in staff or redundancy of
facilities.  This may negatively impact our operating performance and
financial results.





UNTK
recognizes revenue for fixed price construction contracts using the
percentage-of-completion method, therefore, variations of actual results from
its assumptions may reduce its profitability.





UNTK
recognizes revenue and profit on our construction contracts as the work
progresses using the percentage-of-completion method of
accounting.  Under this method of accounting, contracts in progress
are valued at cost plus accrued profits less earned revenue and progress
payments on uncompleted projects.  This method relies on estimates of
total expected contract revenue and costs.





Contract
revenue and total cost estimates are reviewed and revised monthly by management
as the work progresses, such that adjustments to profit resulting from revisions
are made cumulative to the date of revision.  Adjustments are
reflected for the fiscal period affected by such revisions.  If
estimates of costs to complete long-term projects indicate a loss, we
immediately recognize the full amount of the estimated loss.  Such
adjustments and accrued losses may negatively impact UNTK’s operating
results.


11


UNTK
may require additional capital to fund its operations and
obligations.





As of
December 31, 2009, UNTK, on a pro forma basis, had cash and cash equivalents of
$3.8 million.  UNTK may need to raise additional funds to continue to
fund its business’ operations and obligations in 2010 and beyond as well as to
fund potential acquisitions.  Our capital requirements will depend on
several factors, including:





·
            expenditures
      and investments to implement our business
  strategy;


·
            our
      ability to enter into new agreements with customers or to extend the terms
      of our existing agreements with customers, and the terms of such
      agreements;


·
            the
      success rate of our sales efforts;


·
            our
      ability to successfully commercialize our products and services and the
      demand for such products and
services;


·
            costs
      of recruiting and retaining qualified personnel;
  and


·
            the
      identification and successful completion of
  acquisitions.





UNTK may
seek additional funds through public and private securities offerings and/or
borrowings under lines of credit or other sources.  Its inability to
raise adequate funds to support the growth of its business would materially
adversely affect its business.  If UNTK cannot raise additional
capital, it may have to implement one or more of the following
remedies:





·
            reduce
      capital expenditures;


·
            reduce
      our workforce;


·
            forgo
      the pursuit of acquisitions; and/or


·
            curtail
      or cease operations.





We do not
know whether additional financing will be available on commercially acceptable
terms when needed, if at all.  If adequate funds are not available or
are not available on commercially acceptable terms, UNTK’s ability to fund our
operations or otherwise respond to competitive pressures could be significantly
delayed or limited.





If UNTK
raises additional funds by issuing equity securities, further dilution to our
stockholders could result, and new investors could have rights superior to those
of its existing shareholders. Any equity securities issued also may provide for
rights, preferences or privileges senior to those of holders of our Common
Stock. If UNTK raises additional funds by issuing debt securities, these debt
securities would have rights, preferences and privileges senior to those of
holders of our Common Stock, and the terms of the debt securities issued could
impose significant restrictions on our operations.





If
UNTK experiences material delays and/ or defaults in customer payments, it may
be unable to cover all expenditures related to such customer’s
projects.





Because
of the nature of some of our contracts, UNTK commits resources to projects prior
to receiving payments from its customers in amounts sufficient to cover
expenditures as they are incurred.  Delays in customer payments may
require it to make a working capital investment or obtain advances from its line
of credit, which may be adversely affected by the current turmoil in the credit
markets.  If a customer defaults in making its payments on a project
or projects to which UNTK has devoted significant resources, it could have a
material negative effect on its results of operations and negatively impact the
financial covenants with its lenders.





The
nature of UNTK’s construction businesses exposes us to potential liability
claims and contract disputes that may negatively affect its results of
operations.





UNTK
engages in construction activities in its BCI Communications and Advanced
Communications subsidiaries, including engineering and oversight of engineering
firms.  Design, construction or systems failures can result in
substantial injury or damage to third parties.  Any liability in
excess of insurance limits at locations constructed by us could result in
significant liability claims against us, which claims may negatively affect our
results of operations.  In addition, if there is a customer dispute
regarding performance of project services, the customer may decide to delay or
withhold payment to us.  If UNTK is ultimately unable to collect on
these payments, its results of operations would be negatively
impacted.


12





UNTK
may experience significant fluctuations in our quarterly results relating to its
ability to generate additional revenue, manage expenditures and other factors,
some of which are outside of its control.





UNTK’s
quarterly operating results have varied considerably in the past, and may
continue to do so, due to a number of factors.  Many of these factors
are outside of its control and include, without limitation, the
following:





·
            financing
      requested by and provided to customers and potential
      customers;


·
            the
      commencement, progress, completion or termination of contracts during any
      particular quarter; and


·
            satellite,
      cable and telecommunications market conditions and economic conditions
      generally.





Due to
these factors and others, our results for a particular quarter, and therefore,
our combined results for the affected year, may not meet the expectations of
investors, which could cause the price of our Common Stock to decline
significantly.





UNTK’s
backlog is subject to reduction and potential cancellation.





UNTK’s
backlog consists of uncompleted portions of services to be performed under
job-specific contracts and the estimated value of future services that we expect
to provide under master service agreements and other long-term
contracts.  Many of our contracts are multi-year agreements, and we
include in our backlog the amount of services projected to be performed over the
terms of the contracts based on our historical experience with customers and our
experience in procurements of this type.  In many instances, our
customers are not contractually committed to procure specific volumes of
services under a contract.  UNTK estimates of a customer’s
requirements during a particular future period may not prove to be accurate,
particularly in light of the current economic conditions.  If UNTK’s
estimated backlog is significantly inaccurate, this could adversely affect its
financial results and the price of its common stock.





If
UNTK is unable to successfully integrate recent acquisitions, thiscould result in a reduction
ofitsoperating results, cash
flows and liquidity.





UNTK hasmade, and in the future may
continue to make, strategic acquisitions such asthe recent combination of
UniTek andBerliner.  Acquisitions may expose us to operational challenges and
risks, including:





·
            the
      ability to profitably manage additional businesses or successfully
      integrate acquired business operations and financial reporting and
      accounting control systems into our
business;


·
            increased
      indebtedness and contingent purchase price obligations associated with an
      acquisition;


·
            the
      ability to fund cash flow shortages that may occur if anticipated revenue
      is not realized or is delayed, whether by general economic or market
      conditions, or unforeseen internal
difficulties;


·
            the
      availability of funding sufficient to meet increased capital needs;
      and


·
            diversion
      of management’s attention.





Failure to successfully
manage the operational challenges and risks associated with, or resulting from
acquisitions could adversely affectUNTK’sresults of operations, cash
flows and liquidity. Borrowings or issuances of convertible securities
associated with these acquisitions may also result in higher levels of
indebtedness which could impact our ability to service our debt within the
scheduled repayment terms.




13




UNTK
may incur goodwill and other intangible impairment charges which could reduce
its profitability.





In
accordance with the Financial Accounting Standards Board Accounting Standards of
Codification Topic 350 “Intangibles – Goodwill and Other”, UNTK reviews the
carrying values of our goodwill and indefinite lived intangible assets at least
annually.  UNTK determines the fair value of businesses acquired
(reporting units) and compare it to the carrying value, including goodwill, of
such businesses.  If the carrying value exceeds its fair value, the
goodwill of the unit may be impaired.  The amount, if any, of the
impairment is then measured, based on the excess, if any, of the reporting
unit’s carrying value of goodwill over its implied
value.  Accordingly, an impairment charge would be recognized for the
period identified which would reduce its profitability.





UNTK
has a substantial amount of debt and a default on its debt obligations could
have a material, adverse effect on its business.





On
September 27, 2007, Unitek Acquisition, Inc., a Delaware corporation (“Unitek
Acquisition”), now an indirect wholly-owned subsidiary of Berliner, entered into
(1) a $117.5 million First Lien Credit Agreement (as amended,
restated, modified or otherwise supplemented, the “First Lien Credit
Agreement”), by and among Unitek Acquisition, Unitek Midco, Inc., a Delaware
corporation (“Unitek Midco”), certain subsidiaries of Unitek Acquisition as
guarantors, the initial lenders, Royal Bank of Canada, as administrative agent
and collateral agent for the lenders and RBC Capital Markets, as lead arranger
and book-runner and (2) a $25 million Second Lien Term Loan Agreement (as
amended, restated, modified or otherwise supplemented, the “Second Lien Credit
Agreement”), by and among Unitek Acquisition, Unitek Midco, certain subsidiaries
of Unitek Acquisition as guarantors, the initial lenders, Royal Bank of Canada,
as administrative agent and collateral agent for the lenders and RBC Capital
Markets, as lead arranger and book-runner.





Unitek
Holdings, Inc., a Delaware corporation, (“Holdings”) entered into a Loan
Authorization Agreement dated as of September 25, 2007 (as amended, restated,
modified or otherwise supplemented, the “Loan Authorization Agreement”) among
Holdings and BMO Capital Markets Financing, Inc (the “BMO”). The Loan
Authorization Agreement established a $35 million revolving credit facility (the
“Revolving Facility”) and is evidenced by a demand note.  The
Revolving Facility is payable and matures on demand of the
lender.  The lender has the right to terminate the Revolving Facility
at any time upon demand. The obligations under the Loan Authorization Agreement
are guaranteed severally, but not jointly, by Sector Performance Fund, LP and
SPF SBS LP, who are affiliates of HM Capital Partners LLC.





As of
December 31, 2009, UniTek had approximately $160 million outstanding under these
existing credit facilities, which are described in more detail in the Liquidity
Section of “Item 7: Managements’ Discussion and Analysis of Financial Condition
and Results of Operations.”  These facilities are secured by a blanket
security interest that covers substantially all of our assets.  An
event of default with respect to these facilities could result in, among other
things, the acceleration and demand for payment of all principal and interest
due and the foreclosure on the collateral.  In addition, the First Lien
Credit Agreement contains certain financial covenants, including, among other
things, a maximum total leverage ratio, a maximum first lien leverage ratio, a
minimum fixed charge coverage ratio, a minimum interest coverage ratio and
minimum liquidity requirements.  The Second Lien Credit Agreement also
contains total leverage ratio, maximum fixed charge coverage ratio and minimum
interest coverage ratio covenants.





UNTK may
be forced to refinance or obtain extensions of the maturities of all or some of
such debt on terms that significantly restrict its ability to operate, including
terms that place limitations on its ability to incur other indebtedness, to pay
dividends, to use its assets as collateral for other financings, to sell assets
or to make acquisitions or enter into other transactions.  Such
restrictions may adversely affect its ability to finance future operations or to
engage in other business activities.  If UNTK finances the repayment
of its outstanding indebtedness by issuing additional equity or convertible debt
securities, such issuances could result in substantial dilution to our
stockholders.  In the event of foreclosure, the sale of its collateral
would result in a substantial disruption, or total cessation, in its ability to
operate its business.




14




Historically,
UniTek did not always achieve positive net income, and may not in the
future.





UniTek
has not achieved positive net income historically, and may not in future
periods.  To the extent that revenue declines or does not grow at
anticipated rates, or UNTK does not operate its business profitably, or other
factors discussed elsewhere in these Risk Factors occur, our net income could be
negatively impacted.  In addition, we may not be able to take
advantage of anticipated synergies associated with the Merger. Further, if
increases in operating expenses are not subsequently followed by commensurate
increases in revenue or we are unable to adjust operating expense levels
accordingly, we may never sustain positive operating cash flow or generate net
income.





Legal proceedings and other
claims could reduceUNTK’sprofitability, cash flows
and liquidity.





UNTK issubject to various claims,
lawsuits and proceedings which arise in the ordinary course of
business.  These actions may seek, among other things, compensation
for alleged personal injury, workers’compensation, employment
discrimination, wage and hour disputes, breach of contract, property damage,
consequential and punitive damages, civil penalties, or injunctive or
declaratory relief.  In addition,UNTKgenerally
indemnifies
itscustomers
for claims related to the servicesitprovides. Claimants may seek large
damage awards.  Defending these claims can involve significant legal
costs.  When appropriate,UNTKestablishesreserves against litigation
and claims thatitbelievesto be adequate in light of
current information, legal advice and professional indemnity insurance coverage,
and we adjust such reserves from time to time according to
developments.  If reserves are inadequate, insurance coverage proves
to be inadequate or unavailable, or there is an increase in liabilities for
whichUNTKself-insure,itcould experience a reduction
in our profitability and liquidity.  An adverse determination on any
such claim or lawsuit could have a material adverse effect onUNTK’sbusiness, financial
condition and results of operations.  Separately, claims and lawsuits
alleging wrongdoing or negligence byUNTKmay harmitsreputation or divert
management resources away from operatingitsbusiness.





UNTK isself-insured against many
potential liabilities, which exposesitto a substantial portion of
the costs of claims and lawsuits.





AlthoughUNTKmaintainsinsurance policies with
respect to automobile liability, general liability, workers’compensation and employee
group health claims, those policies are subject to high
deductibles.  Because most claims againstUNTKdo not exceed the
deductibles underitsinsurance policies,it
iseffectively
self-insured for substantially all claims.UNTKdeterminesany liabilities for unpaid
claims and associated expenses, including incurred but not reported losses, and
reflectsthe present value of those
liabilities initsbalance sheet as other
current and non-current liabilities.  The determination of such claims
and expenses and the appropriateness of the related liability is reviewed and
updated quarterly. However, insurance liabilities are difficult to assess and
estimate due to the many relevant factors, including the severity of an injury
or legitimacy of a claim and the determination of our liability in proportion to
other parties.  IfUNTK’sinsurance claims increase or
costs exceeditsestimates of insurance
liabilities,itmay experience a decline in
operating results and liquidity.





Increases inUNTK’sinsurance premiums or
collateral requirements could significantly reduceitsprofitability, liquidity and
availability underitscredit
facility.





Because of factors such as
increases in claims, projected significant increases in medical costs and wages,
lost compensation and reductions in coverage, insurance carriers may be
unwilling to continue to provideUNTKwith our current levels of
coverage without a significant increase in insurance premiums or collateral
requirements to cover our deductible obligations. An increase in premiums or
collateral requirements could significantly reduceUNTK’sprofitability and liquidity
as well as reduce availability underitsrevolving credit
facility.





UNTK’s
operating results can be negatively affected by weather conditions.





UNTK
performs most of its services outdoors.  Adverse weather
conditions may affect productivity in performing services or may temporarily
prevent UNTK from performing services for its customers.  The affect
of weather delays on projects that are under fixed price arrangements may be
greater if UNTK is unable to adjust the project schedule for such
delays.  A reduction in  productivity in any given period or
our inability to meet guaranteed schedules may adversely affect the
profitability of our projects.


15





UNTK
bears the risk of cost overruns in some of its contracts.





UNTK
conducts its business under varying contractual arrangements, some of which are
long-term, and generate recurring revenue at agreed upon
pricing.  Certain of its contracts have prices that are established,
in part, on cost and scheduling estimates which are based on a number of
assumptions, including, without limitation, assumptions about future economic
conditions, prices and availability of labor, prices of equipment and materials,
and other variables.  These assumptions are made more difficult to
ascertain by the current uncertainty in the capital markets and the wide
fluctuation in prices for equipment, fuel and other costs associated with our
services.  If cost assumptions prove inaccurate or circumstances
change, cost overruns may occur and, as a result, we may experience reduced
profits or, in some cases, a loss for those projects affected.





Rising
fuel costs could impact UNTK’s operating margins.





UNTK
cannot predict the price of the fuel needed to operate our fleet.  Price
fluctuations are common, and are outside of our control.  These
fluctuations are based on, among other things, political developments, supply
and demand, and actions by oil and gas producers.  Violence and political
instability in oil producing countries can also impact prices.  UNTK will
not be able to adjust our pricing under most of our contracts to account for
fuel costs increases.  Therefore, any increase in fuel costs could
materially reduce our profitability and liquidity.





The
loss of certain key managers could adversely affect our business.





We depend
on the services of our executive officers and the senior management of our
subsidiaries.  Our management team has many years of experience in our
industry; the loss of any of them could negatively affect our ability to execute
our business strategy.  Although we have entered into employment agreements
with our executive officers and certain other key employees, we cannot guarantee
that any key management personnel will remain employed by us. The loss of key
management could adversely affect the management of our operations.





Risks
Related to Our Company and Our Common Stock





Berliner’s
historic stock price has been volatile and purchasers of our common stock could
incur substantial losses.





Historically,
Berliner’s stock price has been volatile.  The stock market in
general, particularly recently, has experienced extreme volatility that has
often been unrelated to the operating performance of particular
companies.  As a result of this volatility, investors may not be able
to sell their Common Stock at or above their respective purchase
prices.  The market price for Berliner’s common stock, now UNTK common
stock, may be influenced by many factors, including, but not limited to,
variations in our financial results or those of companies that are perceived to
be similar to us, investors’ perceptions of us, the number of our shares
available in the market, future sales of our common stock and securities
convertible into our common stock, and general economic, industry and market
conditions.





There
is a lack of a public market for UNTK’s shares, which limits our stockholders’
ability to sell their shares.





There is
currently a limited public market for UNTK common shares, and a more active
market for our common stock may never develop.  Consequently,
investors may not be able to liquidate their shares at a suitable price, or at
all.


16





A small number of existing
stockholders have the ability to influence major corporate
decisions.





HM CapitalPartners, LLCand its affiliates
beneficially owned approximately77% of the outstanding shares
of ourCommonStock as of March25, 2010. Accordingly, they are
in a position to influence:





·
            the
      vote of most matters submitted to UNTK’s stockholders, including any
      merger, consolidation or sale of all or substantially all of its
      assets;


·
            the
      nomination of individuals to its Board of Directors;
  and


·
            a
      change in its control.




These factors may discourage,
delay or prevent a takeover attempt that other stockholders might consider in
their best interest.




17




ITEM
      2.
            PROPERTIES




As of
December 31, 2009, BCI had one material lease agreement for its headquarters at
18-01 Pollitt Dr., Fair Lawn, New Jersey.  This location has 76,790
square feet of office and warehouse space.  We lease other smaller
locations throughout the United States.  We own 0.9 acres of property,
including office and warehouse space, in Arlington, Texas.





We
believe that our properties are adequate to meet our current needs and that
additional facilities, if needed, are available to meet our expansion needs in
existing and projected markets.





ITEM
      3.
            LEGAL
      PROCEEDINGS




UNTK is
subject to various litigation claims that occur in the ordinary course of
business, which UNTK believes, even if decided adversely to it, would not have a
material adverse effect on its business, financial condition and results of
operations.  As a result of the Merger, Berliner is reporting the
below, legacy UniTek litigation matters that were already in process when the
Merger closed on January 27, 2010.




Gerald
Farmer, et al. v. DirectSat USA, LLC





On June
11, 2008, three named plaintiffs, who were formerly employed as technicians by
DirectSat USA, LLC, a UniTek subsidiary, filed a claim in the United States
District Court for the Northern District of Illinois, alleging violations of the
Illinois Wage and Hour Laws and the Fair Labor Standards Act (“FLSA”). These
allegations related to the payment of overtime. The plaintiffs have sought and
have been granted class certification for the state law claims.  They
are demanding $7.4 million in damages related to these claims.  We do
not believe these claims have merit, and we believe the damages claim is grossly
above any potential exposure we may face in this case.





On
February 9, 2010, plaintiffs’ counsel filed a companion case, Lashon
Jacks  v. DirectSat et al., in the Cook County, Illinois Circuit
Court, seeking to expand the class in the Farmer case to include all technicians
in Illinois that worked with DirectSat after June 10, 2008.  No
additional damages claims have been made, and we intend to defend this case,
along with the Farmer case, vigorously.





Monroe
et al. v. FTS USA, LLC and UniTek USA, LLC





On
February 15, 2008, plaintiffs, former employees of  FTS USA, a UniTek
subsidiary, filed a class action in the United States District Court for the
Western District of Tennessee, alleging violations of the FLSA related to
overtime payments.  Conditional class certification was granted, and
plaintiffs have made a claim for damages of $3.2 million.  We do not
believe these claims have merit, and we believe the damages claim is grossly
above any potential exposure we may face in this case.  We intend to
defend the case vigorously.





ITEM
      4.
            (REMOVED
      AND RESERVED)




18


PART
II




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




Our
Common Stock is currently quoted on the National Association of Securities
Dealers-Over the Counter Bulletin Board (“OTCBB”).  On September 16,
2005, our trading symbol was changed to “BERL.OB” to reflect, in part, our name
change at that time.  Prior to that date, our stock was traded under
the symbol “NVNW.OB.”




The
following table sets forth the high and low bid prices of our Common Stock on
the applicable market for the quarterly periods indicated.  Such
prices reflect inter-dealer prices, without retail mark-up, markdown or
commission, and may not necessarily represent actual transactions:




Quarter Ended
                    
                    Low
                    
                    
                    HighDecember
      31, 2009
                    
                    $
                    0.60
                    
                    
                    $
                    0.80September
      30, 2009
                    
                    
                    0.52
                    
                    
                    
                    0.75June
      30, 2009
                    
                    
                    0.52
                    
                    
                    
                    1.00March
      31, 2009
                    
                    
                    0.55
                    
                    
                    
                    1.31December
      31, 2008
                    
                    
                    0.65
                    
                    
                    
                    1.85September
      30, 2008
                    
                    
                    1.01
                    
                    
                    
                    1.65June
      30, 2008
                    
                    
                    1.02
                    
                    
                    
                    1.65March
      31, 2008
                    
                    
                    1.10
                    
                    
                    
                    2.10December
      31, 2007
                    
                    
                    1.02
                    
                    
                    
                    1.20September
      30, 2007
                    
                    
                    1.01
                    
                    
                    
                    1.20




Our stock
has experienced periods, including, without limitation, certain extended
periods, of limited or sporadic quotations.




As of
December 31, 2009, there were 208 holders of record of our Common
Stock.




Recent
Sales of Unregistered Securities





Not
applicable.





Securities
Authorized for Issuance under Equity Compensation Plans




The
following table provides information, as of December 31, 2009, with respect to
all compensation plans and individual compensation arrangements under which
equity securities are authorized for issuance to employees or
non-employees:




Number of securities(A)
                  
                  
                  
                  
                  
                  
                  remaining available forNumber of securities to
                  
                  
                  
                  Weighted average
                  
                  
                  future issuance underbe issued upon exercise
                  
                  
                  
                  exercise price of
                  
                  
                  equity compensation plansof outstanding options,
                  
                  
                  
                  outstanding options,
                  
                  
                  (excluding securities reflectedwarrants and rights
                  
                  
                  
                  warrants and rights
                  
                  
                  in column (A)Equity
      compensation on plans approved by security holders
                  
                  
                  2,332,212
                  (a)
                  
                  
                  $
                  11.06
                  
                  
                  
                  2,000,000Equity
      compensation on plans not approved by security
holders
                  
                  
                  18,704
                  (b)
                  
                  
                  $
                  6,786.00
                  
                  
                  None2,350,916
                  
                  
                  
                  $
                  64.97
                  
                  
                  
                  2,000,000





(a)
            Represents
      options granted under our 1999 Omnibus Securities Plan, our 2001 Equity
      Incentive Plan and our 2009 Omnibus Equity and Incentive Compensation
      Plan, each of which was approved by our stockholders (the “Option
      Plans”).


19





(b)
            Represents
      options granted under stand-alone option agreements, which were not
      associated with the Option Plans, and which vested over three or four year
      periods.





Dividend
Policy




We have
not paid cash dividends on our Common Stock nor do we anticipate doing so in the
foreseeable future.




ITEM
      6.
            SELECTED
      FINANCIAL DATA




Not
applicable.




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




This
discussion should be read together with our consolidated financial statements
and their notes included elsewhere in this Transition Report of Form 10-K. See
“Forward-Looking Statements” and Item 1A – Risk Factors for a discussion of
factors that could cause our future financial condition and results of
operations to be different from those discussed below.  Unless the
context otherwise requires, references to “we,” “us,” “our” and “the Company”
refer to Berliner and its consolidated subsidiary BCI as these businesses
existed during the six month period ended December 31, 2009.





Business





Berliner
is a leading contractor to the wireless communications industry, providing a
wide range of services primarily to wireless and traditional telecommunications
carriers. Berliner’s core activities include communications infrastructure
equipment construction and installation; site acquisition and zoning to support
communication network build-outs; radio frequency and network design and
engineering; radio transmission base station installation and modification; and
in-building network design, engineering and construction. Berliner also provides
specialty communication services, configured solutions, staffing services and
power system solutions. It provides some or all of these services to our
customers, most of which are companies in the wireless telecommunications and/or
data transmission industries, as well as to utility companies and government
agencies and municipalities. Berliner’s customers rely on it to assist them in
planning, site location and leasing. For a more complete discussion of the
business, see Item 1 of this Transition Report on Form 10-K entitled
“Business”.





On
February 28, 2007, Berliner entered into an Asset Purchase Agreement with
Digital Communication Services, Inc. and its affiliates for the purchase of
certain of its assets in Arlington, Texas. This acquisition expanded and
strengthened Berliner’s presence in Texas and the Midwest region. On April 16,
2007, Berliner entered into an Asset Purchase Agreement with Radian
Communication Services, Inc. (“Radian”) to purchase certain of the U.S. assets
and operations of Radian and assume certain liabilities of
Radian.  This acquisition expanded Berliner’s presence in Los Angeles,
California, Las Vegas, Nevada, and Seattle, Washington, and added offices in
Salem, Oregon and Tempe, Arizona.  These acquisitions have allowed
Berliner to become a nation-wide service provider for its customers, the most
significant of which have nationwide operations that require the types of
services Berliner provides.  These acquisitions have also expanded our
customer bases.





On
January 27, 2010, Berliner and Unitek entered into the Merger Agreement, which
consummated the Merger.  The below discussion relates only to the
performance of Berliner and its consolidated subsidiaries for the period
presented, and does not include a discussion of UniTek or the post-merger
combination of Berliner and UniTek. As a result of the Merger, the Company’s results for the
six-month period ending December 31, 2009 are not indicative of the results to
be expected for any future periods.


20





Basis
of Presentation





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Major assets and liabilities that are subject to estimates include allowance for
doubtful accounts, goodwill and other acquired intangible assets, deferred tax
assets and certain accrued and contingent liabilities. One of the more
significant processes requiring estimates is
percentage-of-completion.





We
recognize revenue and profit on our contracts as the work progresses using the
percentage-of-completion method of accounting. Under this method, contracts in
progress are valued at cost plus accrued profits less earned revenue and
progress payments on uncompleted projects. This method relies on estimates of
total expected contract revenue and costs.





We
currently report our financial results on the basis of two reportable segments:
(1) infrastructure construction and technical services and (2) site acquisition
and zoning.




SIX
MONTHS ENDED DECEMBER 31, 2009 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2008
(Unaudited)


(amounts
in thousands unless otherwise stated)





All amounts and references
to the six months ended December 31, 2008 are unaudited.





Revenue


Six Months EndedDecember 31,2009
                        
                        2008
                        
                        IncreaseInfrastructure
      construction and technical services
                        $
                        34,053
                        
                        $
                        24,751
                        
                        $
                        9,302Site
      acquisition and zoning
                        
                        8,832
                        
                        
                        2,870
                        
                        
                        5,962Total
                        $
                        42,885
                        
                        $
                        27,621
                        
                        $
                        15,264





We had
revenue of $42.9million for the six
months ended December 31, 2009, versus $27.6 million for the six months ended
December 31, 2008.  This represents an increase of $15.3 million, or
55%. Revenue from infrastructure construction and technical services increased
$9.3 million from $24.8 million, or 38% for the six months ended December 31,
2009 as compared to the six months ended December 31, 2008. Revenue from site
acquisition and zoning increased $6.0 million from $2.9 million, or 208%, for
the six months ended December 31, 2009 as compared to the six months ended
December 31, 2008.





Of the
$9.3 million increase for infrastructure construction and technical services,
$4.1 million represents revenue from new customers or markets, and most of the
remaining increase represents increased services provided to existing
customers.





Of the
$6.0 million increase in site acquisition and zoning, $2.7 million represents
revenue from customers in markets where we had not previously recognized
revenue, and most of the remaining increase represents services provided to our
largest customer, Clearwire.





We
recognize revenues based on the percentage-of-completion method of
accounting.





Cost
of Revenue





Six Months EndedDecember 31,2009
                      
                      2008
                      
                      IncreaseInfrastructure
      construction and technical services
                      $
                      25,534
                      
                      $
                      17,529
                      
                      $
                      8,005Site
      acquisition and zoning
                      
                      6,376
                      
                      
                      844
                      
                      
                      5,532Total
                      $
                      31,910
                      
                      $
                      18,373
                      
                      $
                      13,537




21




Our cost
of revenue was $31.9million and $18.4
million for the six months ended December 31, 2009 and 2008,
respectively.  This represents an increase of $13.5 million, or 74%,
during a period when revenue increased 55%. These amounts represent 74% and 67%
of total revenue for the six months ended December 31, 2009 and 2008,
respectively.





Cost of
revenue for infrastructure construction and technical services increased $8.0
million from $17.5 million for the six months ended December 31, 2008 to $25.5
million for the six months ended December 31, 2009. This represents an increase
of 46% during a period when corresponding revenue increased 38%.





Cost of
revenue for site acquisition and zoning increased $5.5 million from $0.8 million
for the six months ended December 31, 2008 to $6.4 million for the six months
ended December 31, 2009. This represents an increase of 655% during a period
when corresponding revenue increased 208%.  For a more complete
description of the drivers for the decrease in gross profit during the six
months ended December 31, 2009, please see below under the caption “Gross
Profit”.





Gross
Profit


Six Months EndedDecember 31,2009
                      
                      2008
                      
                      IncreaseInfrastructure
      construction and technical services
                      $
                      8,519
                      
                      $
                      7,222
                      
                      $
                      1,297Site
      acquisition and zoning
                      
                      2,456
                      
                      
                      2,026
                      
                      
                      430Total
                      $
                      10,975
                      
                      $
                      9,248
                      
                      $
                      1,727





Our gross
margin for the six months ended December 31, 2009 increased 19% to $11.0 million
as compared to $9.2million for the six
months ended December 31, 2008.  Our gross margin as a percentage of
revenue was approximately 26% for the six months ended December 31, 2009, as
compared to 33% for the six months ended December 31, 2008.





The most
significant component of the increase in cost of revenues in both of our
segments was the fact that in the six months ended December 31, 2008, our then
largest customer was in the process of cancelling purchase orders for work
previously awarded to us and asking us to delay the completion of other purchase
orders. These cancellations and delays were related to this customer’s sale of
its new generation technology to another company. This led to an unusual
increase in our gross margins during that period. In addition, we have decided
to bid our services more aggressively than in the past. Competition has
increased and many of our customers are exploring ways to reduce costs, which
has impacted pricing for some services. In addition, we have been awarded a
significant amount of work from OEMs and other project management companies that
do work for the carriers, which is at a lower profit margin than the work we do
directly for our carrier customers. This has contributed to a decrease in our
gross profit margins during the six months ended December 31, 2009.





Selling,
General and Administrative Expenses





Selling,
general and administrative expenses for the six months ended December 31, 2009
were $12.0 million as compared to $10.6 million for the six months ended
December 31, 2008. This represents an overall increase of $1.4 million, or 13%,
which consists primarily of increases in expenses related to the Merger of $0.8
million, rent and other occupancy costs of $0.4 million and payroll related
expenses of $0.3 million.





Depreciation
and Amortization





Depreciation
recorded on fixed assets during the six months ended December 31, 2009 totaled
approximately $0.5 million as compared to $0.5 million for the six months ended
December 31, 2008. Amortization of intangible assets acquired as a result of the
Digitcom and Radian acquisitions resulted in amortization expense of
approximately $0.1 million and $0.2 million in the six months ended December 31,
2009 and 2008, respectively.


22





Interest
Expense





We
recognized $0.2 million in interest expense during the six months ended December
31, 2009 as compared to $0.1 million during the six months ended December 31,
2008.  This 85% increase was primarily caused by the increased usage
of our line of credit with PNC.





Amortization
of Deferred Financing Fees





We
recognized $30 thousand in amortization of deferred financing fees during each
of the six months ended December 31, 2009 and 2008, respectively.





Income
Taxes





We
recorded an income tax expense of $3.6 million and an income tax benefit of $0.5
million for the six months ended December 31, 2009 and 2008, respectively. The
effective income tax rate for the six months  ended December 31, 2008
was 30%.  Included in the income tax expense for the six months ended
December 31, 2009 is approximately $4.0 million representing the provision of a
valuation allowance against all of our net deferred tax assets (except for
goodwill amortization).




YEAR
ENDED JUNE 30, 2009 COMPARED TO YEAR ENDED JUNE 30, 2008





(amounts
in thousands unless otherwise stated)





Revenue


Years Ended June 30,2009
                      
                      2008
                      
                      (Decrease)Infrastructure
      construction and technical services
                      $
                      44,897
                      
                      $
                      98,563
                      
                      $
                      (53,666
                      )Site
      acquisition and zoning
                      
                      9,594
                      
                      
                      29,809
                      
                      
                      (20,215
                      )Total
                      $
                      54,491
                      
                      $
                      128,372
                      
                      $
                      (73,881
                      )





We had
revenues of $54.5 million for the year ended June 30, 2009, versus $128.4
million for the year ended June 30, 2008. This represents a decrease of $73.9
million, or 58%.





Revenue
from infrastructure construction and technical services decreased $53.7 million,
or 54% for the year ended June 30, 2009 as compared to the year ended June 30,
2008 and represented 82% and 77% of total revenue for these years,
respectively.





Site
acquisition and zoning decreased $20.2 million, or 68% for the year ended June
30, 2009 as compared to the year ended June 30, 2008, and accounted for
approximately 18% and 23% of total revenues for these years,
respectively.




These
decreases in revenue are related to several factors:




·
            Our
      largest customer during fiscal 2008, Sprint Nextel, cancelled purchase
      orders beginning in the three month period ended June 30, 2008 for work
      previously awarded to us, and asked us to delay the completion of other
      purchase orders.  These cancellations and delays were related to
      Sprint’s sale of its 4G, WiMax networks business to Clearwire
      Communications (“Clearwire”), and were unrelated to our performance on
      these projects. This significantly impacted our financial results
      throughout fiscal 2009 as Sprint Nextel was previously our largest
      customer.  We continue to actively replace this work, and have
      received a significant number of purchase orders related to the
      continuation of this 4G network, primarily in the site acquisition and
      zoning segment of our business as this needs to be completed prior to the
      beginning of construction work.  As of December 31, 2009, our
      backlog was approximately $28.1 million as compared to $15.2 million
      as of June 30, 2008 and $24.8 million as of June 30, 2009.  We
      believe substantially all of our backlog at December 31, 2009 will be
      filled before the end of our fiscal year ending December 31,
      2010.  We continue to win more work, including construction, to
      support the 4G network
build-out.


23





·
            The
      period ended June 30, 2009 was a period of transition for
      us.  In the year ended June 30, 2008, almost 80% of our business
      was from one customer.  We made a significant effort to
      diversify our customer base to remove the risks associated with reliance
      on one customer.  We hired a national business development team
      to lead this effort, with a new Vice President–level executive to lead
      this team.  We also diversified into new lines of business,
      including our cable services and green energy groups.  Perhaps
      most importantly, we began to emphasize seeking business from companies
      outside of the wireless industry, including wire-line, cable, and fiber
      companies, and enterprise and government clients.  With the
      convergence of communications networks and technologies, we saw the need
      to service more than the wireless carriers that have historically been our
      top customers.  This effort took time and
      resources.  We also believe that establishing these initiatives
      had a negative impact on our financial results in the year ended June 30,
      2009 as we hired and trained new people with the appropriate skills sets
      to support these projects, and began long sales cycles with these new
      customers.





·
            The
      six months ended June 30, 2009 was also a period of transition for some of
      our customers and their projects, and this had a negative impact on our
      revenue for that time period.  Several of our customers were
      just beginning large-scale build-outs for new networks, including
      Clearwire and the development of its 4G network, and other customers, such
      as Verizon, are beginning work on new LTE networks.  While we
      are involved with these initiatives, and we have devoted significant time
      and resources to position ourselves to support these projects,
      they  only began in earnest in the latter half of calendar
      2009.  In addition, some of our other customers completed
      projects during the six months ended June 30, 2009 in some markets, and
      while we continue to work for these customers, we saw a decline in
      business from them immediately after the completion of these market
      launches.





·
            The
      general downturn in national and global economic conditions during the
      year ended June 30, 2009 also impacted us and we believe many of our
      customers, subcontractors, vendors and suppliers as well. Many of our
      customers delayed decision-making on capital spending budgets during this
      period, particularly during the beginning of calendar 2009, because of the
      uncertainty associated with general economic conditions. This in turn led
      to delays in initiating network development projects that were awarded to
      us. This required us to maintain staffing levels to support these
      projects, but in some cases being unable to fully utilize this staff until
      receiving authorization from our customers. In addition, we have seen and
      continue to see pricing pressure in some of our service lines, and we
      believe this is attributable in part to a shift in our customer base and
      to a lesser extent general economic
conditions.





We
recognize revenue using the percentage-of-completion method of
accounting.




Cost
of Revenue


Years Ended June 30,2009
                        
                        2008
                        
                        (Decrease)Infrastructure
      construction and technical services
                        $
                        33,960
                        
                        $
                        64,643
                        
                        $
                        (30,683
                        )Site
      acquisition and zoning
                        
                        4,826
                        
                        
                        18,809
                        
                        
                        (13,983
                        )Total
                        $
                        38,786
                        
                        $
                        83,452
                        
                        $
                        (44,666
                        )




24





Our cost
of revenue was $38.8 million and $83.5 million for the years ended June 30, 2009
and 2008, respectively. This represents a decrease of $44.7 million, or 54%,
during a period when sales decreased 58%. These amounts represent 71% and 65% of
total revenues for the years ended June 30, 2009 and 2008,
respectively.





Cost of
revenue for infrastructure construction and technical services decreased $30.7
million for the year ended June 30, 2009 as compared with the year ended June
30, 2008. This represents a decrease of approximately 47% during a period when
sales for this segment decreased 54%.





Cost of
revenue for site acquisition and zoning services decreased $14.0 million for the
year ended June 30, 2009 from the similar period ended June 30, 2008. This
represents a decrease of approximately 74% during a period when sales for this
segment decreased 68%.





Gross
Profit


Years Ended June 30,2009
                        
                        2008
                        
                        (Decrease)Infrastructure
      construction and technical services
                        $
                        10,937
                        
                        $
                        33,920
                        
                        $
                        (22,983
                        )Site
      acquisition and zoning
                        
                        4,768
                        
                        
                        11,000
                        
                        
                        (6,232
                        )$
                        15,705
                        
                        $
                        44,920
                        
                        $
                        (29,215
                        )





Our gross
profit for the years ended June 30, 2009 and 2008 was $15.7 million and $44.9
million, or 29% and 35% of revenues, respectively. This decrease in gross margin
was in part caused by an increase in infrastructure construction and technical
services revenue from 77% of total revenue to 82%. Margins from infrastructure
construction and technical services are typically lower than those associated
with site acquisition and zoning.





In light
of the current telecommunications market and economic conditions in general, we
have decided to bid our services more aggressively than we have in the past.
Competition has increased and many of our customers are exploring ways to reduce
costs, which could impact pricing for some services. In addition, we have been
awarded a significant amount of work from OEMs and other project management
companies that do work for the carriers, which is at a lower profit margin than
the work we do directly for our carrier customers. This has led to a decrease in
our gross profit margins.




Selling,
General and Administrative Expenses





Years Ended June 30,2009
                        
                        2008
                        
                        (Decrease)Infrastructure
      construction and technical services
                        $
                        17,409
                        
                        $
                        20,885
                        
                        $
                        (3,476
                        )Site
      acquisition and zoning
                        
                        3,064
                        
                        
                        4,818
                        
                        
                        (1,754
                        )$
                        20,473
                        
                        $
                        25,703
                        
                        $
                        (5,230
                        )





Selling,
general and administrative expenses for the year ended June 30, 2009 was $20.5
million as compared to $25.7 million for the year ended June 30, 2008. This
represents a decrease of approximately $5.2 million, or 20% during a period when
revenues decreased 58%.  $2.2 million represents a decrease in payroll
expenses. Additionally, as we aggressively managed our cost, we recognized
decreased spending of approximately $0.7 million in insurance premiums, $0.6
million in accounting and legal fees, and $0.5 million in occupancy expenses.
The year ended June 30, 2008 included a charge of $0.2 million to increase our
estimated reserve for an assessment by a state department of revenue. Selling,
general and administrative expenses did not decrease at the same rate as revenue
in part because the Company maintained its nation-wide platform required to
support anticipated growth and increased revenue.





Depreciation
and Amortization





Depreciation
expense for the year ended June 30, 2009 was $0.9 million as compared to $0.8
million for the year ended June 30, 2008. This represents an increase of $0.1
million.


25





Amortization
expense for the year ended June 30, 2009 was $0.4 million as compared to $0.4
million for the year ended June 30, 2008.





Interest
Income and Expense





Interest
income for the year ended June 30, 2009 was $59 thousand, a decrease of $12
thousand from $71 thousand for the year ended June 30, 2008. This decrease was
caused by the decrease in cash and cash equivalents during the year ended June
30, 2009.





Interest
expense for the year ended June 30, 2009 was $0.2 million. This represents a
decrease of $1.2 million from $1.4 million for the year ended June 30, 2008.
This decrease was primarily caused by the conversion in June 2008 of our 7%
Subordinated Convertible Note with Sigma Opportunity Fund LLCand the other
participating noteholders and the reduced usage of our lines of credit with
Presidential Financial Corp. and PNC Bank, National Association
(“PNC”).




Amortization
of deferred financing fees and accretion of debt discount was $60 thousand for
the year ended June 30, 2009 as compared to $2.0 million for the year ended June
30, 2008. This decrease was caused by the issuance of warrants related to our
financing transactions with Sigma and the other participating noteholders during
the fiscal year ended June 30, 2008.





Other
Income





Other
income increased to $0.4 million during the year ended June 30, 2009 as compared
to $0.2 million for the year ended June 30, 2008. These amounts primarily relate
to subrental income recognized on office and warehouse space formerly occupied
by the Company and royalty income from mineral rights recognized from land owned
by the Company, as well as the settlement of a litigation claim which resulted
in an increase of approximately $0.3 million to our income before income taxes
for the year ended June 30, 2009.





Income
Tax Expense (Benefit)




Income
tax benefit was $2.5 million for the year ended June 30, 2009 as compared to a
tax expense of $6.4 million for the year ended June 30, 2008. The effective tax
rate for the years ended June 30, 2009 and 2008 was 42% and 43%,
respectively.




At June
30, 2009, we had total income taxes receivable of approximately $2.7 million,
consisting of $2.2 million federal and $0.5 million state income taxes
receivable which we expect to receive during the third quarter of fiscal
2010.




LIQUIDITY
AND CAPITAL RESOURCES





At
December 31, 2009, Berliner had consolidated current assets of approximately
$32.0 million, including cash and cash equivalents of approximately $1.5 million
and net working capital of approximately $12.5 million. Historically, we have
funded our operations primarily through operating cash flow, the proceeds of
private placements of our common and preferred stock and borrowings under loan
arrangements. The principal uses of cash during the six months ended December
31, 2009 have been working capital, and purchases of property and
equipment.





On April
17, 2008, BCI entered into a revolving line of credit with PNC as lead lender,
which provided for revolving loan advances from time to time in an amount up to
the lesser of (i) 85% of the value of certain of our receivables approved by the
lenders as collateral; or (ii) $15.0 million.  The balance outstanding
at December 31, 2009 was $5.5 million and the amount additionally available on
the line of credit was $6.9 million. Upon consummation of the Merger on January
27, 2010, the PNC credit facility was paid off in its entirety, and this line
has been terminated.




26







UniTek
Debt




As a
result of the Merger, UniTek became a wholly-owned subsidiary of
Berliner.  Therefore, a discussion of UniTek’s debt agreements is
relevant to an understanding of our liquidity and capital
resources.




First
Lien Credit Agreement and Second Lien Credit Agreement




General




On
September 27, 2007, Unitek Acquisition, now an indirect wholly owned subsidiary
of Berliner, entered into (1) the First Lien Credit Agreement, by and among
Unitek Acquisition, Unitek Midco, certain subsidiaries of Unitek Acquisition as
guarantors, the initial lenders, Royal Bank of Canada, as administrative agent
and collateral agent for the lenders and RBC Capital Markets, as lead arranger
and book-runner and (2) the Second Lien Credit Agreement, by and among Unitek
Acquisition, Unitek Midco, certain subsidiaries of Unitek Acquisition as
guarantors, the initial lenders, Royal Bank of Canada, as administrative agent
and collateral agent for the lenders and RBC Capital Markets, as lead arranger
and book-runner.





Availability
and Term




The
credit facilities under the First Lien Credit Agreement (the “First Lien Credit
Facilities”) are (1) a $78 million Term B loan facility (the “Term B
Facility”), (2) a $19.5 million Term C loan facility (the “Term C
Facility”) and (3) a $20 million revolving credit facility (the
“Revolving Facility”), with a portion of such Revolving Facility available as a
swingline facility and a portion available as a letter of credit
facility.  The Term B Facility and the Revolving Facility, including
the swingline loan facility and the letter of credit facility, mature on
September 27, 2012.  The Term C Facility matures on the earlier of
(1) three months after the maturity date of the Term B Facility and
(2) December 31, 2013.  As of January 27, 2010, the Term B
Facility and the Term C Facility are fully drawn at $93 million, and
approximately $13 million of principal is outstanding under the Revolving
Facility.





The
credit facility under the Second Lien Term Loan Agreement (the “Second Lien
Credit Facility”) is a $25 million second lien term loan
facility.  As of January 27, 2010, the Second Lien Credit Facility is
fully drawn.  The Second Lien Credit Facility matures on the earlier
of (1) three months after the maturity date of the Term B Facility and
(2) December 31, 2013.





Interest
Rate and Fees




The Term
B Facility currently bears interest at a rate per annum equal to 5.5% for base
rate advances and 6.5% of Eurodollar advanced (subject to 2.50% floor) provided
that the applicable margin shall be increased for each period in which the First
Lien Leverage Ratio is greater than 3.00:1.00 to 6.25% per annum for base rate
advances and 7.25% per annum for Eurodollar rate advances (subject to 2.5%
floor).  The Term C Facility currently bears interest at a rate of
16.50% on $8 million of the debt and $13.08% on the remaining $11.5 million of
the debt.  The Second Lien Credit Facility currently bears interest at
a rate per annum equal to the greater of (1) 15.75% and (2) the
Eurodollar rate plus a margin of 7.25%.  The Revolving Facility
interest rate margin is 5.0% for base rate advances and 6% of Eurodollar
advances (subject to 2.50% floor) provided that the applicable margin for the
Revolving Facility shall be increased for periods in which the First Lien
Leverage Ratio (as defined in the Revolving Facility) is greater than 3.00:1.00
to 5.75% per annum for base rate advances and 6.75% per annum for Eurodollar
rate advances (subject to 2.50% floor).





Guaranties
and Security





The
obligations under the First Lien Credit Agreement are guaranteed by Unitek Midco
and certain subsidiaries of Unitek Midco (collectively, the “Guarantors”) and
are secured by a first priority lien on substantially all of the assets and
property of the Company and the Guarantors, including a pledge of all equity
interests in Unitek Acquisition and the Guarantors, other than Unitek
Midco.


27




The
obligations under the Second Lien Credit Agreement are guaranteed by the
Guarantors and are secured by a second priority lien on substantially all of the
assets and property of the Company and the Guarantors, including a pledge of all
equity interests in Unitek Acquisition and the Guarantors, other than Unitek
Midco.





The First
Lien Credit Agreement and the Second Lien Credit Agreement contain
representations and warranties and affirmative and negative covenants that are
customary for debt facilities of this type.  In addition, the First
Lien Credit Agreement contains certain financial covenants, including, among
other things, a maximum total leverage ratio, a maximum first lien leverage
ratio, a minimum fixed charge coverage ratio, a minimum interest coverage ratio
and minimum liquidity requirements.  The Second Lien Credit
Agreement also contains total leverage ratio, maximum fixed charge coverage
ratio and minimum interest coverage ratio covenants, although in some cases the
covenants contained in the First Lien Credit Agreement are more
restrictive.





The First
Lien Credit Agreement and the Second Lien Credit Agreement also include events
of default that are customary for debt facilities of this type, subject to
significant threshold amounts and cure periods.  These events of
default include, among other things, payment defaults, breaches of
representations and warranties, covenant defaults, cross-defaults to certain
indebtedness, and bankruptcy.





Loan
Authorization Agreement




General





Unitek
Holdings, Inc., a Delaware corporation, (the “Borrower”) entered into a Loan
Authorization Agreement dated as of September 25, 2007 (as amended, restated,
modified or otherwise supplemented, the “Loan Authorization Agreement”) among
the Borrower and BMO Capital Markets Financing, Inc (the “Lender”).





Availability
and Term





The Loan
Authorization Agreement established a $35 million revolving credit facility (the
“Revolving Facility”) and is evidenced by a demand note.  The
Revolving Facility is payable and matures on demand of the Lender.  As
of January 27, 2010, approximately $25 million of principal plus approximately
$3.8 million in interest (calculated at a per annum rate of 7.25%) is
outstanding under the Revolving Facility.  The Lender has the right to
terminate the Revolving Facility at any time upon demand.





Guaranties





The
obligations under the Loan Authorization Agreement are guaranteed severally, but
not jointly, by Sector Performance Fund, LP and SPF SBS LP, who are affiliates
of HM Capital Partners LLC.





Letter
of Credit Transaction




On March
31, 2010, we entered into a Senior Secured Letter of Credit Facility arrangement
(the “LOC Facility”), via an amendment to the First Lien Credit Agreement (the
“Amendment”), by and among Unitek Acquisition, Unitek Midco, certain
subsidiaries of Unitek Acquisition as guarantors, the initial lenders under the
LOC Facility, and Royal Bank of Canada, as administrative agent and collateral
agent for the lenders.  The Amendment establishes an incremental
$12,000,000 revolving tranche (the “Incremental Tranche”) added to the credit
facilities established by the First Lien Credit Agreement.  The full
amount of Incremental Tranche is solely available to Unitek Acquisition for the
issuance of letters of credit in support of UniTek Acquisition’s obligations
under certain insurance policies and other general corporate purposes. The
LOC Facility charges a 1.3333% per month cash fee payable on issued but unfunded
letters of credit and a 1.0% per annum cash fee on the daily average unfunded
amount of the LOC Facility.  Funded letters of credit will carry an
interest rate of LIBOR plus 6.75% per annum with a 2.5% LIBOR
floor.




28




Our
ability to satisfy our current obligations is dependent upon our cash on hand,
borrowings under our credit facilities, and the operations of our subsidiaries.
Our current obligations consist primarily of capital expenditures, debt service
and funding working capital. In the event we are not able to generate positive
cash flow in the future, or if we incur unanticipated expenses for operations
and are unable to acquire additional capital or financing, we will likely have
to reassess our strategic direction, make significant changes to our business
operations and substantially reduce our expenses until such time as we achieve
positive cash flow. The cancellation and/or deferral of a number of projects
from our largest customers may have a material impact on our ability to generate
sufficient cash flow in future periods.





The net
cash flows for Berliner for the six months ended December 31, 2009 and 2008 and
for the years ended June 30, 2009 and 2008 are as follows:




For the six months endedDecember 31,2009
                      
                      
                      2008Net
      cash (used in) provided by operating activities
                      
                      $
                      (1,779
                      )
                      
                      $
                      425Net
      cash used in investing activities
                      
                      
                      (101
                      )
                      
                      
                      (471
                      )Net
      cash (used in) provided by financing activities
                      
                      
                      2,008
                      
                      
                      
                      (905
                      )





For the Years EndedJune 30,2009
                      
                      
                      2008Net
      cash (used in) provided by operating activities
                      
                      $
                      (2,527
                      )
                      
                      $
                      7,944Net
      cash used in investing activities
                      
                      
                      (599
                      )
                      
                      
                      (947
                      )Net
      cash (used in) provided by financing activities
                      
                      
                      1,343
                      
                      
                      
                      (6,307
                      )





Cash
Provided by / Used in Operating Activities





Net cash
used in operating activities for the six months ended December 31, 2009 totaled
approximately $1.8 million. Net cash provided by operating activities for the
six months ended December 31, 2008 was approximately $0.4 million. During the
six months ended December 31, 2009, cash used in operating activities primarily
resulted from an operating loss of $0.9 million, net of non-cash charges, and an
increase in Accounts Receivable of $6.7 million. Cash provided by operating
activities primarily resulted from an increase in Accounts Payable and Accrued
Expenses of $5.0 million.





Net cash
provided by operating activities in the six months ended December 31, 2008 was
approximately $0.4 million. Net cash used in operating activities primarily
resulted from operating loss, net of non-cash charges, of approximately $0.6
million. We also realized a decrease in accounts receivable of approximately
$10.5 million due to increased collections and decreased revenue during the six
months ended December 31, 2008. These were partly offset by decreases in
accounts payable of approximately $1.5 million and accrued liabilities of
approximately $6.4 million.





Net cash
used in operating activities for the year ended June 30, 2009 totaled
approximately $2.5 million. Net cash provided by operating activities for the
year ended June 30, 2008 was approximately $7.9 million.





During
the year ended June 30, 2009, cash used in operating activities primarily
resulted from an operating loss of $1.0 million, net of non-cash charges. Cash
provided by operating activities primarily resulted from a decrease in accounts
receivable of $10.9 million and a decrease in other assets of $0.5 million which
were partly offset by decreases in accrued liabilities of $8.4 million and
accrued income taxes of $1.8 million.





During
the year ended June 30, 2008, cash provided by operating activities primarily
resulted from operating income of $12.6 million, net of non-cash charges. Cash
used in operating activities primarily resulted from an increase in accounts
receivable of $8.3 million due to increased revenue during the period and
decreases in accounts payable of $2.6 million. These amounts were partly offset
by increases in accrued liabilities of $4.8 million and accrued income taxes of
$1.5 million.




29


Cash
Used in Investing Activities





Cash used
in investing activities for the six months ended December 31, 2009 and 2008
totaled approximately $0.1 million and $0.5 million, respectively. During the
six months ended December 31, 2009 and 2008, cash used in investing activities
primarily resulted from purchases of property and equipment of $0.1 million and
$0.3 million, respectively.





Cash used
in investing activities for the years ended June 30, 2009 and 2008 totaled
approximately $0.6 million and $0.9 million, respectively. During the year ended
June 30, 2009, cash used in investing activities primarily resulted from
purchases of property and equipment of $0.4 million.





During
the year ended June 30, 2008, cash used in investing activities primarily
resulted from purchases of property and equipment of $1.0 million.





Cash
Provided by / Used In Financing Activities





Cash
provided by financing activities for the six months ended December 31, 2009 was
approximately $2.0 million, as compared to cash used in financing activities of
$0.9 million during the six months ended December 31, 2008.





During
the six months ended December 31, 2009, cash provided by financing activities
resulted primarily from net borrowings under our line of credit of $2.6 million
which was partly offset by repayment of our long-term debt and capital leases of
$0.5 million.





During
the six months ended December 31, 2008, net cash used in financing activities
consisted primarily of repayment of long-term debt related to the Digitcom
acquisition and other short-term financing of $0.8 million and repayment of our
line of credit of $0.2 million.





Cash
provided by financing activities for the year ended June 30, 2009 totaled
approximately $1.3 million as compared to cash used in financing activities for
the year ended June 30, 2008 of approximately $6.3 million.





During
the year ended June 30, 2009, cash provided by financing activities resulted
primarily from net borrowings under our credit line of $2.8 million which was
partly offset by the repayment of other debt of $1.3 million.





During
the year ended June 30, 2008, cash used in financing activities primarily
resulted from a net pay down under our credit line of $5.3 million and repayment
of other debt of $1.0 million.





We
believe our existing cash, cash equivalents and line of credit will be
sufficient to meet our cash requirements in the near term. Our future capital
requirements will depend on many factors, including our rate of revenue growth,
the timing and extent of capital expenditures to support our contracts and
expansion of sales and marketing. We cannot assure that additional equity or
debt financing will be available on acceptable terms, or at all. We expect our
sources of liquidity beyond twelve months will be our then current cash
balances, funds from operations, if any, our current credit facilities and any
additional equity or credit facilities we can arrange.





Critical
Accounting Policies





Revenue
Recognition





Site
acquisition and zoning services revenue is based upon output measures using
contract milestones as the basis. Revenue from infrastructure equipment
construction and installation contracts, which are generally completed within 90
days, is recorded under the percentage-of-completion method based on the
percentage that total direct costs incurred to date bear to estimated total
costs at completion. Losses are recognized when such losses become known. All
other revenue is recognized as work is performed.




30




Unbilled
receivables represent revenue on uncompleted contracts that are not yet billed
or billable, pursuant to contract terms. Deferred revenues principally represent
the value of services to customers that have been billed as of the balance sheet
date but for which the requisite services have not yet been
rendered.





Risks
and Uncertainties





Financial
instruments that potentially subject us to concentrations of credit risk consist
primarily of accounts receivable. We routinely assess the financial strength of
our customers and do not require collateral or other security to support
customer receivables. Credit losses are provided for in our consolidated
financial statements in the form of an allowance for doubtful accounts. Our
allowance for doubtful accounts is based upon the expected collectability of all
our accounts receivable. We determine our allowance by considering a number of
factors, including the length of time it is past due, our previous loss history
and the customer’s current ability to pay its obligations. Accounts receivable
are written off when they are considered to be uncollectible and any payments
subsequently received on such receivables are credited to the allowance for
doubtful accounts.





Effects
of Inflation





We do not
believe that the businesses of our subsidiaries are impacted by inflation to a
significantly different extent than the general economy. However, there can be
no assurance that inflation will not have a material effect on operations in the
future.





Recently
Issued Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (the “FASB”) issued
Topic 820 “Fair Value Measurements and Disclosures” (“Topic 820”), which is
intended to increase consistency and comparability in fair value measurements by
defining fair value, establishing a framework for measuring fair value and
expanding disclosures about fair value measurements. The provisions of Topic
820, which are effective for financial statements issued for the fiscal years
beginning after November 15, 2008, and interim periods within those fiscal years
except as it relates to financial assets and liabilities, which we adopted
effective July 1, 2008. The adoption on July 1, 2009 of the remaining provisions
of Topic 820 did not have a material effect to the financial statements taken as
a whole.




In May
2008, the FASB issued Topic 470.20 “Debt with Conversion and Other Options”
(“Topic 470.20”), which applies to convertible debt that includes a cash
conversion feature. Under Topic 470.20, the liability and equity components of
convertible debt instruments within the scope of this pronouncement shall be
separately accounted for in a manner that will reflect the entity’s
nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. Topic 470.20 is effective for fiscal years beginning after
December 15, 2008. The Company adopted Topic 470.20 effective July 1, 2009 with
no material impact on the Company’s consolidated financial position and results
of operations.




In June
2008, the FASB ratified Topic 815.40 “Derivatives and Hedging, Contracts in an
Entity’s Own Equity” (“Topic 815.40”). Topic 815.40 provides that an entity
should use a two step approach to evaluate whether an equity-linked financial
instrument (or embedded feature) is indexed to its own stock, including
evaluating the instrument’s contingent exercise and settlement provisions. It
also clarifies the impact of foreign currency denominated strike prices and
market-based employee stock option valuation instruments on the evaluation.
Topic 815.40 is effective for fiscal years beginning after December 15, 2008.
The Company adopted Topic 815.40 effective July 1, 2009 with no material impact
on the Company’s consolidated financial position and results of operations. The
Company recognized a liability at July 1, 2009 of $67 thousand with a
corresponding offset to additional paid-in capital and cumulative adjustment to
accumulated deficit, which represented the fair value of certain warrants to
purchase the Company’s Common Stock on that date. The Company recognized other
expense during the six months ended December 31, 2009 of $1 thousand
representing the change in fair value of these warrants during the
period.




31




In May
2009, the FASB issued Topic 855 “Subsequent Events” (“Topic 855”) to be
effective for the interim or annual periods ending after June 15, 2009. The
objective of this Topic is to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. In particular,
this Topic sets forth a) the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements; b)
the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements; and c) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. The effect of the adoption of Topic 855
was not material on the Company’s consolidated financial position and results of
operations. The Company evaluated subsequent events through the date the
financial statements were issued.




ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




Not
applicable.





ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA




Please
refer to pages F-1 through F-26.





ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE




None.





ITEM
      9A(T).
              CONTROLS
      AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures




We
maintain disclosure controls and procedures that are designed to ensure that the
information we are required to disclose in our reports filed or submitted under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s (the “SEC”) rules and forms. Our
disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information is accumulated and communicated
to management, including our chief executive officer and our chief financial
officer, to allow timely decisions regarding required disclosure.





In
designing and evaluating our disclosure controls and procedures, management
recognized that disclosure controls and procedures, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the disclosure controls and procedures are met. Additionally, in
designing disclosure controls and procedures, our management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible disclosure controls and procedures. Our chief
executive officer and our chief financial officer evaluated the effectiveness of
the design and operation of the Company’s disclosure controls as of the end of
the period covered by this Transition Report on Form 10-K for the six months
ended December 31, 2009. As a result of that evaluation, they have concluded
that our system of disclosure controls and procedures was effective at a
reasonable level of assurance, and that all of the information required to be
disclosed in this Transition Report on Form 10-K has been recorded, processed,
summarized and reported in a timely manner.




32




Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Exchange Act Rule 13a-15(f). Our
system of internal control over financial reporting is designed to provide
reasonable assurance to our management and board of directors regarding the
preparation and fair presentation of published financial statements and the
reliability of financial reporting. Because of their inherent limitations,
internal controls over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation.




Our
management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2009. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control - Integrated Framework. Based on that
assessment, we believe that as of December 31, 2009, our internal control over
financial reporting is effective.





This
transition report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary SEC rules that permit us to provide only
management’s report in this transition report on Form 10-K.





Beginning
with our Annual Report on Form 10-K for the year ending December 31, 2010,
management’s report on internal control over financial reporting must contain a
statement that our independent registered public accountants have issued an
attestation report on management’s assessment of such internal controls and
conclusion on the operating effectiveness of those controls, unless the SEC
extends the compliance date for such auditor attestation.





Changes
in Internal Control Over Financial Reporting





There was
no change in our internal control over financial reporting that occurred during
our last fiscal quarter that materially affected, or is likely to materially
affect, our internal control over financial reporting.





ITEM
      9B.
            OTHER
      INFORMATION




1.
            Annual Meeting
      Results





We held
our Annual Meeting of Stockholders on December 14, 2009. At this meeting, the
stockholders voted in favor of the following items which were listed in the
Proxy Statement dated October 26, 2009:





(1)
            Election
      of Directors*:





Nominee
              
              For
              
              AgainstPeter
      Mixter
              
              23,261,652
              
              13,498Mehran
      Nazari
              
              23,261,652
              
              13,498





(2)
            Ratification
      of the Berliner Communications, Inc. 2009 Omnibus Equity and Incentive
      Compensation Plan:





For
              
              Against
              
              Abstain21,624,736
              
              1,915
              
              356





(3)
            Ratification
      of the selection of BDO Seidman, LLP as our independent auditors for the
      fiscal year ended June 30, 2010:





For
              
              Against
              
              Abstain23,289,962
              
              4,832
              
              356





*Messrs.
Mixter and Nazari resigned from our Board upon the consummation of the Merger on
January 27, 2010.  For a complete description of our current Board of
Directors, please see Part III of this Report.




33




2.
            Letter
      of Credit Transaction




On March
31, 2010, we entered into a Senior Secured Letter of Credit Facility arrangement
(the “LOC Facility”), via an amendment to the First Lien Credit Agreement (the
“Amendment”), by and among Unitek Acquisition, Unitek Midco, certain
subsidiaries of Unitek Acquisition as guarantors, the initial lenders under the
LOC Facility, and Royal Bank of Canada, as administrative agent and collateral
agent for the lenders.  The Amendment establishes an incremental
$12,000,000 revolving tranche (the “Incremental Tranche”) added to the credit
facilities established by the First Lien Credit Agreement.  The full
amount of Incremental Tranche is solely available to Unitek Acquisition for the
issuance of letters of credit in support of UniTek Aquisition’s obligations
under certain insurance policies and other general corporate
purposes.  The LOC Facility charges a 1.3333% per month cash fee
payable on issued but unfunded letters of credit and a 1.0% per annum cash fee
on the daily average unfunded amount of the LOC Facility.  Funded
letters of credit will carry an interest rate of LIBOR plus 6.75% per annum with
a 2.5% LIBOR floor.




34




PART
III




ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE
    REGISTRANT





INFORMATION
REGARDING DIRECTORS AND EXECUTIVE OFFICERS




The
following biographical descriptions set forth certain information with respect
to the directors whose terms expire at the 2010, 2011 and 2012 Annual Meetings,
and the executive officers of the Company.  The below sets forth
information regarding the current directors and officers of the Company as of
March 31, 2010, and then information regarding the directors and officers of the
Company as of December 31, 2009.





CURRENT
DIRECTORS




CLASS
II DIRECTORS – TERM EXPIRES IN 2010




Peter Giacalone, 50, has been
our Chairman of the Board and President since January 2010.  From July
2008 to January 2010, he served as the President of UniTek USA.  From
March 2005 to June 2008, he was the President and Chief Executive Officer of 180
Connect, Inc., a publicly-traded outsourced infrastructure services provider
that was acquired by UniTek and DIRECTV in 2008. Mr. Giacalone brings
significant experience in finance, business development, acquisitions and
integration to UniTek. He served as Executive Vice President, Customer
Satisfaction for DIRECTV, Inc. For an eight year period prior to that, he served
as Vice President, Finance for The News Corporation Limited, an international
media and entertainment company. Mr. Giacalone has his MBA and BA from Adelphi
University.




Peter Brodsky, 39, has been a
member of our Board since January 2010. Since 1995, Mr. Brodsky has been with HM
Capital Partners, LLC, a private equity firm, where he serves as a Managing
Partner.  Mr. Brodsky’s primary responsibility is deal sourcing, execution
and monitoring of the HM Capital Partners’ media investments.  Mr. Brodsky
also serves as a director of LIN Television (NYSE: TVL), Choice Cable TV,
Canpages, and PDC Pages.  Prior to joining HM Capital Partners, Mr. Brodsky
worked in the Investment Banking Division of Credit Suisse First Boston. 
Mr. Brodsky received his BA from Yale University.




Daniel J. Hopkin, 32,
hasbeen a member
of our Board since January 2010.  Since 2004, Mr. Hopkin has been with
HM Capital Partners LLC, a private equity firm, where he serves as Vice
President.  He focuses primarily on the media and food sectors.  He
serves, or has served, as director of several of HM Capital’s portfolio
companies including Choice Cable TV.  Previous to joining HM Capital, Mr.
Hopkin worked in the Investment Banking Division of Morgan Stanley.  He
received his Bachelors and Masters degrees from Brigham Young University in
2002.




CLASS
III DIRECTORS – TERM TO EXPIRE IN 2011





C. Scott Hisey, 44, has been
our Chief Executive Officer and a member of our Board since January
2010.  Prior to that time, Mr. Hisey was the founder and Chief
Executive Officer of UniTek USA.  Since UniTek’s inception in 2004, Mr.
Hisey has led the company through two private equity transactions, multiple
acquisitions, and has expanded the company to include a workforce of over 5,000
people across four diverse industries.  Prior to founding UniTek, Mr. Hisey
spent over 15 years in positions of increasing responsibility in both the cable
television and satellite communications industries.  Starting as a field
technician, he progressively worked his way into senior management positions
with larger companies.  His roles included Chief Operating Officer in a
private equity turnaround and President of a multi-service construction
company.  Mr. Hisey began his career in the United States Navy. He
served as a Second Class Radioman aboard the USS Forrestal, and is an honorably
discharged, disabled veteran.  Mr. Hisey also serves on the Board of
the Satellite Broadcasting Communications Association.




35




Richard Siber, 48, has been a
director since January 2010.  Mr. Siber has spent the last 25 years
exclusively in the wireless industry.  Currently, Mr. Siber is the Founder,
President and CEO of SiberConsulting LLC.  SiberConsulting provides
strategic, technical and marketing services to members within the wireless
ecosystem.  From January 1994 to June 2004, Mr. Siber was a partner in the
Communications, Electronics, High Tech and Media and Entertainment practice at
Accenture.  While there, he founded the global wireless consulting practice
and helped grow it to thousands of employees and hundreds of millions in
revenue.  While at Accenture, Mr. Siber was also deeply involved in a
number of Government and Homeland Security initiatives utilizing a variety of
wireless technologies.  Mr. Siber has a Bachelor of Arts from Boston
University , a Masters of Business Administration from the Carroll School of
Management from Boston College. He also holds a certificate of special studies
from Harvard University Extension School.  Mr. Siber serves or has served
on the Boards of Directors for Digit Wireless,  InCode (sold to Verisign),
Integrated Mobile, JumpTap, and SingleTouch Interactive (BB: SITO) as well as a
number of Technology Advisory Boards and is involved with several charitable
organizations.




Joe Colonnetta, 48, has been
a director since January 2010.  Since 1998, Mr. Colonnetta has been
with HM Capital Partners, LLC, where he serves as a Managing Director.  Mr.
Colonnetta’s primarily responsibility is deal sourcing, execution and monitoring
of the HM Capital Partners’ energy investments.  Mr. Colonnetta serves
as a director of BlackBrush Oil & Gas, TexStar Midstream Services, UniTek
USA and TriDimension Energy. In November 2008, Mr. Colonnetta was appointed by
Texas Governor Rick Perry to serve as a trustee of the Texas Prepaid Higher
Education Tuition Board.  Prior to joining HM Capital Partners, Mr.
Colonnetta was a Partner with Metropoulos and Co.  Before Metropoulos, Mr.
Colonnetta served in various executive officer and oversight roles in companies
owned by Bass Investment Partners and Oppenheimer & Co.  Mr.
Colonnetta received his BS degree from the University of
Houston.




CLASS
I DIRECTORS – TERM TO EXPIRE IN 2012




Rich B. Berliner, 56, has
been a director since he founded our business in 1995, and now serves as our
Chief Marketing Officer and the Chief Executive Officer of our wireless
division, BCI Communications, Inc. From 1995 to January 2010, Mr. Berliner
served as the Chief Executive Officer, President and Chairman of the Board of
Berliner Communications, Inc., and BCI Communications, Inc. since its formation
in 2005.  Prior to 1995, he served as Executive Vice President of
Communications Development Systems and was responsible for managing sales,
marketing and customer activities for construction services to wireless
carriers.  He has also previously held multiple senior executive
positions with AAT Communications, Inc., a communications-oriented property
management firm, and Drive Phone, Inc., a major distributor of wireless
telephones and services.  Mr. Berliner received a Bachelor of Arts
degree from Rutgers University.




Mark S. Dailey, 52, has been
one of our directors since February 2006.  Mr. Daily is a private
investor who from 1999 to 2004 held senior executive management positions
including Executive Vice President, Sales and Marketing of Intralinks, Inc., a
venture-funded secure document distribution company, Chief Operating Officer of
LexiQuest, Inc., a technology-based company exploiting linguistics and natural
language processing in developing software tools to manage, access and retrieve
large Intranet document collections and Chief Operating Officer of Medcast
Networks, a venture capital-backed start-up delivering comprehensive medical
information to physicians. From 1986 to 1999, Mr. Dailey held various senior
level positions with Bloomberg Financial Markets, a global leader in the
delivery of international real-time financial information.  Prior to
joining Bloomberg, Mr. Dailey worked for several investment banking
firms.  Mr. Dailey received a Bachelor of Arts degree from St. John
Fisher College.




Dean MacDonald, 50, has been
one of our directors since January 2010.  Mr. MacDonald currently
serves as the President and Chief Executive Officer of Newport Partners Income
Fund, a Toronto-based Private Equity Fund.  Mr. MacDonald has a long and
successful career as an operating executive and entrepreneur. His operating
experience includes serving as the Chief Operating Officer of Rogers Cable and
as the Chief Executive Officer of Persona Communications, a TSX-listed cable and
internet services company. Mr. MacDonald worked with a syndicate of investment
partners to turn around Persona’s operations and subsequently sold the business
at a significant premium to its purchase price in 2007. Mr. MacDonald has also
served as chairman of the Newfoundland and Labrador Energy Corporation, which
manages the province’s oil and gas assets.  He has management and
investment experience in a number of industries, including advertising,
marketing and communications. In 2007, Mr. MacDonald was selected as CEO of the
Year by Birch Hill Capital Partners.




36




EXECUTIVE
OFFICERS




Ron Lejman, 41, is our Chief
Financial Officer, a role he assumed in January 2010.  From September
2008 to January 2010, Mr. Lejman was the Chief Financial Officer of UniTek
USA.  Prior to joining UniTek, Mr. Lejman was the Chief Financial
Officer and Chief Operating Officer of Freedom Enterprises, Inc., a Mid-Atlantic
commercial construction company.  Prior to that time, Mr. Lejman has served
as Chief Financial Officer for various organizations including The Stanley Works
Europe, Middle East and Africa, Stanley Bostitch and General Fiber
Communications, Inc.  He has also held senior finance leadership positions
at GE Capital and Amoco.  This diverse experience has provided Mr. Lejman
relevant acquisition evaluation/integration experience on a multinational
scale.  Mr. Lejman received his undergraduate degree from the University of
Illinois and Masters of Management degree from Northwestern University’s J.L.
Kellogg Graduate School of Management.




Nicholas Day, 41, is our General Counsel
and Corporate Secretary, a role he assumed in October, 2006.  Prior to
joining us, Mr. Day served as Senior Corporate Counsel for Net2Phone, Inc., a
then Nasdaq-listed provider of voice over Internet protocol, or VoIP, telephony
products and services from August 2002 to March 2006.  From August
2000 to August 2002, Mr. Day served as Associate General Counsel for WorldGate
Communications, Inc., a then Nasdaq-listed provider of personal video telephony
products.  Mr. Day began his career as a business attorney with the
law firm of Saul Ewing, LLP from September 1995 to August 2000.  Mr.
Day received his A.B. degree from Duke University and his J.D. degree, with
honors, from Villanova University School of Law.




Dan Yannantuono, 36, is the
Chief Executive Officer of our DirectSat USA subsidiary, a role he assumed in
October 2008. Before becoming CEO, Mr. Yannantuono held the position of
President of DirectSat. During his tenure, DirectSat has become one of the
largest contract partners for DIRECTV with over 2000 technicians nationwide.
Prior to DirectSat USA, he served as Vice President of Operations for
DirectSat’s parent company, UniTek USA. Before joining us, Mr. Yannantuono
served as Vice President of Finance for a major telecommunications services
provider. As one of the inaugural members of the executive team he was
instrumental in helping the company to become the largest fulfillment contractor
in the cable industry. He led the due diligence and integration of 9
acquisitions totaling over $90 million in annual revenue. Mr. Yannantuono
received an undergraduate degree in business management and finance from Florida
Atlantic University and is currently pursuing an MBA from Villanova
University.




Chris Perkins, 46, is the
Chief Executive Officer of our FTS USA subsidiary, a role he assumed in July
2006.  As the founder and president of FTS (the business UniTek Global
Services acquired in 2006 to facilitate entry into the cable services market),
Mr. Perkins is responsible for the growth, performance and profitability of the
hard line broadband business. Mr. Perkins began his telecommunications career as
an installer. Soon after, he became a manager and then a vice president of
LB&L Cable, Inc.. Mr. Perkins was able to grow FTS from 20 technicians and
$1 million in revenue to over 800 technicians and $50 million in revenue. As the
founder of FTS, Mr. Perkins has managed every aspect of a multi-million dollar
business with numerous customers. In addition, Mr. Perkins was the Director of
Technical Operations for one of the largest cable contracting companies in the
industry, in charge of maintaining and growing a $50 million plus
region.




Michael S. Guerriero, 48, is
the Chief Operating Officer of our BCI Communications, Inc. subsidiary, a role
he assumed in February 2006.  He previously served as the Executive
Vice President of the Technical Services organization within BCI from February
2004 to January 2005.  From July 2001 to December 2003, Mr. Guerriero
held the position of Area Vice President at Sprint responsible for the
PCS/wireless network build-out in the Northeast Region. Prior to that position,
he was the Director of Engineering for the Northeast and was responsible for the
initial design and deployment of the Sprint PCS/wireless network in the NY/NJ/CT
metro area.  His professional career spans over 20 years and includes
a number of technical and leadership positions in the defense and
telecommunication industries.  Mr. Guerriero received a Bachelor of
Science degree in Electrical Engineering from the New Jersey Institute of
Technology and is a licensed Professional Engineer.




37




Raymond A. Cardonne, Jr., 43,
is the Chief Financial Officer and Treasurer of our BCI Communications, Inc.
division, a role he assumed in November 2007.  Prior to joining the
Company, Mr. Cardonne served as the Chief Financial Officer and Treasurer of
Refac Optical Group, a then AMEX-listed retail optical chain with over 500
locations, from August 2000 until February 2007.  From December 1997
until August 2000, he served as a Vice President of Refac responsible for
technology licensing and commercialization.  Prior to joining Refac,
Mr. Cardonne was a Vice President of Corporate Development at Technology
Management & Funding, L.P., a limited partnership formed to create and
develop early stage technology-based companies, from December 1994 through
November 1997.  Mr. Cardonne also worked for NEPA Venture Funds, an
early-stage venture capital firm.  Mr. Cardonne received his Bachelor
of Science degree and Masters of Business Administration from Lehigh
University.




Code
of Ethics for Senior Officers





Our Board
adopted a Code of Ethics for certain identified senior officers and finance
department personnel (the “Ethics Code”).   The Ethics Code sets
forth the Company’s conflict of interest policy and policies for the protection
of the Company’s property, business opportunities and proprietary
information.  The Ethics Code requires prompt disclosure to
stockholders of any waiver of the Ethics Code for senior officers made by the
Board or any committee thereof.  A copy of the Ethics Code may be
obtained, without charge, by writing to: UniTek Global Services, Inc., 1777
Sentry Parkway West, Blue Bell, PA 19422, Attention: Corporate Secretary, and is
also available on our web page at www.unitekgs.com.




Compensation of
Directors





During
the year ended June 30, 2009, we implemented a compensation program for all of
our non-employee directors. Our non-employee directors include all of our
directors except for Rich B. Berliner, who is our Chief Marketing Officer and
Chief Executive Officer of BCI Communications, Inc. Our non-employee directors
received the following compensation during the six months ended December 31,
2009:





Change inPension ValueandFees
                
                
                
                
                
                
                
                
                
                
                
                NonqualifiedEarned or
                
                
                
                
                
                
                
                
                Non-Equity
                
                
                DeferredPaid in
                
                
                Stock
                
                
                Option
                
                
                Incentive Plan
                
                
                Compensation
                
                
                All OtherCash
                
                
                Awards
                
                
                Awards
                
                
                Compensation
                
                
                Earnings
                
                
                Compensation
                
                
                Total($)
                
                
                ($)
                
                
                ($)
                
                
                ($)
                
                
                ($)
                
                
                ($)
                
                
                ($)Mark
      S. Dailey
                
                
                15,000
                
                
                
                17,519
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                32,519Peter
      J. Mixter
                
                
                34,000
                
                
                
                
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                34,000Mehran
      Nazari
                
                
                16,500
                
                
                
                17,519
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                34,019John
      Stevens Robling, Jr.
                
                
                32,500
                
                
                
                
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                32,500Thom
      Waye
                
                
                12,000
                
                
                
                17,519
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                29,519110,000
                
                
                
                52,557
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                162,557





During
the six months ended December 31, 2009, two non-employee directors each received
a $17,500 annual fee for service on the Board during the fiscal
year.  29,166 shares of our Common Stock was issued to each of the
other non-employee directors, Messrs. Waye, Dailey and Nazari, (pursuant to the
Berliner 2009 Omnibus Equity Plan) as their annual stipend. Each non-employee
director received $2,000 per Board meeting attended in person, and $1,000 for
each Board meeting attended via telephone. Members of the Audit Committee and
Compensation Committee received $1,500 for attending committee meetings during
this period. In addition, all non-employee directors are reimbursed for
reasonable travel expenses incurred in connection with attendance at Board and
committee meetings.





Director
Compensation Policy for the Six Months Ended December 31, 2009




On
September 26, 2008, the Board of Directors established a new compensation
program for non-employee directors for the year ending June 30, 2009, which was
also applicable for the six months ended December 31, 2009:




38




·
            Each
      non-employee director will receive an annual stipend of
      $17,500.  For current directors, this will be paid in October of
      each year.  For new directors, this will be paid upon election
      and on each anniversary date of their election to the
    Board;




·
            Each
      non-employee director will continue to receive $2,000 for each Board
      meeting attended in person and $1,000 for each meeting attended by
      telephone;




·
            Each
      non-employee member of the Audit Committee and Compensation Committee will
      receive $1,500 for each meeting attended in person or by
      telephone;




·
            Each
      non-employee director will be eligible for an annual stock option (or
      other equity) award.  In December 2009 each non-employee
      director received either 29,166 shares of Common Stock  pursuant
      to the Berliner 2009 Omnibus Equity Plan or a cash award of $17,500, which
      is the cash equivalent of those shares;
and




·
            Meeting
      fees will be paid for regularly scheduled meetings only.  The
      Company’s director compensation policy is designed to take into account
      the need for occasional special meetings or informational telephone
      calls.  No additional compensation will be paid for such
      occurrences.




Directors
will continue to be reimbursed for reasonable travel expenses associated with
attending Board or committee meetings.




Messrs.
Dailey, MacDonald and Siber are considered by the Company to be “independent” as
that term is defined by Rule 4200(a)(15) of the National Association of
Securities Dealers Manual (“Rule 4200(a)(15)”).  On January 27, 2010,
the Board approved a new compensation program for these independent
directors.  Each will receive an annual stipend of $15,000, $2,500 for
each board meeting attended in person and $1,500.00 for each board meeting
attended by telephone, plus related expenses.  If any of Messrs.
Dailey, MacDonald and Siber are members of the Audit Committee or the
Compensation Committee, they will receive $500 for each meeting attended in
person or by telephone.  The Chairman of the Audit Committee and our
financial expert on the Committee is currently Mr. Siber, who will receive an
additional annual stipend of $7,500 as Chairman.  Messrs. Dailey,
MacDonald and Siber will be eligible for additional equity awards at the
discretion of the Board, subject to attendance at no less than 75% of all Board
and Committee meetings, as applicable, during the fiscal year preceding the
award.




ITEM
      11.
            EXECUTIVE
      COMPENSATION




SUMMARY
COMPENSATION TABLE




The
following table sets forth information regarding the compensation awarded to
those persons (i) who served or acted as the Company’s principal executive
officer through December 31, 2009, (ii) who were the Company’s other two most
highly compensated executive officers through December 31, 2009 and (iii)
persons who would have been one of the most highly compensated executive
officers had they been employed by the Company as of December 31, 2009 (the
“Named Executive Officers”) for the past two fiscal years.  The
Company changed its fiscal year from June 30 to December 31, and therefore, the
following table includes the compensation of these executives for the six month
period ended December 31, 2009.




Name and Principal
                    Position
                
                Year
                
                Salary
                    ($)
                
                
                Bonus
                    ($)
                
                
                Stock
                    Awards
                    ($)
                
                
                Option
                    Awards
                    ($)(1)
                
                
                All Other
                    Compensation
                    ($)(2)
                
                
                Total
                    ($)Rich B. Berliner
                
                6
      Months
                  Ended
                  12/31/09
                
                
                180,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                6,000
                
                
                
                186,000Chairman
      and Chief
                
                2009
                
                
                360,000
                
                
                
                -
                
                
                
                -
                
                
                
                51,551
                
                
                
                18,300
                
                
                
                429,851Executive
      Officer(3)
                
                2008
                
                
                358,364
                
                
                
                860,058
                
                
                
                -
                
                
                
                98,416
                
                
                
                17,500
                
                
                
                1,334,338Michael
      S. Guerriero
                
                6
      Months Ended 12/31/09
                
                
                112,500
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,600
                
                
                
                116,100Chief
      Operating
                
                2009
                
                
                225,000
                
                
                
                -
                
                
                
                -
                
                
                
                220,175
                
                
                
                14,100
                
                
                
                459,275Officer
                
                2008
                
                
                224,517
                
                
                
                407,281
                
                
                
                -
                
                
                
                20,620
                
                
                
                13,446
                
                
                
                665,864Raymond
      A. Cardonne, Jr.
                
                6
      Months Ended 12/31/09
                
                
                112,500
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,600
                
                
                
                116,100Chief
      Financial
                
                2009
                
                
                225,000
                
                
                
                33,750
                
                
                
                -
                
                
                
                26,591
                
                
                
                14,100
                
                
                
                299,441Officer (4)
                
                2008
                
                
                150,000
                
                
                
                45,000
                
                
                
                -
                
                
                
                21,544
                
                
                
                4,800
                
                
                
                221,344




39








STOCK OPTION VALUATION TABLEName
                        
                        Grant
                          Date
                        
                        Shares
                        
                        
                        Value ($)
                        
                        
                        Dividend
                          Yield
                        
                        
                        Risk-Free
                          Interest
                          Rate
                        
                        
                        Volatility
                        
                        
                        Life
                          (Years)Michael
      S. Guerriero
                        
                        12/21/05
                        
                        
                        37,500
                        
                        
                        
                        -
                        
                        
                        
                        0
                        %
                        
                        
                        4.39
                        %
                        
                        
                        75
                        %
                        
                        58/11/06
                        
                        
                        100,000
                        
                        
                        
                        -
                        
                        
                        
                        0
                        %
                        
                        
                        4.89
                        %
                        
                        
                        78
                        %
                        
                        52/15/07
                        
                        
                        37,500
                        
                        
                        
                        -
                        
                        
                        
                        0
                        %
                        
                        
                        4.76
                        %
                        
                        
                        72
                        %
                        
                        53/1/07
                        
                        
                        50,000
                        
                        
                        
                        3,281
                        
                        
                        
                        0
                        %
                        
                        
                        4.51
                        %
                        
                        
                        72
                        %
                        
                        510/1/08
                        
                        
                        420,000
                        
                        
                        
                        63,959
                        
                        
                        
                        0
                        %
                        
                        
                        3.02
                        %
                        
                        
                        64
                        %
                        
                        6.25Raymond
      A. Cardonne, Jr.
                        
                        12/3/07
                        
                        
                        100,000
                        
                        
                        
                        8,864
                        
                        
                        
                        0
                        %
                        
                        
                        3.39
                        %
                        
                        
                        68
                        %
                        
                        5





(2)
            Represents
      car allowance compensation and payments made by the Company as part of the
      Company’s 401(k) Plan matching
program.




(3)
            On
      September 21, 2009, Mr. Berliner returned to BCI stock option grants to
      purchase 250,000 shares of our Common
Stock.




(4)
            Mr.
      Cardonne became Chief Financial Officer on November 2,
      2007.  The amounts shown above for 2008 are amounts earned from
      November 2, 2007 to June 30, 2008.




EMPLOYMENT
AGREEMENTS OF NAMED EXECUTIVE OFFICERS




The
Compensation Committee recommended, and the Board approved, Employment
Agreements for named executive officers in June 2009.  The
compensation and severance provisions of these agreements are outlined
below.




Rich B.
Berliner.  On June 30, 2009, the Company entered into an
Employment Agreement with Mr. Berliner, then our Chief Executive Officer and
President.  The agreement was effective as of July 1, 2009 and has a
two-year term expiring June 30, 2011.  The agreement provides for an
annual salary of $360,000.  The agreement provides for indemnification
of Mr. Berliner by the Company in connection with any action by reason of the
fact that he is or was a director, officer or employee of the
Company.




Mr.
Berliner’s compensation program also includes a cash bonus component based
entirely on the Company’s financial performance during the
year.  After considering several financial metrics, such as revenue,
gross margin, and earnings before interest, taxes, depreciation and amortization
(“EBITDA”), the Compensation Committee recommended, and the Board approved, a
cash bonus for the fiscal year ended June 30, 2010 based upon the Company’s
EBITDA during the year.  The Compensation Committee established the
following targets for Mr. Berliner’s bonus in this regard:




40




·
            If
      EBITDA is less than $3.5  million for fiscal 2010, Mr. Berliner
      will not receive a cash bonus;




·
            If
      EBITDA is $3.5 million through $4.5 million, Mr. Berliner will receive a
      cash bonus equal to 3% of EBITDA;
and




·
            If
      EBITDA is over $4.5 million, Mr. Berliner will receive a cash bonus equal
      to 4% of EBITDA.




In
addition to base salary and cash bonus, as outlined above, Mr. Berliner’s
Employment Agreement also states that he is eligible for stock option or other
equity awards as part of his annual bonus program.  The agreement will
also provide for a continuation of Mr. Berliner’s existing annual car allowance
of $12,000, and for the Company to pay all of Mr. Berliner’s health insurance
costs.




On
January 27, 2010, we amended the June 30, 2009 Employment Agreement with Mr.
Berliner, now the Chief Marketing Officer of Berliner and the Chief Executive
Officer of BCI.  The amendment provides that the performance targets for
Mr. Berliner’s annual bonuses will be based on the revenue, gross margins and
EBITDA of BCI, rather than UNTK as a whole.  The amendment revises the
terms and procedures relating to payments by the Company to Mr. Berliner
following the termination of his employment so that any such payments comply
with the provisions of Section 409A of the Internal Revenue Code (“Section
409A”).  In addition, in order to receive severance payments following
termination of his employment, Mr. Berliner must execute a release of claims
against the Company.





Michael
Guerriero.  On June 30, 2009, the Company entered into an
Employment Agreement with Mr. Guerriero, then our Chief Operating
Officer.  The agreement was effective as of July 1, 2009 and has a
two-year term expiring June 30, 2011.  The agreement provides for a
base annual salary of $225,000.  The agreement provides for
indemnification of Mr. Guerriero by the Company in connection with any action by
reason of the fact that he is or was a director, officer or employee of the
Company.




Mr.
Guerriero’s compensation program, as set forth in his Employment Agreement, also
includes a cash bonus component based primarily on the Company’s overall
financial performance during the year.  After considering several
financial metrics, the Compensation Committee recommended, and the Board
approved, a cash bonus based primarily on the Company’s EBITDA and revenue for
the year, and also including a component based on branch office performance,
customer satisfaction and executive management and development.  The
formula for calculating this bonus for fiscal 2010 is as follows:




·
            so
      long as revenue is more than $55 million for the fiscal year, 0.03% of
      revenue; plus




·
            so
      long as EBITDA is more than $3 million for the fiscal year, 1.5% of
      EBITDA, plus




·
            personal
      performance goals, with equal weight, based
  upon:




o
            branch
      office revenue performance;




o
            branch
      office EBITDA performance;




o
            customer
      satisfaction; and




o
            executive
      management & development




Mr.
Guerriero did not receive a cash bonus for fiscal 2009.  In addition
to base salary and cash bonus, as outlined above, Mr. Guerriero’s Employment
Agreement also states that he is eligible for stock option or other equity
awards as part of his annual bonus program.  The Board did not award
stock options to Mr. Guerriero as part of his fiscal 2009 performance bonus
plan.  Mr. Guerriero did receive an award of 420,000 options to
acquire shares of Common Stock on October 1, 2008 at $1.48 per share, which was
the fair market value of BCI’s Common Stock at that date, as part of his fiscal
2008 performance bonus plan.  Mr. Guerriero’s agreement also provides
for a continuation of Mr. Guerriero’s annual car allowance of $7,200, and for
the Company to pay all of Mr. Guerriero’s health insurance costs.




41




On
January 27, 2010, Berliner amended its employment agreement with Mr. Guerriero,
now the Chief Operating Officer of BCI. The amendment provides that the
performance targets for Mr. Guerriero’s annual bonuses will be based on the
revenue, gross margins and EBITDA of BCI, rather than UNTK as a whole.  The
amendment revises the terms and procedures relating to payments by the Company
to Mr. Guerriero following the termination of his employment so that any such
payments comply with the provisions of Section 409A.  In addition, in order
to receive severance payments following termination of his employment, Mr.
Guerriero must execute a release of claims against the Company.





Raymond A. Cardonne,
Jr.On November 15, 2007, the Company entered into an
Employment Agreement with Raymond A. Cardonne, Jr., then our Chief Financial
Officer.  The agreement has a term expiring June 30,
2010.  The agreement provides for an annual salary of
$225,000.  The agreement provides for indemnification of Mr. Cardonne
by the Company in connection with any action by reason of the fact that he is or
was a director, officer or employee of the Company.




Mr.
Cardonne’s compensation program may also include a cash bonus component based
partly on the Company’s overall financial performance during the year, and
partly on a subjective evaluation of Mr. Cardonne’s personal performance by the
Compensation Committee and the Chief Executive Officer.  The
Compensation Committee did not believe it was appropriate to base Mr. Cardonne’s
incentive bonus entirely on financial metrics, because the Committee believed
Mr. Cardonne should not be entirely motivated by short term financial metrics
but rather on the long-term best interest of the Company with a focus on
appropriate risk management.  Mr. Cardonne received  a cash
bonus of $33,750 for fiscal 2009.




In
addition to base salary and cash bonus, as outlined above, Mr. Cardonne’s
Employment Agreement also states that he is eligible for stock option or other
equity awards as part of his annual bonus program.  The agreement also
provides for an annual car allowance for Mr. Cardonne of $7,200.




On
January 27, 2010, Berliner amended its employment agreement with Mr. Cardonne,
now the Chief Financial Officer and Treasurer of BCI.  The amendment
provides for Mr. Cardonne to remain employed by Berliner through
June 30, 2010 (the “Resignation Date”), and he will be eligible to receive
certain post-employment payments and benefits. In addition, all unvested stock
options held by Mr. Cardonne will vest on the Resignation Date and will be
exercisable for three months thereafter.  The amendment revises the terms
and procedures relating to payments by the Company to Mr. Cardonne following the
termination of his employment so that any such payments comply with the
provisions of Section 409A.  In addition, in order to receive severance
payments following termination of his employment, Mr. Cardonne must execute a
release of claims against the Company.





OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2009




The
following table sets forth all outstanding equity awards held by the named
executive officers at December 31, 2009.




Name
              
              Number of
                  Securities
                  Underlying
                  Unexercised
                  Options (#)
                  Exercisable
              
              
              Number of
                  Securities
                  Underlying
                  Unexercised
                  Options (#)
                  Unexercisable
              
              
              Option
                  Exercise Price
                  ($)
              
              Option
                  Expiration
                  DateMichael
      S. Guerriero
              
              
              75,000
              
              
              
              -
              
              
              
              0.40
              
              12/21/2015100,000
              
              
              
              -
              
              
              
              0.55
              
              8/11/201625,000
              
              
              
              25,000
              (1)
              
              
              1.28
              
              3/1/2017210,000
              
              
              
              210,000
              (2)
              
              
              1.48
              
              10/1/2018Raymond
      A. Cardonne, Jr.
              
              
              50,000
              
              
              
              50,000
              (3)
              
              
              1.20
              
              12/3/2017





(1)           These
options vest as follows:  12,500 on 3/1/2010 and 12,500 on
3/1/2011.


(2)           These
options vest as follows: 105,000 on 10/1/2010 and 105,000 on
10/1/2011.


(3)           These
options vest as follows: 25,000 on 12/3/2010 and 25,000 on
12/3/2011.




42






OPTION
EXERCISES AND STOCK VESTED




There
were no exercises of stock options held by the named executive officers during
the six months ended December 31, 2009.




POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL




Rich B.
Berliner.  Mr. Berliner has entered into an Employment
Agreement with the Company, dated June 30, 2009, as amended January 27, 2010,
that provides for potential payments upon termination of his employment or a
change in control of the Company.  Pursuant to the agreement, Mr.
Berliner is required to devote all of his business time, attention, skill and
efforts exclusively to Company’s business and affairs.  If his
employment is terminated “Without Cause”, if he resigns for “Good Reason” or if
he is terminated in connection with a “Change of Control” (as each such term is
defined in the agreement), he will be entitled to an amount equal to his base
salary then in effect for the remainder of the employment term (which ends on
June 30, 2011) or for one year, whichever is longer. Payments made in connection
with his termination of employment are generally subject to his delivery to us
of a general release of claims.  Under the agreement, for 12 months
following his termination of employment, he will be subject to certain
non-competition and non-solicitation restrictions.  Payments made in
connection with his termination are subject to his delivery to the Company of a
general release of claims.




Michael S.
Guerriero.  Mr. Guerriero has entered into an Employment
Agreement with the Company, dated June 30, 2009, as amended January 27,
2010,   that would provide for potential payments upon
termination of his employment or a change in control of the
Company.  Pursuant to the agreement, Mr. Guerriero is required to
devote all of his business time, attention, skill and efforts exclusively to
Company’s business and affairs.  If his employment is terminated
“Without Cause”, if he resigns for “Good Reason” or if he is terminated in
connection with a “Change of Control” (as each such term is defined in the
agreement), he will be entitled to an amount equal to his base salary then in
effect for the remainder of the employment term (which ends on June 30, 2011) or
for one year, whichever is longer. Payments made in connection with his
termination of employment are generally subject to his delivery to us of a
general release of claims.  Under the agreement, for 12 months
following his termination of employment, he will be subject to certain
non-competition and non-solicitation restrictions.  Payments made in
connection with his termination are subject to his delivery to the Company of a
general release of claims.




Raymond A. Cardonne,
Jr.  Mr. Cardonne has entered into an Employment Agreement with
the Company, dated November 15, 2007, as amended January 27, 2010,
that  provides for payments upon termination of his employment on June
30, 2010.  The amendment provides for Mr. Cardonne to
remain employed by Berliner through June 30, 2010 (the “Resignation Date”),
and he will be eligible to receive certain post-employment payments and
outplacement services. In addition, all unvested stock options held by Mr.
Cardonne will vest on the Resignation Date and will be exercisable for three
months thereafter.  The amendment revises the terms and procedures relating
to payments by the Company to Mr. Cardonne following the termination of his
employment so that any such payments comply with the provisions of Section
409A.  In addition, in order to receive severance payments following
termination of his employment, Mr. Cardonne must execute a release of claims
against the Company.  Under the agreement, for 12 months following his
termination of employment, he will be subject to certain non-competition and
non-solicitation restrictions.


43





ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS




The
following table sets forth information with respect to the beneficial ownership
of the Common Stock as of March 25, 2010 by: (1) each person who is a beneficial
owner of more than 5% of the Common Stock, (2) each of the Company’s directors,
(3) each of the Company’s Named Executive Officers, and (4) all of the Company’s
executive officers and directors as a group.  Unless otherwise
indicated, the address of each listed stockholder is in care of the Company at
1777 Sentry Park West, Suite 302, Blue Bell, PA 19422.





Holder
                            
                            Common Stock
                            
                            
                            Series A
                              Preferred
                            
                            
                            Series B
                              Preferred
                            
                            
                            Total Number of
                              Shares of Common
                              Stock Post
                              Conversion of
                              Preferred Stock and
                              Exercise of Options
                              and Warrants (1)
                            
                            
                            
                            Percentage
                              Ownership
                              Post
                              Conversion
                              and
                              ExerciseSector
      Performance Fund, LP (a)
                            
                            
                            34,981,936
                            
                            
                            
                            1,049,459
                            
                            
                            
                            204,818
                            
                            
                            
                            97,695,786
                            
                            (2)
                            
                            
                            66.62
                            %HM
      Unitek Coinvest, LP (a)
                            
                            
                            5,327,840
                            
                            
                            
                            159,836
                            
                            
                            
                            -
                            
                            
                            
                            13,319,640
                            
                            (3)
                            
                            
                            9.76
                            %SPF
      SBS LP (a)
                            
                            
                            2,210,224
                            
                            
                            
                            66,307
                            
                            
                            
                            12,941
                            
                            
                            
                            6,172,624
                            
                            (4)
                            
                            
                            4.50
                            %Peter
      Brodsky, Director
                            
                            
                            42,520,000
                            
                            
                            
                            1,275,602
                            
                            
                            
                            217,759
                            
                            
                            
                            117,188,050
                            
                            (5)
                            
                            
                            79.56
                            %Joe
      Colonnetta, Director
                            
                            
                            42,520,000
                            
                            
                            
                            1,275,602
                            
                            
                            
                            217,759
                            
                            
                            
                            117,188,050
                            
                            (6)
                            
                            
                            79.56
                            %Daniel
      Hopkin, Director
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            (7)
                            
                            
                            N/ARichard
      B. Berliner, Director and Chief Marketing Officer
                            
                            
                            7,524,626
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            7,524,626
                            
                            (8)
                            
                            
                            5.52
                            %Old
      Berliner Liquidating Trust
                            
                            
                            13,104,644
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            13,104,644
                            
                            (9)
                            
                            
                            9.61
                            %Sigma
      Opportunity Fund, LLC
                            
                            
                            7,844,789
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            8,019,789
                            
                            (10)
                            
                            
                            5.87
                            %C.
      Scott Hisey, Director and Chief Executive Officer
                            
                            
                            480,000
                            
                            
                            
                            14,400
                            
                            
                            
                            1,000
                            
                            
                            
                            3,207,150
                            
                            (11)
                            
                            
                            2.32
                            %Peter
      Giacalone, Executive Chairman
                            
                            
                            440,000
                            
                            
                            
                            13,200
                            
                            
                            
                            2,667
                            
                            
                            
                            1,833,350
                            
                            (12)
                            
                            
                            1.34
                            %Ronald
      Lejman, Chief Financial Officer and Treasurer
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            200,000
                            
                            (13)
                            
                            
                            *Dan
      Yannantuono, CEO DirectSat
                            
                            
                            22,500
                            
                            
                            
                            900
                            
                            
                            
                            172
                            
                            
                            
                            76,100
                            
                            (14)
                            
                            
                            *Chris
      Perkins, CEO FTS USA
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            118,650
                            
                            (15)
                            
                            
                            *Nicholas
      Day, General Counsel and Secretary
                            
                            
                            30,696
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            146,946
                            
                            (16)
                            
                            
                            *Dean
      MacDonald, Director
                            
                            
                            200,000
                            
                            
                            
                            6,000
                            
                            
                            
                            1,146
                            
                            
                            
                            587,300
                            
                            (17)
                            
                            
                            *Mark
      S. Dailey, Director
                            
                            
                            54,166
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            104,166
                            
                            (18)
                            
                            
                            *Richard
      Siber, Director
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            
                            *Raymond
      A. Cardonne, Jr, Chief Financial Officer and Treasurer of
    BCI
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            50,000
                            
                            (19)
                            
                            
                            *Michael
      S. Guerriero, Chief Operating Officer of BCI
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            422,500
                            
                            (20)
                            
                            
                            N/APeter
      Mixter, Former Director
                            
                            
                            25,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            75,167
                            
                            (21)
                            
                            
                            *Mehran
      Nazari, Former Director
                            
                            
                            54,166
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            104,166
                            
                            (18)
                            
                            
                            *John
      Stevens Robling, Jr., Former Director
                            
                            
                            25,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            75,167
                            
                            (21)
                            
                            
                            *Thom
      Waye, Former Director
                            
                            
                            7,844,789
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            8,019,789
                            
                            (22)
                            
                            
                            5.87
                            %Executive
      Officers and Directors as a Group (nineteen persons)(23)
                            
                            
                            59,220,943
                            
                            
                            
                            1,310,102
                            
                            
                            
                            222,744
                            
                            
                            
                            139,733,127
                            
                            (24)
                            
                            
                            92.29
                            %





(a)
            Address
      is c/o HM Capital, 200 Crescent Ct, Suite 1600, Dallas, Texas
      75201


44





(1)
            For
      purposes of this column, a person is deemed to have beneficial ownership
      of the number of shares of Common Stock and preferred stock that such
      person has the right to acquire within 60 days of February 11,
      2010.  Percentages have been based on 136,403,330 shares of
      Common Stock outstanding after conversion of all outstanding shares of
      Series A Preferred Stock (the “Series A Preferred”) into Common
      Stock.  For purposes of computing the percentage of outstanding
      shares of Common Stock held by any individual listed in this table, any
      shares of Common Stock that such person has the right to acquire pursuant
      to the conversion of the Company’s Series B Preferred Stock (the “Series B
      Preferred”), along with the exercise of stock options or warrants
      exercisable within 60 days of March 25, 2010, is deemed to be outstanding,
      but is not deemed to be outstanding for the purpose of computing the
      percentage ownership of any other
person.




(2)
            Sector
      Performance Fund, LP (“Sector Performance Fund”) is the direct beneficial
      owner of 97,695,786 shares of Common Stock, consisting of
      (i) 34,981,936 shares of Common Stock (including shares of Common
      Stock held in escrow pursuant to the terms and conditions of the Merger
      Agreement), (ii) 52,472,950 shares of Common Stock issuable upon the
      conversion of 1,049,459 shares of Series A Preferred, each share of which
      is automatically convertible into 50 shares of Common Stock, subject to
      customary structural anti-dilution adjustments for stock splits, dividends
      and similar events, upon the filing and effectiveness of an amendment to
      the Company’s Certificate of Incorporation (the “Charter Amendment”), and
      (iii) 10,240,900 shares of Common Stock issuable upon the conversion
      of 204,818 shares of Series B Preferred, each share of which is
      convertible into 50 shares of Common Stock, subject to customary
      structural anti-dilution adjustments for stock splits, dividends and
      similar events, upon the option of the holder following the filing and
      effectiveness of the Charter Amendment.  Sector Performance GP,
      LP (“Sector Performance GP”) is the general partner of Sector Performance
      Fund.  As a result, Sector Performance GP may be deemed to share
      beneficial ownership with respect to these securities.  Sector
      Performance LLC (“Ultimate GP”) is the general partner of Sector
      Performance GP and, as a result, Ultimate GP may be deemed to share
      beneficial ownership with respect to these securities.  Except
      to the extent of any pecuniary interests, each of Sector Performance GP
      and Ultimate GP disclaims the existence of such beneficial
      ownership.  A six-person committee (consisting of Joe
      Colonnetta, Peter S. Brodsky, Jason H. Downie, Edward Herring, John R.
      Muse and Andrew Rosen) exercise, on behalf of Ultimate GP and Sector
      Performance GP, voting and dispositive powers over the securities held by
      Sector Performance Fund.




(3)
            HM
      Unitek Coinvest, LP (“Coinvest”) is the direct beneficial owner of
      13,319,640 shares of Common Stock, consisting of (i) 5,327,840 shares
      of Common Stock (including shares of Common Stock held in escrow pursuant
      to the terms and conditions of the Merger Agreement), and (ii) 7,991,800
      shares of Common Stock issuable upon the conversion of 159,836 shares of
      Series A Preferred.  Ultimate GP is the general partner of
      Coinvest and, as a result, Ultimate GP may be deemed to share beneficial
      ownership with respect to these securities.  Except to the
      extent of any pecuniary interests, Ultimate GP disclaims such beneficial
      ownership.  A six-person committee (consisting of Joe
      Colonnetta, Peter S. Brodsky, Jason H. Downie, Edward Herring, John R.
      Muse and Andrew Rosen) exercise, on behalf of Ultimate GP, voting and
      dispositive powers over the securities held by
  Coinvest.




(4)
            SPF
      SBS LP (“SPF”) is the direct beneficial owner of 6,172,624 shares of
      Common Stock, consisting of (i) 2,210,224 shares of Common Stock
      (including shares of Common Stock held in escrow pursuant to the terms and
      conditions of the Merger Agreement), (ii) 3,315,350 shares of Common Stock
      issuable upon the conversion of 66,307 shares of Series A Preferred, and
      (iii) 647,050 shares of Common Stock issuable upon the conversion of
      12,941 shares of Series B Preferred.  Ultimate GP is the general
      partner of SPF and, as a result, Ultimate GP may be deemed to share
      beneficial ownership with respect to these securities.  Except
      for pecuniary interests, Ultimate GP disclaims such beneficial
      ownership.  A six-person committee (consisting of Joe
      Colonnetta, Peter S. Brodsky, Jason H. Downie, Edward Herring, John R.
      Muse and Andrew Rosen) exercises, on behalf of Ultimate GP, voting and
      dispositive powers over the securities held by
  SPF.




45




(5)
            No
      securities are directly beneficially owned by Mr. Brodsky.  Mr.
      Brodsky holds a direct or indirect interest in Sector Performance Fund,
      Coinvest, and SPF (collectively, the “Investment Funds”), which
      beneficially own an aggregate of 117,188,050 shares of Common Stock on an
      as-converted basis as explained in more detail below.  Mr.
      Brodsky is an executive officer and member of Ultimate GP.  The
      aggregate 117,188,050 shares of Common Stock are comprised as follows: (i)
      42,520,000 shares of Common Stock held by the Investment Funds (including
      shares of Common Stock held in escrow pursuant to the terms and conditions
      of the Merger Agreement), (ii) 63,780,100 shares of Common Stock issuable
      upon the conversion of 1,275,602 shares of the Series A Preferred held by
      the Investment Funds; and (iii) 10,887,950 shares of Common Stock issuable
      upon the conversion of 217,759 shares of the Series B Preferred held by
      the Investment Funds.  Mr. Brodsky is a member of a six-person
      committee (consisting of Mr. Brodsky, Joe Colonnetta, Jason H. Downie,
      Edward Herring, John R. Muse and Andrew Rosen) that exercises, on behalf
      of Ultimate GP, voting and dispositive powers over the securities held by
      the Investment Funds.  No single member of the committee has
      sole dispositive and/or voting power over the securities held by the
      Investment Funds.  Mr. Brodsky may be deemed to beneficially own
      all or a portion of the shares of Common Stock beneficially owned by the
      Investment Funds; however, Mr. Brodsky disclaims beneficial ownership of
      the shares of Common Stock, except to the extent of any pecuniary interest
      therein.




(6)
            No
      securities are directly beneficially owned by Mr.
      Colonnetta.  Mr. Colonnetta holds a direct or indirect interest
      in the Investment Funds, which beneficially own an aggregate of
      117,188,050 shares of Common Stock on an as-converted basis as explained
      in more detail below.  Mr. Colonnetta is an executive officer
      and member of Ultimate GP.  The aggregate 117,188,050 shares of
      Common Stock are comprised as follows: (i) 42,520,000 shares of Common
      Stock held by the Investment Funds (including shares of Common Stock held
      in escrow pursuant to the terms and conditions of the Merger Agreement),
      (ii) 63,780,100 shares of Common Stock issuable upon the conversion of
      1,275,602 shares of the Series A Preferred held by the Investment Funds;
      and (iii) 10,887,950 shares of Common Stock issuable upon the conversion
      of 217,759 shares of the Series B Preferred held by the Investment
      Funds.  Mr. Colonnetta is a member of a six-person committee
      (consisting of Mr. Colonnetta, Peter S. Brodsky, Jason H. Downie, Edward
      Herring, John R. Muse and Andrew Rosen) that exercises, on behalf of
      Ultimate GP, voting and dispositive powers over the securities held by the
      Investment Funds.  No single member of the committee has sole
      dispositive and/or voting power over the securities held by the Investment
      Funds.  Mr. Colonnetta may be deemed to beneficially own all or
      a portion of the shares of Common Stock beneficially owned by the
      Investment Funds; however, Mr. Colonnetta disclaims beneficial ownership
      of the shares of Common Stock, except to the extent of any pecuniary
      interest therein.




(7)
            No
      securities are directly beneficially owned by Mr. Hopkin.  Mr.
      Hopkin is an officer of Ultimate GP; however, in that role, Mr. Hopkin has
      no voting or dispositive power over the securities held by the Investment
      Funds.




(8)
            Represents
      7,524,626 shares directly held by the Old Berliner Liquidating Trust (the
      “Trust”).  The Trust owns 13,104,644 shares of Common Stock and
      Mr. Berliner beneficially owns 57% of the Trust’s assets as a beneficiary
      under the Trust.




(9)
            The
      Trust owns 13,104,644 shares of Common Stock.  Nicholas Day is
      sole trustee of the Trust and has sole voting and dispositive power over
      the securities held by the Trust.




(10)
            These
      shares include (i) 4,489,795 shares of Common Stock held by Sigma
      Opportunity Fund, LLC (“Sigma”); (ii) 2,170,407 shares of Common Stock
      held by Sigma Berliner, LLC (“SBLLC”), an affiliate of Sigma; (iii)
      1,334,587 shares of Common Stock, which includes 175,000 shares of Common
      Stock issuable upon the exercise of warrants with an initial exercise
      price of $0.55 per share, held by Sigma’s affiliate, Sigma Capital
      Advisors, LLC (“Advisors”) and (iv) 25,000 shares of Common Stock held by
      Thom Waye.  Advisors, Sigma Capital Partners, LLC (“Partners”)
      and Thom Waye may be deemed to be indirect 5% owners of the Company by
      virtue of Advisors being the managing member of Sigma, Partners being the
      sole member of Advisors and Mr. Waye being the sole member of
      Partners.  Mr. Waye, Advisors and Partners have disclaimed
      beneficial ownership of the shares owned by Sigma and SBLLC except to the
      extent of their pecuniary interest therein.   The address of
      each of Sigma, SBLLC, Advisors, Partners and Mr. Waye is c/o Sigma Capital
      Advisors, LLC, 800 Third Avenue, Suite 1701, New York,
      NY  10022. Information related to Sigma in this footnote is
      based upon the Schedule 13D filed by Sigma on March 2,
    2010.




46




(11)
            Mr.
      Hisey is the direct beneficial owner of 1,250,000 shares of Common Stock
      (on an as-converted basis), consisting of (i) 480,000 shares of
      Common Stock, (ii) 720,000 shares of Common Stock issuable upon the
      conversion of 14,400 shares of Series A Preferred, and (iii) 50,000
      shares of Common Stock issuable upon the conversion of 1,000 shares of
      Series B Preferred.  Also includes vested options to purchase
      1,738,400 shares of Common Stock.  40% of these options become
      exercisable only when the closing price per share of the Common Stock is
      equal to or greater than $3.00 for twenty (20) consecutive trading days on
      which at least 5,000 shares of Common Stock are traded, as reported on the
      principal exchange on which the Common Stock is then
      traded.  Also includes warrants to purchase 218,750 shares of
      Common Stock.




(12)
            Mr.
      Giacalone is the direct beneficial owner of 1,233,350 shares of Common
      Stock, consisting of (i) 440,000 shares of Common Stock,
      (ii) 660,000 shares of Common Stock issuable upon the conversion of
      13,200 shares of Series A Preferred, and (iii) 133,350 shares of
      Common Stock issuable upon the conversion of 2,667 shares of Series B
      Preferred.  Also includes vested options to purchase 600,000
      shares of Common Stock.  40% of these options become exercisable
      only when the closing price per share of the Common Stock is equal to or
      greater than $3.00 for twenty (20) consecutive trading days on which at
      least 5,000 shares of Common Stock are traded, as reported on the
      principal exchange on which the Common Stock is then
      traded.




(13)
            Represents
      vested options to purchase 200,000 shares of Common Stock.  40%
      of these options become exercisable only when the closing price per share
      of the Common Stock is equal to or greater than $3.00 for twenty (20)
      consecutive trading days on which at least 5,000 shares of Common Stock
      are traded, as reported on the principal exchange on which the Common
      Stock is then traded.




(14)
            Includes
      (i) 22,500 shares of Common Stock, (ii) 45,000 shares of Common Stock
      issuable upon the conversion of 900 shares of Series A Preferred, and
      (iii) 8,600 shares of Common Stock issuable upon the conversion of 172
      shares of Series B Preferred.




(15)
            Represents
      options to purchase 118,650 shares of Common
  Stock.




(16)
            Includes
      vested options to purchase 103,750 shares of Common Stock and options to
      purchase 12,500 shares of Common Stock which will vest within 60 days of
      March 25, 2010.  Also includes 30,696 shares of Common Stock
      held by the Trust for which Mr. Day is the beneficiary. Excludes the
      remainder of the securities held by the Trust, in which Mr. Day disclaims
      all beneficial ownership.




(17)
            Mr.
      MacDonald is the direct beneficial owner of 587,300 shares of Common
      Stock, consisting of (i) 200,000 shares of Common Stock,
      (ii) 300,000 shares of Common Stock issuable upon the conversion of
      6,000 shares of Series A Preferred, and (iii) 57,300 shares of Common
      Stock issuable upon the conversion of 1,146 shares of Series B
      Preferred.  Also includes vested options to purchase 30,000
      shares of Common Stock.  40% of these options become exercisable
      only when the closing price per share of the Common Stock is equal to or
      greater than $3.00 for twenty (20) consecutive trading days on which at
      least 5,000 shares of Common Stock are actually traded, as reported on the
      principal exchange on which the Common Stock is then
      traded.




(18)
            Includes
      54,166 shares of Common Stock and vested options to purchase 50,000 shares
      of Common Stock.




(19)
            Represents
      options to purchase 50,000 shares of Common
  Stock.




(20)
            Represents
      options to purchase 422,500 shares of Common
  Stock.




47




(21)
            Includes
      25,000 shares of Common Stock and vested options to purchase 50,167 shares
      of Common Stock.




(22)
            Thom
      Waye may be deemed to be an indirect owner of the shares held by Sigma
      Opportunity Fund, LLC (“Sigma”) by virtue of Mr. Waye being the manager of
      Sigma. Mr. Waye has disclaimed beneficial ownership of the shares owned by
      Sigma except to the extent of his pecuniary interest therein. Includes
      25,000 shares of Common Stock owned directly by Mr.
  Waye.




(23)
            Includes
      Peter Brodsky, Joe Colonnetta, Daniel Hopkin, Peter Giacalone, C. Scott
      Hisey, Richard B. Berliner, Mark S. Dailey, Richard Siber, Dean MacDonald,
      Dan Yannantuono, Chris Perkins, Ronald Lejman,  Raymond A.
      Cardonne, Jr., Michael S. Guerriero, Peter Mixter, Mehran Nazari, John
      Stevens Robling, Jr., Thom Waye and Nicholas
  Day.




(24)
            Consists
      of 59,220,943 shares of Common Stock, (ii) 65,505,100 shares of
      Common Stock issuable upon the conversion of 1,310,102 shares of Series A
      Preferred, (iii) 11,137,200 shares of Common Stock issuable upon the
      conversion of 222,744 shares of Series B Preferred, (iv) warrants to
      purchase 393,750 shares of Common Stock, and (v) vested options to
      purchase 3,476,134 shares of Common
Stock.




SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE




Section
16(a) of the Exchange Act, requires the Company’s directors, executive officers,
and individuals who own more than 10% of a registered class of the Company’s
equity securities to file initial reports of beneficial ownership and changes in
beneficial ownership of Common Stock with the SEC. Such persons are required by
applicable regulations to furnish us with copies of all Section 16(a) reports
that they file.




To the
Company’s knowledge, based solely on the review of the copies of such reports
furnished to the Company, all of the Company’s directors, officers and 10%
stockholders have complied with the applicable Section 16(a) reporting
requirements for the six months ended December 31, 2009.





ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE




The Board
has adopted a written policy regarding review and approval of related party
transactions.    This policy calls for the Board to appoint
a committee of independent directors to review and approve any related party
transaction, which are defined as any transaction, or a series of similar
transactions, to which the Company or any of its subsidiaries is to be a party,
in which the amount involved exceeds $120,000 and in which any of the following
persons had, or will have, a direct or indirect material interest:




·
            Any
      director or executive officer of the
Company;


·
            Any
      nominee for election as director;


·
            Any
      security holder who is known to the registrant to own of record or
      beneficially more than five percent of any class of the registrant’s
      voting securities; and


·
            Any
      member of the immediate family of any of the foregoing
      persons.




Approval
of the committee reviewing the related party transaction is based on the
business needs of Company, the availability of alternative arrangements and the
costs of the proposed transaction versus these alternatives, if
available.




Pursuant
to the policy, related party transactions shall not include compensation
decisions within the authority of the Compensation Committee, such as officer
and director compensation.  The independent committee will have the
authority to hire and consult with independent consultants, appraisers and/or
advisors to assist in their review of related party
transactions.


48




In
addition, in connection with the Merger, on January 27, 2010, the Board
established a special committee (the “Special Committee”) comprised of three
directors, Rich Berliner, Mark S. Dailey and Richard Siber.  The Special
Committee will automatically dissolve on January 27, 2013.  For so long as
the Special Committee exists, the Company may not take certain actions without
the Special Committee’s consent, including:




·
            amending
      or modifying the Charter Amendment or the bylaws of the Company (the
      “Bylaws”) in a manner that would amend the rights of the Series A or
      Series B Preferred Stock;





·
            issuing
      additional shares of Series A or Series B Preferred Stock to an Affiliated
      Party (as such term is defined in the Merger Agreement) (except pursuant
      to the Credit Support Agreement, as defined
  below);





·
            making
      certain changes or determinations with respect to the BMO Loan Documents
      (as such term is defined in the Merger Agreement);
  or





·
            entering
      into any transactions or amending certain agreements with affiliated
      parties, including HM Capital Partners LLC (except for employment
      arrangements and benefit programs approved by the Board or the
      compensation committee of the
Board).





During
the six months ended December 31, 2009, the Company did not engage in any
related party transaction that required review, approval or ratification under
the Company’s related party transaction review policies and
procedures.  The Company did not engage in any related party
transaction where such policies and procedures were not followed.




Amended
and Restated Monitoring and Oversight Agreement




In
connection with the Merger, on January 27, 2010, we entered into an Amended and
Restated Monitoring and Oversight Agreement (the “M&O Agreement”) with BCI,
Unitek USA, Unitek, Unitek Midco, and Unitek Acquisition (collectively with
Berliner, BCI, Unitek USA, Unitek, and Unitek Midco, the “Clients”) and HM
Capital Partners I LP (“HM LP”).    Pursuant to the M&O Agreement,
the Clients will pay HM LP an annual fee of $720,000 for calendar year 2010,
$730,000 for calendar year 2011 and $754,000 for calendar year 2012 and for each
calendar year thereafter, in consideration for HM LP’s provision of financial
oversight and monitoring services to the Clients as they may be requested from
time to time.  Each annual fee mentioned above will be payable in equal
quarterly installments on March 31, June 30, September 30 and December 31 of the
applicable year; provided, that such payment will not be paid unless the Total
Leverage Ratio (as such term is defined in the Unitek First Lien Credit
Agreement, which such term is defined in the Merger Agreement) is below
3.50:1.00 at the end of the applicable quarter, and if not paid, each such
payment will accrue until the Total Leverage Ratio is below 3.50:1.00 at any
subsequent quarter at which time all accrued and unpaid payments will become due
and payable.  Further, to the extent any amounts payable under the M&O
Agreement are not permitted to be paid under the Unitek First Lien Credit
Agreement, such amounts will continue to accrue until the earlier of the time at
which such amounts are permitted to be paid under the Unitek First Lien Credit
Agreement or the termination of the Unitek First Lien Credit Agreement in
accordance with its terms, at which such time such amounts will become due and
payable.




Each of
the Clients have also agreed to indemnify HM LP, its affiliates, and their
respective directors, partners, officers, controlling persons, agents and
employees (collectively referred to as the “Indemnified Persons”) from and
against any and all claims, liabilities, losses, damages and expenses incurred
by any Indemnified Person (including those arising out of an Indemnified
Person’s negligence and reasonable fees and disbursements of the Indemnified
Person’s counsel) related to or arising out of (i) actions taken or omitted to
be taken by any of the Clients, (ii) actions taken or omitted to be taken
by an Indemnified Person with any Client’s consent or in conformity with any
Client’s instructions or any Client’s actions or omissions or (iii) HM LP’s
engagement that do not result primarily from the bad faith, gross negligence or
willful misconduct of such Indemnified Persons.


49





The
M&O Agreement expires upon the earlier of September 27, 2017 or a buyout of
the M&O Agreement.  Berliner is obligated to buy out the M&O
Agreement upon the first to occur of: (1) any sale or distribution by Berliner
or its subsidiaries to the public of its capital stock and, in connection
therewith, the capital stock of Berliner or its subsidiaries becoming listed on
an established stock exchange or a national market system; (2) any consolidation
or merger of Berliner with or into another entity or other business combination
or transfer of securities of Berliner by any of its stockholders or a series of
transactions in which the stockholders of Berliner immediately prior to such
transaction own less than 50% of the equity of Berliner or HM Capital Partners
LLC or any fund or management company affiliated therewith owns less than 25% of
the equity of Berliner; (3) any sale, license, transfer or disposition of all or
substantially all of the assets of Berliner; or (4) the Special Committee’s
approval of Berliner buying out the M&O Agreement.




Peter
Brodsky and Joseph Colonnetta are Partners and Daniel Hopkin is a Vice President
of HM Capital Partners LLC, which is an affiliate of HM LP.




Credit
Support Agreement




Peter
Brodsky and Joseph Colonnetta are Partners and Daniel Hopkin is a Vice President
of HM Capital Partners LLC, which is an affiliate of Sector Performance Fund, LP
and SPF SBS LP (the “Credit Support Parties”).  Furthermore, Peter Brodsky
and Joseph Colonnetta are each executive officers of the ultimate general
partner of each of the Credit Support Parties and they each own an interest in
such general partner.  Daniel Hopkin is an officer of the ultimate general
partner of each of the  ultimate general partner of each of the Credit
Support Parties and owns an interest in the general partner of Sector
Performance Fund, LP.




Nex-Link
USA, LLC




Unitek
USA and C. Scott Hisey, the Chief Executive Officer of Berliner, jointly own and
operate Nex-Link USA, LLC, a Delaware limited liability company (“Nex-Link”), a
joint venture formed by Mr. Hisey as a disabled veteran-owned business
enterprise for the purpose of supporting customers requiring work to be
completed by a disabled veteran-owned entity.  Mr. Hisey, a registered
disabled veteran, owns 51% of the membership units of Nex-Link.  Unitek USA
owns the remaining 49% of the membership units of Nex-Link.  Nex-Link’s
assets were valued at approximately $0.1 million as of December 31, 2009. 
Nex-Link generated sales of approximately $0.7 million in 2009. 
Historically, Nex-Link has distributed 100% of its net income to Unitek
USA.  Furthermore, Unitek USA is a lender to Nex-Link pursuant to a
revolving credit agreement, dated as of July 2, 2008 (the “Nex-Link Credit
Agreement”).  Nex-Link’s current principal outstanding under the Nex-Link
Credit Agreement is approximately $0.2 million.  Under the Unitek First
Lien Credit Agreement, the maximum amount that Unitek USA and its subsidiaries
may lend to third parties, including Nex-Link, is $1,000,000 in the
aggregate.  No principal or interest payable under the Nex-Link Credit
Agreement was paid in Berliner’s last fiscal year.  Nex-Link’s effective
interest rate for Berliner’s last fiscal year was based on the prime rate
published in the Wall Street Journal plus two percent.  Mr. Hisey is
indemnified by Nex-Link for actions he takes as an owner, officer or director of
Nex-Link to the fullest extent permitted by Delaware law.





ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES




BDO
Seidman, LLP, (“BDO Seidman”) independent registered public accountant, audited
the financial statements of the Company for the fiscal year ended June 30,
2009.  The Audit Committee has selected BDO Seidman as the Auditors of
the Company for the six months ending December 31, 2009.  No member of
BDO Seidman or any of its associates has any financial interest in the Company
or its affiliates.


50




AUDIT
FEES




Six Months Ended December 31,
2009. The aggregate fees billed for professional services rendered by BDO
Seidman for the audit of the Company’s financial statements for the six months
ended December 31, 2009, together with its review of the financial statements
included in the Company’s quarterly report on Form 10-Q, amounted to
approximately $145,131.




Fiscal Year
2009.  The aggregate fees billed for professional services
rendered by BDO Seidman for the audit of the Company’s annual financial
statements for the fiscal year ended June 30, 2009, together with its review of
the financial statements included in the Company’s quarterly reports on Form
10-Q, amounted to approximately $223,195.




Fiscal Year
2008.  The aggregate fees billed for professional services
rendered by BDO Seidman for the audit of the Company’s annual financial
statements for the fiscal year ended June 30, 2008, together with its review of
the financial statements included in the Company’s quarterly reports on Form
10-Q, and tax fees amounted to approximately $229,380.




All
services to be performed for us by independent public accountants must be
pre-approved by the Audit Committee, which has chosen not to adopt any
pre-approval policies for enumerated services and situations, but instead has
retained the sole authority for such approvals.




Six Months
                                    Ended
                                    December 31,
                                    2009
                                  
                                  
                                  Year Ended
                                    June 30, 2009
                                  
                                  
                                  Year Ended
                                    June 30, 2008Audit
      Fees
                                  
                                  $
                                  145,131
                                  
                                  
                                  $
                                  167,000
                                  
                                  
                                  $
                                  217,000Audit
      Related Fees
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  45,250
                                  
                                  
                                  $
                                  12,380Tax
      Fees
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  10,945
                                  
                                  
                                  $
                                  -Other
      Fees
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -$
                                  145,131
                                  
                                  
                                  $
                                  223,195
                                  
                                  
                                  $
                                  229,380


51




PART
IV




ITEM
      15.
            EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES




(a)
            The
      following documents are filed as part of this
  report:





(1)
            Financial
      Statements:





Our
      Consolidated Balance Sheets as of December 31, 2009 and June 30,
      2009


Our
      Consolidated Statements of Operations for the years ended June 30, 2009
      and 2008 and for the six months ended December 31, 2009 and 2008
      (unaudited)


Our
      Consolidated Statements of Stockholders’ Equity for the years ended June
      30, 2009 and 2008 and for the six months ended December 31,
      2009


Our
      Consolidated Statements of Cash Flows for the years ended June 30, 2009
      and 2008 and for the six months ended December 31, 2009 and 2008
      (unaudited)





(b)
            Exhibits





Exhibit Number
                                    
                                    Description
                                    
                                    Filed Herewith3.1
                                    
                                    Certificate
      of Amendment to Amended and Restated Certificate of
      Incorporation
                                    
                                    Incorporated
      herein by reference from Company’s Form 10-Q filed on February 14,
      20073.2
                                    
                                    Amended
      and Restated Bylaws of eVentures Group, Inc.
                                    
                                    Incorporated
      herein by reference from Company’s Form 10-K filed on September 28,
      20054.1
                                    
                                    Warrant
      for the Purchase of Shares of Common Stock issued by Berliner
      Communications, Inc. to Sigma Capital Advisors, LLC, dated December 29,
      2006
                                    
                                    Incorporated
      herein by reference from Company’s Form 8-K filed on January 5,
      20074.2
                                    
                                    Warrant
      for the Purchase of Shares of Common Stock issued by Berliner
      Communications, Inc. to Punk, Ziegel & Company, L.P., dated December
      29, 2006
                                    
                                    Incorporated
      herein by reference from Company’s Form 8-K filed on January 5,
      20074.3
                                    
                                    Warrant
      for the Purchase of Shares of Common Stock issued by Berliner
      Communications, Inc. to Sigma Capital Advisors, LLC, dated February 15,
      2007
                                    
                                    Incorporated
      herein by reference from Company’s Form 8-K filed on February 22,
      20074.4
                                    
                                    Warrant
      for the Purchase of Shares of Common Stock issued by Berliner
      Communications, Inc. to Punk, Ziegel & Company, L.P., dated February
      15, 2007
                                    
                                    Incorporated
      herein by reference from Company’s Form 8-K filed on February 22,
      20074.5
                                    
                                    Warrant
      for the Purchase of Shares of Common Stock issued by Berliner
      Communications, Inc. to Digital Communication Services, Inc., dated
      February 28, 2007
                                    
                                    Incorporated
      herein by reference from Company’s Form 8-K filed on March 6,
      200710.1*
                                    
                                    Employment
      Agreement, dated as of November 15, 2007, by and between Berliner
      Communications, Inc. and Raymond A. Cardonne, Jr.
                                    
                                    Incorporated
      herein by reference from Company’s Form 8-K filed on November 15,
      2007


52





10.2*
                                        
                                        Employment
      Agreement, dated as of June 30, 2009, by and between Berliner
      Communications, Inc. and Richard B. Berliner
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on July 2,
      200910.3*
                                        
                                        Employment
      Agreement, dated as of June 30, 2009, by and between Berliner
      Communications, Inc. and Nicholas Day
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on July 2,
      200910.4*
                                        
                                        Employment
      Agreement, dated as of June 30, 2009, by and between Berliner
      Communications, Inc. and Michael S. Guerriero
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on July 2,
      200910.5*
                                        
                                        Employment
      Agreement, dated as of June 30, 2009, by and between Berliner
      Communications, Inc. and Robert Bradley
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on July 2,
      200910.6
                                        
                                        Asset
      Purchase Agreement, dated as of April 16, 2007, by and among Radian
      Communication Services, Inc. and BCI Communications, Inc.
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on April 20,
      200710.7
                                        
                                        Revolving
      Credit and Security Agreement, dated April 17, 2008, between BCI
      Communications, Inc. as borrower and PNC Bank National Association as
      lender and agent
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on April 23,
      200810.8
                                        
                                        First
      Amendment to Revolving Credit and Security Agreement, dated March 31,
      2009, by and between BCI Communications, Inc. and PNC Bank, National
      Association
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on April 3,
      200910.9
                                        
                                        Second
      Amendment to Revolving Credit and Security Agreement, dated September 25,
      2009, by and between BCI Communications, Inc. and PNC Bank, National
      Association
                                        
                                        Incorporated
      herein by reference from Company’s Form 10-K filed on September 28,
      200910.10
                                        
                                        $15,000,000
      Revolving Credit Note, dated April 17, 2008, between BCI Communications,
      Inc. as borrower and PNC Bank, National Association as lender and
      agent
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on April 23,
      200810.11
                                        
                                        Guaranty
      & Suretyship Agreement, dated April 17, 2008, made by Berliner
      Communications, Inc. as guarantor on behalf of BCI Communications, Inc.
      and in favor of PNC Bank, National Association
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on April 23,
      200810.12
                                        
                                        Guarantor’s
      Ratification of that certain Guaranty & Suretyship Agreement dated
      April 17, 2008, made by Berliner Communications, Inc. as guarantor on
      behalf of BCI Communications, Inc. and in favor of PNC Bank, National
      Association
                                        
                                        Incorporated
      herein by reference from Company’s Form 10-K filed on September 28,
      200910.13
                                        
                                        Subordination
      & Inter-creditor Agreement, dated April 17, 2008, by and among PNC
      Bank, National Association as agent for the lenders and Sigma Opportunity
      Fund, LLC, Sigma Berliner, LLC, Operis Partners I LLC, and Pacific Asset
      Partners as the subordinated investors
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on April 23,
      200810.14
                                        
                                        Agreement
      and Plan of Reorganization, dated September 15, 2008, between Berliner
      Communications, Inc, and Old Berliner, Inc.
                                        
                                        Incorporated
      herein by reference from Company’s Form 8-K filed on September 15,
      2008




53




10.15*
                                  
                                  Berliner
      Communications, Inc. Omnibus Securities Plan, Adopted Effective September
      22, 1999
                                  
                                  Incorporated
      herein by reference from Company’s Form S-8 filed on July 30,
      200710.16*
                                  
                                  Berliner
      Communications, Inc. 2009 Omnibus Equity and
                                    Incentive
      Compensation Plan
                                  
                                  Incorporated
      herein by reference from Appendix A to the Company’s Proxy Statement filed
      on October 27, 200918.1
                                  
                                  Preferability
      Letter of BDO Seidman, LLP
                                  
                                  X21.1
                                  
                                  Subsidiaries
      of Berliner Communications, Inc.
                                  
                                  X23.1
                                  
                                  Consent
      of BDO Seidman, LLP
                                  
                                  X31.1
                                  
                                  Certification
      of Principal Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
                                  
                                  X31.2
                                  
                                  Certification
      of Principal Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
                                  
                                  X32.1
                                  
                                  Certification
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                                  
                                  X





*
Management contract or compensatory plan or arrangement.


54




SIGNATURES





Pursuant
to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




Berliner
      Communications, Inc.By:
              /s/ C. Scott HiseyName:
              C.
      Scott HiseyTitle:
              Chief
      Executive Officer





Pursuant
to the requirement of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the
capacities indicated on March 31, 2010.




SIGNATURE
                                        
                                        TITLE/s/
      C. Scott Hisey
                                        
                                        Chief
      Executive OfficerC.
      Scott Hisey
                                        
                                        (Principal
      Executive Officer)/s/
      Ronald J. Lejman
                                        
                                        Chief
      Financial Officer and TreasurerRonald
      J. Lejman
                                        
                                        (Principal
      Financial Officer)/s/
      Peter Giacalone
                                        
                                        Director,
      Chairman of the Board and PresidentPeter
      Giacalone/s/
      Rich Berliner
                                        
                                        Director,
      Chief Marketing Officer and Chief ExecutiveRich
      Berliner
                                        
                                        Officer
      of BCI Communications, Inc./s/
      Peter Brodsky
                                        
                                        DirectorPeter
      Brodsky/s/
      Dan Hopkin
                                        
                                        DirectorDan
      Hopkin/s/
      Joe Colonnetta
                                        
                                        DirectorJoe
      Colonnetta/s/
      Dean MacDonald
                                        
                                        DirectorDean
      MacDonald/s/
      Mark Dailey
                                        
                                        DirectorMark
      Dailey/s/
      Richard Siber
                                        
                                        DirectorRichard
      Siber


55





BERLINER
COMMUNICATIONS, INC. AND SUBSIDIARIES


INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





Report
      of Independent Registered Public Accounting Firm
                  
                  F-2Consolidated
      Balance Sheets as of December 31, 2009 and June 30, 2009
                  
                  F-3Consolidated
      Statements of Operations for the years ended June 30, 2009 and 2008 and
      for the  six months ended December 31, 2009 and 2008
      (unaudited)
                  
                  F-4Consolidated
      Statements of Stockholders’ Equity for the years ended June 30, 2009 and
      2008  and for the six months ended December 31,
    2009
                  
                  F-5Consolidated
      Statements of Cash Flows for the years ended June 30, 2009 and 2008 and
      for the six months ended December 31, 2009 and 2008
      (unaudited)
                  
                  F-6Notes
      to Consolidated Financial Statements
                  
                  F-8


F-1


Report
of Independent Registered Public Accounting Firm





Board of
Directors and Stockholders


Berliner
Communications, Inc.


Blue
Bell, Pennsylvania





We have
audited the accompanying consolidated balance sheets of Berliner Communications,
Inc. and Subsidiaries as of December 31, 2009 and June 30, 2009 and the related
consolidated statements of operations, stockholders’ equity, and cash flows for
the six month period ended December 31, 2009 and for the years ended June 30,
2009 and 2008. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Berliner Communications,
Inc. and Subsidiaries at December 31, 2009 and June 30, 2009, and the results of
their operations and cash flows for the six month period ended December 31, 2009
and for the years ended June 30, 2009 and 2008 in conformity with accounting
principles generally accepted in the United States of America.





As
discussed in note 2 to the consolidated financial statements, the Company has
elected to change its method of accounting for goodwill as required by Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 350
Intangibles—Goodwill and Otheron December 31, 2009.




/s/ BDO Seidman, LLPWoodbridge,
      New JerseyMarch
      31, 2010




F-2




BERLINER
COMMUNICATIONS, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(Amounts
in thousands)





December 31,
                    
                    
                    June 30,2009
                    
                    
                    2009ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                    
                    $
                    1,518
                    
                    
                    $
                    1,390Accounts
      receivable, net of allowance for doubtful accounts of $522 and $200 at
      December 31, 2009 and June 30, 2009, respectively
                    
                    
                    26,573
                    
                    
                    
                    20,116Income
      tax receivable
                    
                    
                    2,251
                    
                    
                    
                    2,659Inventories
                    
                    
                    999
                    
                    
                    
                    1,005Deferred
      tax assets - current
                    
                    
                    -
                    
                    
                    
                    429Prepaid
      expenses and other current assets
                    
                    
                    670
                    
                    
                    
                    89132,011
                    
                    
                    
                    26,490Property
      and equipment, net
                    
                    
                    2,064
                    
                    
                    
                    2,239Amortizable
      intangible assets, net
                    
                    
                    353
                    
                    
                    
                    479Goodwill
                    
                    
                    2,284
                    
                    
                    
                    2,284Deferred
      tax assets - long-term
                    
                    
                    -
                    
                    
                    
                    2,789Other
      assets
                    
                    
                    283
                    
                    
                    
                    276Total
      Assets
                    
                    $
                    36,995
                    
                    
                    $
                    34,557LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
                    
                    $
                    8,586
                    
                    
                    $
                    4,644Accrued
      liabilities
                    
                    
                    4,905
                    
                    
                    
                    3,685Line
      of credit
                    
                    
                    5,518
                    
                    
                    
                    2,967Current
      portion of long-term debt
                    
                    
                    333
                    
                    
                    
                    777Current
      portion of capital lease obligations
                    
                    
                    206
                    
                    
                    
                    11819,548
                    
                    
                    
                    12,191Long-term
      debt, net of current portion
                    
                    
                    4
                    
                    
                    
                    18Long-term
      capital lease obligations, net of current portion
                    
                    
                    234
                    
                    
                    
                    194Deferred
      tax liabilities
                    
                    
                    146
                    
                    
                    
                    -Other
      long-term liabilities
                    
                    
                    484
                    
                    
                    
                    105Total
      liabilities
                    
                    
                    20,416
                    
                    
                    
                    12,508COMMITMENTSSTOCKHOLDERS’
      EQUITYCommon
      stock
                    
                    
                    1
                    
                    
                    
                    1Additional
      paid-in capital
                    
                    
                    25,815
                    
                    
                    
                    25,766Accumulated
      deficit
                    
                    
                    (9,237
                    )
                    
                    
                    (3,718
                    )Total
      stockholders’ equity
                    
                    
                    16,579
                    
                    
                    
                    22,049Total
      liabilities and stockholders’ equity
                    
                    $
                    36,995
                    
                    
                    $
                    34,557





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


F-3


BERLINER
COMMUNICATIONS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Amounts
in thousands, except per share data)





Six
      Months Ended
                      
                      
                      Years
      endedDecember
      31,
                      
                      
                      June
      30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008(Unaudited)Revenue
                      
                      $
                      42,885
                      
                      
                      $
                      27,621
                      
                      
                      $
                      54,491
                      
                      
                      $
                      128,372Costs
      of revenue
                      
                      
                      31,910
                      
                      
                      
                      18,373
                      
                      
                      
                      38,786
                      
                      
                      
                      83,452Gross
      profit
                      
                      
                      10,975
                      
                      
                      
                      9,248
                      
                      
                      
                      15,705
                      
                      
                      
                      44,920Selling,
      general and administrative expenses
                      
                      
                      12,008
                      
                      
                      
                      10,643
                      
                      
                      
                      20,473
                      
                      
                      
                      25,703Depreciation
      and amortization
                      
                      
                      634
                      
                      
                      
                      628
                      
                      
                      
                      1,285
                      
                      
                      
                      1,190(Gain)
      loss on sale of fixed assets
                      
                      
                      5
                      
                      
                      
                      (5
                      )
                      
                      
                      (8
                      )
                      
                      
                      (11
                      )Income
      (loss) from operations
                      
                      
                      (1,672
                      )
                      
                      
                      (2,018
                      )
                      
                      
                      (6,045
                      )
                      
                      
                      18,038Other
      (income) expenseInterest
      expense
                      
                      
                      198
                      
                      
                      
                      107
                      
                      
                      
                      208
                      
                      
                      
                      1,359Amortization
      of deferred financing fees and accretion of debt discount
                      
                      
                      30
                      
                      
                      
                      30
                      
                      
                      
                      60
                      
                      
                      
                      2,031Interest
      income
                      
                      
                      (7
                      )
                      
                      
                      (52
                      )
                      
                      
                      (59
                      )
                      
                      
                      (71
                      )Other
      income
                      
                      
                      (22
                      )
                      
                      
                      (356
                      )
                      
                      
                      (373
                      )
                      
                      
                      (162
                      )Income
      (loss) before income taxes
                      
                      
                      (1,871
                      )
                      
                      
                      (1,747
                      )
                      
                      
                      (5,881
                      )
                      
                      
                      14,881Income
      tax (benefit) expense
                      
                      
                      3,635
                      
                      
                      
                      (519
                      )
                      
                      
                      (2,457
                      )
                      
                      
                      6,427Net
      income (loss) allocable to common shareholders
                      
                      $
                      (5,506
                      )
                      
                      $
                      (1,228
                      )
                      
                      $
                      (3,424
                      )
                      
                      $
                      8,454Net
      income (loss) per share:Basic
                      
                      $
                      (0.21
                      )
                      
                      $
                      (0.05
                      )
                      
                      $
                      (0.13
                      )
                      
                      $
                      0.47Diluted
                      
                      $
                      (0.21
                      )
                      
                      $
                      (0.05
                      )
                      
                      $
                      (0.13
                      )
                      
                      $
                      0.31Weighted
      average number of shares outstanding:Basic
                      
                      
                      26,516
                      
                      
                      
                      26,365
                      
                      
                      
                      26,439
                      
                      
                      
                      17,918Diluted
                      
                      
                      26,516
                      
                      
                      
                      26,365
                      
                      
                      
                      26,439
                      
                      
                      
                      27,166





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


F-4


BERLINER
COMMUNICATIONS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY


(Amounts
in thousands except share and per share data)





Common
      Stock100,000,000
      shares authorized
                              
                              
                              Additional
                              
                              
                              
                              
                              
                              Total$0.00002
      par value
                              
                              
                              Paid-in
                              
                              
                              Accumulated
                              
                              
                              Stockholders’Shares
                              
                              
                              Amount
                              
                              
                              Capital
                              
                              
                              Deficit
                              
                              
                              EquityBalance
      at June 30, 2007
                              
                              
                              17,080,906
                              
                              
                              $
                              -
                              
                              
                              $
                              15,655
                              
                              
                              $
                              (8,748
                              )
                              
                              $
                              6,907Stock-based
      compensation
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              181
                              
                              
                              
                              -
                              
                              
                              
                              181Exercise
      of warrants
                              
                              
                              2,982,951
                              
                              
                              
                              -
                              
                              
                              
                              5
                              
                              
                              
                              -
                              
                              
                              
                              5Exercise
      of stock options
                              
                              
                              126,875
                              
                              
                              
                              -
                              
                              
                              
                              69
                              
                              
                              
                              -
                              
                              
                              
                              69Change
      in conversion price on convertible notes payable
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              720
                              
                              
                              
                              -
                              
                              
                              
                              720Conversion
      of convertible debt
                              
                              
                              6,000,000
                              
                              
                              
                              1
                              
                              
                              
                              6,000
                              
                              
                              
                              -
                              
                              
                              
                              6,001Net
      income
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              8,454
                              
                              
                              
                              8,454Balance
      at June 30, 2008
                              
                              
                              26,190,732
                              
                              
                              
                              1
                              
                              
                              
                              22,630
                              
                              
                              
                              (294
                              )
                              
                              
                              22,337Stock-based
      compensation
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              580
                              
                              
                              
                              -
                              
                              
                              
                              580Tax
      benefit on exercise of stock options
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              18
                              
                              
                              
                              -
                              
                              
                              
                              18Exercise
      of warrants
                              
                              
                              200,000
                              
                              
                              
                              -
                              
                              
                              
                              146
                              
                              
                              
                              -
                              
                              
                              
                              146Issuance
      of Director Shares
                              
                              
                              125,000
                              
                              
                              
                              -
                              
                              
                              
                              137
                              
                              
                              
                              -
                              
                              
                              
                              137Reorganization
      expenses
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              (106
                              )
                              
                              
                              -
                              
                              
                              
                              (106
                              )NOLs
      acquired through OldBerliner
      reorganization
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              2,361
                              
                              
                              
                              -
                              
                              
                              
                              2,361Net
      loss
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (3,424
                              )
                              
                              
                              (3,424
                              )Balance
      at June 30, 2009
                              
                              
                              26,515,732
                              
                              
                              
                              1
                              
                              
                              
                              25,766
                              
                              
                              
                              (3,718
                              )
                              
                              
                              22,049Cumulative
      adjustment for fair value of warrants
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (55
                              )
                              
                              
                              (13
                              )
                              
                              
                              (68
                              )Stock-based
      compensation
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              105
                              
                              
                              
                              
                              
                              
                              
                              105Reorganization
      expenses
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (1
                              )
                              
                              
                              
                              
                              
                              
                              (1
                              )Net
      loss
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (5,506
                              )
                              
                              
                              (5,506
                              )Balance
      at December 31, 2009
                              
                              
                              26,515,732
                              
                              
                              $
                              1
                              
                              
                              $
                              25,815
                              
                              
                              $
                              (9,237
                              )
                              
                              $
                              16,579





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


F-5





BERLINER
COMMUNICATIONS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Amounts
in thousands)





Six
      Months EndedDecember
      31,
                                  
                                  
                                  Year
      Ended June 30,2009
                                  
                                  
                                  2008
                                  
                                  
                                  2009
                                  
                                  
                                  2008(Unaudited)Cash
      flows from operating activities:Net
      income (loss)
                                  
                                  $
                                  (5,506
                                  )
                                  
                                  $
                                  (1,228
                                  )
                                  
                                  $
                                  (3,424
                                  )
                                  
                                  $
                                  8,454Adjustments
      to reconcile net income (loss) to net cash (used in) provided by operating
      activities:Depreciation
      and amortization
                                  
                                  
                                  634
                                  
                                  
                                  
                                  628
                                  
                                  
                                  
                                  1,285
                                  
                                  
                                  
                                  1,190Amortization
      of deferred financing fees
                                  
                                  
                                  30
                                  
                                  
                                  
                                  30
                                  
                                  
                                  
                                  60
                                  
                                  
                                  
                                  591Change
      in fair value of embedded derivative
                                  
                                  
                                  1
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Bad
      debt expense
                                  
                                  
                                  480
                                  
                                  
                                  
                                  186
                                  
                                  
                                  
                                  342
                                  
                                  
                                  
                                  569Stock-based
      compensation
                                  
                                  
                                  105
                                  
                                  
                                  
                                  417
                                  
                                  
                                  
                                  734
                                  
                                  
                                  
                                  181(Gain)
      loss on sale of fixed assets
                                  
                                  
                                  5
                                  
                                  
                                  
                                  (5
                                  )
                                  
                                  
                                  (8
                                  )
                                  
                                  
                                  (14
                                  )Accretion
      of interest from warrants
                                  
                                  
                                  -
                                  
                                  
                                  
                                  20
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,372Financing
      fees
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  26Deferred
      tax assets, net
                                  
                                  
                                  3,365
                                  
                                  
                                  
                                  (704
                                  )
                                  
                                  
                                  186
                                  
                                  
                                  
                                  204Changes
      in operating assets and liabilities:Accounts
      receivable
                                  
                                  
                                  (6,652
                                  )
                                  
                                  
                                  10,488
                                  
                                  
                                  
                                  10,925
                                  
                                  
                                  
                                  (8,262
                                  )Income
      tax receivable
                                  
                                  
                                  408
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (2,659
                                  )
                                  
                                  
                                  -Inventories
                                  
                                  
                                  6
                                  
                                  
                                  
                                  60
                                  
                                  
                                  
                                  7
                                  
                                  
                                  
                                  (308
                                  )Prepaid
      expenses and other current assets
                                  
                                  
                                  191
                                  
                                  
                                  
                                  295
                                  
                                  
                                  
                                  458
                                  
                                  
                                  
                                  41Other
      assets
                                  
                                  
                                  183
                                  
                                  
                                  
                                  (13
                                  )
                                  
                                  
                                  (9
                                  )
                                  
                                  
                                  119Accounts
      payable
                                  
                                  
                                  3,938
                                  
                                  
                                  
                                  (1,516
                                  )
                                  
                                  
                                  (174
                                  )
                                  
                                  
                                  (2,578
                                  )Accrued
      liabilities
                                  
                                  
                                  1,033
                                  
                                  
                                  
                                  (6,384
                                  )
                                  
                                  
                                  (8,401
                                  )
                                  
                                  
                                  4,837Accrued
      income taxes
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (1,849
                                  )
                                  
                                  
                                  (1,849
                                  )
                                  
                                  
                                  1,522Net
      cash (used in) provided by operating activities
                                  
                                  
                                  (1,779
                                  )
                                  
                                  
                                  425
                                  
                                  
                                  
                                  (2,527
                                  )
                                  
                                  
                                  7,944Cash
      flows from investing activities:Purchases
      of property and equipment
                                  
                                  
                                  (113
                                  )
                                  
                                  
                                  (279
                                  )
                                  
                                  
                                  (413
                                  )
                                  
                                  
                                  (956
                                  )Cash
      paid for acquisitions and transaction costs
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (200
                                  )
                                  
                                  
                                  (200
                                  )
                                  
                                  
                                  (39
                                  )Proceeds
      from the sale of property and equipment
                                  
                                  
                                  12
                                  
                                  
                                  
                                  8
                                  
                                  
                                  
                                  14
                                  
                                  
                                  
                                  48Net
      cash used in investing activities
                                  
                                  
                                  (101
                                  )
                                  
                                  
                                  (471
                                  )
                                  
                                  
                                  (599
                                  )
                                  
                                  
                                  (947
                                  )Cash
      flows from financing activities:Proceeds
      from line of credit
                                  
                                  
                                  38,924
                                  
                                  
                                  
                                  40,335
                                  
                                  
                                  
                                  70,904
                                  
                                  
                                  
                                  120,453Repayment
      of line of credit
                                  
                                  
                                  (36,373
                                  )
                                  
                                  
                                  (40,552
                                  )
                                  
                                  
                                  (68,154
                                  )
                                  
                                  
                                  (125,773
                                  )Repayment
      of long-term debt
                                  
                                  
                                  (458
                                  )
                                  
                                  
                                  (770
                                  )
                                  
                                  
                                  (1,276
                                  )
                                  
                                  
                                  (972
                                  )Repayment
      of capital leases
                                  
                                  
                                  (84
                                  )
                                  
                                  
                                  (64
                                  )
                                  
                                  
                                  (171
                                  )
                                  
                                  
                                  (90
                                  )Proceeds
      from exercise of stock options and warrants
                                  
                                  
                                  -
                                  
                                  
                                  
                                  146
                                  
                                  
                                  
                                  146
                                  
                                  
                                  
                                  75Reorganization
      expenses
                                  
                                  
                                  (1
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (106
                                  )
                                  
                                  
                                  -Net
      cash (used in) provided by financing activities
                                  
                                  
                                  2,008
                                  
                                  
                                  
                                  (905
                                  )
                                  
                                  
                                  1,343
                                  
                                  
                                  
                                  (6,307
                                  )Net
      increase (decrease) in cash and cash equivalents
                                  
                                  
                                  128
                                  
                                  
                                  
                                  (951
                                  )
                                  
                                  
                                  (1,783
                                  )
                                  
                                  
                                  690Cash
      and cash equivalents at beginning of period
                                  
                                  
                                  1,390
                                  
                                  
                                  
                                  3,173
                                  
                                  
                                  
                                  3,173
                                  
                                  
                                  
                                  2,483Cash
      and cash equivalents at end of period
                                  
                                  $
                                  1,518
                                  
                                  
                                  $
                                  2,222
                                  
                                  
                                  $
                                  1,390
                                  
                                  
                                  $
                                  3,173





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


F-6


BERLINER
COMMUNICATIONS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Amounts
in thousands)





Six
      Months EndedDecember
      31,
                                  
                                  
                                  Year
      Ended June 30,2009
                                  
                                  
                                  2008
                                  
                                  
                                  2009
                                  
                                  
                                  2008(Unaudited)Supplemental
      cash flow information:Interest
      paid
                                  
                                  $
                                  109
                                  
                                  
                                  $
                                  67
                                  
                                  
                                  $
                                  134
                                  
                                  
                                  $
                                  1,310Income
      taxes paid
                                  
                                  $
                                  8
                                  
                                  
                                  $
                                  2,030
                                  
                                  
                                  $
                                  1,972
                                  
                                  
                                  $
                                  5,492Non-cash
      investing and financing activities:Assets
      purchased under capital leases
                                  
                                  $
                                  209
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  13
                                  
                                  
                                  $
                                  262Purchase
      of vehicles financed with notes payable
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  14Federal
      net operating loss carryforwards acquired  inOld
      Berliner Recapitalization
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  2,361
                                  
                                  
                                  $
                                  -Conversion
      of 7% Convertible Notes Payable
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  6,000





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


F-7


BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





1. Business





Berliner
Communications, Inc. was originally incorporated in Delaware in 1987 as Adina,
Inc. (“Adina”). Adina’s corporate existence was permitted to lapse in February
of 1996 and in August of 1999 was reinstated as eVentures Group, Inc.
(“eVentures”).  In December of 2000, eVentures changed its name to
Novo Networks, Inc. (“Novo”).





On
February 18, 2005, Novo entered into an asset purchase agreement with the former
Berliner Communications, Inc., which subsequently changed its name to Old
Berliner, Inc.  (“Old Berliner”) and BCI Communications, Inc. (“BCI”),
a Delaware corporation and Novo’s wholly-owned subsidiary.  As part of
this transaction, BCI acquired (the “Acquisition”) the operations and
substantially all of the assets and liabilities of Old Berliner. On September
16, 2005, Novo changed its name to Berliner Communications, Inc.
(“Berliner”).





Prior to
the Acquisition, Old Berliner provided wireless carriers with comprehensive site
acquisition, construction and zoning services. Old Berliner was founded in 1995,
and over the course of the following years, its service offerings were expanded
to include radio frequency and network design and engineering, infrastructure
equipment construction and installation, radio transmission base station
modification and project management services. With the consummation of the
Acquisition, BCI carried on the operations of Old Berliner.





The
results of these acquired businesses have been incorporated into our
consolidated financial statements since the dates of acquisition.





The
Company operates in two business segments: (1) infrastructure construction and
technical services; and (2) site acquisition and zoning.





On
January 27, 2010, Berliner, BCI East, Inc., a Delaware corporation and a wholly
owned subsidiary of Berliner (“Merger Sub”), and Unitek Holdings, Inc., a
Delaware corporation (“Unitek”), entered into an Agreement and Plan of Merger
(the “Merger Agreement”), pursuant to which Merger Sub merged (the “Merger”)
with and into Unitek and Unitek became a wholly owned subsidiary of
Berliner.  The time on January 27, 2010 at which the Merger became
effective is referred to herein as the “Effective Time.” Following the Merger,
Berliner is now doing business as UniTek Global Services, Inc.
(“UNTK”).





UNTK is
now the public reporting entity.  Prior to the Merger, Berliner had a
June 30 fiscal year end.  After the Merger, the fiscal year for
Berliner, now UNTK, was changed by the Board of Directors to end on December 31,
2009.  The financial presentation set forth in this Report on Form
10-K relates to the historic financials of Berliner for the six-month period
ending December 31, 2009.  We have added relevant information about
UniTek and its various other subsidiaries where we have deemed it helpful or
informative.  We intend to file a Form 8-K/A on or before April 12,
2010, which will present historical financial information for UniTek as well as
pro forma financial information.  As a result of the Merger, the
Company’s results for the six-month period ending December 31, 2009 are not
indicative of the results to be expected for any future periods.





2.
            Summary
      of Significant Accounting Policies





Basis
of Presentation, Use of Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Major assets and liabilities that are subject to estimates include allowance for
doubtful accounts, goodwill and other acquired intangible assets, deferred tax
assets and certain accrued and contingent liabilities. One of the more
significant processes requiring estimates is
percentage-of-completion.





We
recognize revenue and profit on our contracts as the work progresses using the
percentage-of-completion method of accounting. Under this method, contracts in
progress are valued at cost plus accrued profits less earned revenue and
progress payments on uncompleted projects. This method relies on estimates of
total expected contract revenue and costs.


F-8


BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





We follow
accounting standards set by the Financial Accounting Standards Board (“FASB”).
The FASB sets generally accepted accounting principles (“GAAP”) that we follow
to ensure we consistently report our financial condition, results of operations,
and cash flows. References to GAAP issued by the FASB in these footnotes are to
the FASB Accounting Standards of Codification.





Principles
of Consolidation





The
consolidated financial statements include our accounts and the accounts of our
wholly-owned subsidiary. All significant intercompany accounts and transactions
have been eliminated in consolidation.





Cash
and Cash Equivalents





We
consider all highly liquid instruments purchased with an original maturity of
three months or less to be cash equivalents. Cash and cash equivalents are
stated at cost, which approximates fair value. The Company’s cash and cash
equivalents are invested in investment-grade, short-term investment instruments
with high quality financial institutions.





Accounts
Receivable, Allowance for Doubtful Accounts





Accounts
receivable are customer obligations for services sold to such customers under
normal trade terms. The Company’s customers are primarily communications
carriers, corporate and government customers, located primarily in the U.S. The
Company performs periodic credit evaluations of its customers’ financial
condition. The Company provides allowances for doubtful accounts. Provisions for
doubtful accounts are recorded in selling, general and administrative expenses.
The adequacy of the reserve is evaluated using several factors including length
of time a receivable is past due, changes in the customer’s credit worthiness,
customer’s payment history, the length of the customer’s relationship with the
Company, current industry trends and the current economic climate.





Inventories





Inventories,
which consist mainly of parts and raw materials, are stated at the lower of cost
or market. Cost is determined using the average cost method.





Prepaid
Expenses and Other Assets





Prepaid
expenses are recorded as assets and expensed in the period in which the related
services are received. At December 31, 2009 and June 30, 2009, current prepaid
expenses and other current assets totaled approximately $0.7 million and $0.9
million, respectively, and consisted mainly of rental payments, insurance and
income tax payments.  Other non-current assets of approximately $0.3
million at December 31, 2009 and June 30, 2009 are mainly deposits for our
office and warehouse locations.





Property
and Equipment





Property
and equipment consist of automobiles and trucks, equipment, computer equipment
and software, furniture and fixtures, buildings, land and leasehold
improvements. Each class of asset is recorded at cost and depreciated using the
straight-line method over the estimated useful lives which range from a period
of three to five years. Leasehold improvements are amortized over the term of
the lease or the estimated useful life, whichever is shorter. Buildings are
amortized over 27.5 years. Maintenance and repairs are charged to expense as
incurred. Significant renewals and betterments are capitalized. At the time of
retirement or other disposition of property and equipment, the cost and
accumulated depreciation are removed from the accounts and any resulting gain or
loss is reflected in our Statements of Operations.





Goodwill
and Other Intangible Assets





In
accordance with Topic 350, “Intangibles – Goodwill and Other”, goodwill and
indefinite lived intangible assets are no longer amortized but are assessed for
impairment on at least an annual basis. Topic 350 also requires that intangible
assets with definite useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for
impairment.


F-9


BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





Topic 350
requires that goodwill be tested at least annually, utilizing a two-step
methodology. The initial step requires the Company to determine the fair value
of the business acquired (reporting unit) and compare it to the carrying value,
including goodwill, of such business. If the fair value exceeds its carrying
value, no impairment loss is recognized. However, if the carrying value of the
reporting unit exceeds its fair value, the goodwill of the unit may be impaired.
The amount, if any, of the impairment is then measured in the second step, based
on the excess, if any, of the reporting unit’s carrying value of goodwill over
its implied value.





The
Company determines the fair value of the business acquired (reporting units) for
purposes of this test primarily using indications of value determined by the use
of Guideline Public Company and Precedent Transactions Analyses. The fair value
of the Company’s reporting units derived using the aforementioned analyses
exceeded the carrying values of the reporting units at January 31 and December
31, 2009. Accordingly, step two was unnecessary and no impairment charge was
recognized in the consolidated statements of income for the year ended June 30,
2009 or the six months ended December 31, 2009.  Effective December
31, 2009, the Company changed its annual goodwill impairment testing date from
January 31 to December 31 of each year. This change ensures the completion of
the annual goodwill impairment test prior to the end of the annual reporting
period which was changed to December 31 from June 30 on January 27, 2010,
thereby aligning impairment testing procedures with year-end financial
reporting. Accordingly, management considers this accounting change preferable.
This change does not accelerate, delay, avoid, or cause an impairment charge,
nor does this change result in adjustments to previously issued financial
statements.





Goodwill
through the six months ended December 31, 2009 and the years ended June 30, 2009
and 2008 consisted of the following:





Beginning
      balance, July 1, 2007
                      
                      $
                      2,270Digitcom
      acquisition - purchase price adjustment
                      
                      
                      (225
                      )Comtech
      acquisition - additional payment
                      
                      
                      39Ending
      balance June 30, 2008
                      
                      
                      2,084T3
      acquisition
                      
                      
                      200Ending
      balance December 31, 2009 and June 30, 2009
                      
                      $
                      2,284





Revenue
Recognition





Site
acquisition and zoning services revenue is based upon output measures using
contract milestones as the basis. Revenue from infrastructure equipment
construction and installation contracts, which are generally completed within 90
days, is recorded under the percentage-of-completion method based on the
percentage that total direct costs incurred to date bear to estimated total
costs at completion. Losses are recognized when such losses become known. All
other revenue is recognized as work is performed.





Unbilled
receivables represent revenue on uncompleted infrastructure equipment
construction and installation contracts that are not yet billed or billable,
pursuant to contract terms. Deferred revenues principally represent the value of
services to customers that have been billed as of the balance sheet date but for
which the requisite services have not yet been rendered.





Income
Taxes





We
account for income taxes under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the carrying amounts of existing assets and
liabilities in the financial statements and their respective tax bases. Deferred
tax assets and liabilities are measured using applicable tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on the deferred tax assets and
liabilities of a change in tax rates is recognized in the Statement of
Operations in the period that includes the enactment date. A valuation allowance
is provided for deferred tax assets when it is more likely than not that such
assets will not be recovered.


F-10


BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





Stock-based
Compensation





We
elected to adopt Topic 718, “Compensation – Stock Compensation” using a modified
prospective application, whereby the provisions of the statement are applied
going forward only from the date of adoption to new (issued subsequent to July
1, 2005) stock option awards, and for the portion of any previously issued and
outstanding stock option awards for which the requisite service is rendered
after the date of adoption. All of our previously issued options had fully
vested prior to July 1, 2005.





Compensation
expense must be recognized for any awards modified, repurchased, or cancelled
after the date of adoption. Under the modified prospective application, no
restatement of previously issued results is required.





The fair
value of each option award is estimated on the date of the grant using the
Black-Scholes Merton option pricing model. Expected volatilities are based on
the historical volatility of WPCS International, which is another company in our
industry sector with similar revenue streams. We use historical data to estimate
an option’s expected life. The risk free interest rate input is based on the
market yield on United States Treasury securities at 5-year constant maturity in
effect at the time of the grant. Compensation costs, net of forfeitures, are
recognized on a straight-line basis over the period between the grant and
vesting dates. The expected term represents the period that the Company’s
stock-based awards are expected to be outstanding using the simplified method
since the Company does not have sufficient historical exercise activity pursuant
to Staff Accounting Bulletin (“SAB”) 107 and SAB 110.





The
following weighted average assumptions used for purposes of determining the fair
value were as follows:





Six
      months ended December 31,
                          
                          
                          Years
      ended June 30,2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008(Unaudited)Risk-free
      interest rate
                          
                          2.43%
      - 2.66%
                          
                          
                          2.06%
      - 3.06%
                          
                          
                          1.50%
      - 3.06%
                          
                          
                          2.58%
      - 4.97%Dividend
      yield
                          
                          0%
                          
                          
                          0%
                          
                          
                          0%
                          
                          
                          0%Volatility
                          
                          68%
                          
                          
                          64%
      - 67%
                          
                          
                          64%
      - 68%
                          
                          
                          66%
      - 71%Life
                          
                          6.25
      Years
                          
                          
                          6.25
      Years
                          
                          
                          6.25
      Years
                          
                          
                          5 -
      7.5 Years





Earnings
(Loss) per Share





We
calculate earnings per share in accordance with Topic 260, “Earnings Per Share”
(“EPS”). Topic 260 requires dual presentation of basic EPS and diluted EPS on
the face of the income statement for all entities with complex capital
structures.





Basic EPS
is computed as net income divided by the weighted-average number of common
shares outstanding during the period. Diluted EPS is computed as net income
divided by the weighted-average number of common shares that would have been
outstanding if the dilutive potential common shares had been issued. The
dilutive effect of the outstanding options and warrants are reflected in diluted
earnings per share by application of the treasury stock method. Diluted EPS
reflects the potential dilution that could occur from common shares issuable
through stock options, warrants and convertible debentures.




The
weighted average number of common shares utilized in the EPS computation for the
six months ended December 31, 2009 and 2008 (unaudited) and for the years ended
June 30, 2009 and 2008 was 26,515,732, 26,364,509, 26,439,499 and 17,918,035,
respectively.





The
following table sets forth the computations of basic earnings (loss) per share
and diluted earnings (loss) per share:


F-11





BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





Six
      Months Ended
                  
                  
                  Years
      endedDecember
      31,
                  
                  
                  June
      30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008(Unaudited)Basic
      earnings per share:Numerator:Net
      income (loss) allocable to common shareholders
                  
                  $
                  (5,506
                  )
                  
                  $
                  (1,228
                  )
                  
                  $
                  (3,424
                  )
                  
                  $
                  8,454Denominator:Weighted
      average common shares outstanding
                  
                  
                  26,516
                  
                  
                  
                  26,365
                  
                  
                  
                  26,439
                  
                  
                  
                  17,918Net
      income (loss) per share – basic
                  
                  $
                  (0.21
                  )
                  
                  $
                  (0.05
                  )
                  
                  $
                  (0.13
                  )
                  
                  $
                  0.47





Six
      Months Ended
                    
                    
                    Years
      endedDecember
      31,
                    
                    
                    June
      30,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008(Unaudited)Diluted
      earnings per share:Numerator:Net
      income (loss) allocable to common shareholders
                    
                    $
                    (5,506
                    )
                    
                    $
                    (1,228
                    )
                    
                    $
                    (3,424
                    )
                    
                    $
                    8,454Denominator:Weighted
      average common shares outstanding
                    
                    
                    26,516
                    
                    
                    
                    26,365
                    
                    
                    
                    26,439
                    
                    
                    
                    17,918Effect
      of dilutive securities:Stock
      options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    563Warrants
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    8,685Weighted
      average common shares outstanding assuming dilution
                    
                    
                    26,516
                    
                    
                    
                    26,365
                    
                    
                    
                    26,439
                    
                    
                    
                    27,166Net
      income (loss) per share - diluted
                    
                    $
                    (0.21
                    )
                    
                    $
                    (0.05
                    )
                    
                    $
                    (0.13
                    )
                    
                    $
                    0.31





Common
share equivalents consist of stock options and warrants using the treasury stock
method. For the year ended June 30, 2008, 320,690 stock options were excluded
from the computation of diluted net income per share because the exercise price
of these were greater than the average market price of the Company’s common
stock during the period, and therefore the effect is antidilutive.





Fair
Value of Financial Instruments





The
Company adopted Topic 820, “Fair Value Measurements and Disclosures” for cash
and cash equivalents effective July 1, 2008. This Topic defines fair value,
establishes a framework for measuring fair value, and requires expanded
disclosures about fair value measurements. Topic 820 emphasizes that fair value
is a market-based measurement, not an entity-specific measurement, and defines
fair value as the price that would be received to sell an asset or transfer a
liability in an orderly transaction between market participants at the
measurement date.  Topic 820 discusses valuation techniques, such as
the market approach (comparable market prices), the income approach (present
value of future income or cash flow) and the cost approach (cost to replace the
service capacity of an asset or replacement cost), which are each based upon
observable and unobservable inputs. Observable inputs reflect market data
obtained from independent sources, while unobservable inputs reflect the
Company’s market assumptions. Topic 820 utilizes a fair value hierarchy that
prioritizes inputs to fair value measurement techniques into three broad
levels:




Level
      1:
            Observable
      inputs such as quoted prices for identical assets or liabilities in active
      markets.


F-12




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





Level
      2:
            Observable
      inputs other than quoted prices that are directly or indirectly observable
      for the asset or liability, including quoted prices for similar assets or
      liabilities in active markets; quoted prices for similar or identical
      assets or liabilities in markets that are not active; and model-derived
      valuations whose inputs are observable or whose significant value drivers
      are observable.





Level
      3:
            Unobservable
      inputs that reflect the reporting entity’s own
  assumptions.





The
Company’s investment in overnight money market institutional funds, which
amounted to $1.2 million and $1.2 million at December 31, 2009 and June 30,
2009, respectively, is included in cash and cash equivalents on the accompanying
balance sheets and is classified as a Level 1 asset.





Currently,
Topic 820 applies to the derivative that is within our Warrants, which is
included in accrued liabilities in our consolidated balance sheet and is
considered a Level 3 liability. The derivative was valued using the
Black-Scholes Merton pricing model. The key inputs in the model are as
follows:




December
      31,
                  
                  
                  June
      30,2009
                  
                  
                  2009Maturity
      date
                  
                  12/29/2011
                  
                  
                  12/29/2011Risk-free
      interest rate
                  
                  
                  0.95
                  %
                  
                  
                  1.72
                  %Price
      of Common Stock
                  
                  $
                  0.80
                  
                  
                  $
                  0.75Volatility
                  
                  
                  67
                  %
                  
                  
                  68
                  %





The
Company’s consolidated balance sheets include the following financial
instruments: short-term cash investments, trade accounts receivable, trade
accounts payable, long-term debt and the PNC line of credit. The Company
believes the carrying amounts in the financial statements approximates the fair
value of these financial instruments due to the relatively short period of time
between the origination of the instruments and their expected realization or the
interest rates which approximate current market rates.





Concentration
of Credit Risk





Financial
instruments which potentially subject the Company to concentration of credit
risk consist principally of temporary cash investments and accounts receivable.
The Company does not enter into financial instruments for trading or speculative
purposes.





Recently
Issued Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued Topic
820 “Fair Value Measurements and Disclosures” (“Topic 820”) which is intended to
increase consistency and comparability in fair value measurements by defining
fair value, establishing a framework for measuring fair value and expanding
disclosures about fair value measurements. The provisions of Topic 820, which
are effective for financial statements issued for the fiscal years beginning
after November 15, 2008, and interim periods within those fiscal years except as
it relates to financial assets and liabilities, which we adopted effective July
1, 2008. The adoption on July 1, 2009 of the remaining provisions of Topic 820
did not have a material effect to the financial statements taken as a
whole.




In May
2008, the FASB issued Topic 470.20”Debt with Conversion and Other Options”
(“Topic 470-20”), which applies to convertible debt that includes a cash
conversion feature. Under Topic 470.20, the liability and equity components of
convertible debt instruments within the scope of this pronouncement shall be
separately accounted for in a manner that will reflect the entity’s
nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. Topic 470.20 is effective for fiscal years beginning after
December 15, 2008. The Company adopted Topic 470.20 effective July 1, 2009 with
no material impact on the Company’s consolidated financial position and results
of operations.


F-13





BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)




In June
2008, the FASB ratified Topic 815.40 “Derivatives and Hedging, Contracts in an
Entity’s Own Equity” (“Topic 815.40”). Topic 815.40 provides that an entity
should use a two step approach to evaluate whether an equity-linked financial
instrument (or embedded feature) is indexed to its own stock, including
evaluating the instrument’s contingent exercise and settlement provisions. It
also clarifies the impact of foreign currency denominated strike prices and
market-based employee stock option valuation instruments on the evaluation.
Topic 815.40 is effective for fiscal years beginning after December 15, 2008.
The Company adopted Topic 815.40 effective July 1, 2009 with no material impact
on the Company’s consolidated financial position and results of operations. The
Company recognized a liability at July 1, 2009 of $68 thousand with a
corresponding offset to Additional paid-in capital and Cumulative adjustment to
accumulated deficit, which represented the fair value of certain warrants to
purchase the Company’s Common Stock on that date. The Company recognized other
expense during the six months ended December 31, 2009 of $1 thousand
representing the change in fair value of these warrants during the
period.




In May
2009, the FASB issued Topic 855 “Subsequent Events” (“Topic 855”) to be
effective for the interim or annual periods ending after June 15, 2009. The
objective of this Topic is to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. In particular,
this Topic sets forth a) the period after the balance sheet date during which
management of a reporting entity  should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements; b) the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements; and c) the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. The effect of
the adoption of Topic 855 was not material on the Company’s consolidated
financial position and results of operations. The Company evaluated subsequent
events through the date the financial statements were issued.




3.
            Accounts
      Receivable and Concentration of Credit
Risk





Accounts
receivable at December 31, 2009 and June 30, 2009 consist of the
following:





December
      31,
                    
                    
                    June
      30,2009
                    
                    
                    2009Accounts
      receivable
                    
                    $
                    19,196
                    
                    
                    $
                    16,204Unbilled
      receivables
                    
                    
                    7,899
                    
                    
                    
                    4,11227,095
                    
                    
                    
                    20,316Allowance
      for doubtful accounts
                    
                    
                    (522
                    )
                    
                    
                    (200
                    )Total
                    
                    $
                    26,573
                    
                    
                    $
                    20,116





Unbilled
receivables represent revenue on uncompleted infrastructure construction and
site acquisition contracts that are not yet billed or billable, pursuant to
contract terms. Unbilled receivables are generally billed within three months
subsequent to the provision of services. Deferred revenue principally represents
the value of services to customers that have been billed as of the balance sheet
date but for which the requisite services have not yet been rendered. Unbilled
receivables and deferred revenue are reported net in accounts receivable. The
total value of deferred revenue was $0.8 million and $0.6 million at December
31, 2009 and June 30, 2009, respectively.





The
allowance for doubtful accounts for the years ended December 31, 2009 and June
30, 2009 consisted of the following:


Balance
      at
                  
                  
                  
                  
                  Recoveries/
                  
                  Balance
      atBeginning
                  
                  Charged
      to
                  
                  Deductions/
                  
                  End
      ofof
      Period
                  
                  Expense
                  
                  Write-offs
                  
                  PeriodAllowance
      for doubtful accounts:Year
      ended June 30, 2009
                  
                  $
                  830
                  
                  
                  
                  342
                  
                  
                  
                  (972
                  )
                  
                  $
                  200Six
      months ended December 31, 2009
                  
                  $
                  200
                  
                  
                  
                  480
                  
                  
                  
                  (158
                  )
                  
                  $
                  522





As of and
for the six months ended December 31, 2009, we derived 53% of our total revenue
from four customers, and those customers represented 51% of our accounts
receivable. During the six months ended December 31, 2009, Clearwire US LLC
represented 22%, T-Mobile (and its subsidiaries) and Ericsson, Inc. each
represented 13%, and Cox Communications, Inc. represented 6% of our total
revenue.


F-14





BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





As of and
for the six months ended December 31, 2008, we derived 72% of our total revenue
from our six largest customers, and these customers represented 66% of our
accounts receivable.  During the six months ended December 31, 2008,
American Tower, Cricket Corporation and Ericsson, Inc. each individually
represented greater than 5%, T-Mobile (and its subsidiaries) represented 13% ,
Sprint Nextel Corporation  represented 17% and Metro PCS, Inc. (and
its subsidiaries) represented 25% of our net revenue for the
period.





As of and
for the year ended June 30, 2009, we derived 43% of our total revenue from three
customers, and those customers represented 28% of our accounts receivable.
During the year ended June 30, 2009, Metro PCS, Inc. (and its subsidiaries)
represented 19%, T-Mobile (and its subsidiaries) represented 13%, and Clearwire
US LLC represented 11% of our total revenue.





As of and
for the year ended June 30, 2008, we derived 84% of our total revenue from our
two largest customers, and those customers represented 62% of our accounts
receivable. During the year ended June 30, 2008, Sprint Nextel Corporation
represented 77% and Metro PCS represented 7% of our total revenue.





4.
            Property
      and Equipment





Property
and equipment at December 31, 2009 and June 30, 2009 consisted of the
following:





December
      31,
                    
                    
                    June
      30,2009
                    
                    
                    2009Automobiles
      and trucks
                    
                    $
                    1,624
                    
                    
                    $
                    1,691Furniture
      and fixtures
                    
                    
                    501
                    
                    
                    
                    469Equipment
                    
                    
                    3,520
                    
                    
                    
                    3,312Computer
      equipment and software
                    
                    
                    522
                    
                    
                    
                    454Buildings
                    
                    
                    313
                    
                    
                    
                    313Leasehold
      improvements
                    
                    
                    291
                    
                    
                    
                    2566,771
                    
                    
                    
                    6,495Less:
      accumulated depreciation
                    
                    
                    (4,797
                    )
                    
                    
                    (4,346
                    )1,974
                    
                    
                    
                    2,149Land
                    
                    
                    90
                    
                    
                    
                    90$
                    2,064
                    
                    
                    $
                    2,239





Depreciation
on property and equipment for the six months ended December 31, 2009 and 2008
and for the years ended June 30, 2009 and 2008 was approximately $0.5 million,
$0.5 million, $0.9 million and $0.8 million, respectively.





5.
            Non-Current
      Assets





Non-current
assets include amortizable intangible assets consisting of customer
relationships and covenants not to compete. These assets, together with
goodwill, were the result of the allocation of the purchase price for
acquisitions. Amortization expense related to amortizable intangible assets was
$0.1 million, $0.2 million, $0.3 million and $0.4 million for the six months
ended December 31, 2009 and 2008 and for the years ended June 30, 2009 and 2008,
respectively.





Intangible
assets subject to amortization are amortized based upon the assets’ estimated
useful lives. Customer relationships have estimated useful lives of 70 months
and covenants not to compete have estimated useful lives of approximately 45
months. We will continue to evaluate the estimated useful lives on an ongoing
basis.





Scheduled
amortization charges for the intangible assets, as of December 31, 2009 are as
follows:


F-15




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





2010
                    
                    
                    1972011
                    
                    
                    962012
                    
                    
                    602013
                    
                    
                    -Total
                    
                    $
                    353





6.
            Accrued
      Liabilities





Accrued
liabilities at December 31, 2009 and June 30, 2009 consisted of the
following:


December
      31,
                    
                    
                    June
      30,2009
                    
                    
                    2009Employee
      compensation
                    
                    $
                    1,535
                    
                    
                    $
                    1,230Construction
      costs
                    
                    
                    2,727
                    
                    
                    
                    2,027Other
                    
                    
                    643
                    
                    
                    
                    428$
                    4,905
                    
                    
                    $
                    3,685





Accrued
construction costs are reported net of amounts deferred in the calculation of
percentage of completion for our construction and site acquisition projects. The
amount of deferred expense included in accrued construction costs was $3.1
million and $1.3 million at December 31, 2009 and June 30, 2009,
respectively.





7.
            Income
      Taxes





We
adopted Topic 740 “Income Taxes” on July 1, 2007. We recognize interest, if any,
as interest expense, and penalties, if any, as a component of selling, general
and administrative expense in our consolidated financial statements. We file a
consolidated U.S. federal income tax return as well as income tax returns for
several state jurisdictions, of which New Jersey is the most significant. We
currently have our income tax returns for the periods January 1, 2006 through
December 31, 2008 under audit by the State of New Jersey. Income tax returns
remain open for examination under U.S. and state statutes for years ended June
30, 2006 and thereafter.





Income
tax expense differed from amounts computed by applying the U.S. federal tax rate
of 34% to pre-tax income as a result of the following:





Six
      months ended December 31,
                        
                        
                        Years
      ended June 30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008(Unaudited)Tax
      expense (benefit) at statutory rate of 34%
                        
                        $
                        (636
                        )
                        
                        $
                        (594
                        )
                        
                        $
                        (1,999
                        )
                        
                        $
                        5,109Increase
      (decrease) in valuation allowance against deferred tax
    assets
                        
                        
                        3,625
                        
                        
                        
                        (43
                        )
                        
                        
                        54
                        
                        
                        
                        (2
                        )State
      and local income tax expense (benefit), net of income tax
      benefit
                        
                        
                        337
                        
                        
                        
                        (127
                        )
                        
                        
                        (326
                        )
                        
                        
                        1,092Meals
      and entertainment
                        
                        
                        44
                        
                        
                        
                        35
                        
                        
                        
                        63
                        
                        
                        
                        64Financing
      fees
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        8Acquisition
      costs
                        
                        
                        265
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Other
      (net)
                        
                        
                        -
                        
                        
                        
                        210
                        
                        
                        
                        (249
                        )
                        
                        
                        156(Benefit)
      provision for income taxes
                        
                        $
                        3,635
                        
                        
                        $
                        (519
                        )
                        
                        $
                        (2,457
                        )
                        
                        $
                        6,427





The
following summarizes the (benefit) provision for income taxes:


F-16





BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)





Six
      months ended December 31,
                    
                    
                    Years
      ended June 30,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008(Unaudited)Current:Federal
                    
                    $
                    -
                    
                    
                    $
                    (518
                    )
                    
                    $
                    (2,208
                    )
                    
                    $
                    4,825State
      and local
                    
                    
                    -
                    
                    
                    
                    (165
                    )
                    
                    
                    (285
                    )
                    
                    
                    1,744Total
      current
                    
                    
                    -
                    
                    
                    
                    (683
                    )
                    
                    
                    (2,493
                    )
                    
                    
                    6,569Deferred:Federal
                    
                    
                    3,124
                    
                    
                    
                    203
                    
                    
                    
                    178
                    
                    
                    
                    (105
                    )State
      and local
                    
                    
                    511
                    
                    
                    
                    (39
                    )
                    
                    
                    (142
                    )
                    
                    
                    (37
                    )Total
      deferred
                    
                    
                    3,635
                    
                    
                    
                    164
                    
                    
                    
                    36
                    
                    
                    
                    (142
                    )(Benefit)
      provision for income taxes
                    
                    $
                    3,635
                    
                    
                    $
                    (519
                    )
                    
                    $
                    (2,457
                    )
                    
                    $
                    6,427





The tax
effects of temporary differences that give rise to deferred tax assets and
liabilities at December 31, 2009 and June 30, 2009 are as
follows:


F-17


BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ($
amount in thousands except per share and share amounts)


December
      31, 2009
                              
                              
                              June
      30.Federal
                              
                              
                              State
                              
                              
                              Total
                              
                              
                              2009Deferred Tax AssetsCurrent:Allowance
      for doubtful accounts
                              
                              $
                              160
                              
                              
                              $
                              46
                              
                              
                              $
                              206
                              
                              
                              $
                              77Allowance
      for obsolete inventory
                              
                              
                              41
                              
                              
                              
                              12
                              
                              
                              
                              53
                              
                              
                              
                              10Accrued
      bonus
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              3Accrued
      vacation
                              
                              
                              82
                              
                              
                              
                              24
                              
                              
                              
                              106
                              
                              
                              
                              19Contributions
                              
                              
                              13
                              
                              
                              
                              4
                              
                              
                              
                              17
                              
                              
                              
                              -NOL
      carryforward
                              
                              
                              640
                              
                              
                              
                              -
                              
                              
                              
                              640
                              
                              
                              
                              320936
                              
                              
                              
                              86
                              
                              
                              
                              1,022
                              
                              
                              
                              429Non-Current:Stock-based
      compensation
                              
                              
                              352
                              
                              
                              
                              102
                              
                              
                              
                              454
                              
                              
                              
                              414NOL
      carryforward
                              
                              
                              2,377
                              
                              
                              
                              1,057
                              
                              
                              
                              3,434
                              
                              
                              
                              3,652Customer
      list amortization
                              
                              
                              172
                              
                              
                              
                              50
                              
                              
                              
                              222
                              
                              
                              
                              201Covenant
      amortization
                              
                              
                              44
                              
                              
                              
                              13
                              
                              
                              
                              57
                              
                              
                              
                              44Deferred
      Rent
                              
                              
                              87
                              
                              
                              
                              25
                              
                              
                              
                              112
                              
                              
                              
                              -Amortization
      of warrants in deferred financing fees
                              
                              
                              77
                              
                              
                              
                              17
                              
                              
                              
                              94
                              
                              
                              
                              953,109
                              
                              
                              
                              1,264
                              
                              
                              
                              4,373
                              
                              
                              
                              4,406Total
      Deferred Tax Assets
                              
                              
                              4,045
                              
                              
                              
                              1,350
                              
                              
                              
                              5,395
                              
                              
                              
                              4,835Deferred Tax LiabilitiesLong-TermGoodwill
      amortization
                              
                              
                              116
                              
                              
                              
                              30
                              
                              
                              
                              146
                              
                              
                              
                              119Depreciation
      expense
                              
                              
                              142
                              
                              
                              
                              41
                              
                              
                              
                              183
                              
                              
                              
                              244Total
      Deferred Tax Liabilities
                              
                              
                              258
                              
                              
                              
                              71
                              
                              
                              
                              329
                              
                              
                              
                              3633,787
                              
                              
                              
                              1,279
                              
                              
                              
                              5,066
                              
                              
                              
                              4,472Less:
      Valuation allowance
                              
                              
                              (3,903
                              )
                              
                              
                              (1,309
                              )
                              
                              
                              (5,212
                              )
                              
                              
                              (1,254
                              )Net
      deferred tax assets (liabilities)
                              
                              $
                              (116
                              )
                              
                              $
                              (30
                              )
                              
                              $
                              (146
                              )
                              
                              $
                              3,218





Deferred
income taxes result from temporary differences in the financial reporting basis
and tax basis of assets and liabilities.




We have
federal net operating loss carryforwards of approximately $9.4 million which
begin expiring in 2023. These carryforwards are subject to Section 382
limitations as a result of the Acquisition and Old Berliner reorganization.
These limitations will need to be re-evaluated due to the Merger.


We have
state net operating loss carryforwards of approximately $14.6 million which
begin expiring in 2012.


In
assessing the realizability of deferred tax assets, we consider whether it is
more likely than not for some portion or all of the deferred tax assets will not
be realized. The ultimate realization of deferred tax assets is dependent upon
the generation of future taxable income during the periods in which those
temporary differences become deductible.






F-18




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ($
amount in thousands except per share and share amounts)


Based on
management’s assessment of certain tax attributes, we have determined that it
was more likely than not that all of our net deferred tax assets (except for
goodwill amortization)  totaling approximately $5.2 million will not
be realized. This determination was made based on our historical losses and our
understanding of the effect of the Merger transaction which is more fully
described in Footnote 16. Accordingly, valuation allowances have been
established for these net assets.





At
December 31, 2009 and June 30, 2009, we had total income taxes receivable of
$2.3 million and $2.7 million, respectively, most of which was received in March
2010.





8.
            Revolving
      Credit Facility





PNC
Bank, National Association Facility





On April
17, 2008, our wholly owned subsidiary BCI Communications, Inc. (“BCI”), as
borrower, became obligated under a Revolving Credit and Security Agreement (the
“PNC Facility”) with PNC Bank, National Association (“PNC”).  Under
the terms of the PNC Facility, BCI was entitled to request that PNC make
revolving advances to BCI from time to time in an amount up to the lesser of (i)
85% of the value of certain receivables owned by BCI and approved by PNC as
collateral or (ii) a total of $15.0 million.  Such revolving advances
were used by BCI to repay existing indebtedness, pay fees and expenses relating
to entering into the PNC Facility and provide for BCI’s working capital
needs.  The balance outstanding at December 31, 2009 was $5.5 million
and the amount additionally available on the line of credit was $6.9
million.  In connection with the Merger, on January 27, 2010, the PNC
Facility was terminated and paid in full along with an early termination fee of
$57,500.




Long-Term
Debt




Long-term
debt at December 31, 2009 and June 30, 2009 consisted of the
following:





December31,
                            
                            
                            June
      30,2009
                            
                            
                            2009Note
      payable to J&J Leasing due February 2010, at Prime
Rate
                            
                            $
                            292
                            
                            
                            $
                            438Notes
      payable to finance companies related to insurancepremiums,
      payable in monthly installments of $3thousand,
      interest at 3%, due February 2010
                            
                            
                            5
                            
                            
                            
                            287Notes
      payable to finance companies, payable in monthlyinstallments
      of $5 thousand, interest ranging from5%
      to 13%, due January 2010 through June 2011
                            
                            
                            40
                            
                            
                            
                            70Capital
      Leases (Note 9)
                            
                            
                            440
                            
                            
                            
                            312777
                            
                            
                            
                            1,107Less
      current portion
                            
                            
                            (539
                            )
                            
                            
                            (895
                            )$
                            238
                            
                            
                            $
                            212





Note
Purchase Agreement





On
December 29, 2006, we entered into a Note Purchase Agreement (the “Note Purchase
Agreement”) with Sigma Opportunity Fund, LLC (“Sigma”) for the issuance and sale
of a 7% Senior Subordinated Secured Convertible Note due on December 29, 2008,
in the original principal amount of $3.0 million (the “Note”) convertible at
$1.10 per share (subject to adjustment) and a warrant to purchase up to 1.5
million shares of our common stock with a strike price of $0.01 (the
“Warrant”).





On
February 2, 2007, we entered into a Joinder Agreement to the Note Purchase
Agreement with Pacific Asset Partners, LLC (“Pacific”) and Operis Partners I,
LLC (“Operis”) and issued a second 7% Senior Subordinated Secured Convertible
Note due on December 29, 2008 in the original principal amount of $1.0 million
and a warrant to purchase up to 500,000 shares of our common stock (with a fair
value of $0.4 million) to Pacific, and a third 7% Senior Subordinated Secured
Convertible Note due on December 29, 2008 in the original principal amount of
$0.5 million and a warrant to purchase up to 250,000 shares of our common stock
(with a fair value of $0.2 million) to Operis, all on substantially the same
terms as the Note and Warrant issued to Sigma.


F-19




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)


On
February 15, 2007, we entered into a Joinder Agreement to the Note Purchase
Agreement with Sigma Berliner, LLC (“Sigma Berliner”) to issue a fourth 7%
Senior Subordinated Secured Convertible Note due on December 29, 2008 in the
original principal amount of $1.5 million (the “Sigma Berliner Note”) and a
warrant to purchase up to 750,000 shares of our common stock (with a fair value
of $0.6 million) to Sigma Berliner, also on substantially the same terms as the
Note and Warrant issued to Sigma.





Pursuant
to the Note Purchase Agreement, we agreed to register the shares of common stock
issuable upon conversion of the Note and upon exercise of the Warrant and the
Additional Warrants (collectively, the “Registrable Shares”) for resale under
the Securities Act. We agreed to file with the SEC a Registration Statement with
respect to the Registrable Shares, which was filed with the SEC on March 19,
2007, and to cause the Registration Statement to become effective on or before
June 15, 2007.





We were
unable to have the Registration Statement declared effective by the Securities
and Exchange Commission prior to June 15, 2007.  Therefore, pursuant
to the Note Purchase Agreement, we became subject to liquidated damages equal to
2% of the aggregate purchase price paid by each purchaser for each of the first
six months that we failed to meet the requirement.  On September 27,
2007, we signed a Waiver and Amendment to Note Purchase Agreement (the “Waiver”)
with the noteholders to lower the conversion price of the Notes from $1.10 to
$1.00 per share.  The reduction in the conversion price resulted in
finance charges of $0.7 million, which was reflected in our balance sheet as
other long-term liabilities and was subsequently reclassified as Additional
paid-in capital. Pursuant to the Waiver, we have agreed to continue to use our
best efforts to register the shares underlying the Notes and the associated
warrants, and to maintain the effectiveness of any registration statement we
file with respect to these shares. Effective December 4, 2008, we registered
with the SEC 896,756 of these shares of common stock for resale by the security
holders on a delayed or continuous basis, which does not completely fulfill our
obligations.





In
connection with the Note Purchase Agreement, on February 8, 2007 we amended our
certificate of incorporation to increase the number of shares of our authorized
common stock from 20,000,000 shares to 100,000,000 shares.





In
connection with the Sigma note, the Pacific note, the Operis note and the Sigma
Berliner note, we recorded debt discounts equal to the fair value of the
warrants associated with such notes as follows:





LoanFace
                      
                      
                      Warrants
                      
                      
                      DebtAmount
                      
                      
                      Issued
                      
                      
                      DiscountSigma
      note
                      
                      $
                      3,000
                      
                      
                      
                      1,500,000
                      
                      
                      $
                      753Pacific
      note
                      
                      
                      1,000
                      
                      
                      
                      500,000
                      
                      
                      
                      376Operis
      note
                      
                      
                      500
                      
                      
                      
                      250,000
                      
                      
                      
                      188Sigma
      Berliner note
                      
                      
                      1,500
                      
                      
                      
                      750,000
                      
                      
                      
                      564$
                      6,000
                      
                      
                      
                      3,000,000
                      
                      
                      $
                      1,881





We
reduced the carrying value of these notes on the books accordingly with the
corresponding entries to paid-in capital. We have accreted these amounts over
the lives of the notes, charging interest expense whereby the notes’ balances
will equal the face amounts at December 29, 2008.





On June
25, 2008, the Noteholders converted the full principal amounts of the Notes into
common stock of the Company at a conversion price of $1.00 per share. The
Company paid each Noteholder cash payments representing interest payments the
Noteholders would have received had they converted on the Notes’ maturity date,
December 29, 2008. Upon conversion, (a) Sigma received 3,000,000 shares of
common stock and a cash payment of $0.2 million, (b) Operis received 500,000
shares of common stock and a cash payment of $0.1 million, (c) Pacific received
1,000,000 shares of common stock and a cash payment of $0.1 million, and (d)
Sigma Berliner received 1,500,000 shares of common stock and a cash payment of
$0.1 million.


F-20




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)


In
connection with the conversion of the Notes, we charged the unamortized balance
of deferred finance fees in the amount of $0.2 million and the unaccreted
balance of the warrants issued in connection with the Notes in the amount of
$0.5 million to amortization of deferred financing fees and accretion of debt
discount.





9.
            Capitalized
      Leases





We have
entered into capital leases for certain automobiles and trucks. As of December
31, 2009 and June 30, 2009, the total cost of the vehicles was approximately
$0.8 million and $0.7 million, respectively, and the related accumulated
depreciation was approximately $0.4 million and $0.3 million,
respectively.





The
following is a schedule of future minimum lease payments under capital leases as
of December 31, 2009:





2010
                      
                      $
                      2392011
                      
                      
                      1772012
                      
                      
                      722013
                      
                      
                      6Thereafter
                      
                      
                      2496Amounts
      representing interest
                      
                      
                      56Future
      minimum lease payments
                      
                      $
                      440





10.
            Commitments
      and Contingencies





Operating
Leases





We lease
office and warehouse space under various operating leases. Rent expense for the
six months ended December 31, 2009 and 2008 was $1.0 million and $0.6 million,
respectively, and for the years ended June 30, 2009 and 2008 was $1.2 million
and $0.8 million, respectively.





Minimum
future amounts due under operating leases are as follows:





2010
                      
                      $
                      1,9842011
                      
                      
                      1,9852012
                      
                      
                      1,9822013
                      
                      
                      2,0192014
                      
                      
                      1,848Thereafter
                      
                      
                      4,958$
                      14,776





11.
            Legal
      Proceedings





We are
involved in legal proceedings from time to time, none of which we believe, if
decided adversely to us, would have a material adverse effect on our business,
financial condition or results of operations.





12.
            Employee
      Benefit Plan





Berliner
maintains a defined contribution plan under Section 401(k) of the Internal
Revenue Code. Under the plans, employees may elect to defer a percentage of
their salary, subject to defined limitations. Berliner retains the right to
provide for a discretionary matching contribution in addition to discretionary
contributions based upon participants’ salaries. We accrued for voluntary
matching or discretionary contributions totaling $92 thousand and $0.2 million
for the years ended June 30, 2009 and 2008, respectively.


F-21




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)


13.
            Related
      Party Transactions





Pursuant
to the provisions of the Note Purchase Agreement described in Note 8, so long as
the Note remains outstanding or Sigma beneficially owns at least 5% of our
outstanding common stock, Sigma has the right to nominate one director to our
Board of Directors. On December 29, 2006, Sigma nominated, and our Board of
Directors appointed, Thom Waye to serve as a member of our Board of Directors as
a Class III director, with his term expiring at the 2008 annual meeting. Mr.
Waye was re-elected at the 2008 annual meeting with a term expiring at the 2011
annual meeting. We are obligated to use our best efforts to cause Mr. Waye, as
well as all reasonably suited future designees, to continue to serve on our
Board of Directors.  During the year ended June 30, 2008, we paid
Sigma $0.4 million in interest on the Note. We paid Mr. Waye $9 thousand and $21
thousand during the six months ended December 31, 2009 and 2008, respectively,
and $23 thousand and $17 thousand during the years ended June 30, 2009 and 2008,
respectively, for his service as a director pursuant to our standard
non-employee director compensation program. In addition, during fiscal 2008 we
issued 25,000 shares of our common stock to each of Mr. Waye and all of our
outside independent directors. The value of the stock issued to each director
was $28 thousand at the time of issuance. During the year ended June 30, 2009 we
issued 29,166 shares of our common stock to each of Mr. Waye and two of our
outside independent directors. The value of the stock issued to each director
was $18 thousand at the time of issuance.





On
February 15, 2007, we entered into a Joinder Agreement to the Note Purchase
Agreement with Sigma Berliner, an affiliate of Sigma and Thom Waye, and issued a
fourth 7% Senior Subordinated Secured Convertible Note due on December 29, 2008
in the original principal amount of $1.5 million and a warrant to purchase up to
750,000 shares of our common stock to Sigma Berliner, on substantially the same
terms as the Note and Warrant issued to Sigma. This transaction was the result
of Sigma exercising a right that Sigma negotiated as part of the December 29,
2006 transaction, at a time at which it was not an affiliate of Berliner. During
the year ended June 30, 2008, we paid Sigma Berliner $0.2 million in interest on
the Note.





14.
            Stockholders’
      Equity





Common
and Preferred Stock





As of
June 30, 2009, pursuant to the Amendment to our Amended and Restated Certificate
of Incorporation dated February 8, 2007, we are authorized to issue 102,000,000
shares, consisting of (i) 100,000,000 shares of common stock, par value $0.00002
per share, and (ii) 2,000,000 shares of preferred stock, par value $0.00002 per
share.





Stock
Options





At June
30, 2009, we sponsored two stock option plans, the 1999 Omnibus Securities Plan
(the “1999 Plan”) and the 2001 Equity Incentive Plan (the “2001 Plan”),
collectively (the “Plans”). We have elected to account for those Plans under
SFAS 123R.





The Plans
provide for the grant of incentive stock options and non-qualified stock
options. The terms of the options are set by our Board of Directors. The options
expire no later than ten years after the date the stock option is granted. The
number of shares authorized for grants under the Plans is 15% of the total
outstanding common stock as computed by the Company as fully diluted, provided
that no more than 4 million options can be “incentive” stock options. The 2001
Plan provides for the grant of a maximum of 40,000 incentive stock options that
expire no later than ten years after the date the stock option is
granted.





The
following table represents stock options under our Plans as of December 31,
2009:


F-22


BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ($
amount in thousands except per share and share amounts)


2001
      Plan
                    
                    
                    1999
      Plan
                    
                    
                    Non-PlanWeighted
                    
                    
                    
                    
                    
                    Weighted
                    
                    
                    
                    
                    
                    WeightedNumber
                    
                    
                    Average
                    
                    
                    Number
                    
                    
                    Average
                    
                    
                    Number
                    
                    
                    Averageof
                    
                    
                    Exercise
                    
                    
                    of
                    
                    
                    Exercise
                    
                    
                    of
                    
                    
                    ExerciseShares
                    
                    
                    Price
                    
                    
                    Shares
                    
                    
                    Price
                    
                    
                    Shares
                    
                    
                    PriceBalance
      at June 30, 2008
                    
                    
                    16,891
                    
                    
                    $
                    1,387.50
                    
                    
                    
                    1,413,685
                    
                    
                    $
                    3.37
                    
                    
                    
                    18,704
                    
                    
                    $
                    6,786.00Options
      granted at fair value
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    958,326
                    
                    
                    
                    1.42
                    
                    
                    
                    -
                    
                    
                    
                    -Options
      cancelled
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (203,629
                    )
                    
                    
                    1.09
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at June 30, 2009
                    
                    
                    16,891
                    
                    
                    $
                    1,387.50
                    
                    
                    
                    2,168,382
                    
                    
                    $
                    2.72
                    
                    
                    
                    18,704
                    
                    
                    $
                    6,786.00Exercisable
      at June 30, 2009
                    
                    
                    16,891
                    
                    
                    $
                    1,387.50
                    
                    
                    
                    1,141,451
                    
                    
                    $
                    3.96
                    
                    
                    
                    18,704
                    
                    
                    $
                    6,786.00Options
      granted at fair value
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    424,896
                    
                    
                    
                    0.74
                    
                    
                    
                    -
                    
                    
                    
                    -Options
      cancelled
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (277,957
                    )
                    
                    
                    13.84
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at December 31, 2009
                    
                    
                    16,891
                    
                    
                    $
                    1,387.50
                    
                    
                    
                    2,315,321
                    
                    
                    $
                    1.02
                    
                    
                    
                    18,704
                    
                    
                    $
                    6,786.00Exercisable
      at December 31, 2009
                    
                    
                    16,891
                    
                    
                    $
                    1,387.50
                    
                    
                    
                    1,388,615
                    
                    
                    $
                    0.94
                    
                    
                    
                    18,704
                    
                    
                    $
                    6,786.00





The
intrinsic values of options exercised, outstanding and exercisable as of and for
the six months ended December 31, 2009 were as follows:





Options
      exercised
                  
                  $
                  0Options
      outstanding
                  
                  $
                  596,857Options
      exercisable
                  
                  $
                  358,987





Stock-based
compensation expense included in the consolidated statement of operations for
the years ended June 30, 2009 and 2008 was approximately $0.6 million and $0.2
million, respectively, and $0.1 million and $0.3 million for the six months
ended December 31, 2009 and 2008, respectively.. As of December 31, 2009, there
was approximately $0.4 million of total unrecognized stock-based compensation
cost related to options granted under our Plans that will be recognized over
four years.





At
December 31, 2009, the range of exercise prices, weighted average exercise price
and weighted average remaining contractual life for options outstanding were as
follows:





Options Outstanding and ExercisableWeightedWeighted
                  
                  AverageNumber
                  
                  
                  
                  
                  
                  Average
                  
                  Remainingof
                  
                  
                  
                  
                  
                  Exercise
                  
                  ContractualOption
      Price Range
                  
                  
                  Shares
                  
                  
                  Exercisable
                  
                  
                  Price
                  
                  Life2001
      Plan
                  
                  
                  
                  
                  $
                  1,387.50
                  
                  
                  
                  16,891
                  
                  
                  
                  16,891
                  
                  
                  $
                  1,387.50
                  
                  1.03
      Years1999
      Plan
                  
                  $
                  0.30
      to
                  
                  
                  $
                  0.81
                  
                  
                  
                  1,047,496
                  
                  
                  
                  725,474
                  
                  
                  $
                  0.53
                  
                  6.86
      Years$
                  0.90
      to
                  
                  
                  $
                  1.48
                  
                  
                  
                  1,265,408
                  
                  
                  
                  635,350
                  
                  
                  $
                  1.35
                  
                  8.35
      Years$
                  7.05
                  
                  
                  
                  167
                  
                  
                  
                  167
                  
                  
                  $
                  7.05
                  
                  4.54
      Years$
                  8.01
                  
                  
                  
                  250
                  
                  
                  
                  250
                  
                  
                  $
                  8.01
                  
                  4.16
      Years$
                  16.50
                  
                  
                  
                  2,000
                  
                  
                  
                  2,000
                  
                  
                  $
                  16.50
                  
                  0.93
      YearsNon-Plan
                  
                  
                  
                  
                  
                  $
                  3,600.00
                  
                  
                  
                  637
                  
                  
                  
                  637
                  
                  
                  $
                  3,600.00
                  
                  0.19
      Years$
                  6,900.00
                  
                  
                  
                  18,067
                  
                  
                  
                  18,067
                  
                  
                  $
                  6,900.00
                  
                  0.26
      Years





During
the six months ended December 31, 2009, we issued 424,896 options to 28
individuals with vesting as follows:




WeightedNumber
                          
                          
                          AverageVesting
      Period
                          
                          of
      Shares
                          
                          
                          Fair
      Value25%
      per year after one year
                          
                          
                          22,500
                          
                          
                          $
                          0.4125%
      Immediate and 25% per year thereafter
                          
                          
                          402,396
                          
                          
                          
                          0.48424,896
                          
                          
                          
                          0.47


F-23




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)


The value
of this stock based on quoted market values at the time of grant was $0.3
million.





The
following table summarizes information about unvested stock option
transactions:





2001 Plan
                          
                          
                          1999 PlanWeighted
                          
                          
                          WeightedAverage
                          
                          
                          AverageNumber
      of
                          
                          
                          Number
      of
                          
                          
                          Exercise
                          
                          
                          FairShares
                          
                          
                          Shares
                          
                          
                          Price
                          
                          
                          ValueBalance
      at June 30, 2008
                          
                          
                          -
                          
                          
                          
                          631,613
                          
                          
                          $
                          1.14
                          
                          
                          $
                          0.81Options
      granted at fair value
                          
                          
                          -
                          
                          
                          
                          958,326
                          
                          
                          
                          1.42
                          
                          
                          
                          0.87Options
      vested
                          
                          
                          -
                          
                          
                          
                          (419,739
                          )
                          
                          
                          1.26
                          
                          
                          
                          0.81Options
      cancelled
                          
                          
                          -
                          
                          
                          
                          (143,269
                          )
                          
                          
                          1.16
                          
                          
                          
                          0.95Outstanding
      at June 30, 2009
                          
                          
                          -
                          
                          
                          
                          1,026,931
                          
                          
                          
                          1.34
                          
                          
                          
                          0.85Options
      granted at fair value
                          
                          
                          -
                          
                          
                          
                          424,896
                          
                          
                          
                          0.74
                          
                          
                          
                          0.47Options
      vested
                          
                          
                          -
                          
                          
                          
                          (382,082
                          )
                          
                          
                          1.18
                          
                          
                          
                          0.74Options
      cancelled
                          
                          
                          -
                          
                          
                          
                          (143,039
                          )
                          
                          
                          1.27
                          
                          
                          
                          0.88Outstanding
      at December 31, 2009
                          
                          
                          -
                          
                          
                          
                          926,706
                          
                          
                          $
                          1.14
                          
                          
                          
                          0.72





Stock
Warrants





At
December 31, 2009, we had issued warrants to purchase up to 1,003,572 shares of
our common stock. The following table summarizes those warrant
grants:





Number
      of
                      
                      Grant
                      
                      StrikeIssued
      to
                      
                      Shares
                      
                      Date
                      
                      Price
                      
                      
                      NotePunk,
      Ziegel & Company, L.P.
                      
                      
                      100,000
                      
                      June
      21, 2006
                      
                      $
                      1.00
                      
                      
                      
                      APunk,
      Ziegel & Company, L.P.
                      
                      
                      214,286
                      
                      December
      29, 2006
                      
                      
                      0.70
                      
                      
                      
                      ASigma
      Capital Advisors, LLC
                      
                      
                      150,000
                      
                      December
      29, 2006
                      
                      
                      0.55
                      
                      
                      
                      BSigma
      Capital Advisors, LLC
                      
                      
                      25,000
                      
                      February
      15, 2007
                      
                      
                      0.55
                      
                      
                      
                      BPunk,
      Ziegel & Company, L.P.
                      
                      
                      214,286
                      
                      February
      15, 2007
                      
                      
                      0.70
                      
                      
                      
                      ADigital
      Communication Services, Inc.
                      
                      
                      300,000
                      
                      February
      28, 2007
                      
                      
                      0.73
                      
                      
                      
                      C1,003,572





A
-  Part of advisory services fee.


B –
Warrants issued relating to the issuance of 7% Senior Subordinated Secured
Convertible Notes. See Note 9.


C –
Warrants issued related to the acquisition of Digitcom.





During
the year ended June 30, 2009, warrants to purchase 200,000 shares were
exercised. These warrants were issued relating to the acquisition of Digitcom.
During the year ended June 30, 2008, warrants to purchase 3,000,000 shares were
exercised. These warrants were issued relating to the issuance of 7% Senior
Subordinated Secured Convertible Notes which were converted on June 25, 2008.
See Note 8.





15.
            Selected
      Segment Financial Data





Topic 280
“Segment Reporting” establishes standards for reporting information about
operating segments in annual financial statements of public business enterprises
and requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. Operating segments
are components of an enterprise about which separate financial information is
available and regularly evaluated by the chief operating decision maker(s) of an
enterprise. We do not assign assets to our segments.


F-24




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)


We have
organized our company into two operating segments based upon the types of
customers served, services provided and the economic characteristics of each
segment. Our operating segments are:





Infrastructure equipment
construction and technical service: This segment includes radio frequency
and network design and engineering, radio transmission base station
modification, in-building network design, engineering and construction, project
management, specialty communication services, configured solutions as well as
design, installation and construction of wireless telecommunications system
towers.





Site acquisition and zoning:
Generally we act as an intermediary between telecommunications companies and
owners of real estate and other facilities. We identify appropriate properties,
negotiate the transactions and handle the administrative details.





We
evaluate the performance of our operating segments based on several factors, of
which the primary financial measure is segment operating income. Segment
operating income is presented herein because our chief operating decision makers
evaluate and measure each business unit’s performance based on its segment
operating income.





Six
      Months Ended December 31,2009
                  
                  
                  2008Infrastructure
                  
                  
                  Site
                  
                  
                  
                  
                  
                  Infrastructure
                  
                  
                  SiteConstruction
                  
                  
                  Acquisition
                  
                  
                  Total
                  
                  
                  Construction
                  
                  
                  Acquisition
                  
                  
                  TotalRevenue
                  
                  $
                  34,053
                  
                  
                  $
                  8,832
                  
                  
                  $
                  42,885
                  
                  
                  $
                  24,751
                  
                  
                  $
                  2,870
                  
                  
                  $
                  27,621Cost
      of revenue
                  
                  
                  25,534
                  
                  
                  
                  6,376
                  
                  
                  
                  31,910
                  
                  
                  
                  17,529
                  
                  
                  
                  844
                  
                  
                  
                  18,373Gross
      margin
                  
                  
                  8,519
                  
                  
                  
                  2,456
                  
                  
                  
                  10,975
                  
                  
                  
                  7,222
                  
                  
                  
                  2,026
                  
                  
                  
                  9,248Selling,
      general and administrative expenses
                  
                  
                  9,636
                  
                  
                  
                  2,372
                  
                  
                  
                  12,008
                  
                  
                  
                  10,297
                  
                  
                  
                  346
                  
                  
                  
                  10,643Depreciation
      and amortization
                  
                  
                  634
                  
                  
                  
                  
                  
                  
                  
                  634
                  
                  
                  
                  563
                  
                  
                  
                  65
                  
                  
                  
                  628Gain
      on sale of fixed assets
                  
                  
                  5
                  
                  
                  
                  
                  
                  
                  
                  5
                  
                  
                  
                  (4
                  )
                  
                  
                  (1
                  )
                  
                  
                  (5
                  )Operating
      income
                  
                  $
                  (1,756
                  )
                  
                  $
                  84
                  
                  
                  $
                  (1,672
                  )
                  
                  $
                  (3,634
                  )
                  
                  $
                  1,616
                  
                  
                  $
                  (2,018
                  )





Years
      Ended June 30,2009
                    
                    
                    2008Infrastructure
                    
                    
                    Site
                    
                    
                    
                    
                    
                    Infrastructure
                    
                    
                    SiteConstruction
                    
                    
                    Acquisition
                    
                    
                    Total
                    
                    
                    Construction
                    
                    
                    Acquisition
                    
                    
                    TotalRevenue
                    
                    $
                    44,897
                    
                    
                    $
                    9,594
                    
                    
                    $
                    54,491
                    
                    
                    $
                    98,563
                    
                    
                    $
                    29,809
                    
                    
                    $
                    128,372Cost
      of revenue
                    
                    
                    33,960
                    
                    
                    
                    4,826
                    
                    
                    
                    38,786
                    
                    
                    
                    64,643
                    
                    
                    
                    18,809
                    
                    
                    
                    83,452Gross
      margin
                    
                    
                    10,937
                    
                    
                    
                    4,768
                    
                    
                    
                    15,705
                    
                    
                    
                    33,920
                    
                    
                    
                    11,000
                    
                    
                    
                    44,920Selling,
      general and administrative expenses
                    
                    
                    17,409
                    
                    
                    
                    3,064
                    
                    
                    
                    20,473
                    
                    
                    
                    20,885
                    
                    
                    
                    4,818
                    
                    
                    
                    25,703Depreciation
      and amortization
                    
                    
                    1,229
                    
                    
                    
                    56
                    
                    
                    
                    1,285
                    
                    
                    
                    914
                    
                    
                    
                    276
                    
                    
                    
                    1,190Gain
      on sale of fixed assets
                    
                    
                    (8
                    )
                    
                    
                    -
                    
                    
                    
                    (8
                    )
                    
                    
                    (8
                    )
                    
                    
                    (3
                    )
                    
                    
                    (11
                    )Operating
      income
                    
                    $
                    (7,693
                    )
                    
                    $
                    1,648
                    
                    
                    $
                    (6,045
                    )
                    
                    $
                    12,129
                    
                    
                    $
                    5,909
                    
                    
                    $
                    18,038





16.
            Subsequent
      Events





The
Merger





On
January 27, 2010, Berliner, BCI East, Inc., a Delaware corporation and a wholly
owned subsidiary of Berliner (“Merger Sub”), and Unitek Holdings, Inc., a
Delaware corporation (“UniTek”), entered into an Agreement and Plan of Merger
(the “Merger Agreement”), pursuant to which Merger Sub merged (the “Merger”)
with and into UniTek and UniTek became a wholly owned subsidiary of
Berliner.  UniTek is a portfolio company of HM Capital Partners, a
Dallas-based private equity firm.  Under the terms of the Merger
Agreement, HM Capital and its affiliates will ultimately hold approximately 80%
of the common stock of Berliner.  Following the Merger, Berliner is
now known as UniTek Global Services, Inc. (“UNTK”).  The Company
intends to apply for a new ticker symbol on the OTC Bulletin
Board.  Until that time, the Company will continue to trade under the
symbol BERL.





UNTK is
now the public reporting entity.  Prior to the Merger, Berliner had a
June 30 fiscal year end.  After the Merger, the fiscal year for
Berliner, now UNTK, was changed by the Board of Directors to end on December 31,
2009.


F-25




BERLINER
COMMUNICATIONS INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


($
amount in thousands except per share and share amounts)


Notwithstanding
the fact that Berliner was the legal acquirer under the Merger and remains the
registrant for Securities and Exchange Commission (“SEC”) reporting purposes,
the Merger was accounted for as a reverse acquisition with UniTek as the
accounting acquirer. Berliner will account for the Merger as a purchase business
combination, using UniTek’s historical financial information and accounting
policies and applying fair value estimates to the acquired assets, liabilities
and commitments of Berliner as of January 27, 2010.




Letter
of Credit Transaction




On March
31, 2010, we entered into a Senior Secured Letter of Credit Facility arrangement
(the “LOC Facility”), via an amendment to the First Lien Credit Agreement (the
“Amendment”), by and among Unitek Acquisition, Unitek Midco, certain
subsidiaries of Unitek Acquisition as guarantors, the initial lenders under the
LOC Facility, and Royal Bank of Canada, as administrative agent and collateral
agent for the lenders.  The Amendment establishes an incremental
$12,000,000 revolving tranche (the “Incremental Tranche”) added to the credit
facilities established by the First Lien Credit Agreement.  The full
amount of Incremental Tranche is solely available to Unitek Acquisition for the
issuance of letters of credit in support of UniTek Acquisition’s obligations
under certain insurance policies and other general corporate
purposes.  The LOC Facility charges a 1.3333% per month cash fee
payable on issued but unfunded letters of credit and a 1.0% per annum cash fee
on the daily average unfunded amount of the LOC Facility.  Funded
letters of credit will carry an interest rate of LIBOR plus 6.75% per annum with
a 2.5% LIBOR floor.




F-26