**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


________________________





**FORM
      10-K**





x
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE**
              **ACT
                OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30,
                2008**





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





**Commission
      File Number 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.)






**97
      LINDEN AVE. ELMWOOD PARK, NEW JERSEY 07407**


(Address
      of Principal Executive Offices)





**201-791-3200**


(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
o
      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
o
      No x





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




Indicate
      by check mark 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 o  Accelerated filer  o 
Non-accelerated
      filer  o 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 o 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
      December 31, 2007, was approximately $4,468,000.




As
      of
      September 23, 2008, 26,391,612 shares of the registrant’s common stock, par
      value $0.00002, were outstanding.




DOCUMENTS
      INCORPORATED BY REFERENCE





PART
      III
—
      Incorporated by reference to the registrant’s proxy statement to be mailed or
      sent to securities holders on or about October 24, 2008.








TABLE
      OF
      CONTENTS





PAGEPART
                IITEM
                1.
            Business
            3ITEM
                1A.
            Risk
                Factors
            11ITEM
                2.
            Properties
            18ITEM
                3.
            Legal
                Proceedings
            19ITEM
                4.
            Submission
                of Matters to a Vote of Security Holders
            19PART
                IIITEM 5.
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            20ITEM
                6.
            Selected
                Financial Data
            21ITEM
                7.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operation
            22ITEM
                7A.
            Quantitative
                and Qualitative Disclosures About Market Risk
            30ITEM
                8.
            Financial
                Statements and Supplementary Data
            30ITEM
                9.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            30ITEM
                9A(T).
            Controls
                and Procedures
            31PART
                IIIITEM
                10.
            Directors,
                Executive Officers and Corporate Governance of the
                Registrant
            33ITEM
                11.
            Executive
                Compensation
            33ITEM
                12.
            Security
                Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters
            33ITEM
                13.
            Certain
                Relationships and Related Transactions and Director
                Independence
            33ITEM
                14.
            Principal
                Accountant Fees and Services
            33PART
                IVITEM
                15.
            Exhibits
                and Financial Statement Schedules
            33SIGNATURES
            34EXHIBIT
                INDEX
            35







PART
      I




ITEM
      1.  BUSINESS




**General**




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., currently named 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”). Berliner is now the public reporting
      entity, and all of our operations are run out of Berliner’s wholly-owned
      subsidiary, BCI. Unless the context otherwise requires, references to “we”,
“us”, “our” and “the Company” refer to Berliner and its consolidated subsidiary
      BCI.





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.





On
      February 28, 2007, BCI entered into an Asset Purchase Agreement with Digital
      Communication Services, Inc. (“Digitcom”) and its affiliates for the purchase of
      certain of its assets in Arlington, Texas. This acquisition has expanded and
      strengthened our presence in Texas and the Midwest region. On April 16, 2007,
      we
      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 our presence
      in Los Angeles, California, Las Vegas, Nevada, and Seattle, Washington, and
      adds
      offices in Salem, Oregon and Tempe, Arizona. These acquisitions have allowed
      us
      to become a nationwide service provider for our customers, the most significant
      of which have nationwide operations that require the types of services we
      provide. These acquisitions have also expanded our customer base and have had
      a
      positive impact on our fiscal 2008 and 2007 financial results.




With
      the
      consummation of these acquisitions, BCI is now a leading self-performing, full
      service vendor to the wireless communications industry, providing a wide range
      of services, on a nationwide basis. Our core activities include site acquisition
      and zoning; infrastructure equipment construction and installation; network
      services; radio frequency and network design and engineering; radio transmission
      base station installation and modification; and in-building network design,
      engineering and construction. We provide some combination of these services
      primarily to companies in the wireless telecommunications and/or data
      transmission industries and, to a lesser extent, to utility companies and
      government entities. Our customers rely on us to assist them in planning,
      locating sites and leasing space for wireless communication transmission
      systems.





**An
      Overview of Our Markets and Products**





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. Our 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, specialty communication services,
      configured solutions and power system solutions. Our 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.


3





*Infrastructure
      Equipment Construction and Installation* .
      Infrastructure equipment construction and installation services are the key
      drivers of our business, and the majority of our revenue comes from this service
      offering. The quality of the installation work in a wireless telecommunications
      system build-out is one of the most critical aspects of its performance. Once
      the necessary site acquisition steps have been completed, materials to construct
      a tower are ordered from a fabricator. In some cases, equipment and materials
      are ordered to modify an existing site. Depending on our customers’ needs, we
      could be involved in all aspects of site acquisition, construction and
      installation. Installation could involve clearing sites, laying foundations,
      bringing in utility lines and installing shelters and towers. Once we finish
      this part of the process, we install equipment and landscape the site. The
      site
      is now ready to be put into service once the remainder of the network is
      completed. Installation may start once the preliminary work has been completed
      and the individual “cell site” or switch location is ready to be built. Every
      site is then tested with a simulation to see what levels of line loss exist
      and
      how the transmission systems perform. Since we operate in many urban areas,
      often our business is contracted to build cell sites on existing buildings.
      This
      includes installing equipment on roof tops, parapets and building facades.
      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
      Frequency and Network Design and Engineering.* Wireless
      network designs are based on projected subscriber density, traffic demand and
      desired coverage area. The initial system design is intended to optimize
      available radio frequency and to result in the highest possible signal quality
      for the greatest portion of projected subscriber usage base within existing
      technical constraints. Based on such initial guidelines, we identify and rank
      potential sites. This process is known as identifying “search
      rings.”





*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 order to
      minimize the impact on existing wireless customers, most of the upgrade or
      modification work must be performed at night during a so-called “maintenance
      window” between the hours of 11:00 PM and 5:00 AM. Carriers generally entrust
      this kind of work only to trained, capable vendors, such as BCI, who can
      reliably and successfully complete the work at each site during such
      timeframes.





*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
      and
      may include voice services (using cellular or personal communications services
      (“PCS”) and wireless private branch exchange (“PBX”) technologies), data
      services (including 802.11 (2.4 and 5 GHz)), enhanced coverage for safety
      spectrum (police, fire and rescue) and wireless primary and secondary broadband
      backbones, synchronous optical networks (“SONETs”) and campus
      connections.





*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 division provides 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. We believe this business presents a significant growth
      opportunity for us, and we intend to grow this aspect of our business during
      fiscal 2009.


4





*Configured
      Solutions.* In early
      fiscal 2008, we introduced a configured solutions service offering, designed
      to
      supplement our other business lines by providing logistics services to our
      customers and to other third parties that may not have the facilities, resources
      or capabilities that we do. These services include transportation, tracking,
      storing and delivering of equipment, and configuring and testing equipment
      at
      our locations. Our diverse geographic locations provide an excellent platform
      for these services, and we have the expertise in-house for the testing and
      configuration work. We believe this will provide an additional source of
      revenue, allow us to further utilize existing resources and facilities and
      provide yet another service that our customers need and not all of our
      competitors can offer.





*Power
      System Solutions* .
      In late
      fiscal 2008, we created our Green Energy Group. This Division provides a
      complete portfolio of traditional network power equipment integrated with
“environmentally friendly” or “Green” primary and backup power solutions. These
      solutions are designed to meet our customers’ growing network needs and help
      address the growing environmental challenges BCI and our customers feel strongly
      about. While the regulations have not yet been finalized, the Federal
      Communications Commission, or FCC, has proposed a mandate that wireless carriers
      provide for eight-hour power back-up solutions for their networks . As
      our
      customers work to develop power solutions for their networks given the FCC’s
      mandate, we believe we will be positioned to provide a wide array of power
      options for their consideration, including hydrogen fuel cells, micro turbines,
      solar and wind power solutions. These new product and service offerings will
      seamlessly integrate with our existing network installation and technical
      services business. We have many years of experience with the installation of
      back-up power systems, primarily generators and batteries, and this makes the
      addition of the Green Energy Group a natural extension of what we believe we
      already do very well.





*Site
      Acquisition and Zoning.* We
      began
      our business providing primarily 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 antennas and equipment. The telecommunications
      companies are typically able and willing to pay fees for the rights to place
      their equipment in such strategic locations. Facility owners are generally
      eager
      to earn additional income from their properties. 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.





**Industry
      Background**





**Wireless
      Telecommunications Networks**





Wireless
      telecommunications networks are built using radio-based systems that allow
      a
      telephone or data terminal to communicate without a metallic or optical cord
      or
      wire equipment. The life cycle of a wireless network continually evolves and
      consists of several phases, including strategic planning, design, deployment,
      expansion, operations and maintenance. During the strategic planning phase,
      operators pursue the licenses necessary to build out a wireless system and
      make
      decisions about the type of technology and equipment to be used, where it will
      be located and how it will be configured. Technical planning and preliminary
      engineering designs are often required to decide on a deployment strategy and
      determine construction costs and the revenue generating ability of the wireless
      system.


5





Following
      acceptance of a wireless network design, access to land or building rooftops
      must be secured for towers or telecommunications equipment, including radio
      base
      stations, antennae and supporting electronics. Each site must be qualified
      in a
      number of areas, including zoning ordinance requirements, regulatory compliance
      and suitability for construction. Detailed site location designs are prepared,
      and radio frequency engineers review interference to or from co-located
      antennae. Construction and equipment installation then must be performed, and
      site performance is measured after completion of construction. Finally,
      professional technicians install and commission the new radio equipment, test
      it, integrate it with existing networks and tune the components to optimize
      performance.





Once
      a
      wireless network becomes operational and the number of subscribers increases,
      the system must be expanded to increase system coverage and capacity. In
      addition, the wireless system must be continually updated and optimized to
      address changes in traffic patterns and interference from neighboring or
      competing networks or other radio sources. Operations and maintenance also
      involves tuning the network to enable operators to compete more effectively
      in
      areas where there are multiple system operators.





Finally,
      as new technologies are continuously developed, wireless service providers
      must
      determine whether to upgrade their existing networks or deploy new networks
      utilizing the latest available technologies. Overlaying new technologies, such
      as late second generation, third generation and fourth generation (“2.5G”, “3G”
and “4G,” respectively), onto an existing network or deploying a new network
      requires operators 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. A significant portion of business today is modifying
      existing sites by overlaying new technologies, as well as developing new sites
      for wireless carriers and others.





*Growth
      and Evolution of the Wireless Telecommunications Industry*





Worldwide
      use of wireless telecommunications has grown rapidly as cellular and other
      emerging wireless communications services have become more widely available
      and
      affordable for the mass business and consumer markets. The rapid growth in
      wireless telecommunications is 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 255.4 million wireless subscribers in the
      United States in 2007, up from 207.9 million in 2005. These subscribers used
      2.1
      trillion minutes, up from 1.5 trillion in 2005 and 431.9 million in 1995. This
      usage accounted for approximately $138.9 billion in wireless service revenue
      in
      2007, an increase of 22% from the prior year. Also according to the CTIA, there
      were 213,299 cell sites in the U.S. in 2007, up from 183,689 in 2005 and 22,633
      in 1995. Clearly the wireless industry continues to be in a strong growth mode,
      and we expect that to continue for the foreseeable future.





Wireless
      access to the Internet is also growing rapidly as web-enabled devices become
      more accessible. 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.
      We believe that as new technologies are introduced, network upgrades will become
      necessary, and we will be well-positioned to assist our customers with the
      required upgrade work as we have the technical expertise, experience and
      capabilities to handle this work on a large scale, nation-wide basis. We believe
      that the industry’s commitment to adopt LTE (long term evolution) 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. Therefore, we are positioned and trained to assist our
      customers regardless of the technology they adopt, for example, LTE or
      WiMax.




6


*Industry
      Challenges*





During
      the past several years, the major wireless carriers began evaluating their
      costs
      for engineering and constructing wireless sites and, as a result, those expenses
      became an important issue. At that time, several well-funded private and public
      firms entered the industry as high-level general contractors. These larger
      companies, sometimes referred to as “consolidators”, include such companies as
      Bechtel Corporation and General Dynamics Corporation. These and other similarly
      situated companies put themselves between the larger wireless service providers,
      like Sprint Nextel, AT&T Wireless Services, Inc., Verizon Wireless, T-Mobile
      USA, Inc., and MetroPCS and their former contractors, such as us, by negotiating
      flat rate pricing. Many contracting firms entered into agreements with limited
      knowledge of the actual cost to complete the work, resulting in many lower
      than
      market bids. As a result, many smaller subcontractors could not compete at
      such
      reduced margins. During 2004, the wireless carriers also significantly reduced
      the number of sites they were going to build. These factors contributed to
      industry attrition in the equipment construction and installation sector. They
      also had a severe negative effect on the profitability of companies such as
      ours
      during that time. Today, we have the size, scope and resources to establish
      direct-to-carrier relationships. In addition, carriers are contracting with
      original equipment manufacturers, or OEMs, such as Ericsson, Samsung, Nokia
      and
      Motorola, to perform installation services, and we have been working directly
      with these OEMs to assist with these installation projects.





*Position
      in Industry*





We
      believe that the large wireless carriers have not been entirely satisfied with
      their experience with some of the large contracting or project management firms,
      and that this dissatisfaction created an opportunity for full service,
“self-performing” firms, such as BCI, with the ability to handle significant
      volume, to take over a portion of the work currently being performed by such
      firms. Now that we have become what is known as a “tier one” service provider,
      we receive purchase orders directly from the end user customer, the wireless
      carriers. This situation enhances our profitability by removing a layer of
      costs
      from our projects. We expect to continue to benefit from new developments in
      wireless technology and additional consolidation in the telecommunications
      industry.





*Key
      Drivers of Change in Our Business*





The
      key
      drivers of change in the wireless telecommunications industry have
      been:





**•**
            the
                introduction of new services or technologies;


**•**
            the
                increase in the number of subscribers served by wireless service
                providers;


**•**
            the
                increasing complexity of wireless systems in operation;


**•**
            continuing
                , merger, acquisitions and divestitures the telecommunications sector;


•
            the
                issuance of new or additional licenses to wireless service providers;
                and


**•**
            the
                increase in spending to rebuild and improve other communications
                networks,
                such as Public Safety Networks.





Each
      of
      these key drivers is discussed below:





*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 ours 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. Our customers also need
      companies such as ours to supplement their internal resources to address these
      developments.




7


*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, we can provide the services
      necessary to implement such an upgrade. If the carrier elects to deploy a new
      network, we can also provide the services necessary to implement this new
      development. For companies such as ours, the type of technology that our
      customers deploy or their decisions on whether to build new or upgrade existing
      networks is not critical. The driver for our business is the rapid growth of
      technology and increasing complexity of the networks that requires carriers
      to
      hire companies such as ours on an ongoing basis.





*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. We provide 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
      largest customer, Sprint Nextel Corporation, announced an agreement with
      Clearwire Corporation to form a new wireless communications company called
      Clearwire. According to Sprint, Clearwire will be focused on deploying the
      first
      nationwide mobile WiMAX network, which will offer enhanced speed and access
      to
      the Internet, among other things, for Clearwire customers. Clearwire is being
      funded by various other strategic partners, including Intel Corporation, Google
      Inc., Comcast Corporation, Time Warner Cable Inc. and Brighthouse Networks.
      We
      believe this type of transaction, with the addition of significant financial
      support from strategic partners, provides an excellent opportunity for companies
      such as ours to participate in the build-out of the WiMAX networks by Clearwire,
      while continuing to provide ongoing services to Sprint as it looks to upgrade
      and enhance its existing networks.





*The
      issuance of new or additional licenses to wireless service
      providers.* The
      Federal Communications Commission, or FCC, has issued, and we expect it will
      continue to issue, new licenses to wireless service providers that we believe
      will present new opportunities for us. 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
      we
      are 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 public safety and homeland security communications.  We
      currently service this growing market, and we plan 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 it will once again attempt to sell certain “D-Block” licenses to support
      public safety networks across the country. We believe 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.




8





**Plan
      of Operation**





We
      believe it will be necessary to take the following steps within the next 12
      months in order to meet our revenue goals and to achieve increased
      profitability:





*Increase
      Business Development Activities* .
      We
      recognize the need to increase our focus on business development, customer
      retention and the diversification of our customer base. We anticipate achieving
      this result though a variety of means, including, without limitation, hiring
      additional business development staff, increasing our exposure at trade shows
      and customer-sponsored events, and increasing our marketing efforts in an
      organized and effective manner. During fiscal 2008, we assembled a business
      development team dedicated entirely to our efforts in this area, which has
      already achieved positive results by winning new business around the country,
      expanding relationships with existing customers and diversifying our customer
      base.





*Increase
      Subcontractor Base.* As
      we
      experience increased demand for our services, we will have to be flexible and
      utilize subcontractors in order to meet construction schedules to the extent
      we
      are unable to staff such jobs with existing staff. We have a robust
      qualification process for our subcontractors, and we believe our ability to
      locate and retain high quality, reliable subcontractors that meet our
      qualifications will be a significant part of our ability to achieve our growth
      goals. To that end, we have implemented an Internet based electronic payables
      system that allows our subcontractors to invoice us electronically,
      significantly easing the burden on our administrative staff, speeding up our
      payments to our subcontractors and helping us maintain our goal to be a “green”
company by eliminating a significant amount of paper from the payment process.
      We have also implemented a Subcontractor Bill of Rights, making it clear that
      we
      treat our subcontractors as important members of our service team, and we
      believe our positive relationships with our subcontractors is a significant
      asset for our customers, reduces project-related disputes and distinguishes
      us
      from many of our competitors, specifically some of our larger competitors.





*Increase
      Marketing Activities* .
      Although we have achieved recognition in the wireless area, we believe that
      our
      typical customer may not be aware of our entire range of services. For example,
      one set of our customers may recognize us for our site acquisition and zoning
      or
      infrastructure equipment construction and installation services without being
      aware that we also provide radio frequency and network design and engineering
      services. Accordingly, we have recognized a need to create and implement a
      marketing plan to market us as a provider of the full range of wireless
      services. Our integrated service package might be of interest not only to
      potential customers looking for complete “turn-key” solutions but also clients
      who are more interested in an “a la carte” approach to their wireless needs. We
      have hired a Director of Marketing to assist with these efforts and provide
      the
      appropriate amount of focus to achieve our desired results in this
      area.





*Seek
      Additional Strategic Acquisitions and Integrate Recent
      Acquisitions* .
      In
      fiscal 2009, we plan to acquire compatible businesses that can be assimilated
      into our organization, expand our geographic coverage and add accretive earnings
      to our business. Our preferred acquisition candidates will have (i) service
      offerings that supplement, and not necessarily overlap with, our existing
      service offerings, (ii) an expansive customer base that will allow us to
      diversify our customer concentration, and (iii) a favorable financial profile.
      In Fiscal 2007, we acquired the assets and businesses of Digitcom and Radian,
      and these acquisitions have expanded our customer base, geographic presence,
      and
      number of employees. We believe we have successfully managed the associated
      growth and the integration of these companies into our business, and that this
      was an important part of our success in fiscal 2008. We will need to continue
      to
      see strong results from these offices to achieve our fiscal 2009 goals, in
      addition to successfully managing and integrating any new businesses we may
      acquire.


9





**Competition**





The
      telecommunications industry is highly competitive. It is difficult to clearly
      identify our competitors because we offer such a wide breadth of service
      offerings and many companies provide services similar to ours. However, we
      currently believe that our most significant competitors include WFI Deployment
      Services, NSORO LLC (now owned by MasTec), Goodman Networks Inc., Bechtel
      Corporation, and General Dynamics Corporation. Some of these competitors have
      greater capital resources, longer operating histories, larger customer bases,
      and more established industry relationships than we do. We distinguish ourselves
      from our competitors by being large enough to provide the resources our
      customers need on a nationwide, self-performing basis, while still maintaining
      our ability to be responsive, on a local level, to customer specific tasks
      that
      arise during any given engagement for services.





**Government
      Regulation**





Although
      we are not directly subject to any FCC or similar government regulations, the
      wireless networks that we design, deploy and manage 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, such as the proposed requirement for
      wireless carriers to maintain eight-hour back-up power supplies for their cell
      sites, affect our business by driving our customers to pay for additional
      services to meet these requirements, which we 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. Currently, the costs attributable
      to subcontractors represent approximately 72% of our cost of revenues. Over
      39%
      of our subcontractor costs relate to fees paid to electrical and architectural
      and engineering (“A&E”) firms, as we do not hold electrical or A&E
      licenses in any of the jurisdictions where we operate. We do not rely on any
      one
      subcontractor, and we must utilize subcontractors that meet our qualification
      standards, timeframes and the contractual requirements of our customers.





**Major
      Customers**





As
      of and
      for the year ended June 30, 2008, we derived 84% of our total revenues 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 revenues. Our work
      for
      Sprint Nextel includes 4G, or WiMax (work for their Xohm Division), CDMA
      (Code-Division Multiple Access) and IDEN (Integrated Digital Enhanced Network)
      work.





As
      of and
      for the year ended June 30, 2007, we derived 87% of our total revenues from
      our
      two largest customers, and those customers represented 77% of our accounts
      receivable. During the year ended June 30, 2007, Sprint Nextel Corporation
      represented 80% and T-Mobile USA, Inc. represented 7% of our total
      revenues.





**Seasonality**





Incidents
      of inclement weather, particularly in the winter months in the northern parts
      of
      the country, hinder our ability to complete certain outdoor activities relating
      to the provision of certain of our services. Demand for our services is
      typically higher in the last few months of the calendar year, due primarily
      to
      acceleration of most customers’ capital expenditures for completing year-end
      projects, 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.


10


**Backlog**





As
      of
      June 30, 2008 and 2007, our backlog was approximately **$** 15.2
      million ($11.1 million in infrastructure construction and technical services
      and
      $4.1 million in site acquisition and zoning) and $30.9 million ($16.9 million
      in
      infrastructure construction and technical services and $14.0 million in site
      acquisition and zoning), respectively. In the fourth quarter of fiscal 2008,
      our
      largest customer notified us to delay completing certain purchase orders, and
      has cancelled other existing purchase orders. As a result, our backlog has
      decreased from $52.5 million as of March 31, 2008 to $15.2 million. We believe
      substantially all of our backlog at June 30, 2008 will be filled within the
      fiscal year ending June 30, 2009.





**Employees**





As
      of
      June 30, 2008, we employed 330 full-time and 12 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.





**ITEM
      1A. RISK FACTORS**





**Although
      we have had net income in**  **prior
      periods and in the current period, we have experienced losses in the past and
      we
      may never achieve sustained profitability.**





Although
      we had net income during the years ended June 30, 2008, 2007 and 2006, we may
      not be profitable in future periods, either on a short or long-term basis.
      To
      the extent that revenue declines or does not grow at anticipated rates,
      increases in operating expenses precede or are not subsequently followed by
      commensurate increases in revenue or we are unable to adjust operating expense
      levels accordingly, your investment could be jeopardized.





**We
      generate a substantial portion of our revenue from a limited number
      of**  **customers,
      and if our relationships with such customers were harmed,
      our**  **business
      would suffer.**





As
      of and
      for the year ended June 30, 2008, we derived 84% of our total revenues 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 revenues.





As
      of and
      for the year ended June 30, 2007, we derived 87% of our total revenues from
      our
      two largest customers, and those customers represented 77% of our accounts
      receivable. During the year ended June 30, 2007, Sprint Nextel Corporation
      represented 80% and T-Mobile USA, Inc. represented 7% of our total
      revenues.





We
      believe that a limited number of clients will continue to be the source of
      a
      substantial portion of our revenue for the foreseeable future. Key factors
      in
      maintaining our relationships with such customers include, without limitation,
      our performance on individual contracts and the strength of our professional
      reputation. To the extent that our performance does not meet client
      expectations, or our reputation or relationships with one or more key customers
      are impaired, this could cause a significant decrease in our revenue, which
      would negatively impact our ability to generate income. In addition, our key
      customers could slow or stop spending on initiatives related to projects we
      are
      performing for them, and this, while outside our control, could materially
      impair our operating results.





**We
      experienced a significant reduction in revenue from our largest customer in
      the
      fourth quarter of fiscal 2008 due to the cancellation or postponement of a
      number of projects.**





During
      the fourth quarter of fiscal 2008, we were advised that our largest customer
      had
      slowed the implementation of initiatives related to significant projects we
      were
      performing for them. This customer notified us of the cancellation of certain
      purchase orders, and instructed us to delay the completion of other existing
      purchase orders. This loss of revenue had a material impact on our financial
      results, including our revenue and operating income, for the fourth quarter
      of
      fiscal 2008, and we expect it to negatively impact our first and second quarter
      fiscal 2009 financial results. We cannot predict when this customer will
      authorize us to complete these delayed purchase orders, or if they will do
      so at
      all, or whether we could replace this lost revenue through new or existing
      customers. These developments, while outside of our control, could materially
      impair our future operating results.


11





**Our
      recent rapid growth has created challenges for our management, systems and
      resources, and this may impact our ability to effectively manage future growth,
      if any.**





We
      have
      grown rapidly during fiscal 2008 and 2007. In early calendar 2007, we acquired
      three new businesses. In fiscal 2008, our sales volume increased from $55
      million to $128 million. This rapid growth strained our systems, processes,
      resources, management and other infrastructure and support mechanisms. We expect
      that any future growth may create additional challenges. To manage the
      anticipated growth of our operations, we will be required to:





·
            improve
                existing and implement new operational, financial and management
                information controls, reporting systems and
                procedures;


·
            establish
                relationships with additional vendors, suppliers and strategic partners
                and maintain and expand our existing relationships;
                and


·
            hire,
                train, manage and retain additional personnel, especially qualified
                sales
                and marketing, business development and financial reporting
                personnel.





To
      the
      extent we are unable to assemble the personnel, controls, systems, procedures
      and relationships necessary to manage our future growth, if any, management
      resources may be diverted and our opportunity for success limited.





**If
      we experience delays and or defaults in customer payments, we could
      be**  **unable
      to cover all expenditures.**





Because
      of the nature of our contracts, at times we commit resources to projects prior
      to receiving payments from our customers in amounts sufficient to cover
      expenditures on client projects as they are incurred. Delays in customer
      payments may require us to make a working capital investment, or obtain advances
      from our line of credit. If a customer defaults in making its payments on a
      project or projects in which we have devoted significant resources, it could
      have a material negative effect on our results of operations or negatively
      impact our financial covenants with our lenders.





**If
      the percentage of our revenue derived from construction-related
      activities**  **increases,
      our gross margins may suffer.**





We
      have
      historically earned lower relative gross margins on engineering and
      construction-related activities. We typically perform our own network
      design-related, site acquisition-related services and hire subcontractors to
      perform engineering and construction services under our direct management.
      Subcontracted work generally carries lower profit margins than self-performed
      work. If the proportion of construction-related services we deliver increases,
      then our gross margins and net income may suffer.





**We
      may need additional working capital, the lack of which would likely have
      a**  **significant
      negative impact on our ability to grow our business.**





We
      may
      require additional working capital in order to fund the growth of our
      operations. If adequate funds are not available on terms acceptable to us,
      we
      may not be able to effectively grow our operations and expand our business.
      Our
      ability to fund our operations and corporate infrastructure is directly related
      to the continued availability of these and other funding
      sources.


12





In
      order
      to grow our business, we may incur significant operating, borrowing and other
      costs. Should our operations require additional funding or our capital
      requirements exceed current estimates, we could be required to seek additional
      financing in the future. We can provide no assurances that we would be able
      to
      raise such financing when needed or on acceptable terms. As a result, we may
      be
      forced to reduce or delay additional expenditures or otherwise delay, curtail
      or
      discontinue some or all of our operations. Further, if we are able to access
      additional capital through borrowings, such debt would increase our debt
      obligations, which could have a material adverse effect on our financial
      condition, results of operations or cash flows.




**Our
      business is dependent upon our ability to keep pace with the
      latest**  **technological
      changes.**





The
      market for our services is characterized by rapid change and technological
      improvements. If we are unable to respond in a timely and cost-effective way
      to
      these technological developments, this would result in serious harm to our
      business and operating results. We have derived, and we expect to continue
      to
      derive, a substantial portion of our revenue from creating wireless networks
      that are based upon today’s leading technologies and that are capable of
      adapting to future technologies. As a result, our success will depend, in part,
      on our ability to develop and market service offerings that respond in a timely
      manner to the technological advances of our customers, evolving industry
      standards and changing client preferences.





**Our
      success is dependent on growth in the deployment of wireless networks
      and**  **new
      technology upgrades, and to the extent that such growth slows, our
      business**  **may
      be harmed.**





Telecommunications
      carriers are constantly re-evaluating their network deployment plans in response
      to trends in the capital markets, changing perceptions regarding industry
      growth, the adoption of new wireless technologies, increasing pricing
      competition for subscribers and general economic conditions in the United States
      and internationally. If the rate of network deployment slows and carriers reduce
      their capital investments in wireless infrastructure or fail to expand into
      new
      geographic areas, our business may be significantly harmed.





The
      uncertainty associated with rapidly changing telecommunications technologies
      may
      also negatively impact the rate of deployment of wireless networks and the
      demand for our services. Telecommunications service providers face significant
      challenges in assessing consumer demand and in acceptance of rapidly changing
      enhanced telecommunications capabilities. If telecommunications service
      providers perceive that the rate of acceptance of next generation
      telecommunications products will grow more slowly than previously expected,
      they
      may, as a result, slow their development of next generation technologies.
      Moreover, increasing price competition for subscribers could adversely affect
      the profitability of carriers and limit their resources for network deployment.
      Any significant sustained slowdown will further reduce the demand for our
      services and adversely affect our financial results.





**Delays
      in the adoption and deployment of next generation wireless**  **networks
      could negatively affect the demand for our services and our ability
      to**  **grow
      our revenue.**





Wireless
      service providers may delay their development of next generation technology
      if,
      among other things, they expect slow growth in the adoption of such technology,
      reduced profitability due to price competition for subscribers or regulatory
      delays. For example, even though wireless service providers have made
      substantial investments worldwide in acquiring third generation, or 3G licenses,
      some providers have delayed deployment of 3G networks. Since we expect that
      a
      substantial portion of our growth will be derived from our services related
      to
      new technologies, further delays in the adoption and deployment of these
      technologies, such as 3G and fourth generation, or 4G, would negatively affect
      the demand for our services and our ability to grow our revenue.





**We
      bear the risk of cost overruns in some of our contracts.**





We
      conduct our business under various types of contractual
      arrangements. **** Under
      such contracts, prices 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, equipment and materials, and other exigencies. If those
      estimates prove inaccurate, or circumstances change, cost overruns may occur,
      and we could experience reduced profits or, in some cases, a loss for that
      project.


13





**Our
      dependence on subcontractors and equipment manufacturers could
      adversely**  **affect
      us.**





We
      rely
      on third-party subcontractors as well as third-party equipment manufacturers
      to
      complete our projects. To the extent that we cannot engage subcontractors or
      acquire equipment or materials, our ability to complete a project in a timely
      fashion or at a profit may be impaired. If the amount we are required to pay
      for
      these goods and services exceeds the amount we have estimated in bidding for
      fixed-price contracts, we could experience losses in the performance of these
      contracts. In addition, if a subcontractor or a manufacturer is unable to
      deliver its services, equipment or materials according to the negotiated terms
      for any reason, including the deterioration of its financial condition, we
      may
      be required to purchase the services, equipment or materials from another source
      at a higher price. This may reduce the profit to be realized or result in a
      loss
      on a project for which the services, equipment or materials were
      needed.





**If
      we guarantee the timely completion or performance standard of a project,
      we**  **could
      incur significant, additional costs.**





In
      some
      instances, we guarantee to a customer that we will complete a project by a
      scheduled date. The contract sometimes provides that the project, when
      completed, will also achieve certain performance standards. If we subsequently
      fail to complete the project as scheduled, or if the project falls short of
      guaranteed performance standards, we may be held responsible for cost impacts
      to
      the client resulting from any delay or the costs to cause the project to achieve
      such performance standards. In some cases, where we fail to meet those
      performance standards, we may also be subject to agreed-upon liquidated damages.
      To the extent that these events occur, the total costs of the project could
      exceed its original estimates and we could experience reduced profits or, in
      some cases, a loss for that project.





**The
      nature of our construction business exposes us to potential**  **liability
      claims and contract disputes that may negatively affect our
      results**  **of
      operations.**





We
      engage
      in construction activities, including the oversight of engineering firms, for
      wireless networks where 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, perhaps materially. In addition, if there is a customer dispute
      regarding our performance of project services, the customer may decide to delay
      or withhold payment to us. If we were ultimately unable to collect on these
      payments, our results of operations would be negatively impacted, perhaps
      materially.





**We
      maintain a workforce based upon current and anticipated workloads. If we
      do**  **not
      receive future contract awards or if these awards are delayed, we may
      incur**  **significant
      costs in meeting workforce demands.**





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


14




**We
      may not be able to hire or retain a sufficient number of qualified
      engineers**  **and
      other employees to meet our contractual obligations or maintain the
      quality**  **of
      our services.**





As
      a
      service business, our ultimate success depends significantly on our ability
      to
      attract, train and retain engineering, system deployment, managerial, marketing
      and sales personnel who have excellent technical and interpersonal skills.
      Competition for employees with the required range of skills fluctuates,
      depending on customer needs, and can be intense, particularly for radio
      frequency engineers. At times, we have had difficulty recruiting and retaining
      qualified technical personnel to properly and quickly staff large customer
      projects. In addition to recruitment difficulties, we must fully and properly
      train our employees according to our customers’ technology requirements and
      deploy and fully integrate each employee into our customers’ projects.
      Competition in the wireless industry is increasing the level of specific
      technical experience and training required to fulfill customer-staffing
      requirements. This process is costly, and resource constraints may impede our
      ability to quickly and effectively train and deploy all of the personnel
      required to staff a large project.





**Intense
      competition in the engineering and construction industry could
      reduce**  **our
      market share.**





We
      serve
      markets that are highly competitive and in which a large number of multinational
      companies compete. In particular, the engineering and construction markets
      are
      highly competitive and require substantial resources and capital investment
      in
      equipment, technology and skilled personnel. Competition also places downward
      pressure on our contract prices and profit margins. Intense competition is
      expected to continue in these markets. If we are unable to meet these
      competitive challenges, we could lose market share to our competitors and
      experience an overall reduction in our operating performance.





**We
      are vulnerable to the cyclical nature of the market we
      serve.**





The
      demand for our services and products is dependent upon the existence of projects
      with engineering, procurement, construction and management needs. The
      telecommunications market, where we principally compete, is particularly
      cyclical in nature. Such industries have historically been, and will continue
      to
      be, vulnerable to general downturns and are cyclical in nature. As a result,
      our
      past results have varied considerably and our performance may continue to be
      volatile, depending upon the demand for future projects in the
      industry.





**We
      may experience significant fluctuations in our quarterly results as a
      result**  **of
      uncertainties relating to our ability to generate additional revenue,
      manage**  **expenditures
      and other factors, certain of which are outside of our
      control.**





Our
      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 our control
      and include, without limitation, the following:





§
            financing
                provided to potential customers;





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





§
            the
                availability of equipment to deploy new technologies, such as 4G
                and
                broadband;





§
            the
                growth rate of wireless subscribers, which has a direct impact on
                the rate
                at which new cell sites are developed and built;
                and





§
            telecommunications
                market conditions and economic conditions generally.





Due
      to
      these factors, our results for a particular quarter, and therefore, our combined
      results for that same period, may not meet the expectations of investors, which
      could cause the price of our common stock to decline significantly.





**Our
      stock price is volatile and purchasers of our common stock could
      incur**  **substantial
      losses.**





Historically,
      our stock price has been volatile. The stock market in general, and the market
      for telecommunications companies in particular, 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 our 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
      general economic, industry and market conditions.




15


**There
      is a lack of a public market for our shares, which limits
      our**  **shareholders’
      ability to sell their shares.**





There
      is
      currently a limited public market for our shares, and we cannot assure you
      that
      a more active market for our stock will develop. Consequently, investors may
      not
      be able to liquidate their shares at a suitable price, or at all.





**We
      have experienced, and expect to continue to experience, long sales
      cycles,**  **we
      expect to incur significant costs to generate new business and our
      customer**  **base
      may not experience growth commensurate with such costs.**





Historically,
      purchases of our services by customers often entailed a lengthy decision-making
      process for the customer. Selecting wireless network deployment services
      involves substantial costs and has strategic implications. Senior management
      of
      the customer is often involved in this process, given the importance of the
      decision, as well as the risks faced by the customer if the services do not
      meet
      the customer’s particular needs. We may expend substantial funds and effort to
      negotiate agreements for these services, but may ultimately be unable to
      consummate agreements for services and expand our customer base. As a result
      of
      lengthy sales cycles, we expect to continue to incur relatively high costs
      to
      generate new business.





**If
      we are unable to identify and complete future acquisitions, we may be
      unable**  **to
      continue our growth.**





We
      may
      not be able to identify additional, attractive acquisition opportunities. Even
      if we identify favorable acquisition targets, there is no guarantee that we
      can
      acquire them on reasonable terms or at all. If we are unable to complete
      attractive acquisitions, the growth that we have experienced over the last
      three
      fiscal years may decline.





**We
      may not be able to register the shares of common stock issued
      upon**  **conversion
      of our 7% Senior Subordinated Secured Convertible Notes and**  **exercise
      of the accompanying warrants, which may subject us to**  **financial
      penalties.**





The
      Note
      Purchase Agreement we entered into in connection with our financings with Sigma
      Opportunity Fund, LLC (“Sigma”), Pacific Asset Partners, LP (“Pacific”), Operis
      Partners I, LLC (“Operis”) and Sigma Berliner, LLC (collectively the
“Noteholders”) requires that we file and make effective a registration statement
      with the SEC covering the shares of common stock issued upon conversion of
      each
      of the 7% Senior Subordinated Secured Convertible Notes (the “Notes”) and
      exercise of the accompanying warrants. We have agreed to use our best efforts
      to
      register the shares issued for the Notes and the associated warrants, and to
      maintain the effectiveness of any registration statement we file with respect
      to
      these shares. We were able to register only 1,295,047 shares of our common
      stock
      underlying certain of the Accompanying Warrants on a delayed or continuing
      basis
      (as required under the Note Purchase Agreement), and are obligated to register
      the remaining shares of common stock as we are able to in the future. If we
      are
      unable to meet the registration requirements set forth in the Waiver and Amended
      Note Purchase Agreement that we entered into with the Noteholders on September
      27, 2007, we may be subject to damages.


16





**A
      default on our debt obligations could result in foreclosure on all of our
      assets.**




In
      April
      2008, we replaced our credit facility with Presidential Financial Corporation
      of
      Delaware Valley with a new credit facility of up to $15 million with PNC Bank,
      National Association (the “PNC Facility”). The PNC Facility is secured by a
      blanket security interest that covers certain of BCI’s receivables, equipment,
      general intangibles, inventory, investment property, certain real property,
      certain leasehold interests, all subsidiary stock, records and other property
      (collectively, the “Collateral”) and proceeds of all of the Collateral. An event
      of default with respect to the PNC Facility could result in, among other things,
      the acceleration and demand for payment of all principal and interest due and
      the foreclosure on the Collateral. The sale of such Collateral at foreclosure
      would result in a substantial disruption in our ability to operate our business
      and could significantly lower our revenue and profitability. We may not be
      able
      to refinance or obtain extensions of the maturities of all or some of such
      debt
      only on terms that significantly restrict our ability to operate, including
      terms that place limitations on our ability to incur other indebtedness, to
      pay
      dividends, to use our assets as collateral for other financings, to sell assets
      or to make acquisitions or enter into other transactions. Such restrictions
      may
      adversely affect our ability to finance our future operations or to engage
      in
      other business activities. If we finance the repayment of our outstanding
      indebtedness by issuing additional equity or convertible debt securities, such
      issuances could result in substantial dilution to our stockholders.




**If
      we fail to accurately estimate costs and other factors associated with contracts
      accounted for using the percentage-of-completion method of accounting, this
      may
      reduce our profitability.**





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.





Contract
      revenue and total cost estimates are reviewed and revised monthly 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 those revised estimates. 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 could result in reducing
      our profitability.





**We
      may incur goodwill and other intangible impairment charges which could reduce
      our profitability.**





In
      accordance with Statement of Financial Accounting Standards No. 142, “Goodwill
      and Other Intangible Assets”, we review the carrying values of our goodwill and
      indefinite lived intangible assets at least annually. We determine 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 our profitability.


17





**ITEM
      2.**  **PROPERTIES**




As
      of
      June 30, 2008, we had leases or contractual arrangements to utilize
      approximately 234,593 square feet for our operations, as set forth below:




**Size in**
              
              
              
              **End of****Location**
              
              **Square Feet**
              
              **Description**
              
              **Lease Term**20
                  Bushes Lane
              
              15,800
              
              Office
                  and warehouse space
              
              December
                  2008Elmwood
                  Park, NJ97
                  Linden Avenue *
              
              13,000
              
              Office
                  and warehouse space
              
              August
                  2008Elmwood
                  Park, NJ270
                  Market Street **
              
              34,780
              
              Office
                  and warehouse space
              
              April
                  2013Saddle
                  Brook, NJ18-01
                  Pollitt Drive
              
              76,926
              
              Office
                  and warehouse space
              
              December
                  2017 ***Fair
                  Lawn, NJ1100
                  Taylors Lane
              
              10,209
              
              Office
                  and warehouse space
              
              November
                  2008Cinnaminson,
                  NJ45
                  Stouts Lane
              
              5,000
              
              Office
                  and warehouse space
              
              November
                  2011Monmouth
                  Junction, NJ8300
                  Stayton Drive
              
              19,853
              
              Office
                  and warehouse space
              
              November,
                  2010Jessup,
                  MD215
                  Pineda Street
              
              4,500
              
              Office
                  and warehouse space
              
              September
                  2008Longwood,
                  FL2580
                  N. Powerline Road
              
              7,600
              
              Office
                  and warehouse space
              
              February
                  2010Pompano
                  Beach, FL1210
                  West Alameda Drive
              
              2,460
              
              Office
                  space
              
              Month-to-monthTempe,
                  AZ95
                  Ryan Drive
              
              6,500
              
              Office
                  space
              
              March
                  2010Raynham,
                  MA14270
                  Albers Way
              
              10,607
              
              Office
                  and warehouse space
              
              December
                  2010Chino,
                  CA9401
                  Watson Industrial Park
              5,000
              
              Office
                  and warehouse space
              
              November
                  2008Crestwood,
                  MO4550
                  Cooper Sage Street
              
              3,750
              
              Office
                  space
              
              November
                  2008N.
                  Las Vegas, NV4280
                  25th Street NE
              
              6,000
              
              Office
                  and warehouse space
              
              Month-to-monthSalem,
                  OR15030
                  Highway 99
              
              12,608
              
              Office
                  and warehouse space
              
              March
                  2010Lynwood,
                  WA




*
                One third of the office space is sub-leased
              **
                Warehouse space is sub-leased
              ***
                Based upon a commencement date of January 1, 2009, See Note
                11





We
      also
      own 0.9 acres of property, including office and warehouse facilities, in
      Arlington, Texas.


18





**ITEM
      3.**  **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.




**ITEM
                4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS**




None




19


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.
      Prior to that date, our stock was traded under the symbol “NVNW.OB.”




From
            
            To
            
            Ticker
            
            MarketSeptember
                17, 2005
            
            Present
            
            BERL
            
            OTCBB





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**
            
            **High**June
                30, 2008
            
            $
            1.10
            
            $
            1.60March
                31, 2008
            
            
            1.15
            
            
            2.00December
                31, 2007
            
            
            1.02
            
            
            1.20September
                30, 2007
            
            
            1.01
            
            
            1.20June
                30, 2007
            
            
            1.01
            
            
            1.35March
                31, 2007
            
            
            0.51
            
            
            2.00December
                31, 2006
            
            
            0.31
            
            
            1.46September
                30, 2006
            
            
            0.55
            
            
            1.46





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




As
      of
      June 30, 2008, there were 450 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 June 30, 2008, with respect to
      all
      compensation plans and individual compensation arrangements under which equity
      securities are authorized for issuance to employees or
      non-employees:




20




**Number of securities****remaining available for****Number of securities to**
            
            **Weighted average**
            
            **future issuance under****be issued upon exercise**
            
            **exercise price of**
            
            **equity compensation plans****of outstanding options,**
            
            **outstanding options,**
            
            **(excluding securities****Plan Category**
            
            **warrants and rights**
            
            **warrants and rights**
            
            **reflected in column (A)**Equity
                compensation on plans approved by security holders
            
            
            1,430,576
            (a)
            $
            19.71
            
            
            2,644,331Equity
                compensation on plans not approved by security holders
            
            
            18,704
            (b)
            $
            6,786.00
            
            
            None1,449,280
            
            $
            107.04
            
            
            2,644,331




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


(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.




21


**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 Annual Report. 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.*





**Business**





We
      are a
      leading contractor to the wireless communications industry, providing a wide
      range of services primarily to wireless and traditional telecommunications
      carriers. Our 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. We also provide
      specialty communication services, configured solutions and power system
      solutions. We provide 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. Our customers rely on us to assist them in planning, site
      location and leasing. For a more complete discussion of our business, see Item
      1
      of this Annual Report entitled “Business”.





On
      February 28, 2007, we 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
      our
      presence in Texas and the Midwest region. On April 16, 2007, we 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 our presence in Los Angeles,
      California, Las Vegas, Nevada, and Seattle, Washington, and added offices in
      Salem, Oregon and Tempe, Arizona. These acquisitions have allowed us to become
      a
      nationwide service provider for our customers, the most significant of which
      have nationwide operations that require the types of services we provide. These
      acquisitions have also expanded our customer base and have had a positive impact
      on our fiscal 2008 and 2007 financial results.





**Basis
      of Presentation**





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.




**YEAR
      ENDED JUNE 30, 2008 COMPARED TO YEAR ENDED JUNE 30, 2007**


**(amounts
      in thousands unless otherwise stated)**





***Revenues***





**Fiscal Years Ended****June 30,****2008**
            
            **2007**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            98,563
            
            $
            43,501
            
            $
            55,062Site
                acquisition and zoning
            
            
            29,809
            
            
            11,634
            
            
            18,175Total
            
            $
            128,372
            
            $
            55,135
            
            $
            73,237





We
      had
      revenues of $128.4 million for the year ended June 30, 2008, versus $55.1
      million for the year ended June 30, 2007. This represents an increase of $73.2
      million, or 133%. This increase is primarily due to significant growth in our
      infrastructure construction and technical services segment and to significant
      awards of new business from our top customers during the first half of fiscal
      2008. In addition, approximately $19.2 million of this increase is attributable
      to the Digitcom and Radian acquisitions in the third and fourth quarters of
      the
      fiscal year ended June 30, 2007.


22




Revenues
      from infrastructure construction and technical services increased $55.1 million,
      or 127% for the year ended June 30, 2008 as compared to the year ended June
      30,
      2007, and accounted for approximately 77% and 79% of total revenues for these
      years, respectively. Newly acquired regional markets resulting from the Digitcom
      and Radian acquisitions accounted for approximately $16.1 million, or 29% of
      the
      increase.




Site
      acquisition and zoning increased $18.2 million, or 156% for the year ended
      June
      30, 2008 as compared to the year ended June 30, 2007, and accounted for
      approximately 23% and 21% of total revenues for these years, respectively.
      Newly
      acquired regional markets resulting from the Digitcom and Radian acquisitions
      accounted for approximately $3.1 million, or 17% of the increase. We expect
      this
      mix of segment revenue to remain substantially the same during the fiscal year
      ending June 30, 2009.


Because
        of the nature of our business, we win and begin projects on an irregular
        basis,
        and therefore, we expect to see considerable variability in our quarterly
        results during fiscal 2009. In fiscal 2008, for example, we had an
        extraordinarily strong second quarter because of a significant push by our
        largest customer to complete a large number of jobs in this period. In the
        fourth quarter of fiscal 2008, this customer cancelled certain purchase orders,
        and instructed us to delay the completion of other existing purchase orders.
        We
        expect this to impact our financial results in the first and second fiscal
        quarters of fiscal 2009, and therefore, we do not believe the financial results
        of these quarters will match the results of the first and second quarters
        of
        fiscal 2008.  We
        consider our annual results to be the most appropriate measure for evaluating
        our business because of the quarterly variability of our
        results.




***Cost
      of Revenues***




**Fiscal Years Ended****June 30,****2008**
            
            **2007**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            64,643
            
            $
            29,674
            
            $
            34,969Site
                acquisition and zoning
            
            
            18,809
            
            
            7,601
            
            
            11,208Total
            
            $
            83,452
            
            $
            37,275
            
            $
            46,177







Our
      cost
      of revenues was $83.5 million and $37.3 million for the years ended June 30,
      2008 and 2007, respectively. This represents an increase of $46.2 million,
      or
      124%, during a period when sales increased 133%. These amounts represent 65%
      and
      68% of total revenues for the years ended June 30, 2008 and 2007, respectively.





Cost
      of
      revenues for infrastructure construction and technical services increased $35.0
      million for the year ended June 30, 2008 as compared with the year ended June
      30, 2007. This represents an increase of approximately 118% during a period
      when
      sales for this segment increased 127%. Newly acquired regional markets resulting
      from the Digitcom and Radian acquisitions accounted for approximately $11.2
      million of the total cost of revenues for this segment during Fiscal
      2008.





Cost
      of
      revenues for site acquisition and zoning services increased $11.2 million for
      the year ended June 30, 2008 from the similar period ended June 30, 2007. This
      represents an increase of approximately 147% during a period when sales for
      this
      segment increased 156%. Newly acquired regional markets resulting from the
      Digitcom and Radian acquisitions accounted for approximately $2.3 million of
      the
      total cost of revenues for this segment during Fiscal 2008.




***Gross
      Margin***




**Fiscal Years Ended****June 30,****2008**
            
            **2007**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            33,920
            
            $
            13,827
            
            $
            20,093Site
                acquisition and zoning
            
            
            11,000
            
            
            4,033
            
            
            6,967Total
                gross margin
            
            $
            44,920
            
            $
            17,860
            
            $
            27,060




23




Our
      gross
      margin for the years ended June 30, 2008 and 2007 was $44.9 million and $17.9
      million, or 35% and 32% of revenues, respectively.





Gross
      margins increased because of a large number of premature job closeouts by our
      largest customer in the fourth quarter of fiscal 2008. The revenue associated
      with these jobs is accounted for under the percentage-of-completion method
      of
      accounting using revenue and performance milestones as a method of estimating
      percentage of completion. This estimated percentage of completion is applied
      to
      the total estimated contract cost in order to accrue costs each quarter. When
      this large number of jobs was prematurely terminated, we reversed certain costs
      that we had previously accrued in this manner. This reversal lowered our cost
      of
      revenues and increased our reported gross margin. Absent these job cancellations
      in the fourth quarter, our gross margin for fiscal 2008 would have been
      approximately 30%, or slightly lower than our fiscal 2007 gross margin. We
      have
      historically had a gross margin in this range, and we believe that our gross
      margin will remain in this range going forward as long as our business mix
      remains substantially the same.





***Selling,
      General and Administrative Expenses***




**Fiscal Years Ended****June 30,****2008**
            
            **2007**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            20,885
            
            $
            11,964
            
            $
            8,921Site
                acquisition and zoning
            
            
            4,818
            
            
            2,650
            
            
            2,168Total
            
            $
            25,703
            
            $
            14,614
            
            $
            11,089





Selling,
      general and administrative expenses for the year ended June 30, 2008 was $25.7
      million as compared to $14.6 million for the year ended June 30, 2007. This
      represents an increase of approximately $11.1 million, or 76% during a period
      when revenues increased 133%. $4.4 million of this increase represents
      additional expenses relating to the operations of the markets we acquired in
      the
      third and fourth quarters of fiscal 2007. $4.6 million represents additional
      payroll expenses in existing markets relating to increased staffing levels
      necessary to facilitate the increased sales and expected continued growth of
      our
      existing operations. Additionally, we recognized increased spending of
      approximately $0.3 million in insurance premiums, $0.6 million in accounting
      and
      legal fees and a decrease of $0.2 million for an additional provision for
      potential New Jersey sales taxes.





***Depreciation
      and Amortization***





Depreciation
      expense for the year ended June 30, 2008 was $0.8 million as compared to $0.4
      million for the year ended June 30, 2007. This represents an increase of $0.4
      million. The increase was primarily caused by an increase in purchases of
      property and equipment, including those acquired through the acquisitions of
      Digitcom and Radian.





Amortization
      expense for the year ended June 30, 2008 was $0.4 million as compared to $0.1
      million for the year ended June 30, 2007. This represents an increase of $0.3
      million. This increase was caused by a full year of amortization of amortizable
      intangible assets related to the acquisitions of Digitcom and Radian as compared
      to less than a full year in fiscal 2007.





***Interest
      Income and Expense***





Interest
      income for the year ended June 30, 2008 was $71 thousand, an increase of $34
      thousand from $37 thousand for the year ended June 30, 2007. This increase
      was
      caused by the additional cash and cash equivalents we received as a result
      of
      our cash provided by operations and financing transactions with Sigma
      Opportunity Fund and its affiliates and non-affiliated co-investors during
      the
      second and third quarters of fiscal 2007 (the “Sigma Transactions”).





Interest
      expense for the year ended June 30, 2008 was $1.4 million. This represents
      an
      increase of $0.8 million from $0.6 million for the year ended June 30, 2007.
      This increase was caused by additional debt incurred related to the Sigma
      Transactions, our issuance of a promissory note as part of the purchase price
      for our acquisition of Digital Communications Services, Inc., and our expanded
      line of credit with Presidential Financial and PNC Bank.


24




Amortization
      of deferred financing fees and accretion of debt discount was $2.0 million
      for
      the year ended June 30, 2008 as compared to $0.7 million for the year ended
      June
      30, 2007. This increase was caused by a full year of amortization and accretion
      of fees during fiscal 2008 as compared to only six months during fiscal 2007.
      See Note 9 of our Consolidated Financial Statements presented elsewhere in
      this
      Report for a more complete description of these charges.




***Other
      Income***




Other
      income increased to $0.2 million during the year ended June 30, 2008 as compared
      to $14 thousand for the year ended June 30, 2007. The increase primarily related
      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.




***Income
      Tax Expense***




Income
      tax expense was $6.4 million for the year ended June 30, 2008 as compared to
      a
      tax benefit of ($0.2) million for the year ended June 30, 2007. The effective
      tax rate for the year ended June 30, 2008 was 43%. During fiscal 2007, the
      Company reversed its valuation allowance of $0.7 million, resulting in a tax
      benefit for the year.




**LIQUIDITY
      AND CAPITAL RESOURCES**





At
      June
      30, 2008, we had consolidated current assets of approximately $36.7 million,
      including cash and cash equivalents of approximately $3.2 million and net
      working capital of approximately $16.6 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 year ended June 30, 2008
      have been working capital, purchases of property and equipment and repayment
      of
      debt.





In
      September 2003, we entered into a revolving credit facility with Presidential
      Financial Corporation of Delaware Valley (the “Presidential Facility”). On April
      3, 2007, we amended the Presidential Facility to, among other things, increase
      the availability under the Presidential Facility to $8.0 million. The
      Presidential Facility matured on April 3, 2008 and was extended on a
      month-to-month basis thereafter on the same terms and conditions, except for
      a
      .25% increase in monthly service fees. In connection with BCI’s entry into the
      Revolving Credit and Security Agreement with PNC (as described below), on April
      18, 2008, the Company retired the Presidential Facility and satisfied all sums
      due and payable thereunder. There were no penalties associated with retiring
      the
      Presidential Facility prior to the end of the one-month term.




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”) and such other
      lenders as may thereafter become a party to the PNC Facility (collectively,
      the
“Lenders”). Under the terms of the PNC Facility, BCI is entitled to request that
      the Lenders 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 the Lenders as collateral or (ii) a total of $15.0 million. Such
      revolving advances were used by BCI to repay existing indebtedness owed to
      Presidential, pay fees and expenses relating to entering into the PNC Facility
      and provide for BCI’s working capital needs, and may be used to assist in the
      acquisition of companies engaged in the same line of business as
      BCI.




Interest
      on the revolving advances shall accrue (a) for domestic rate loans, at a rate
      per annum equal to the higher of (i) the base commercial lending rate of PNC
      as
      publicly announced to be in effect from time to time, or (ii) the federal funds
      open rate plus 1/2 of 1%, and (b) for Eurodollar rate loans, at a rate per
      annum
      equal to (i) the rate at which U.S. dollar deposits are offered by leading
      banks
      in the London interbank deposit market (as displayed by Bloomberg), divided
      by
      (ii) one minus the reserve percentage requirement as determined by the Board
      of
      Governors of the Federal Reserve System. Such amounts are secured by a blanket
      security interest in favor of the Lenders that covers all of BCI’s receivables,
      equipment, general intangibles, inventory, investment property, certain real
      property, certain leasehold interests, all subsidiary stock, records and other
      property and proceeds of all of the foregoing.


25




The
      term
      of the PNC Facility is three years and shall terminate on April 17, 2011. BCI
      may terminate the PNC Facility at any time upon sixty (60) days’ prior written
      notice and upon payment in full of the obligations owing under the PNC Facility
      or any related documents. Upon such early termination by BCI, BCI shall pay
      the
      Lenders an early termination fee in an amount equal to (y) one half of one
      percent (0.50%) of $15.0 million if the early termination occurs on or before
      April 16, 2009, and (z) three eighths of one percent (0.375%) of $15.0 million
      if the early termination occurs on or after April 17, 2009 or on or before
      April
      16, 2010.




In
      connection with the closing of the PNC Facility, Berliner Communications, Inc.
      became obligated under that certain Guaranty and Suretyship Agreement (the
      “Guaranty”), dated April 17, 2008, in favor of the Lenders, pursuant to which we
      unconditionally guaranteed and became surety for the prompt payment and
      performance of all loans, advances, debts, liabilities, obligations, covenants
      and duties owing by BCI to PNC as agent for the benefit of the Lenders, of
      any
      kind or nature, present or future, whether direct or indirect, absolute or
      contingent, joint or several, due or to become due, now existing or hereafter
      arising, to the Lenders by BCI. In the event BCI is unable to pay any amounts
      owed to the Lenders, we would be liable, pursuant to the Guaranty, for such
      amounts upon the same terms and conditions as BCI would be liable.




Along
      with the PNC Facility, BCI entered into a Revolving Credit Note (the “PNC Note”)
      with the Lenders, pursuant to which, BCI agreed to repay the Lenders the
      principal amount of $15.0 million or, if different from such amount, the unpaid
      balance of advances due and owing to PNC under the PNC Facility, plus interest
      on the principal amount from time to time outstanding until such principal
      amount is paid in full, at the applicable interest rates in accordance with
      the
      provisions of the PNC Facility. The PNC Note is subject to mandatory prepayment
      upon default under the terms of the agreement and may be voluntarily prepaid,
      in
      whole or in part, on the terms and conditions set forth in the PNC Facility.
      Upon the occurrence of an event of default due to bankruptcy or BCI’s inability
      to pay, the PNC Note shall immediately become due and payable, without notice.
      Other uncured defaults under the PNC Facility or any related document shall
      cause the PNC Note to be declared immediately due and payable, without notice,
      in accordance with the terms of the PNC Facility. Notwithstanding the foregoing,
      all outstanding principal and interest are due and payable on April 17, 2011.
      On
      June 30, 2008, the balance of the PNC Note was $0.2 million.




On
      December 29, 2006, we entered into the Note Purchase Agreement pursuant to
      which
      over a period of time the Company entered into four separate promissory notes
      (the "Notes") with each of Sigma Opportunity Fund, LLC ("Sigma") in the original
      principal amount of $3.0 million, Pacific Asset Partners ("Pacific") in the
      original principal amount of $1.0 million, Operis Partners I LLC ("Operis")
      in
      the original principal amount of $500,000, and Sigma Berliner, LLC ("SBLLC")
      in
      the original principal amount of $1,500,000. Collectively, SBLLC, Sigma, Operis,
      and Pacific are referred to as the "Noteholders." In connection with the Note
      Purchase Agreement, the Company entered into a Security Agreement, dated as
      of
      December 29, 2006 (the "Security Agreement") pursuant to which the Company
      granted a security interest in certain collateral to the Noteholders.




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. As a result of the conversion, the Security Agreement terminated
      by its own terms.





Our
      ability to satisfy our current obligations is dependent upon our cash on hand,
      borrowings under our credit facility with PNC, and the operations of BCI. Our
      current obligations consist of capital expenditures, debt service and funding
      working capital. In the event we do not continue to generate positive cash
      flow,
      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 customer
      may have a material impact on our ability to generate sufficient cash flow
      in
      future periods. We anticipate that certain cost savings strategies will be
      necessary unless and until our largest customer elects to proceed with these
      cancelled or deferred projects or we have obtained orders from other customers
      sufficient to replace these projects.


26




The
      net
      cash flows for the years ended June 30, 2008 and 2007 are as
      follows:





**For the Years Ended****June 30,****2008**
            
            **2007**Net
                cash (used in) provided by operating activities
            
            $
            7,944
            
            $
            (1,064
            )Net
                cash used in investing activities
            
            
            (947
            )
            
            (6,239
            )Net
                cash (used in) provided by financing activities
            
            
            (6,307
            )
            
            9,252




*Cash
      Provided by / Used in Operating Activities*





Net
      cash
      provided by operating activities for the year ended June 30, 2008 totaled
      approximately $7.9 million. Net cash used in operating activities for the year
      ended June 30, 2007 was approximately $1.1 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.





During
      the year ended June 30, 2007, cash provided by operating activities primarily
      resulted from operating income of $2.2 million, net of non-cash charges. Cash
      used in operating activities primarily resulted from an increase in accounts
      receivable of $4.2 million due to increased revenue during the period, increased
      accrued expenses of $0.6 million, and decreases in accounts payable (net of
      accounts payable realized for the acquisition of Radian) of $1.0
      million.





*Cash
      Used in Investing Activities*





Cash
      used
      in investing activities for the years ended June 30, 2008 and 2007 totaled
      approximately $0.9 million and $6.2 million, respectively.





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





During
      the year ended June 30, 2007, cash used in investing activities primarily
      resulted from asset acquisitions of $5.7 million and purchases of property
      and
      equipment of $0.5 million.




*Cash
      Provided by / Used In Financing Activities*





Cash
      used
      in financing activities for the year ended June 30, 2008 totaled approximately
      $6.3 million as compared to cash provided by financing activities for the year
      ended June 30, 2007 of approximately $9.3 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.


27




During
      the year ended June 30, 2007, cash provided by financing activities primarily
      resulted from net borrowings under our credit line of $4.4 million and new
      debt
      incurred of $6.0 million which were partially offset by financing fees paid
      of
      $0.6 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 PNC credit facility and
      any
      additional equity or credit facilities we can arrange.





**Forward-Looking
      Statements**





“Forward-looking”
      statements appear throughout this Report. 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 Report, including, without limitation, those
      risks identified in Item 1A - Risk Factors set forth elsewhere in this Report,
      could have an adverse effect on the business, results of operations or financial
      condition of the Company.





Forward-looking
      statements in this Annual Report 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;


·
            our
                ability to adequately staff our service
                offerings;


·
            opportunities
                for us from new and emerging wireless
                technologies;


·
            our
                ability to obtain additional
                financing;


·
            our
                growth strategy;


·
            trends
                in the wireless telecommunications
                industry;


·
            key
                drivers of change in our business;


·
            our
                competitive position; 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 wireless telecommunications
                industry;


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


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


·
            risks
                that we will not be able to take advantage of new and emerging wireless
                technologies; 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 Report. 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 Report. We undertake no
      obligation to publicly revise these forward-looking statements to reflect events
      or circumstances that arise after the date of this Report.


28





**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.





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.





*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
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes - an interpretation of SFAS Statement No.
      109,* (“FIN
      48”), which establishes that the financial statement effects of a tax position
      taken or expected to be taken in a tax return are to be recognized in the
      financial statements when it is more likely than not, based on the technical
      merits, that the position will be sustained upon examination. FIN 48 is
      effective for fiscal years beginning after December 15, 2006.





We
      adopted FIN 48 on July 1, 2007. On that date, we had no material uncertain
      tax
      positions. The cumulative effect of applying this interpretation did not result
      in any adjustment to retained earnings as of 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 do not have any income tax returns which are
      under audit. Income tax returns remain open for examination under U.S. and
      state
      statutes for years ended June 30, 2005 and thereafter.





In
      September 2006, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards No. 157, *Fair
      Value Measurements* ("SFAS
      157") 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. SFAS No. 157
      is
      effective for financial statements issued for the fiscal years beginning after
      November 15, 2008, and interim periods within those fiscal years. The Company
      has determined that the impact SFAS 157 will have on its consolidated financial
      statements upon adoption will not be material to the financial statements taken
      as a whole.


29




In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      159, *The
      Fair Value Option for Financial Assets and Financial Liabilities* ("SFAS
      159"). This statement permits companies to choose to measure many financial
      assets and liabilities at fair value. Unrealized gains and losses on items
      for
      which the fair value option has been elected are reported in earnings. SFAS
      159
      is effective for fiscal years beginning after November 15, 2007. The Company
      has
      determined that the impact SFAS 159 will have on its consolidated financial
      statements upon adoption will not be material to the financial statements taken
      as a whole.





In
      December 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      160, *Noncontrolling
      Interests in Consolidated Financial Statements, an amendment of ARB No.
      51* (“SFAS
      160”). This statement amends ARB No. 51 to establish accounting and reporting
      standards for the noncontrolling interest (minority interest) in a subsidiary
      and for the deconsolidation of a subsidiary. Upon its adoption, noncontrolling
      interests will be classified as equity in our consolidated balance sheets.
      Income and comprehensive income attributed to noncontrolling interests will
      be
      included in our consolidated statements of operations and our consolidated
      statements of equity. SFAS 160 is effective for fiscal years beginning after
      December 15, 2008. This statement shall be applied prospectively as of the
      beginning of the fiscal year in which this Statement is initially applied,
      except for the presentation and disclosure requirements which must be applied
      retrospectively for all periods presented.





In
      December 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      141 (Revised), *Business
      Combinations* (“SFAS
      141R”). This statement provides companies with principles and requirements on
      how an acquirer recognizes and measures in its financial statements the
      identifiable assets acquired, liabilities assumed, and any noncontrolling
      interest in the acquiree as well as the recognition and measurement of goodwill
      acquired in a business combination. The statement also requires certain
      disclosures to enable users of the financial statements to evaluate the nature
      and financial effects of the business combination. Acquisition costs associated
      with the business combination will generally be expensed as incurred. SFAS
      141R
      is effective for business combinations occurring in fiscal years beginning
      after
      December 15, 2008. Early adoption of this statement is not
      permitted.





In
      June
      2008, the FASB ratified EITF Issue No. 07-5, *Determining
      Whether an Instrument (or an Embedded Feature) is Indexed to an Entity’s Own
      Stock* (“EITF
      07-5”). EITF 07-5 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 on the impact of foreign
      currency denominated strike prices and market-based employee stock option
      valuation instruments on the evaluation. EITF 07-5 is effective for fiscal
      years
      beginning after December 15, 2008. The Company is currently assessing the
      impact, if any, on its consolidated financial position and results of
      operations.





**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-27.





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





None.


30




**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 is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s 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. While the design of our disclosure
      controls and procedures is adequate for our current needs and anticipated future
      conditions, and there can be no assurance that our current design will succeed
      in achieving its stated goals under all possible future conditions. Accordingly
      we may be required to modify our disclosure controls and procedures in the
      future.





Based
      on
      their evaluation as of the end of the period covered by this Annual Report
      on
      Form 10-K for the year ended June 30, 2008, our chief executive officer and
      our
      chief financial officer have concluded that the design of our system of
      disclosure controls and procedures was effective to ensure that material
      information relating to our company is made known to them and that our system
      of
      disclosure controls and procedures is operating to provide a reasonable level
      of
      assurance that information required to be disclosed in our reports is recorded,
      processed, summarized and reported in a timely manner, particularly during
      the
      period in which this Annual Report on Form 10-K was being prepared.





***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 June 30, 2008. In making this assessment, management used the
      criteria set forth by the Committee of Sponsoring Organizations of the Treadway
      Commission (“COSO”) in Internal Control - Integrated Framework. Based on that
      assessment, we believe that as of June 30, 2008, our internal control over
      financial reporting is effective.





This
      annual 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 annual report on Form 10-K.





Beginning
      with our Annual Report on Form 10-K for the year ending June 30, 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.


31




***Changes
      in Internal Control Over Financial Reporting***





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




**ITEM
      9B. OTHER INFORMATION**





Not
      applicable.


32




**PART
      III**





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





Information
      called for by Item 10 will be set forth under the caption “Election of
      Directors” in our 2008 Proxy Statement, which will be filed not later than 120
      days after the end of our fiscal year ended June 30, 2008, and which is
      incorporated herein by this reference.





**ITEM
      11. EXECUTIVE COMPENSATION**





Information
      called for by Item 11 will be set forth under the caption “Executive
      Compensation and Other Matters” in our 2008 Proxy Statement, which will be filed
      not later than 120 days after the end of our fiscal year ended June 30, 2008,
      and which is incorporated herein by this reference.





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




Information
      called for by Item 12 will be set forth under the caption “Security Ownership of
      Directors, Management and Principal Stockholders” in our 2008 Proxy Statement,
      which will be filed not later than 120 days after the end of our fiscal year
      ended June 30, 2008, and which is incorporated herein by this
      reference.





**ITEM
      13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE**





Information
      called for by Item 13 will be set forth under the caption “Certain Relationships
      and Related Transactions” in our 2008 Proxy Statement, which will be filed not
      later than 120 days after the end of our fiscal year ended June 30, 2008, and
      which is incorporated herein by this reference.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





Information
      called for by Item 14 will be set forth under the caption “Principal Accountant
      Fees and Services” in our 2008 Proxy Statement, which will be filed not later
      than 120 days after the end of our fiscal year ended June 30, 2008, and which
      is
      incorporated herein by this reference.





**PART
      IV**





**ITEM
      15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**





The
      following documents are filed as part of this report:





Financial
      Statements:





Our
      Consolidated Balance Sheets as of June 30, 2008 and 2007


Our
      Consolidated Statements of Operations for the years ended June 30, 2008 and
      2007


Our
      Consolidated Statements of Stockholders’ Equity for the years ended June 30,
      2008 and 2007


Our
      Consolidated Statements of Cash Flows for the years ended June 30, 2008 and
      2007


33


**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/
                Rich B. BerlinerName:
            Rich B.
                BerlinerTitle:
            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 September 26, 2008.




SIGNATURE
            
            TITLE/s/
                Rich B. Berliner
            
            Chief
                Executive OfficerRich B.
                Berliner
            
            (Principal
                Executive Officer)/s/
                Raymond A. Cardonne, Jr.
            
            Chief
                Financial Officer and TreasurerRaymond
                A. Cardonne, Jr.
            
            (Principal
                Financial Officer)/s/
                Mark S. Dailey
            
            DirectorMark
                S. Dailey/s/
                Peter J. Mixter
            
            DirectorPeter
                J. Mixter/s/
                Mehran Nazari
            
            DirectorMehran
                Nazari/s/
                John Stevens Robling, Jr.
            
            DirectorJohn
                Stevens Robling, Jr./s/
                Thom Waye
            
            DirectorThom
                Waye




34


**INDEX
      TO EXHIBITS**





Exhibit Number
            
            Description
            
            Filed
                Herewith10.1
            
            Amendment
                and Waiver Agreement, dated September 27, 2007, among Berliner
                Communications, Inc., Sigma Opportunity Fund, LLC, Pacific Asset
                Partners,
                LP, Operis Partners I LLC, and Sigma Berliner, LLC
            
            Incorporated
                herein by reference from Company’s Form 10-K filed on October 2,
                200710.2
            
            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,
                200710.3
            
            Employment
                Agreement, dated as of December 10, 2007, by and between Berliner
                Communications, Inc. and Richard B. Berliner
            
            Incorporated
                herein by reference from Company’s Form 8-K filed on December 13,
                200710.4
            
            Employment
                Agreement, dated as of December 10, 2007, by and between Berliner
                Communications, Inc. and Nicholas Day
            
            Incorporated
                herein by reference from Company’s Form 8-K filed on December 13,
                200710.5
            
            Employment
                Agreement, dated as of December 12, 2007, by and between Berliner
                Communications, Inc. and Michael S. Guerriero
            
            Incorporated
                herein by reference from Company’s Form 8-K filed on December 13,
                200710.6
            
            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
            
            $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,
                200810.9
            
            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,
                200810.10
            
            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,
                200810.11
            
            Amendment
                to Note Purchase Agreement and Notes and Security Agreement Thereunder,
                dated April 17, 2008, by and among Berliner Communications, Inc.,
                Sigma
                Opportunity Fund, LLC, Sigma Berliner, LLC, Operis Partners I LLC,
                and
                Pacific Asset Partners
            
            Incorporated
                herein by reference from Company’s Form 8-K filed on April 23,
                2008




35





10.12
            
            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,
                200821.1
            
            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




36





**BERLINER
      COMMUNICATIONS, INC. AND SUBSIDIARIES**


**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Report
                of Independent Registered Public Accounting Firm
            F-2Consolidated
                Balance Sheets as of June 30, 2008 and 2007
            F-3Consolidated
                Statements of Operations for the years ended June 30, 2008 and 2007
            F-4Consolidated
                Statements of Stockholders' Equity for the years ended June 30, 2008
                and
                2007
            F-5Consolidated
                Statements of Cash Flows for the years ended June 30, 2008 and 2007
            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.


Elmwood
      Park, New Jersey





We
      have
      audited the accompanying consolidated balance sheets of Berliner Communications,
      Inc. and Subsidiaries as of June 30, 2008 and 2007 and the related consolidated
      statements of operations, stockholders’ equity, and cash flows for the years
      ended June 30, 2008 and 2007. 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 June 30, 2008 and 2007, and the results of their
      operations and cash flows for the years ended June 30, 2008 and 2007 in
      conformity with accounting principles generally accepted in the United States
      of
      America.





/s/
                BDO Seidman, LLPWoodbridge,
                New JerseySeptember
                29, 2008


F-2




**BERLINER
      COMMUNICATIONS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**(Amounts
      in thousands)**





**June
                30,****2008**
            
            **2007****ASSETS****CURRENT
                ASSETS**Cash
                and cash equivalents
            
            $
            3,173
            
            $
            2,483Accounts
                receivable, net of allowance for doubtful accounts of $830 and $261
                at
                June 30, 2008 and 2007, respectively
            
            
            31,189
            
            
            22,911Inventories
            
            
            1,012
            
            
            666Deferred
                tax assets - current
            
            
            536
            
            
            336Prepaid
                expenses and other current assets
            
            
            762
            
            
            77136,672
            
            
            27,167Property
                and equipment, net
            
            
            2,924
            
            
            2,569Amortizable
                intangible assets, net
            
            
            816
            
            
            960Goodwill
            
            
            2,084
            
            
            2,270Deferred
                tax assets - long-term, net
            
            
            505
            
            
            911Other
                assets
            
            
            268
            
            
            387Total
                Assets
            
            $
            43,269
            
            $
            34,264**LIABILITIES
                AND STOCKHOLDERS' EQUITY****CURRENT
                LIABILITIES**Accounts
                payable
            
            $
            4,820
            
            $
            7,399Accrued
                liabilities
            
            
            11,919
            
            
            6,588Accrued
                income taxes
            
            
            1,849
            
            
            326Line
                of credit
            
            
            217
            
            
            5,537Current
                portion of long-term debt
            
            
            1,133
            
            
            797Current
                portion of capital lease obligations
            
            
            118
            
            
            5220,056
            
            
            20,699Long-term
                debt, net of current portion
            
            
            467
            
            
            5,765Long-term
                capital lease obligations, net of current portion
            
            
            305
            
            
            199Other
                long-term liabilities
            
            
            104
            
            
            694Total
                liabilities
            
            
            20,932
            
            
            27,357**COMMITMENTS****STOCKHOLDERS'
                EQUITY**Common
                stock
            
            
            1
            
            
            -Additional
                paid-in capital
            
            
            22,630
            
            
            15,655Accumulated
                deficit
            
            
            (294
            )
            
            (8,748
            )Total
                stockholders' equity
            
            
            22,337
            
            
            6,907Total
                liabilities and stockholders' equity
            
            $
            43,269
            
            $
            34,264




*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)**





**Year Ended June 30,****2008**
            
            **2007**Revenues
            
            $
            128,372
            
            $
            55,135Costs
                of revenues
            
            
            83,452
            
            
            37,275Gross
                margin
            
            
            44,920
            
            
            17,860Selling,
                general and administrative expenses
            
            
            25,703
            
            
            14,614Depreciation
                and amortization
            
            
            1,190
            
            
            484Gain
                on sale of fixed assets
            
            
            (11
            )
            
            (5
            )Income
                from operations
            
            
            18,038
            
            
            2,767Other
                (income) expenseInterest
                expense
            
            
            1,359
            
            
            560Amortization
                of deferred financing fees and accretion of debt discount
            
            
            2,031
            
            
            678Financing
                fees
            
            
            -
            
            
            695Interest
                income
            
            
            (71
            )
            
            (37
            )Income
                in equity investments
            
            
            -
            
            
            (41
            )Other
                income
            
            
            (162
            )
            
            (14
            )Income
                before income taxes
            
            
            14,881
            
            
            926Income
                tax (benefit) expense
            
            
            6,427
            
            
            (186
            )Net
                income allocable to common shareholders
            
            $
            8,454
            
            $
            1,112Net
                income per share:Basic
            
            $
            0.47
            
            $
            0.07Diluted
            
            $
            0.31
            
            $
            0.06Weighted
                average number of shares outstanding:Basic
            
            
            17,918
            
            
            17,035Diluted
            
            
            27,166
            
            
            19,062




*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)**
 
 **Preferred Stock****2,000,000 shares**
                **authorized;**
              
              **Common Stock**
                **20,000,000 shares authorized**
              
              **Additional**
              
              
              
              **Total****$0.00002 par value**
              
              **$0.00002 par value**
              
              **Paid-in**
              
              **Accumulated**
              
              **Stockholders'****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Equity**Balance
                  at June 30, 2006
              
              
              -
              
              $
              -
              
              
              17,034,857
              
              $
              -
              
              $
              13,018
              
              $
              (9,860
              )
              $
              3,158Exercise
                  of stock options
              
              
              
              
              
              
              
              
              46,929
              
              
              
              
              
              
              
              
              
              
              
              -Stock-based
                  compensation expense
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              300
              
              
              
              
              
              300Value
                  of warrants granted with debt
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,337
              
              
              
              
              
              2,337Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,112
              
              
              1,112Balance
                  at June 30, 2007
              
              
              -
              
              
              -
              
              
              17,081,786
              
              
              -
              
              
              15,655
              
              
              (8,748
              )
              
              6,907Stock-based
                  compensation expense
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              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
              
              
              -
              
              $
              -
              
              
              26,191,612
              
              $
              1
              
              $
              22,630
              
              $
              (294
              )
              $
              22,337
  *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)**
 **Year Ended June 30,****2008**
                
                **2007**Cash
                    flows from operating activities:Net
                    income
                
                $
                8,454
                
                $
                1,112Adjustments
                    to reconcile net income to net cash (used in) provided by operating
                    activities:Depreciation
                    and amortization
                
                
                1,190
                
                
                484Amortization
                    of deferred financing fees
                
                
                591
                
                
                189Bad
                    debt expense
                
                
                569
                
                
                140Stock-based
                    compensation
                
                
                181
                
                
                300Gain
                    on sale of fixed assets
                
                
                (14
                )
                
                (5
                )Accretion
                    of interest from warrants
                
                
                1,372
                
                
                509Financing
                    fees
                
                
                26
                
                
                695Deferred
                    tax assets, net
                
                
                204
                
                
                (1,247
                )Changes
                    in operating assets and liabilities:Accounts
                    receivable
                
                
                (8,262
                )
                
                (4,212
                )Inventories
                
                
                (308
                )
                
                1,039Prepaid
                    expenses and other current assets
                
                
                41
                
                
                39Other
                    assets
                
                
                119
                
                
                20Accounts
                    payable
                
                
                (2,578
                )
                
                (974
                )Accrued
                    liabilities
                
                
                4,837
                
                
                649Accrued
                    income taxes
                
                
                1,522
                
                
                198**Net
                    cash (used in)/provided by operating activities**
                
                
                7,944
                
                
                (1,064
                )Cash
                    flows from investing activities:Purchases
                    of property and equipment
                
                
                (956
                )
                
                (519
                )Proceeds
                    from the sale of property and equipment
                
                
                48
                
                
                8Acquisition
                    of Digitcom
                
                
                -
                
                
                (2,000
                )Acquisition
                    of Radian
                
                
                -
                
                
                (3,630
                )Acquisition
                    of Comtech
                
                
                (39
                )
                
                (98
                )**Net
                    cash used in investing activities**
                
                
                (947
                )
                
                (6,239
                )Cash
                    flows from financing activities:Proceeds
                    from line of credit
                
                
                120,453
                
                
                23,843Proceeds
                    from long-term debt
                
                
                -
                
                
                6,000Repayment
                    of line of credit
                
                
                (125,773
                )
                
                (19,417
                )Repayment
                    of long-term debt
                
                
                (972
                )
                
                (529
                )Repayment
                    of capital leases
                
                
                (90
                )
                
                (41
                )Proceeds
                    from exercise of stock options
                
                
                75
                
                
                -Debt
                    issuance costs
                
                
                -
                
                
                (604
                )**Net
                    cash (used in) provided by financing activities**
                
                
                (6,307
                )
                
                9,252Net
                    increase in cash and cash equivalents
                
                
                690
                
                
                1,949Cash
                    and cash equivalents at beginning of period
                
                
                2,483
                
                
                534Cash
                    and cash equivalents at end of period
                
                $
                3,173
                
                $
                2,483
  *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)**
 
 **Year Ended June 30,****2008**
              
              **2007****Supplemental
                  cash flow information:**Interest
                  paid
              
              $
              1,310
              
              $
              164Income
                  taxes paid
              
              $
              5,492
              
              $
              863**Non-cash
                  investing and financing activities:**Assets
                  purchased under capital leases
              
              $
              262
              
              $
              235Purchase
                  of vehicles financed with notes payable
              
              $
              14
              
              $
              21Fair
                  value of warrants issued with debt
              
              $
              -
              
              $
              2,336Note
                  payable issued in connection with the acquisition of
                  Digitcom
              
              $
              -
              
              $
              1,750Conversion
                  of 7% Convertible Notes Payable
              
              $
              6,000
              
              $
              -
  F-7
 **BERLINER
        COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE YEAR ENDED JUNE 30, 2008**
 **($
        amount in thousands except per share and per share
        amounts)**
 **1.** **Business**
 
 General
 
 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., currently named 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”). Berliner is now the public reporting
        entity, and all of our operations are run out of Berliner’s wholly-owned
        subsidiary, BCI. Unless the context otherwise requires, references to “we”,
“us”, “our” and “the Company” refer to Berliner and its consolidated subsidiary
        BCI.
 
 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.
 
 On
        February 19, 2007, we acquired substantially all of the assets of Comtech
        Systems, Inc.
 
 On
        February 28, 2007, BCI entered into an Asset Purchase Agreement (the “Digitcom
        Asset Purchase Agreement”) with Digital Communication Services, Inc.
        (“Digitcom”) and its affiliates for the purchase of certain of its assets in
        Arlington, Texas. This acquisition expanded our presence in Texas and the
        Midwest markets.
 
 On
        April
        16, 2007, we 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
        our presence in the Los Angeles, California, Las Vegas, Nevada, and Seattle,
        Washington markets, and added offices in Salem, Oregon and Tempe, Arizona.
 
 The
        results of these acquired businesses have been incorporated into our
        consolidated financial statements since the dates of acquisition.
 
 **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 of construction projects.
  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**
 **FOR
            THE YEAR ENDED JUNE 30, 2008**
 **($
            amount in thousands except per share and per share
            amounts)**
 ***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 June 30, 2008 and 2007, current prepaid expenses
        and
        other current assets totaled approximately $0.8 million and $0.8 million,
        respectively, and consisted mainly of insurance, deferred financing fees
        and
        rents. Other non-current assets of approximately $0.3 million at June 30,
        2008
        and $0.4 million at June 30, 2007 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 operations.
  F-9
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 ***Goodwill
        and Other Intangible Assets***
 
 In
        accordance with Statement of Financial Accounting Standards No. 142, *“Goodwill
        and Other Intangible Assets”* (“SFAS
        142”), goodwill and indefinite lived intangible assets are no longer amortized
        but are assessed for impairment on at least an annual basis. SFAS 142 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.
 
 SFAS
        142
        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, 2008.
        Accordingly, step two was unnecessary and no impairment charge was recognized
        in
        the consolidated statements of income for the year ended June 30, 2008. On
        an
        ongoing basis, the Company expects to perform its annual impairment test
        at
        January 31 absent any interim impairment indicators.
 
 Goodwill
        through the years ended June 30, 2008 and 2007 consisted of the
        following:
 
 Beginning
                  balance, July 1, 2006
              
              $
              -Comtech
                  acquisition
              
              
              31Digitcom
                  acquisition
              
              
              1,840Digitcom
                  acquisition – purchase price adjustment
              
              
              11Radian
                  acquisition
              
              
              388Ending
                  balance June 30, 2007
              
              
              2,270Digitcom
                  acquisition - purchase price adjustment
              
              
              (225
              )Comtech
                  acquisition - additional payment
              
              
              39Ending
                  balance June 30, 2008
              
              $
              2,084
 
 
 ***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.
  F-10
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 ***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 significant deferred tax assets when it is more likely than
        not
        that such assets will not be recovered.
 
 ***Stock-based
        Compensation***
 
 In
        December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
        123 (revised 2004), *Share-Based
        Payment,* (SFAS
        123R) which requires all share-based payments to employees, including grants
        of
        employee stock options, to be recognized in the financial statements based
        on
        fair values. SFAS 123R became effective for public companies at the beginning
        of
        the first interim or annual period beginning after December 15, 2005. This
        required us to adopt SFAS 123R effective July 1, 2005. We elected to adopt
        SFAS
        123R 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).
 
 In
        addition, 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:
 
 **2008**
              
              **2007**Expected
                  Volatility
              
              66%
                  - 71%
              
              70%
                  - 78%Expected
                  dividend yield
              
              0%
              
              0%Risk-free
                  interest rate
              
              2.58%
                  - 4.97%
              
              4.51%
                  - 5.01%Expected
                  life
              
              5
                  -
                  7.5 Years
              
              5
                  Years
  ***Earnings
        per Share***
 
 Basic
        earnings per share are computed by dividing income available to common
        shareholders by the weighted-average number of common shares outstanding
        during
        the period. Diluted earnings per share are computed by dividing income available
        to common shareholders 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.
 
 The
        following table sets forth the computations of basic earnings per share and
        diluted earnings per share:
  F-11
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 **Year Ended June 30,****2008**
              
              **2007****Basic
                  earnings per share:**Numerator:Net
                  income allocable to common shareholders
              
              $
              8,454
              
              $
              1,112Denominator:Weighted
                  average common shares outstanding
              
              
              17,918
              
              
              17,035Net
                  income per share - basic
              
              $
              0.47
              
              $
              0.07
 
 **Year Ended June 30,****2008**
              
              **2007****Diluted earnings
                  per share:**Numerator:Net
                  income allocable to common shareholders
              
              $
              8,454
              
              $
              1,112Denominator:Weighted
                  average common shares outstanding
              
              
              17,918
              
              
              17,035Effect
                  of dilutive securities:Stock
                  options
              
              
              563
              
              
              528Warrants
              
              
              8,685
              
              
              1,499Weighted
                    average common shares outstanding assuming dilution
              
              
              27,166
              
              
              19,062Net
                  income per share - diluted
              
              **$**
              0.31
              
              **$**
              0.06
 
 Common
        share equivalents consist of stock options and warrants using the treasury
        stock
        method. For the years ended June 30, 2008, and, 2007, 320,690 and 452,026
        stock
        options, respectively and 0 and 5,454,545 shares convertible upon conversion
        of
        our 7% Notes, respectively, 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’s consolidated balance sheets include the following financial
        instruments: short-term cash investments, trade accounts receivable and trade
        accounts payable. 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.
  F-12
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 ***Reclassifications***
 
 Certain
        reclassifications have been reflected in the fiscal year 2007 consolidated
        financial statements to conform to the current year presentation.
 
 ***Recently
        Issued Accounting Pronouncements***
 
 In
        June
        2006, the Financial Accounting Standards Board (“FASB”) issued FASB
        Interpretation No. 48, *Accounting
        for Uncertainty in Income Taxes – an interpretation of SFAS Statement No.
        109,* (“FIN
        48”), which establishes that the financial statement effects of a tax position
        taken or expected to be taken in a tax return are to be recognized in the
        financial statements when it is more likely than not, based on the technical
        merits, that the position will be sustained upon examination. FIN 48 is
        effective for fiscal years beginning after December 15, 2006.
 
 We
        adopted FIN 48 on July 1, 2007. On that date, we had no material uncertain
        tax
        positions. The cumulative effect of applying this interpretation did not
        result
        in any adjustment to retained earnings as of 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 do not have any income tax returns which are
        under audit. Income tax returns remain open for examination under U.S. and
        state
        statutes for years ended June 30, 2005 and thereafter.
 
 In
        September 2006, the Financial Accounting Standards Board ("FASB") issued
        Statement of Financial Accounting Standards No. 157, *Fair
        Value Measurements* ("SFAS
        157") 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. SFAS No. 157
        is
        effective for financial statements issued for the fiscal years beginning
        after
        November 15, 2008, and interim periods within those fiscal years. The Company
        has determined that the impact SFAS 157 will have on its consolidated financial
        statements upon adoption will not be material to the financial statements
        taken
        as a whole.
 
 In
        February 2007, the FASB issued Statement of Financial Accounting Standards
        No.
        159, *The
        Fair Value Option for Financial Assets and Financial Liabilities* ("SFAS
        159"). This statement permits companies to choose to measure many financial
        assets and liabilities at fair value. Unrealized gains and losses on items
        for
        which the fair value option has been elected are reported in earnings. SFAS
        159
        is effective for fiscal years beginning after November 15, 2007. The Company
        has
        determined that the impact SFAS 159 will have on its consolidated financial
        statements upon adoption will not be material to the financial statements
        taken
        as a whole.
 
 In
        December 2007, the FASB issued Statement of Financial Accounting Standards
        No.
        160, *Noncontrolling
        Interests in Consolidated Financial Statements, an amendment of ARB No.
        51* (“SFAS
        160”). This statement amends ARB No. 51 to establish accounting and reporting
        standards for the noncontrolling interest (minority interest) in a subsidiary
        and for the deconsolidation of a subsidiary. Upon its adoption, noncontrolling
        interests will be classified as equity in our consolidated balance sheets.
        Income and comprehensive income attributed to noncontrolling interests will
        be
        included in our consolidated statements of operations and our consolidated
        statements of equity. SFAS 160 is effective for fiscal years beginning after
        December 15, 2008. This statement shall be applied prospectively as of the
        beginning of the fiscal year in which this Statement is initially applied,
        except for the presentation and disclosure requirements which must be applied
        retrospectively for all periods presented.
 
 In
        December 2007, the FASB issued Statement of Financial Accounting Standards
        No.
        141 (Revised), *Business
        Combinations* (“SFAS
        141R”). This statement provides companies with principles and requirements on
        how an acquirer recognizes and measures in its financial statements the
        identifiable assets acquired, liabilities assumed, and any noncontrolling
        interest in the acquiree as well as the recognition and measurement of goodwill
        acquired in a business combination. The statement also requires certain
        disclosures to enable users of the financial statements to evaluate the nature
        and financial effects of the business combination. Acquisition costs associated
        with the business combination will generally be expensed as incurred. SFAS
        141R
        is effective for business combinations occurring in fiscal years beginning
        after
        December 15, 2008. Early adoption of this statement is not
        permitted.
  F-13
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 In
        June
        2008, the FASB ratified EITF Issue No. 07-5, *Determining
        Whether an Instrument (or an Embedded Feature) is Indexed to an Entity’s Own
        Stock* (“EITF
        07-5”). EITF 07-5 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 on the impact of foreign
        currency denominated strike prices and market-based employee stock option
        valuation instruments on the evaluation. EITF 07-5 is effective for fiscal
        years
        beginning after December 15, 2008. The Company is currently assessing the
        impact, if any, on its consolidated financial position and results of
        operations.
 
 **3.** **Accounts
        Receivable and Concentration of Credit Risk**
 
 Accounts
        receivable at June 30, 2008 and 2007 consist of the following:
 **June
                    30,****2008**
                
                **2007**Accounts
                    receivable
                
                $
                23,870
                
                $
                17,727Unbilled
                    receivables, net
                
                
                8,149
                
                
                5,44532,019
                
                
                23,172Allowance
                    for doubtful accounts
                
                
                (830
                )
                
                (261
                )Total
                
                $
                31,189
                
                $
                22,911
 
 Unbilled
        receivables represent revenue on uncompleted infrastructure construction
        and
        technical services 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 $1.0 million at June
        30,
        2008 and 2007, respectively.
 
 The
        allowance for doubtful accounts for the years ended June 30, 2008 and 2007
        consisted of the following:
 
 **Balance at**
              
              
              
              **Recoveries/**
              
              **Balance at****Beginning**
              
              **Charged to**
              
              **Deductions/**
              
              **End of****of Period**
              
              **Expense**
              
              **Write-offs**
              
              **Period**Allowance for
                  doubtful accounts:Year
                  ended June 30, 2007
              
              $
              180
              
              
              140
              
              
              (59
              )
              $
              261Year
                  ended June 30, 2008
              
              $
              261
              
              
              569
              
              
              -
              
              $
              830
 
 As
        of and
        for the year ended June 30, 2008, we derived 84% of our total revenues 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.
 
 As
        of and
        for the year ended June 30, 2007, we derived 87% of our total revenues from
        our
        two largest customers, and those customers represented 77% of our accounts
        receivable. During the year ended June 30, 2007, Sprint Nextel Corporation
        represented 80% and T-Mobile USA, Inc. represented 7% of our total
        revenue.
 
 **4.** **Property
        and Equipment**
 
 Property
        and equipment at June 30, 2008 and 2007 consisted of the following:
  F-14
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 **Year
                  Ended June 30,****2008**
              
              **2007**Automobiles
                  and trucks
              
              $
              1,701
              
              $
              1,559Furniture
                  and fixtures
              
              
              454
              
              
              427Equipment
              
              
              3,179
              
              
              2,622Computer
                  equipment and software
              
              
              392
              
              
              143Buildings
              
              
              313
              
              
              313Leasehold
                  improvements
              
              
              244
              
              
              1186,283
              
              
              5,182Less:
                  Accumulated depreciation
              
              
              (3,449
              )
              
              (2,703
              )2,834
              
              
              2,479Land
              
              
              90
              
              
              90$
              2
                  ,924
              
              $
              2
                  ,569
 
 Depreciation
        on property and equipment for the years ended June 30, 2008 and 2007 was
        approximately $0.8 million and $0.4 million, respectively.
 
 **5.** **Non-Current
        Assets**
 
 On
        February 28, 2007, BCI entered into the Digitcom Asset Purchase Agreement
        with
        Digitcom, a Texas corporation, J&J Leasing Partnership, a Texas general
        partnership (“J&J”), and the shareholders of Digitcom for the purchase of
        certain assets, excluding cash and receivables, of Digitcom and property
        of
        J&J.
 
 The
        transaction was recorded as a purchase of a business that included real estate,
        vehicles, equipment and inventory. The allocation of the purchase price was
        preliminary until such time as management was able to review all of the assets
        acquired and determine the appropriate allocation based upon independent
        appraisals. We have concluded our review and have determined the final
        allocation of the purchase price. The schedule below details the original
        allocation and the final allocation:
 **Original**
                
                **Final**Land
                    and building
                
                $
                402
                
                $
                402Vehicles
                    and equipment
                
                
                357
                
                
                357Inventory
                
                
                325
                
                
                325Customer
                    relationships
                
                
                544
                
                
                1,040Covenants
                    not to compete
                
                
                523
                
                
                253Goodwill
                
                
                1,840
                
                
                1,614$
                3,991
                
                $
                3,991
 
 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 the
        Digitcom and Radian acquisitions. Amortization expense related to amortizable
        intangible assets was $0.4 million and $0.1 million for the year ended June
        30,
        2008 and 2007, 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 June 30, 2008 are as
        follows:
  F-15
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 2009
              
              $
              3372010
              
              
              2532011
              
              
              1282012
              
              
              772013
              
              
              21Total
              
              $
              816
 
 The
        following table summarizes the unaudited pro forma financial information
        for the
        years ended June 30, 2006 and 2007 assuming the Digitcom and Radian acquisitions
        had occurred on July 1, 2005. The Digitcom fiscal year end was December 31.
        The
        unaudited pro forma financial information uses data corresponding to Berliner’s
        reporting period. This unaudited pro forma financial information does not
        represent what would have occurred if the transactions had taken place on
        July
        1, 2005 and does not reflect our future combined results of operations or
        financial position.
 
 **For
                  the Years Ended June 30,****2007**
              
              **2006****(Unaudited)**Sales
              
              $
              78,144
              
              $
              66,282Net
                  income (loss)
              
              
              (821
              )
              
              (17,261
              )Net
                  income per share:basic
                  and diluted
              
              
              (0.05
              )
              
              (1.27
              )
 
 **6.** **Accrued
        Liabilities**
 
 Accrued
        liabilities at June 30, 2008 and 2007 consisted of the following:
 
 **June
                  30,****2008**
              
              **2007**Employee
                  compensation
              
              $
              2,998
              
              $
              874Construction
                  costs
              
              
              8,107
              
              
              5,018Other
              
              
              814
              
              
              696$
              11,919
              
              $
              6,588
 
 Included
        in other accrued liabilities at June 30, 2007 was a potential liability of
        $0.6
        million for state sales tax. In May 2008, we paid $0.8 million to a state
        department of revenue as final settlement of an informal notice of assessment
        which was originally issued for $1.8 million.
 
 **7.** **Income
        Taxes**
 
 Income
        tax expense differed from amounts computed by applying the U.S. federal tax
        rate
        of 35% to pre-tax income as a result of the following:
  F-16
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 **Year
                  ended June 30,****2008**
              
              **2007**Tax
                  expense at statutory rate of 35%
              
              $
              5,109
              
              $
              315Decrease
                    in valuation allowance against deferred tax assets
              
              
              (2
              )
              
              (738
              )State
                    and local income tax expense, net of income tax
                    benefit
              
              
              1,092
              
              
              11Meals
                  and entertainment
              
              
              64
              
              
              24Financing
                  fees
              
              
              8
              
              
              236Other
                  (net)
              
              
              157
              
              
              (34
              )$
              6,427
              
              $
              (186
              )
 
 The
        following summarizes the (benefit) provision for income taxes:
 
 **Year
                  ended June 30,****2008**
              
              **2007**Current:Federal
              
              $
              4,825
              
              $
              858State
                  and local
              
              
              1,744
              
              
              203Total
                  Current
              
              
              6,569
              
              
              1,061Deferred:Federal
              
              
              (105
              )
              
              (1,124
              )State
              
              
              (37
              )
              
              (123
              )Total
                  Deferred
              
              
              (142
              )
              
              (1,247
              )(Benefit)
                  provision for income taxes
              
              $
              6,427
              
              $
              (186
              )
 
 The
        tax
        effects of temporary differences that give rise to deferred tax assets and
        liabilities at June 30, 2008 and 2007 are as follows:
  F-17
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 **2008**
              
              **2007****Federal**
              
              **State**
              
              **Total****Deferred
                  Tax Assets****Current:**Allowance
                  for doubtful accounts
              
              $
              255
              
              $
              73
              
              $
              328
              
              $
              104Allowance
                  for obsolete inventory reserve
              
              
              -
              
              
              -
              
              
              -
              
              
              44Accrued
                  bonus
              
              
              97
              
              
              29
              
              
              126
              
              
              160Accrued
                  vacation
              
              
              64
              
              
              18
              
              
              82
              
              
              -AMT
                  carryforward
              
              
              -
              
              
              -
              
              
              -
              
              
              28416
              
              
              120
              
              
              536
              
              
              336**Non-Current:**Stock-based
                  compensation
              
              
              140
              
              
              41
              
              
              181
              
              
              152NOL
                  carryforward
              
              
              878
              
              
              642
              
              
              1,520
              
              
              1,594Accrued
                  sales tax
              
              
              -
              
              
              -
              
              
              -
              
              
              170Accretion
                  of debt discount
              
              
              -
              
              
              -
              
              
              -
              
              
              203Customer
                  list amortization
              
              
              99
              
              
              29
              
              
              128
              
              
              32Covenant
                  amortization
              
              
              14
              
              
              4
              
              
              18
              
              
              2Amortization
                  of warrants in deferred financing fees
              
              
              77
              
              
              22
              
              
              99
              
              
              -1,208
              
              
              738
              
              
              1,946
              
              
              2,153**Total
                  Deferred Tax Assets**
              
              
              1,624
              
              
              858
              
              
              2,482
              
              
              2,489**Deferred
                  Tax Liabilities****Long-Term**Goodwill
                  amortization
              
              
              54
              
              
              11
              
              
              65
              
              
              18Depreciation
                  expense
              
              
              136
              
              
              40
              
              
              176
              
              
              21**Total
                  Deferred Tax Liabilities**
              
              
              190
              
              
              51
              
              
              241
              
              
              391,434
              
              
              807
              
              
              2,241
              
              
              2,450**Less:
                  Valuation allowance**
              
              
              (508
              )
              
              (692
              )
              
              (1,200
              )
              
              (1,203
              )Net
                  deferred tax assets
              
              $
              926
              
              $
              115
              
              $
              1,041
              
              $
              1,247
  Deferred
        income taxes result from temporary differences in the financial reporting
        basis
        and tax basis of assets and liabilities.
 
 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.
 
 Based
        on
        management’s assessment of certain state tax attributes, we have determined that
        it was more likely than not that amounts of approximately $1.2 million will
        not
        be realized.
 
 We
        have
        net operating loss carryforwards for federal and state income tax purposes
        of
        approximately $1.2 million expiring in 2026 and approximately $6.1 million
        expiring between 2012 and 2014, respectively, which may be applied against
        future taxable income. We can only utilize approximately $64 thousand per
        year
        of the federal carryforward due to limitations as a result of the
        Acquisition.
  F-18
 **BERLINER
        COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE YEAR ENDED JUNE 30, 2008**
 **($
        amount in thousands except per share and per share
        amounts)**
 
 **8.** **Revolving
        Credit Facility**
 
 ***Presidential
        Financial Corporation of Delaware Valley Facility***
 
 In
        September 2003, we entered into a revolving credit facility with Presidential
        Financial Corporation of Delaware Valley (the “Presidential Facility”). On April
        3, 2007, we amended the Presidential Facility to, among other things, increase
        the availability under the Presidential Facility to $8.0 million. The
        Presidential Facility matured on April 3, 2008 and was extended on a
        month-to-month basis thereafter on the same terms and conditions, except
        for a
        .25% increase in monthly service fees. In connection with BCI’s entry into the
        Revolving Credit and Security Agreement with PNC (as described below), on
        April
        18, 2008, the Company retired the Presidential Facility and satisfied all
        sums
        due and payable thereunder. There were no penalties associated with retiring
        the
        Presidential Facility prior to the end of the one-month term.
  ***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”) and such other
        lenders as may thereafter become a party to the PNC Facility (collectively,
        the
“Lenders”). Under the terms of the PNC Facility, BCI is entitled to request that
        the Lenders 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 the Lenders as collateral or (ii) a total of $15.0 million. Such
        revolving advances were used by BCI to repay existing indebtedness owed to
        Presidential, pay fees and expenses relating to entering into the PNC Facility
        and provide for BCI’s working capital needs and shall be used to assist in the
        acquisition of companies engaged in the same line of business as
        BCI.
  Interest
        on the revolving advances shall accrue (a) for domestic rate loans, at a
        rate
        per annum equal to the higher of (i) the base commercial lending rate of
        PNC as
        publicly announced to be in effect from time to time, or (ii) the federal
        funds
        open rate plus 1/2 of 1%, and (b) for Eurodollar rate loans, at a rate per
        annum
        equal to (i) the rate at which U.S. dollar deposits are offered by leading
        banks
        in the London interbank deposit market (as displayed by Bloomberg), divided
        by
        (ii) one minus the reserve percentage requirement as determined by the Board
        of
        Governors of the Federal Reserve System. Such amounts are secured by a blanket
        security interest in favor of the Lenders that covers all of BCI’s receivables,
        equipment, general intangibles, inventory, investment property, certain real
        property, certain leasehold interests, all subsidiary stock, records and
        other
        property and proceeds of all of the foregoing.
  The
        term
        of the PNC Facility is three years and shall terminate on April 17, 2011.
        BCI
        may terminate the PNC Facility at any time upon sixty (60) days’ prior written
        notice and upon payment in full of the obligations owing under the PNC Facility
        or any related documents. Upon such early termination by BCI, BCI shall pay
        the
        Lenders an early termination fee in an amount equal to (y) one half of one
        percent (0.50%) of $15.0 million if the early termination occurs on or before
        April 16, 2009, and (z) three eighths of one percent (0.375%) of $15.0 million
        if the early termination occurs on or after April 17, 2009 or on or before
        April
        16, 2010.
  In
        connection with the closing of the PNC Facility, Berliner Communications,
        Inc.
        became obligated under that certain Guaranty and Suretyship Agreement (the
        “Guaranty”), dated April 17, 2008, in favor of the Lenders, pursuant to which we
        unconditionally guaranteed and became surety for the prompt payment and
        performance of all loans, advances, debts, liabilities, obligations, covenants
        and duties owing by BCI to PNC as agent for the benefit of the Lenders, of
        any
        kind or nature, present or future, whether direct or indirect, absolute or
        contingent, joint or several, due or to become due, now existing or hereafter
        arising, to the Lenders by BCI. In the event BCI is unable to pay any amounts
        owed to the Lenders, we would be liable, pursuant to the Guaranty, for such
        amounts upon the same terms and conditions as BCI would be liable.
  Along
        with the PNC Facility, BCI entered into a Revolving Credit Note (the “PNC Note”)
        with the Lenders, pursuant to which, BCI agreed to repay the Lenders the
        principal amount of $15.0 million or, if different from such amount, the
        unpaid
        balance of advances due and owing to PNC under the PNC Facility, plus interest
        on the principal amount from time to time outstanding until such principal
        amount is paid in full, at the applicable interest rates in accordance with
        the
        provisions of the PNC Facility. The PNC Note is subject to mandatory prepayment
        upon default under the terms of the agreement and may be voluntarily prepaid,
        in
        whole or in part, on the terms and conditions set forth in the PNC Facility.
        Upon the occurrence of an event of default due to bankruptcy or BCI’s inability
        to pay, the PNC Note shall immediately become due and payable, without notice.
        Other uncured defaults under the PNC Facility or any related document shall
        cause the PNC Note to be declared immediately due and payable, without notice,
        in accordance with the terms of the PNC Facility. Notwithstanding the foregoing,
        all outstanding principal and interest are due and payable on April 17, 2011.
        The balance outstanding at June 30, 2008 was $0.2 million.
  F-19
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 **9.** **Long-Term
        Debt**
 
 Long-term
        debt at June 30, 2008 and 2007 consisted of the following:
 
 **June
                  30,****2008**
              
              **2007**7%
                  Senior Subordinated Secured Convertible Notes due December 29,
                  2008 in the
                  original principal amount of $6.0 million, convertible at $1.10
                  per share
                  less unamortized debt discount plus accreted interest
              
              $
              -
              
              $
              4,628Note
                  payable to J&J Leasing due February 2010, at Prime
                  Rate
              
              
              1,021
              
              
              1,604Notes
                  payable to Aicco, Inc. related to annual insurance premiums, payable
                  in
                  monthly installments of $64 thousand, interest at 6%, due December
                  2008
              
              
              316
              
              
              -Loans
                  payable to financing companies, payable in monthly installments
                  of $11
                  thousand, interest ranging from 0% to 12.8% annually, due August
                  2008
                  through June 2011
              
              
              263
              
              
              330Capital
                  Leases (Note 10)
              
              
              423
              
              
              2512,023
              
              
              6,813Less
                  current portion
              
              
              (1,251
              )
              
              (849
              )$
              772
              
              $
              5,964
 
 **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.
 
 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.
  F-20
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**
 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.
 
 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:
 
 **Loan****Face**
              
              **Warrants**
              
              **Debt****Amount**
              
              **Issued**
              
              **Discount**Sigma
                  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
        1,500,000 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.
 
 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.
 
 **10.** **Capitalized
        Leases**
 
 We
        have
        entered into capital leases for certain automobiles and trucks. As of June
        30,
        2008 and 2007, the total cost of the vehicles was approximately $0.7 million
        and
        $0.5 million, respectively, and the related accumulated depreciation was
        approximately $0.2 million and $0.2 million, respectively.
 
 The
        following is a schedule of future minimum lease payments under capital leases
        as
        of June 30, 2008:
 
 2009
              
              $
              1422010
              
              
              1322011
              
              
              1242012
              
              
              82Thereafter
              
              
              4484Amounts
                  representing interest
              
              
              (61
              )Future
                  minimum lease payments
              
              $
              423
  F-21
 **BERLINER
          COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEAR ENDED JUNE 30, 2008**
 **($
          amount in thousands except per share and per share
          amounts)**


**11.** **Commitments
          and Contingencies**





**Operating
      Leases**





We
      lease
      office and warehouse space under various operating leases. Rent expense for
      the
      years ended June 30, 2008 and 2007 was approximately $0.8 million and $0.8
      million, respectively.





Minimum
      future amounts due under operating leases are as follows:





2009
            
            $
            8492010
            
            
            1,2182011
            
            
            9512012
            
            
            8312013
            
            
            793Thereafter
            
            
            2,114Total
            
            $
            6,756





We
      have
      entered into a six year Lease Agreement for approximately 70,000 square feet
      of
      office and warehouse space in Fairlawn, New Jersey, which will commence upon
      the
      landlord meeting certain contingencies, including construction of new office
      facilities to our satisfaction. While we do not know the commencement date
      at
      this time, our best estimate is that the lease will commence on January 1,
      2009,
      and the above table includes rental payments for this location from that date
      going forward.





**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 $0.2 million and $52 thousand
      for the years ended June 30, 2008 and 2007, respectively.





**13.** **Related
          Party Transactions**





Pursuant
      to the provisions of the Note Purchase Agreement described in Note 9, 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. 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, 2007, we paid or accrued Sigma Capital Advisors $0.1
      million and issued warrants to them to purchase up to 175,000 shares of our
      common stock exercisable over a period of five years at an exercise price of
      $0.55 per share, which were valued at $55 thousand using the Black-Scholes
      Merton option pricing model using the following assumptions:


F-22


**BERLINER
        COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE YEAR ENDED JUNE 30, 2008**
 **($
        amount in thousands except per share and per share
        amounts)**


**Black-Scholes
                Merton Assumptions****Expected**
            
            **Risk-free****Warrants**
            
            
            
            **Expected**
            
            **Dividend**
            
            **Interest**
            
            **Expected****Issued**
            
            **Value**
            
            **Volatility**
            
            **Yield**
            
            **Rate**
            
            **Life**150,000
            
            
            42
            
            
            62%
            
            
            0%
            
            
            4.70%
            
            
            5
                Years25,000
            
            
            13
            
            
            72%
            
            
            0%
            
            
            4.76%
            
            
            5
                Years





We
      also
      paid Sigma $0.1 million for expenses associated with the Note through June
      30,
      2007 and $0.1 million in interest on the Note. During the year ended June 30,
      2008, we paid Sigma $0.4 million in interest on the Note.





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, 2008, 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, 2008, 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 June 30,
      2008:


F-23


**BERLINER
        COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE YEAR ENDED JUNE 30, 2008**
 **($
        amount in thousands except per share and per share
        amounts)**
  **2001
                  Plan**
              
              **1999
                  Plan**
              
              **Non-Plan****Weighted**
              
              
              
              **Weighted**
              
              
              
              **Weighted****Average**
              
              
              
              **Average**
              
              
              
              **Average****Number**
              
              **Exercise**
              
              **Number**
              
              **Exercise**
              
              **Number**
              
              **Exercise****of
                  Shares**
              
              **Price**
              
              **of
                  Shares**
              
              **Price**
              
              **of****Shares**
              
              **Price**Balance
                  at June 30, 2006
              
              
              17,724
              
              $
              1,387.50
              
              
              483,300
              
              $
              22.53
              
              
              18,704
              
              $
              6,786.00Options
                  granted at fair value
              
              
              -
              
              
              -
              
              
              1,091,526
              
              
              0.84
              
              
              -
              
              
              -Options
                  exercised
              
              
              -
              
              
              -
              
              
              (75,500)
              
              
              0.40
              
              
              -
              
              
              -Options
                  cancelled
              
              
              (833)
              
              
              1,387.50
              
              
              (91,275)
              
              
              78.77
              
              
              -
              
              
              -Outstanding
                  at June 30, 2007
              
              
              16,891
              
              $
              1,387.50
              
              
              1,408,051
              
              $
              3.26
              
              
              18,704
              
              $
              6,786
                  .00Exercisable
                  at June 30, 2007
              
              
              16,891
              
              $
              1,387.50
              
              
              501,426
              
              $
              7.59
              
              
              18,704
              
              $
              6,786.00Options
                  granted at fair value
              
              
              -
              
              
              -
              
              
              354,230
              
              
              1.06
              
              
              -
              
              
              -Options
                  exercised
              
              
              -
              
              
              -
              
              
              (126,875)
              
              
              0.55
              
              
              -
              
              
              -Options
                  cancelled
              
              
              -
              
              
              -
              
              
              (221,721)
              
              
              0.59
              
              
              -
              
              
              -Outstanding
                  at June 30, 2008
              
              
              16,891
              
              $
              1,387.50
              
              
              1,413,685
              
              $
              3.37
              
              
              18,704
              
              $
              6,786.00Exercisable
                  at June 30, 2008
              
              
              16,891
              
              $
              1,387.50
              
              
              782,072
              
              $
              5.17
              
              
              18,704
              
              $
              6,786.00





The
      intrinsic values of options exercised, outstanding and exercisable as of and
      for
      the year ending June 30, 2008 were as follows:





Options
                exercised
            
            $
            89,375Options
                outstanding
            
            $
            410,710Options
                exercisable
            
            $
            371,973





Stock-based
      compensation expense included in the consolidated statement of operations for
      the years ended June 30, 2008 and 2007 was approximately $0.2 million and $0.3
      million, respectively. As of June 30, 2008, 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
      June
      30, 2008, the range of exercise prices, weighted average exercise price and
      weighted average remaining contractual life for options outstanding were as
      follows:


F-24


**BERLINER
        COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE YEAR ENDED JUNE 30, 2008**
 **($
        amount in thousands except per share and per share
        amounts)**


**Options
                Outstanding and Exercisable****Weighted****Weighted**
            
            **Average****Number**
            
            
            
            **Average**
            
            **Remaining****of**
            
            
            
            **Exercise**
            
            **Contractual****Option
                Price Range**
            
            **Shares**
            
            **Exercisable**
            
            **Price**
            
            **Life**2001
                Plan
            
            
            
            
            
            
            
            $
            1,387.50
            
            
            16,890
            
            
            16,890
            
            $
            1,387.50
            
            
            2.53 Years1999
                Plan
            
            $
            0.30
            
            
            to
            
            $
            0.81
            
            
            673,000
            
            
            618,950
            
            $
            0.50
            
            
            7.90
                Years$
            1.01
            
            
            to
            
            $
            1.46
            
            
            736,684
            
            
            159,121
            
            $
            1.22
            
            
            8.82
                Years$
            7.05
            
            
            167
            
            
            167
            
            $
            7.05
            
            
            6.05
                Years$
            8.01
            
            
            250
            
            
            250
            
            $
            8.01
            
            
            5.67
                Years$
            16.50
            
            
            2,417
            
            
            2,417
            
            $
            16.50
            
            
            2.03
                Years$
            3,000.00
            
            
            1,167
            
            
            1,167
            
            $
            3,000.00
            
            
            1.27
                YearsNon-Plan
            
            
            
            
            
            
            
            $
            3,600.00
            
            
            636
            
            
            636
            
            $
            3,600.00
            
            
            1.69
                Years$
            6,900.00
            
            
            18,067
            
            
            18,067
            
            $
            6,900.00
            
            
            1.76
                Years





During
      the year ended June 30, 2008, we issued 354,230 options to 35 individuals with
      vesting as follows:





**Weighted****Number**
            
            **Average****Vesting
                Period**
            
            **of
                Shares**
            
            **Fair
                Value**25%
                per year after one year
            
            
            316,730
            
            $
            0.69Immediate
            
            
            37,500
            
            
            0.57354,230
            
            
            0.68





The
      value
      of this stock based on quoted market values at the time of grant was $0.4
      million.





The
      following table summarizes information about unvested stock option
      transactions:





**2001
                Plan**
            
            **1999
                Plan**
            
            **Non-Plan****Weighted**
            
            **Weighted****Average**
            
            **Average****Number**
            
            **Number**
            
            **Exercise**
            
            **Fair**
            
            **Number****of
                Shares**
            
            **of
                Shares**
            
            **Price**
            
            **Value**
            
            **of
                Shares**Balance
                at June 30, 2006
            
            
            -
            
            
            271,125
            
            $
            0.41
            
            
            0.27
            
            
            -Options
                granted at fair value
            
            
            -
            
            
            1,091,526
            
            
            0.84
            
            
            0.58
            
            
            -Options
                vested
            
            
            -
            
            
            (420,401)
            
            
            0.56
            
            
            0.38
            
            
            -Options
                cancelled
            
            
            -
            
            
            (35,625)
            
            
            0.44
            
            
            0.29
            
            
            -Outstanding
                at June 30, 2007
            
            
            -
            
            
            906,625
            
            
            0.86
            
            
            0.59
            
            
            -Options
                granted at fair value
            
            
            -
            
            
            354,230
            
            
            1.06
            
            
            0.81
            
            
            -Options
                vested
            
            
            -
            
            
            (432,257)
            
            
            0.76
            
            
            0.55
            
            
            -Options
                cancelled
            
            
            -
            
            
            (196,985)
            
            
            0.57
            
            
            0.37
            
            
            -Outstanding
                at June 30, 2008
            
            
            -
            
            
            631,613
            
            $
            1.14
            
            $
            0.81
            
            
            -





F-25


**BERLINER
        COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE YEAR ENDED JUNE 30, 2008**
 **($
        amount in thousands except per share and per share
        amounts)**


***Stock
      Warrants***





At
      June
      30, 2008, we had issued warrants to purchase up to 1,203,572 shares of our
      common stock. The following table summarizes those warrant grants:





**Number
                of**
            
            **Grant**
            
            **Strike****Issued
                to**
            
            **Shares**
            
            **Date**
            
            **Price**
            
            **Note**Punk,
                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
            
            
            APunk,
                Ziegel & Company, L.P.
            
            
            214,286
            
            
            February
                15, 2007
            
            
            0.70
            
            
            BDigital
                Communication Services, Inc.
            
            
            500,000
            
            
            February
                28, 2007
            
            
            0.73
            
            
            C1,203,572





A
      - Part
      of advisory services fee. We recorded stock-based compensation expense of $0.2
      million related to these warrants.


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. On August 29, 2008,
      the
      warrant holder exercised 200,000 of these warrants, leaving 300,000 unexercised
      warrants as of the date of this Annual Report.





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 9.





**15.** **Selected
          Segment Financial Data**





Statement
      of Financial Accounting Standards No. 131, *Disclosures
      About Segments of an Enterprise and Related Information* established 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.





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.


F-26


**BERLINER
        COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE YEAR ENDED JUNE 30, 2008**
 **($
        amount in thousands except per share and per share
        amounts)**


**Years
                Ended June 30,****2008**
            
            **2007****Infrastructure**
            
            **Site**
            
            
            
            **Infrastructure**
            
            **Site****Construction**
            
            **Acquisition**
            
            **Total**
            
            **Construction**
            
            **Acquisition**
            
            **Total**Revenue
            
            $
            98,563
            
            $
            29,809
            
            $
            128,372
            
            $
            43,501
            
            $
            11,634
            
            $
            55,135Cost
                of revenue
            
            
            64,643
            
            
            18,809
            
            
            83,452
            
            
            29,674
            
            
            7,601
            
            
            37,275Gross
                margin
            
            
            33,920
            
            
            11,000
            
            
            44,920
            
            
            13,827
            
            
            4,033
            
            
            17,860Selling,
                general and administrative expenses
            
            
            20,885
            
            
            4,818
            
            
            25,703
            
            
            11,964
            
            
            2,650
            
            
            14,614Depreciation
                and amortization
            
            
            914
            
            
            276
            
            
            1,190
            
            
            382
            
            
            102
            
            
            484Gain
                on sale of fixed assets
            
            
            (8
            )
            
            (3
            )
            
            (11
            )
            
            (4
            )
            
            (1
            )
            
            (5
            )Operating
                income
            
            $
            12,129
            
            $
            5,909
            
            $
            18,038
            
            $
            1,485
            
            $
            1,282
            
            $
            2,767


**16. 
        **Subsequent
        Events****





*Settlement
      of Lawsuit*





On
      May 7,
      2007, we filed a complaint against one of our former customers in the United
      States District Court for the District of New Jersey, alleging, among other
      things, breach of partnership contract.  On September 19, 2008, we entered
      into a Settlement Agreement with the defendant which resulted in (i) a payment
      from defendant to us of $400,000 in exchange for our agreement to release them
      from all claims, and (ii) a payment from defendant of $200,000 related to
      disputed invoices that had been reserved for which were not related to the
      litigation.  After payment of legal fees, the litigation settlement amount
      will result in an increase of approximately $330,000 to our income before income
      taxes for the first quarter of fiscal 2009.





*Reorganization*





On
      September 15, 2008, we announced the approval by our Board of Directors of
      a
      plan of reorganization consisting of a one for one share exchange with Old
      Berliner, Inc. (“Old Berliner”), our largest shareholder. The transaction, which
      is subject to the approval of the shareholders of Old Berliner, is designed
      to
      simplify our ownership structure, increase the number of shares in our “public
      float”, and improve liquidity for our shareholders.





Under
      the
      plan, Old Berliner would exchange approximately 13 million shares of our common
      stock for approximately 13 million newly issued, registered shares. Old Berliner
      would then liquidate and distribute these shares to the shareholders of Old
      Berliner. The Company will continue to have the same number of shares
      outstanding before and after the closing, expected to be early 2009. Because
      of
      the large number of shareholders of Old Berliner, Inc. with no affiliation
      to
      the Company, the Company expects this transaction to increase its public float
      by approximately 5 million shares.





The
      reorganization remains subject to certain conditions set forth in the Agreement
      and Plan of Reorganization, dated September 9, 2008. Under the agreement the
      Company will not assume any liabilities or obligations of Old Berliner.


F-27