SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE PERIOD ENDED SEPTEMBER 30, 2000.


[]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934


                        Commission File Number 000-31105

                                   LEXENT INC

                              --------------------

             (Exact name of registrant as specified in its charter)

           Delaware                                      13-3990223
           --------                                      ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

     Three New York Plaza
     New York, New York                                        10004
--------------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code: 212-981-0700
                                                    ------------

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

                            Yes  X         No
                               ----          ----

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest  practicable date. Common Stock, $.001 par value,
41,077,738 shares outstanding as of November 10, 2000.

<PAGE>

                          LEXENT INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS

PART I.   FINANCIAL INFORMATION                                         Page No.
                                                                        --------
ITEM 1.   Financial Statements

          Condensed Consolidated Balance Sheets as of September 30,
          2000 (unaudited) and December 31, 1999                            3

          Condensed Consolidated Statements of Income for the Three
          Months Ended September 30, 2000 (unaudited) and 1999
          (unaudited) and the Nine Months Ended September 30, 2000
          (unaudited) and 1999 (unaudited)                                  4

          Condensed Consolidated Statements of Cash Flows for the Nine
          Months Ended September 30, 2000 (unaudited) and 1999
          (unaudited)                                                       5

          Notes to Condensed Consolidated Financial Statements              7

ITEM 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                        10

ITEM 3.   Quantitative and Qualitative Disclosures about Market Risk       12

PART II.  OTHER INFORMATION

ITEM 1.   Legal Proceedings                                                14

ITEM 2.   Changes in Securities and Use of Proceeds                        14

ITEM 4.   Submission of Matters to a Vote of Security Holders              15

ITEM 6.   Exhibits and Reports on Form 8-K                                 15


SIGNATURES                                                                 16


                                       2
<PAGE>

                     PART I. FINANCIAL INFORMATION

ITEM 1:  Financial Statements

                          LEXENT INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (dollars in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                                    September 30,        December 31,
                                                                                         2000                1999
                                                                                         ----                ----
                           Assets:                                                  (unaudited)
<S>                                                                                    <C>                 <C>
Current Assets:
  Cash and cash equivalents                                                            $  81,762           $  1,158
  Receivables, net                                                                        89,290             48,748
  Prepaid expenses and other current assets                                                  942                156
  Deferred tax asset, net                                                                 10,436              3,592
                                                                                       ---------           --------
       Total current assets                                                              182,430             53,654

Property and equipment, net                                                               11,826              6,180
Other assets                                                                               1,550                545
                                                                                       ---------           --------
       Total assets                                                                    $ 195,806           $ 60,379
                                                                                       =========           ========

                 Liabilities and Stockholders' Equity:

Current liabilities:
  Accounts payable                                                                     $  17,583           $  8,434
  Accrued liabilities                                                                     18,602              9,613
  Income taxes payable                                                                     2,199              5,798
  Billings in excess of costs and estimated earnings on uncompleted projects               4,818              1,084
  Subordinated note payable to stockholder                                                 1,582              1,582
  Equipment and capital lease obligations                                                  1,479              1,014
  Due to related parties                                                                     241                432
                                                                                       ---------           --------
       Total current liabilities                                                          46,504             27,957

Subordinated notes payable to stockholders                                                 3,956              5,533
Notes payable to banks                                                                     2,000              8,841
Equipment and capital lease obligations                                                    2,263              1,842
                                                                                       ---------           --------
       Total liabilities                                                                  54,723             44,173
                                                                                       ---------           --------
Redeemable convertible preferred stock at stated
liquidation preference $2.2553 per share at December
31, 1999, $0.001 par value, 5,538,458 shares                                                   -             12,491
authorized, issued and outstanding                                                     ---------           --------

Stockholders' equity:
  Common stock, $.001 par value, 120,000,000 shares
  authorized, 40,964,286 and 22,919,100 shares
  outstanding at September 30, 2000 and December
  31, 1999, respectively                                                                      41                 23
  Additional paid-in capital                                                             165,296             11,787
  Deferred stock-based compensation                                                      (24,949)            (7,142)
  Retained earnings                                                                          695               (953)
                                                                                       ---------           --------
       Total stockholders' equity                                                        141,083              3,715
                                                                                       ---------           --------
       Total liabilities and stockholders' equity                                      $ 195,806           $ 60,379
                                                                                       =========           ========
 See accompanying notes to condensed consolidated financial statements.

</TABLE>


                                       3
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                 (dollars in thousands except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                  For the Three Months                      For the Nine Months
                                                                  Ended September 30,                       Ended September 30,
                                                                2000              1999                     2000            1999
                                                                ----              ----                     ----            ----
<S>                                                           <C>               <C>                      <C>             <C>
Revenues                                                      $ 82,412          $ 46,020                 $203,649        $ 95,542
Cost of sales                                                   61,030            36,362                  151,077          76,812
General, administrative and marketing expenses                   6,344             3,220                   16,389           7,684
Depreciation and amortization                                      892               423                    2,339             897
Non-cash stock based compensation                                2,244                11                   23,915              30
                                                              --------          --------                 --------        --------
Operating income                                                11,902             6,004                    9,929          10,119
Interest expense                                                   283               290                    1,017             752
Other expense(income), net                                        (883)               39                     (889)             39
                                                              --------          --------                 --------        --------
Income before income taxes                                      12,502             5,675                    9,801           9,328
Provision for income taxes                                       5,762             2,622                    7,756           4,310
                                                              --------          --------                 --------        --------
Net income                                                    $  6,740          $  3,053                 $  2,045        $  5,018
                                                              ========          ========                 ========        ========
Net income per share:
  Basic                                                       $   0.19          $   0.13                 $   0.06        $   0.20
                                                              ========          ========                 ========        ========
  Diluted                                                     $   0.16          $   0.09                 $   0.05        $   0.16
                                                              ========          ========                 ========        ========
Weighted average common shares outstanding:
     Basic                                                      35,124            22,717                   27,429          22,717
                                                              ========          ========                 ========        ========
     Diluted                                                    40,854            32,477                   37,339          31,868
                                                              ========          ========                 ========        ========

</TABLE>

 See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                               2000        1999
                                                               ----        ----
<S>                                                         <C>         <C>
Cash flows from operating activities:
  Net income                                                $  2,045    $  5,018
  Adjustments to reconcile net income to net cash
  (used in) provided by operating activities:
    Loss on disposition of assets                                 18           -
    Provision for uncollectible amounts, net                   3,134       1,212
    Depreciation and amortization                              2,339         897
    Non-cash stock based compensation                         23,915          30
    Provision for deferred taxes                              (6,844)        522
    Changes in working capital items:
      Receivables                                            (43,676)    (16,245)
      Prepaid expenses and other current assets                 (786)        161
      Other assets                                              (376)       (339)
      Accounts payable                                         9,149       4,631
      Accrued liabilities                                      8,989       3,271
      Income taxes payable                                    (3,495)        (99)
      Billings in excess of costs and estimated
      earnings on uncompleted contracts                        3,734       1,446
                                                            --------    --------
        Net cash (used in) provided by operating
          activities                                          (1,854)        505

Cash from investing activities:
  Capital expenditures and acquisitions                       (6,819)     (1,975)
  Proceeds from sale of fixed assets                              13           -
                                                            --------    --------
        Net cash used in investing activities                 (6,806)     (1,975)
                                                            --------    --------
Cash flows from financing activities:
  Proceeds from exercise of stock options and
  sales of restricted stock                                    5,905           -
  Preferred dividends paid                                    (1,087)          -
  Proceeds from initial public offering of common stock       96,255           -
  Payments of equity issuance costs                           (2,260)          -
  Repayment of subordinated notes payable to stockholders     (1,577)     (1,582)
  Net (repayments)borrowings under revolving credit line      (6,841)      2,855
  Net (payments)borrowings (to)from related parties             (191)        236
  Repayment of equipment loans and capital leases               (940)       (399)
                                                            --------    --------
        Net cash provided by financing activities             89,264       1,110
                                                            --------    --------
Net increase (decrease) in cash                               80,604        (360)

Cash and cash equivalents at beginning of period               1,158       1,495
                                                            --------    --------
Cash and cash equivalents at end of period                  $ 81,762    $  1,135
                                                            ========    ========

</TABLE>

 See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                             (dollars in thousands)
                                   (unaudited)

                                                             2000          1999
                                                             ----          ----
Supplemental cash flow information:
  Cash paid for:
    Interest                                             $   1,093       $   683
    Income taxes                                         $  18,094       $ 3,902

Supplemental disclosures of noncash investing
and financing activities:
  Property, plant and equipment additions
  financed by equipment loans and capital leases         $   1,826         1,442
  Accrued dividends on preferred shares                  $     104       $   516


 See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

     The  condensed   consolidated  financial  statements  of  Lexent  Inc.  and
Subsidiaries  (the "Company")  included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange  Commission
("SEC").  Certain information and footnote  disclosures normally included in the
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to SEC rules and regulations.
The condensed  consolidated  financial statements of the Company reflect, in the
opinion of management, all adjustments necessary to present fairly the financial
position of the Company at September 30, 2000 and the results of its  operations
and cash flows for the periods ended  September 30, 2000 and September 30, 1999.
All adjustments are of a normal  recurring  nature.  These financial  statements
should be read in  conjunction  with the annual  financial  statements and notes
thereto for the fiscal year ended  December 31, 1999  included in the  Company's
final  prospectus filed with the SEC on July 27, 2000. The results for the three
and nine months ended September 30, 2000 are not  necessarily  indicative of the
results for the entire fiscal year ending December 31, 2000.

1.  NET INCOME PER SHARE

     Basic net income  per share is  computed  by  dividing  net  income  (after
deducting  dividends declared on preferred stock) by the weighted average number
of common shares outstanding for the period. Diluted earnings per share reflects
the  potential   dilution  of  other   securities  by  assuming  the  redeemable
convertible preferred stock had been converted into common stock as of the later
of the date of issuance of the  preferred  stock or the  beginning of the fiscal
period presented, at the conversion rates that would have been in effect at such
dates (and without  deducting  from net income  dividends  declared on preferred
stock), and by including the dilutive effect of outstanding stock options in the
weighted average number of common shares outstanding for each period. Details of
the calculations are as follows:

<TABLE>
<CAPTION>
                                                  Three Months             Nine Months
                                               Ended September 30,     Ended September 30,
                                               -------------------     -------------------
                                                 2000       1999         2000       1999
                                                 ----       ----         ----       ----
                                                 (in thousands, except per share amounts)
<S>                                           <C>         <C>         <C>         <C>
Net Income per share - basic:

Net income ................................   $  6,740    $  3,053    $  2,045    $  5,018

Less: preferred dividends .................        (53)       (171)       (397)       (516)
                                              --------    --------    --------    --------
Net income available to
 common stockholders ......................   $  6,687    $  2,882    $  1,648    $  4,502
                                              ========    ========    ========    ========
Weighted average shares - basic ...........     35,124      22,717      27,429      22,717
                                              ========    ========    ========    ========
Net income per share - basic ..............   $   0.19    $   0.13    $   0.06    $   0.20
                                              ========    ========    ========    ========
Net Income per share - diluted:

Net income ................................   $  6,740    $  3,053    $  2,045    $  5,018
                                              ========    ========    ========    ========
Weighted average shares - basic ...........     35,124      22,717      27,429      22,717

Assumed conversion of
  preferred stock as
  of the later of the
  date of issuance
  of the preferred
  stock or the beginning
  of the fiscal period
  presented, at the
  conversion rates that
  would have been in
  effect at such dates ....................      3,272       8,740       7,634       8,740

Dilutive effect of stock options ..........      2,458       1,020       2,276         411
                                              --------    --------    --------    --------
Weighted average shares - diluted .........     40,854      32,477      37,339      31,868
                                              ========    ========    ========    ========
Net income per share - diluted ............   $   0.16    $   0.09    $   0.05    $   0.16
                                              ========    ========    ========    ========
</TABLE>


                                       7
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

2.  RECEIVABLES, NET

<TABLE>
<CAPTION>
                                                        September 30,     December 31,
                                                            2000              1999
                                                            ----              ----
                                                                (in thousands)
<S>                                                      <C>              <C>
Accounts receivable - billed to customers ..........     $ 57,605         $ 30,226
Unbilled receivables on completed projects
  accounted for under the completed contract
  method ...........................................       11,614            4,908
Costs and estimated earnings in excess of
  billings on projects accounted for under
  the percentage-of-completion method ..............        3,617            3,858
Unbilled receivables on cost-plus contracts ........        7,357            6,066
Costs of uncompleted projects accounted for
  under the completed contract method ..............       13,497            6,138
Retainage ..........................................        2,336            1,154
                                                         --------         --------
                                                           96,026           52,350
Less: allowance for uncollectible amounts ..........       (6,736)          (3,602)
                                                         --------         --------
                                                         $ 89,290         $ 48,748
                                                         ========         ========

</TABLE>

     For the nine  months  ended  September  30,  2000 and 1999,  the  Company's
provision  for  uncollectible   amounts  was  $4.6  million  and  $1.5  million,
respectively.  The amounts  written off against the  allowance for those periods
were $1.5 million and $0.3 million, respectively.

     Amounts retained by customers related to projects that are  progress-billed
may be outstanding for periods that exceed one year.

3.  NOTES PAYABLE AND OTHER FINANCING ARRANGEMENTS

     On March 8, 2000, the Company's  revolving  credit  facility with banks was
increased to $20 million and its expiration date was extended to September 2003.

4.  RELATED PARTY TRANSACTIONS

     On May 1, 2000, the Company  entered into a ten-year lease for a garage and
warehouse  facility in Long Island City,  New York.  The lease payments are $0.5
million per year  commencing  May 1, 2000. The facility is leased from an entity
that is owned by the Company's two principal common stockholders.

     On August 31, 2000, the Company repaid $0.4 million of  subordinated  notes
payable to its two principal common stockholders.

5.  CONTINGENCIES

     From time to time,  the Company is involved in various  lawsuits  and legal
proceedings,  which arise in the ordinary course of business.  On or about March
31, 2000 a former  employee  filed a lawsuit  against the Company and certain of
the Company's  employees,  officers and directors in the U.S. District Court for
the Southern District of New York,  seeking,  among other things,  reinstatement
with back and front pay, compensatory damages in excess of $5,000,000,  punitive
damages, costs and attorneys' fees, based upon allegations of sexual harassment,
employment  discrimination  and retaliation.  The Company intends to defend this
claim  vigorously.  As this  litigation  is still in the  discovery  phase,  the
Company is not yet able to determine  whether the resolution of this matter will
have a material adverse effect on the Company's  financial  condition or results
of operations.

6.  STOCKHOLDERS' EQUITY

     On July 6, 2000, the Company  effected a 1-for-2 reverse stock split of the
Company's common stock with no change in par value. Accordingly, the stock split
has been recognized by reclassifying  $22,717, the par value reduction in shares
resulting  from the split,  from  common  stock to retained  earnings.  Retained
earnings,  common stock, per share and shares  outstanding data in the Condensed
Consolidated  Financial  Statements  and  Notes  to the  Condensed  Consolidated
Financial  Statements  have been  retroactively  restated to reflect  this stock
split.

     On July 6, 2000, the Company filed an amendment to its Restated Certificate
of Incorporation. This amendment decreased the shares of authorized common stock
from 94,461,542 to 50,000,000 shares.


                                       8
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

     On  July  31,  2000,  the  Company  filed a  Second  Amended  and  Restated
Certificate  of  Incorporation.  Among other  things,  the restated  certificate
increased the shares of authorized  common stock from  50,000,000 to 120,000,000
shares and authorized the issuance of up to 5,000,000 shares of preferred stock,
the terms of which are set at the discretion of the Board of Directors.

     On August 2, 2000,  the Company  completed  an initial  public  offering of
6,900,000 shares of its common stock at a price of $15.00 per share. The Company
received net proceeds of $96.3  million after  underwriting  discount and before
expenses of the  offering.  The Company  used $10.1  million of the  proceeds to
repay notes payable to banks,  and $1.1 million to pay dividends on  outstanding
preferred  shares  accrued  from  January 1,  1999.  All  outstanding  shares of
redeemable  convertible  preferred stock were converted into 9,814,624 shares of
common stock on August 2, 2000.

7.  STOCK OPTIONS AND AWARDS

     During the three and nine months ended  September  30, 2000,  2,172,100 and
4,603,100  options,  respectively,  were  granted.  As of  September  30,  2000,
6,896,450 options were outstanding.

     For certain  options and  restricted  stock granted in the first quarter of
2000,  the exercise or sale prices were  determined by the Board of Directors at
dates of grant to be equal to the fair value of the  underlying  stock,  however
such exercise or sale prices were  subsequently  determined to be lower than the
deemed fair values for financial  reporting  purposes of the  underlying  common
stock on the date of grant. Accordingly,  for those options and restricted stock
grants, the Company recorded deferred stock-based  compensation of $41.7 million
in the  first  quarter  of  2000.  Amortization  of  such  deferred  stock-based
compensation for the three and nine months ended September 30, 2000 was $2.2 and
$23.9  million,  respectively.  Deferred  tax  benefits of $0.9 million and $7.4
million  were  recorded in the three and nine months ended  September  30, 2000,
respectively,   in  connection  with   amortization   of  deferred   stock-based
compensation  related to non-qualified  options,  to the extent that the Company
expects to realize such tax benefits.

8.  ACQUISITION

     On  September  15,  2000,   the  Company   purchased   certain   assets  of
Communications  Planning and Services,  Inc.,  which provides certain design and
implementation   services  for  communications   systems.  The  acquisition  was
accounted for under the purchase  method of  accounting.  The purchase price was
$0.7  million,  of which $0.4  million was  allocated  to goodwill  and is being
amortized over ten years.

9.  SUBSEQUENT EVENT

     On  October 2, 2000,  the  Company  purchased  certain  assets of  Magnetic
Electric  Construction  Corp., which provides certain electrical  services.  The
purchase  price was $1.3  million,  comprised of $0.7 million in cash and 23,077
common shares of the Company valued at approximately  $0.6 million on October 2,
2000. The acquisition was accounted for under the purchase method of accounting,
and  approximately  $1.2 million of the purchase price was allocated to goodwill
and is being amortized over ten years.


                                       9
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

ITEM 2. Management's Discussion and Analysis of
        Financial Condition and Results of Operations

     The following  discussion and analysis provides  information that should be
read  in  conjunction  with  the  historical  condensed  consolidated  financial
statements, including the notes thereto, included elsewhere in this Form 10-Q.

OVERVIEW

     We  provide  outsourced  local   telecommunications   network  services  to
telecommunications  companies by supplying the expertise and resources needed to
enable  our   customers   to  build  and   connect   their   networks  to  other
telecommunications  companies and individual  end users.  For the three and nine
months ended September 30, 2000, approximately 70% and 75%, respectively, of our
revenues were earned from services provided in the New York metropolitan region,
including New York City, New Jersey, Long Island and Westchester.  Our customers
for  the  design  and  deployment  of  telecommunications  networks  are  large,
well-established  telecommunications  carriers as well as  smaller,  early stage
telecommunications  carriers.  We have  derived  a  significant  portion  of our
revenues from a limited number of customers. For the three and nine months ended
September 30, 2000, we derived approximately 28% and 25%,  respectively,  of our
revenues  from our  largest  customer  and 10% of our  revenues  from our second
largest customer.

RESULTS OF OPERATIONS

THIRD QUARTER OF 2000 COMPARED TO THIRD QUARTER OF 1999.

     Revenues.  Our  revenues  increased  by 79% to $82.4  million for the third
quarter of 2000 from $46.0 million in the third quarter of 1999. The increase in
revenues was  primarily  attributable  to higher  demand for our  services  from
customers as they expanded their telecommunications networks.

     Cost of revenues.  Our cost of revenues  increased by 68% to $61.0  million
for the third  quarter of 2000 from $36.4  million in the third quarter of 1999.
The  increase  was due in part to  increased  technical  personnel in support of
additional  demand from customers for our services and in part to an increase in
rent  expense for  additional  space and an  increase in our fleet of  specialty
vehicles.  The costs of technical  personnel  are  comprised  of wages,  related
benefits and payroll-based  insurance premiums. Cost of revenues declined to 74%
of total  revenues  in the third  quarter of 2000 from 79% in the same period of
1999,  because the rate of increase in our  revenues was higher than the rate of
increase in our overhead expenses.

     General, administrative and marketing expenses. Our general, administrative
and  marketing  expenses  increased 97% to $6.3 million for the third quarter of
2000 from $3.2 million in the third quarter of 1999.  The increase was primarily
due to salaries and related benefits for additional executive and administrative
personnel required to support our increased revenues.

     Non-cash  stock-based  compensation.  We recorded  amortization of non-cash
stock-based compensation of $2.2 million in the third quarter of 2000


                                       10
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

related to options and restricted  stock  previously  granted at exercise prices
determined  by our Board of  Directors at dates of grant to be equal to the fair
value of the  underlying  stock,  but  with  respect  to  which,  for  financial
reporting purposes, the exercise or sales prices were subsequently determined to
be lower than the deemed fair values of the underlying  common stock at dates of
grant.

     Provision for income taxes.  Our  effective tax rate is  approximately  45%
because a significant portion of our operations is currently concentrated in New
York  City,  which  subjects  us to a  local  tax  on  income  derived  in  that
jurisdiction.


NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999.

     Revenues.  Our revenues  increased  by 113% to $203.6  million for the nine
months  ended  September  30, 2000 from $95.5  million for the nine months ended
September  30,  1999.  The increase in revenues was  primarily  attributable  to
higher  demand  for  our  services  from   customers  as  they  expanded   their
telecommunications networks.

     Cost of revenues.  Our cost of revenues  increased by 97% to $151.1 million
for the nine months  ended  September  30, 2000 from $76.8  million for the nine
months  ended  September  30,  1999.  The  increase was due in part to increased
technical  personnel  in support of  additional  demand from  customers  for our
services,  an increase in rent expense for additional office space and equipment
and to an increase in our fleet of specialty vehicles. Cost of revenues declined
to 74% of total  revenues for the nine months ended  September 30, 2000 from 80%
in the same period of 1999,  because the rate of  increase in our  revenues  was
higher than the rate of increase in our overhead expenses.

     General, administrative and marketing expenses. Our general, administrative
and marketing expenses increased 113% to $16.4 million for the nine months ended
September  30, 2000 from $7.7  million for the nine months ended  September  30,
1999. The increase was primarily due to $4.3 million for additional salaries and
related  benefits for new executive  and  administrative  personnel  required to
support our increased revenues.

     Non-cash  stock-based  compensation.  We recorded  amortization of non-cash
stock-based  compensation  of $23.9 million for the nine months ended  September
30, 2000 related to options and  restricted  stock granted during that period at
exercise  prices  determined  by our Board of  Directors at dates of grant to be
equal to the fair value of the underlying  stock, but with respect to which, for
financial  reporting  purposes,  the exercise or sales prices were  subsequently
determined  to be lower than the deemed  fair  values of the  underlying  common
stock at dates of grant.

     Operating income.  Operating income for the nine months ended September 30,
2000 (before  amortization of deferred  non-cash  stock-based  compensation) was
$33.8 million,  compared with $10.1 million for the nine months ended  September
30, 1999. After giving effect to amortization of deferred  non-cash  stock-based
compensation,  operating income for the nine months ended September 30, 2000 was
$9.9 million.


                                       11
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

     Interest  expense.  Interest expense increased to $1.0 million for the nine
months  ended  September  30, 2000 from $0.8  million for the nine months  ended
September 30, 1999.  The increase was due to a higher level of borrowings  under
our  revolving  credit  line  and  increases  in  equipment  and  capital  lease
obligations.

     Provision for income taxes.  Our normal effective tax rate is approximately
45% because a significant portion of our operations is currently concentrated in
New York  City,  which  subjects  us to a local  tax on income  derived  in that
jurisdiction.   However,   amortization   of   deferred   non-cash   stock-based
compensation  ($23.9  million  for the nine months  ended  September  30,  2000)
relates to both incentive stock options and nonqualified stock options,  but tax
benefits are not available for compensation  expense recorded in connection with
incentive stock options. Deferred tax benefits of $7.4 million were recorded for
the nine months ended September 30, 2000 in connection with non-cash stock-based
compensation related to nonqualified stock options.

LIQUIDITY AND CAPITAL RESOURCES

     Cash used in operations  is primarily  derived from our projects in process
and changes in working capital. Net cash used in operations was $1.9 million for
the nine months ended  September 30, 2000.  For the nine months ended  September
30,  2000,  our primary  use of cash was to finance  higher  receivables,  which
increased by $43.7 million primarily as a result of our increased revenues. This
use of cash  was  offset  in part by  increases  in  accounts  payable,  accrued
liabilities,  and  billings  in  excess  of  costs  and  estimated  earnings  on
uncompleted contracts.

     Cash used in  investing  activities  was $6.8  million  for the nine months
ended September 30, 2000.  Investing  activities consist of capital expenditures
and acquisitions to support our growth.

     Net cash provided by financing activities for the first nine months of 2000
was $89.3  million,  comprised  of $96.3  million in  proceeds  from the initial
public  offering of common stock and $5.9 million in proceeds from  exercises of
stock  options  and sales of  restricted  stock,  offset by  payments  of equity
issuance  costs of $2.3  million,  net  repayments  under our  revolving  credit
facility of $6.8 million, payments of $1.6 million on subordinated notes payable
to stockholders and payments of preferred dividends of $1.1 million.

     As of September 30, 2000, we had cash and cash equivalents of $81.8 million
and we had $18.0 million of availability under our bank credit facility.

     We have no  material  commitments  other  than  obligations  under our bank
credit facility,  installment obligations related to equipment purchases, leases
for facilities,  computer equipment and vehicles,  and subordinated note payable
to stockholder.


ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

     The  following  discusses our exposure to market risk related to changes in
interest  rates,  equity prices and foreign  currency  exchange rates. We do not
believe that our exposure to market risk is material.


                                       12
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

     As of  September  30,  2000,  we had  cash and  cash  equivalents  of $81.8
million.  Cash  and  cash  equivalents  are  interest-bearing  investment  grade
securities,  primarily short-term,  highly liquid investments with maturities at
the date of  purchase  of less than 90 days.  These  investments  are subject to
interest rate risk and will decrease in value if market interest rates increase.
A hypothetical  increase or decrease in the market  interest rates by 10 percent
from the rates in effect  on the date of this  Form  10-Q  would  cause the fair
value of these short-term  investments to decline by an insignificant amount. We
have the ability to hold these investments  until maturity,  and therefore we do
not expect the value of these  investments  to be  affected  to any  significant
degree by the effect of a sudden change in market  interest  rates.  Declines in
interest rates over time will, however, reduce our interest income.

     We do not  own  any  investments  in  publicly  traded  equity  securities.
Therefore, we do not currently have any direct equity price risk.

     We do not have  any  international  operations,  and we do not  enter  into
forward  exchange  contracts  or other  financial  instruments  with  respect to
foreign currency. Accordingly, we do not have any foreign currency exchange rate
risk.

FORWARD LOOKING STATEMENTS

     This   Quarterly   Report  on  Form  10-Q  contains  both   historical  and
forward-looking  statements.  All statements other than statements of historical
fact are, or may be deemed to be, forward-looking  statements within the meaning
of section 27A of the  Securities  Act of 1933 and section 21E of the Securities
Exchange Act of 1934. These forward-looking  statements are only predictions and
generally can be identified  by use of statements  that include  phrases such as
"believe," "expect," "anticipate," "intend," "plan," "foresee" or other words or
phrases of similar  import.  Similarly,  statements  that describe the Company's
objectives,  plans or goals also are forward-looking  statements.  The Company's
operations  are  subject to certain  risks and  uncertainties  that could  cause
actual  results to differ  materially  from those  contemplated  by the relevant
forward-looking  statement.  The forward-looking  statements included herein are
made only as of the date of this  Quarterly  Report on Form 10-Q and the Company
undertakes no obligation to publicly update such  forward-looking  statements to
reflect  subsequent  events or  circumstances.  No assurances  can be given that
projected results or events will be achieved.


                                       13
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

PART II - OTHER INFORMATION


ITEM 1. Legal Proceedings

          From time to time,  we may become  involved  in various  lawsuits  and
legal proceedings, which arise, in the ordinary course of business. In addition,
on or about March 31, 2000 a former  employee,  Italia Casella,  filed a lawsuit
against us in the U.S.  District  Court for the  Southern  District of New York,
naming as defendants Lexent, Hugh O'Kane Electric Co., Hugh O'Kane Electric Co.,
LLC, National Network Technologies,  LLC, and certain of our employees, officers
and directors.  Casella seeks,  among other things,  reinstatement with back and
front pay, compensatory damages in excess of $5,000,000, punitive damages, costs
and  attorneys'  fees based upon  allegations of sexual  harassment,  employment
discrimination  and  retaliation.  Our  management  intends to defend this claim
vigorously.  As this litigation is still in the discovery  phase, we are not yet
able to  determine  whether the  resolution  of this matter will have a material
adverse effect on our financial condition or results of operations.

ITEM 2. Changes in Securities and Use of Proceeds

     (a) As part of the  consummation of our initial public offering  ("IPO") on
August 2, 2000, we completed a recapitalization which included the conversion of
our Series A Convertible Preferred Stock, par value $.001 per share ("redeemable
convertible  preferred  stock")  and the accrued  and unpaid  dividends  through
December 31, 1998 on such stock into an aggregate 9,814,624 shares of our common
stock.  The  conversion  ratio,  calculated in accordance  with the terms of the
redeemable  convertible  preferred stock, was 1.77209 shares of common stock per
share of preferred  stock.  The remainder of the accrued and unpaid dividends on
the  redeemable  convertible  preferred  stock  was paid in cash to the  holders
thereof out of the proceeds received by us in the IPO. See Item 2 (d).

     (c) During the period from July 1, 2000 to September 30, 2000, we issued an
aggregate  169,562  shares of common  stock upon the  exercise of stock  options
granted under our stock option plan.  The weighted  average  exercise  price for
such options was $3.93 per share.  These  issuances of securities were deemed to
be exempt from registration under the Securities Act of 1933 in reliance on Rule
701 under the Securities Act or as a private placement under Section 4(2) of the
Securities Act.

     (d) On August 2,  2000,  we  completed  an IPO of  6,900,000  shares of our
common stock at a price per share of $15.00 (including  900,000 shares that were
subject to the underwriters' overallotment option, which was exercised in full).
The aggregate  offering  price was  $103,500,000.  The amount of all  applicable
underwriting  discounts and commissions was $7,245,000.  The amount of all other
issuance costs incurred by us was approximately $2,260,000.  After deducting all
underwriting  discounts and commissions and other issuance costs,  the total net
proceeds we received was $93,995,000.

          Of the net proceeds of the IPO,  approximately $10.1 million were used
to prepay a portion of the outstanding  balance  (including any accrued interest
thereon) under our revolving credit  facility.  We also used $1.1 million of the
net proceeds to pay dividends  accrued after December 31, 1998 on the redeemable
convertible  preferred stock converted to common


                                       14
<PAGE>

                          LEXENT INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (unaudited)

stock upon  consummation  of our IPO.  In  addition,  the  Company has used $0.4
million  to  repay  subordinated  notes  payable  to our  two  principal  common
stockholders and an aggregate $1.4 million to make strategic  acquisitions.  The
remaining  net  proceeds  have  been  invested  in cash,  cash  equivalents  and
short-term  investments.  Other than the  payment  of  dividends  accrued  after
December  31,  1998  on our  redeemable  convertible  preferred  stock  and  the
repayment  of  the   subordinated   notes  payable  to  our   principal   common
stockholders,  none of the net proceeds from our IPO were used to pay,  directly
or indirectly,  directors,  officers,  persons owning ten percent or more of our
equity securities or any of our affiliates.  The foregoing use of net proceeds
does not represent a material change in the use of net proceeds described in the
prospectus relating to our IPO.

          The effective date of our registration  statement on Form S-1 was July
27, 2000, and the Commission file number assigned to the registration  statement
was 333-30660. The IPO was completed upon the sale of all securities registered.
Credit Suisse First Boston Corporation, Chase Securities, Inc. and Raymond James
& Associates, Inc. acted as lead underwriters for the IPO.


ITEM 4. Submission of Matters to a Vote of Security Holders

          On June 30, 2000, the holders of more than a majority of each class of
our  capital  stock  then  outstanding  acted by  written  consent to approve an
amendment  to our  Amended  and  Restated  Certificate  of  Incorporation  which
authorized a one-for-two  reverse  stock split of our common stock.  The reverse
stock split took effect on July 6, 2000.


ITEM 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits:

              The following exhibits are filed as part of this report:

                   Exhibit No.                        Description
                   -----------                        -----------

                   27.1                          Financial Data Schedule

         (b)  Reports:

                   None.


                                       15
<PAGE>

                                   SIGNATURES

          Pursuant to the requirements 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.


                                        LEXENT INC.
                                        (Registrant)

                                   By:  /s/ ALF T. HANSEN
                                      -------------------------------------
                                      Alf T. Hansen
                                      President and
                                      Chief Executive Officer, on
                                      behalf of the Registrant


                                   By:  /s/ JONATHAN H. STERN
                                      -------------------------------------
                                      Jonathan H. Stern
                                      Executive Vice President and
                                      Chief Financial Officer

November 13, 2000


                                       16