##### 



________________________________________________________________________________


UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





Form 10-Q


(Mark One)


|  |  |                                                                                                                                                                     
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|þ |  | Quarterly report pursuant to Section 13 or 15(d) of the
    Securities
    Exchange Act of 1934
    For the quarterly period ended March 31, 2006                   
|  |  | or                                                                                                                                                                  
|o |  | Transition Report Pursuant to Section 13 or 15(d) of the
    Securities
    Exchange Act of 1934
    For the transition period
    from             to             .

Commission File Number: 0-21213


LCC International, Inc.




|                                                                   |  |                                        
|------------------------------------------------------------------ |  | ---------------------------------------
|Delaware                                                           |  | 54-1807038                             
|(State or Other Jurisdiction of
    Incorporation or Organization) |  | (I.R.S. Employer Identification Number)
|                                                                  
|7925 Jones Branch Drive, McLean, VA                                |  | 22102                                  
|(Address of Principal Executive Offices)                           |  | (Zip Code)                             

Registrants telephone number, including area code:
(703) 873-2000


Not Applicable







þ o


12b-2 þ o


12b-2 o o






o o
















---



##### 



LCC International, Inc. and Subsidiaries


Quarterly Report on
Form 10-Q


For the quarter ended March 31, 2006


INDEX


|         |  |                                                                                                                    |  |        |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------------------ |  | ------ | -- | 
|         |  |                                                                                                                    |  | Page   |   
|         |  |                                                                                                                    |  | Number |   
|         |  |                                                                                                                    |  |        |   
|PART I:  |  | FINANCIAL INFORMATION                                                                                              |  |        |    | 
|ITEM 1:  |  | FINANCIAL STATEMENTS                                                                                               |  |        | 3  | 
|         |  | Condensed consolidated statements of operations for the three
    months ended March 31, 2005 and 2006 (unaudited) |  |        | 3  | 
|         |  | Condensed consolidated balance sheets as of December 31,
    2005 and March 31, 2006 (unaudited)                   |  |        | 4  | 
|         |  | Condensed consolidated statements of cash flows for the three
    months ended March 31, 2005 and 2006 (unaudited) |  |        | 5  | 
|         |  | Notes to condensed consolidated financial statements                                                               |  |        | 6  | 
|ITEM 2:  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND RESULTS OF OPERATIONS                          |  |        | 15 | 
|ITEM 3:  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                         |  |        | 26 | 
|ITEM 4:  |  | CONTROLS AND PROCEDURES                                                                                            |  |        | 27 | 
|        
|PART II: |  | OTHER INFORMATION                                                                                                  |  |        |    | 
|ITEM 1:  |  | Legal proceedings                                                                                                  |  |        | 29 | 
|ITEM 1A: |  | Risk Factors                                                                                                       |  |        | 29 | 
|ITEM 2:  |  | Unregistered sales of Equity Securities and Use of Proceeds                                                        |  |        | 29 | 
|ITEM 3:  |  | Defaults upon senior securities                                                                                    |  |        | 29 | 
|ITEM 4:  |  | Submission of matters to a vote of security holders                                                                |  |        | 29 | 
|ITEM 5:  |  | Other information                                                                                                  |  |        | 29 | 
|ITEM 6:  |  | Exhibits and reports on Form 8-K                                                                                   |  |        | 29 | 

2



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##### 






PART I: FINANCIAL INFORMATION





Item 1: Financial Statements


LCC International, Inc. and Subsidiaries





Condensed Consolidated Statements of Operations


(In thousands, except per share data)


(Unaudited)


|                                                                       |                               |                    |        |        |      |   |        |        |  
|---------------------------------------------------------------------- | ----------------------------- | ------------------ | ------ | ------ | ---- | - | ------ | ------ | -
|                                                                       |                               | Three Months Ended |       
|                                                                       |                               | March 31,          |       
|                                                                       |                               |                    |       
|                                                                       |                               | 2005               |        |        | 2006 |  
|                                                                       |                               |                    |        |        |      |  
|REVENUES                                                               |                               | $                  | 45,409 |        |      | $ | 41,194 |       
|COST OF REVENUES (exclusive of depreciation shown below)               |                               |                    | 37,277 |        |      |   | 32,788 |       
|                                                                       |                               |                    |        |        |      |  
|GROSS PROFIT                                                           |                               |                    | 8,132  |        |      |   | 8,406  |       
|                                                                       |                               |                    |        |        |      |  
|OPERATING EXPENSES:                                                    |                               |                    |        |        |      |   |        |       
|                                                                       | Sales and marketing           |                    |        | 2,258  |      |   |        | 2,048  |  
|                                                                       | General and administrative    |                    |        | 7,487  |      |   |        | 6,615  |  
|                                                                       | Depreciation and amortization |                    |        | 718    |      |   |        | 704    |  
|                                                                       |                               |                    |        |        |      |  
|                                                                       |                               |                    | 10,463 |        |      |   | 9,367  |       
|                                                                       |                               |                    |        |        |      |  
|OPERATING LOSS                                                         |                               |                    | (2,331 | )      |      |   | (961   | )     
|                                                                       |                               |                    |        |        |      |  
|OTHER INCOME (EXPENSE):                                                |                               |                    |        |        |      |   |        |       
|                                                                       | Interest income               |                    |        | 40     |      |   |        | 27     |  
|                                                                       | Interest expense              |                    |        | (82    | )    |   |        | (186   | )
|                                                                       | Other                         |                    |        | (468   | )    |   |        | (60    | )
|                                                                       |                               |                    |        |        |      |  
|                                                                       |                               |                    | (510   | )      |      |   | (219   | )     
|                                                                       |                               |                    |        |        |      |  
|LOSS FROM OPERATIONS BEFORE INCOME TAXES                               |                               |                    | (2,841 | )      |      |   | (1,180 | )     
|INCOME TAX EXPENSE                                                     |                               |                    | 881    |        |      |   | 980    |       
|                                                                       |                               |                    |        |        |      |  
|NET LOSS                                                               |                               | $                  | (3,722 | )      |      | $ | (2,160 | )     
|                                                                       |                               |                    |        |        |      |  
|NET LOSS PER SHARE:                                                    |                               |                    |        |        |      |   |        |       
|                                                                       | Basic                         |                    | $      | (0.15  | )    |   | $      | (0.09  | )
|                                                                       |                               |                    |        |        |      |  
|                                                                       | Diluted                       |                    | $      | (0.15  | )    |   | $      | (0.09  | )
|                                                                       |                               |                    |        |        |      |  
|WEIGHTED AVERAGE SHARES USED IN CALCULATION OF NET LOSS PER
    SHARE: |                               |                    |        |        |      |   |        |       
|                                                                       | Basic                         |                    |        | 24,418 |      |   |        | 24,712 |  
|                                                                       |                               |                    |        |        |      |  
|                                                                       | Diluted                       |                    |        | 24,418 |      |   |        | 24,712 |  
|                                                                       |                               |                    |        |        |      |  



3



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##### 



LCC International, Inc. and Subsidiaries





Condensed Consolidated Balance Sheets


(In thousands, except per share data)


|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |   |         |        |        | 
|------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ------- | ----------- | --------- | - | ------- | ------ | ------ | 
|                                                                                      |                                                                                                                                                                                                       | December 31,                            |         |             | March 31, |  
|                                                                                      |                                                                                                                                                                                                       | 2005                                    |         |             | 2006      |  
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|                                                                                      |                                                                                                                                                                                                       |                                         |         | (Unaudited) |          
|ASSETS:                                                                              
|Current assets:                                                                       |                                                                                                                                                                                                       |                                         |         |             |           |   |         |       
|                                                                                      | Cash and cash equivalents                                                                                                                                                                             |                                         | $       | 14,196      |           |   | $       | 10,590 |       
|                                                                                      | Restricted cash                                                                                                                                                                                       |                                         |         | 1,141       |           |   |         | 1,164  |       
|                                                                                      | Receivables, net of allowance for doubtful accounts of $317 and
    $232 at December 31, 2005 and March 31, 2006,
    respectively:                                                                   |                                         |         |             |           |   |         |        |       
|                                                                                      |                                                                                                                                                                                                       | Trade accounts receivable               |         |             | 47,448    |   |         |        | 48,776 | 
|                                                                                      |                                                                                                                                                                                                       | Unbilled receivables                    |         |             | 35,791    |   |         |        | 30,097 | 
|                                                                                      |                                                                                                                                                                                                       | Due from related parties and affiliates |         |             | 15        |   |         |        | 28     | 
|                                                                                      | Prepaid expenses and other current assets                                                                                                                                                             |                                         |         | 1,998       |           |   |         | 1,819  |       
|                                                                                      | Prepaid tax receivable and prepaid taxes                                                                                                                                                              |                                         |         | 1,195       |           |   |         | 1,194  |       
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|                                                                                      |                                                                                                                                                                                                       | Total current assets                    |         |             | 101,784   |   |         |        | 93,668 | 
|Property and equipment, net                                                           |                                                                                                                                                                                                       |                                         | 3,642   |             |           |   | 3,280   |       
|Deferred income taxes, net                                                            |                                                                                                                                                                                                       |                                         | 1,171   |             |           |   | 1,171   |       
|Goodwill                                                                              |                                                                                                                                                                                                       |                                         | 11,014  |             |           |   | 11,137  |       
|Other intangibles                                                                     |                                                                                                                                                                                                       |                                         | 312     |             |           |   | 257     |       
|Other assets                                                                          |                                                                                                                                                                                                       |                                         | 1,030   |             |           |   | 986     |       
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|                                                                                      |                                                                                                                                                                                                       | $                                       | 118,953 |             |           | $ | 110,499 |       
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY:                                                
|Current liabilities:                                                                  |                                                                                                                                                                                                       |                                         |         |             |           |   |         |       
|                                                                                      | Line of credit                                                                                                                                                                                        |                                         | $       | 2,975       |           |   | $       | 4,263  |       
|                                                                                      | Accounts payable                                                                                                                                                                                      |                                         |         | 27,876      |           |   |         | 24,127 |       
|                                                                                      | Accrued expenses                                                                                                                                                                                      |                                         |         | 22,480      |           |   |         | 16,986 |       
|                                                                                      | Accrued employee compensation and benefits                                                                                                                                                            |                                         |         | 5,390       |           |   |         | 5,417  |       
|                                                                                      | Deferred revenue                                                                                                                                                                                      |                                         |         | 1,142       |           |   |         | 839    |       
|                                                                                      | Income taxes payable                                                                                                                                                                                  |                                         |         | 2,891       |           |   |         | 3,675  |       
|                                                                                      | Accrued restructuring current                                                                                                                                                                         |                                         |         | 1,072       |           |   |         | 1,179  |       
|                                                                                      | Other current liabilities                                                                                                                                                                             |                                         |         | 188         |           |   |         | 194    |       
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|                                                                                      |                                                                                                                                                                                                       | Total current liabilities               |         |             | 64,014    |   |         |        | 56,680 | 
|                                                                                      | Accrued restructuring non-current                                                                                                                                                                     |                                         |         | 492         |           |   |         | 257    |       
|                                                                                      | Other liabilities                                                                                                                                                                                     |                                         |         | 696         |           |   |         | 680    |       
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|                                                                                      |                                                                                                                                                                                                       | Total liabilities                       |         |             | 65,202    |   |         |        | 57,617 | 
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|Shareholders equity:                                                                 |                                                                                                                                                                                                       |                                         |         |             |           |   |         |       
|Preferred stock:                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |   |         |       
|                                                                                      | 10,000 shares authorized; 0 shares issued and
    outstanding                                                                                                                                         |                                         |         |            |           |   |         |       |       
|Class A common stock, $0.01 par value:                                                |                                                                                                                                                                                                       |                                         |         |             |           |   |         |       
|                                                                                      | 70,000 shares authorized; 20,485 shares issued and
    20,326 shares outstanding and 20,634 shares issued and
    20,475 shares outstanding at December 31, 2005 and
    March 31, 2006, respectively |                                         |         | 205         |           |   |         | 206    |       
|Class B common stock, $0.01 par value:                                                |                                                                                                                                                                                                       |                                         |         |             |           |   |         |       
|                                                                                      | 20,000 shares authorized; 4,428 shares issued and
    outstanding at December 31, 2005 and March 31, 2006                                                                                             |                                         |         | 44          |           |   |         | 44     |       
|Paid-in capital                                                                       |                                                                                                                                                                                                       |                                         | 108,902 |             |           |   | 109,763 |       
|Accumulated deficit                                                                   |                                                                                                                                                                                                       |                                         | (55,440 | )           |           |   | (57,600 | )     
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|                                                                                      | Subtotal                                                                                                                                                                                              |                                         |         | 53,711      |           |   |         | 52,413 |       
|Accumulated other comprehensive income  foreign
    currency translation adjustments |                                                                                                                                                                                                       |                                         | 922     |             |           |   | 1,351   |       
|Treasury stock (159 shares)                                                           |                                                                                                                                                                                                       |                                         | (882    | )           |           |   | (882    | )     
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|                                                                                      |                                                                                                                                                                                                       | Total shareholders equity              |         |             | 53,751    |   |         |        | 52,882 | 
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  
|                                                                                      |                                                                                                                                                                                                       | $                                       | 118,953 |             |           | $ | 110,499 |       
|                                                                                      |                                                                                                                                                                                                       |                                         |         |             |           |  



4



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##### 



LCC International, Inc. and Subsidiaries





Condensed Consolidated Statements of Cash Flows


(In thousands)


(Unaudited)


|                                                        |                                                                                 |                                   |                                              |                                          |      |       |        |        |   |     |        |  
|------------------------------------------------------- | ------------------------------------------------------------------------------- | --------------------------------- | -------------------------------------------- | ---------------------------------------- | ---- | ----- | ------ | ------ | - | --- | ------ | -
|                                                        |                                                                                 | Three Months Ended                |                                             
|                                                        |                                                                                 | March 31,                         |                                             
|                                                        |                                                                                 |                                   |                                             
|                                                        |                                                                                 | 2005                              |                                              |                                          | 2006 |      
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Cash flows from operating activities:                   |                                                                                 |                                   |                                              |                                          |      |       |        |       
|                                                        | Net loss                                                                        |                                   | $                                            | (3,722                                   | )    |       | $      | (2,160 | )
|                                                        | Adjustments to reconcile net loss to net cash used in operating
    activities: |                                   |                                              |                                          |      |       |        |        |  
|                                                        |                                                                                 |                                   | Depreciation and amortization                |                                          |      | 515   |        |        |   | 750 |       
|                                                        |                                                                                 |                                   | Share-based compensation expense             |                                          |      |      |        |        |   | 490 |       
|                                                        |                                                                                 |                                   | Provision for doubtful accounts              |                                          |      | 43    |        |        |   | 7   |       
|                                                        |                                                                                 |                                   | Loss on equity method investment             |                                          |      | 28    |        |        |   |    |       
|                                                        |                                                                                 |                                   | Changes in operating assets and liabilities: |                                          |      |       |        |        |   |     |       
|                                                        |                                                                                 |                                   |                                              | Trade, unbilled, and other receivables   |      |       | 2,284  |        |   |     | 4,968  |  
|                                                        |                                                                                 |                                   |                                              | Accounts payable and accrued expenses    |      |       | (3,581 | )      |   |     | (9,617 | )
|                                                        |                                                                                 |                                   |                                              | Other current assets and liabilities     |      |       | (354   | )      |   |     | 444    |  
|                                                        |                                                                                 |                                   |                                              | Other non-current assets and liabilities |      |       | (53    | )      |   |     | 61     |  
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Net cash used in operating activities                   |                                                                                 |                                   | (4,840                                       | )                                        |      |       | (5,057 | )     
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Cash flows from investing activities:                   |                                                                                 |                                   |                                              |                                          |      |       |        |       
|                                                        | Purchases of property and equipment                                             |                                   |                                              | (177                                     | )    |       |        | (254   | )
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Net cash used in investing activities                   |                                                                                 |                                   | (177                                         | )                                        |      |       | (254   | )     
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Cash flows from financing activities:                   |                                                                                 |                                   |                                              |                                          |      |       |        |       
|                                                        | Payments on line of credit                                                      |                                   |                                              | (2,422                                   | )    |       |        | (7,244 | )
|                                                        | Borrowings on line of credit                                                    |                                   |                                              | 2,254                                    |      |       |        | 8,532  |  
|                                                        | Proceeds from issuance of common stock, net                                     |                                   |                                              | 30                                       |      |       |        |       |  
|                                                        | Proceeds from exercise of options                                               |                                   |                                              | 223                                      |      |       |        | 370    |  
|                                                        | Decrease (increase) in restricted cash                                          |                                   |                                              | 71                                       |      |       |        | (8     | )
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Net cash provided by financing activities               |                                                                                 |                                   | 156                                          |                                          |      |       | 1,650  |       
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Effect of exchange rate changes on cash and equivalents |                                                                                 |                                   | (168                                         | )                                        |      |       | 55     |       
|Net decrease in cash and cash equivalents               |                                                                                 |                                   | (5,029                                       | )                                        |      |       | (3,606 | )     
|Cash and cash equivalents at beginning of period        |                                                                                 |                                   | 21,930                                       |                                          |      |       | 14,196 |       
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Cash and cash equivalents at end of period              |                                                                                 | $                                 | 16,901                                       |                                          |      | $     | 10,590 |       
|                                                        |                                                                                 |                                   |                                              |                                          |      |      
|Supplemental disclosures of cash flow information:      |                                                                                 |                                   |                                              |                                          |      |       |        |       
|                                                        |                                                                                 | Cash paid during the quarter for: |                                              |                                          |      |       |        |        |   |    
|                                                        |                                                                                 |                                   | Income taxes                                 |                                          | $    | 1,288 |        |        | $ | 82  |       
|                                                        |                                                                                 |                                   | Interest                                     |                                          | $    | 6     |        |        | $ | 185 |       



5



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##### 



LCC International, Inc. and Subsidiaries





Notes to Condensed Consolidated Financial Statements


(Unaudited)


(1) Description of Operations




end-to


(2) Basis of Presentation




10-K


(3) Share-Based Compensation








6



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##### 





Service Based Awards




|                             |  |           |       |  
|---------------------------- |  | --------- | ----- | -
|                             |  | Number of |      
|                             |  | Shares    |      
|                             |  |           |      
|Balance at December 31, 2005 |  |           | 2,966 |  
|Granted                      |  |           |      |  
|Exercised                    |  |           | (154  | )
|Cancelled/expired            |  |           | (387  | )
|                             |  |           |      
|Balance at March 31, 2006    |  |           | 2,425 |  









|            |  |           |       |          |          |          |           |              |  |  |                 |  |  |   |     | 
|----------- |  | --------- | ----- | -------- | -------- | -------- | --------- | ------------ |  |  | --------------- |  |  | - | --- | 
|            |  |           |       |          |          | Weighted |           |              | 
|            |  |           |       | Weighted |          |          | Average   |              |  | 
|            |  |           |       | Average  |          |          | Remaining |              |  | 
|            |  | Number of |       |          | Exercise |          |           | Contractual  |  |  | Average         | 
|            |  | Shares    |       |          | Price    |          |           | Term (Years) |  |  | Intrinsic Value | 
|            |  |           |       |          |          |          |           |              |  |  |                 | 
|Outstanding |  |           | 2,425 |          |          | $        | 5.39      |              |  |  | 5.97            |  |  | $ | 884 | 
|Exercisable |  |           | 1,970 |          |          | $        | 5.50      |              |  |  | 5.48            |  |  | $ | 815 | 



|                        |  |                    |             | 
|----------------------- |  | ------------------ | ----------- | 
|                        |  | Three Months Ended |            
|                        |  | March 31, 2005     |            
|                        |  |                    |            
|Expected dividend yield |  |                    | 0%          | 
|Risk-free interest rate |  |                    | 4.40%       | 
|Expected life           |  |                    | 3 - 7 years | 
|Volatility              |  |                    | 45% - 52%   | 

7



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##### 







|                                                                                                    |         |                |        |       |  
|--------------------------------------------------------------------------------------------------- | ------- | -------------- | ------ | ----- | -
|                                                                                                    |         | Three Months   |       
|                                                                                                    |         | Ended          |       
|                                                                                                    |         | March 31, 2005 |       
|                                                                                                    |         |                |       
|Net loss as reported                                                                                |         | $              | (3,722 | )    
|Deduct total stock-based employee compensation expense
    determined under fair value based method |         |                | (453   | )    
|                                                                                                    |         |                |       
|Pro forma net loss                                                                                  |         | $              | (4,175 | )    
|                                                                                                    |         |                |       
|Net loss per share                                                                                  |         |                |        |      
|As reported:                                                                                        |         |                |        |      
|                                                                                                    | Basic   |                | $      | (0.15 | )
|                                                                                                    |         |                |       
|                                                                                                    | Diluted |                | $      | (0.15 | )
|                                                                                                    |         |                |       
|Pro forma:                                                                                          |         |                |        |      
|                                                                                                    | Basic   |                | $      | (0.17 | )
|                                                                                                    |         |                |       
|                                                                                                    | Diluted |                | $      | (0.17 | )
|                                                                                                    |         |                |       



Market Based Awards






Restricted Stock Awards




8



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##### 





|                                |  |        |       |               |       |   |      | 
|------------------------------- |  | ------ | ----- | ------------- | ----- | - | ---- | 
|                                |  |        |       | Weighted      |      
|                                |  |        |       | Average Grant |      
|                                |  |        |       | Date Fair     |      
|                                |  | Shares |       |               | Value |  
|                                |  |        |       |               |       |  
|Non vested at December 31, 2005 |  |        | 1,068 |               |       | $ | 3.03 | 
|Granted                         |  |        | 45    |               |       |   | 3.17 | 
|Vested                          |  |        |      |               |       |   |     | 
|Forfeited                       |  |        | (78   | )             |       |   | 3.54 | 
|                                |  |        |       |               |       |  
|Non vested at March 31, 2006    |  |        | 1,035 |               |       | $ | 3.00 | 



|    |                                  
|--- | ---------------------------------
|(4) | Other Comprehensive Income (Loss)



|                                                                       |  |      |        |   |      |   |        |  
|---------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                                       |  | 2005 |        |   | 2006 |  
|                                                                       |  |      |        |   |      |  
|Net loss                                                               |  | $    | (3,722 | ) |      | $ | (2,160 | )
|                                                                       |  |      |        |   |      |  
|Other comprehensive income (loss), before tax                          |  |      | (902   | ) |      |   | 429    |  
|Income tax benefit related to items of comprehensive income
    (loss) |  |      |       |   |      |   |       |  
|                                                                       |  |      |        |   |      |  
|Other comprehensive income (loss), net of tax                          |  |      | (902   | ) |      |   | 429    |  
|                                                                       |  |      |        |   |      |  
|Comprehensive loss                                                     |  | $    | (4,624 | ) |      | $ | (1,731 | )
|                                                                       |  |      |        |   |      |  



|    |                           
|--- | --------------------------
|(5) | Related Party Transactions

ten-to






9



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##### 









|    |                     
|--- | --------------------
|(6) | Restructuring Charge







10



---



##### 









|                                                   |                                                          |                |       |      |            |   |        |        |   |   |        |        |  
|-------------------------------------------------- | -------------------------------------------------------- | -------------- | ----- | ---- | ---------- | - | ------ | ------ | - | - | ------ | ------ | -
|                                                   |                                                          | Severance      |       |      | Facilities |   |        | Total  |  
|                                                   |                                                          |                |       |      |            |   |        |        |  
|                                                   |                                                          | (in thousands) |      
|Restructuring charge                               |                                                          | $              | 1,030 |      |            | $ | 12,492 |        |   | $ | 13,522 |       
|Reclassification of deferred rent                  |                                                          |                |      |      |            |   | 639    |        |   |   | 639    |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|                                                   |                                                          |                | 1,030 |      |            |   | 13,131 |        |   |   | 14,161 |       
|Charges against the provision:                     |                                                          |                |       |      |            |   |        |        |   |   |        |       
|                                                   | Payments for excess office space, net of sublease income |                |       |     |            |   |        | (2,152 | ) |   |        | (2,152 | )
|                                                   | Severance and associated costs paid                      |                |       | (878 | )          |   |        |       |   |   |        | (878   | )
|                                                   | Leasehold improvements and other assets written-off      |                |       |     |            |   |        | (1,461 | ) |   |        | (1,461 | )
|                                                   | Other                                                    |                |       |     |            |   |        | 53     |   |   |        | 53     |  
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring payable as of December 31, 2002      |                                                          | $              | 152   |      |            | $ | 9,571  |        |   | $ | 9,723  |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Reversal of excess severance                       |                                                          |                | (152  | )    |            |   |       |        |   |   | (152   | )     
|Reversal for reoccupied space                      |                                                          |                |      |      |            |   | (385   | )      |   |   | (385   | )     
|Additional charge for reduction of sublease income |                                                          |                |      |      |            |   | 535    |        |   |   | 535    |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|                                                   | Restructuring charge (recovery)                          |                |       | (152 | )          |   |        | 150    |   |   |        | (2     | )
|Charges against the provision:                     |                                                          |                |       |      |            |   |        |        |   |   |        |       
|                                                   | Payments for excess office space, net of sublease income |                |       |     |            |   |        | (2,971 | ) |   |        | (2,971 | )
|                                                   | Leasehold improvements and other assets written-off      |                |       |     |            |   |        | (564   | ) |   |        | (564   | )
|                                                   | Other                                                    |                |       |     |            |   |        | 149    |   |   |        | 149    |  
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring payable as of December 31, 2003      |                                                          | $              |      |      |            | $ | 6,335  |        |   | $ | 6,335  |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Reversal for reoccupied space                      |                                                          |                |      |      |            |   | (1,166 | )      |   |   | (1,166 | )     
|Charges against the provision:                     |                                                          |                |       |      |            |   |        |        |   |   |        |       
|                                                   | Payments for excess office space, net of sublease income |                |       |     |            |   |        | (2,131 | ) |   |        | (2,131 | )
|                                                   | Leasehold improvements and other assets written-off      |                |       |     |            |   |        | (214   | ) |   |        | (214   | )
|                                                   | Other                                                    |                |       |     |            |   |        | 77     |   |   |        | 77     |  
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring payable as of December 31, 2004      |                                                          | $              |      |      |            | $ | 2,901  |        |   | $ | 2,901  |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring charge                               |                                                          |                | 752   |      |            |   | 176    |        |   |   | 928    |       
|Reversal for reoccupied space                      |                                                          |                |      |      |            |   | (330   | )      |   |   | (330   | )     
|                                                   |                                                          |                |       |      |            |   |        |        |  
|                                                   | Restructuring charge (recovery)                          |                |       | 752  |            |   |        | (154   | ) |   |        | 598    |  

11



---



##### 



|                                              |                                                          |                |    |      |            |   |       |       |   |   |       |      |  
|--------------------------------------------- | -------------------------------------------------------- | -------------- | -- | ---- | ---------- | - | ----- | ----- | - | - | ----- | ---- | -
|                                              |                                                          | Severance      |    |      | Facilities |   |       | Total |  
|                                              |                                                          |                |    |      |            |   |       |       |  
|                                              |                                                          | (in thousands) |   
|Charges against the provision:                |                                                          |                |    |      |            |   |       |       |   |   |       |     
|                                              | Payments for excess office space, net of sublease income |                |    |     |            |   |       | (960  | ) |   |       | (960 | )
|                                              | Severance and associated costs paid                      |                |    | (730 | )          |   |       |      |   |   |       | (730 | )
|                                              | Leasehold improvements and other assets written-off      |                |    |     |            |   |       | (37   | ) |   |       | (37  | )
|                                              | Other                                                    |                |    |     |            |   |       | (208  | ) |   |       | (208 | )
|                                              |                                                          |                |    |      |            |   |       |       |  
|Restructuring payable as of December 31, 2005 |                                                          | $              | 22 |      |            | $ | 1,542 |       |   | $ | 1,564 |     
|                                              |                                                          |                |    |      |            |   |       |       |  
|Charges against the provision:                |                                                          |                |    |      |            |   |       |       |   |   |       |     
|                                              | Payments for excess office space, net of sublease income |                |    |     |            |   |       | (129  | ) |   |       | (129 | )
|                                              | Other                                                    |                |    |     |            |   |       | 1     |   |   |       | 1    |  
|                                              |                                                          |                |    |      |            |   |       |       |  
|Restructuring payable as of March 31, 2006    |                                                          | $              | 22 |      |            | $ | 1,414 |       |   | $ | 1,436 |     
|                                              |                                                          |                |    |      |            |   |       |       |  



|                              |  |              |       |  |           |   |       | 
|----------------------------- |  | ------------ | ----- |  | --------- | - | ----- | 
|                              |  | December 31, |       |  | March 31, |  
|                              |  | 2005         |       |  | 2006      |  
|                              |  |              |       |  |           |  
|Accrued restructuring current |  | $            | 1,072 |  |           | $ | 1,179 | 
|Accrued restructuring         |  |              | 492   |  |           |   | 257   | 
|                              |  |              |       |  |           |  
|Accrued restructuring total   |  | $            | 1,564 |  |           | $ | 1,436 | 
|                              |  |              |       |  |           |  

(7) Line of Credit








12



---



##### 









(8) Commitments and Contingencies




(9) Segment Reporting


Disclosures about Segments of an
Enterprise and Related Information






13



---



##### 





|                             |                         |                |        |        |        |   |        |               |        |   |        |        |        |      |        |        |        |   |        |        |        |   |         |        |        | 
|---------------------------- | ----------------------- | -------------- | ------ | ------ | ------ | - | ------ | ------------- | ------ | - | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------- | ------ | ------ | 
|                             |                         | Americas       |        |        | EMEA   |   |        | Segment Total |       
|                             |                         |                |        |        |        |   |        |               |       
|                             |                         | 2005           |        |        | 2006   |   |        | 2005          |        |   | 2006   |        |        | 2005 |        |        | 2006   |  
|                             |                         |                |        |        |        |   |        |               |        |   |        |        |        |      |        |        |        |  
|Three Months Ended March 31, |                         |                |        |        |        |   |        |               |        |   |        |        |        |      |        |        |        |   |        |        |        |   |         |       
|                             | Revenues:               |                |        |        |        |   |        |               |        |   |        |        |        |      |        |        |        |   |        |        |        |   |         |        |       
|                             | From external customers |                | $      | 22,231 |        |   | $      | 14,134        |        |   | $      | 22,361 |        |      | $      | 27,060 |        |   | $      | 44,592 |        |   | $       | 41,194 |       
|                             | Inter-segment revenues  |                |        |       |        |   |        |              |        |   |        |       |        |      |        |       |        |   |        |       |        |   |         |       |       
|                             |                         | Total revenues |        | $      | 22,231 |   |        | $             | 14,134 |   |        | $      | 22,361 |      |        | $      | 27,060 |   |        | $      | 44,592 |   |         | $      | 41,194 | 
|Income (loss) before taxes   |                         | $              | (1,023 | )      |        | $ | (426   | )             |        | $ | 681    |        |        | $    | 2,170  |        |        | $ | (342   | )      |        | $ | 1,744   |       
|Total assets                 |                         | $              | 37,247 |        |        | $ | 28,814 |               |        | $ | 58,799 |        |        | $    | 72,901 |        |        | $ | 96,046 |        |        | $ | 101,715 |       



|                            |                                                 |                            |         |        |       |   |         |         |       | 
|--------------------------- | ----------------------------------------------- | -------------------------- | ------- | ------ | ----- | - | ------- | ------- | ----- | 
|                            |                                                 | Three Months Ended         |        
|                            |                                                 | March 31,                  |        
|                            |                                                 |                            |        
|                            |                                                 | 2005                       |         |        | 2006  |  
|                            |                                                 |                            |         |        |       |  
|Revenues:                   |                                                 |                            |         |        |       |   |         |        
|                            | Revenues for reportable segments                |                            | $       | 44,592 |       |   | $       | 41,194  |      
|                            | Revenues for nonreportable segments             |                            |         | 817    |       |   |         |        |      
|                            |                                                 |                            |         |        |       |  
|Total consolidated revenues |                                                 |                            | 45,409  |        |       |   | 41,194  |        
|                            |                                                 |                            |         |        |       |  
|Assets                      |                                                 |                            |         |        |       |   |         |        
|                            | Assets for reportable segments                  |                            | $       | 96,046 |       |   | $       | 101,715 |      
|                            | Assets not attributable to reportable segments: |                            |         |        |       |   |         |         |      
|                            |                                                 | Cash and cash equivalents  |         |        | 9,856 |   |         |         | 4,873 | 
|                            |                                                 | Restricted Cash            |         |        | 232   |   |         |         | 37    | 
|                            |                                                 | Receivables                |         |        | 1,175 |   |         |         | 581   | 
|                            |                                                 | Deferred and prepaid taxes |         |        | 1,831 |   |         |         | 2,365 | 
|                            |                                                 | Property and equipment     |         |        | 741   |   |         |         | 416   | 
|                            |                                                 | Investments                |         |        | 636   |   |         |         |      | 
|                            |                                                 | Prepaid and Other          |         |        | 327   |   |         |         | 512   | 
|                            |                                                 |                            |         |        |       |  
|Total consolidated assets   |                                                 | $                          | 110,844 |        |       | $ | 110,499 |        
|                            |                                                 |                            |         |        |       |  

(10) Receivables




(11) Reclassifications




14



---



##### 






Item 2: Managements Discussion and Analysis of
Financial Condition and Results of Operations


10-Q


10-K


Overview


end-to




| |  |                        |  |                                                                                                                                                                                                                                                                                                                                  
| |  | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Americas:              |  | Headquartered in McLean, Virginia, the Americas region provides
    the full range of service offerings to wireless operators and
    equipment vendors through a network of project offices in North
    America and South America. In the first quarter of 2006,
    Americas generated approximately 34% of our total revenue.
| |  | EMEA:                  |  | Based in London, the Europe, Middle East and Africa region is
    responsible for operations in the U.K., Italy, Netherlands,
    Algeria, Germany, Spain, Greece, Saudi Arabia and the Middle
    East. In the first quarter of 2006, EMEA generated approximately
    66% of our total revenue.                                
| |  | Nonreportable segment: |  | This includes our Corporate operations which generated no
    revenues during the first quarter of 2006.                                                                                                                                                                                                                         

percentage-of


15



---



##### 















Trends That Have Affected or May Affect Results of Operations
and Financial Condition






| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | project related revenues derived from a limited set of customers
    in each market where we do business;                                          
|
| |  | the acceleration or the delay associated with the introduction
    of new technologies and services by our customers;                              
|
| |  | the management and the services composition of our fixed price
    contracts;                                                                      
|
| |  | the impact of the percentage of subcontracted work (versus self
    perform work) on our large programs and the associated margin
    degradations;
|
| |  | customers agreeing to exclude construction services from
    fixed-price contracts, and;                                                           
|
| |  | increased spending by wireless service providers in the areas of
    network design, deployment and optimization.                                  



16



---



##### 













17



---



##### 



Three Months Ended March 31, 2006


Compared to


Three Months Ended March 31, 2005


Results of Operations




Revenues, Cost of Revenues and Gross Margins


|                  |                       |                    |        |                |                |  |                |      |   |   |        |        |  |  |      |      |  
|----------------- | --------------------- | ------------------ | ------ | -------------- | -------------- |  | -------------- | ---- | - | - | ------ | ------ |  |  | ---- | ---- | -
|                  |                       | Three Months Ended |       
|                  |                       |                    |       
|                  |                       | March 31, 2005     |        |                | March 31, 2006 | 
|                  |                       |                    |        |                |                | 
|                  |                       | (in thousands)     |        |                |                |  | (in thousands) |      |   |  
|Revenues:         |                       |                    |        |                |                |  |                |      |   |   |        |        |  |  |      |     
|                  | Americas              |                    | $      | 22,231         |                |  |                |      |   |   | $      | 14,134 |  |  |      |      |  
|                  | EMEA                  |                    |        | 22,361         |                |  |                |      |   |   |        | 27,060 |  |  |      |      |  
|                  | Nonreportable segment |                    |        | 817            |                |  |                |      |   |   |        |       |  |  |      |      |  
|                  |                       |                    |        |                |                |  |                |      |   |   |        |       
|                  |                       | $                  | 45,409 |                |                |  |                |      |   | $ | 41,194 |        |  |  |      |     
|                  |                       |                    |        |                |                |  |                |      |   |   |        |       
|                  |                       | (% of revenue)     |        | (% of revenue)
|Cost of revenues: |                       |                    |        |                |                |  |                |      |   |   |        |        |  |  |      |     
|                  | Americas              |                    | $      | 20,080         |                |  |                | 90.3 | % |   | $      | 12,483 |  |  |      | 88.3 | %
|                  | EMEA                  |                    |        | 16,682         |                |  |                | 74.6 | % |   |        | 20,305 |  |  |      | 75.0 | %
|                  | Nonreportable segment |                    |        | 515            |                |  |                | 63.0 | % |   |        |       |  |  |      |     | %
|                  |                       |                    |        |                |                |  |                |      |   |   |        |       
|                  |                       | $                  | 37,277 |                |                |  | 82.1           | %    |   | $ | 32,788 |        |  |  | 79.6 | %   
|                  |                       |                    |        |                |                |  |                |      |   |   |        |       
|Gross margins:    |                       |                    |        |                |                |  |                |      |   |   |        |        |  |  |      |     
|                  | Americas              |                    | $      | 2,151          |                |  |                | 9.7  | % |   |        | 1,651  |  |  |      | 11.7 | %
|                  | EMEA                  |                    |        | 5,679          |                |  |                | 25.4 | % |   |        | 6,755  |  |  |      | 25.0 | %
|                  | Nonreportable segment |                    |        | 302            |                |  |                | 37.0 | % |   |        |       |  |  |      |     | %
|                  |                       |                    |        |                |                |  |                |      |   |   |        |       
|                  |                       | $                  | 8,132  |                |                |  | 17.9           | %    |   | $ | 8,406  |        |  |  | 20.4 | %   
|                  |                       |                    |        |                |                |  |                |      |   |   |        |       

Americas






18



---



##### 





EMEA


period-to quarter-to


period-to quarter-to


Nonreportable segment




19



---



##### 



Operating Expenses


|                              |                       |                    |        |       |           |   |       |       |  
|----------------------------- | --------------------- | ------------------ | ------ | ----- | --------- | - | ----- | ----- | -
|                              |                       | Three Months Ended |       
|                              |                       |                    |       
|                              |                       | March 31,          |        |       | March 31, |  
|                              |                       | 2005               |        |       | 2006      |  
|                              |                       |                    |        |       |           |  
|                              |                       | (in thousands)     |       
|Sales and marketing           |                       |                    |        |       |           |   |       |      
|                              | Americas              |                    | $      | 544   |           |   | $     | 583   |  
|                              | EMEA                  |                    |        | 1,576 |           |   |       | 1,461 |  
|                              | Nonreportable segment |                    |        | 138   |           |   |       | 4     |  
|                              |                       |                    |        |       |           |  
|                              |                       |                    | 2,258  |       |           |   | 2,048 |      
|Bad debt expense (recovery)   |                       |                    |        |       |           |   |       |      
|                              | Americas              |                    |        |      |           |   |       | 22    |  
|                              | EMEA                  |                    |        | 14    |           |   |       | (41   | )
|                              | Nonreportable segment |                    |        |      |           |   |       |      |  
|                              |                       |                    |        |       |           |  
|                              |                       |                    | 14     |       |           |   | (19   | )    
|General and administrative    |                       |                    |        |       |           |   |       |      
|                              | Americas              |                    |        | 2,513 |           |   |       | 1,283 |  
|                              | EMEA                  |                    |        | 2,787 |           |   |       | 2,599 |  
|                              | Nonreportable segment |                    |        | 2,173 |           |   |       | 2,752 |  
|                              |                       |                    |        |       |           |  
|                              |                       |                    | 7,473  |       |           |   | 6,634 |      
|Depreciation and amortization |                       |                    |        |       |           |   |       |      
|                              | Americas              |                    |        | 123   |           |   |       | 196   |  
|                              | EMEA                  |                    |        | 504   |           |   |       | 435   |  
|                              | Nonreportable segment |                    |        | 91    |           |   |       | 73    |  
|                              |                       |                    |        |       |           |  
|                              |                       |                    | 718    |       |           |   | 704   |      
|Total                         |                       |                    |        |       |           |   |       |      
|                              | Americas              |                    |        | 3,180 |           |   |       | 2,084 |  
|                              | EMEA                  |                    |        | 4,881 |           |   |       | 4,454 |  
|                              | Nonreportable segment |                    |        | 2,402 |           |   |       | 2,829 |  
|                              |                       |                    |        |       |           |  
|Total                         |                       | $                  | 10,463 |       |           | $ | 9,367 |      
|                              |                       |                    |        |       |           |  





20



---



##### 



Other Income and Expense


|                 |                       |                    |      |      |                |   |      |      |  
|---------------- | --------------------- | ------------------ | ---- | ---- | -------------- | - | ---- | ---- | -
|                 |                       | Three Months Ended |     
|                 |                       |                    |     
|                 |                       | March 31, 2005     |      |      | March 31, 2006 |  
|                 |                       |                    |      |      |                |  
|                 |                       | (in thousands)     |     
|Interest income  |                       |                    |      |      |                |   |      |     
|                 | Americas              |                    | $    | 9    |                |   | $    | 12   |  
|                 | EMEA                  |                    |      | 6    |                |   |      | 6    |  
|                 | Nonreportable segment |                    |      | 25   |                |   | $    | 9    |  
|                 |                       |                    |      |      |                |  
|                 |                       |                    | 40   |      |                |   | 27   |     
|Interest expense |                       |                    |      |      |                |   |      |     
|                 | Americas              |                    |      | (1   | )              |   |      |     |  
|                 | EMEA                  |                    |      | (70  | )              |   |      |     |  
|                 | Nonreportable segment |                    |      | (11  | )              |   |      | (186 | )
|                 |                       |                    |      |      |                |  
|                 |                       |                    | (82  | )    |                |   | (186 | )   
|Other            |                       |                    |      |      |                |   |      |     
|                 | Americas              |                    |      | (2   | )              |   |      | (5   | )
|                 | EMEA                  |                    |      | (53  | )              |   |      | (137 | )
|                 | Nonreportable segment |                    |      | (413 | )              |   |      | 82   |  
|                 |                       |                    |      |      |                |  
|                 |                       |                    | (468 | )    |                |   | (60  | )   
|Total            |                       |                    |      |      |                |   |      |     
|                 | Americas              |                    |      | 6    |                |   |      | 7    |  
|                 | EMEA                  |                    |      | (117 | )              |   |      | (131 | )
|                 | Nonreportable segment |                    |      | (399 | )              |   |      | (95  | )
|                 |                       |                    |      |      |                |  
|                 |                       | $                  | (510 | )    |                | $ | (219 | )   
|                 |                       |                    |      |      |                |  



|                           |                        |                    |        |        |                |   |        |        |  
|-------------------------- | ---------------------- | ------------------ | ------ | ------ | -------------- | - | ------ | ------ | -
|                           |                        | Three Months Ended |       
|                           |                        |                    |       
|                           |                        | March 31, 2005     |        |        | March 31, 2006 |  
|                           |                        |                    |        |        |                |  
|                           |                        | (in thousands)     |       
|Income (loss) before taxes |                        |                    |        |        |                |   |        |       
|                           | Americas               |                    | $      | (1,023 | )              |   | $      | (426   | )
|                           | EMEA                   |                    |        | 681    |                |   |        | 2,170  |  
|                           | Nonreportable segments |                    |        | (2,499 | )              |   |        | (2,924 | )
|                           |                        |                    |        |        |                |  
|                           |                        | $                  | (2,841 | )      |                | $ | (1,180 | )     
|                           |                        |                    |        |        |                |  

Tax Expense




21



---



##### 



Net Loss






Liquidity and Capital Resources






| |                         
| | ------------------------
| | Sources and Uses of Cash

|                                                 |                                           |                    |        |        |                |   |        |        |  
|------------------------------------------------ | ----------------------------------------- | ------------------ | ------ | ------ | -------------- | - | ------ | ------ | -
|                                                 |                                           | Three Months Ended |       
|                                                 |                                           |                    |       
|                                                 |                                           | March 31, 2005     |        |        | March 31, 2006 |  
|                                                 |                                           |                    |        |        |                |  
|                                                 |                                           | (in thousands)     |       
|Net cash used in operating activities            |                                           | $                  | (4,840 | )      |                | $ | (5,057 | )     
|Net cash used in investing activities            |                                           |                    | (177   | )      |                |   | (254   | )     
|Net cash provided by financing activities        |                                           |                    | 156    |        |                |   | 1,650  |       
|Effect of exchange rates on cash and equivalents |                                           |                    | (168   | )      |                |   | 55     |       
|                                                 |                                           |                    |        |        |                |  
|                                                 | Net decrease in cash and cash equivalents |                    | $      | (5,029 | )              |   | $      | (3,606 | )
|                                                 |                                           |                    |        |        |                |  







| |                  
| | -----------------
| | Cash Requirements

|                          |                                       |                   |        |        |                |   |        |        | 
|------------------------- | ------------------------------------- | ----------------- | ------ | ------ | -------------- | - | ------ | ------ | 
|                          |                                       | December 31, 2005 |        |        | March 31, 2006 |  
|                          |                                       |                   |        |        |                |  
|                          |                                       | (in thousands)    |       
|Cash and cash equivalents |                                       | $                 | 14,196 |        |                | $ | 10,590 |       
|Restricted cash           |                                       |                   | 1,141  |        |                |   | 1,164  |       
|                          |                                       |                   |        |        |                |  
|                          | Total cash and short-term investments |                   | $      | 15,337 |                |   | $      | 11,754 | 
|                          |                                       |                   |        |        |                |  
|Line of credit            |                                       | $                 | 2,975  |        |                | $ | 4,263  |       
|                          |                                       |                   |        |        |                |  
|Working capital           |                                       | $                 | 37,770 |        |                | $ | 36,988 |       
|                          |                                       |                   |        |        |                |  

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Critical Accounting Policies






| |   |                                 
| | - | --------------------------------
| |  | revenue recognition;            
|
| |  | allowance for doubtful accounts;
|
| |  | accounting for income taxes;    
|
| |  | restructuring charge; and       
|
| |  | share-based compensation        



| |                    
| | -------------------
| | Revenue recognition

percentage-of percentage-of


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| |                                
| | -------------------------------
| | Allowance for doubtful accounts





| |                            
| | ---------------------------
| | Accounting for income taxes







| |                     
| | --------------------
| | Restructuring charge



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Share-Based Compensation






Related Party Transactions







Item 3: Quantitative and Qualitative Disclosures about
Market Risk






non-U.S. non-U.S.




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Item 4. Controls and Procedures






10-K. 10-K








13a-15(f) 15d-15(f).




| |   |                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of the company;                                                                                                                                                                                        
|
| |  | provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the company are being made
    only in accordance with authorizations of management and
    directors of the company; and
|
| |  | provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use, or disposition of
    the companys assets that could have a material effect on
    the financial statements.                                                                                                                                      

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10-K, percentage-of




| |   |                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Each project manager must complete and sign a checklist and
    questionnaire monthly on which the project manager attests that
    he or she has reviewed the calculation and concurs with it.                 
|
| |  | The VP Finance for the Americas and the project managers must
    review the calculation with the chief executive officer and the
    chief financial officer during the Companys monthly
    contract reviews.
|
| |  | It is a requirement that the person serving as VP Finance have a
    strong accounting background.                                                                                                              



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PART II:     OTHER
INFORMATION





Item 1: Legal Proceedings







Item 1A: Risk Factors


10-K





Item 2: Unregistered Sales of Equity Securities and Use
of Proceeds







Item 3: Defaults Upon Senior Securities







Item 4: Submission of Matters to a Vote of Security
Holders







Item 5: Other Information







Item 6: Exhibits






| |        |                                                                                                                                                                                   
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 11    | Calculation of Net Loss Per Share.                                                                                                                                                
|
| | 31.1  | Certification of Chief Executive Officer pursuant to Exchange
    Act
    Rules 13a-14(a)/15d-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.
|
| | 31.2  | Certification of Chief Financial Officer pursuant to Exchange
    Act
    Rules 13a-14(a)/15d-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.
|
| | 32.1  | Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                        
|
| | 32.2  | Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                        

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Signature






| |                                      
| | -------------------------------------
| | /s/ Charles R. Waldron               
| |                                      
| | Charles R. Waldron                   
| | Senior Vice President,               
| | Chief Financial Officer and Treasurer



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