**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**





**FORM
      10-Q**





(Mark
      One)





**xQUARTERLY
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





**For
      the quarterly period ended March 31, 2008**





**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 0-28579**





**BERLINER
      COMMUNICATIONS, INC.**


(Exact
      Name of Registrant as Specified in Its Charter)





**Delaware**
            **75-2233445**(State
                or Other Jurisdiction of Incorporation)
            (I.R.S.
                Employer Identification No.)





**97
      Linden Avenue**


**Elmwood
      Park, New Jersey 07407**


(Address
      of Principal Executive Offices)





**(201)
      791-3200**


(Registrant’s
      Telephone Number, Including Area Code)





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





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      definition of “accelerated filer” and “smaller reporting company” in Rule 12b-2
      of the Exchange Act.




Larger
                accelerated filer o
            Accelerated
                filer oNon-accelerated
                filer o
            Smaller
                reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act). Yes oNo x





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date:





On
      May
      13, 2008, 20,191,612 shares of the registrant's common stock, $0.00002 par
      value
      per share, were outstanding.








**BERLINER
      COMMUNICATIONS, INC.**





**QUARTERLY
      REPORT ON FORM 10-Q**


**INDEX**





**PAGE
                NO.****PART
                I:**
            **FINANCIAL
                INFORMATION**Item
                1.
            Financial
                StatementsConsolidated
                Balance Sheets as of March 31, 2008 (Unaudited),and
                June 30, 2007
            3Consolidated
                Statements of Operations for the three and nine months
                endingMarch
                31, 2008 and 2007 (Unaudited)
            4Consolidated
                Statements of Cash Flows for the nine months endingMarch
                31, 2008 and 2007 (Unaudited)
            5Consolidated
                Statement of Stockholders' Equity (Unaudited)
            7Notes
                to Consolidated Financial Statements
            8Item
                2.
            Management's
                Discussion and Analysis of Financial Condition andResults
                of Operations
            20Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            29Item
                4.
            Controls
                and Procedures
            29**PART
                II:**
            **OTHER
                INFORMATION**Item
                1.
            Legal
                Proceedings
            29Item
                1A.
            Risk
                Factors
            29Item
                2.
            Unregistered
                Sale of Equity Securities and Use of Proceeds
            31Item
                3.
            Defaults
                Upon Senior Securities
            31Item
                4.
            Submission
                of Matters to a Vote of Securities Holders
            31Item
                5.
            Other
                Information
            31Item
                6.
            Exhibits
            31**SIGNATURES**
            32


2





**BERLINER
      COMMUNICATIONS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**(Amounts
      in thousands)**





**March
                31,**
            
            **June
                30,****2008**
            
            **2007****ASSETS**
            
            
            **(Unaudited**)******CURRENT
                ASSETS**Cash
                and cash equivalents
            
            $
            1,247
            
            $
            2,483Accounts
                receivable, net of allowance for doubtful accountsof
                $261 at June 30, 2007 and $296 at March 31, 2008, respectively
            
            
            40,175
            
            
            22,911Inventories
            
            
            1,010
            
            
            666Deferred
                tax assets - current
            
            
            867
            
            
            336Prepaid
                expenses and other current assets
            
            
            1,110
            
            
            77144,409
            
            
            27,167Property
                and equipment, net
            
            
            3,082
            
            
            2,569Amortizable
                intangible assets, net
            
            
            932
            
            
            960Goodwill
            
            
            2,084
            
            
            2,270Deferred
                tax assets - long-term
            
            
            895
            
            
            950Other
                assets
            
            
            281
            
            
            387Total
                Assets
            
            $
            51,683
            
            $
            34,303**LIABILITIES
                AND STOCKHOLDERS' EQUITY****CURRENT
                LIABILITIES**Accounts
                payable
            
            $
            9,080
            
            $
            7,399Accrued
                liabilities
            
            
            16,078
            
            
            6,588Accrued
                income taxes
            
            
            1,781
            
            
            326Line
                of credit
            
            
            2,593
            
            
            5,537Current
                portion of long-term debt
            
            
            6,706
            
            
            797Current
                portion of capital lease obligations
            
            
            118
            
            
            5236,356
            
            
            20,699Long-term
                debt, net of current portion
            
            
            637
            
            
            5,765Long-term
                capital lease obligations, net of current portion
            
            
            331
            
            
            199Other
                long-term liabilities
            
            
            39
            
            
            694Deferred
                tax liabilities - long-term
            
            
            118
            
            
            39Total
                liabilities
            
            
            37,481
            
            
            27,396**COMMITMENTS****STOCKHOLDERS'
                EQUITY**Common
                stock
            
            
            -
            
            
            -Additional
                paid-in capital
            
            
            16,565
            
            
            15,655Accumulated
                deficit
            
            
            (2,363
            )
            
            (8,748
            )Total
                stockholders' equity
            
            
            14,202
            
            
            6,907Total
                liabilities and stockholders' equity
            
            $
            51,683
            
            $
            34,303




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


3


**BERLINER
      COMMUNICATIONS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(Unaudited)**


**(Amounts
      in thousands, except per share data)**




**Three months ended**
            
            **Nine months ended****March 31,**
            
            **March
                31,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Revenues
            
            $
            28,696
            
            $
            15,394
            
            $
            103,971
            
            $
            36,887Costs
                of revenues
            
            
            20,207
            
            
            11,222
            
            
            71,255
            
            
            25,597Gross
                margin
            
            
            8,489
            
            
            4,172
            
            
            32,716
            
            
            11,290Selling,
                general and administrative expenses
            
            
            5,942
            
            
            2,977
            
            
            19,016
            
            
            8,841Depreciation
                and amortization
            
            
            329
            
            
            68
            
            
            841
            
            
            188(Gain)
                loss on sale of fixed assets
            
            
            -
            
            
            (7
            )
            
            8
            
            
            (5
            )Income
                from operations
            
            
            2,218
            
            
            1,134
            
            
            12,851
            
            
            2,266Other
                (income) expenseInterest
                expense
            
            
            263
            
            
            117
            
            
            952
            
            
            167Amortization
                of deferred financing fees and accretion of debt discount
            
            
            355
            
            
            283
            
            
            1,076
            
            
            287Financing
                fees
            
            
            -
            
            
            -
            
            
            36
            
            
            -Interest
                income
            
            
            (24
            )
            
            (20
            )
            
            (50
            )
            
            (28
            )Income
                in equity investments
            
            
            -
            
            
            (4
            )
            
            -
            
            
            (4
            )Other
            
            
            (35
            )
            
            (14
            )
            
            (41
            )
            
            (28
            )Income
                before income taxes
            
            
            1,659
            
            
            772
            
            
            10,878
            
            
            1,872Income
                tax expense
            
            
            759
            
            
            411
            
            
            4,493
            
            
            920Net
                income allocable to common shareholders
            
            $
            900
            
            $
            361
            
            $
            6,385
            
            $
            952Net
                income per share:Basic
            
            $
            0.05
            
            $
            0.02
            
            $
            0.37
            
            $
            0.06Diluted
            
            $
            0.04
            
            $
            0.02
            
            $
            0.27
            
            $
            0.05Weighted
                average number of shares outstanding:Basic
            
            
            17,358
            
            
            17,035
            
            
            17,174
            
            
            17,035Diluted
            
            
            27,579
            
            
            19,927
            
            
            27,176
            
            
            17,673





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


4





**BERLINER
      COMMUNICATIONS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(Amounts
      in thousands)**


**(Unaudited)**





**Nine months ended****March 31,****2008**
            
            **2007**Cash
                flows from operating activities:Net
                income
            
            $
            6,385
            
            $
            952Adjustments
                to reconcile net income to net cash (used in) provided by operating
                activities:Depreciation
                and amortization
            
            
            841
            
            
            278Amortization
                of deferred financing fees
            
            
            285
            
            
            -Bad
                debt expense
            
            
            35
            
            
            90Stock-based
                compensation
            
            
            117
            
            
            199Gain
                on sale of fixed assets
            
            
            8
            
            
            -Accretion
                of debt discount associated with warrants
            
            
            766
            
            
            213Financing
                fees
            
            
            26
            
            
            -Deferred
                tax assets, net
            
            
            (397
            )
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (17,299
            )
            
            (3,038
            )Inventories
            
            
            (307
            )
            
            (87
            )Prepaid
                expenses and other current assets
            
            
            (1
            )
            
            (126
            )Other
                assets
            
            
            108
            
            
            44Accounts
                payable
            
            
            1,679
            
            
            (1,313
            )Accrued
                liabilities
            
            
            9,513
            
            
            2,680Accrued
                income taxes
            
            
            1,455
            
            
            228**Net
                cash provided by operating activities**
            
            
            3,214
            
            
            120Cash
                flows from investing activities:Purchases
                of property and equipment
            
            
            (873
            )
            
            (254
            )Proceeds
                from the sale of property and equipment
            
            
            12
            
            
            -Acquisition
                of Digitcom
            
            
            -
            
            
            (2,000
            )Acquisition
                of Comtech
            
            
            (39
            )
            
            (98
            )**Net
                cash used in investing activities**
            
            
            (900
            )
            
            (2,352
            )Cash
                flows from financing activities:Proceeds
                from line of credit
            
            
            89,707
            
            
            3,923Proceeds
                from long-term debt
            
            
            -
            
            
            6,000Repayment
                of line of credit
            
            
            (92,651
            )
            
            (5,034
            )Repayment
                of long-term debt
            
            
            (626
            )
            
            (368
            )Repayment
                of capital leases
            
            
            (54
            )
            
            (11
            )Proceeds
                from exercise of stock options
            
            
            74
            
            
            -Debt
                issuance costs
            
            
            -
            
            
            (598
            )**Net
                cash (used in) provided by financing activities**
            
            
            (3,550
            )
            
            3,912Net
                increase (decrease) in cash and cash equivalents
            
            
            (1,236
            )
            
            1,680Cash
                and cash equivalents at beginning of period
            
            
            2,483
            
            
            534Cash
                and cash equivalents at end of period
            
            $
            1,247
            
            $
            2,214




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


5


**BERLINER
      COMMUNICATIONS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(Amounts
      in thousands)**


**(Unaudited)**





**Nine
                months ended****March
                31,****2008**
            
            **2007****Supplemental
                cash flow information:**Interest
                paid
            
            $
            582
            
            $
            150Income
                taxes paid
            
            $
            3,421
            
            $
            564**Non-cash
                investing and financing activities:**Assets
                purchased under capital leases
            
            $
            272
            
            $
            20Purchase
                of vehicles financed with notes payable
            
            $
            -
            
            $
            21Fair
                value of warrants issued with debt
            
            $
            -
            
            $
            2,337Note
                payable issued in connection with the acquisition of Digitcom
            
            $
            -
            
            $
            1,750




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


6


**BERLINER
        COMMUNICATIONS, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS' EQUITY**
 **(Amounts
        in thousands except share and per share data)**
 **(Unaudited)**
  **Common Stock**
              ****
              ****
              ****
              ****
              ****
              ****
              ********
              ****
              **100,000,000 shares authorized**
              ****
              **Additional**
              ****
              ****
              ****
              **Total**
              ********
              ****
              **$0.00002 par value**
              
              **Paid-in**
              ****
              **Accumulated**
              ****
              **Stockholders'**
              ********
              ****
              **Shares**
              ****
              **Amount**
              ****
              **Capital**
              ****
              **Deficit**
              ****
              **Equity**Balance
                  at June 30, 2007
              
              
              17,081,786
              
              $
              -
              
              $
              15,655
              
              $
              (8,748
              )
              $
              6,907Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              116
              
              
              -
              
              
              116Exercise
                  of Warrants
              
              
              748,259
              
              
              -
              
              
              5
              
              
              -
              
              
              5Exercise
                  of Stock Options
              
              
              125,000
              
              
              -
              
              
              69
              
              
              -
              
              
              69Change
                  in conversion price on convertible
                  notes payable
              
              
              -
              
              
              -
              
              
              720
              
              
              -
              
              
              720Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              6,385
              
              
              6,385Balance
                  at March 31, 2008
              
              
              17,955,045
              
              $
              -
              
              $
              16,565
              
              $
              (2,363
              )
              $
              14,202
 
 *The
        accompanying notes are an integral part of these financial
        statements.*


7




BERLINER
      COMMUNICATIONS, INC. AND
      SUBSIDIARIES


NOTES
      TO CONSOLIDATED FINANCIAL
      STATEMENTS


(Amounts
      in thousands except for share and per
      share data)




**1.**  **Business**





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





On
      February 18, 2005, Novo entered into an asset purchase agreement with the former
      Berliner Communications, Inc. (“Old Berliner”) and BCI Communications, Inc.
      (“BCI”), a Delaware corporation and our wholly-owned subsidiary, whereby BCI
      acquired (the “Acquisition”) the operations and substantially all of the assets
      and liabilities of Old Berliner. In September 2005, Novo changed its name to
      Berliner Communications, Inc.





Since
      the
      Acquisition was settled through the issuance of a controlling interest in Novo’s
      common stock, Old Berliner was deemed to be the acquirer for accounting
      purposes. Furthermore, since Novo was deemed to be a shell company prior to
      the
      Acquisition, purchase accounting was not applied. Therefore, the transaction
      was
      accounted for as a reverse acquisition and recapitalization of Old Berliner.





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





On
      February 19, 2007, we acquired substantially all of the assets of Comtech
      Systems, Inc. ("Comtech"). On February 28, 2007, we entered into an Asset
      Purchase Agreement (the “Digitcom Asset Purchase Agreement”) with Digital
      Communication Services, Inc. (“Digitcom”) and its affiliates for the purchase of
      certain of its assets in Arlington, Texas. This acquisition expanded our
      presence in Texas and the Southeast markets. On April 16, 2007, we entered
      into
      an Asset Purchase Agreement with Radian Communication Services, Inc. (“Radian”)
      to purchase certain of the U.S. assets and operations of Radian and assume
      certain liabilities of Radian (the “Wireless Operations of Radian”). This
      acquisition has expanded our presence in the Los Angeles, California, Las Vegas,
      Nevada, Seattle, Washington, Salem, Oregon and Tempe, Arizona markets.





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





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





**2.**  **Basis of Presentation**





The
      accompanying unaudited consolidated financial statements as of March 31, 2008,
      and for the three and nine months ended March 31, 2008, and 2007, respectively,
      have been prepared by us pursuant to the interim financial statements rules
      and
      regulations of the United States Securities and Exchange Commission (“SEC”). In
      our opinion, the accompanying unaudited consolidated financial statements
      include all adjustments necessary to present fairly the results of our
      operations and cash flows at the dates and for the periods indicated. The
      results of operations for the interim periods are not necessarily indicative
      of
      the results for the full fiscal year. The accompanying unaudited consolidated
      financial statements should be read in conjunction with the audited consolidated
      financial statements included in our Annual Report on Form 10-K for the fiscal
      year ended June 30, 2007.




**3.**  **Accounting
      Policies**




*Use
      of Estimates.*





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires us to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosures of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Some of the more significant estimates being made include
      the
      allowance for doubtful accounts and percentage of completion of construction
      projects. Actual results could differ from those estimates.


8





*Revenue
      Recognition.*





Revenue
      from radio frequency and network design and engineering, infrastructure
      equipment construction and installation, radio transmission base station
      modifications and project management services is recognized as work is
      performed. Revenue from real estate acquisition and zoning services is
      recognized under the percentage-of-completion method of accounting based on
      output measures using contract milestones as the base. Revenue from
      infrastructure equipment construction and installation contracts, which are
      generally completed within 90 days, is recorded under the
      percentage-of-completion method based on the estimated percentage that total
      direct costs incurred to date bear to estimated total costs at completion.
      Losses are recognized when such losses become known.





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





*Risks
      and Uncertainties.*





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





*Income
      Per Share* .




We
      calculate earnings per share in accordance with Statement of Financial
      Accounting Standards No. 128, *Earnings
      Per Share* (“EPS”)
      (“SFAS 128”). SFAS 128 requires dual presentation of basic EPS and diluted EPS
      on the face of the income statement for all entities with complex capital
      structures. Basic EPS is computed as net income divided by the weighted average
      number of common shares outstanding for the period. Diluted EPS reflects the
      potential dilution that could occur from common shares issuable through stock
      options, warrants and convertible debentures.




The
      weighted number of common shares utilized in the earnings per share computation
      for the three months ended March 31, 2008 and 2007 was 17,357,655 and
      17,035,357 **,** **** respectively.
      The weighted average number of common shares utilized in the earnings per share
      computation for the nine months ended March 31, 2008 and 2007 was 17,173,742
      and
      17,035,357, respectively.





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




(Amounts
      in thousands, except for per share
      data)




**Three
                months ended**
            
            **Nine
                months ended****March
                31,**
            
            **March
                31,****2008**
            
            
            **2007**
            
            
            **2008**
            
            
            **2007****Basic
                earnings per share:**Numerator:Net
                income allocable to common shareholders
            
            $
            900
            
            $
            361
            
            $
            6,385
            
            $
            952Denominator:Weighted
                average common shares outstanding
            
            
            17,358
            
            
            17,035
            
            
            17,174
            
            
            17,035Net
                income per share - basic
            
            $
            0.05
            
            $
            0.02
            
            $
            0.37
            
            $
            0.06





9




(Amounts
      in thousands, except for per share
      data)


**Three
                months ended**
            
            **Nine
                months ended****March
                31,**
            
            **March
                31,****2008**
            
            **2007**
            
            **2008**
            
            **2007****Diluted
                earnings per share:**Numerator:Net
                income allocable to common shareholders
            
            $
            900
            
            $
            361
            
            $
            6,385
            
            $
            952Plus:
                Interest expense on convertible debt net of income taxes
            
            
            261
            
            
            -
            
            
            835
            
            
            -Net
                income allocable to common shareholders
            
            
            1,161
            
            
            361
            
            
            7,220
            
            
            952Denominator:Weighted
                average common shares outstanding
            
            
            17,358
            
            
            17,035
            
            
            17,174
            
            
            17,035Effect
                of dilutive securities:Stock
                options
            
            
            799
            
            
            640
            
            
            581
            
            
            536Warrants
            
            
            3,422
            
            
            2,252
            
            
            3,421
            
            
            102Convertible
                debt
            
            
            6,000
            
            
            -
            
            
            6,000
            
            
            -Weighted
                average common shares outstanding assuming dilution
            
            
            27,579
            
            
            19,926
            
            
            27,176
            
            
            17,673Net
                income per share - diluted
            
            **$**
            0.04
            
            **$**
            0.02
            
            **$**
            0.27
            
            **$**
            0.05





Common
      share equivalents consist of stock options and warrants (for which we used
      the
      treasury stock method) and convertible notes payable (for which we used the
“if
      converted” method). For the three months ended March 31, 2008 and 2007, 4,000
      and 22,026 stock options, respectively, and 0 and 5,454,545 shares convertible
      upon conversion of our 7% Senior Subordinated Secured Convertible Notes (the
“
7% Notes”), respectively, were excluded from the computation of diluted net
      income per share because, in the case of the stock options, the exercise price
      of these were greater than the average market price of the Company’s common
      stock during the period, and, in the case of the 7% Notes, the incremental
      per
      share increase was greater than the basic earnings per share, and therefore
      the
      effect is antidilutive.





For
      the
      nine months ended March 31, 2008 and 2007, 15,190 and 328,026 stock options,
      respectively, and 0 and 5,454,545 shares convertible upon conversion of our
      7%
      Notes, respectively, were excluded from the computation of diluted net income
      per share because, in the case of the stock options, the exercise price of
      these
      were greater than the average market price of the Company’s common stock during
      the period, and, in the case of the 7% Notes, the incremental per share increase
      was greater than the basic earnings per share, and therefore the effect is
      antidilutive.




*Stock-based
      Compensation.*




We
      elected to adopt Statement of Financial Accounting Standard No. 123 (revised
      2004), *Share
      Based Payment* (“SFAS
      123R”) using a modified prospective application, whereby the provisions of the
      SFAS 123R applied going forward only from the date of adoption to new (issued
      subsequent to July 1, 2005) stock option awards, and for the portion of any
      previously issued and outstanding stock option awards for which the requisite
      service is rendered after the date of adoption. All of our previously issued
      options had fully vested prior to July 1, 2005.





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




We
      use
      the Black-Scholes option-pricing model to measure fair value. This is the same
      method we used in prior years for disclosure purposes.


10




*Recently
      Issued Accounting Pronouncements.*




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





We
      adopted FIN 48 on July 1, 2007. On that date, we had no uncertain tax positions.
      The cumulative effect of applying this interpretation did not result in any
      adjustment to retained earnings as of July 1, 2007. We recognize interest,
      if
      any, as interest expense, and penalties, if any, as a component of selling,
      general and administrative expense in our consolidated financial statements.
      We
      file a consolidated U.S. federal income tax return as well as income tax returns
      for several state jurisdictions, of which New Jersey is the most significant.
      We
      currently do not have any income tax returns which are under audit. Income
      tax
      returns remain open for examination under U.S. and state statutes for years
      ended June 30, 2004 and thereafter.





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157, *Fair
      Value Measurements* (“SFAS
      157”) which is intended to increase consistency and comparability in fair value
      measurements by defining fair value, establishing a framework for measuring
      fair
      value and expanding disclosures about fair value measurements. SFAS 157 is
      effective for financial statements issued for the fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. The Company
      is
      in the process of evaluating this guidance and therefore has not yet determined
      the impact that SFAS 157 will have on its consolidated financial statements
      upon
      adoption.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      159 *,
      The
      Fair Value Option for Financial Assets and Financial
      Liabilities* (“SFAS
      159”). This statement permits companies to choose to measure many financial
      assets and liabilities at fair value. Unrealized gains and losses on items
      for
      which the fair value option has been elected are reported in earnings. SFAS
      159
      is effective for fiscal years beginning after November 15, 2007. The Company
      is
      currently assessing the impact of SFAS 159 on its consolidated financial
      statements upon adoption.





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





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


11





**4.**  **Accounts
      Receivable and Concentration of Credit Risk**





Accounts
      receivable at March 31, 2008, and June 30, 2007, consist of the
      following:







**March
                31,**
            
            **June
                30,****2008**
            
            **2007**Accounts
                receivable
            
            $
            26,680
            
            $
            17,727Unbilled
                receivables
            
            
            13,791
            
            
            5,44540,471
            
            
            23,172Allowance
                for doubtful accounts
            
            
            (296
            )
            
            (261
            )Total
            
            $
            40,175
            
            $
            22,911





Unbilled
      receivables principally represent the value of services rendered to customers
      not billed as of the balance sheet date. Unbilled receivables are generally
      billed within three months subsequent to the provision of the services. Unbilled
      receivables include deferred revenue which represent amounts that have been
      billed to customers as of the balance sheet date but for which the requisite
      services have not yet been rendered. The total amount of deferred revenue
      included in unbilled receivables was $1.5 million and $1.0 million at March
      31,
      2008 and June 30, 2007, respectively.





For
      the
      three months ended March 31, 2008, we derived 80% of our total revenue from
      our
      two largest customers, and these customers represented 76% of our accounts
      receivable. Of those customers, both of them individually represented greater
      than 5% **** of
      net
      revenue, and one of them represented greater than 74% of net revenue for the
      period. For the three months ended March 31, 2007, we derived 93% of our total
      revenue from our three largest customers. Of those customers, one of them
      individually represented 82% **** of
      net
      revenue for the period.





For
      the
      nine months ended March 31, 2008, we derived 87% of our total revenue from
      two
      of our largest customers, and these customers represented 76% of our accounts
      receivable. Of those customers, one represented greater than 5% of net revenue
      and one represented greater than 81% of net revenue for the period. For the
      nine
      months ended March 31, 2007, we derived 90% of our total revenue from our three
      largest customers. Of those customers, one of them represented greater than
      10%
      of net revenue for the period.





**5.**  **Inventories**





Inventories
      totaled approximately $1.0 million and $0.7 million as of March 31, 2008, and
      June 30, 2007, respectively. Inventories consist mainly of parts and raw
      materials, and are stated at the lower of cost or market value. Cost is
      determined using the first-in, first-out method.








**6.** **Non-Current
          Assets**





On
      February 28, 2007 (the “Digitcom Closing Date”), BCI entered into an Asset
      Purchase Agreement (the “Digitcom Asset Purchase Agreement”) with Digital
      Communication Services, Inc., a Texas corporation (“Digitcom”), J&J Leasing
      Partnership, a Texas general partnership (“J&J”), and the shareholders of
      Digitcom for the purchase of certain assets, excluding cash and receivables,
      of
      Digitcom and property of J&J.





The
      transaction was recorded as a purchase of a business that included real estate,
      vehicles, equipment and inventory. The allocation of the purchase price was
      preliminary until such time as management was able to review all of the assets
      acquired and determine the appropriate allocation based upon independent
      appraisals. We have concluded our review and have determined the final
      allocation of the purchase price. The schedule below details the original
      allocation and the final allocation:


12





**Original**
            
            **Final**Land
                and building
            
            $
            402
            
            $
            402Vehicles
                and equipment
            
            
            357
            
            
            357Inventory
            
            
            325
            
            
            325Customer
                relationships
            
            
            544
            
            
            1,040Covenants
                not to compete
            
            
            523
            
            
            253Goodwill
            
            
            1,840
            
            
            1,614$
            3,991
            
            $
            3,991





Non-current
      assets include amortizable intangible assets consisting of customer
      relationships and covenants not to compete. These assets, together with
      goodwill, were the result of the allocation of the purchase price for the
      Digitcom and Radian acquisitions. Amortization expense related to amortizable
      intangible assets was $0.1 million and $0 for the three months ended March
      31,
      2008 and 2007, respectively, and $0.3 million and $0 for the nine months ended
      March 31, 2008 and 2007, respectively.





Intangible
      assets subject to amortization are amortized based upon the assets’ estimated
      useful lives. Customer relationships have estimated useful lives of 70 months
      and covenants not to compete have estimated useful lives of approximately 45
      months. We have increased the useful life of customer relationships from 45
      months to 70 months based upon our estimate of the useful lives of the customer
      relationships.





**7.** **Accrued
          Liabilities**




Accrued
      liabilities at March 31, 2008, and June 30, 2007, consist of the
      following:





**March
                31,**
            
            **June
                30,****2008**
            
            **2007**Employee
                compensation
            
            $
            2,463
            
            $
            874Construction
                costs
            
            
            12,635
            
            
            5,018Other
            
            
            980
            
            
            696$
            16,078
            
            $
            6,588








Included
      in other accrued liabilities is a $0.8 million liability for state sales tax.
      In
      January 2007, we received an informal notice of assessment in the amount of
      $1.8
      million from a state department of revenue, including unpaid taxes, penalties
      and interest for the years 1998 to 2004. We had previously recorded $0.6 million
      in the year ended June 30, 2007 and $0.1 million in the quarter ended December
      31, 2007 related to these  taxes. In May 2008, we received a revised
      proposed assessment for $0.8 million and now
      expect to resolve this matter for that amount. Accordingly,
      we increased our estimated reserve for the
      quarter ended March 31, 2008 by $0.1 million to $0.8 million.




**8.**  **Income
      Taxes**




We
      recorded income tax expense of $0.8 million and $0.4 million for the three
      months ended March 31, 2008 and 2007, respectively. We recorded income tax
      expense of $4.5 million and $0.9 million for the nine months ended March 31,
      2008 and 2007, respectively. The company recorded an additional $0.2 million
      of
      federal income tax during the three months ended March 31, 2008 related to
      a
      true-up of the fiscal 2007 tax accrual.




For
      the
      three and nine months ended March 31, 2008 and 2007, the income tax expense
      was
      calculated as follows:


13




**Three
                months ended**
            
            **Nine
                months ended****March
                31,**
            
            **March
                31,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Federal
                Income Tax expense
            
            **$**
            701
            
            **$**
            350
            
            **$**
            4,087
            
            **$**
            780State
                Income Tax expense
            
            
            158
            
            
            61
            
            
            1,149
            
            
            140Total
                current income tax provision
            
            
            859
            
            
            411
            
            
            5,236
            
            
            920Change
                in deferred tax assets:Federal
            
            
            (84
            )
            
            -
            
            
            (589
            )
            
            -State
            
            
            (16
            )
            
            -
            
            
            (154
            )
            
            -Total
                increase in deferred tax assets
            
            
            (100
            )
            
            -
            
            
            (743
            )
            
            -Current
                income tax expense
            
            $
            759
            
            $
            411
            
            $
            4,493
            
            $
            920




**9.**  **Line
      of Credit**




***Presidential
      Financial Corporation of Delaware Valley Facility***





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




***PNC
      Bank, National Association Facility***





On
      April
      17, 2008, our wholly owned subsidiary BCI Communications, Inc. (“BCI”), as
      borrower, became obligated under a Revolving Credit and Security Agreement
      (the
“PNC Facility”) with PNC Bank, National Association (“PNC”) and such other
      lenders as may thereafter become a party to the PNC Facility (collectively,
      the
“Lenders”). Under the terms of the PNC Facility, BCI is entitled to request that
      the Lenders make revolving advances to BCI from time to time in an amount up
      to
      the lesser of (i) 85% of the value of certain receivables owned by BCI and
      approved by the Lenders as collateral or (ii) a total of $15.0 million. Such
      revolving advances were used by BCI to repay existing indebtedness owed to
      Presidential, and shall be used to make subordinated debt payments to Sigma,
      Sigma Berliner, Operis, and Pacific under the Notes (as described below in
      Note
      10), pay fees and expenses relating to entering into the PNC Facility, provide
      for BCI’s working capital needs and reimburse drawings under letters of credit
      issued by PNC as agent for the Lenders, and assist in the acquisition of
      companies engaged in the same line of business as BCI.




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




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


14


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




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





**10.**  **Long-Term
      Debt**




On
      December 29, 2006, we entered into a Note Purchase Agreement (the “Note Purchase
      Agreement”) with Sigma Opportunity Fund, LLC (“Sigma”) for the issuance and sale
      of a 7% Senior Subordinated Secured Convertible Note due on December 29, 2008,
      in the original principal amount of $3.0 million (the “Sigma Note”) convertible
      at $1.10 per share (subject to adjustment) and a warrant to purchase up to
      1.5
      million shares of our common stock (with a fair value of $0.8 million) with
      a
      strike price of $0.01 (the “Sigma Warrant”).





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





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





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





We
      were
      unable to have the Registration Statement declared effective by the Securities
      and Exchange Commission prior to June 15, 2007. Therefore, pursuant to the
      Note
      Purchase Agreement, we became subject to liquidated damages equal to 2% of
      the
      aggregate purchase price paid by each purchaser for each of the first six months
      that we failed to meet the requirement. On September 27, 2007, we signed a
      Waiver and Amendment to Note Purchase Agreement (the “Waiver”) with the
      noteholders to lower the conversion price of the Notes from $1.10 to $1.00
      per
      share. The reduction in the conversion price resulted in finance charges of
      $0.7
      million, which was reflected in our balance sheet as Other long-term liabilities
      and was subsequently reclassified as Additional paid-in capital. Pursuant to
      the
      Waiver, we have agreed to continue to use our best efforts to register the
      shares underlying the Notes and the associated warrants, and to maintain the
      effectiveness of any registration statement we file with respect to these
      shares.




15




In
      connection with Waiver, the number of common shares issuable upon conversion
      changed as follows:





**Number of shares****Issued to**
            
            **Original**
            
            **Revised**Sigma
                Opportunity Fund, LLC
            
            
            2,727,273
            
            
            3,000,000Pacific
                Asset Partners, LP
            
            
            909,091
            
            
            1,000,000Operis
                Partners I, LLC
            
            
            454,545
            
            
            500,000Sigma
                Berliner, LLC
            
            
            1,363,636
            
            
            1,500,0005,454,545
            
            
            6,000,000





As
      of
      December 29, 2007, all amounts outstanding pursuant to the Notes became current
      liabilities, since the Notes are all payable on December 29, 2008. Therefore,
      as
      of March 31, 2008, we had no long-term debt other than those outstanding
      pursuant to capital leases and the note payable issued related to our
      acquisition of Digitcom. We will make periodic payments of interest throughout
      the lives of the Notes.





In
      connection with the Sigma Note, the Pacific Note, the Operis Note and the Sigma
      Berliner Note (collectively the “Notes”), we recorded debt discounts equal to
      the fair value of the warrants associated with such notes as
      follows:




**Loan****Face**
              
              **Warrants**
              
              **Debt****Amount**
              
              **Issued**
              
              **Discount**Sigma
                  Note
              
              $
              3,000
              
              
              1,500,000
              
              $
              753Pacific
                  Note
              
              
              1,000
              
              
              500,000
              
              
              376Operis
                  Note
              
              
              500
              
              
              250,000
              
              
              188Sigma
                  Berliner Note
              
              
              1,500
              
              
              750,000
              
              
              564$
              6,000
              
              
              3,000,000
              
              $
              1,881





We
      reduced the carrying value of the Notes accordingly with the corresponding
      entries to paid-in capital. We will accrete these amounts over the lives of
      the
      Notes, charging accretion of debt discount whereby the Notes’ balances will
      equal the face amounts at December 29, 2008. If we default on a Note, or a
      Note
      is otherwise accelerated, we will immediately charge the balance remaining
      at
      that time to accretion of debt discount.





The
      Notes
      were each junior to our $8.0 million line of credit with Presidential. On April
      17, 2008, we entered into an Amendment to Note Purchase Agreement and Notes
      and
      Security Agreement Thereunder with Sigma, Pacific, Operis and Sigma Berliner,
      whereby the Note Purchase Agreement, Security Agreement and the Notes were
      amended to reflect the replacement of Presidential by PNC as the lender of
      a
      line of credit senior to the Sigma, Pacific, Operis and SBLLC debt and to raise
      the maximum amount of permissible senior debt to $15.0 million. Also on April
      17, 2008, PNC entered into a Subordination and Inter-Creditor Agreement (the
      “Subordination Agreement”) with Sigma, Pacific, Operis and Sigma Berliner (the
“Subordinated Investors”). Under the terms of the Subordination Agreement, the
      Subordinated Investors agreed to subordinate their security interests in the
      collateral securing each of the Notes, the related UCC-1 financing statements,
      and the obligations and indebtedness of BCI to the Subordinate Investors, up
      to
      $15.0 million in the aggregate, to the security interests of PNC (as agent
      for the Lenders) in the collateral securing the PNC Facility.




**11.**  **Stock-Based
      Compensation**





At
      March
      31, 2008, we sponsored two stock option plans, the 1999 Omnibus Securities
      Plan
      (the “1999 Plan”) and the 2001 Equity Incentive Plan (the “2001 Plan”),
      collectively (the “Plans”). We have elected to account for those Plans under
      SFAS 123R.





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


16





Our
      Board
      of Directors, in the case of executive officer and director grants, and the
      stock plan committee of our Board of Directors, in the case of other grants,
      is
      responsible for determining the type of award, when and to whom awards are
      granted, the number of shares and terms of the awards and the exercise price.
      The options are exercisable for a period not to exceed ten years from the date
      of the grant, unless otherwise approved by the committee. Vesting periods range
      from immediately vesting to vesting annually over four years.





Stock-based
      compensation expense of approximately $38 thousand and $33 thousand was recorded
      during the three months ended March 31, 2008, and 2007, respectively, and $0.1
      million and $0.2 million was recorded during the nine months ended March 31,
      2008 and 2007, respectively. The fair value of each stock option grant is
      estimated on the grant date using the Black-Scholes option-pricing model with
      the following assumptions: dividend yield of 0%; expected volatility of between
      66% and 71% (derived from peer company implied estimated volatility); expected
      term of five to 7.5 years (based on our best estimate since we do not have
      any
      historical data); and risk-free interest rate between 2.58% and 4.97% based
      on
      the yield at the time of grant of a U.S. Treasury security with an equivalent
      remaining term.





The
      following table summarizes share-based award activity under our stock option
      plans:





**2001
                Plan**
            
            **1999
                Plan**
            
            **Non-Plan****Weighted**
            
            
            
            **Weighted**
            
            
            
            **Weighted****Average**
            
            
            
            **Average**
            
            
            
            **Average****Number**
            
            **Exercise**
            
            **Number**
            
            **Exercise**
            
            **Number**
            
            **Exercise****of
                Shares**
            
            **Price**
            
            **of
                Shares**
            
            **Price**
            
            **of
                Shares**
            
            **Price**Balance
                at June 30, 2007
            
            
            16,891
            
            $
            1,387.50
            
            
            1,408,051
            
            $
            3.26
            
            
            18,704
            
            $
            6,786.00Options
                granted at fair value
            
            
            -
            
            
            -
            
            
            334,730
            
            
            1.05
            
            
            -
            
            
            -Options
                exercised
            
            
            -
            
            
            -
            
            
            (125,000
            )
            
            0.55
            
            
            -
            
            
            -Options
                cancelled
            
            
            -
            
            
            1,387.50
            
            
            (210,236
            )
            
            0.59
            
            
            -
            
            
            -Outstanding
                at March 31, 2008
            
            
            16,891
            
            $
            1,387.50
            
            
            1,407,545
            
            $
            3.37
            
            
            18,704
            
            $
            6,786.00Exercisable
                at March 31, 2008
            
            
            16,891
            
            $
            1,387.50
            
            
            712,515
            
            $
            5.57
            
            
            18,704
            
            $
            6,786.00





Nonvested
      options activity:





**2001
                Plan**
            
            **1999
                Plan**
            
            **Non-Plan****Weighted**
            
            **Weighted**
            
            
            
            **Weighted****Average**
            
            **Average**
            
            
            
            **Average****Number**
            
            **Number**
            
            **Exercise**
            
            **Fair**
            
            **Number**
            
            **Exercise****of
                Shares**
            
            **of
                Shares**
            
            **Price**
            
            **Value**
            
            **of
                Shares**
            
            **Price**Balance
                at June 30, 2007
            
            
            -
            
            
            906,625
            
            $
            0.86
            
            $
            0.59
            
            
            -Options
                granted at fair value
            
            
            -
            
            
            334,730
            
            
            1.05
            
            
            0.67
            
            
            -Options
                vested
            
            
            -
            
            
            (355,700
            )
            
            0.69
            
            
            0.52
            
            
            -Options
                cancelled
            
            
            -
            
            
            (190,625
            )
            
            0.57
            
            
            0.37
            
            
            -Outstanding
                at March 31, 2008
            
            
            -
            
            
            695,030
            
            $
            1.13
            
            $
            0.73
            
            
            -





At
      March
      31, 2008, the range of exercise prices, weighted average exercise price and
      weighted average remaining contractual life for options outstanding are as
      follows:


17





**Options
                Outstanding and Exercisable****Weighted****Weighted**
            
            **Average****Number**
            
            
            
            **Average**
            
            **Remaining****of**
            
            
            
            **Exercise**
            
            **Contractual****Option
                Price Range**
            
            **Shares**
            
            **Exercisable**
            
            **Price**
            
            **Life**2001
                Plan
            
            
            
            
            
            
            
            $
            1,387.50
            
            
            16,890
            
            
            16,890
            
            $
            1,387.50
            
            
            2.78
                Years1999
                Plan
            
            $
            0.30
            
            
            to
            
            $
            0.81
            
            
            682,125
            
            
            621,325
            
            $
            0.50
            
            
            8.14
                Years$
            1.01
            
            
            to
            
            $
            1.46
            
            
            721,420
            
            
            87,190
            
            $
            1.30
            
            
            8.86
                Years$
            7.05
            
            
            167
            
            
            167
            
            $
            7.05
            
            
            6.30
                Years$
            8.01
            
            
            250
            
            
            250
            
            $
            8.01
            
            
            5.92
                Years$
            16.50
            
            
            2,417
            
            
            2,417
            
            $
            16.50
            
            
            2.28
                Years$
            3,000.00
            
            
            1,167
            
            
            1,167
            
            $
            3,000.00
            
            
            1.52
                YearsNon-Plan
            
            
            
            
            
            
            
            $
            3,600.00
            
            
            636
            
            
            636
            
            $
            3,600.00
            
            
            1.94
                Years$
            6,900.00
            
            
            18,067
            
            
            18,067
            
            $
            6,900.00
            
            
            2.01
                Years





**12.**  **Related
      Party Transactions**





Pursuant
      to the provisions of the Note Purchase Agreement, so long as the Sigma Note
      remains outstanding or Sigma beneficially owns at least 5% of our outstanding
      common stock, Sigma has the right to nominate one director to our Board of
      Directors. On December 29, 2006, Sigma nominated, and our Board of Directors
      appointed, Thom Waye to serve as a member of our Board of Directors as a Class
      III director, with his term expiring at the 2008 annual meeting. We are
      obligated to use our best efforts to cause Mr. Waye, as well as all reasonably
      suited future designees, to continue to serve on our Board of Directors. During
      the three and nine months ended March 31, 2008, we paid (or accrued to) Sigma
      $53 thousand and $0.2 million, respectively, in interest on the Sigma Note.
      During the three and nine months ended March 31, 2008, we paid Mr. Waye $2
      thousand and $15 thousand, respectively, for his service as a director pursuant
      to our standard non-employee director compensation program. During the three
      months ended March 31, 2007, we paid or accrued to Sigma Advisors $0.1 million
      for expenses associated with the Note. During the nine months ended March 31,
      2007, we also paid a one time fee of $0.1 million for business, finance and
      organizational strategy, advisory, consulting and other services related to
      our
      business for as long as the Note is outstanding.





On
      February 15, 2007, we entered into a Joinder Agreement to the Note Purchase
      Agreement with Sigma Berliner, an affiliate of Sigma and Thom Waye, and issued
      the Sigma Berliner Note and the Sigma Berliner Warrant, on substantially the
      same terms as the Sigma Note and the Sigma Warrant. This transaction was the
      result of Sigma exercising a right that Sigma negotiated as part of the December
      29, 2006 transaction, at a time at which it was not an affiliate of Berliner.
      During the three and nine months ended March 31, 2008, we paid (or accrued
      to)
      Sigma $26 thousand and $0.1 million, respectively, in interest on the Sigma
      Berliner Note.





**13.**  **Legal
      Proceedings**





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




**14.**  **Segment
      Financial Data**




We
      currently report our financial results on the basis of two reportable segments:
      (1) infrastructure construction and technical services and (2) site acquisition
      and zoning. The
      segments are determined in accordance with how management views and evaluates
      our business based on the aggregation criteria as outlined in FASB Statement
      No. 131, “Disclosures about Segments of an Enterprise and Related
      Information.” Operating income, as presented below, is defined as gross margin
      less selling, general and administrative expenses, depreciation and gain (loss)
      on sale of fixed assets. We do not identify or allocate assets, including
      capital expenditures, by operating segment. Accordingly, assets are not reported
      by segment because the information is not available and is not reviewed in
      the
      evaluation of segment performance or in making decisions in the allocation
      of
      resources. Selected
      segment financial information for the three and nine months ended March 31,
      2008, and 2007, is presented below:




18




**Three months ended**
            
            **Nine months ended****March 31,**
            
            **March 31,****2008**
            
            **2007**
            
            **2008**
            
            **2007****(Unaudited)**
            
            **(Unaudited)****Revenue:**Infrastructure
                construction and technical services
            
            $
            21,125
            
            $
            12,621
            
            $
            84,043
            
            $
            29,348Site acquisition
                and zoning
            
            
            7,571
            
            
            2,773
            
            
            19,928
            
            
            7,539Total
            
            $
            28,696
            
            $
            15,394
            
            $
            103,971
            
            $
            36,887**Operating
                income:**Infrastructure
                construction and technical services
            
            $
            1,054
            
            $
            602
            
            $
            10,436
            
            $
            860Site acquisition
                and zoning
            
            
            1,164
            
            
            532
            
            
            2,415
            
            
            1,406Total
            
            $
            2,218
            
            $
            1,134
            
            $
            12,851
            
            $
            2,266




19





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





**Cautionary
      Statement for the Purposes of the “Safe Harbor” Provisions of the Private
      Securities Litigation Reform Act of 1995**




Certain
      information included in this Quarterly Report on Form 10-Q (the “Quarterly
      Report”) and in our other reports, SEC filings, statements and presentations is
      forward-looking within the meaning of the Private Securities Litigation Reform
      Act of 1995, including, but not limited to, statements concerning our
      anticipated operating results, financial resources, growth and expansion and
      the
      ability to obtain new contracts. Such forward-looking information involves
      important risks and uncertainties that could significantly affect actual results
      and cause them to differ materially from expectations expressed herein and
      in
      other reports, SEC filings, statements and presentations. Therefore, this
      Quarterly Report should only be read in context described under “Forward-Looking
      Statements” and “Risk Factors” below.





**Forward-Looking
      Statements**





The
      SEC
      encourages companies to disclose forward-looking information so that investors
      and stockholders can better understand a company’s future prospects and make
      investment decisions. “Forward-looking” statements appear throughout this
      Quarterly Report. We have based these forward-looking statements on our current
      expectations and projections about future events. We have attempted, wherever
      possible, to identify such statements by using words such as “ anticipates,”  “estimates,”  “expects,”
      “projects,” “intends,” “plans,” “believes” and words and terms of similar
      substance in connection with any discussions of future operating or financial
      performance.




The
      important factors listed in Part II, Item 1A of this Quarterly Report and in
      our
      Annual Report on Form 10-K for our fiscal year ended June 30, 2007 (the “Annual
      Report”) under the heading entitled “Risk Factors,” as well as all other
      cautionary language in this Quarterly Report, provide examples of risks,
      uncertainties and events that may cause actual results to differ materially
      from
      the expectations described in these “forward-looking” statements. It is
      important to note that the occurrence of the events described in these
      considerations and elsewhere in this Quarterly Report and our Annual Report
      could have an adverse effect on the business, results of operations or financial
      condition of the entity affected.




Forward-looking
      statements in this Quarterly Report include, without limitation, statements
      concerning:




§
            our
                financial condition and strategic
                direction;


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


§
            the
                potential generation of future revenue;


§
            our
                ability to adequately staff our service
                offerings;


§
            our
                ability to obtain additional
                financing;


§
            our
                growth strategy;


§
            trends
                in the wireless telecommunications
                industry;


§
            our
                expectations for future revenue generation and expense
                reductions;


§
            our
                ability to repay our current indebtedness under our 7% Senior Subordinated
                Secured Convertible Notes when due;


§
            our
                competitive position; and


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





It
      is
      important to note that all of our forward-looking statements are subject to
      a
      number of risks, assumptions and uncertainties, such as (and in no particular
      order):





§
            risks
                related to a concentration of revenue from a small number of
                customers;


§
            risks
                associated with the integration of business
                acquisitions;


§
            risks
                associated with competition in the wireless telecommunications
                industry;


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


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


§
            risks
                that we will not be able to take advantage of new and emerging wireless
                technologies;


§
            risks
                that we will be unable to adequately staff our service
                offerings;


§
            risks
                that we may not have sufficient future revenue to fund our future
                expenses; and


20





§
            risks
                that we may be unable to repay our current indebtedness under our
                7%
                Senior Subordinated Secured Convertible Notes when
                due.





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




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





**Summary
      of Operating Results**





The
      following table presents consolidated selected financial information. The
      statement of operations data for the three and nine months ended March 31,
      2008,
      and 2007, has been derived from our unaudited consolidated financial statements
      that, in the opinion of management, include all adjustments, consisting only
      of
      normal recurring adjustments, necessary to state fairly the data for such
      period. We operate in two
      reportable segments: (1) infrastructure construction and technical services,
      and
      (2) site acquisition and zoning to wireless communications carriers.




All
      amounts presented herein are expressed in thousands, except share and per share
      data, unless otherwise specifically noted.





**Three months ended**
            
            **Nine months ended****March 31,**
            
            **March 31,****2008**
            
            **2007**
            
            **2008**
            
            **2007****Statement
                of Operations Data:**Revenue
            
            $
            28,696
            
            $
            15,394
            
            $
            103,971
            
            $
            36,887Gross
                margin
            
            
            8,489
            
            
            4,172
            
            
            32,716
            
            
            11,290Operating
                income
            
            
            2,218
            
            
            1,134
            
            
            12,851
            
            
            2,266Net
                    income allocable to  common shareholders
            
            
            900
            
            
            361
            
            
            6,385
            
            
            952Net
                income allocable to commonshareholders
                per share:Basic
            
            $
            0.05
            
            $
            0.02
            
            $
            0.37
            
            $
            0.06Diluted
            
            $
            0.04
            
            $
            0.02
            
            $
            0.27
            
            $
            0.05





**March 31,**
            
            **June 30,****2008**
            
            **2007****Balance Sheet Data:**Current
                assets
            
            $
            44,409
            
            $
            27,167Total
                assets
            
            
            51,683
            
            
            34,303Current
                liabilities
            
            
            36,356
            
            
            20,699Long-term
                  debt, net of debt  discount and current portion
            
            
            968
            
            
            5,964Shareholder's
                equity
            
            
            14,202
            
            
            6,907




21





**Three
      months ended March 31, 2008, compared to three months ended March 31,
      2007**





*Revenue*





**Three months ended****March 31,****2008**
            
            **2007**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            21,125
            
            $
            12,621
            
            $
            8,504Site acquisition
                and zoning
            
            
            7,571
            
            
            2,773
            
            
            4,798Total
            
            $
            28,696
            
            $
            15,394
            
            $
            13,302





We
      had
      revenue of $28.7 **** million
      for the three months ended March 31, 2008, versus $15.4 million for the three
      months ended March 31, 2007. This represents an increase of $13.3 million,
      or
      86%. This increase is primarily due to significant growth in our infrastructure
      construction and technical services segment and to significant awards of new
      business from our top customers. In addition, approximately $4.6 million of
      this
      increase is attributable to the acquisitions of Digital Communication Services,
      Inc. (“Digitcom”) and Radian Communication Services, Inc. (“Radian”) that we
      closed in the third and fourth quarters of the fiscal year ended June 30, 2007.




Historically,
      our second fiscal quarter, which is the fourth fiscal quarter for most of our
      customers, is the strongest quarter of our fiscal year in terms of our financial
      performance.  As previously disclosed, we expect that this will also
      be true for fiscal 2008.  We believe that this trend is a result of our
      customers pushing to complete projects by the end of their fiscal years, and
      also to complete outdoor projects before winter weather can impact building
      schedules in northern states.  Therefore, while we have shown
      improved results for the third fiscal quarter of 2008 versus the third fiscal
      quarter of fiscal 2007, as expected, our operating results for the third quarter
      did not match our second quarter of fiscal 2008 results. In addition to this
      seasonal trend, in the fourth quarter of fiscal 2008, our largest customer
      advised us of a slow-down in the implementation of projects we are performing
      for them. This customer has notified us of the cancellation of certain purchase
      orders, and has instructed us to delay the completion of other existing purchase
      orders. Therefore, we expect our financial results, including revenue and
      operating income for the fourth quarter to be lower than our financial results
      for the third quarter of fiscal 2008 as a result of this slow-down.




We
      recognize revenues from contracts from infrastructure construction and technical
      services and site acquisition and zoning on the percentage-of-completion method
      of accounting.




*Cost
      of Revenue*





**Three months ended****March 31,****2008**
            
            **2007**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            15,133
            
            $
            9,383
            
            $
            5,750Site acquisition
                and zoning
            
            
            5,074
            
            
            1,839
            
            
            3,235Total
            
            $
            20,207
            
            $
            11,222
            
            $
            8,985




Our
      cost
      of revenue was $20.2 **** million
      and $11.2 million for the three months ended March 31, 2008 and 2007,
      respectively. This represents an increase of $9.0 million, or 80%, during a
      period when sales increased 86%. These amounts represent 70% and 73% of total
      revenue for the three months ended March 31, 2008 and 2007, respectively. Newly
      acquired regional markets resulting from the Digitcom and Radian acquisitions
      accounted for approximately $3.5 million, or 38% of the increase.




*Gross
      Margin*





Our
      gross
      margin for the three months ended March 31, 2008, was $8.5 million as compared
      to $4.2 **** million
      for the three months ended March 31, 2007. Our gross margin as a percentage
      of
      revenue was approximately 30% for the three months ended March 31, 2008, as
      compared to 27% for the three months ended March 31, 2007.




22




*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses for the three months ended March 31, 2008
      was $5.9 million as compared to $3.0 million for the three months ended March
      31, 2007. This represents an increase of $2.9 million, or 100% during a period
      when revenues increased 86%. New markets we acquired during the third and fourth
      quarters of fiscal 2007 represent $1.1 million of this increase. Of the
      remaining $1.8 million increase related to existing markets: $0.8 million
      represents additional expenses relating to payroll; $0.3 million represents
      additional professional fees, and; $0.2 million represents an increase in
      rent.





*Depreciation
      and Amortization*





Depreciation
      recorded on fixed assets during the three months ended March 31, 2008 totaled
      approximately $0.2 million as compared to $68 thousand for the three months
      ended March 31, 2007. The increase was primarily caused by an increase in
      purchases of property and equipment, including those acquired through the
      acquisitions of Digitcom and Radian. Amortization of intangible assets acquired
      as a result of the abovementioned acquisitions resulted in amortization expense
      of approximately $92 thousand in the three months ended March 31,
      2008.





*Interest
      Expense*





We
      recognized $0.3 million in interest expense during the three months ended March
      31, 2008 as compared to $0.1 million during the three months ended March 31,
      2007. This increase was primarily caused by additional debt incurred related
      to
      our financing transactions with Sigma and the other participating noteholders,
      our issuance of a promissory note as part of the purchase price for our
      acquisition of Digitcom, and our expanded line of credit with
      Presidential.





*Amortization
      of Deferred Financing Fees and Accretion of Debt Discount*





We
      recognized $0.4 million and $0.3 million in amortization of deferred financing
      fees and interest accretion caused by the issuance of warrants related to our
      financing transactions with Sigma and the other participating noteholders during
      the three months ended March 31, 2008 and 2007, respectively.





*Income
      Taxes*




We
      recorded income tax expense of $0.8 million and $0.4 million for the three
      months ended March 31, 2008 and 2007, respectively. The company recorded an
      additional $0.2 million of federal income tax during the three months ended
      March 31, 2008 related to a true-up of the fiscal 2007 tax accrual.




For
      the
      three months ended March 31, 2008 and 2007, the income tax expense was
      calculated as follows:




**Three months ended****March 31,****2008**
            
            **2007**Federal Income Tax expense
            
            **$**
            701
            
            **$**
            350State
                Income Tax expense
            
            
            158
            
            
            61Total
                current income tax provision
            
            
            859
            
            
            411Change
                in deferred tax assets:Federal
            
            
            (84
            )
            
            -State
            
            
            (16
            )
            
            -Total
                increase in deferred tax assets
            
            
            (100
            )
            
            -Current
                income tax expense
            
            $
            759
            
            $
            411




23





At
      June
      30, 2007, we
      had
      net operating loss carryforwards for federal and state income tax purposes
      of
      approximately $1.2 million expiring in 2026, which may be applied against future
      taxable income. We can only utilize approximately $64 thousand per year due
      to
      limitations as a result of the Acquisition. ****





**Nine
      months ended March 31, 2008, compared to nine months ended March 31,
      2007**




*Revenue*





**Nine months ended****March 31,****2008**
            
            **2007**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            84,043
            
            $
            29,348
            
            $
            54,695Site acquisition
                and zoning
            
            
            19,928
            
            
            7,539
            
            
            12,389Total
            
            $
            103,971
            
            $
            36,887
            
            $
            67,084





We
      had
      revenue of $104.0 **** million
      for the nine months ended March 31, 2008, versus $36.9 million for the nine
      months ended March 31, 2007. This represents an increase of $67.1 million,
      or
      182%. This increase is primarily due to significant growth in our infrastructure
      construction and technical services segment and to significant awards of new
      business from our top customers. In addition, approximately $13.2 million of
      this increase is attributable to the acquisitions of Digitcom and Radian that
      we
      closed in the third and fourth quarters of the fiscal year ended June 30, 2007.




*Cost
      of Revenue*




**Nine months ended****March 31,****2008**
            
            **2007**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            57,197
            
            $
            21,031
            
            $
            36,166Site acquisition
                and zoning
            
            
            14,058
            
            
            4,566
            
            
            9,492Total
            
            $
            71,255
            
            $
            25,597
            
            $
            45,658





Our
      cost
      of revenue was $71.3 **** million
      and $25.6 million for the nine months ended March 31, 2008 and 2007,
      respectively. This represents an increase of $45.7 million, or 178%, during
      a
      period when sales increased 182%. These amounts represent 69% of total revenue
      for the both of the nine months ended March 31, 2008 and 2007, respectively.
      Newly acquired regional markets resulting from the Digitcom and Radian
      acquisitions accounted for approximately $10.2 million, or 22% of the
      increase.




*Gross
      Margin*





Our
      gross
      margin for the nine months ended March 31, 2008, was $32.7 million as compared
      to $11.3 **** million
      for the nine months ended March 31, 2007. Our gross margin as a percentage
      of
      revenue was approximately 31% for each of the nine month periods ended March
      31,
      2008 and 2007, respectively.




*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses for the nine months ended March 31, 2008
      were $19.0 million as compared to $8.8 million for the nine months ended March
      31, 2007. This represents an increase of $10.2 million, or 115% during a period
      when revenues increased 182%. New markets we acquired during the third and
      fourth quarters of fiscal 2007 represent $3.6 million of this increase. Of
      the
      remaining $6.6 million increase, representing increases in existing markets:
      $3.7 million represents additional expenses relating to payroll; $0.5 million
      relates to increases in insurance premiums; $0.7 million represents additional
      professional fees, and; $0.4 million represents an increase in
      rent.





*Depreciation
      and Amortization*





Depreciation
      recorded on fixed assets during the nine months ended March 31, 2008 totaled
      approximately $0.6 million as compared to $0.2 million for the nine months
      ended
      March 31, 2007. The increase was primarily caused by an increase in purchases
      of
      property and equipment, including those acquired through the acquisitions of
      Digitcom and Radian. Amortization of intangible assets acquired as a result
      of
      the abovementioned acquisitions resulted in amortization expense of
      approximately $0.3 million in the nine months ended March 31,
      2008.


24





*Interest
      Expense*





We
      recognized $1.0 million in interest expense during the nine months ended March
      31, 2008 as compared to $0.2 million during the nine months ended March 31,
      2007. This increase was primarily caused by additional debt incurred related
      to
      our financing transactions with Sigma and the other participating noteholders,
      our issuance of a promissory note as part of the purchase price for our
      acquisition of Digitcom, and our expanded line of credit with
      Presidential.





*Amortization
      of Deferred Financing Fees and Accretion of Debt Discount*





We
      recognized $1.1 million and $0.3 million in amortization of deferred financing
      fees and interest accretion caused by the issuance of warrants related to our
      financing transactions with Sigma and the other participating noteholders during
      the nine months ended March 31, 2008 and 2007, respectively. The fiscal 2008
      amount is significantly higher than the fiscal 2007 amount because there is
      nine
      months of accretion relating to $6 million in convertible notes in fiscal 2008
      whereas there is only three months on $3 million (the Sigma Note), 57 days
      on
      $1.5 million (the Operis and Pacific Notes) and 44 days on $1.5 million (the
      Sigma Berliner Note).





*Income
      Taxes*




We
      recorded income tax expense of $4.5 million and $0.9 million for the nine months
      ended March 31, 2008 and 2007, respectively. The Company recorded an additional
      $0.2 million of federal income tax during the nine months ended March 31, 2008
      related to a true-up of the fiscal year 2007 tax accrual. For the nine months
      ended March 31, 2008 and 2007, the income tax expense was calculated as
      follows:




**Nine months ended****March 31,****2008**
            
            **2007**Federal Income Tax expense
            
            $
            4,087
            
            $
            780State
                Income Tax expense
            
            
            1,149
            
            
            140Total
                current income tax provision
            
            
            5,236
            
            
            920Change
                in deferred tax assets:Federal
            
            
            (589
            )
            
            -State
            
            
            (154
            )
            
            -Total
                increase in deferred tax assets
            
            
            (743
            )
            
            -Current
                income tax expense
            
            $
            4,493
            
            $
            920





At
      June
      30, 2007, we had net operating loss carryforwards for federal and state income
      tax purposes of approximately $1.2 million expiring in 2026, which may be
      applied against future taxable income. We can only utilize approximately $64
      thousand per year due to limitations as a result of the Acquisition.





**Liquidity
      and Capital Resources**





At
      March
      31, 2008, we had consolidated current assets of approximately
      $44.4 million, including cash and cash equivalents of approximately $1.2
      million and net working capital of approximately $8.1 million.
      Historically, we have funded our operations primarily through operating cash
      flow, the proceeds of private placements of our common stock and borrowings
      under loan arrangements. The principal use of cash during the nine months ended
      March 31, 2008 was to repay part of our line of credit with Presidential and
      to
      fund the increase in accounts receivable, including a significant increase
      in
      unbilled accounts receivable, which increased approximately $17.3  million
      due to increased revenue during the nine months ended March 31, 2008.




25







In
      September 2003, we entered into a revolving credit facility with Presidential
      Financial Corporation of Delaware Valley (the “Presidential Facility”). On April
      3, 2007, we amended the Presidential Facility to, among other things, increase
      the availability under the Presidential Facility to $8.0 million. The balance
      outstanding at March 31, 2008 was $2.6 million. The Presidential Facility
      matured on April 3, 2008 and was extended on a month-to-month basis thereafter
      on the same terms and conditions, except for a .25% increase in monthly service
      fees. In connection with BCI’s entry into the Revolving Credit and Security
      Agreement with PNC (as described below), on April 18, 2008, the Company retired
      the Presidential Facility and satisfied all sums due and payable thereunder.




On
      April
      17, 2008, our wholly owned subsidiary BCI Communications, Inc. (“BCI”), as
      borrower, became obligated under a Revolving Credit and Security Agreement
      (the
“PNC Facility”) with PNC Bank, National Association (“PNC”) and such other
      lenders as thereafter may become a party to the PNC facility (collectively
      the
“Lenders”). Under the terms of the PNC Facility, BCI is entitled to request that
      the Lenders make revolving advances to BCI from time to time in an amount up
      to
      the lesser of (i) 85% of the value of certain receivables owned by BCI and
      approved by the Lenders as collateral or (ii) a total of $15.0 million. Such
      revolving advances were used by BCI to repay existing indebtedness owed to
      Presidential, and shall be used to make subordinated debt payments to Sigma,
      Sigma Berliner, Operis, and Pacific under the Notes, pay fees and expenses
      relating to entering into the PNC Facility, provide for BCI’s working capital
      needs and reimburse drawings under letters of credit issued by PNC, and assist
      in the acquisition of companies engaged in the same line of business as
      BCI.




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




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





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





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





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





The
      Sigma
      Note, the Pacific Note, the Operis Note and the Sigma Berliner Note
      (the  “Notes”)
      were each junior to our $8.0 million line of credit with Presidential. On April
      17, 2008, we entered into an Amendment to Note Purchase Agreement and Notes
      and
      Security Agreement Thereunder with Sigma, Pacific, Operis and Sigma Berliner,
      whereby the Note Purchase Agreement, Security Agreement and the Notes were
      amended to reflect the replacement of Presidential by PNC as the lender of
      a
      line of credit senior to the Sigma, Pacific, Operis and SBLLC debt and to raise
      the maximum amount of permissible senior debt to $15.0 million. Also on April
      17, 2008, PNC entered into a Subordination and Inter-Creditor Agreement (the
      “Subordination Agreement”) with Sigma, Pacific, Operis and Sigma Berliner (the
“Subordinated Investors”). Under the terms of the Subordination Agreement, the
      Subordinated Investors agreed to subordinate their security interests in the
      collateral securing each of the Notes, the related UCC-1 financing statements,
      and the obligations and indebtedness of BCI to the Subordinated Investors,
      up to
      $15.0 million in the aggregate, to the security interests of PNC (as agent
      for the Lenders) in the collateral securing the PNC Facility.




26




We
      will
      make periodic payments of interest throughout the life of the Notes. On
      September 27, 2007, we signed a Waiver and Amendment to Note Purchase Agreement
      (the  “Waiver”)
      with Sigma, Pacific, Operis and Sigma Berliner (the “Noteholders”) to lower the
      conversion price of the Notes from $1.10 to $1.00 per share.





On
      February 28, 2007, in connection with the Asset Purchase Agreement with
      Digitcom, J&J Leasing Partnership and the shareholders of Digitcom for the
      purchase certain of the assets of Digitcom, we issued a promissory note to
      J&J Leasing Partnership (the  “J&J
      Note”) in the amount of $1.75 million. The principal amount and any accrued and
      unpaid interest thereon is due and payable quarterly for a three year period
      ending on March 1, 2010. The outstanding principal amount of the J&J Note
      bears interest at the rate of 8.25% per year. The J&J Note is secured by
      certain land and buildings sold to us by J&J Leasing Partnership. The
      balance outstanding at March 31, 2008 was $1.2 million.





Our
      ability to satisfy our current obligations is dependent upon our cash on hand,
      borrowings under our credit facility with PNC, borrowings under the Notes and
      the operations of BCI. Our current obligations consist of capital expenditures,
      debt service and funding working capital. In addition, we are obligated to
      pay
      off our borrowings under the Notes in December 2008 unless the Noteholders
      elect
      to convert the Notes prior to that time. While we have received indications
      that
      the Noteholders will likely elect to convert the Notes, if they
      ultimately do not we will have to pay off the Notes from our then existing
      credit facility and/or cash from operations. If necessary, we can enter into
      negotiations with the Noteholders to refinance the Notes, but we can not provide
      any assurances that these negotiations would be successful, or completed on
      terms and conditions favorable to us. In the event we do not continue to
      generate positive cash flow, or if we incur unanticipated expenses for
      operations and are unable to acquire additional capital or financing, we will
      likely have to reassess our strategic direction, make significant changes to
      our
      business operations and substantially reduce our expenses until such time as
      we
      achieve positive cash flow. The cancellation and/or deferral of a number of
      projects from our largest customer may have a material impact on our ability
      to
      generate sufficient cash flow in future periods. We anticipate that certain
      cost
      savings strategies will be necessary unless and until our largest customer
      elects to proceed with these cancelled or deferred projects or we have obtained
      orders from other customers sufficient to replace these projects. In fact,
      in
      May 2008 we implemented a plan to reduce our workforce by approximately 10%.
      We
      may need to take additional cost savings measures if future revenues are not
      sufficient to support future operating expenses.




As
      of
      March 31, 2008, our backlog was approximately $52.5  million
      as compared to $30.9 million as of June 30, 2007. In the fourth quarter of
      fiscal 2008, our largest customer notified us to delay completing certain
      purchase orders, and has cancelled other existing purchase orders. While we
      are
      still evaluating the impact of these delays and cancellations, we expect them
      to
      negatively impact our backlog in the fourth quarter of fiscal 2008.




The
      net
      cash provided by (used in) ** operating,
      investing and financing activities for the nine months ended March 31, 2008
      and
      2007, is summarized below:




**Nine
                  months ended**
              ********
              ****
              **March
                  31,**
              ********
              ****
              **2008**
              ****
              **2007**Net
                  cash provided by operating activities
              
              $
              3,214
              
              $
              120Net
                  cash used in investing activities
              
              
              (900
              )
              
              (2,352
              )Net
                  cash (used in) provided by financing activities
              
              
              (3,550
              )
              
              3,912




27




***Cash
      provided by operating activities.***




Net
      cash
      provided by operating activities in the nine months ended March 31, 2008 was
      approximately $3.2 million and $0.1 million in the nine months ended March
      31,
      2007. During the nine months ended March 31, 2008, cash flow provided by
      operating activities primarily resulted from operating income, net of non-cash
      charges, of approximately $8.1 million, which represents an increase of $6.4
      million from the nine months ended March 31, 2007. This increase was primarily
      caused by net income of $6.4 million as compared to $1.0 million, and increases
      in non-cash charges of $0.6 million in depreciation and amortization, $0.3
      million in amortization of deferred financing fees and $0.6 million in accretion
      of interest expense resulting from the issuance of warrants. We also realized
      an
      increase in accounts receivable of approximately $17.3  million
      due to increased revenue during the nine months ended March 31, 2008, and an
      increase in inventories of approximately $0.3 million due to anticipated
      increased usage. These were partly offset by an increase in accounts payable
      of
      approximately $1.7 million and an increase in accrued liabilities of
      approximately $9.5 million. ** In
      the
      nine months ended March 31, 2007, cash provided by operating activities
      primarily resulted from operating income, net of non-cash charges, of
      approximately $1.7 million, an increase in accounts receivable of approximately
      $3.0 million, a decrease in accounts payable of approximately $1.3 million
      and
      an increase in accrued liabilities of approximately $2.7 million.




***Cash
      used in investing activities.***




Net
      cash
      used in investing activities was approximately $0.9 million and $2.4 million
      in
      the nine months ended March 31, 2008 and 2007, respectively. During the nine
      months ended March 31, 2008, cash used in investing activities was primarily
      used for the purchase of fixed assets. During the similar period ended March
      31,
      2007, $0.3 million was used for the purchase of fixed assets and $2.1 million
      was used to acquire Digitcom and Comtech.




***Cash
      (used in) provided by financing activities.***




Net
      cash
      used in financing activities was approximately $3.6 million in the nine months
      ended March 31, 2008 and net cash provided by financing activities was
      approximately $3.9 million in the nine months ended March 31, 2007. During
      the
      nine months ended March 31, 2008, net cash used in financing activities
      consisted of net repayments against our line of credit with Presidential of
      $2.9
      million and repayment of long-term debt related to the Digitcom acquisition
      of
      $0.6 million. During the nine months ended March 31, 2007, net cash provided
      by
      financing activities consisted of payments against our credit facility net
      of
      borrowings of approximately $1.1 million, reductions of other debt obligations
      of approximately $0.4 million, debt issuance costs of approximately $0.6 million
      and proceeds from our 7% convertible notes of $6.0 million.




We
      believe our existing cash, cash equivalents and line of credit will be
      sufficient to meet our cash requirements in the near term, assuming that the
      Noteholders elect to convert their Notes on or before December 29, 2008. Our
      future capital requirements will depend on many factors, including our rate
      of
      revenue growth, the timing and extent of capital expenditures to support our
      contracts and expansion of sales and marketing. We cannot assure that additional
      equity or debt financing will be available on acceptable terms, or at all.
      We
      expect our sources of liquidity beyond twelve months will be our then current
      cash balances, funds from operations, if any, our current PNC credit facility
      and any additional equity or credit facilities we can arrange.


28




**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk**





Not
      applicable.




**Item
      4.**  **Controls
      and Procedures**




Our
      Principal Executive Officer and Principal Financial Officer have evaluated
      the
      effectiveness of our and BCI’s disclosure controls and procedures as defined in
      Rule 13a-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934. Based
      upon that evaluation, such officers have concluded that our disclosure controls
      and procedures are effective, as of the end of the period covered by this
      report, in timely alerting them to material information relating to us
      (including our consolidated subsidiaries) required to be included in this
      Quarterly Report. There have been no significant changes in our internal
      controls over financial reporting or in other factors, which could significantly
      affect such internal controls, subsequent to the date that we carried out our
      evaluation.




**PART
      II: OTHER INFORMATION**




**Item
      1.**  **Legal
      Proceedings**




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




**Item
      1A. Risk Factors**




We
      are
      subject to a variety of risks in addition to the matters set forth under
“Forward Looking Statements,” in Item 2 of Part I, “Management's Discussion and
      Analysis of Financial Condition and Results of Operations” presented above. The
      company has identified a number of risk factors in its Annual Report on Form
      10-K for the year ended June 30, 2007 (the “Annual Report”) that could
      materially affect our business, financial condition or future results. The
      information presented below updates certain risks factors and should be read
      in
      conjunction with the risk factors and information disclosed in the Annual
      Report. The risk factors in our Annual Report and those presented below should
      be considered carefully in evaluating our risk profile.




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





Although
      we had net income during the quarters ended March 31, 2008, December 31 and
      September 30, 2007, and the years ended June 30, 2007 and 2006, we may not
      be
      profitable in future periods, either on a short or long-term basis. To the
      extent that revenue declines or does not grow at anticipated rates, increases
      in
      operating expenses precede or are not subsequently followed by commensurate
      increases in revenue or we are unable to adjust operating expense levels
      accordingly, your investment could be jeopardized.




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





For
      the
      nine months ended March 31, 2008, we derived 87% of our total revenue from
      two
      of our largest customers, and these customers represented 76% of our accounts
      receivable. Of those customers, one represented greater than 5% of net revenue
      and one represented greater than 81% of net revenue for the period. For the
      nine
      months ended March 31, 2007, we derived 90% of our total revenue from our three
      largest customers. Of those customers, one of them represented greater than
      10%
      of net revenue for the period.





We
      believe that a limited number of clients will continue to be the source of
      a
      substantial portion of our revenue for the foreseeable future. Key factors
      in
      maintaining our relationships with such customers include, without limitation,
      our performance on individual contracts and the strength of our professional
      reputation. To the extent that our performance does not meet client
      expectations, or our reputation or relationships with one or more key customers
      are impaired, this could cause a significant decrease in our revenue, which
      would negatively impact our ability to generate income.




29




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





We
      have
      been advised that our largest customer has slowed the implementation of
      initiatives related to projects we are performing for them. This customer has
      notified us of the cancellation of certain purchase orders, and has instructed
      us to delay the completion of other existing purchase orders. We expect this
      loss of revenue to have a material impact on our financial results, including
      our revenue and operating income, for the fourth quarter of fiscal 2008, and
      perhaps future quarters as well, unless and until this customer authorizes
      us to
      resume these projects or we obtain business sufficient to replace this lost
      revenue. We cannot predict when this customer will authorize us to complete
      these delayed purchase orders, or if they will do so at all, or whether we
      could
      replace this lost revenue through new or existing customers. These developments,
      while outside of our control, could materially impair our future operating
      results.





**We
      may not be able to register the shares of common stock issuable
      upon**  **conversion
      of our 7% Senior Subordinated Secured Convertible Notes due on December 29,
      2008
      and**  **exercise
      of certain of our outstanding warrants, which may subject us
      to**  **financial
      penalties.**





The
      Note
      Purchase Agreement we entered into in connection with our financings with Sigma
      Opportunity Fund, LLC (“Sigma”), Pacific Asset Partners, LP (“Pacific”), Operis
      Partners I, LLC (“Operis”) and Sigma Berliner, LLC (collectively the
“Noteholders”) requires that we file and make effective a registration statement
      with the SEC covering shares of common stock issuable upon conversion of each
      of
      the 7% Senior Subordinated Secured Convertible Notes due on December 29, 2008
      (the “Notes”) and exercise of the accompanying warrants (the “Accompanying
      Warrants”). We were required to use our best efforts to have the SEC declare
      this registration statement effective prior to June 15, 2007, and we were unable
      to meet this deadline. Therefore, pursuant to the Note Purchase Agreement,
      we
      became subject to damages equal to 2% of the aggregate purchase price paid
      by
      each Noteholder for each of the first six months that we failed to meet the
      requirement. On September 27, 2007, we signed a Waiver and Amendment to Note
      Purchase Agreement with the Noteholders whereby the Noteholders agreed to waive
      this damages clause in exchange for our agreement to lower the conversion price
      of the Notes from $1.10 to $1.00 per share. Pursuant to this Waiver and
      Amendment to Note Purchase Agreement, we have agreed to continue to use our
      best
      efforts to register the shares underlying the Notes and the associated warrants,
      and to maintain the effectiveness of any registration statement we file with
      respect to these shares. We were able to register only 1,295,047 shares of
      our
      common stock underlying certain of the Accompanying Warrants on a delayed or
      continuing basis (as required under the Note Purchase Agreement), and are
      obligated to register the remaining shares of common stock as we are able to
      in
      the future. If we are unable to meet the registration requirements set forth
      in
      the Waiver and Amended Note Purchase Agreement, we may be subject to additional
      damages.





**We
      may not be able to repay our Noteholders in December 2008.**





If
      the
      Noteholders **** do
      not
      elect to convert their indebtedness under our 7% Senior Subordinated Secured
      Convertible Notes on or before their maturity on December 29, 2008, and if
      we
      are unable to draw sufficient funds under our credit facility, then we may
      be
      unable to repay the full amount of the indebtedness due under these notes on
      the
      maturity date. If we cannot repay the indebtedness when it becomes due, this
      will trigger a default under the agreements with the Noteholders, and a default
      under the terms of our credit facility with PNC, and we will be subject to
      damages. ****





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




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




30




**Item
      2.**  **Unregistered
      Sale of Equity Securities and Use of Proceeds**





None.





**Item
      3.**  **Defaults
      Upon Senior Securities**





None.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders**





None.





**Item
      5.**  **Other
      Information**





None





**Item
      6.**  **Exhibits**





(a)
            Exhibits





31.1
            
            Certification
                of the Principal Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002. *31.2
            
            Certification
                of the Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002. *32.1
            
            Certification
                of our Principal Executive Officer and Principal Financial Officer
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002. *10.1
            
            Revolving
                Credit and Security Agreement, dated April 17, 2008, between BCI
                Communications, Inc. as borrower and PNC Bank, National Association
                as
                lender and agent. (Incorporated by reference to Exhibit 10.1 to a
                Form 8-K
                filed by the Registrant on April 23, 2008).10.2
            
            $15,000,000
                Revolving Credit Note, dated April 17, 2008, between BCI Communications,
                Inc. as borrower and PNC Bank, National Association as lender and
                agent.
                (Incorporated by reference to Exhibit 10.2 to a Form 8-K filed by
                the
                Registrant on April 23, 2008).10.3
            
            Guaranty
                & Suretyship Agreement, dated April 17, 2008, made by Berliner
                Communications, Inc. as guarantor on behalf of BCI Communications,
                Inc.
                and in favor of PNC Bank, National Association. (Incorporated by
                reference
                to Exhibit 10.3 to a Form 8-K filed by the Registrant on April 23,
                2008).10.4
            
            Subordination
                & Intercreditor Agreement, dated April 17, 2008, by and among PNC
                Bank, National Association as agent for the lenders and Sigma Opportunity
                Fund, LLC, Sigma Berliner, LLC, Operis Partners I LLC, and Pacific
                Asset
                Partners as the subordinated investors. (Incorporated by reference
                to
                Exhibit 10.4 to a Form 8-K filed by the Registrant on April 23,
                2008).10.5
            
            Amendment
                to Note Purchase Agreement and Notes and Security Agreement Thereunder,
                dated April 17, 2008, by and among Berliner Communications, Inc.,
                Sigma
                Opportunity Fund, LLC, Sigma Berliner, LLC, Operis Partners I LLC,
                and
                Pacific Asset Partners. (Incorporated by reference to Exhibit 10.5
                to a
                Form 8-K filed by the Registrant on April 23,
                2008).




*
      Filed
      herewith.


31





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, Berliner
      Communications, Inc. has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.





BERLINER COMMUNICATIONS,
                INC.Date:
                May 15, 2008
            By:
            /s/
                Richard B. BerlinerRichard
                B. BerlinerChief
                Executive Officer(Principal
                Executive Officer)Date:
                May 15, 2008
            By:
            /s/
                Raymond A. Cardonne, Jr.Raymond
                A. Cardonne, Jr.Chief
                Financial Officer(Principal
                Financial Officer)




32