##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 (Mark
One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 COMMISSION FILE NUMBER 0-28579
 BERLINER COMMUNICATIONS, INC.
  Delaware
(State or Other Jurisdiction of Incorporation)
    
    75-2233445
(I.R.S. Employer Identification No.)
 20 Bushes Lane
Elmwood Park, New Jersey 07407
 (201) 791-3200
 þ o
  Larger accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
 o þ




---



##### 



BERLINER COMMUNICATIONS, INC.
 QUARTERLY REPORT FORM 10-Q
INDEX
 PAGE NO.PART I: FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of March 31, 2006, and June 30, 2005
    
    
    3Consolidated Statements of Operations for the three and nine months ended
March 31, 2006, and 2005
    
    
    4Consolidated Statements of Cash Flows for the nine months ended
March 31, 2006, and 2005
    
    
    5Consolidated Statements of Stockholders Equity
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    17PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A.Risk Factors
    
    
    17Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults Upon Senior Securities
    
    
    21Item 4. Submission of Matters to a Vote of Securities Holders
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    21SIGNATURES
    
    
    22Certification of Principal Executive Officer Pursuant to Section 302Certification of Principal Financial and Accounting Officer Pursuant to Section 302Certification Pursuant to Section 906




---



##### Table of Contents



BERLINER COMMUNICATIONS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    June 30,2006
    
    
    2005(Unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    647,496
    
    
    $
    402,432Accounts receivable, net of allowance for doubtful
accounts of $149,535 at March 31, 2006 and
$91,572 at June 30, 2005
    
    
    8,983,358
    
    
    
    5,261,311Inventories
    
    
    396,924
    
    
    
    506,615Prepaid expenses and other current assets
    
    
    414,882
    
    
    
    516,84210,442,660
    
    
    
    6,687,200LONG-TERM ASSETSProperty and equipment, net
    
    
    528,349
    
    
    
    469,855Other assets
    
    
    186,890
    
    
    
    359,139$
    11,157,899
    
    
    $
    7,516,194LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESLine of credit
    
    $
    424,509
    
    
    $
    493,824Current portion of long-term debt
    
    
    367,146
    
    
    
    425,964Current portion of capital lease obligations
    
    
    34,099
    
    
    
    39,596Accounts payable
    
    
    3,667,315
    
    
    
    2,209,775Accrued liabilities
    
    
    4,301,795
    
    
    
    2,285,8898,794,864
    
    
    
    5,455,048LONG-TERM LIABILITIESLong-term debt, net of current portion
    
    
    153,684
    
    
    
    243,942Long-term capital lease obligations, net of current portion
    
    
    33,750
    
    
    
    10,068187,434
    
    
    
    254,010COMMITMENTS
    
    
    
    
    
    
    STOCKHOLDERS EQUITYPreferred stock
    
    
    
    
    
    
    79Common stock
    
    
    341
    
    
    
    13Additional paid-in capital
    
    
    12,945,514
    
    
    
    12,922,329Accumulated deficit
    
    
    (10,770,254
    )
    
    
    (11,115,285
    )2,175,601
    
    
    
    1,807,136$
    11,157,899
    
    
    $
    7,516,194
 The accompanying notes are an integral part of these financial statements.
 3




---



##### Table of Contents



BERLINER COMMUNICATIONS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended
    
    
    Nine months endedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    8,546,825
    
    
    $
    3,750,688
    
    
    $
    28,311,613
    
    
    $
    11,614,631Costs of revenues
    
    
    6,482,994
    
    
    
    2,796,207
    
    
    
    21,288,659
    
    
    
    7,474,407Gross margin
    
    
    2,063,831
    
    
    
    954,481
    
    
    
    7,022,954
    
    
    
    4,140,224Selling, general and administrative expenses
    
    
    2,362,232
    
    
    
    1,793,200
    
    
    
    6,647,420
    
    
    
    4,976,914Depreciation
    
    
    62,215
    
    
    
    76,566
    
    
    
    186,260
    
    
    
    238,668(Gain) loss on sale of fixed assets
    
    
    (4,368
    )
    
    
    1,271
    
    
    
    (5,127
    )
    
    
    5,544Income (loss) from operations
    
    
    (356,248
    )
    
    
    (916,556
    )
    
    
    194,401
    
    
    
    (1,080,902
    )Other (income) expenseInterest expense
    
    
    14,673
    
    
    
    10,186
    
    
    
    41,536
    
    
    
    37,885Interest income
    
    
    (3,686
    )
    
    
    (2,712
    )
    
    
    (9,874
    )
    
    
    (3,801
    )Gain on sale of equity of investment, net of losses
    
    
    
    
    
    
    15,791
    
    
    
    (97,995
    )
    
    
    15,791Other
    
    
    (4,798
    )
    
    
    1,086
    
    
    
    (89,797
    )
    
    
    1,086Income (loss) before income taxes
    
    
    (362,437
    )
    
    
    (940,907
    )
    
    
    350,531
    
    
    
    (1,131,863
    )Income tax expense
    
    
    2,450
    
    
    
    6,000
    
    
    
    5,500
    
    
    
    24,000Net income (loss)
    
    $
    (364,887
    )
    
    $
    (946,907
    )
    
    $
    345,031
    
    
    $
    (1,155,863
    )Deemed Series B and D preferred dividends
    
    
    
    
    
    
    
    
    
    
    19,935,779
    
    
    
    Net loss allocable to common shareholders
    
    $
    (364,887
    )
    
    $
    (946,907
    )
    
    $
    (19,590,748
    )
    
    $
    (1,155,863
    )Net loss per share  basic and diluted
    
    $
    (0.02
    )
    
    $
    (2.78
    )
    
    $
    (1.58
    )
    
    $
    (7.36
    )Weighted average number of shares
outstanding  basic and diluted
    
    
    17,034,857
    
    
    
    340,407
    
    
    
    12,375,299
    
    
    
    157,084
 The accompanying notes are an integral part of these financial statements.
 4




---



##### Table of Contents



BERLINER COMMUNICATIONS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine months endedMarch 31,2006
    
    
    2005(Unaudited)
    
    
    (Unaudited)Cash flows from operating activitiesNet income (loss)
    
    $
    345,031
    
    
    $
    (1,155,863
    )Adjustments to reconcile net income (loss)
to net cash provided by operationsDepreciation
    
    
    186,260
    
    
    
    238,668Loss in equity of investments
    
    
    102,005
    
    
    
    15,791Bad debt expense
    
    
    74,186
    
    
    
    45,636Stock based compensation
    
    
    23,434
    
    
    
    Gain on the sale of equity investment
    
    
    (200,000
    )
    
    
    (Gain) loss on sale of fixed assets
    
    
    (5,127
    )
    
    
    5,544Changes in operating assets and liabilities
    
    
    
    
    
    
    Accounts receivable
    
    
    (3,796,669
    )
    
    
    10,622Inventories
    
    
    109,691
    
    
    
    56,049Prepaid expenses and other current assets
    
    
    5,182
    
    
    
    (310,928
    )Other assets
    
    
    169,437
    
    
    
    (8,593
    )Accounts payable
    
    
    1,457,537
    
    
    
    (221,493
    )Accrued liabilities
    
    
    2,010,572
    
    
    
    297,999Net cash provided by (used in) operating
activities
    
    
    481,539
    
    
    
    (1,026,568
    )Cash flow from investing activitiesPurchase of property and equipment
    
    
    (189,806
    )
    
    
    (100,403
    )Proceeds from the sale of property and equipment
    
    
    16,250
    
    
    
    28,396Proceeds from the sale of equity investment
    
    
    200,000
    
    
    
    Net cash provided by (used in) investing activities
    
    
    26,444
    
    
    
    (72,007
    )Cash flows from financing activitiesProceeds from line of credit
    
    
    3,021,301
    
    
    
    1,801,274Proceeds from long-term debt
    
    
    96,779
    
    
    
    185,128Proceeds from loan from stockholder
    
    
    
    
    
    
    101,640Repayment of line of credit
    
    
    (3,092,599
    )
    
    
    (1,750,058
    )Repayment of long-term debt
    
    
    (245,855
    )
    
    
    (332,836
    )Repayment of loan from shareholder
    
    
    
    
    
    
    (101,640
    )Repayment of capital leases
    
    
    (42,545
    )
    
    
    (66,208
    )Net cash (used in) financing activities
    
    
    (262,919
    )
    
    
    (162,700
    )Net increase (decrease) in cash and cash equivalents
    
    
    245,064
    
    
    
    (1,261,275
    )Cash and cash equivalents at beginning of period
    
    
    402,432
    
    
    
    211,162Cash and cash equivalents, acquired
    
    
    
    
    
    
    1,723,408Cash and cash equivalents at end of period
    
    $
    647,496
    
    
    $
    673,295Supplemental disclosure of cash flow informationInterest paid
    
    $
    38,103
    
    
    $
    30,459Income taxes paid
    
    $
    5,500
    
    
    $
    37,845Non-cash investing and financing activitiesCapital leases entered into
    
    $
    60,730
    
    
    $
    
 The accompanying notes are an integral part of these financial statements.
 5




---



##### Table of Contents



BERLINER COMMUNICATIONS, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Preferred Stock
    
    
    Common Stock2,000,000 shares authorized;
    
    
    20,000,000 shares authorized
    
    
    Additional
    
    
    
    
    
    
    Total$0.00002 par value
    
    
    $0.00002 par value
    
    
    Paid-in
    
    
    Accumulated
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Equity(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Balance at June 30, 2005
    
    
    3,927,642
    
    
    $
    79
    
    
    
    666,667
    
    
    $
    13
    
    
    $
    12,922,329
    
    
    $
    (11,115,285
    )
    
    $
    1,807,136Deemed dividend in the conversion of
the Series B and Series D
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,915,843Convertible
Preferred Stock
    
    
    (13,973
    )
    
    
    
    
    
    
    996,788,940
    
    
    
    19,936
    
    
    
    (19,935,779
    )
    
    
    
    
    
    
    Conversion of Series E ConvertiblePreferred Stock
    
    
    (3,913,669
    )
    
    
    (79
    )
    
    
    3,913,668,046
    
    
    
    78,273
    
    
    
    (78,194
    )
    
    
    
    
    
    
    Reverse stock split of one share for
every
300 shares on September 16, 2005
    
    
    
    
    
    
    
    
    
    
    (4,894,088,796
    )
    
    
    (97,881
    )
    
    
    97,881
    
    
    
    
    
    
    
    Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,434
    
    
    
    
    
    
    
    23,434Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    345,031
    
    
    
    345,031Balance at March 31, 2006
    
    
    
    
    
    $
    
    
    
    
    17,034,857
    
    
    $
    341
    
    
    $
    12,945,514
    
    
    $
    (10,770,254
    )
    
    $
    2,175,601
 The accompanying notes are an integral part of these financial statements.
 6




---



##### Table of Contents



BERLINER COMMUNICATIONS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. History and Description of Business
    2. Basis of Presentation
   3. Accounting Policies
 Use of Estimates.
 Revenue Recognition.
 7




---



##### Table of Contents



Risks and Uncertainties.
 Income (Loss) Per Share Earnings Per Share
 ,
 Stock-based Compensation. Share-Based Payment,
 4. Accounts Receivable
  March 31,
    
    
    June 30,2006
    
    
    2005(Unaudited)Accounts receivable
    
    $
    6,289,653
    
    
    $
    4,209,743Unbilled receivables
    
    
    2,843,240
    
    
    
    1,143,1409,132,893
    
    
    
    5,352,883Allowance for doubtful accounts
    
    
    (149,535
    )
    
    
    (91,572
    )Total
    
    $
    8,983,358
    
    
    $
    5,261,311
  8




---



##### Table of Contents



5. Inventories
  6. Accrued Liabilities
  March 31,
    
    
    June 30,2006
    
    
    2005(Unaudited)Employee compensation
    
    $
    384,049
    
    
    $
    192,702Construction costs
    
    
    3,654,964
    
    
    
    1,937,786Other
    
    
    262,782
    
    
    
    155,401$
    4,301,795
    
    
    $
    2,285,889
 7. Revolving Credit Facility
   8. Recapitalization of Berliner Communications
  
    
    To increase the aggregate number of shares that we will have the authority to
issue from 225,000,000 to 6,600,000,000 shares, of which 6,000,000,000 shares will
be shares of Common Stock, and 600,000,000 shares will be shares of Preferred
Stock;
 9




---



##### Table of Contents




    
    To change our name from Novo Networks, Inc. to Berliner Communications, Inc.;
    
    To amend the Certificate of Designation, Preferences and Rights of Series B
Convertible Preferred Stock to reduce the conversion price of the Series B
Convertible Preferred Stock to $0.014018, and thereby increase the number of shares
of Common Stock issuable upon conversion of such shares of the Series B Convertible
Preferred Stock to 321,015,546 (in the quarter ended September 30, 2005, we
recorded a deemed dividend of approximately $6.4 million due to the reduction in
the conversion price that appears on the accompanying Consolidated Statement of
Operations in computing the net loss allocable to common shareholders);
    
    To amend the Certificate of Designation, Preferences and Rights of Series D
Convertible Preferred Stock to reduce the conversion price of the Series D
Convertible Preferred Stock to $0.014018, and thereby increase the number of shares
of Common Stock issuable upon conversion of such shares of the Series D Convertible
Preferred Stock to 675,773,394 (in the quarter ended September 30, 2005, we
recorded a deemed dividend of approximately $13.5 million due to the reduction in
the conversion price that appears on the accompanying Consolidated Statement of
Operations in computing the net loss allocable to common shareholders);
    
    To provide that, upon the filing of the Certificate of Amendment, all shares of
the Series B Convertible Preferred Stock, Series D Convertible Preferred Stock, and
Series E Convertible Preferred Stock will be automatically converted into Common
Stock;
    
    To effect a 1:300 reverse stock split, such that the outstanding shares of
Common Stock and Convertible Preferred Stock will be reclassified and one new share
of Common Stock will be issued for every 300 shares of existing Common Stock (which
has been retroactively reflected in the accompanying Balance Sheet); and
    
    To amend the Certificate of Incorporation, such that, after giving effect to the
reverse stock split, the aggregate number of shares that we will have the authority
to issue is 22,000,000 shares, of which 20,000,000 shares will be shares of Common
Stock, and 2,000,000 shares will be shares of Preferred Stock.
  9. Stock Compensation
   10




---



##### Table of Contents



2001 Plan
    
    
    1999 Plan
    
    
    Non-PlanWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageNumber
    
    
    Exercise
    
    
    Number
    
    
    Exercise
    
    
    Number
    
    
    Exerciseof Shares
    
    
    Price
    
    
    of Shares
    
    
    Price
    
    
    of Shares
    
    
    PriceBalance at June 30, 2005
    
    
    17,924
    
    
    $
    1,387.50
    
    
    
    6,700
    
    
    $
    1,791.00
    
    
    
    18,704
    
    
    $
    6,787.76Options granted at fair value value
    
    
    
    
    
    
    
    
    
    
    510,300
    
    
    $
    0.40
    
    
    
    Options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options cancelled
    
    
    (200
    )
    
    
    
    
    
    
    13,200
    
    
    $
    77.12
    
    
    
    Outstanding at June 30, 2005
    
    
    17,724
    
    
    $
    1,387.50
    
    
    
    503,800
    
    
    $
    21.62
    
    
    
    18,704
    
    
    $
    6,787.76Exercisable at June 30, 2005
    
    
    17,724
    
    
    $
    1,387.50
    
    
    
    211,675
    
    
    $
    50.92
    
    
    
    18,704
    
    
    $
    6,787.76
  Options Outstanding and ExercisableNumber
    
    Number
    
    Weighted
    
    Weightedof
    
    of
    
    Average
    
    AverageOption Price
    
    Options
    
    Shares
    
    Exercise
    
    RemainingRange
    
    
    Outstanding
    
    Exercisable
    
    Price
    
    Contractual Life2001 Plan
    
    $
    1,387.50
    
    
    
    17,724
    
    
    
    17,724
    
    
    $
    1,387.50
    
    
    5.00 years1999 Plan
    
    $
    0.40
    
    
    
    497,300
    
    
    
    205,175
    
    
    $
    0.40
    
    
    9.80 years$
    7.05 to $8.01
    
    
    
    417
    
    
    
    417
    
    
    $
    7.63
    
    
    8.07 years$
    16.50
    
    
    
    4,083
    
    
    
    4,083
    
    
    $
    16.50
    
    
    7.92 years$
    3,000.00 to 8,550.00
    
    
    
    2,000
    
    
    
    2,000
    
    
    $
    5,312.50
    
    
    4.55 yearsNon-Plan
    
    $
    3,600.00 to $6,900.00
    
    
    
    18,704
    
    
    
    18,704
    
    
    $
    6,787.76
    
    
    4.98 years
 10. Related Party Transactions
  11. Legal Proceedings
  
 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
  11




---



##### Table of Contents



Forward-Looking Statements
   
    
    our financial condition and strategic direction;
    
    our future capital requirements and our ability to satisfy our capital needs;
    
    the potential generation of future revenues;
    
    BCIs ability to adequately staff its service offerings;
    
    opportunities for BCI from new and emerging wireless technologies;
    
    our discussions with Presidential, or some other lender, to obtain additional financing;
    
    our growth strategy for BCI;
    
    trends in the wireless telecommunications industry;
    
    key drivers of change in BCIs business;
    
    BCIs position in the wireless telecommunications industry;
    
    BCIs competitive position; and
    
    other statements that contain words like believe, anticipate, expect and similar expressions.
  
    
    risks associated with competition in the wireless telecommunications sector we entered
with the acquisition of the Berliner Assets;
    
    BCIs function as an early stage company;
    
    risk that we may not be able to obtain additional financing from Presidential or any other lender;
    
    risks associated with Old Berliners history of losses;
    
    risks related to a concentration in revenues from a small number of customers;
    
    risks that BCI will not be able to take advantage of new and emerging wireless technologies; and
    
    risks that BCI will be unable to adequately staff its service offerings.
   12




---



##### Table of Contents



Summary of Operating Results
   Three months ended
    
    
    Nine months endedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    8,546,825
    
    
    $
    3,750,688
    
    
    $
    28,311,613
    
    
    $
    11,614,631Costs of revenues
    
    
    6,482,994
    
    
    
    2,796,207
    
    
    
    21,288,659
    
    
    
    7,474,407Gross margin
    
    
    2,063,831
    
    
    
    954,481
    
    
    
    7,022,954
    
    
    
    4,140,224Selling, general and administrative expenses
    
    
    2,362,232
    
    
    
    1,793,200
    
    
    
    6,647,420
    
    
    
    4,976,914Depreciation
    
    
    62,215
    
    
    
    76,566
    
    
    
    186,260
    
    
    
    238,668(Gain) loss on sale of fixed assets
    
    
    (4,368
    )
    
    
    1,271
    
    
    
    (5,127
    )
    
    
    5,544Income (loss) from operations
    
    
    (356,248
    )
    
    
    (916,556
    )
    
    
    194,401
    
    
    
    (1,080,902
    )Other (income) expenseInterest expense
    
    
    14,673
    
    
    
    10,186
    
    
    
    41,536
    
    
    
    37,885Interest income
    
    
    (3,686
    )
    
    
    (2,712
    )
    
    
    (9,874
    )
    
    
    (3,801
    )Gain on sale of equity of investment, net of
losses
    
    
    
    
    
    
    15,791
    
    
    
    (97,995
    )
    
    
    15,791Other
    
    
    (4,798
    )
    
    
    1,086
    
    
    
    (89,797
    )
    
    
    1,086Income (loss) before income taxes
    
    
    (362,437
    )
    
    
    (940,907
    )
    
    
    350,531
    
    
    
    (1,131,863
    )Income tax expense
    
    
    2,450
    
    
    
    6,000
    
    
    
    5,500
    
    
    
    24,000Net income (loss)
    
    $
    (364,887
    )
    
    $
    (946,907
    )
    
    $
    345,031
    
    
    $
    (1,155,863
    )Deemed Series B and D preferred dividends
    
    
    
    
    
    
    
    
    
    
    19,935,779
    
    
    
    Net loss allocable to common shareholders
    
    $
    (364,887
    )
    
    $
    (946,907
    )
    
    $
    (19,590,748
    )
    
    $
    (1,155,863
    )Net loss per share  basic and diluted
    
    $
    (0.02
    )
    
    $
    (2.78
    )
    
    $
    (1.58
    )
    
    $
    (7.36
    )Weighted average number of shares
outstanding  basic and diluted
    
    
    17,034,857
    
    
    
    340,407
    
    
    
    12,375,299
    
    
    
    157,084
 Three months ended March 31, 2006, Compared to Three months ended March 31, 2005
 Since the Acquisition is being accounted for as a recapitalization of Old Berliner, the following
discussion is based upon the operations of us for the three months ended March 31, 2006, and for
the three months ended March 31, 2005. Accordingly, no distinction is made between us, Berliner
Communications and BCI for the purposes of following period- to- period comparison.
 Revenues
 13




---



##### Table of Contents



Costs of Revenues
 Gross Margin.
 Selling, General and Administrative Expenses
  Depreciation
 Loss in Equity Investments
 Income Taxes.
 14




---



##### Table of Contents



Nine months ended March 31, 2006 Compared to Nine months ended March 31, 2005
 Since the Acquisition is being accounted for as a recapitalization of Old Berliner, the following
discussion is
based upon the operations of us for the nine months ended March 31, 2006, as compared to the
historical operations for Old Berliner for the nine months ended March 31, 2005. Accordingly, no
distinction is made between us, Berliner Communications and BCI for the purposes of following
period- to- period comparison.
 Revenues
 Costs of Revenues
 Gross Margin.
 Selling, General and Administrative Expenses
  Depreciation
 Loss in Equity Investments
 15




---



##### Table of Contents



Other Income
 Income Taxes.
 Liquidity and Capital Resources
        16




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  
 PART II: OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 We, in essence, are an early stage company. Therefore, in light of its anticipated significance,
our business prospects are difficult to evaluate.
   
    
    adapt and successfully execute an evolving and unpredictable business model;
    
    attract necessary working capital;
 17




---



##### Table of Contents




    
    establish, train and manage a larger and more productive workforce;
    
    develop meaningful customer and vendor relationships;
    
    provide services that consistently meet customer demands in a rapidly evolving industry;
    
    implement and improve operational, financial and management systems and processes;
    
    respond effectively to competitive developments; and
    
    otherwise manage and adapt to changing operations.
  We may need additional financing, almost immediately, to grow our business.
  We have a history of losses and we anticipate that our combined operations will generate losses in
the short term.
  Since the percentage of our revenues derived from construction-related activities continues to
increase, our gross margins may suffer.
  We generate a substantial portion of our revenues from a limited number of customers, and if our
relationships with such customers were harmed, our business would suffer.
  If we experience delays and/or defaults in customer payments, we could be unable to cover all
expenditures.
  18




---



##### Table of Contents



If we are unable to collect receivables from our smaller customers, our operating results may be
materially harmed.
  New technologies may reduce the demand for our services.
  Further delays in the adoption and deployment of next generation wireless networks could negatively
affect the demand for our services and our ability to grow our revenues.
  We bear the risk of cost overruns in some of our contracts.
  If we guarantee the timely completion or performance standard of a project, we could incur
significant, additional costs.
  The nature of our engineering and construction business exposes us to potential liability claims
and contract disputes that may negatively affect our results of operations.
  19




---



##### Table of Contents



We maintain a workforce based upon current and anticipated workloads. If we do not receive future
contract awards or if these awards are delayed, significant costs may result.
  We may not be able to hire or retain sufficient number of qualified engineers and other employees
to meet our contractual obligations or maintain the quality of our services.
  We are dependent on subcontractors and suppliers.
  Intense competition in the engineering and construction industry could reduce our market share.
  Past and future environmental, safety and health regulations could impose on us significant
additional costs that would negatively affect our operations.
  We are vulnerable to the cyclical nature of the market we serve.
  20




---



##### Table of Contents



We may experience significant fluctuations in our quarterly results as a result of uncertainties
relating to our ability to generate additional revenues, manage expenditures and other factors,
certain of which are outside of our control.
  
    
    financing provided to potential customers;
    
    the commencement, progress, completion or termination of contracts during any particular quarter;
    
    the availability of equipment to deploy new technologies, such as 3G and broadband;
    
    the growth rate of wireless subscribers, which has a direct impact on the rate at which
new cell sites are developed and built; and
    
    telecommunications market conditions and economic generally.
  Because Old Berliner experienced, and we expect to continue to experience, long sales cycles, we
expect to incur significant costs to generate new business and our customer base may not experience
growth commensurate with such costs.
  
 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 (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 and Accounting Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 21




---



##### Table of Contents



SIGNATURES
   Date: May 15, 2006
    
    By:
    
    /s/ Richard B. BerlinerRichard B. BerlinerChief Executive Officer(Principal Executive Officer)Date: May 15, 2006
    
    By:
    
    /s/ Patrick G. MackeyPatrick G. MackeySenior Vice President(Principal Financial and Accounting Officer)
 22