**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**





**FORM
      10-Q**





(Mark
      One)





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


**SECURITIES
      EXCHANGE ACT OF 1934**





**For
      the quarterly period ended September 30, 2007**





**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.)




**20
      Bushes Lane**


**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 x No o





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





Larger
      accelerated filer o  Accelerated filer o  Non-accelerated filer x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act). Yes o
      No x





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





On
      November 13, 2007, 17,081,786 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
                    INFORMATIONItem
                    1.
                Financial
                    StatementsConsolidated
                    Balance Sheets as of September 30, 2007 (Unaudited), and June
                    30,
                    2007
                3Consolidated
                    Statements of Operations for the three months ended September
                    30, 2007 and
                    2006 (Unaudited)
                4Consolidated
                    Statements of Cash Flows for the three months ended September
                    30, 2007 and
                    2006 (Unaudited)
                5Consolidated
                    Statements of Stockholders’ Equity (Unaudited)
                7Notes
                    to Consolidated Financial Statements
                8Item
                    2.
                Management’s
                    Discussion and Analysis of Financial Condition and Results of
                    Operations
                16Item
                    3.
                Quantitative
                    and Qualitative Disclosures About Market Risk
                22Item
                    4.
                Controls
                    and Procedures
                22PART
                    II:
                OTHER
                    INFORMATIONItem
                    1.
                Legal
                    Proceedings
                22Item
                    1A.
                Risk
                    Factors
                22Item
                    2.
                Unregistered
                    Sale of Equity Securities and Use of Proceeds
                24Item
                    3.
                Defaults
                    Upon Senior Securities
                24Item
                    4.
                Submission
                    of Matters to a Vote of Security Holders
                24Item
                    5.
                Other
                    Information
                24Item
                    6.
                Exhibits
                24SIGNATURES
                
                25


2





**BERLINER
                COMMUNICATIONS, INC. AND SUBSIDIARIES****CONSOLIDATED
                BALANCE SHEETS****(Amounts
                in thousands)**


**September
                  30, 2007**
              
              **June
                  30, 2007****(Unaudited)****ASSETS****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              73
              
              $
              2,483Accounts
                  receivable, net of allowance for doubtful accountsof
                  $291 at September 30, 2007 and $261 at June 30, 2007, respectively
              
              
              29,114
              
              
              22,911Inventories
              
              
              881
              
              
              666Deferred
                  tax assets - current
              
              
              508
              
              
              336Prepaid
                  expenses and other current assets
              
              
              802
              
              
              77131,378
              
              
              27,167Property
                  and equipment, net
              
              
              2,643
              
              
              2,569Amortizable
                  intangible assets, net
              
              
              879
              
              
              960Goodwill
              
              
              2,309
              
              
              2,270Deferred
                  tax assets - long-term
              
              
              1,020
              
              
              950Other
                  assets
              
              
              285
              
              
              387Total
                  Assets
              
              $
              38,514
              
              $
              34,303**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              8,944
              
              $
              7,399Accrued
                  liabilities
              
              
              10,996
              
              
              6,588Accrued
                  income taxes
              
              
              140
              
              
              326Line
                  of credit
              
              
              3,689
              
              
              5,537Current
                  portion of long-term debt
              
              
              798
              
              
              797Current
                  portion of capital lease obligations
              
              
              60
              
              
              5224,627
              
              
              20,699Long-term
                  debt, net of current portion
              
              
              5,869
              
              
              5,765Long-term
                  capital lease obligations, net of current portion
              
              
              195
              
              
              199Other
                  long-term liabilities
              
              
              720
              
              
              694Deferred
                  tax liabilities - long-term
              
              
              106
              
              
              39Total
                  liabilities
              
              
              31,517
              
              
              27,396**COMMITMENTS****STOCKHOLDERS'
                  EQUITY**Common
                  stock
              
              
              -
              
              
              -Additional
                  paid-in capital
              
              
              15,706
              
              
              15,655Accumulated
                  deficit
              
              
              (8,709
              )
              
              (8,748
              )Total
                  stockholders' equity
              
              
              6,997
              
              
              6,907Total
                  liabilities and stockholders' equity
              
              $
              38,514
              
              $
              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**
              **September
                30,****2007**
            
            **2006**Revenue
            
            $
            23,142
            
            $
            7,805Costs
                of revenue
            
            
            16,625
            
            
            5,716Gross
                margin
            
            
            6,517
            
            
            2,089Selling,
                general and administrative expenses
            
            
            5,456
            
            
            2,581Depreciation
                and amortization
            
            
            228
            
            
            57Loss
                on sale of fixed assets
            
            
            8
            
            
            3Income
                (loss) from operations
            
            
            825
            
            
            (552
            )Other
                (income) expenseInterest
                expense
            
            
            350
            
            
            29Amortization
                of deferred financing fees andaccretion
                of debt discount
            
            
            373
            
            
            -Financing
                fees
            
            
            36
            
            
            -Interest
                income
            
            
            (9
            )
            
            (5
            )Income
                from equity investments
            
            
            (6
            )
            
            -Other
            
            
            -
            
            
            (14
            )Income
                (loss) before income taxes
            
            
            81
            
            
            (562
            )Income
                tax expense
            
            
            42
            
            
            -Net
                income (loss) allocable to common shareholders
            
            $
            39
            
            $
            (562
            )Net
                income (loss) per share:Basic
            
            $
            0.00
            
            $
            (0.03
            )Diluted
            
            $
            0.00
            
            $
            (0.03
            )Weighted
                average number of shares outstanding:Basic
            
            
            17,082
            
            
            17,035Diluted
            
            
            20,951
            
            
            17,035




*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)**




**Three
                months ended**
              **September
                30,****2007**
            
            **2006**Cash
                flows from operating activities:Net
                income (loss)
            
            $
            39
            
            $
            (562
            )Adjustments
                to reconcile net income (loss) to netcash
                (used in) provided by operating activities:Depreciation
                and amortization
            
            
            326
            
            
            57Bad
                debt expense
            
            
            30
            
            
            20Stock-based
                compensation
            
            
            51
            
            
            121Loss
                on sale of fixed assets
            
            
            8
            
            
            3Accretion
                of interest from warrants
            
            
            275
            
            
            -Financing
                fees
            
            
            26
            
            
            -Deferred
                taxes
            
            
            (175
            )
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (6,233
            )
            
            3,116Inventories
            
            
            (177
            )
            
            6Prepaid
                expenses and other current assets
            
            
            (130
            )
            
            (87
            )Other
                assets
            
            
            102
            
            
            72Accounts
                payable
            
            
            1,546
            
            
            (1,343
            )Accrued
                liabilities
            
            
            4,413
            
            
            (727
            )Accrued
                income taxes
            
            
            (186
            )
            
            (119
            )**Net
                cash (used in) provided by operating activities**
            
            
            (85
            )
            
            557Cash
                flows from investing activities:Purchases
                of property and equipment
            
            
            (261
            )
            
            (16
            )Proceeds
                from the sale of property and equipment
            
            
            12
            
            
            -Acquisition
                of Comtech
            
            
            (39
            )
            
            -**Net
                cash used in investing activities**
            
            
            (288
            )
            
            (16
            )Cash
                flows from financing activities:Proceeds
                from line of credit
            
            
            16,155
            
            
            1,444Repayment
                of line of credit
            
            
            (18,003
            )
            
            (1,921
            )Repayment
                of long-term debt
            
            
            (171
            )
            
            (175
            )Repayment
                of capital leases
            
            
            (18
            )
            
            (10
            )**Net
                cash used in financing activities**
            
            
            (2,037
            )
            
            (662
            )Net
                decrease in cash and cash equivalents
            
            
            (2,410
            )
            
            (121
            )Cash
                and cash equivalents at beginning of period
            
            
            2,483
            
            
            534Cash
                and cash equivalents at end of period
            
            $
            73
            
            $
            413




5




**BERLINER
                COMMUNICATIONS, INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(Amounts
                in thousands)****(Unaudited)**


**Three
                  months ended**
                **September
                  30,****2007**
              
              **2006****Supplemental
                  cash flow information:**Interest
                  paid
              
              $
              160
              
              $
              29Income
                  taxes paid
              
              $
              311
              
              $
              119**Non-cash
                  investing and financing activities:**Assets
                  purchased under capital leases
              
              $
              22
              
              $
              -




*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
            
            
            
            
            
            
            
            
            51
            
            
            
            
            
            51Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            39
            
            
            39Balance
                at September 30, 2007
            
            
            17,081,786
            
            $
            -
            
            $
            15,706
            
            $
            (8,709
            )
            $
            6,997




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





7


**BERLINER
      COMMUNICATIONS, INC.**


**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. On February 28, 2007, BCI entered into an Asset Purchase Agreement
      (the “Digitcom Asset Purchase Agreement”) with Digital Communication Services,
      Inc. (“Digitcom”) and its affiliates for the purchase of certain of its assets
      in Arlington, Texas. This acquisition expanded our presence in Texas and the
      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,
      and
      Seattle, Washington markets, and adds offices in Salem, Oregon, Tempe, Arizona
      and Salt Lake City, Utah.





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





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





The
      accompanying unaudited consolidated financial statements as of September 30,
      2007, and for the three months ended September 30, 2007, and 2006, 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. The Company is
      considering a potential adjustment to the purchase price allocation based on
      a
      review of the value of the customer relationships and covenants not to compete
      acquired from Digitcom.





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 completed contract method of accounting. Revenue associated
      with multiple elements reflect the relative fair value of the services included
      in the contract. 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 on infrastructure equipment construction and
      installation contracts 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.





*Risks
      and Uncertainties.*





Financial
      instruments that potentially subject us to concentrations of credit risk consist
      primarily of accounts receivable. We routinely assess the financial strength
      of
      our customers and do not require collateral or other security to support 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
      (Loss) Per Share* .




We
      calculate earnings (loss) per share in accordance with SFAS No. 128, *Earnings
      Per Share* (“EPS”).
      SFAS No. 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 (loss) 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 September 30, 2007, and 2006, was 17,081,786 and
      17,034,857 **,** **** respectively.





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




**Three
                months ended**
              **September
                30,****2007**
            
            **2006****Basic
                earnings per share:**Numerator:Net
                income (loss) allocable to common shareholders
            
            $
            39
            
            $
            (562
            )Denominator:Weighted
                average common shares outstanding
            
            
            17,082
            
            
            17,035Net
                income (loss) per share - basic
            
            $
            0.00
            
            $
            (0.03
            )





9




**Three
                months ended**
              **September
                30,****2007**
            
            **2006****Diluted
                earnings per share:**Numerator:Net
                income (loss) allocable to common shareholders
            
            $
            39
            
            $
            (562
            )Denominator:Weighted
                average common shares outstanding
            
            
            17,082
            
            
            17,035Effect
                of dilutive securities:Stock
                options
            
            
            500
            
            
            -Warrants
            
            
            3,369
            
            
            -Weighted
                average common shares outstandingassuming
                dilution
            
            
            20,951
            
            
            17,035$
            0.00
            
            $
            (0.03
            )





Common
      share equivalents consist of stock options and warrants using the treasury
      stock
      method and convertible notes payable using the “if converted” method. For the
      three months ended September 30, 2007, 448,651 stock options and 6,000,000
      shares convertible upon conversion of our 7% notes 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
      convertible notes, the incremental per share increase was greater than the
      basic
      earning 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
      Statement 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.




*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 FASF 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 consolidated
      income tax returns for several state jurisdictions, of which New Jersey is
      the
      most significant.





10


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 No. 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 on
      its
      consolidated financial statements upon adoption.




**4.**
            **Accounts
                Receivable**





Accounts
      receivable at September 30, 2007, and June 30, 2007, consist of the
      following:




**September
                30,**
            
            **June
                30,****2007**
            
            **2007**Accounts
                receivable
            
            $
            18,157
            
            $
            17,727Unbilled
                receivables
            
            
            11,248
            
            
            5,44529,405
            
            
            23,172Allowance
                for doubtful accounts
            
            
            (291
            )
            
            (261
            )Total
            
            $
            29,114
            
            $
            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.





For
      the
      three months ended September 30, 2007, we derived 86% of our total revenue
      from
      our two largest customers. Of those customers, both of them individually
      represented greater than 5% **** of
      net
      revenue, and one of them represented greater than 10% of net revenue for the
      period. In the three months ended September 30, 2006, five customers represented
      approximately 90% of our total revenue. Of those customers, three of them
      individually represented greater than 5% **** of
      net
      revenue, and two of them represented greater than 10% of net revenue for the
      period.





**5.**
            **Inventories**





Inventories
      totaled approximately $0.9 million and $0.7 million as of September 30, 2007,
      and June 30, 2007, respectively, which consist mainly of parts and raw
      materials, and are stated at the lower of cost or market. Cost is determined
      using the first-in, first-out method.





**6.**
            **Long-Lived
                Assets**





Long-lived
      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 $81 thousand and $0 for the three months ended September
      30, 2007 and 2006, respectively.





Intangible
      assets subject to amortization are amortized based upon the assets’ estimated
      useful lives. Customer relationships and covenants not to compete have estimated
      useful lives of approximately 3.75 years.




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




Accrued
      liabilities at September 30, 2007, and June 30, 2007, consist of the
      following:




**September
                30,**
            
            **June
                30,****2007**
            
            **2007**Employee
                compensation
            
            $
            1,686
            
            $
            874Construction
                costs
            
            
            8,574
            
            
            5,018Other
            
            
            736
            
            
            696$
            10,996
            
            $
            6,588





11




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




We
      recorded income tax expense of $42 thousand and $0 for the three months ended
      September 30, 2007 and 2006, respectively. For the three months ended September
      30, 2007, the income tax expense was calculated as follows:




Federal
                Income Tax expense
            
            $
            180State
                Income Tax expense
            
            
            37Total
                current income tax provision
            
            
            217Change
                in deferred tax assets:Federal
            
            
            (146
            )State
            
            
            (29
            )Total
                increase in deferred tax assets
            
            
            (175
            )Current
                income tax expense
            
            $
            42




**9.**
            **Revolving
                Credit Facility**




In
      September 2003, we entered into a revolving credit facility with Presidential
      Financial Corporation of Delaware Valley (“Presidential”). On April 3, 2007, we
      amended this facility to, among other things, increase the availability under
      the credit facility to $8.0 million. The credit facility is available for
      working capital, capital expenditures and general corporate purposes. The credit
      facility interest rate is prime plus one and one-half percent (1.5%). In
      addition, we pay .25% per month on the average daily balance. The prime rate
      was
      8.25% at September 30, 2007.





The
      credit facility is secured by substantially all of BCI’s assets and a guarantee
      from Berliner. The balance outstanding at September 30, 2007 and June 30, 2007
      was $3.7 million and $5.5 million, respectively. The revolving credit facility
      has a term of twelve months and currently matures on April 3, 2008, and we
      can
      elect to renew on a month-to-month basis thereafter.





**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.





12


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





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 is reflected in our balance sheet as Other long-term liabilities.
      Pursuant to the Waiver, we have agreed to continue to use our best efforts
      to
      register the shares underlying the Notes and the associated warrants, and to
      maintain the effectiveness of any registration statement we file with respect
      to
      these shares.





In
      connection with the 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 on the books 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 charge the balance remaining
      at that time to accretion of debt discount.





The
      Notes
      are each junior to our existing $8.0 million line of credit with Presidential.
      We will make periodic payments of interest throughout the lives of the
      Notes.





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





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





At
      September 30, 2007, 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.





13




The
      stock
      plan committee of our Board of Directors 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 $51 thousand and $121 thousand was
      recorded during the three months ended September 30, 2007, and 2006,
      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 69% and 71%
      (derived from peer company implied estimated volatility); expected term of
      five
      years (based on our best estimate since we do not have any historical data);
      and
      risk-free interest rate between 4.26% 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
            
            
            -
            
            
            -
            
            
            58,000
            
            
            0.62
            
            
            -
            
            
            -Options
                exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                cancelled
            
            
            -
            
            
            -
            
            
            (44,500
            )
            
            0.40
            
            
            -
            
            
            -Outstanding
                at September 30, 2007
            
            
            16,891
            
            $
            1,387.50
            
            
            1,421,551
            
            $
            3.24
            
            
            18,704
            
            $
            6,786.00Exercisable
                at September 30, 2007
            
            
            16,891
            
            $
            1,387.50
            
            
            637,926
            
            $
            6.07
            
            
            18,704
            
            $
            6,786.00





Nonvested
      options activity:





**2001
                Plan**
            
            **1999
                Plan**
            
            **Non-Plan****Weighted**
            
            **Weighted****Average**
            
            **Average****Number**
            
            **Number**
            
            **Exercise**
            
            **Fair**
            
            **Number****of
                Shares**
            
            **of
                Shares**
            
            **Price**
            
            **Value**
            
            **of
                Shares**Balance
                at June 30, 2007
            
            
            -
            
            
            906,625
            
            $
            0.86
            
            $
            0.59
            
            
            -Options
                granted at fair value
            
            
            -
            
            
            58,000
            
            
            0.62
            
            
            0.60
            
            
            -Options
                vested
            
            
            -
            
            
            (137,500
            )
            
            0.51
            
            
            0.43
            
            
            -Options
                cancelled
            
            
            -
            
            
            (43,500
            )
            
            0.40
            
            
            0.27
            
            
            -Outstanding
                at September 30, 2007
            
            
            -
            
            
            783,625
            
            $
            0.93
            
            $
            0.54
            
            
            -





At
      September 30, 2007, the range of exercise prices, weighted average exercise
      price and weighted average remaining contractual life for options outstanding
      are as follows:





**Options
                Outstanding and Exercisable****Option
                Price Range**
            
            **Number****of**
                **Shares**
            
            **Exercisable**
            
            **Weighted****Average**
              **Exercise**
              **Price**
            
            **Weighted
                        Average Remaining Contractual
                        Life**2001
                Plan
            
            $
            1,387.50
            
            
            16,890
            
            
            16,890
            
            $
            1,387.50
            
            
            3.28
                Years1999
                Plan
            
            $
            0.30
                to $0.81
            
            
            946,400
            
            
            615,275
            
            $
            0.49
            
            
            8.66
                Years$
            1.01
                to $1.46
            
            
            471,151
            
            
            18,651
            
            $
            1.46
            
            
            8.95
                Years$
            7.05
            
            
            167
            
            
            167
            
            $
            7.05
            
            
            6.80
                Years$
            8.01
            
            
            250
            
            
            250
            
            $
            8.01
            
            
            6.42
                Years$
            16.50
            
            
            2,417
            
            
            2,417
            
            $
            16.50
            
            
            2.78
                Years$
            3,000.00
            
            
            1,167
            
            
            1,167
            
            $
            3,000.00
            
            
            2.02
                YearsNon-Plan
            
            $
            3,600.00
            
            
            636
            
            
            636
            
            $
            3,600.00
            
            
            2.44
                Years$
            6,900.00
            
            
            18,067
            
            
            18,067
            
            $
            6,900.00
            
            
            2.51
                Years




14




**12** .  **Concentration
      of Credit Risk**





As
      of and
      for the three months ended September 30, 2007, we derived 86% of our total
      revenue from our two largest customers, and those customers represented 77%
      of
      our accounts receivable. Both of our two largest customers individually
      represented greater than 5% of net revenue, and one of them represented greater
      than 10% of net revenue for the period.





As
      of and
      for the three months ended September 30, 2006, we derived 90% of our total
      revenue from our five largest customers. Of those customers, three of them
      individually represented greater than 5% **** of
      net
      revenue, and two of them represented greater than 10% of net revenue for the
      period.





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





We
      contracted with RBI Real Estate, LLC (“RBI”) for the lease of certain vehicles
      used in our operations. This contract resulted in payments in the three months
      ended September 30, 2007, and 2006, to RBI in an amount equal to $43 thousand
      and $24 thousand, respectively. Our current chief executive officer, a major
      beneficial owner of us, and a former senior executive officer of Old Berliner
      own RBI equally. These contracts terminated during the quarter and we do not
      expect to make any additional payments to RBI.





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 months ended September 30, 2007, we paid (or accrued to) Sigma $53
      thousand in interest on the Sigma Note.





On
      February 15, 2007, we entered into a Joinder Agreement to the Note Purchase
      Agreement with Sigma Berliner, an affiliate of Sigma and Thom Waye, and issued
      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 months ended September 30, 2007, we paid (or accrued to) Sigma
      $26 thousand in interest on the Sigma Berliner Note.





**14.**  **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.




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




We
      currently report our financial results on the basis of two reportable segments:
      (1) infrastructure construction and technical services and (2) real estate
      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 (loss), 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 months ended September 30,
      2007, and 2006, is presented below:




**Three
                Months Ended**
              **September
                30,**
            
            **Increase****2007**
            
            **2006**
            
            **(Decrease)****Revenue:**Infrastructure
                construction and technical services
            
            $
            18,485
            
            $
            5,388
            
            $
            13,097Real
                estate acquisition and zoning
            
            
            4,657
            
            
            2,417
            
            
            2,240Total
            
            $
            23,142
            
            $
            7,805
            
            $
            15,337**Operating
                Income:**Infrastructure
                construction and technical services
            
            $
            965
            
            $
            (837
            )
            $
            1,802Real
                estate acquisition and zoning
            
            
            (140
            )
            
            285
            
            
            (425
            )Total
            
            $
            825
            
            $
            (552
            )
            $
            1,377




15





**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;


·
            opportunities
                for our wholly owned subsidiary, BCI Communications, Inc. (“BCI”) from new
                and emerging wireless technologies;


·
            our
                ability to obtain additional financing;


·
            our
                growth strategy for BCI;


·
            trends
                in the wireless telecommunications
                industry;


·
            key
                drivers of change in BCI’s business;


·
            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
                associated with the integration of recent business
                acquisitions;


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


·
            risks
                associated with competition in the wireless telecommunications
                industry;


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


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


·
            risks
                that 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.




16




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 months ended September 30, 2007,
      and
      2006, 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 business segments: providing (1) infrastructure
      equipment construction and technical services and (2) real estate acquisition
      and zoning services to wireless communications carriers.





**Three
                months ended****September
                30,****2007**
            
            **2006****Statement
                of Operations Data:**Revenue
            
            $
            23,142
            
            $
            7,805Gross
                margin
            
            
            6,517
            
            
            2,089Operating
                income (loss)
            
            
            825
            
            
            (552
            )Net
                income (loss) allocable to common shareholders
            
            
            39
            
            
            (562
            )Net
                income (loss) allocable to common shareholders per share:Basic
            
            $
            0.00
            
            $
            (0.03
            )Diluted
            
            $
            0.00
            
            $
            (0.03
            )




**September
                30,**
            
            **June
                30,****2007**
            
            **2007****Balance
                Sheet Data:**Current
                assets
            
            $
            31,378
            
            $
            27,167Total
                assets
            
            
            38,514
            
            
            34,303Current
                liabilities
            
            
            24,627
            
            
            20,699Long-term
                debt, net of debt discount and current portion
            
            
            5,869
            
            
            5,765Stockholder's
                equity
            
            
            6,997
            
            
            6,907





**Three
      months ended September 30, 2007, Compared to Three months ended September 30,
      2006**





***Revenue***




**Three
                Months Ended September 30,****2007**
            
            **2006**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            18,485
            
            $
            5,388
            
            $
            13,097Real
                estate acquisition and zoning services
            
            
            4,657
            
            
            2,417
            
            
            2,240Total
            
            $
            23,142
            
            $
            7,805
            
            $
            15,337




We
      had revenue of $23.1****million
      for the three months ended September 30, 2007, versus $7.8 million for the
      three
      months ended September 30, 2006. This represents an increase of $15.3 million,
      or 197%. 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 $3.8
      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.




17




Revenue
      from infrastructure construction and technical services increased $13.1 million,
      or 243% for the three months ended September 30, 2007 as compared to the three
      months ended September 30, 2006 and accounted for approximately 80% and 69%
      of
      total revenue for those periods, respectively. Newly acquired regional markets
      resulting from the Digitcom and Radian acquisitions accounted for approximately
      $3.0 million, or 23% of the increase. The balance of the increase is primarily
      due to significant new awards of business from our largest
      customers.




Revenue
      from real estate acquisition and zoning segment increased $2.2 million, or
      93%
      for the three months ended September 30, 2007 as compared to the three months
      ended September 30, 2006, and accounted for approximately 20% and 31% of total
      revenue for those periods, respectively. Newly acquired regional markets
      resulting from the Digitcom and Radian acquisitions accounted for approximately
      $0.8 million, or 35% of the increase. Most of the remaining increase resulted
      from increased activity with our largest customers.




We
      recognize revenue from infrastructure construction and network services
      contracts on the percentage of completion method of accounting and real estate
      site acquisition and zoning services on the completed contract
      method.




***Costs
      of Revenue***




**Three
                Months Ended September 30,****2007**
            
            **2006**
            
            **Increase**Infrastructure
                construction and technical services
            
            $
            12,836
            
            $
            4,290
            
            $
            8,546Real
                estate acquisition and zoning services
            
            
            3,789
            
            
            1,426
            
            
            2,363Total
            
            $
            16,625
            
            $
            5,716
            
            $
            10,909




Our
      cost
      of revenue was $16.7 **** million
      and $5.7 million for the three months ended September 30, 2007 and 2006,
      respectively. This represents an increase of $10.9 million, or 191%, during
      a
      period when sales increased 197%. These amounts represent 72% and 73% of total
      revenue for the three months ended September 30, 2007 and 2006, respectively.
      Newly acquired regional markets resulting from the Digitcom and Radian
      acquisitions accounted for approximately $3.0 million, or 28% of the
      increase.




The
      cost
      of revenue for our infrastructure construction and technical services segment
      increased $8.5 million for the three months ended September 30, 2007 as compared
      to the three months ended September 30, 2006. This represents an increase of
      approximately 199% during a period when sales for this segment increased 243%.
      Newly acquired regional markets resulting from the Digitcom and Radian
      acquisitions accounted for approximately $2.5 million of the total cost of
      revenue for this segment during the three months ended September 30,
      2007.




The
      cost
      of revenue for our real estate acquisition and zoning segment increased $2.4
      million for the three months ended September 30, 2007. This represents an
      increase of approximately 166% during a period when sales for this segment
      increased 93%. The primary reason for the increase being greater than the
      revenue increase was an increase in the use of subcontractors to supplement
      our
      existing workforce during the period in order to satisfy our customers
      requirements. Newly acquired regional markets resulting from the Digitcom and
      Radian acquisitions accounted for approximately $0.5 million of the total cost
      of revenue for this segment during the three months ended September 30, 2007.




***Gross
      Margin***




Our
      gross
      margin for the three months ended September 30, 2007, was $6.5 million as
      compared to $2.1 **** million
      for the three months ended September 30, 2006. Our gross margin as a percentage
      of revenue was approximately 28% for the three months ended September 30, 2007,
      as compared to 27% for the three months ended September 30, 2006.




The
      gross
      margin for our infrastructure construction and technical services segment was
      $5.6 million and $1.1 million for the three months ended September 30, 2007
      and
      2006, respectively.




18




The
      gross
      margin for our site acquisition and zoning services segment was $0.9 million
      and
      $1.0 million for the three months ended September 30, 2007 and 2006,
      respectively.




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




Selling,
      general and administrative expenses for the three months ended September 30,
      2007 was $5.5 million as compared to $2.6 million for the three months ended
      September 30, 2006. This represents an increase of approximately $2.9 million,
      or 111% during a period when revenue increased 197%. $1.2 million of this
      increase represents additional expenses relating to the operations of the
      markets we acquired in the third and fourth quarters of fiscal 2007. $0.9
      million represents additional expenses relating to payroll in existing markets
      relating to increased staffing levels necessary to facilitate the increased
      sales and expected continued growth of our existing operations. Additionally,
      we
      recognized increased spending of approximately $0.2 million in insurance
      premiums and $0.2 million in rent.




***Depreciation
      and Amortization***




Depreciation
      recorded on fixed assets during the three months ended September 30, 2007,
      totaled approximately $0.1 million as compared to approximately $57 thousand
      for
      the three months ended September 30, 2006. 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 the result of the abovementioned acquisitions resulted in
      amortization expense of approximately $81 thousand.




***Interest
      Expense***





We
      recognized $0.4 million in interest expense during the three months ended
      September 30, 2007 as compared to $29 thousand during the three months ended
      September 30, 2006. This increase was primarily caused by additional debt
      incurred related to our financing transactions with Sigma Opportunity Fund,
      LLC
      (“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 Financial Corporation of Delaware
      (“Presidential”).





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





We
      recognized $0.4 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 September 30, 2007. There were no similar charges during the three
      months ended September 30, 2006.





***Income
      Taxes***




We
      recorded income tax expense of $42 thousand and $0 for the three months ended
      September 30, 2007 and 2006, respectively. For the three months ended September
      30, 2007, the income tax expense was calculated as follows:




Federal
                Income Tax expense
            
            $
            180State
                Income Tax expense
            
            
            37Total
                current income tax provision
            
            
            217Change
                in deferred tax assets:Federal
            
            
            (146
            )State
            
            
            (29
            )Total
                increase in deferred tax assets
            
            
            (175
            )Current
                income tax expense
            
            $
            42





At
      June
      30, 2007, we
      had
      net operating loss carryforwards for federal and state income tax purposes
      of
      approximately $1.5 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
        September 30, 2007, we had consolidated current assets of approximately
        $31.4 million, including cash and cash equivalents of approximately $73
        thousand and net working capital of approximately $6.7 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 three months
        ended
        September 30, 2007 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 $6.2  million
        due to increased revenue during the three months ended September 30, 2007
        and
        late payments made by one of our largest customers relating to problems with
        their accounts payable software system. Subsequent to September 30, 2007,
        significant improvements in processing our payments have been made and our
        customer has corrected many of the problems with their
        system.




19




It
      should
      be noted that at December 31, 2007, $5.2 million of our long-term debt will
      be
      reclassified from long-term debt to current.





In
      September 2003, we entered into a revolving credit facility with Presidential.
      On April 3, 2007, we amended this facility to, among other things, increase
      the
      availability under the credit facility to $8.0 million. The credit facility
      is
      available for working capital, capital expenditures and general corporate
      purposes. The credit facility interest rate is prime plus one and one-half
      percent (1.5%). As of September 30, 2007, the prime rate was 8.25%. In addition,
      we pay .25% per month on the average daily balance.





The
      credit facility is secured by substantially all of BCI’s assets and a guarantee
      from Berliner. The balance outstanding at September 30, 2007 was $3.7 million.
      The revolving credit facility has a term of twelve months and currently matures
      on April 3, 2008, and we can elect to renew on a month-to-month basis
      thereafter.





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”) are each junior to our existing $8.0 million line of credit with
      Presidential. 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 September 30,
      2007 was $1.5 million.





Our
      ability to satisfy our current obligations is dependent upon our cash on hand,
      borrowings under our credit facility with Presidential, borrowings under the
      Notes and the operations of BCI. Our current obligations consist of capital
      expenditures, debt service and funding working capital. In the event we do
      not
      continue to generate positive cash flow, or if we incur unanticipated expenses
      for operations and are unable to acquire additional capital or financing, we
      will likely have to reassess our strategic direction, make significant changes
      to our business operations and substantially reduce our expenses until such
      time
      as we achieve positive cash flow.




20




As
      of
      September 30, 2007, our backlog was approximately $50.1  million
      as compared to $30.9 million as of June 30, 2007, and we currently anticipate
      completing those backlog orders by March 31, 2008.




The
      net
      cash provided by (used in) ** operating,
      investing and financing activities for the three months ended September 30,
      2007, and 2006, is summarized below:




**Three
                months ended****September
                30,****2007**
            
            **2006**Net
                cash (used in) provided by operating activities
            
            $
            (85
            )
            $
            557Net
                cash (used in) investing activities
            
            
            (288
            )
            
            (16
            )Net
                cash (used in) financing activities
            
            
            (2,037
            )
            
            (662
            )




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




Net
      cash
      used in operating activities in the three months ended September 30, 2007 was
      approximately $85 thousand and net cash provided by operating activities in
      the
      three months ended September 30, 2006 was approximately $0.6 million . During
      the three months ended September 30, 2007, cash flow provided by operating
      activities primarily resulted from operating income, net of non-cash charges,
      of
      approximately $0.6 million, which represents an increase of $0.9 million from
      the three months ended September 30, 2006. This increase was primarily caused
      by
      net income of $39 thousand as compared to a loss of $0.6 million, and increases
      in non-cash charges of $0.2 million in depreciation and amortization, $98
      thousand in amortization of deferred financing fees and $0.3 million in
      accretion of interest expense resulting from the issuance of warrants. We also
      realized an increase in accounts receivable of approximately $6.2  million
      due to increased revenue during the three months ended September 30, 2007 and
      late payments made by one of our customers relating to problems with the
      customer’s electronic accounts payable systems, and an increase in inventories
      of approximately $0.2 million due to anticipated increased usage. These were
      partly offset by a decrease in accounts payable of approximately $1.5 million
      and a decrease in accrued liabilities of approximately $4.4 million. ** In
      the
      three months ended September 30, 2006, cash provided by operating activities
      primarily resulted from an operating loss, net of non-cash charges, of
      approximately $0.4 million, a decrease in accounts receivable of approximately
      $3.1 million, a decrease in accounts payable of approximately $1.3 million
      and a
      decrease in accrued liabilities of approximately $0.7 million.




***Cash
      used in investing activities***




Net
      cash
      used in investing activities was approximately $0.3 million and $16 thousand
      in
      three months ended September 30, 2007 and 2006, respectively, and was primarily
      used for the purchase of fixed assets.




***Cash
      used in financing activities***




Net
      cash
      used in financing activities was approximately $2.0 million in the three months
      ended September 30, 2007 and $0.7 million in the three months ended September
      30, 2006. During the three months ended September 30, 2007, net cash used in
      financing activities consisted of net repayments against our line of credit
      with
      Presidential of $1.8 million and repayment of long-term debt related to the
      Digitcom acquisition of $0.2 million. During the three months ended September
      30, 2006, net cash used in financing activities consisted of payments against
      our credit facility net of borrowings of approximately $0.5 million and
      reductions of other debt obligations of approximately $0.2 million.




We
      believe our existing cash, cash equivalents and line of credit will be
      sufficient to meet our cash requirements in the near term. However, we may
      be
      required, or could elect, to seek additional funding within the next twelve
      months. 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. Our sources of liquidity beyond twelve months, in management’s
      opinion, will be our then current cash balances, funds from operations, if
      any,
      and our current credit facility and any additional equity or credit facilities
      we can arrange. We have no other agreements or arrangements with third parties
      to provide us with sources of liquidity and capital resources beyond twelve
      months.




21




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





We
      are
      exposed to the impact of interest rates and other risks. We have borrowings
      under our line of credit of approximately $3.7 million. We believe that the
      effects of changes in interest rates are limited and would not materially affect
      profitability.




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




Our
      Principal Executive Officer and Principal Financial Officer have evaluated
      the
      effectiveness of our disclosure controls and procedures as defined in Rule
      13a-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934 as well as
      those of BCI. 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, "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 quarter ended 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. Prior to the year ended June 30, 2006, Old
      Berliner had historically incurred net losses. Old Berliner incurred a net
      loss
      of approximately $1.2 million for the six months ended June 30, 2005 and $836
      thousand for the year ended December 31, 2004. We can provide no assurances
      that
      losses will not recur in the future or that we will ever sustain profitability
      on a quarterly or annual 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
      quarter ended September 30, 2007, we derived 86% of our total revenue from
      our
      two largest customers, and those customers represented 77% 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 10% of net
      revenue for the period. During the quarter ended September 30, 2007, Sprint
      Nextel Corporation represented 79% of our revenue for the quarter and Metro
      PCS,
      Inc. represented 8%.




22




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





**We
      may not be able to register the shares of common stock issuable
      upon**  **conversion
      of our 7% Senior Subordinated Secured Convertible Notes Due 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 the shares of common stock issuable upon conversion of
      each of the 7% Senior Subordinated Secured Convertible Notes Due 2008 (the
      “Notes”) and exercise of 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 cannot guarantee
      that we will be able to cause a registration statement covering the shares
      to be
      declared effective, or that we will be able to keep any such registration
      statement effective. 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.





23




**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, Principal Financial Officer and Principal
              Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
              to Section 906 of the Sarbanes-Oxley Act of 2002.
              *




*
            Filed
                herewith.




24





**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: November
              14, 2007
            By:
            /s/ Richard
              B. BerlinerRichard
              B. BerlinerChief
                Executive Officer
              (Principal
                Executive Officer)  Date: November
              14, 2007
            By:
            /s/ Albert
              E.
              GencarellaAlbert
              E. GencarellaChief
                Financial Officer
              (Principal
                Financial Officer)




25