**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 December 31, 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
      February 13, 2008, 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
                INFORMATION**Item
                1.
            Financial
                StatementsConsolidated
                Balance Sheets as of December 31, 2007 (Unaudited),and
                June 30, 2007
            3Consolidated
                Statements of Operations for the three and six months
                endingDecember
                31, 2007 and 2006 (Unaudited)
            4Consolidated
                Statements of Cash Flows for the six months endingDecember
                31, 2007 and 2006 (Unaudited)
            5Consolidated
                Statement of Stockholders' Equity (Unaudited)
            7Notes
                to Consolidated Financial Statements
            8Item
                2.
            Management's
                Discussion and Analysis of Financial Condition andResults
                of Operations
            19Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            27Item
                4.
            Controls
                and Procedures
            27**PART
                II:**
            **OTHER
                INFORMATION**Item
                1.
            Legal
                Proceedings
            27Item
                1A.
            Risk
                Factors
            27Item
                2.
            Unregistered
                Sale of Equity Securities and Use of Proceeds
            29Item
                3.
            Defaults
                Upon Senior Securities
            29Item
                4.
            Submission
                of Matters to a Vote of Securities Holders
            29Item
                5.
            Other
                Information
            29Item
                6.
            Exhibits
            29**SIGNATURES**
            
            30





2





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




**December
                    31,**
                  **2007**
              
              **June
                    30,****2007****(Unaudited)****ASSETS****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              1,909
              
              $
              2,483Accounts
                  receivable, net of allowance for doubtful accountsof
                  $261 at June 30, 2007 and $291 at December 31, 2007, respectively
              
              
              49,706
              
              
              22,911Inventories
              
              
              1,005
              
              
              666Deferred
                  tax assets - current
              
              
              811
              
              
              336Prepaid
                  expenses and other current assets
              
              
              686
              
              
              77154,117
              
              
              27,167Property
                  and equipment, net
              
              
              2,972
              
              
              2,569Amortizable
                  intangible assets, net
              
              
              798
              
              
              960Goodwill
              
              
              2,309
              
              
              2,270Deferred
                  tax assets - long-term
              
              
              1,181
              
              
              950Other
                  assets
              
              
              199
              
              
              387Total
                  Assets
              
              $
              61,576
              
              $
              34,303**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              15,714
              
              $
              7,399Accrued
                  liabilities
              
              
              18,355
              
              
              6,588Accrued
                  income taxes
              
              
              4,332
              
              
              326Line
                  of credit
              
              
              2,653
              
              
              5,537Current
                  portion of long-term debt
              
              
              5,954
              
              
              797Current
                  portion of capital lease obligations
              
              
              120
              
              
              5247,128
              
              
              20,699Long-term
                  debt, net of current portion
              
              
              797
              
              
              5,765Long-term
                  capital lease obligations, net of current portion
              
              
              360
              
              
              199Other
                  long-term liabilities
              
              
              720
              
              
              694Deferred
                  tax liabilities - long-term
              
              
              100
              
              
              39Total
                  liabilities
              
              
              49,105
              
              
              27,396**COMMITMENTS****STOCKHOLDERS'
                  EQUITY**Common
                  stock
              
              
              -
              
              
              -Additional
                  paid-in capital
              
              
              15,734
              
              
              15,655Accumulated
                  deficit
              
              
              (3,263
              )
              
              (8,748
              )Total
                  stockholders' equity
              
              
              12,471
              
              
              6,907Total
                  liabilities and stockholders' equity
              
              $
              61,576
              
              $
              34,303*The
                  accompanying notes are an integral part of these financial statements.*




3





**BERLINER
                COMMUNICATIONS, INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF OPERATIONS****(Amounts
                in thousands, except per share data)****(Unaudited)**




**Three
                  months ended**
                **December
                  31,**
              
              **Six
                  months ended**
                **December
                  31,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Revenue
              
              $
              52,133
              
              $
              13,688
              
              $
              75,275
              
              $
              21,493Costs
                  of revenue
              
              
              34,423
              
              
              8,658
              
              
              51,048
              
              
              14,374Gross
                  margin
              
              
              17,710
              
              
              5,030
              
              
              24,227
              
              
              7,119Selling,
                  general and administrative expenses
              
              
              7,618
              
              
              3,284
              
              
              13,074
              
              
              5,864Depreciation
                  and amortization
              
              
              284
              
              
              62
              
              
              512
              
              
              119Loss
                  on sale of fixed assets
              
              
              -
              
              
              -
              
              
              8
              
              
              3Income
                  from operations
              
              
              9,808
              
              
              1,684
              
              
              10,633
              
              
              1,133Other
                  (income) expenseInterest
                  expense
              
              
              339
              
              
              26
              
              
              689
              
              
              55Amortization
                  of deferred financing fees andaccretion
                  of debt discount
              
              
              348
              
              
              -
              
              
              721
              
              
              -Financing
                  fees
              
              
              -
              
              
              -
              
              
              36
              
              
              -Interest
                  income
              
              
              (17
              )
              
              (4
              )
              
              (26
              )
              
              (8
              )Other
              
              
              -
              
              
              -
              
              
              (6
              )
              
              (14
              )Income
                  before income taxes
              
              
              9,138
              
              
              1,662
              
              
              9,219
              
              
              1,100Income
                  tax expense
              
              
              3,692
              
              
              509
              
              
              3,734
              
              
              509Net
                  income allocable to common shareholders
              
              $
              5,446
              
              $
              1,153
              
              $
              5,485
              
              $
              591Net
                  income per share:Basic
              
              $
              0.32
              
              $
              0.07
              
              $
              0.32
              
              $
              0.03Diluted
              
              $
              0.21
              
              $
              0.06
              
              $
              0.22
              
              $
              0.03Weighted
                  average number of shares outstanding:Basic
              
              
              17,082
              
              
              17,035
              
              
              17,082
              
              
              17,035Diluted
              
              
              27,005
              
              
              18,576
              
              
              26,979
              
              
              17,273*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)**




**Six
                  months ended**
                  **December
                    31,****2007**
              
              **2006**Cash
                  flows from operating activities:Net
                  income
              
              $
              5,485
              
              $
              591Adjustments
                  to reconcile net income (loss) to netcash
                  (used in) provided by operating activities:Depreciation
                  and amortization
              
              
              512
              
              
              119Amortization
                  of deferred financing fees
              
              
              191
              
              
              -Bad
                  debt expense
              
              
              30
              
              
              55Stock-based
                  compensation
              
              
              79
              
              
              166Gain
                  on sale of fixed assets
              
              
              8
              
              
              3Accretion
                  of debt discount
              
              
              530
              
              
              3Financing
                  fees
              
              
              26
              
              
              -Deferred
                  tax assets, net
              
              
              (644
              )
              
              -Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (26,825
              )
              
              (548
              )Inventories
              
              
              (301
              )
              
              (44
              )Prepaid
                  expenses and other current assets
              
              
              (106
              )
              
              127Other
                  assets
              
              
              188
              
              
              143Accounts
                  payable
              
              
              8,314
              
              
              (601
              )Accrued
                  liabilities
              
              
              11,838
              
              
              1,259Accrued
                  income taxes
              
              
              4,006
              
              
              314**Net
                  cash provided by operating activities**
              
              
              3,331
              
              
              1,587Cash
                  flows from investing activities:Purchases
                  of property and equipment
              
              
              (623
              )
              
              (50
              )Proceeds
                  from the sale of property and equipment
              
              
              12
              
              
              -Acquisition
                  of Comtech
              
              
              (39
              )
              
              -**Net
                  cash used in investing activities**
              
              
              (650
              )
              
              (50
              )Cash
                  flows from financing activities:Proceeds
                  from line of credit
              
              
              47,657
              
              
              3,340Proceeds
                  from long-term debt
              
              
              -
              
              
              3,000Repayment
                  of line of credit
              
              
              (50,541
              )
              
              (3,949
              )Repayment
                  of long-term debt
              
              
              (342
              )
              
              (269
              )Repayment
                  of capital leases
              
              
              (29
              )
              
              (18
              )Debt
                  issuance costs
              
              
              -
              
              
              (529
              )**Net
                  cash (used in) provided by financing activities**
              
              
              (3,255
              )
              
              1,575Net
                  (decrease) increase in cash and cash equivalents
              
              
              (574
              )
              
              3,112Cash
                  and cash equivalents at beginning of period
              
              
              2,483
              
              
              534Cash
                  and cash equivalents at end of period
              
              $
              1,909
              
              $
              3,646*The
                  accompanying notes are an integral part of these financial statements.*




5




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




**Six
                  months ended**
                **December
                  31,****2007**
            
            **2006****Supplemental
                cash flow information:**Interest
                paid
            
            $
            422
            
            $
            55Income
                taxes paid
            
            $
            371
            
            $
            195**Non-cash
                investing and financing activities:**Assets
                purchased under capital leases
            
            $
            258
            
            $
            20Fair
                value of warrants issued with debt
            
            $
            -
            
            $
            849*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 $0.00002 par
                  value**
              
              **Additional
                  Paid-in**
              
              **Accumulated**
              
              **Total
                  Stockholders'****Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Equity**Balance
                  at June 30, 2007
              
              
              17,081,786
              
              $
              -
              
              $
              15,655
              
              $
              (8,748
              )
              $
              6,907Stock-based
                  compensation
              
              
              
              
              
              
              
              
              79
              
              
              
              
              
              79Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              5,485
              
              
              5,485Balance
                  at December 31, 2007
              
              
              17,081,786
              
              $
              -
              
              $
              15,734
              
              $
              (3,263
              )
              $
              12,471*The
                  accompanying notes are an integral part of these financial statements.*





7


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





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





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





The
      accompanying unaudited consolidated financial statements as of December 31,
      2007, and for the three months ended December 31, 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 percentage-of-completion method of accounting. 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. Deferred revenues principally represent the value
      of
      services to customers that have been billed as of the balance sheet date but
      for
      which the requisite services have not yet been rendered.





*Risks
      and Uncertainties.*





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





*Income
      (Loss) Per Share* .




We
      calculate earnings (loss) per share in accordance with Statement of Financial
      Accounting Standards No. 128, *Earnings
      Per Share* (“EPS”)
      (“SFAS 128”). SFAS 128 requires dual presentation of basic EPS and diluted EPS
      on the face of the income statement for all entities with complex capital
      structures. Basic EPS is computed as net income (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 December 31, 2007 and 2006 was 17,081,786 and
      17,035,140 **,** **** respectively.
      The weighted average number of common shares utilized in the earnings per share
      computation for the six months ended December 31, 2007 and 2006 was 17,081,786
      and 17,034,998, respectively.




9





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


**Three
                  months ended**
                **December
                  31,**
              
              **Six
                  months ended**
                **December
                  31,****2007**
              
              **2006**
              
              **2007**
              
              **2006****Basic
                  earnings per share:**Numerator:Net
                  income allocable to common shareholders
              
              $
              5,446
              
              $
              1,153
              
              $
              5,485
              
              $
              591Denominator:Weighted
                  average common shares outstanding
              
              
              17,082
              
              
              17,035
              
              
              17,082
              
              
              17,035Net
                  income per share - basic
              
              $
              0.32
              
              $
              0.07
              
              $
              0.32
              
              $
              0.03







**Three
                  months ended**
                **December
                  31,**
              
              **Six
                  months ended**
                **December
                  31,****2007**
              
              **2006**
              
              **2007**
              
              **2006****Diluted
                  earnings per share:**Numerator:Net
                  income allocable to common shareholders
              
              $
              5,446
              
              $
              1,153
              
              $
              5,485
              
              $
              591Plus:
                  Interest expense on convertible debtnet
                  of income taxes
              
              
              288
              
              
              -
              
              
              574
              
              
              -Net
                  income allocable to common shareholders
              
              
              5,734
              
              
              1,153
              
              
              6,059
              
              
              591Denominator:Weighted
                  average common shares outstanding
              
              
              17,082
              
              
              17,035
              
              
              17,082
              
              
              17,035Effect
                  of dilutive securities:Stock
                  options
              
              
              517
              
              
              1,501
              
              
              508
              
              
              218Warrants
              
              
              3,406
              
              
              41
              
              
              3,389
              
              
              20Convertible
                  debt
              
              
              6,000
              
              
              -
              
              
              6,000
              
              
              -Weighted
                  average common shares outstandingassuming
                  dilution
              
              
              27,005
              
              
              18,576
              
              
              26,979
              
              
              17,273Net
                  income per share - diluted
              
              **$**
              0.21
              
              **$**
              0.06
              
              **$**
              0.22
              
              **$**
              0.03






Common
      share equivalents consist of stock options and warrants (for which we used
      the
      treasury stock method) and convertible notes payable (for which we used the
“if
      converted” method). For the three months ended December 31, 2007 and 2006,
      483,190 and 22,026 stock options, respectively, and 0 and 3,000,000 shares
      convertible upon conversion of our 7% Senior Subordinated Secured Convertible
      Notes (the “ 7% Notes”), respectively, were excluded from the computation of
      diluted net income per share because, in the case of the stock options, the
      exercise price of these were greater than the average market price of the
      Company’s common stock during the period, and, in the case of the 7% Notes, the
      incremental per share increase was greater than the basic earnings per share,
      and therefore the effect is antidilutive.





For
      the
      six months ended December 31, 2007 and 2006, 655,920 and 22,026 stock options,
      respectively, and 0 and 3,000,000 shares convertible upon conversion of our
      7%
      Notes, respectively, were excluded from the computation of diluted net income
      per share because, in the case of the stock options, the exercise price of
      these
      were greater than the average market price of the Company’s common stock during
      the period, and, in the case of the 7% Notes, the incremental per share increase
      was greater than the basic earnings per share, and therefore the effect is
      antidilutive.




10




*Stock-based
      Compensation.*




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





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




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




*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. We currently do not have any income tax returns which are
      under audit. Income tax returns remain open for examination under U.S. and
      state
      statutes for years ended June 30, 2004 and thereafter.





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





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





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




11





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





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





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


**December
                  31,**
                  **2007**
              
              
              **June
                  30,**
                  **2007**Accounts
                  receivable
              
              $
              32,718
              
              $
              17,727Unbilled
                  receivables
              
              
              17,279
              
              
              5,44549,997
              
              
              23,172Allowance
                  for doubtful accounts
              
              
              (291
              )
              
              (261
              )Total
              
              $
              49,706
              
              $
              22,911




Unbilled
      receivables principally represent the value of services rendered to customers
      not billed as of the balance sheet date. Unbilled receivables are generally
      billed within three months subsequent to the provision of the services. Unbilled
      receivables include deferred revenue which represent amounts that have been
      billed to customers as of the balance sheet date but for which the requisite
      services have not yet been rendered. The total amount of deferred revenue
      included in unbilled receivables were $1.1 million and $1.0 million at December
      31, 2007 and June 30, 2007, respectively.





For
      the
      three months ended December 31, 2007, we derived 91% of our total revenue from
      our two largest customers, and these customers represented 88% 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. For the three months ended December 31, 2006, we derived 96% of our
      total revenues from our three largest customers. Of those customers, two of
      them
      individually represented greater than 5% **** and
      10% **** of
      net
      revenues for the period.





For
      the
      six months ended December 31, 2007, we derived 91% of our total revenues from
      two of our largest customers, and these customers represented 88% of our
      accounts receivable. Of those customers, one represented greater than 5% of
      net
      revenues and one represented greater than 10% of net revenues for the period.
      For the six months ended December 31, 2006, we derived 93% of our total revenues
      from our five largest customers. Of those customers, two of them individually
      represented greater than 5% of net revenues, and two of them represented greater
      than 10% of net revenues for the period.





**5.**  **Inventories**





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




12







**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 $0.1 million and $0 for the three months ended December
      31, 2007 and 2006, respectively, and $0.2 million and $0 for the six months
      ended December 31, 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 December 31, 2007, and June 30, 2007, consist of the
      following:






**December
                31,**
            
            
            **June
                30,****2007**
            
            
            **2007**Employee
                compensation
            
            $
            2,239
            
            $
            874Construction
                costs
            
            
            14,749
            
            
            5,018Other
            
            
            1,367
            
            
            696$
            18,355
            
            $
            6,588




Included
      in other accrued liabilities is a potential liability for state sales tax.
      In
      January 2007, we received an informal notice of assessment in the amount of
      $1.8
      million from a state department of revenue, including unpaid taxes, penalties
      and interest for the years 1998 to 2004. We had previously recorded $0.6 million
      in the year ended June 30, 2007 related to these potential taxes. We have
      continued to review their findings and believe that certain items that they
      deemed subject to tax were exempt. Accordingly, we increased our estimated
      reserve in the quarter ended December 31, 2007 to $0.7 million based on our
      revised best estimate of the potential liability.




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




We
      recorded income tax expense of $3.7 million and $0.5 million for the three
      months ended December 31, 2007 and 2006, respectively. We recorded income tax
      expense of $3.7 million and $0.5 million for the six months ended December
      31,
      2007 and 2006, respectively. For the three and six months ended December 31,
      2007 and 2006, the income tax expense was calculated as follows:




**Three
                  months ended**
                  **December
                    31,**
              
              **Six
                  months ended**
                  **December
                    31,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Federal
                  Income Tax expense
              
              $
              3,206
              
              **$**
              430
              
              **$**
              3,386
              
              **$**
              430State
                  Income Tax expense
              
              
              954
              
              
              79
              
              
              991
              
              
              79Total
                  current income tax provision
              
              
              4,160
              
              
              509
              
              
              4,377
              
              
              509Change
                  in deferred tax assets:Federal
              
              
              (359
              )
              
              -
              
              
              (505
              )
              
              -State
              
              
              (109
              )
              
              -
              
              
              (138
              )
              
              -Total
                  increase in deferred tax assets
              
              
              (468
              )
              
              -
              
              
              (643
              )
              
              -Current
                  income tax expense
              
              $
              3,692
              
              $
              509
              
              $
              3,734
              
              $
              509




13




**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
      7.25% at December 31, 2007.





The
      credit facility is secured by substantially all of BCI’s assets and a guarantee
      from Berliner. The balance outstanding at December 31, 2007 and June 30, 2007
      was $2.7 million and $5.5 million, respectively. The revolving credit facility
      has a term of twelve months and currently matures on April 3, 2008.  We
      have agreed with Presidential to extend the credit facility on
      a month-to-month basis thereafter on the same terms and
      conditions as the current facility, except that our monthly service fee will
      increase from .25% to .50% of the average daily loan balance for each
      month.





**10.**  **Convertible
      Notes**




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





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





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





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





We
      were
      unable to have the Registration Statement declared effective by the Securities
      and Exchange Commission prior to June 15, 2007. Therefore, pursuant to the
      Note
      Purchase Agreement, we became subject to liquidated damages equal to 2% of
      the
      aggregate purchase price paid by each purchaser for each of the first six months
      that we failed to meet the requirement. On September 27, 2007, we signed a
      Waiver and Amendment to Note Purchase Agreement (the “Waiver”) with the
      noteholders to lower the conversion price of the Notes from $1.10 to $1.00
      per
      share. The reduction in the conversion price resulted in finance charges of
      $0.7
      million, which 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.




14





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





As
      of
      December 29, 2007, all amounts outstanding pursuant to the Notes became current
      liabilities, since the Notes are all payable on December 29, 2008. Therefore,
      as
      of December 31, 2007, we had no long-term debt other than those outstanding
      pursuant to capital leases and a loan related to our acquisition of
      Digitcom.





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





At
      December 31, 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.





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




15





Stock-based
      compensation expense of approximately $28 thousand and $46 thousand was recorded
      during the three months ended December 31, 2007, and 2006, respectively, and
      $79
      thousand and $167 thousand was recorded during the six months ended December
      31,
      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
      68% 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 3.39% 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
            
            
            -
            
            
            -
            
            
            330,730
            
            
            1.05
            
            
            -
            
            
            -Options
                exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                cancelled
            
            
            -
            
            
            1,387.50
            
            
            (196,861
            )
            
            0.56
            
            
            -
            
            
            -Outstanding
                at December 31, 2007
            
            
            16,891
            
            $
            1,387.50
            
            
            1,541,920
            
            $
            3.13
            
            
            18,704
            
            $
            6,786.00Exercisable
                at December 31, 2007
            
            
            16,891
            
            $
            1,387.50
            
            
            762,565
            
            $
            5.16
            
            
            18,704
            
            $
            6,786.00





Nonvested
      options activity:


**2001
                  Plan**
              
              **1999
                  Plan**
              
              **Non-Plan****Weighted**
              
              **Weighted**
              
              
              
              **Weighted****Average**
              
              **Average**
              
              
              
              **Average****Number**
                    **of
                      Shares**
              
              **Number**
                    **of
                      Shares**
              
              **Exercise**
                    **Price**
              
              **Fair**
                    **Value**
              
              **Number**
                    **of
                      Shares**
              
              **Exercise**
                    **Price**Balance
                  at June 30, 2007
              
              
              -
              
              
              906,625
              
              $
              0.86
              
              $
              0.59
              
              
              -Options
                  granted at fair value
              
              
              -
              
              
              330,730
              
              
              1.05
              
              
              0.67
              
              
              -Options
                  vested
              
              
              -
              
              
              (279,000
              )
              
              0.53
              
              
              0.42
              
              
              -Options
                  cancelled
              
              
              -
              
              
              (179,000
              )
              
              0.54
              
              
              0.35
              
              
              -Outstanding
                  at December 31, 2007
              
              
              -
              
              
              779,355
              
              $
              1.14
              
              $
              0.74
              
              
              -





At
      December 31, 2007, the range of exercise prices, weighted average exercise
      price
      and weighted average remaining contractual life for options outstanding are
      as
      follows:




16




**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
              
              
              16,891
              
              
              16,891
              
              $
              1,387.50
              
              
              3.03
                  Years1999
                  Plan
              
              $
              0.30
                  to
              
              $
              0.81
              
              
              809,500
              
              
              747,375
              
              $
              0.51
              
              
              8.50
                  Years$
              1.01
                to
              
              $
              1.46
              
              
              728,420
              
              
              11,190
              
              $
              1.46
              
              
              8.70
                  Years$
              7.05
              
              
              167
              
              
              167
              
              $
              7.05
              
              
              6.55
                  Years$
              8.01
              
              
              250
              
              
              250
              
              $
              8.01
              
              
              6.16
                  Years$
              16.50
              
              
              2,417
              
              
              2,417
              
              $
              16.50
              
              
              2.53
                  Years$
              3,000.00
              
              
              1,167
              
              
              1,167
              
              $
              3,000.00
              
              
              1.77
                  YearsNon-Plan
              
              
              
              
              $
              3,600.00
              
              
              636
              
              
              636
              
              $
              3,600.00
              
              
              2.19
                  Years$
              6,900.00
              
              
              18,068
              
              
              18,068
              
              $
              6,900.00
              
              
              2.26
                  Years


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





Pursuant
      to the provisions of the Note Purchase Agreement, so long as the Sigma Note
      remains outstanding or Sigma beneficially owns at least 5% of our outstanding
      common stock, Sigma has the right to nominate one director to our Board of
      Directors. On December 29, 2006, Sigma nominated, and our Board of Directors
      appointed, Thom Waye to serve as a member of our Board of Directors as a Class
      III director, with his term expiring at the 2008 annual meeting. We are
      obligated to use our best efforts to cause Mr. Waye, as well as all reasonably
      suited future designees, to continue to serve on our Board of Directors. During
      the three and six months ended December 31, 2007, we paid (or accrued to) Sigma
      $53 thousand and $0.1 million, respectively, in interest on the Sigma Note.
      During the three and six months ended December 31, 2007, we paid Mr. Waye $12
      thousand and $13 thousand, respectively, for his service as a director pursuant
      to our standard non-employee director compensation program. No payments were
      made during the three and six months ended December 31, 2006.





On
      February 15, 2007, we entered into a Joinder Agreement to the Note Purchase
      Agreement with Sigma Berliner, an affiliate of Sigma and Thom Waye, and issued
      the Sigma Berliner Note and the Sigma Berliner Warrant, on substantially the
      same terms as the Sigma Note and the Sigma Warrant. This transaction was the
      result of Sigma exercising a right that Sigma negotiated as part of the December
      29, 2006 transaction, at a time at which it was not an affiliate of Berliner.
      During the three and six months ended December 31, 2007, we paid (or accrued
      to)
      Sigma $26 thousand and $52 thousand, respectively, in interest on the Sigma
      Berliner Note.





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





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




17




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




We
      currently report our financial results on the basis of two reportable segments:
      (1) infrastructure construction and technical services and (2) site acquisition
      and zoning. The
      segments are determined in accordance with how management views and evaluates
      our business based on the aggregation criteria as outlined in FASB Statement
      No. 131, “Disclosures about Segments of an Enterprise and Related
      Information.” Operating income, as presented below, is defined as gross margin
      less selling, general and administrative expenses, depreciation and gain (loss)
      on sale of fixed assets. We do not identify or allocate assets, including
      capital expenditures, by operating segment. Accordingly, assets are not reported
      by segment because the information is not available and is not reviewed in
      the
      evaluation of segment performance or in making decisions in the allocation
      of
      resources. Selected
      segment financial information for the three and six months ended
      December 31, 2007, and 2006, is presented below:




**Three
                  months ended**
                **December
                  31,**
            
            **Six
                  months ended**
                **December
                  31,****2007**
            
            **2006**
            
            **2007**
            
            **2006****(Unaudited)**
            
            **(Unaudited)**
            
            **(Unaudited)**
            
            **(Unaudited)****Revenue:**Infrastructure
                construction and technical services
            
            $
            44,433
            
            $
            11,339
            
            $
            62,918
            
            $
            16,727Site
                acquisition and zoning
            
            
            7,700
            
            
            2,349
            
            
            12,357
            
            
            4,766Total
            
            $
            52,133
            
            $
            13,688
            
            $
            75,275
            
            $
            21,493**Operating
                income:**Infrastructure
                construction and technical services
            
            $
            8,417
            
            $
            1,095
            
            $
            9,382
            
            $
            259Site
                acquisition and zoning
            
            
            1,391
            
            
            589
            
            
            1,251
            
            
            874Total
            
            $
            9,808
            
            $
            1,684
            
            $
            10,633
            
            $
            1,133





18





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





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




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





**Forward-Looking
      Statements**





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




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




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




·
            our
                financial condition and strategic
                direction;


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


·
            the
                potential generation of future revenue;


·
            our
                ability to adequately staff our service
                offerings;


·
            our
                ability to obtain additional financing;


·
            our
                growth strategy;


·
            trends
                in the wireless telecommunications
                industry;


·
            our
                competitive position; and


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





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





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


·
            risks
                associated with the integration of business
                acquisitions;


·
            risks
                associated with competition in the wireless telecommunications
                industry;


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


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


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


·
            risks
                that we will be unable to adequately staff its service
                offerings.





19





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




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





**Summary
      of Operating Results**





The
      following table presents consolidated selected financial information. The
      statement of operations data for the three and six months ended December 31,
      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
      reportable segments: (1) infrastructure construction and technical services
      ,
      and (2) site acquisition and zoning to wireless communications carriers.




**Three
                  months ended**
              
              **Six
                  months ended****December
                  31,**
              
              **December
                  31,****2007**
              
              **2006**
              
              **2007**
              
              **2006****Statement
                  of Operations Data:**Revenue
              
              $
              52,133
              
              $
              13,688
              
              $
              75,275
              
              $
              21,493Gross
                  margin
              
              
              17,710
              
              
              5,030
              
              
              24,227
              
              
              7,119Operating
                  income
              
              
              9,808
              
              
              1,684
              
              
              10,633
              
              
              1,133Net
                  income allocable tocommon
                  shareholders
              
              
              5,446
              
              
              1,153
              
              
              5,485
              
              
              591Net
                  income allocable to commonShareholders
                  per share:Basic
              
              $
              0.32
              
              $
              0.07
              
              $
              0.32
              
              $
              0.03Diluted
              
              $
              0.21
              
              $
              0.06
              
              $
              0.22
              
              $
              0.03




**December
                  31,**
              
              **June
                  30,****2007**
              
              **2007**(Unaudited)**Balance
                  Sheet Data:**Current
                  assets
              
              $
              54,117
              
              $
              27,167Total
                  assets
              
              
              61,576
              
              
              34,303Current
                  liabilities
              
              
              47,128
              
              
              20,699Long-term
                  debt, net of debtdiscount
                  and current portion
              
              
              1,157
              
              
              5,964Stockholders’
                  equity
              
              
              12,471
              
              
              6,907




20




**Three
      months ended December 31, 2007, compared to three months ended December 31,
      2006**





*Revenue*




**Three
                  months ended****December
                  31,****2007**
              
              **2006**
              
              **Increase**Infrastructure
                  construction and technical services
              
              $
              44,433
              
              $
              11,339
              
              $
              33,094Site
                  acquisition and zoning
              
              
              7,700
              
              
              2,349
              
              
              5,351Total
              
              $
              52,133
              
              $
              13,688
              
              $
              38,445





We
      had
      revenue of $52.1 **** million
      for the three months ended December 31, 2007, versus $13.7 million for the
      three
      months ended December 31, 2006. This represents an increase of $38.4 million,
      or
      281%. 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 $5.4 million of
      this
      increase is attributable to the acquisitions of Digital Communication Services,
      Inc. ( “ Digitcom”)
      and Radian Communication Services, Inc. ( “ Radian”)
      that we closed in the third and fourth quarters of the fiscal year ended June
      30, 2007.




Historically,
      our second fiscal quarter, which is the fourth fiscal quarter for most of our
      customers, is the strongest quarter of our fiscal year in terms of our financial
      performance.  We believe that this will also be true for fiscal
      2008.  We believe that this trend is a result of our customers pushing to
      complete projects by the end of their fiscal years, and also to complete outdoor
      projects before winter weather can impact building schedules in northern
      states.  Therefore, while we expect to continue to show improved
      results for the third and fourth quarter of fiscal 2008 versus comparable
      periods of fiscal 2007, we do not expect our results for these
      quarters to match our second quarter of fiscal 2008 results.


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




*Cost
      of Revenue*




**Three
                  months ended****December
                  31,****2007**
              
              **2006**
              
              **Increase**Infrastructure
                  construction and technical services
              
              $
              29,228
              
              $
              7,357
              
              $
              21,871Site
                  acquisition and zoning
              
              
              5,195
              
              
              1,301
              
              
              3,894Total
              
              $
              34,423
              
              $
              8,658
              
              $
              25,765




Our
      cost
      of revenue was $34.4 **** million
      and $8.7 million for the three months ended December 31, 2007 and 2006,
      respectively. This represents an increase of $25.8 million, or 298%, during
      a
      period when sales increased 281%. These amounts represent 66% and 63% of total
      revenue for the three months ended December 31, 2007 and 2006, respectively.
      Newly acquired regional markets resulting from the Digitcom and Radian
      acquisitions accounted for approximately $4.2 million, or 17% of the
      increase.




*Gross
      Margin*





Our
      gross
      margin for the three months ended December 31, 2007, was $17.7 million as
      compared to $5.0 **** million
      for the three months ended December 31, 2006. Our gross margin as a percentage
      of revenue was approximately 34% for the three months ended December 31, 2007,
      as compared to 37% for the three months ended December 31, 2006. The primary
      reason for the decrease in gross margin is the increase in the use of
      subcontractors to supplement our existing workforce during the period in order
      to satisfy our customers requirements.




21




*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses for the three months ended December 31,
      2007
      was $7.6 million as compared to $3.3 million for the three months ended December
      31, 2006. This represents an increase of $4.3 million, or 132% during a period
      when revenues increased 281%. New markets we acquired during the third and
      fourth quarters of fiscal 2007 represent $1.3 million of this increase. Of
      the
      remaining $3.0 million increase, related to existing markets: $2.1 million
      represents additional expenses relating to payroll; $0.3 million relates to
      increases in insurance premiums; $0.4 million represents additional professional
      fees, and; $0.1 million represents an increase in rent.





*Depreciation
      and Amortization*





Depreciation
      recorded on fixed assets during the three months ended December 31, 2007 totaled
      approximately $0.2 million as compared to $62 thousand for the three months
      ended December 31, 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 a result of the abovementioned acquisitions resulted in amortization expense
      of approximately $81 thousand in the three months ended December 31,
      2007.





*Interest
      Expense*





We
      recognized $0.3 million in interest expense during the three months ended
      December 31, 2007 as compared to $26 thousand during the three months ended
      December 31, 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 $0.3 million in amortization of deferred financing fees and interest
      accretion caused by the issuance of warrants related to our financing
      transactions with Sigma and the other participating noteholders during the
      three
      months ended December 31, 2007. There were no similar charges during the three
      months ended December 31, 2006.





*Income
      Taxes*




We
      recorded income tax expense of $3.7 million and $0.5 million for the three
      months ended December 31, 2007 and 2006, respectively. For the three months
      ended December 31, 2007, the income tax expense was calculated as
      follows:




**2007**
              
              **2006**Federal
                  Income Tax expense
              
              **$**
              3,206
              
              **$**
              430State
                  Income Tax expense
              
              
              954
              
              
              79Total
                  current income tax provision
              
              
              4,160
              
              
              509Change
                  in deferred tax assets:Federal
              
              
              (359
              )
              
              -State
              
              
              (109
              )
              
              -Total
                  increase in deferred tax assets
              
              
              (468
              )
              
              -Current
                  income tax expense
              
              $
              3,692
              
              $
              509




22




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





**Six
      months ended December 31, 2007, compared to six months ended December 31,
      2006**




*Revenue*




**Six
                  months ended****December
                  31,****2007**
              
              **2006**
              
              **Increase**Infrastructure
                  construction and technical services
              
              $
              62,918
              
              $
              16,727
              
              $
              46,191Site
                  acquisition and zoning
              
              
              12,357
              
              
              4,766
              
              
              7,591Total
              
              $
              75,275
              
              $
              21,493
              
              $
              53,782





We
      had
      revenue of $75.3 **** million
      for the six months ended December 31, 2007, versus $21.5 million for the three
      months ended December 31, 2006. This represents an increase of $53.8 million,
      or
      250%. 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 $9.4 million of
      this
      increase is attributable to the acquisitions Digitcom and Radian that we closed
      in the third and fourth quarters of the fiscal year ended June 30, 2007.




*Cost
      of Revenue*




**Six
                  months ended****December
                  31,****2007**
              
              **2006**
              
              **Increase**Infrastructure
                  construction and technical services
              
              $
              42,064
              
              $
              11,647
              
              $
              30,417Site
                  acquisition and zoning
              
              
              8,984
              
              
              2,727
              
              
              6,257Total
              
              $
              51,048
              
              $
              14,374
              
              $
              36,674




Our
      cost
      of revenue was $51.0 **** million
      and $14.4 million for the six months ended December 31, 2007 and 2006,
      respectively. This represents an increase of $36.7 million, or 255%, during
      a
      period when sales increased 250%. These amounts represent 68% and 67% of total
      revenue for the six months ended December 31, 2007 and 2006, respectively.
      Newly
      acquired regional markets resulting from the Digitcom and Radian acquisitions
      accounted for approximately $7.3 million, or 20% of the increase.




*Gross
      Margin*





Our
      gross
      margin for the six months ended December 31, 2007, was $24.2 million as compared
      to $7.1 **** million
      for the three months ended December 31, 2006. Our gross margin as a percentage
      of revenue was approximately 32% for the six months ended December 31, 2007,
      as
      compared to 33% for the six months ended December 31, 2006.




*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses for the six months ended December 31, 2007
      was $13.1 million as compared to $5.9 million for the six months ended December
      31, 2006. This represents an increase of $7.2 million, or 123% during a period
      when revenues increased 250%. New markets we acquired during the third and
      fourth quarters of fiscal 2007 represent $2.5 million of this increase. Of
      the
      remaining $4.7 million increase, representing increases in existing markets:
      $2.9 million represents additional expenses relating to payroll; $0.4 million
      relates to increases in insurance premiums; $0.5 million represents additional
      professional fees, and; $0.2 million represents an increase in
      rent.




23




*Depreciation
      and Amortization*





Depreciation
      recorded on fixed assets during the six months ended December 31, 2007 totaled
      approximately $0.4 million as compared to $0.1 million for the six months ended
      December 31, 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 a result
      of
      the abovementioned acquisitions resulted in amortization expense of
      approximately $0.2 million in the six months ended December 31,
      2007.





*Interest
      Expense*





We
      recognized $0.7 million in interest expense during the six months ended December
      31, 2007 as compared to $55 thousand during the six months ended December 31,
      2006. This increase was primarily caused by additional debt incurred related
      to
      our financing transactions with Sigma and the other participating noteholders,
      our issuance of a promissory note as part of the purchase price for our
      acquisition of Digitcom, and our expanded line of credit with
      Presidential.





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





We
      recognized $0.7 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
      six
      months ended December 31, 2007. There were no similar charges during the six
      months ended December 31, 2006.





*Income
      Taxes*




We
      recorded income tax expense of $3.7 million and $0.5 million for the six months
      ended December 31, 2007 and 2006, respectively. For the six months ended
      December 31, 2007, the income tax expense was calculated as
      follows:




**2007**
              
              **2006**Federal
                  Income Tax expense
              
              $
              3,386
              
              $
              430State
                  Income Tax expense
              
              
              991
              
              
              79Total
                  current income tax provision
              
              
              4,377
              
              
              509Change
                  in deferred tax assets:Federal
              
              
              (505
              )
              
              -State
              
              
              (138
              )
              
              -Total
                  increase in deferred tax assets
              
              
              (643
              )
              
              -Current
                  income tax expense
              
              $
              3,734
              
              $
              509





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





**Liquidity
      and Capital Resources**





At
      December 31, 2007, we had consolidated current assets of approximately
      $54.1 million, including cash and cash equivalents of approximately $1.9
      million and net working capital of approximately $7.0 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 six months ended
      December 31, 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 $26.8  million
      due to increased revenue during the six months ended December 31,
      2007.




24




On
      December 31, 2007, $5.2 million of our long-term debt was 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 December 31, 2007, the prime rate was 7.25%. 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 December 31, 2007 was $2.7 million.
      The revolving credit facility has a term of twelve months and currently matures
      on April 3, 2008.  We have agreed with Presidential to extend the
      credit facility on a month-to-month basis thereafter on the same
      terms and conditions as the current facility, except that our monthly service
      fee will increase from .25% to .50% of the average daily loan balance for each
      month.





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 December 31, 2007 was $1.3 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 addition, we are
      obligated to pay off our borrowings under the Notes in December 2008 unless
      the
      Noteholders elect to convert the Notes prior to that time. While we believe
      the
      Noteholders will convert the Notes, if they do not we will have to pay off
      the
      Notes from our then existing credit facility and/or cash from operations. If
      necessary, we can enter into negotiations with the Noteholders to refinance
      the
      Notes, but we can not provide any assurances that these negotiations would
      be
      successful, or completed on terms and conditions favorable to us. In the event
      we do not continue to generate positive cash flow, or if we incur unanticipated
      expenses for operations and are unable to acquire additional capital or
      financing, we will likely have to reassess our strategic direction, make
      significant changes to our business operations and substantially reduce our
      expenses until such time as we achieve positive cash flow.




25




As
      of
      December 31, 2007, our backlog was approximately $62.8  million
      as compared to $30.9 million as of June 30, 2007. While we believe we will
      complete these backlog orders in the near-term, we cannot accurately predict
      when we will complete these orders in every case, or if we will complete all
      of
      these orders, as some of our customers may delay or cancel orders in limited
      circumstances. The net cash provided by (used in) ** operating,
      investing and financing activities for the six months ended December 31, 2007,
      and 2006, is summarized below:




**Six
                  months ended****December
                  31,****2007**
              
              **2006**Net
                  cash provided by operating activities
              
              $
              3,331
              
              $
              1,587Net
                  cash used in investing activities
              
              
              (650
              )
              
              (50
              )Net
                  cash (used in) provided by financing activities
              
              
              (3,255
              )
              
              1,575




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




Net
      cash
      provided by operating activities in the six months ended December 31, 2007
      was
      approximately $3.3 million and $1.6 million in the six months ended December
      31,
      2006. During the six months ended December 31, 2007, cash flow provided by
      operating activities primarily resulted from operating income, net of non-cash
      charges, of approximately $6.2 million, which represents an increase of $5.3
      million from the six months ended December 31, 2006. This increase was primarily
      caused by net income of $5.5 million as compared to $0.6 million, and increases
      in non-cash charges of $0.4 million in depreciation and amortization, $0.2
      million in amortization of deferred financing fees and $0.5 million in accretion
      of interest expense resulting from the issuance of warrants. We also realized
      an
      increase in accounts receivable of approximately $26.8  million
      due to increased revenue during the six months ended December 31, 2007, and
      an
      increase in inventories of approximately $0.3 million due to anticipated
      increased usage. These were partly offset by an increase in accounts payable
      of
      approximately $8.3 million and an increase in accrued liabilities of
      approximately $11.8 million. ** In
      the
      six months ended December 31, 2006, cash provided by operating activities
      primarily resulted from operating income, net of non-cash charges, of
      approximately $0.9 million, an increase in accounts receivable of approximately
      $0.5 million, a decrease in accounts payable of approximately $0.6 million
      and
      an increase in accrued liabilities of approximately $1.3 million.




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




Net
      cash
      used in investing activities was approximately $0.7 million and $50 thousand
      in
      six months ended December 31, 2007 and 2006, respectively, and was primarily
      used for the purchase of fixed assets.




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




Net
      cash
      used in financing activities was approximately $3.3 million in the six months
      ended December 31, 2007 and net cash provided by financing activities was
      approximately $1.6 million in the six months ended December 31, 2006. During
      the
      six months ended December 31, 2007, net cash used in financing activities
      consisted of net repayments against our line of credit with Presidential of
      $2.9
      million and repayment of long-term debt related to the Digitcom acquisition
      of
      $0.3 million. During the six months ended December 31, 2006, net cash provided
      by financing activities consisted of payments against our credit facility net
      of
      borrowings of approximately $0.6 million, reductions of other debt obligations
      of approximately $0.3 million, debt issuance costs of approximately $0.5 million
      and proceeds from our 7% convertible notes of $3.0 million.




We
      believe our existing cash, cash equivalents and line of credit will be
      sufficient to meet our cash requirements in the near term if the Noteholders
      elect to convert the Notes. However, we are currently in discussions with other
      lenders to replace and expand our existing revolving credit facility, which
      expires on April 3, 2008, which would provide sufficient additional availability
      if we will be required to repay the Notes. 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 a replacement of 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.


26





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





We
      are
      exposed to the impact of interest rates and other market risks. We have
      borrowings under our line of credit of approximately $2.7 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 and BCI’s disclosure controls and procedures as defined in
      Rule 13a-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934. Based
      upon that evaluation, such officers have concluded that our disclosure controls
      and procedures are effective, as of the end of the period covered by this
      report, in timely alerting them to material information relating to us
      (including our consolidated subsidiaries) required to be included in this
      Quarterly Report. There have been no significant changes in our internal
      controls over financial reporting or in other factors, which could significantly
      affect such internal controls, subsequent to the date that we carried out our
      evaluation.




**PART
      II: OTHER INFORMATION**




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




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




**Item
      1A. Risk Factors**




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




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





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




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





For
      the
      six months ended December 31, 2007, we derived 91% of our total revenue from
      our
      two largest customers, and those customers represented 88% 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 six months ended December 31, 2006, we
      derived 93% of our total revenues from our five largest customers with one
      customer representing 72%.





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.




27




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





The
      Note
      Purchase Agreement we entered into in connection with our financings with Sigma
      Opportunity Fund, LLC (“Sigma”), Pacific Asset Partners, LP (“Pacific”), Operis
      Partners I, LLC (“Operis”) and Sigma Berliner, LLC (collectively the
“Noteholders”) requires that we file and make effective a registration statement
      with the SEC covering the shares of common stock issuable upon conversion of
      each of the 7% Senior Subordinated Secured Convertible Notes due on December
      29, 2008 (the “Notes”) and exercise of the accompanying warrants. 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. If we are unable to meet the registration requirements set forth in
      the
      Waiver and Amended Note Purchase Agreement, we may be subject to additional
      damages.





**We
      may be subject to additional liability for state sales
      tax.**





In
      January 2007, we received an informal notice of assessment in the amount of
      $1.8
      million from a state tax authority, including unpaid sales taxes, penalties
      and
      interest for the years 1998 through 2004. As of December 31, 2007, we have
      recorded a reserve of $0.7million related to these potential taxes based on
      the
      notice from the taxing authority and our best estimate of the potential
      liability. Our best estimate may not be correct, and we could be required to
      pay
      the entire $1.8 million, with the possibility of additional penalties and
      interest, and also additional amounts for tax periods dating after 2004. If
      we
      owe any amounts over and above our estimate of $0.7 million, we will revise
      our
      accrued liabilities, and increase our selling, general and administrative
      expenses in the period when we become aware of these additional amounts, and
      this could materially impact our results of operations for that
      period.


28


**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**




We
      held
      our Annual Meeting of Stockholders on December 17, 2007. At this meeting the
      stockholders voted in favor of the following items listed in the Proxy Statement
      dated October 29, 2007:




(1)
            Election
                of Directors:




Nominee
            
            For
            
            WithheldRichard
                B. Berliner
            
            
            14,460,610
            
            
            6,355J.
                Stevens Robling
            
            
            14,466,436
            
            
            529




(2)  Ratification
      of the selection of BDO Seidman, LLP as our independent auditors
      for the fiscal year ending June 30, 2008.




For
            
            Against
            
            Abstain14,466,858
            
            
            83
            
            
            24





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





None





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





(a)
            Exhibits





31.1
            
            Certification
                of the Principal Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002. *31.2
            
            Certification
                of the Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002. *32.1
            
            Certification
                of our Principal Executive Officer and Principal Financial Officer
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002. *10.1
            
            Employment
                Agreement, dated as of November 15, 2007, by and between Berliner
                Communications, Inc. and Raymond A. Cardonne, Jr. (Incorporated by
                reference to Exhibit 10.1 to a Form 8-K filed by the Registrant on
                November 15, 2007.)10.2
            
            Employment
                Agreement, dated as of December 10, 2007, by and between Berliner
                Communications, Inc. and Richard B. Berliner. (Incorporated by reference
                to Exhibit 10.1 to a Form 8-K filed by the Registrant on December
                13,
                2007.)10.3
            
            Employment
                Agreement, dated as of December 10, 2007, by and between Berliner
                Communications, Inc. and Nicholas Day. (Incorporated by reference
                to
                Exhibit 10.2 to a Form 8-K filed by the Registrant on December 13,
                2007.)10.4
            
            Employment
                Agreement, dated as of December 12, 2007, by and between Berliner
                Communications, Inc. and Michael S. Guerriero. (Incorporated by reference
                to Exhibit 10.3 to a Form 8-K filed by the Registrant on December
                13,
                2007.)10.5
            
            Fourth
              Amendment to Demand Secured Promissory Note and Loan Modification
              Agreement, dated
              February 13, 2008, by and among BCI Communications Inc., Berliner
              Communications, Inc., and Presidential Financial Corporation of Delaware
              Valley. *





*
      Filed
      herewith.




29





**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:
                February 14, 2008
            By:
            /s/
                Richard B. BerlinerRichard
                B. BerlinerChief
                Executive Officer(Principal
                Executive Officer)  Date:
                February 14, 2008
            By:
            /s/
                Raymond A. Cardonne, Jr.Raymond
                A. Cardonne, Jr.Chief
                Financial Officer(Principal
                Financial Officer)




30