##### Table of Contents



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




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##### 



BERLINER COMMUNICATIONS, INC.
 QUARTERLY REPORT ON FORM 10-Q
INDEX
 PAGE NO.PART I:
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of December 31, 2006 (unaudited), and June 30, 2006
    
    
    3Consolidated Statements of Operations for the three and six months ended December 31, 2006, and 2005 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the six months ended December 31, 2006, and 2005 (unaudited)
    
    
    5Consolidated Statements of Stockholders' Equity for the six months ended December 31, 2006 (unaudited)
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4.
    
    Controls and Procedures
    
    
    20PART II:
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    20Item 1A.
    
    Risk Factors
    
    
    20Item 2.
    
    Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    26Item 3.
    
    Defaults Upon Senior Securities
    
    
    26Item 4.
    
    Submission of Matters to a Vote of Securities Holders
    
    
    26Item 5.
    
    Other Information
    
    
    26Item 6.
    
    Exhibits
    
    
    27SIGNATURES
    
    
    
    
    28Exhibit 3.1Exhibit 31.1Exhibit 31.2Exhibit 31.3Exhibit 32.1
   2




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##### Table of Contents



BERLINER COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    June 30,2006
    
    
    2006(Unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    3,646,043
    
    
    $
    534,350Accounts receivable, net of allowance for doubtful
accounts of $189,423 at December 31, 2006 and
$179,535 at June 30, 2006
    
    
    12,826,548
    
    
    
    12,333,892Inventories
    
    
    366,528
    
    
    
    322,029Prepaid expenses and other current assets
    
    
    204,085
    
    
    
    331,54617,043,204
    
    
    
    13,521,817LONG-TERM ASSETSProperty and equipment, net
    
    
    519,261
    
    
    
    565,592Debt issuances costs, net
    
    
    528,636
    
    
    
    Other assets
    
    
    116,186
    
    
    
    168,210$
    18,207,287
    
    
    $
    14,255,619LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESLine of credit
    
    $
    501,750
    
    
    $
    1,110,803Current portion of long-term debt
    
    
    132,281
    
    
    
    373,856Current portion of capital lease obligations
    
    
    32,436
    
    
    
    33,105Accounts payable
    
    
    4,755,303
    
    
    
    5,355,827Accrued liabilities
    
    
    5,166,603
    
    
    
    3,908,803Accrued income taxes
    
    
    442,244
    
    
    
    127,92711,030,617
    
    
    
    10,910,321LONG-TERM LIABILITIESLong-term debt, net of debt discount and current portion
    
    
    2,384,660
    
    
    
    162,769Long-term capital lease obligations, net of current portion
    
    
    26,460
    
    
    
    24,0812,411,120
    
    
    
    186,850COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITYPreferred stock
    
    
    
    
    
    
    Common stock
    
    
    341
    
    
    
    341Additional paid-in capital
    
    
    14,033,918
    
    
    
    13,018,241Accumulated deficit
    
    
    (9,268,709
    )
    
    
    (9,860,134
    )4,765,550
    
    
    
    3,158,448$
    18,207,287
    
    
    $
    14,255,619
 The accompanying notes are an integral part of these financial statements.
  3




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BERLINER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended
    
    
    Six months endedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    13,687,584
    
    
    $
    11,107,423
    
    
    $
    21,492,748
    
    
    $
    19,764,788Costs of revenues
    
    
    8,657,705
    
    
    
    8,588,115
    
    
    
    14,374,284
    
    
    
    14,805,665Gross margin
    
    
    5,029,879
    
    
    
    2,519,308
    
    
    
    7,118,464
    
    
    
    4,959,123Selling, general and administrative expenses
    
    
    3,283,849
    
    
    
    2,241,441
    
    
    
    5,864,757
    
    
    
    4,285,188Depreciation and amortization
    
    
    62,214
    
    
    
    62,909
    
    
    
    119,093
    
    
    
    124,045(Gain) loss on sale of fixed assets
    
    
    
    
    
    
    (509
    )
    
    
    2,517
    
    
    
    (759
    )Income from operations
    
    
    1,683,816
    
    
    
    215,467
    
    
    
    1,132,097
    
    
    
    550,649Other (income) expenseInterest expense
    
    
    25,572
    
    
    
    17,292
    
    
    
    54,645
    
    
    
    26,863Interest income
    
    
    (3,801
    )
    
    
    (3,342
    )
    
    
    (8,411
    )
    
    
    (6,188
    )Gain on sale of equity of investment, net of losses
    
    
    
    
    
    
    (163,742
    )
    
    
    
    
    
    
    (97,995
    )Other
    
    
    
    
    
    
    (85,399
    )
    
    
    (14,488
    )
    
    
    (84,999
    )Income before income taxes
    
    
    1,662,045
    
    
    
    450,658
    
    
    
    1,100,351
    
    
    
    712,968Income tax expense
    
    
    508,926
    
    
    
    2,250
    
    
    
    508,926
    
    
    
    3,050Net income
    
    $
    1,153,119
    
    
    $
    448,408
    
    
    $
    591,425
    
    
    $
    709,918Deemed Series B and D preferred dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,935,779Net income (loss) allocable to common shareholders
    
    $
    1,153,119
    
    
    $
    448,408
    
    
    $
    591,425
    
    
    $
    (19,225,861
    )Net income (loss) per share  basic and dilutedBasic
    
    $
    0.07
    
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (1.89
    )Diluted
    
    $
    0.06
    
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (1.89
    )Weighted average number of shares outstandingBasic
    
    
    17,035,140
    
    
    
    17,034,857
    
    
    
    17,034,998
    
    
    
    10,185,125Diluted
    
    
    18,576,196
    
    
    
    17,034,857
    
    
    
    17,272,929
    
    
    
    10,185,125
 The accompanying notes are an integral part of these financial statements.
  4




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BERLINER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months endedDecember 31,2006
    
    
    2005(Unaudited)
    
    
    (Unaudited)Cash flows from operating activitiesNet income
    
    $
    591,425
    
    
    $
    709,918Adjustments to reconcile net income
to net cash provided by operationsDepreciation and amortization
    
    
    119,093
    
    
    
    124,045Loss in equity of investments
    
    
    
    
    
    
    102,005Bad debt expense
    
    
    55,000
    
    
    
    44,186Stock based compensation
    
    
    166,479
    
    
    
    10,244Accretion of debt discount associated with warrants
    
    
    3,139
    
    
    
    (Gain) on the sale of equity investment
    
    
    
    
    
    
    (200,000
    )(Gain) loss on sale of fixed assets
    
    
    2,517
    
    
    
    (759
    )Changes in operating assets and liabilities
    
    
    Accounts receivable
    
    
    (547,657
    )
    
    
    (4,854,038
    )Inventories
    
    
    (44,499
    )
    
    
    49,989Prepaid expenses and other current assets
    
    
    127,462
    
    
    
    212,415Other assets
    
    
    142,939
    
    
    
    54,684Accounts payable
    
    
    (600,523
    )
    
    
    1,836,521Accrued liabilities
    
    
    1,257,801
    
    
    
    2,196,703Income taxes payable
    
    
    314,317
    
    
    
    Net cash provided by operating
activities
    
    
    1,587,493
    
    
    
    285,913Cash flow from investing activitiesPurchase of property and equipment
    
    
    (50,499
    )
    
    
    (143,821
    )Proceeds from the sale of property and equipment
    
    
    
    
    
    
    3,250Proceeds from the sale of equity investment
    
    
    
    
    
    
    200,000Net cash (used in) provided by investing activities
    
    
    (50,499
    )
    
    
    59,429Cash flows from financing activitiesProceeds from line of credit
    
    
    3,340,134
    
    
    
    1,902,074Proceeds from long-term debt
    
    
    3,000,000
    
    
    
    83,540Repayment of line of credit
    
    
    (3,949,189
    )
    
    
    (1,862,516
    )Repayment of long-term debt
    
    
    (269,673
    )
    
    
    (179,169
    )Repayment of capital leases
    
    
    (18,137
    )
    
    
    (24,381
    )Debt issuance costs
    
    
    (528,636
    )
    
    
    Proceeds from exercise of stock options
    
    
    200
    
    
    
    Net cash provided by (used in) financing activities
    
    
    1,574,699
    
    
    
    (80,452
    )Net increase in cash and cash equivalents
    
    
    3,111,693
    
    
    
    264,890Cash and cash equivalents at beginning of period
    
    
    534,350
    
    
    
    402,432Cash and cash equivalents at end of period
    
    $
    3,646,043
    
    
    $
    667,322Supplemental disclosure of cash flow informationInterest paid
    
    $
    54,645
    
    
    $
    26,284Income taxes paid
    
    $
    194,610
    
    
    $
    3,050Non-cash investing and financing activitiesAssets acquired under capital leases
    
    $
    19,846
    
    
    $
    17,370Fair value of warrants issued with debt and for
fundraising services provided to additional paid in capital
    
    $
    848,998
    
    
    $
    
 The accompanying notes are an integral part of these financial statements.
  5




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##### Table of Contents



BERLINER COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Preferred Stock
    
    
    Common Stock2,000,000 shares authorized;
    
    
    20,000,000 shares authorized
    
    
    Additional
    
    
    
    
    
    
    Total$0.00002 par value
    
    
    $0.00002 par value
    
    
    Paid-in
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Equity(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Balance at June 30, 2006
    
    
    
    
    
    $
    
    
    
    
    17,034,857
    
    
    $
    341
    
    
    $
    13,018,241
    
    
    $
    (9,860,134
    )
    
    $
    3,158,448Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    200
    
    
    
    
    
    
    
    200Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166,479
    
    
    
    
    
    
    
    166,479Value of warrants granted with debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    848,998
    
    
    
    
    
    
    
    848,998Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    591,425
    
    
    
    591,425Balance at December 31, 2006
    
    
    
    
    
    $
    
    
    
    
    17,035,357
    
    
    $
    341
    
    
    $
    14,033,918
    
    
    $
    (9,268,709
    )
    
    $
    4,765,550
 The accompanying notes are an integral part of these financial statements.
  6




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##### Table of Contents



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




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Income (Loss) Per Share Earnings Per Share
 ,
 Stock-based Compensation. Accounting for Stock Issued to
Employees Accounting for Stock-Based
Compensation
 Share-Based Payment,
   Recently Issued Accounting Pronouncements
  Fair
Value Measurements
  8




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##### Table of Contents



Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 4. Accounts Receivable
  December 31,
    
    
    June 30,2006
    
    
    2006(Unaudited)Accounts receivable
    
    $
    9,504,800
    
    
    $
    9,723,178Unbilled receivables
    
    
    3,511,171
    
    
    
    2,790,24913,015,971
    
    
    
    12,513,427Allowance for doubtful accounts
    
    
    (189,423
    )
    
    
    (179,535
    )Total
    
    $
    12,826,548
    
    
    $
    12,333,892
    5. Inventories
  6. Debt Issuance Costs
   9




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##### Table of Contents



7. Accrued Liabilities
  December 31,
    
    
    June 30,2006
    
    
    2006(Unaudited)Employee compensation
    
    $
    375,478
    
    
    $
    536,015Construction costs
    
    
    3,943,695
    
    
    
    3,179,061Sales tax liability
    
    
    600,000
    
    
    
    175,000Other
    
    
    247,430
    
    
    
    18,727$
    5,166,603
    
    
    $
    3,908,803
  8. Revolving Credit Facility
   9. Note Purchase Agreement
    10




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
    
    if the Registration Statement is not filed on or before March 15, 2007;
    
    if the Registration Statement is not declared effective by the Commission on or
prior to June 15, 2007;
    
    if after the effective date of the Registration Statement, sales cannot be made
under the Registration Statement, except in certain situations;
    
    if after the date on which our securities are listed or included for quotation on
any of the Over-the-Counter Bulletin Board, the American Stock Exchange, Nasdaq or New
York Stock Exchange (each, a Trading Market), our common stock, or the Registrable
Securities specifically, are not listed or included for quotation on a Trading Market,
or the trading of our common stock is suspended or halted for five or more days on the
Trading Market on which our common stock principally trades; or
    
    if we fail, refuse or are otherwise unable to timely issue common stock to Sigma
upon conversion of the Note or exercise of the Warrant or Additional Warrant, or if we
fail, refuse or are otherwise unable to timely transfer any such shares as required
under the Note Purchase Agreement or any related document executed therewith.
   10. Recapitalization of Berliner Communications
    11




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11. Stock Compensation
     2001 Plan
    
    
    1999 Plan
    
    
    Non-PlanWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageNumber
    
    
    Exercise
    
    
    Number
    
    
    Exercise
    
    
    Number
    
    
    Exerciseof Shares
    
    
    Price
    
    
    of Shares
    
    
    Price
    
    
    of Shares
    
    
    PriceOutstanding at June 30, 2006
    
    
    17,724
    
    
    $
    1,387.50
    
    
    
    483,300
    
    
    $
    22.53
    
    
    
    18,704
    
    
    $
    6,786.00Options granted at fair value value
    
    
    
    
    
    
    
    
    
    
    656,026
    
    
    $
    0.58
    
    
    
    Options exercised
    
    
    
    
    
    
    
    
    
    
    (500
    )
    
    $
    0.40
    
    
    
    Options cancelled
    
    
    
    
    
    
    
    
    
    
    (47,350
    )
    
    $
    0.40
    
    
    
    Outstanding at December 31, 2006
    
    
    17,724
    
    
    $
    1,387.50
    
    
    
    1,091,476
    
    
    $
    9.96
    
    
    
    18,704
    
    
    $
    6,786.00Exercisable at December 31, 2006
    
    
    17,724
    
    
    $
    1,387.50
    
    
    
    567,726
    
    
    $
    19.35
    
    
    
    18,704
    
    
    $
    6,786.00
  2001 Plan
    
    
    1999 Plan
    
    
    Non-PlanWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageNumber
    
    
    Fair
    
    
    Number
    
    
    Fair
    
    
    Number
    
    
    Fairof Shares
    
    
    Value
    
    
    of Shares
    
    
    Value
    
    
    of Shares
    
    
    ValueBalance at June 30, 2006
    
    
    
    
    
    $
    
    
    
    
    271,125
    
    
    $
    0.41
    
    
    
    
    
    
    $
    Granted
    
    
    
    
    
    
    
    
    
    
    656,026
    
    
    $
    0.58
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    (377,526
    )
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    (25,875
    )
    
    
    
    
    
    
    Outstanding at December 31, 2006
    
    
    
    
    
    $
    
    
    
    
    523,750
    
    
    $
    0.44
    
    
    
    
    
    
    $
    
  12




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Options Outstanding and ExercisableWeighted
    
    
    WeightedNumber
    
    
    
    
    
    
    Average
    
    
    AverageOption Price
    
    
    of
    
    
    
    
    
    
    Exercise
    
    
    RemainingRange
    
    
    Shares
    
    
    Exercisable
    
    
    Price
    
    
    Contractual Life2001 Plan
    
    
    
    
    
    
    
    
    
    $
    1,387.50
    
    
    
    17,724
    
    
    
    17,724
    
    
    $
    1,387.50
    
    
    4.50 years1999 Plan
    
    $
    0.36
    
    
    to
    
    $
    0.55
    
    
    
    1,029,950
    
    
    
    567,726
    
    
    $
    0.49
    
    
    9.54 years$
    0.56
    
    
    to
    
    $
    2.00
    
    
    
    55,026
    
    
    
    55,026
    
    
    $
    1.07
    
    
    9.83 years$
    7.05
    
    
    
    167
    
    
    
    167
    
    
    $
    7.05
    
    
    7.79 years$
    8.01
    
    
    
    250
    
    
    
    250
    
    
    $
    8.01
    
    
    7.33 years$
    16.50
    
    
    
    4,083
    
    
    
    4,083
    
    
    $
    16.50
    
    
    6.33 years$
    3,000.00
    
    
    
    1,167
    
    
    
    1,167
    
    
    $
    3,000.00
    
    
    4.04 years$
    8,550.00
    
    
    
    833
    
    
    
    833
    
    
    $
    8,550.00
    
    
    4.46 yearsNon-Plan
    
    
    
    
    
    
    
    
    
    $
    3,600.00
    
    
    
    637
    
    
    
    637
    
    
    $
    3,600.00
    
    
    4.21 years$
    6,900.00
    
    
    
    18,067
    
    
    
    18,067
    
    
    $
    6,900.00
    
    
    4.25 years
 12. Related Party Transactions
   13. Legal Proceedings
  14. Subsequent Events
   13




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15. Segment Financial Data
  Three months ended
    
    
    Six months endedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues:Infrastructure construction and technical services
    
    $
    11,339,460
    
    
    $
    10,656,087
    
    
    $
    16,711,473
    
    
    $
    18,612,728Real estate acquisition and zoning
    
    
    2,348,556
    
    
    
    439,794
    
    
    
    4,766,030
    
    
    
    1,128,954Other
    
    
    (432
    )
    
    
    11,542
    
    
    
    15,245
    
    
    
    23,106Total
    
    $
    13,687,584
    
    
    $
    11,107,423
    
    
    $
    21,492,748
    
    
    $
    19,764,788Operating income (loss):Infrastructure construction and technical services
    
    $
    1,094,595
    
    
    $
    329,044
    
    
    $
    248,725
    
    
    $
    751,526Real estate acquisition and zoning
    
    
    588,862
    
    
    
    (130,850
    )
    
    
    873,860
    
    
    
    (219,100
    )Other
    
    
    359
    
    
    
    17,273
    
    
    
    9,512
    
    
    
    18,223$
    1,683,816
    
    
    $
    215,467
    
    
    $
    1,132,097
    
    
    $
    550,649
 
 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
   14




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Forward-Looking Statements
    
    
    our financial condition and strategic direction;
    
    our future capital requirements and our ability to satisfy our capital needs;
    
    the potential generation of future revenues;
    
    our ability to adequately staff our service offerings;
    
    opportunities for BCI from new and emerging wireless technologies;
    
    our ability to obtain additional financing;
    
    our growth strategy for BCI;
    
    trends in the wireless telecommunications industry;
    
    key drivers of change in BCIs business;
    
    our competitive position; and
    
    other statements that contain words like believe, anticipate, expect and similar
expressions are also used to identify forward-looking statements.
  
    
    risks inherent in our ability to continue as a going concern;
    
    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 related to a concentration of revenues from a small number of customers;
    
    risks that BCI will not be able to take advantage of new and emerging wireless technologies; and
    
    risks that BCI will be unable to adequately staff its service offerings.
    15




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##### Table of Contents



Summary of Operating Results
  Three months ended
    
    
    Six months endedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    13,687,584
    
    
    $
    11,107,423
    
    
    $
    21,492,748
    
    
    $
    19,764,788Costs of revenues
    
    
    8,657,705
    
    
    
    8,588,115
    
    
    
    14,374,284
    
    
    
    14,805,665Gross margin
    
    
    5,029,879
    
    
    
    2,519,308
    
    
    
    7,118,464
    
    
    
    4,959,123Selling, general and administrative expenses
    
    
    3,283,849
    
    
    
    2,241,441
    
    
    
    5,864,757
    
    
    
    4,285,188Depreciation and amortization
    
    
    62,214
    
    
    
    62,909
    
    
    
    119,093
    
    
    
    124,045(Gain) loss on sale of fixed assets
    
    
    
    
    
    
    (509
    )
    
    
    2,517
    
    
    
    (759
    )Income from operations
    
    
    1,683,816
    
    
    
    215,467
    
    
    
    1,132,097
    
    
    
    550,649Other (income) expenseInterest expense
    
    
    25,572
    
    
    
    17,292
    
    
    
    54,645
    
    
    
    26,863Interest income
    
    
    (3,801
    )
    
    
    (3,342
    )
    
    
    (8,411
    )
    
    
    (6,188
    )Gain on sale of equity of investment, net of losses
    
    
    
    
    
    
    (163,742
    )
    
    
    
    
    
    
    (97,995
    )Other
    
    
    
    
    
    
    (85,399
    )
    
    
    (14,488
    )
    
    
    (84,999
    )Income before income taxes
    
    
    1,662,045
    
    
    
    450,658
    
    
    
    1,100,351
    
    
    
    712,968Income tax expense
    
    
    508,926
    
    
    
    2,250
    
    
    
    508,926
    
    
    
    3,050Net income
    
    $
    1,153,119
    
    
    $
    448,408
    
    
    $
    591,425
    
    
    $
    709,918Deemed Series B and D preferred dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,935,779Net income (loss) allocable to common shareholders
    
    $
    1,153,119
    
    
    $
    448,408
    
    
    $
    591,425
    
    
    $
    (19,225,861
    )
 Balance Sheet data:
 December 31,2006
    
    
    2005Cash and cash equivalents
    
    
    
    
    
    $
    3,646,043
    
    
    $
    667,322Working capital
    
    
    
    
    
    $
    6,012,587
    
    
    $
    1,968,815Total assets
    
    
    
    
    
    $
    18,207,287
    
    
    $
    12,206,915Long term liabilities
    
    
    
    
    
    $
    2,411,120
    
    
    $
    149,410Total liabilities
    
    
    
    
    
    $
    13,441,737
    
    
    $
    9,679,617Stockholders equity
    
    
    
    
    
    $
    4,765,550
    
    
    $
    2,527,298
  16




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##### Table of Contents



Three months ended December 31, 2006, Compared to Three months ended December 31, 2005
 Revenues
 Costs of Revenues.
 Gross Margin.
 Selling, General and Administrative Expenses.
  Depreciation and Amortization.
 Loss in Equity of Investments.
 Income Taxes.
  17




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##### Table of Contents



Six months ended December 31, 2006, Compared to Six months ended December 31, 2005
 Revenues
 Cost of Revenues
 Gross Margin.
 Selling, General and Administrative Expenses
  Depreciation and Amortization
 Loss in Equity Investments
 Other (Income)
 Income Taxes.
  18




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Liquidity and Capital Resources
           19




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  
 PART II: OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 Old Berliner had a history of losses, and although we have had net income in prior periods, we may
never achieve sustained profitability.
  We generate a substantial portion of our revenues from a limited number of customers, and if our
relationships with such customers were harmed, our business would suffer.
  20




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##### Table of Contents



If the percentage of our revenues derived from construction-related activities increases, our gross
margins may suffer.
  Recent and continuing consolidations among wireless service providers may result in a
significant reduction in our existing and potential customer base, and, if we are unable to
maintain our existing relations with such providers or expand such relationships, we could have a
significant decrease in our revenues, which would negatively impact our ability to generate income
as well as result in lower profitability.
  We may need additional working capital, the lack of which would likely have a significant negative
impact on our ability to grow our business.
   If we experience delays and or defaults in customer payments, we could be unable to cover all
expenditures.
  Many of our customers face difficulties in obtaining financing to fund the expansion of their
wireless networks, including deployments and upgrades, which may reduce demand for our services.
  21




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##### Table of Contents



Our business is dependent upon our ability to keep pace with the latest technological changes.
  Our success is dependent on growth in the deployment of wireless networks and new technology
upgrades, and to the extent that such growth slows, our business may be harmed.
   Further delays in the adoption and deployment of next generation wireless networks could negatively
affect the demand for our services and our ability to grow our revenues.
  We bear the risk of cost overruns in some of our contracts.
   22




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##### Table of Contents



Our dependence on subcontractors and equipment manufacturers could adversely affect us.
  If we guarantee the timely completion or performance standard of a project, we could incur
significant, additional costs.
  The nature of our engineering and construction business exposes us to potential liability claims
and contract disputes that may negatively affect our results of operations.
  We maintain a workforce based upon current and anticipated workloads. If we do not receive future
contract awards or if these awards are delayed, we may incur significant costs in meeting workforce
demands.
  We may not be able to hire or retain a sufficient number of qualified engineers and other employees
to meet our contractual obligations or maintain the quality of our services.
   23




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##### Table of Contents



Intense competition in the engineering and construction industry could reduce our market share.
  We are vulnerable to the cyclical nature of the market we serve.
  We may experience significant fluctuations in our quarterly results as a result of uncertainties
relating to our ability to generate additional revenues, manage expenditures and other factors,
certain of which are outside of our control.
  
    
    financing provided to potential customers;
    
    the commencement, progress, completion or termination of contracts during any particular quarter;
    
    the availability of equipment to deploy new technologies, such a 4G and broadband;
    
    the growth rate of wireless subscribers, which has a direct impact on the rate at which
new cell sites are developed and built; and
    
    telecommunications market conditions and economic conditions generally.
  Our stock price is volatile and purchasers of our common stock could incur substantial losses.
  There is a lack of a public market for our shares, which limits our shareholders ability to sell
their shares.
  We have experienced, and expect to continue to experience, long sales cycles, we expect to incur
significant costs to generate new business and our customer base may not experience growth
commensurate with such costs.
   24




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##### Table of Contents



If we are unable to identify and complete future acquisitions, we may be unable to continue our
growth.
  We may be subject to additional liability for state sales tax.
  Risk Factors Related to Financing with Sigma, Pacific and Operis
 We may not be able to register the shares of common stock issuable upon conversion of our 7% Senior
Subordinated Secured Convertible Note Due 2008 and exercise of certain of our outstanding warrants,
which may subject us to financial penalties.
  Our 7% Senior Subordinated Secured Convertible Notes Due 2008 and the related Note Purchase
Agreement contain restrictions that may limit our flexibility to take certain actions in the
future, including raising additional capital.
  
    
    incur additional indebtedness;
    
    transfer or sell substantially all of our assets;
    
    incur liens;
    
    issue certain securities; and
    
    enter into transactions with affiliates.
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If we fail to reach certain revenue and other financial targets, the conversion price of our 7%
Senior Subordinated Secured Convertible Note Due 2008 will be reduced and you may experience
additional dilution.
  
 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   Nominee
    
    For
    
    
    Against
    
    
    AbstainPeter J. Mixter
    
    
    14,456,839
    
    
    
    117
    
    
    
    Mehran Nazari
    
    
    14,356,339
    
    
    
    617
    
    
    
    
   For
    
    Against
    
    Abstain14,456,881
    
    72
    
    3
  
 Item 5. Other Information
   26




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Item 6. Exhibits
  3.1
    
    Amended Articles of Incorporation filed on February 8, 2007.31.1
    
    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. *31.3
    
    Certification of the Principal Accounting Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002. *32.1
    
    Certification of our Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
   27




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##### Table of Contents



SIGNATURES
   Date:  February 14, 2007
    By:
    /s/ Richard B. BerlinerRichard B. BerlinerChief Executive Officer
(Principal Executive Officer)Date: February 14, 2007
    By:
    /s/ Albert E. GencarellaAlbert E. GencarellaChief Financial Officer
(Principal Financial Officer)Date: February 14, 2007
    By:
    /s/ Patrick G. MackeyPatrick G. MackeySenior Vice President
(Principal Accounting Officer)  28




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description3.1
    
    Amended Articles of Incorporation filed on February 8, 2007.31.1
    
    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. *31.3
    
    Certification of the Principal Accounting Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002. *32.1
    
    Certification of our Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
   29