The condensed consolidated financial statements include the accounts of Beacon Enterprise Solutions Group, Inc., a Nevada corporation and its wholly-owned subsidiaries including BESG Ireland Ltd. and Beacon Solutions S.R.O, collectively referred to as “Beacon” or the “Company”. Datacenter Contractors AG (formerly Beacon Solutions AG) acquired on July 29, 2009 and discontinued as of June 30, 2010, has been deconsolidated as of December 14, 2010 due to the cessation of the Company’s controlling financial interest in the subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements for the three and six months ended March 31, 2012 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the annual audited consolidated financial statements. The unaudited Condensed Consolidated Balance Sheet as of March 31, 2012, and Condensed Consolidated Statement of Operations for the three and six months ending March 31, 2012, and Condensed Consolidated Statements of Cash Flows and Stockholders’ Equity for the six months ended March 31, 2012 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which Beacon considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three and six months ended March 31, 2012 are not necessarily indicative of results to be expected for the year ending September 30, 2012 or for any future interim period. The accompanying condensed consolidated financial statements should be read in conjunction with Beacon’s consolidated financial statements and notes thereto included in Beacon’s Annual Report on Form 10-K, which was filed with the SEC on December 12, 2011.

Beacon provides international telecommunications and information technology systems (ITS) infrastructure services, encompassing a comprehensive suite of consulting, design, installation, and infrastructure management offerings. Beacon’s portfolio of infrastructure services spans all professional and construction requirements for design, build and management of telecommunications, network and technology systems infrastructure. Professional services offered include consulting, engineering, program management, project management, construction services and infrastructure management services. Beacon offers these services under either a comprehensive contract option or unbundled to the Company’s global and regional clients.

Liquidity and Capital Resources

For the six months ended March 31, 2012, the Company generated a net loss of $2,091, which included non-cash expenses aggregating $1,207. Cash used in continuing operations amounted to $800 for the six months ended March 31, 2012. The Company’s accumulated deficit amounted to $38,747, with cash and cash equivalents of $893 and a working capital deficit of $3,517.

On October 6, 2011, the Company initiated a private placement of up to $4,500 of 12 month Senior Secured Notes (“Notes”). The Notes bear interest at 13% APR. Net proceeds were used to repay and replace previously existing Senior Secured Bank Notes totaling approximately $3,000 and for additional working capital. As of March 31, 2012, the Company has raised net proceeds of $3,529 (gross proceeds of $4,208 less costs of $679). See Note 4.

On October 14, 2011, the Company raised $160 in cash proceeds from the sales 107 units of Series C-3 Convertible Preferred Stock. See Note 7.

On March 28, 2012 the Company issued a 90 day promissory note in the amount of $300 bearing interest at 12% per annum.

Despite the temporary delays in the orders from the Company's largest customer, year-to-date sales continue to compare favorably with the previous fiscal year. As a result of the improved sales and cost reduction measures implemented and those that are still to be reflected in the financial results, operations are expected to generate a positive cash flow in the current fiscal year, although there can be no such assurances. The principal payments on the Notes previously discussed will begin to come due in June of fiscal 2012, which could cause the Company to have a potential cash shortfall. Accordingly, the Company will need to secure additional financing or arrange for extensions in order to service these principal payments. Therefore management is currently in discussions with potential lenders for additional financing as well as the holders of the Notes. While management believes it will be successful, there can be no assurance at this time that they will secure the required arrangements. To the extent that the Company is unsuccessful in its plans to obtain new financing arrangements or extend the existing Notes, the Company will be required to take additional measures to conserve liquidity. These measures may include curtailing its business development activities, suspending the execution of the Company's business plan, controlling overhead expenses and extending certain obligations.