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 nine months ended June 30, 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 June 30, 2012, and Condensed Consolidated Statement of Operations for the three and nine months ending June 30, 2012, and Condensed Consolidated Statements of Cash Flows and Stockholders’ Equity for the nine months ended June 30, 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 nine months ended June 30, 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.

Going Concern, Liquidity and Capital Resources

For the nine months ended June 30, 2012, the Company generated a net loss of $5,894, which included a non- cash impairment of intangible assets of $2,062 (see Note 2) and other non-cash expenses aggregating $1,952. Cash used in operations amounted to $1,042 for the nine months ended June 30, 2012. As of June 30, 2012, the Company’s accumulated deficit amounted to $42,587, with cash and cash equivalents of $75 and a working capital deficit of $4,905. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

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. The placement expired on March 1, 2012 and the Company raised aggregate 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. Upon maturity, on June 29, 2012 the Company began negotiating an extension with the Noteholder to roll the balance into another note, with an additional $300 of funds, received on July 2, 2012, for a total note of $600 bearing interest at 12% and payable over a 24 month term, with interest only for the first twelve months and principal and interest payments beginning month thirteen through the end of the term.

The principal payments on the Notes previously discussed have begun to come due and have been paid in June of fiscal 2012 according to terms. However subsequent to June 30, 2012, the Company has been unable to make the required principal payments and is currently in a state of default with respect to the Notes. The Company is currently negotiating potential options related to the notes, including restructuring the debt, refinancing and recapitalizing the Company. There can be no assurance at this time that the Company will secure the required arrangements to meet its obligations. 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 consider other strategic alternatives and or take additional measures to conserve liquidity. These strategic alternatives and measures may include but are not limited to securing a strategic investor, the sale or merger of the Company, the issuance of additional debt or equity, suspending the execution of the Company’s business plan, controlling overhead expenses, extending certain obligations and or a structured reorganization.

Accordingly, the accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.