##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 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 No. 000-31355
 BEACON ENTERPRISE SOLUTIONS GROUP, INC.
  Nevada
    
    81-0438093(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 
 
  þ o
  o þ
  o þ
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ




---



##### 



PART I: FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 4. Controls and Procedures
    
    
    36PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    38Item 4. Removed and Reserved
    
    
    38Item 5. Other information
    
    
    38Item 6. Exhibits
    
    
    38Signatures
    
    
    39EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



ITEM 1.
    
    FINANCIAL STATEMENTS
 Beacon Enterprise Solutions Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
 March 31,
    
    
    September 30,2010
    
    
    2009(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,430,465
    
    
    $
    264,338Accounts receivable, net
    
    
    3,750,730
    
    
    
    3,980,715Unbilled accounts receivable
    
    
    1,744,421
    
    
    
    Inventory, net
    
    
    497,332
    
    
    
    604,622Prepaid expenses and other current assets
    
    
    1,200,885
    
    
    
    397,319Total current assets
    
    
    10,623,833
    
    
    
    5,246,994Property and equipment, net
    
    
    710,620
    
    
    
    394,571Goodwill
    
    
    3,057,038
    
    
    
    3,151,948Other intangible assets, net
    
    
    3,599,510
    
    
    
    3,903,124Other assets
    
    
    126,110
    
    
    
    117,111Total assets
    
    $
    18,117,111
    
    
    $
    12,813,748LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short term credit obligations
    
    $
    500,000
    
    
    $
    550,000Convertible notes payable
    
    
    
    
    
    
    297,999Bridge notes (net of $0 and $33,123 discounts)
    
    
    100,000
    
    
    
    166,879Current portion of long-term debt
    
    
    410,205
    
    
    
    475,348Accounts payable
    
    
    4,318,254
    
    
    
    2,176,845Accrued expenses
    
    
    3,890,937
    
    
    
    3,047,418Billings in excess of estimated costs and earnings on uncompleted
contracts
    
    
    191,866
    
    
    
    Total current liabilities
    
    
    9,411,262
    
    
    
    6,714,489Long-term debt, less current portion
    
    
    606,549
    
    
    
    802,335Deferred tax liability
    
    
    133,051
    
    
    
    103,484Total liabilities
    
    
    10,150,862
    
    
    
    7,620,308Stockholders equityPreferred Stock: $0.01 par value, 5,000,000 shares
authorized, 1,464 and 3,436 shares outstanding in the
following classes:Series A convertible preferred stock, $1,000 stated value,
4,500 shares authorized, 342 and 1,984 shares issued and
outstanding at March 31, 2010 and September 30, 2009, respectively,
(liquidation preference $471,280)
    
    
    342,373
    
    
    
    1,984,074Series A-1 convertible preferred stock, $1,000 stated value,
1,000 shares authorized, 422 and 752 shares issued and
outstanding, at March 31, 2010 and September 30, 2009, respectively
(liquidation preference $548,727)
    
    
    422,389
    
    
    
    752,347Series B convertible preferred stock, $1,000 stated value, 4,000 shares
authorized, 700 shares issued and outstanding at March 31, 2010 and
September 30, 2009, respectively (liquidation preference $941,068)
    
    
    700,000
    
    
    
    700,000Common stock, $0.001 par value 70,000,000 shares
authorized, 35,275,513 and 24,655,990 shares issued and
outstanding at March 31, 2010 and September 30, 2009, respectively.
    
    
    35,275
    
    
    
    24,656Additional paid in capital
    
    
    34,704,730
    
    
    
    17,977,046Subscription
receivable
    
    
    (334,950
    )
    
    
    Accumulated deficit
    
    
    (27,999,235
    )
    
    
    (16,254,545
    )Accumulated other comprehensive income
    
    
    95,667
    
    
    
    9,862Total stockholders equity
    
    
    7,966,249
    
    
    
    5,193,440Total liabilities and stockholders equity
    
    $
    18,117,111
    
    
    $
    12,813,748
  3




---



##### Table of Contents



Beacon Enterprise Solutions Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
 For the three
    
    
    For the three
    
    
    For the six
    
    
    For the sixmonths ended
    
    
    months ended
    
    
    months ended
    
    
    months endedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    11,771,687
    
    
    $
    2,277,877
    
    
    $
    20,341,331
    
    
    $
    4,079,085Cost of goods sold
    
    
    7,617,973
    
    
    
    767,045
    
    
    
    13,051,886
    
    
    
    1,430,920Cost of services
    
    
    1,538,157
    
    
    
    625,179
    
    
    
    2,909,535
    
    
    
    1,277,924Gross profit
    
    
    2,615,557
    
    
    
    885,653
    
    
    
    4,379,910
    
    
    
    1,370,241Operating expenseSalaries and benefits
    
    
    2,175,798
    
    
    
    1,018,946
    
    
    
    3,486,830
    
    
    
    1,922,587Selling, general and administrative
    
    
    2,105,406
    
    
    
    847,932
    
    
    
    3,343,893
    
    
    
    1,524,016Total operating expense
    
    
    4,281,204
    
    
    
    1,866,878
    
    
    
    6,830,723
    
    
    
    3,446,603Loss from operations
    
    
    (1,665,647
    )
    
    
    (981,225
    )
    
    
    (2,450,813
    )
    
    
    (2,076,362
    )Other (expenses) incomeInterest expense
    
    
    (7,435
    )
    
    
    (226,632
    )
    
    
    (192,984
    )
    
    
    (439,969
    )Interest
income
    
    
    10,591
    
    
    
    195
    
    
    
    10,929
    
    
    
    362Change in fair value of warrants
    
    
    (4,349,296
    )
    
    
    
    
    
    
    (4,373,012
    )
    
    
    Total other expenses
    
    
    (4,346,140
    )
    
    
    (226,437
    )
    
    
    (4,555,067
    )
    
    
    (439,607
    )Net (loss) before income taxes
    
    
    (6,011,787
    )
    
    
    (1,207,662
    )
    
    
    (7,005,880
    )
    
    
    (2,515,969
    )Income tax benefit
    
    
    120,857
    
    
    
    
    
    
    
    84,246
    
    
    
    Net (loss)
    
    
    (5,890,930
    )
    
    
    (1,207,662
    )
    
    
    (6,921,634
    )
    
    
    (2,515,969
    )Series A, A-1 and B Preferred Stock:Contractual dividends
    
    
    (78,910
    )
    
    
    (126,000
    )
    
    
    (126,506
    )
    
    
    (251,152
    )Deemed dividends related to beneficial
conversion feature
    
    
    (43,591
    )
    
    
    (106,792
    )
    
    
    (69,020
    )
    
    
    (187,139
    )Net (loss) available to common stockholders
    
    $
    (6,013,431
    )
    
    $
    (1,440,454
    )
    
    $
    (7,117,160
    )
    
    $
    (2,954,260
    )Net loss per share to common stockholders
- basic and diluted
    
    $
    (0.20
    )
    
    $
    (0.10
    )
    
    $
    (0.25
    )
    
    $
    (0.22
    )Weighted average shares outstanding
basic and diluted
    
    
    30,258,763
    
    
    
    14,049,769
    
    
    
    28,184,868
    
    
    
    13,294,909Other Comprehensive income, net of taxNet Loss
    
    $
    (6,013,431
    )
    
    $
    (1,440,454
    )
    
    $
    (7,117,160
    )
    
    $
    (2,954,260
    )Foreign currency translations adjustment
    
    
    100,975
    
    
    
    
    
    
    
    85,805
    
    
    
    Comprehensive loss
    
    $
    (5,912,456
    )
    
    $
    (1,440,454
    )
    
    $
    (7,031,355
    )
    
    $
    (2,954,260
    )
  4




---



##### Table of Contents



Beacon Enterprise Solutions Group, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders Equity
(unaudited)
 Series A Convertible
    
    
    Series A-1 Convertible
    
    
    Series B Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedPreferred Stock
    
    
    Preferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other$1,000 Stated
    
    
    
    
    
    
    $1,000 Stated
    
    
    
    
    
    
    $1,000 Stated
    
    
    
    
    
    
    $0.001 Par
    
    
    Subscription
    
    
    Paid-In
    
    
    Accumulated
    
    
    ComprehensiveShares
    
    
    Value
    
    
    Shares
    
    
    Value
    
    
    Shares
    
    
    Value
    
    
    Shares
    
    
    Value
    
    
    Receivable
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    TotalBalance at September 30, 2009
    
    
    1,984
    
    
    $
    1,984,074
    
    
    
    752
    
    
    $
    752,347
    
    
    
    700
    
    
    $
    700,000
    
    
    
    24,655,990
    
    
    $
    24,656
    
    
    
    
    
    
    $
    17,977,046
    
    
    $
    (16,254,545
    )
    
    $
    9,862
    
    
    $
    5,193,440Cumulative effect of change in accounting principal 
fair value of warrants with anti dilutive rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,627,530
    )
    
    
    
    
    
    
    (4,627,530
    )Reclassification of derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,094,782
    
    
    
    
    
    
    
    
    
    
    
    10,094,782Vested portion of share based
payments to employee for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    485,545
    
    
    
    
    
    
    
    
    
    
    
    485,545Common Stock issued
in private placement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,795,295
    
    
    
    3,794
    
    
    
    
    
    
    
    1,883,966
    
    
    
    
    
    
    
    
    
    
    
    1,887,759Private placement offering costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (583,875
    )
    
    
    
    
    
    
    
    
    
    
    (583,875
    )Warrants issued for extension
of non-interest bearing note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,311
    
    
    
    
    
    
    
    
    
    
    
    64,311Warrants issued under consulting agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,652
    
    
    
    
    
    
    
    
    
    
    
    101,652Common Stock issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    for investor relations agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    50
    
    
    
    
    
    
    
    44,450
    
    
    
    
    
    
    
    
    
    
    
    44,500Market value of Common stock
vested for investor relations agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    50
    
    
    
    
    
    
    
    3,700
    
    
    
    
    
    
    
    
    
    
    
    3,750Amortization of non-employee stock options issued
for performance of services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,145
    
    
    
    
    
    
    
    
    
    
    
    3,145Conversion of preferred shares to common stock
    
    
    (1,681
    )
    
    
    (1,680,551
    )
    
    
    (351
    )
    
    
    (351,178
    )
    
    
    
    
    
    
    
    
    
    
    2,715,160
    
    
    
    2,716
    
    
    
    
    
    
    
    2,029,014Common Stock issued in warrant offering
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,375,376
    
    
    
    3,376
    
    
    $
    (334,950
    )
    
    
    2,422,437
    
    
    
    
    
    
    
    
    
    
    
    2,090,863Shares issued in conversion of bridge note
to common
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183,620
    
    
    
    183
    
    
    
    
    
    
    
    109,988
    
    
    
    
    
    
    
    
    
    
    
    110,171Cashless warrant exercises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450,072
    
    
    
    450
    
    
    
    
    
    
    
    (450
    )
    
    
    
    
    
    
    
    
    
    
    Series A Preferred Stock contractual
dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67,888
    )
    
    
    
    
    
    
    (67,888
    )Series A Preferred Stock contractual
dividends paid in in kind
    
    
    39
    
    
    
    38,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,850Series A-1 Preferred Stock contractual
dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,618
    )
    
    
    
    
    
    
    (37,618
    )Series A-1 Preferred Stock contractual
dividends paid in in kind
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    21,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,220Series B Preferred Stock contractual
dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,000
    )
    
    
    
    
    
    
    (21,000
    )Beneficial conversion feature 
deemed preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,020
    
    
    
    (69,020
    )
    
    
    
    
    
    
    Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,805
    
    
    
    85,805Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,921,634
    )
    
    
    
    
    
    
    (6,921,634
    )Balance at March 31, 2010
    
    
    342
    
    
    $
    342,373
    
    
    
    422
    
    
    $
    422,389
    
    
    
    700
    
    
    $
    700,000
    
    
    
    35,275,513
    
    
    $
    35,275
    
    
    $
    (334,950
    )
    
    $
    34,704,730
    
    
    $
    (27,999,235
    )
    
    $
    95,667
    
    
    $
    7,966,249
  5




---



##### Table of Contents



Beacon Enterprise Solutions Group, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
 For the Six
    
    
    For the SixMonths Ended
    
    
    Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (6,921,634
    )
    
    $
    (2,515,969
    )Adjustments to reconcile net loss to net cash used in operating activities:Change in reserve for obsolete inventory
    
    
    22,708
    
    
    
    33,629Change in reserve for doubtful accounts
    
    
    66,716
    
    
    
    44,912Depreciation and amortization
    
    
    388,278
    
    
    
    301,936Non-cash interest
    
    
    107,604
    
    
    
    302,546Share based payments
    
    
    638,592
    
    
    
    247,890Change in fair value of warrants with anti-dilution rights
    
    
    4,373,012
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    138,508
    
    
    
    (494,021
    )Unbilled accounts receivable
    
    
    (1,744,421
    )
    
    
    Billings in excess of estimated costs and earnings on uncompleted contracts
    
    
    191,866
    
    
    
    Inventory
    
    
    84,582
    
    
    
    (2,775
    )Prepaid expenses and other current assets
    
    
    (812,566
    )
    
    
    (388,380
    )Accounts payable
    
    
    2,141,409
    
    
    
    385,588Accrued expenses
    
    
    973,433
    
    
    
    119,249NET CASH USED IN OPERATING ACTIVITIES
    
    
    (351,914
    )
    
    
    (1,965,395
    )CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (451,102
    )
    
    
    (86,287
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (451,102
    )
    
    
    (86,287
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from sale of preferred stock, net of offering costs
    
    
    
    
    
    
    300,000Proceeds from sale of common stock, net of offering costs
    
    
    2,398,126
    
    
    
    1,588,905Proceeds from warrant exercises, net of offering costs
    
    
    2,090,862
    
    
    
    Proceeds from issuances of notes
    
    
    500,000
    
    
    
    500,000Payment of deferred financing costs
    
    
    
    
    
    
    (75,000
    )Net payments under lines of credit
    
    
    (50,000
    )
    
    
    (46,400
    )Payments of bridge and other short term notes
    
    
    (500,000
    )
    
    
    Repayment of convertible notes
    
    
    (297,999
    )
    
    
    Payments of notes payable
    
    
    (260,929
    )
    
    
    (297,395
    )Payments of capital lease obligation
    
    
    
    
    
    
    (8,269
    )NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    3,880,060
    
    
    
    1,961,841Effect of exchange rate changes on cash and cash equivalents
    
    
    89,083
    
    
    
    NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    3,166,127
    
    
    
    (89,841
    )CASH AND CASH EQUIVALENTS  BEGINNING OF PERIOD
    
    
    264,338
    
    
    
    127,373CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    3,430,465
    
    
    $
    37,532Supplemental disclosuresCash paid for:Interest
    
    $
    85,380
    
    
    $
    88,697Income taxes
    
    $
    
    
    
    $
    
  6




---



##### Table of Contents



BEACON ENTERPRISE SOLUTIONS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 NOTE 1  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Organization
   Symbiotec Solutions AG
   For the
    
    For thethree months
    
    six monthsMarch 31,
    
    March 31,2009
    
    2009(unaudited)
    
    (unaudited)Net sales
    
    $
    2,420,697
    
    
    $
    4,371,175Loss from operations
    
    $
    (969,342
    )
    
    $
    (2,052,059
    )Net loss available to common stockholders
    
    $
    (1,430,794
    )
    
    $
    (2,934,940
    )Net loss per share  basic and diluted
    
    
    (0.10
    )
    
    
    (0.21
    )Pro-forma weighted average shares outstanding
    
    
    14,449,769
    
    
    
    13,694,909
  7




---



##### Table of Contents



Basis of Presentation
  Principles of Consolidation
  Revenue and Cost Recognition
   Construction Type Contracts
  8




---



##### Table of Contents



Time and Materials Contracts
   Revenue Recognition (ASC Topic 605) Multiple-Deliverable Revenue Arrangements  a consensus of the
FASB EITF 00-21-1
 9




---



##### Table of Contents



Professional Services Revenue
   Warranties
  Use of Estimates
  10




---



##### Table of Contents



Fair Value of Financial Assets and Liabilities
    Level 1  quoted prices in active markets for identical assets or liabilitiesLevel 2  quoted prices for similar assets and liabilities in active markets or inputs that
are observableLevel 3  inputs that are unobservable (for example cash flow modeling inputs based on
assumptions)
 Foreign Currency Reporting
  Net Loss per Share
  11




---



##### Table of Contents



TotalStock
    
    Common
    
    CommonOptions and
    
    Stock
    
    StockWarrants
    
    Equivalents
    
    EquivalentsSeries A Convertible Preferred Stock Warrants
    
    
    228,249
    
    
    
    456,497
    
    
    
    684,746Series A-1 Convertible Preferred Stock Warrants
    
    
    281,593
    
    
    
    563,185
    
    
    
    844,778Series B Convertible Preferred Stock Warrants
    
    
    350,000
    
    
    
    875,000
    
    
    
    1,225,000Common Stock Offering Warrants
    
    
    2,028,515
    
    
    
    
    
    
    
    2,028,515Placement Agent Warrants
    
    
    2,660,911
    
    
    
    
    
    
    
    2,660,911Affiliate Warrants
    
    
    55,583
    
    
    
    
    
    
    
    55,583Bridge Financings Warrants
    
    
    707,690
    
    
    
    166,667
    
    
    
    874,357Convertible Notes Payable Warrants
    
    
    50,000
    
    
    
    
    
    
    
    50,000Compensatory Warrants
    
    
    300,000
    
    
    
    
    
    
    
    300,000Put Option Warrants
    
    
    399,998
    
    
    
    
    
    
    
    399,998Equity Financing Arrangements Warrants
    
    
    2,418,825
    
    
    
    
    
    
    
    2,418,825Consulting Warrants
    
    
    2,500,000
    
    
    
    
    
    
    
    2,500,000Employee Stock Options
    
    
    3,475,200
    
    
    
    
    
    
    
    3,475,200Non-Employee Stock Options
    
    
    100,000
    
    
    
    
    
    
    
    100,00015,556,564
    
    
    
    2,061,350
    
    
    
    17,617,914
 Recent Accounting Pronouncements
   12




---



##### Table of Contents



Revenue
Recognition  Milestone Method (Topic 605): Milestone Method of Revenue Recognition.
  NOTE 2  LIQUIDITY, FINANCIAL CONDITION AND MANAGEMENTS PLANS
  13




---



##### Table of Contents



NOTE 3  CONDENSED CONSOLIDATED BALANCE SHEET
 Accounts Receivable
  As of
    
    
    As ofMarch 31,
    
    
    September 30,2010
    
    
    2009Accounts receivable
    
    $
    3,933,201
    
    
    $
    4,138,486Less: Allowance for doubtful accounts
    
    
    (182,471
    )
    
    
    (157,771
    )Accounts receivable, net
    
    $
    3,750,730
    
    
    $
    3,980,715
  As of
    
    
    As ofMarch 31,
    
    
    September 30,2010
    
    
    2009Opening balance
    
    $
    (157,771
    )
    
    $
    (50,000
    )Add: Additions to reserve
    
    
    (66,716
    )
    
    
    (151,888
    )Less: charges
    
    
    42,016
    
    
    
    44,117Ending balance
    
    $
    (182,471
    )
    
    $
    (157,771
    )
  14




---



##### Table of Contents



Inventory
  As of
    
    
    As ofMarch 31,
    
    
    September 30,2010
    
    
    2009Inventory
    
    $
    680,539
    
    
    $
    765,121Less: reserve for obsolete inventory
    
    
    (183,207
    )
    
    
    (160,499
    )Inventory
    
    $
    497,332
    
    
    $
    604,622
  As of
    
    
    As ofMarch 31,
    
    
    September 30,2010
    
    
    2009Opening balance
    
    $
    (160,499
    )
    
    $
    (35,058
    )Add: additions to reserve
    
    
    (22,708
    )
    
    
    (144,659
    )Less: charges
    
    
    
    
    
    
    19,218Ending balance
    
    $
    (183,207
    )
    
    $
    (160,499
    )
 Prepaid and other current assets
  As of
    
    
    As ofMarch 31,
    
    
    September 30,2010
    
    
    2009Prepaid note discount
    
    $
    732,765
    
    
    $
    5,667Note receiveable  Gerber
    
    
    170,000
    
    
    
    320,000Investor relations
    
    
    23,955
    
    
    
    24,689Other
    
    
    274,165
    
    
    
    46,963Accounts receivable, net
    
    $
    1,200,885
    
    
    $
    397,319
  15




---



##### Table of Contents



Other Intangible Assets
  As of
    
    
    As ofMarch 31,
    
    
    September 30,2010
    
    
    2009Total
    
    
    TotalConsideration
    
    
    ConsiderationCustomer relationships
    
    $
    4,135,462
    
    
    $
    4,223,174Covenants not to compete
    
    
    701,529
    
    
    
    642,3004,836,990
    
    
    
    4,865,474Less: Accumulated amortization
    
    
    (1,237,481
    )
    
    
    (962,350
    )Intangibles, net
    
    $
    3,599,510
    
    
    $
    3,903,124
  Accrued Expenses
  As of
    
    
    As ofMarch 31,
    
    
    September 30,2010
    
    
    2009Accrued Sub-contractor
    
    $
    1,698,796
    
    
    $
    Sales tax payable
    
    
    970,976
    
    
    
    66,798Compensation related
    
    
    510,873
    
    
    
    559,782Dividends
    
    
    104,398
    
    
    
    37,962Contingent consideration
    
    
    145,189
    
    
    
    145,189Interest
    
    
    47,795
    
    
    
    122,660Warranty reserve
    
    
    34,446
    
    
    
    65,072Goods received not invoiced
    
    
    
    
    
    
    1,092,042Severance and related
    
    
    
    
    
    
    156,248Other
    
    
    378,464
    
    
    
    801,665$
    3,890,937
    
    
    $
    3,047,418
 16




---



##### Table of Contents



Debt
  As of
    
    
    As ofMarch 31,
    
    
    September 30,2010
    
    
    2009Lines of
Credit and
Short-Term Notes
    
    $
    500,000
    
    
    $
    550,000Convertible Notes Payable
    
    $
    
    
    
    $
    297,999Bridge Note
    
    $
    100,000
    
    
    $
    166,879Integra Bank
    
    $
    382,079
    
    
    $
    439,367Acquistion notes
(payable to the
sellers
of the acquired businesses)ADSnetcurve
    
    
    45,733
    
    
    
    80,922Bell-Haun
    
    
    
    
    
    
    43,985CETCON
    
    
    359,247
    
    
    
    416,404Strategic Secured Note
    
    
    229,695
    
    
    
    297,0051,016,754
    
    
    
    1,277,683Less: current portion
    
    
    (410,205
    )
    
    
    (475,348
    )Non-current portion
    
    $
    606,549
    
    
    $
    802,335
 Lines of Credit and Short-Term Notes
    17




---



##### Table of Contents



Convertible Notes Payable
  Bridge Notes
   Term Debt
  NOTE 4  RELATED PARTY TRANSACTIONS
   NOTE 5  COMMITMENTS AND CONTINGENCIES
 Employment Agreements
  18




---



##### Table of Contents



Operating Leases
  2011
    
    $
    118,8762012
    
    
    36,0002013
    
    
    36,0002014
    
    
    9,000$
    199,876
 Engagement of Investor Relations Firm
   Consulting Agreement
  Expected
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Risk-Free
    
    
    Value
    
    
    Amount to beIssuance
    
    Warrants
    
    
    Life
    
    
    Strike
    
    
    Stock
    
    
    
    
    
    
    Dividend
    
    
    Interese
    
    
    per
    
    
    charged toDate
    
    Issued
    
    
    (days)
    
    
    Price
    
    
    Price
    
    
    Volatility
    
    
    Yield
    
    
    Rate
    
    
    Option
    
    
    compensation12/1/2009
    
    
    1,500,000
    
    
    
    1,825
    
    
    $
    1.00
    
    
    $
    0.81
    
    
    
    66.34
    %
    
    
    0
    %
    
    
    2.03
    %
    
    $
    0.42
    
    
    $
    627,60012/1/2009
    
    
    250,000
    
    
    
    1,825
    
    
    $
    1.50
    
    
    $
    0.81
    
    
    
    66.34
    %
    
    
    0
    %
    
    
    2.03
    %
    
    $
    0.34
    
    
    $
    85,52512/1/2009
    
    
    250,000
    
    
    
    1,825
    
    
    $
    2.00
    
    
    $
    0.81
    
    
    
    66.34
    %
    
    
    0
    %
    
    
    2.03
    %
    
    $
    0.29
    
    
    $
    72,27512/1/2009
    
    
    250,000
    
    
    
    1,825
    
    
    $
    2.25
    
    
    $
    0.81
    
    
    
    66.34
    %
    
    
    0
    %
    
    
    2.03
    %
    
    $
    0.27
    
    
    $
    67,02512/1/2009
    
    
    250,000
    
    
    
    1,825
    
    
    $
    2.50
    
    
    $
    0.81
    
    
    
    66.34
    %
    
    
    0
    %
    
    
    2.03
    %
    
    $
    0.25
    
    
    $
    62,4502,500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    914,875
 19




---



##### Table of Contents



NOTE 6 STOCKHOLDERS EQUITY
 Authorized Capital
  Preferred Stock
     Preferred Stock Dividend
  Preferred Stock Conversions to Common Stock
  Completion of Common Stock and Warrant Offering
    20




---



##### Table of Contents



Cashless Warrant conversions
  Derivative Financial Instruments
   October 12009Expected Life
    
    
    3.72Risk-free interest rate
    
    
    2.20
    %Dividend Yield
    
    
    0
    %Volatility
    
    
    66.34
    %Warrants issued with private placements
    
    
    9,979,577Fair value of warrants
    
    $
    4,627,530
  Expected Life
    
    
    5Risk-free interest rate
    
    
    2.69
    %Dividend Yield
    
    
    0
    %Volatility
    
    
    66.34
    %Weighted
average unit fair value
    
    $
    0.47
  21




---



##### Table of Contents



March 30,2010Expected Life
    
    
    3.88Risk-free interest rate
    
    
    2.55
    %Dividend Yield
    
    
    0
    %Volatility
    
    
    65.40
    %Warrants
issued with private placements (including 3,375,375 with a discounted
exercise price of $0.10 per share)
    
    
    12,291,827Fair value of warrants
    
    $
    10,094,782
   22




---



##### Table of Contents



Issuance of non-employee compensatory options
  NOTE 7  INCOME TAXES
     Beacon North
    
    
    BESG IrelandAmerica
    
    
    Ltd
    
    
    Beacon AG
    
    
    Beacon CZ
    
    
    ConsolidatedNet income (loss)
    
    $
    (5,433,285
    )
    
    $
    (623,735
    )
    
    $
    27,961
    
    
    $
    17,272
    
    
    $
    (6,011,787
    )Tax rate
    
    
    1
    %
    
    
    25
    %
    
    
    8
    %
    
    
    19
    %Tax expense (benefit)
    
    $
    29,567
    
    
    $
    (155,921
    )
    
    $
    2,216
    
    
    $
    3,281
    
    
    $
    (120,857
    )
 23




---



##### Table of Contents



Beacon North
    
    
    BESG IrelandAmerica
    
    
    Ltd
    
    
    Beacon AG
    
    
    Beacon CZ
    
    
    ConsolidatedNet income (loss)
    
    $
    (6,572,129
    )
    
    $
    (468,433
    )
    
    $
    17,411
    
    
    $
    17,271
    
    
    $
    (7,005,880
    )Tax rate
    
    
    0
    %
    
    
    25
    %
    
    
    0
    %
    
    
    19
    %Tax expense (benefit)
    
    $
    29,567
    
    
    $
    (117,094
    )
    
    $
    
    
    
    $
    3,281
    
    
    $
    (84,246
    )
   NOTE 8  EMPLOYEE BENEFIT PLANS
 Stock Options and Other Equity Compensation Plans
  January 22,
    
    February 5,
    
    March 22,2010
    
    2010
    
    2010Stock Price
    
    
    1.07
    
    
    
    1.07
    
    
    
    1.38Expected Life
    
    
    6.5
    
    
    
    6.5
    
    
    
    6.5Volatility
    
    
    65.40
    %
    
    
    65.40
    %
    
    
    65.40
    %Risk-free interest rate
    
    
    2.23
    %
    
    
    2.65
    %
    
    
    2.36
    %Dividend Yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Fair value
of options
    
    $
    0.67
    
    
    $
    0.67
    
    
    $
    0.86
  Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Non-Cash Share-Based Compensation ExpenseRestricted Stock
    
    $
    9,761
    
    
    $
    44,119
    
    
    $
    54,862
    
    
    $
    89,220Stock Options
    
    
    230,727
    
    
    
    54,883
    
    
    
    430,683
    
    
    
    61,870Total Stock Compensation Expense
    
    $
    240,488
    
    
    $
    99,002
    
    
    $
    485,545
    
    
    $
    151,090
  WeightedAverageWeighted
    
    
    
    
    
    
    RemainingNumber
    
    
    Average
    
    
    Intrinsic
    
    
    ContractualOf Options
    
    
    Exercise Price
    
    
    Value
    
    
    LifeOptions Outstanding at October 1, 2009
    
    
    3,200,900
    
    
    $
    1.19Granted
    
    
    285,000
    
    
    $
    1.10Forfeited
    
    
    (10,700
    )
    
    $
    (0.91
    )Options Outstanding at March 31, 2010
    
    
    3,475,200
    
    
    $
    1.18
    
    
    
    0.38
    
    
    
    9.13Exercisable, March 31, 2010
    
    
    111,733
    
    
    $
    1.21
    
    
    
    0.92
    
    
    
    8.57
 24




---



##### Table of Contents



Restricted Stock
  Note 9  Segment Reporting
     United States
    
    Europe
    
    TotalNet Sales
    
    
    2,333,840
    
    
    
    9,437,847
    
    
    
    11,771,687Loss from Operations
    
    
    (1,076,855
    )
    
    
    (588,792
    )
    
    
    (1,665,647
    )Interest Expense
    
    
    (7,184
    )
    
    
    (251
    )
    
    
    (7,435
    )Change in fair value of warrants
    
    
    (4,349,296
    )
    
    
    
    
    
    
    (4,349,296
    )Interest and Other Income
    
    
    
    
    
    
    10,591
    
    
    
    10,591Depreciation and Amortization
    
    
    (170,272
    )
    
    
    (25,910
    )
    
    
    (196,182
    )Net Loss
    
    
    (5,462,902
    )
    
    
    (428,028
    )
    
    
    (5,890,930
    )Assets
    
    
    10,992,660
    
    
    
    7,124,451
    
    
    
    18,117,111Goodwill
    
    
    2,791,648
    
    
    
    265,390
    
    
    
    3,057,038Intangible Assets
    
    
    3,111,228
    
    
    
    488,282
    
    
    
    3,599,510
 25




---



##### Table of Contents



United States
    
    Europe
    
    TotalNet Sales
    
    
    4,594,784
    
    
    
    15,746,547
    
    
    
    20,341,331Loss from Operations
    
    
    (2,006,751
    )
    
    
    (444,062
    )
    
    
    (2,450,813
    )Interest Expense
    
    
    (192,366
    )
    
    
    (618
    )
    
    
    (192,984
    )Change in fair value of
warrants
    
    
    (4,373,012
    )
    
    
    
    
    
    
    (4,373,012
    )Interest and Other Income
    
    
    
    
    
    
    10,929
    
    
    
    10,929Depreciation and Amortization
    
    
    (333,406
    )
    
    
    (54,872
    )
    
    
    (388,278
    )Net Loss
    
    
    (6,601,696
    )
    
    
    (319,938
    )
    
    
    (6,921,634
    )
  NOTE 10  SUBSEQUENT EVENTS
 Extension of Warrant Offering
   26




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Company
 Cautionary Statements  Forward Outlook and Risks
  
    
    general economic and business conditions, such as the current global recession, that
may affect demand for our services and products and the ability of our customers to
pay for such services and products;
    
    effects of competition in the markets in which the Company operates;
    
    liability and other claims asserted against the Company;
    
    ability to attract and retain qualified personnel;
    
    availability and terms of capital;
    
    loss of significant contracts or reduction in revenue associated with major customers;
    
    ability of customers to pay for services;
    
    business disruption due to natural disasters or terrorist acts;
 27




---



##### Table of Contents




    
    ability to successfully integrate the operations of acquired businesses and achieve expected
synergies and operating efficiencies from the acquisitions, in each case within expected
time-frames or at all;
    
    changes in, or failure to comply with, existing governmental regulations; and
    
    changes in estimates and judgments associated with critical accounting policies and estimates.
  Overview
  Acquisition Growth Strategy
 We are continuing to pursue mergers and acquisitions for a portion of our growth.
   
    
    Accretive to earnings in the first year.
    
    Strategic locations throughout the US and Europe where we have significant concentrations of demand for our service
offerings.
    
    Highly trained technical staff that can meet our internal requirements and the requirements of our Global customers.
  28




---



##### Table of Contents



Organic Growth Strategy
  
    
    The first strategy is to expand the a la carte services
offered to existing major national, multi-national and
global clients who have not already signed an
infrastructure managed services agreement. This has been
initiated by the hiring of branch level account managers
focused on the sale of individual infrastructure services
and the global managed services offering. With
reorganization of the professional services team
structure, it permits Beacon to accommodate branch level
services delivery to potential global clients.
    
    The second strategy is to continue to add regional
branches to the existing branches in Columbus and
Cincinnati, Ohio, Louisville, Kentucky and Raritan, NJ.
The additional branches will be strategically located to
provide regional coverage and depth of resources to
support global client demand.
    
    The third strategy is to add regional and major account
sales resources in each new branch. This will facilitate
the introduction of Fortune 1000, Global 2000 and
qualifying multi-national firms. We refer to these current
and future clients as Fortune 10000.
 Results of Operations
 For the three and six months ended March 31, 2010 and 2009
  North American Operations
 For the three months ended March 31,
    
    For the six months ended March 31,2010
    
    
    
    
    
    2009
    
    
    
    
    
    
    
    
    
    2010
    
    
    
    
    
    2009North America
    
    
    
    
    
    North America
    
    
    
    
    
    change
    
    North America
    
    
    
    
    
    North America
    
    
    
    
    
    changeNet Sales
    
    
    2,333,840
    
    
    
    100
    %
    
    
    2,277,877
    
    
    
    100
    %
    
    
    55,963
    
    
    
    4,594,784
    
    
    
    100
    %
    
    
    4,079,085
    
    
    
    100
    %
    
    
    515,699Cost of Goods Sold
    
    
    245,584
    
    
    
    11
    %
    
    
    767,045
    
    
    
    34
    %
    
    
    (521,461
    )
    
    
    728,388
    
    
    
    16
    %
    
    
    1,430,920
    
    
    
    35
    %
    
    
    (702,532
    )Cost of Services
    
    
    993,281
    
    
    
    43
    %
    
    
    625,179
    
    
    
    27
    %
    
    
    368,102
    
    
    
    1,934,749
    
    
    
    42
    %
    
    
    1,277,924
    
    
    
    31
    %
    
    
    656,825Gross Margin
    
    
    1,094,975
    
    
    
    47
    %
    
    
    885,653
    
    
    
    39
    %
    
    
    209,322
    
    
    
    1,931,647
    
    
    
    42
    %
    
    
    1,370,241
    
    
    
    34
    %
    
    
    561,406Operating expenseSalaries and Benefits
    
    
    1,199,229
    
    
    
    51
    %
    
    
    1,018,946
    
    
    
    45
    %
    
    
    180,283
    
    
    
    2,239,859
    
    
    
    49
    %
    
    
    1,922,587
    
    
    
    47
    %
    
    
    317,272Selling, General and
Administrative
    
    
    972,601
    
    
    
    42
    %
    
    
    847,932
    
    
    
    37
    %
    
    
    124,669
    
    
    
    1,698,539
    
    
    
    37
    %
    
    
    1,524,016
    
    
    
    37
    %
    
    
    174,523(Loss) Income from Operations
    
    
    (1,076,855
    )
    
    NM
    
    
    (981,225
    )
    
    NM
    
    
    (95,630
    )
    
    
    (2,006,751
    )
    
    NM
    
    
    (2,076,362
    )
    
    NM
    
    
    69,611Interest Expense
    
    
    (7,184
    )
    
    
    
    
    
    
    (226,632
    )
    
    
    
    
    
    
    219,448
    
    
    
    (192,366
    )
    
    
    
    
    
    
    (439,969
    )
    
    
    
    
    
    
    247,603Change in Fair Value of Warrants
    
    
    (4,349,296
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,349,296
    )
    
    
    (4,373,012
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,373,012
    )Interest and Other Income
    
    
    
    
    
    
    
    
    
    
    195
    
    
    
    
    
    
    
    (195
    )
    
    
    
    
    
    
    
    
    
    
    362
    
    
    
    
    
    
    
    (362
    )Net (Loss) Income before taxes
    
    
    (5,433,335
    )
    
    
    
    
    
    
    (1,207,662
    )
    
    
    
    
    
    
    (4,225,673
    )
    
    
    (6,572,129
    )
    
    
    
    
    
    
    (2,515,969
    )
    
    
    
    
    
    
    (4,056,160
    )Income taxes
    
    
    (29,567
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,567
    )
    
    
    (29,567
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,567
    )Net (Loss) Income
    
    
    (5,462,902
    )
    
    
    
    
    
    
    (1,207,662
    )
    
    
    
    
    
    
    (4,255,240
    )
    
    
    (6,601,696
    )
    
    
    
    
    
    
    (2,515,969
    )
    
    
    
    
    
    
    (4,085,727
    )
 29




---



##### Table of Contents



30




---



##### Table of Contents



European Operations
 For the three months ended March 31,
    
    For the six months ended March 31,2010
    
    
    
    
    
    2009
    
    2010
    
    
    
    
    
    2009Europe
    
    
    
    
    
    Europe
    
    Europe
    
    
    
    
    
    EuropeNet Sales
    
    
    9,437,847
    
    
    
    100
    %
    
    
    
    
    
    
    15,746,547
    
    
    
    100
    %
    
    
    Cost of Goods Sold
    
    
    7,372,390
    
    
    
    78
    %
    
    
    
    
    
    
    12,323,500
    
    
    
    78
    %
    
    
    Cost of Services
    
    
    544,875
    
    
    
    6
    %
    
    
    
    
    
    
    974,784
    
    
    
    6
    %
    
    
    Gross Margin
    
    
    1,520,582
    
    
    
    16
    %
    
    
    
    
    
    
    2,448,263
    
    
    
    16
    %
    
    
    Operating expenseSalaries and Benefits
    
    
    976,569
    
    
    
    10
    %
    
    
    
    
    
    
    1,246,971
    
    
    
    8
    %
    
    
    Selling, General and Administrative
    
    
    1,132,805
    
    
    
    12
    %
    
    
    
    
    
    
    1,645,354
    
    
    
    10
    %
    
    
    (Loss) Income from Operations
    
    
    (588,792
    )
    
    NM
    
    
    
    
    
    
    (444,062
    )
    
    NM
    
    
    Interest Expense
    
    
    (251
    )
    
    
    
    
    
    
    
    
    
    
    (618
    )
    
    
    
    
    
    
    Change in Fair Value of WarrantsInterest and Other Income
    
    
    10,591
    
    
    
    
    
    
    
    
    
    
    
    10,929
    
    
    
    
    
    
    
    Net (Loss) Income before taxes
    
    
    (578,452
    )
    
    
    
    
    
    
    
    
    
    
    (433,751
    )
    
    
    
    
    
    
    Income taxes
    
    
    150,424
    
    
    
    
    
    
    
    
    
    
    
    113,813
    
    
    
    
    
    
    
    Net (Loss) Income
    
    
    (428,028
    )
    
    
    
    
    
    
    
    
    
    
    (319,938
    )
    
    
    
    
    
    
    
    31




---



##### Table of Contents



Liquidity and Capital Resources
       32




---



##### Table of Contents



Off-Balance Sheet Arrangements
  33




---



##### Table of Contents



Contractual Obligations as of March 31, 2010
  Contractual Obligations
    
    Total
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterLong-term debt obligations
    
    $
    1,016,754
    
    
    $
    776,289
    
    
    $
    240,465
    
    
    $
    
    
    
    $
    Interest obligations (1)
    
    
    39,010
    
    
    
    30,875
    
    
    
    8,135
    
    
    
    
    
    
    
    Operating lease obligations (2)
    
    
    199,876
    
    
    
    118,876
    
    
    
    36,000
    
    
    
    36,000
    
    
    
    9,000$
    1,255,640
    
    
    $
    926,040
    
    
    $
    284,600
    
    
    $
    36,000
    
    
    $
    9,000
    
    
    $
    
 
 (1)
    
    Interest obligations assume Prime Rate of 3.25% at
March 31, 2010. Interest rate obligations are presented
through the maturity dates of each component of
long-term debt.(2)
    
    Operating lease obligations represent payment
obligations under non-cancelable lease agreements
classified as operating leases.   Customers
  34




---



##### Table of Contents



Competition
  Employees
  Facilities
  Certain Relationships and Related Party Transactions
   35




---



##### Table of Contents



Filing Status
  
 ITEM 4. CONTROLS AND PROCEDURES
  DISCLOSURE CONTROLS AND INTERNAL CONTROLS
    36




---



##### Table of Contents



Changes in Internal Control Over Financial Reporting
  37




---



##### Table of Contents



31.1
    
    Certification of Principal Executive Officer, pursuant to Rules 13a-14(a) of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer, pursuant to Rules 13a-14(a) of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Principal Executive Officer, pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Principal Financial Officer, pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
 
 *
    
    This certification shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of
1934, or otherwise subject to the liability of that
section, nor shall it be deemed to be incorporated by
reference into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934 38




---



##### Table of Contents



Date: May 17, 2010
    Beacon Enterprise Solutions Group, Inc.By:
    /s/ Bruce WidenerBruce WidenerChief Executive Officer and
Chairman of the Board of
Directors
andDate: May 17, 2010
    By:
    /s/ Michael GrendiMichael GrendiPrincipal Financial Officer 39