Organization and Basis of Presentation of Unaudited Interim Financial Statements.

3 Months Ended

Sep. 30, 2011

Organization and Basis of Presentation of Unaudited Interim Financial Statements.

Organization and Basis of Presentation of Unaudited Interim Financial Statements.

1. Organization and Basis of Presentation of Unaudited Interim Financial Statements.

Organization

Homeland Security Capital Corporation (the “Company” or the “Holding Company”) is a consolidator of companies, whose current operating companies provide title, escrow and asset management real estate services. We are focused on creating long term value by taking a controlling interest in and developing our subsidiary companies through superior operations and management. We intend to operate businesses that provide real estate services, growing organically and by acquisitions. The Company targets emerging companies that are generating revenues but face challenges in scaling their businesses to capitalize on opportunities in the aforementioned industry sector.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company 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 rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2011.

The condensed consolidated financial statements include the accounts of the Company,  its 80% owned subsidiary, Fiducia Real Estate Services, Inc. (“FRES”), 93%-owned NTG Management, Inc. and its wholly-owned subsidiary, CSS Management, Inc. (successor companies to Nexus Technologies Group, Inc. (“Nexus”) and its subsidiary, Corporate Security Solutions, Inc. (“CSS”), respectively, whose assets were sold on August 19, 2011) in continuing operations and the discontinued operations of Safety & Ecology Holdings Corporation and its subsidiaries (“Safety”), Nexus and CSS through August 19, 2011, and Polimatrix, Inc. (“PMX”).  The Company controls each of the subsidiary boards of directors and provides extensive advisory services to the subsidiaries included in continuing operations. Accordingly, the Company believes it exercises sufficient control over the operations and financial results of each of those companies and consolidates the results of operations, eliminating minority interests when such minority interests have a basis in the consolidated entity.  All intercompany balances and transactions have been eliminated.