1006459--9/28/2009--Homeland_Security_Capital

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{stock, price, operating}

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WE ARE SUBJECT TO VARIOUS RISKS, WHICH MAY MATERIALLY HARM OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS FILING. IF ANY OF THESE RISKS OR UNCERTAINTIES ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD BE MATERIALLY HARMED. We Have A Limited Operating History Which Makes It Difficult To Evaluate Our Current Business And Future Prospects And May Cause Our Revenues To Decline We Are Dependent Upon Key Personnel Who Would Be Difficult To Replace And Whose Loss Could Impede Our Development Appropriate Acquisitions May Not Be Available Which May Adversely Affect Our Growth If Our Consolidation Strategy Is Not Successful, Our Operations And Financial Condition Will Be Adversely Affected Obligations Of Our Chief Executive Officer May Create A Conflict Of Interest That Could Adversely Affect The Company s Operations Our Inability To Successfully Integrate Our Acquisitions May Adversely Affect Our Operations And Financial Condition Competition And Industry Consolidation May Limit Our Ability To Implement Our Business Strategies Failure To Qualify For Investment Company Act Exemptions Could Adversely Effect Our Growth And Financial Condition Potential Tax Consequences Of Our Acquisitions May Adversely Affect Our Financial Conditions Our Financial Condition Could Be Harmed If Businesses We Acquire Failed To Comply With Applicable Laws Or Have Other Undisclosed Liabilities Costs Arising From Our Future Acquisitions Could Adversely Affect Our Financial Condition If We Are Unable To Effectively Manage Our Growth, Our Ability To Implement Our Business Strategy And Our Operating Results Will Likely Be Materially Adversely Affected Because Our Operating Results May Fluctuate Significantly And May Be Below The Expectations Of Analysts And Investors, The Market Price For Our Stock May Be Volatile We Will Be Required To Evaluate Our Internal Controls Over Financial Reporting Under Section 404 Of The Sarbanes-Oxley Act Of 2002, Which Could Result In A Loss Of Investor Confidence In Our Financial Reports And Have An Adverse Effect On The Price Of Our Shares Of Common Stock. Risks Related to the Business of SEC As A Government Contractor, We Are Subject To Extensive Government Regulation, And Our Failure To Comply With Applicable Regulations Could Subject Us To Penalties That May Restrict Our Ability To Conduct Our Business Economic Downturns, Reductions Or Diversions In Government Funding Could Have A Negative Impact On Our Businesses We And Our Customers Operate In Regulated Industries That Require Us And Them To Obtain, And To Comply With, National, State And Local Government Licenses, Permits And Approvals We And Our Customers Operate In A Politically Sensitive Environment, And The Public Perception Of Radioactive Materials Can Affect Our Customers And Us The Elimination Or Any Modification Of The Price-Anderson Act s Indemnification Authority Could Have Adverse Consequents For Our Business We Are Subject To Liability Under Environmental Laws And Regulation And Maintenance Sites Are Inherently Dangerous Workplaces. If We Fail To Maintain Safe Work Sites, We Ca n Be Exposed To Significant Financial Losses As Well As Civil And Criminal Proceedings. Our Failure To Maintain Our Safety Record Could Have An Adverse Effect On Our Business We Are Engaged In Highly Competitive Businesses And Typically Must Bid Against Other Competitors To Obtain Major Contracts As a Small Business for Significant Opportunities Which Would Be Negatively Impacted If Our Small Business Status Were to Change to Other Than Small If Our Teaming Members or Partners Fail To Perform Their Contractual Obligations On A Project Or If We Fail To Effectively With Our Partners or Subcontractors, We Could Be Exposed To Legal Liability, Loss Of Reputation And Reduced Profit On The Project Are Difficult To Predict And May Fluctuate Significantly In The Future The Contracts In Our Backlog May Be Adjusted, Cancelled Or Suspended By Our Clients. Additionally, Even If Fully Performed, Our Backlog May Not Be A Good Indicator Of Our Future Gross Margins. Involve Risks That Could Have A Material Adverse Effect On Our Results Of Operations Or A Few Customers Could Have An Adverse Effect On Us We Bear The Risk Of Cost Overruns In Fixed-Price Contracts. We May Experience Reduced Profits Or, In Some Cases, Losses These Contracts If Costs Increase Above Our Estimates Our Use Of Level Of Effort Or Percent Complete Performance Accounting Could Result In Reduction Or Elimination Of Previously Reported Profits The Outcome Of Pending And Future Claims And Litigation Could Have A Material Adverse Effect On Our Business Is Necessary For Us To Win Certain Types Of New Work We Have Substantial Financial Assurance And Insurance Requirements, And Increases In The Costs Of Obtaining Financial Assurance, Or The Inadequacy Of Our Insurance Coverages, Could Negatively Impact Our Liquidity And Increase Our Liabilities Could Result In A Need For Additional Capital Our Operating Results May Be Adversely Impacted By Worldwide Political And Economic Uncertainties And Specific Conditions In The Markets We Address We Derive A Majority Of Our Revenue From Government Agencies, And Any Disruption In Government Funding Or In Our Relationship With Those Agencies Could Adversely Affect Our Business A Delay In The Completion Of The Budget Process Of The U.S. Government Could Delay Procurement Of Our Services And Have An Adverse Effect On Our Future Revenues Our Failure To Win New Contracts And Renew Existing Contracts With Private And Public Sector Clients Could Adversely Affect Our Profitability Restrictive Covenants In Our Credit Agreement May Restrict Our Ability To Pursue Certain Business Strategies We May Need To Raise Additional Capital On Terms Unfavorable To Our Stockholders Our Common Stock Is Deemed To Be Penny Stock, Which May Make It More Difficult For Investors To Sell Their Shares Due To Suitability Requirements We Do Not Expect To Pay Dividends With Respect To Our Common Stock Which May Hinder Our Ability To Attract Additional Capital We Have Historically Had Severe Working Capital Shortages, Even Following Significant Financing Transactions We Have Raised Capital And Issued Securities During The Fiscal Years Ended June 30, 2008 And December 31, 2007 And December 31, 2006, Which Has Resulted (And Will In The Future When Warrant Exercises Or Conversions Occur Result) In Dilution To Our Existing Stockholders; This Was Accomplished To Provide Necessary Working Capital Or Obtain Assets And Services. We Will Likely Issue More Securities To Raise Additional Capital Or To Obtain Other Services Or Assets, Any Of Which May Result In Substantial Additional Dilution If Demand For Any Of Our Products Grows Suddenly, We May Lack The Resources To Meet Demand Or We May Be Required To Increase Our Capital Spending Significantly Our Common Stock Is Vulnerable To Pricing And Purchasing Actions That Are Beyond Our Control And, Therefore, Persons Acquiring Or Holding Our Shares Or Warrants May Be Unable To Resell Their Shares At A Profit As A Result Of This Volatility The Conversion Ratio of Our Series H Stock is subject to Adjustment Based on the Performance of our SEC Subsidiary in 2008 and 2009 Outstanding Preferred Stock, Options And Warrants May Make It Difficult For Us To Obtain Additional Capital On Reasonable Terms If We Fail To Effect And Maintain Registration Of The Common Stock Issued Or Issuable Pursuant To Conversion Of Our Preferred Stock, Or Certain Of Our Outstanding Common Stock Warrants, We May Be Obligated To Pay The Investors Of Those Securities Liquidated Damages

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1006459--9/28/2009--Homeland_Security_Capital_CORP