**UNITED STATES**

**SECURITIES ANDEXCHANGE COMMISSION**

**WASHINGTON, DC 20549**

 

**FORM 10-QSB**

|   | (Mark One)                                                                                                                                                                                                                                                                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                       |
|   | [x]  Quarterly report under Section 13 or 15(d)of the Securities Exchange Act of 1934                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                       |
|   | For the quarterly period ended June 30, 2003                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                       |
|   | [  ]  Transition report under Section 13 or15(d) of the Securities Exchange Act of 1934                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                       |
|   | For the transition period from                             to                          |
|   |                                                                                                                                                                                                                                                                                                                                                       |   |
|   | Commission file number                                                                                                                                                                                                                                                                                                                                     |                      0-22388 |

 

| **HOMESOLUTIONS OF AMERICA, INC.**                     |
|--------------------------------------------------------|
| (Exact Name of Registrant as Specified in Its Charter) |
|                                                   |   |   |
| Delaware                                               |   | 99-0273889 |
| (State or Other Jurisdiction of              |   | (IRS Employer |
| Incorporation or Organization)                         |   | Identification No.) |
|                                                   |
| 11850 Jones Road, Houston, Texas  77070           |
| (Addressof Principal Executive Offices)                |
|                                                   |
| (281) 970-9859                                         |
| (Issuer's Telephone Number, Including Area Code)       |
|                                                   |
| (Former Name, Former Address and Former Fiscal Year,   |
| if Changed Since Last Report)                          |

 

                Checkwhether the issuer (1) filed all reports required to be filed by Section 13 or15(d) of the Exchange Act during the past 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

Yes         X               No                         

                 

                The number of shares outstanding ofthe registrant's common stock, $.001 par value per share, as of August 7, 2003was 12,515,871 shares.

 

                TransitionalSmall Business Disclosure Format: Yes                       No         X             

 

----

**PART IFINANCIAL INFORMATION**

**Item 1.  Financial Statements.**

| **HOME SOLUTIONS OF AMERICA, INC.**                                         |
|-----------------------------------------------------------------------------|
| **CONSOLIDATED BALANCE SHEETS**                                             |
| (In Thousands, Except Per Share Data)                                       |
|                                                                             |  |  |  |  | June 30, |
|                                                                             |  |  |  |  | 2003 |
|                                                                             |  |  |  |  |  (unaudited) |
| **ASSETS**                                                                  |  |  |  |
| Current assets:                                                             |  |  |
|                                                                             | Cash |  |  |  $           251  |
|                                                                             | Accounts receivable, net of  allowance for doubtful accounts of $68 |  |            2,703  |
|                                                                             | Prepaid expenses and other  current assets |  |               301  |
|                                                                             |  |  | Total current assets |  |            3,255  |
|                                                                             |  |  |  |  |  |
| Property and equipment, net  of accumulated depreciation of $225            |  |            2,176  |
|                                                                             |  |  |  |  |  |
| Goodwill                                                                    |  |  |          10,815  |
|                                                                             |  |  |  |  |  |
| Deferred income taxes                                                       |  |                 32  |
|                                                                             |  |  |  |  |  |
| Due from related party                                                      |  |                 53  |
|                                                                             |  |  |  |  |  |
| Other assets                                                                |  |               523  |
|                                                                             |  |  |  |  |  |
|                                                                             |  |  |  |  |  $      16,854  |
|                                                                             |  |  |  |  |  |
| **LIABILITIES AND  STOCKHOLDERS' EQUITY**                                   |  |  |
| Current liabilities:                                                        |  |  |
|                                                                             | Accounts payable and accrued  expenses |  |  $        1,839  |
|                                                                             | Due to related party |  |                 12  |
|                                                                             | Line of credit borrowings |  |               524  |
|                                                                             | Current portion of long-term  debt |  |            1,275  |
|                                                                             | Current portion of capital  lease obligations |  |               140  |
|                                                                             | Notes payable |  |               161  |
|                                                                             | Notes payable to related  party |  |            1,000  |
|                                                                             |  |  | Total current liabilities |  |            4,951  |
|                                                                             |  |  |  |  |  |
| Long-term liabilities:                                                      |  |  |
|                                                                             | Long-term debt, net of current  portion |  |            4,854  |
|                                                                             | Capital lease obligations,  net of current portion |  |               159  |
|                                                                             |  |  |  |  |  |
|                                                                             |  |  | Total liabilities |  |             9,964  |
|                                                                             |  |  |  |  |  |
| Commitments and  contingencies                                              |  |  |
|                                                                             |  |  |  |  |  |
| Stockholders' equity:                                                       |  |  |
|                                                                             | Common stock, $0.001 par  value, 50,000 shares authorized; |  |  |
|                                                                             |  | 11,961 shares issued and  outstanding |  |                 12  |
|                                                                             | Additional paid-in capital |  |          29,116  |
|                                                                             | Accumulated deficit |  |         (22,238) |
|                                                                             |  |  | Total stockholders' equity |  |            6,890  |
|                                                                             |  |  |  |  |  |
|                                                                             |  |  |  |  |  $       16,854  |
|                                                                             |  |  |  |  |  |
| The accompanying notes are an integral part of these  financial statements. |

1

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| **HOME SOLUTIONS OF AMERICA, INC.**                                         |
|-----------------------------------------------------------------------------|
| **CONSOLIDATED STATEMENTS OF OPERATIONS**                                   |
| (In Thousands, Except Per Share Amounts)                                    |
| (Unaudited)                                                                 |
|                                                                             |  |  |  |  |  |  |  |  |  |
|                                                                             |  |  | Three Months Ended |  | Six Months Ended |
|                                                                             |  |  | June 30, |  | June 30, |
|                                                                             |  |  | 2003 |  | 2002 |  | 2003 |  | 2002 |
|                                                                             |  |  |  |  |  |  |  |  |  |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Net Sales                                                                   |  $      3,053  |  |  $              -  |  |  $      6,982  |  |  $              -  |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Costs and expenses                                                          |  |  |  |  |  |  |  |
|                                                                             | Cost of sales |          1,712  |  |                  -  |  |          3,784  |  |                  -  |
|                                                                             | Selling, general and  administrative expenses |          1,525  |  |             487  |  |          3,223  |  |             897  |
|                                                                             |  |  |          3,237  |  |             487  |  |          7,007  |  |             897  |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Operating loss                                                              |           (184) |  |            (487) |  |             (25) |  |            (897) |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Other income (expense):                                                     |  |  |  |  |  |  |  |
|                                                                             | Gain on sale of assets |               64  |  |                  -  |  |               64  |  |                  -  |
|                                                                             | Interest income |                 1  |  |               32  |  |                 1  |  |               63  |
|                                                                             | Interest expense |            (209) |  |                (4) |  |            (358) |  |                (4) |
|                                                                             | Other income |              152  |  |          1,105  |  |              156    |  |          1,105  |
|                                                                             |  | Total other income (expense) |                  8  |  |          1,133  |  |            (137) |  |          1,164  |
|                                                                             |  |  |  |  |  |  |  |  |  |
|                                                                             |  | Income (loss) from  continuing operations before income taxes |            (176) |  |             646  |  |            (162) |  |             267  |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Income taxes                                                                |                  -  |  |                  -  |  |                  -    |  |                  -  |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Loss from discontinued  operations (including loss on                       |  |  |  |  |  |  |  |
|                                                                             | disposal of $104) |                  -  |  |                  -  |  |                  -    |  |            (247) |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Net income (loss)                                                           |  $        (176) |  |  $         646  |  |  $        (162) |  |  $           20  |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Income (loss) per share from  continuing operations                         |  |  |  |  |  |  |  |
|                                                                             | Basic and diluted |  $       (0.02) |  |  $        0.07  |  |  $       (0.01) |  |  $        0.03  |
| Loss from discontinued  operations                                          |  |  |  |  |  |  |  |
|                                                                             | Basic and diluted |  $               -  |  |  $               -  |  |  $               -  |  |  $      (0.03) |
| Net income (loss) per share                                                 |  |  |  |  |  |  |  |
|                                                                             | Basic and diluted |  $       (0.02) |  |  $        0.07  |  |  $       (0.01) |  |  $        0.00  |
|                                                                             |  |  |  |  |  |  |  |  |  |
| Weighted average number of  common shares outstanding                       |  |  |  |  |  |  |  |
|                                                                             | Basic |        11,337  |  |          9,272  |  |        11,209  |  |          9,756  |
|                                                                             | Diluted |        11,337  |  |          9,272  |  |        11,209  |  |          9,756  |
|                                                                             |  |  |  |  |  |  |  |  |  |
| The accompanying notes are an integral part of these  financial statements. |

2

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| **HOME SOLUTIONS OF AMERICA, INC.**       |
|-------------------------------------------|
| **CONSOLIDATED STATEMENTS OF CASH FLOWS** |
| (In Thousands)                            |
| (Unaudited)                               |
|                                           |  |  |  |  |  |  |  | Six Months Ended |
|                                           |  |  |  |  |  |  |  | June 30, |
|                                           |  |  |  |  |  |  |  | 2003 |  | 2002 |
|                                           |  |  |  |  |  |  |  |  |  |  |
| CASH FLOWS FROM OPERATING  ACTIVITIES:    |  |  |  |
|                                           | Net income (loss) |  $             (162) |  |  $                20  |
|                                           | Adjustments to reconcile net  income (loss) to net cash provided by (used in) |  |  |  |
|                                           |  | operating activities: |  |  |  |
|                                           |  |  | Depreciation and  amortization |                  313  |  |                    15  |
|                                           |  |  | Allowance for doubtful  accounts |                   (24) |  |                      -  |
|                                           |  |  | Loss on sale of PTP |                       -    |  |                  104  |
|                                           |  |  | Gain on sale of assets for  settlement of obligation |                  (64) |               |                      -  |
|                                           |  |  | Gain on extinguishment of  debt |                (152) |  |                      -  |
|                                           |  |  | Stock-based compensation |                    81  |  |                      -  |
|                                           |  |  | Changes in operating assets  and liabilities, net of acquisitions |  |  |  |
|                                           |  |  |  | and divestitures- |  |  |  |
|                                           |  |  |  |  | Accounts receivable |                  991  |  |                  284  |
|                                           |  |  |  |  | Costs and estimated earnings  in excess of billings on jobs in |  |  |  |
|                                           |  |  |  |  |  | progress, net |                       -  |  |                      6  |
|                                           |  |  |  |  | Prepaid expenses and  supplies |                  213  |  |                   (34) |
|                                           |  |  |  |  | Other assets |                  (65) |  |                      -  |
|                                           |  |  |  |  | Accounts payable and accrued  liabilities |                (248) |  |              (1,408) |
|                                           |  |  |  |  | Due to related party |                  (75) |  |                      -  |
|                                           |  |  |  |  |  |  |  |  |  |  |
|                                           | Net cash provided by (used  in) operating activities |                  808  |  |              (1,013) |
|                                           |  |  |  |  |  |  |  |  |  |  |
| CASH FLOWS FROM INVESTING  ACTIVITIES:    |  |  |  |
|                                           | Principal payments received  on notes receivable |                       -  |  |                    94  |
|                                           | Cash transferred in sale of  PTP |                       -  |  |                 (198) |
|                                           | Fees paid for pending  acquisitions |                 (280) |  |                 (484) |
|                                           | Advances from related party,  net |                      7  |  |                       -  |
|                                           | Purchases of property and  equipment |                   (85) |  |                 (140) |
|                                           |  |  |  |  |  |  |  |  |  |  |
|                                           | Net cash used in investing  activities |                 (358) |  |                 (728) |
|                                           |  |  |  |  |  |  |  |  |  |  |
| CASH FLOWS FROM FINANCING  ACTIVITIES:    |  |  |  |
|                                           | Net repayments on line of  credit |                     (4) |  |                       -  |
|                                           | Proceeds from notes payable  to related party |                    250  |  |                       -  |
|                                           | Proceeds from notes payable |                    250  |  |                       -  |
|                                           | Principal payments on notes  payable |                    (89) |  |                       -  |
|                                           | Principal payments on  long-term debt and capital leases |                  (871) |  |                 (290) |
|                                           |  |  |  |  |  |  |  |  |  |  |
|                                           | Net cash used in financing  activities |                 (464) |  |                 (290) |
|                                           |  |  |  |  |  |  |  |  |  |  |
| NET DECREASE IN CASH                      |                   (14) |  |              (2,031) |
|                                           |  |  |  |  |  |  |  |  |  |  |
| CASH AT BEGINNING OF PERIOD               |                  265  |  |               2,210  |
|                                           |  |  |  |  |  |  |  |  |  |  |
| CASH AT END OF PERIOD                     |  $              251  |  |  $              179  |

3

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|                                                                             |                                                                               |                                                                                                                  |                                                                                                                  |                                                                                                                       |                                                                                                                       |                                                                                                                 |  |  |  |  |
|-----------------------------------------------------------------------------|-------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|--|--|--|--|
| Supplemental disclosures of  cash flow information                          |                                                                               |                                                                                                                  |                                                                                                                  |
|                                                                             | Cash paid for:                                                                |                                                                                                                  |                                                                                                                  |                                                                                                                       |
|                                                                             |                                                                               | Interest                                                                                                         |                                                                                                                  |  $                28                  |                                                                                                                       |  $                  7 |
|                                                                             |                                                                               | Income taxes                                                                                                     |  $                   - |                                                                                                                       |  $                   - |
|                                                                             |                                                                               |                                                                                                                  |                                                                                                                  |                                                                                                                       |                                                                                                                       |                                                                                                                 |  |  |  |  |
| Supplemental schedule of  non-cash investing and financing activities:      |                                                                               |                                                                                                                  |                                                                                                                  |
|                                                                             | Fixed assets acquired  through capital lease obligations                      |  $                15             |                                                                                                                  |  $                   - |
|                                                                             | Fixed assets acquired  through notes payable                                  |  $              100                        |                                                                                                                  |  $                   - |
|                                                                             | Issuance of stock for  settlement of obligations                              |  $           2,242                                        |                                                                                                                  |  $                   - |
|                                                                             | Disposal of assets for  settlement of obligations                             |  $              786                        |                                                                                                                  |  $                   - |
|                                                                             | Disposal of capital lease  obligations for settlement of obligations          |  $              101                        |                                                                                                                  |  $                   - |
|                                                                             | Gain on sale of assets for  settlement of obligations                         |  $                64             |                                                                                                                  |  $                   - |
|                                                                             | Interest expense converted  to long-term debt                                 |  $              124                        |                                                                                                                  |  $                   - |
|                                                                             | Fair market value of warrant  issued for American Stock Exchange listing fees |  $                49             |                                                                                                                  |  $                   - |
|                                                                             | Common stock returned as  settlement                                          |  $                   - |                                                                                                                  |  $           2,628                                             |
|                                                                             |                                                                               |                                                                                                                  |                                                                                                                  |                                                                                                                       |                                                                                                                       |                                                                                                                 |  |  |  |  |
| The accompanying notes are an integral part of these  financial statements. |

 

 

4

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**HOME SOLUTIONS OF AMERICA, INC.NOTES TO CONSOLIDATED FINANCIALSTATEMENTSJUNE 30, 2003(Dollars and Shares in Thousands,Except Per Share Data) **

** **

**NOTE 1 -         BASISOF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Company Descriptionand Nature of Operations**

HomeSolutions of America, Inc. ("we," "us," "Home Solutions," or the "Company") isa Delaware corporation that was incorporated in 1998.  Our growth strategy isto become a leading provider of specialty residential services that protect thehomeowner's single largest investment - their home. We seek a dominant marketposition through the acquisition of strategic, specialized, profitable andwell-managed residential service companies, and through the above averageinternal growth of these operations.  Home Solutions will provide services suchas cleaning and fabric protection, fire and water damage restoration, and theremediation of indoor air contaminants.

InNovember 2002, Home Solutions acquired PW Stephens, Inc. ("PWS"), a provider ofresidential and light commercial indoor air remediation services, for $13,402,consisting of cash, the exchange of certain assets, seller notes, commissionsand other costs.  These operations are included in our 2003 financial results. Also, the Company has announced letters of intent to acquire additionalresidential service providers in Texas.  Of these letters of intent, theCompany has closed two acquisitions. Central Texas Residential Services, Inc.and Fiber Seal Systems, LP were acquired in July 2003.  Currently, a letter ofintent is outstanding for Quality Interiors, Inc. (See Note 2).

Theaccompanying unaudited, interim consolidated financial statements have beenprepared by the Company in accordance with accounting principles generallyaccepted in the United States of America and Regulation S-B, as promulgated bythe Securities and Exchange Commission. Certain information and footnotedisclosures normally included in audited financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America have been condensed or omitted. Accordingly, these interimconsolidated financial statements should be read in conjunction with theCompany's consolidated financial statements and related notes as contained inthe Company's annual report on Form 10-KSB for the year ended December 31,2002. In the opinion of management, the interim consolidated financialstatements reflect all adjustments, including normal recurring adjustments,necessary for fair presentation of the interim periods presented. The resultsof operations for the three and six months ended June 30, 2003 are notnecessarily indicative of results of operations to be expected for the full year.

**Principles of Consolidation**

Theaccompanying consolidated financial statements include the accounts of HomeSolutions of America, Inc. and its wholly owned subsidiaries. All significantintercompany transactions and balances have been eliminated in consolidation. 

**Use of Estimates**

The preparation of financial statements in conformitywith accounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of the contingent assets andliabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Significant estimates madeby management include, among others, the realizability of accounts receivable,property and equipment and goodwill, and valuation of deferred tax assets. Actual results could differ from these estimates. 

**Goodwill**

Goodwill represents the excess of acquisition cost overthe net assets acquired in a business combination and is not amortized inaccordance with Statement of Financial Accounting Standards ("SFAS") No. 142, "*Goodwilland Other Intangible Assets"*.  Management reviews, on an annual basis, thecarrying value of goodwill in order to determine whether impairment hasoccurred. Impairment is based on several factors including the Company'sprojection of future undiscounted operating cash flows. If an impairment of thecarrying value were to be indicated by this review, the Company would adjustthe carrying value of goodwill to its estimated fair value. 

**Long-Lived Assets**

The Company's management assesses the recoverability ofits long-lived assets by determining whether the depreciation and amortizationof long-lived assets over their remaining lives can be recovered throughprojected undiscounted future cash flows.  The amount of long-lived assetimpairment, if any, is measured based on fair value and is charged tooperations in the period in which long-lived asset impairment is determined bymanagement.  At June 30, 2003, the Company's management believes there is noimpairment of its long-lived assets.  There can be no assurance, however, thatmarket conditions will not change or demand for the Company's products and serviceswill continue, which could result in impairment of long-lived assets in thefuture.

** Other Assets **

During the six months ended June 30, 2003, the Company prepaidcash of $60, accrued $7 in accounts payable and issued a warrant to purchase 50shares of the Company's stock at $3 per share for American Stock Exchangeinitial listing fees and related consulting fees.  The warrant vestsimmediately, expires in July 2007, and is valued at $49 (using theBlack-Scholes option pricing model on the date of grant).  The Company willamortize this total prepaid cost of $116 over a 3-year period, which is themanagement's estimate of the period of benefit. During the six months endedJune 30, 2003, the Company amortized $2 of this prepaid cost to selling,general and administrative expenses in the accompanying consolidated statementsof operations.

** **5

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**HOME SOLUTIONS OF AMERICA, INC.NOTES TO CONSOLIDATED FINANCIALSTATEMENTSJUNE 30, 2003(Dollars and Shares in Thousands,Except Per Share Data)**

**NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES, continued  **

**Revenue Recognition**

Since the purchase of PWS, revenue is recognized at thetime the contract and related services are performed.

Prior to that time, the Company reported revenues fromfixed priced contracts using the percentage of completion method for financialreporting purposes.  Under the percentage of completion method, revenues withrespect to individual contracts were recognized in the proportion that costsincurred to date bore to total estimated costs.  Revenue and cost estimateswere subject to revision during the terms of the contracts, and any requiredadjustments were made in the periods in which the revisions become known. Provision was made, where applicable, for the entire amount of future estimatedlosses on contracts in progress when such losses were determined.  General andadministrative costs were not allocated to contract costs and were charged toexpense as incurred.

The Company recognized revenues from time and materialscontracts and consulting services as those services were performed.  Advancepayments made under these contracts were recorded as deferred revenue andrecognized when the related services were performed.

** Stock-Based Compensation**

The Company uses the intrinsic value method ofaccounting for stock-based compensation to employees in accordance withAccounting Principles Board Opinion ("APB") No. 25, as amended, *"Accountingfor Stock Issued to Employees."*   The Company accounts fornon-employee stock-based compensation under SFAS No. 123, *"Accountingfor Stock-Based Compensation."* At June 30, 2003, the Company has twostock-based employee compensation plans, which are described more fully in Note4.  During the six months ended June 30, 2003 and 2002, no compensation expensewas recognized in the accompanying consolidated statements of operations foroptions issued to employees pursuant to APB 25.  No other stock-based employeecompensation cost is reflected in the 2003 and 2002 consolidated statements ofoperations, as all options granted in the six months ended June 30, 2003 and2002 under those plans had either exercise prices equal to or greater than themarket value of the underlying common stock on the date of grant or the vestingperiod starts after the six months ended June 30, 2003 and 2002.  The followingtable illustrates the effect on net loss and loss per share if the Company hadapplied the fair value recognition provisions of SFAS No. 123 to stock-basedemployee compensation:

|                                                                                                                                        | Three Months Ended June 30,                                               | Six Months Ended June 30,                                          |
|----------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|--------------------------------------------------------------------|
|                                                                                                                                        | 2003                                                                      | 2002                                                               | 2003 | 2002 |
|                                                                                                                                        |                                                                           |                                                                    |  |  |
| Net income (loss) as  reported                                                                                                         | $          (176)             | $          646   | $         (162) | $             20  |
|                                                                                                                                        |                                                                           |                                                                    |  |  |
| Deduct:  Total stock-based  employee compensation expense under APB 25                                                            |                                                                           |                                                                    |  |  |
| --                                                                                                                      | --                                                                   | --                                                            | --  |
|                                                                                                                                        |                                                                           |                                                                    |  |  |
| Add:  Total stock-based employee  compensation expense under fair value  based method for all awards,  net of related tax effects |                                                                           |                                                                    |  |  |
|                                                                                                                                        |                                                                           |                                                                    |  |
|                                                                                                                                        |                                                                           |                                                                    |  |
| (10)                                                                                                                                   | (171)                                                                     | (77)                                                               | (171) |
|                                                                                                                                        |                                                                           |                                                                    |  |  |
| Pro forma net income (loss)                                                                                                            | $          (186)             | $           475  | $         (239) | $        (151) |
|                                                                                                                                        | =========                                                                 | =========                                                          | ========= | ========= |
| Basic and diluted income (loss)  per share - as reported                                                                               |                                                                           |                                                                    |  |  |
| $          (0.02)                                                                    | $           0.07                  | $        (0.01)            |     $         0.00  |
|                                                                                                                                        | =========                                                                 | =========                                                          | ========= | ========= |
| Basic and diluted loss per  share -  pro forma                                                                                         |                                                                           |                                                                    |  |  |
| $          (0.02)                                                                    | $            0.05  | $        (0.02)            | $         (0.02) |
|                                                                                                                                        | =========                                                                 | =========                                                          | ========= | ========= |
|                                                                                                                                        |                                                                           |                                                                    |  |  |

**Other Income**

During the six monthsended June 30, 2003, the Company recognized income of $152 from extinguishmentof old accounts payable balances of the Company's inactive subsidiary that isno longer legally collectible by the vendors.  The income is recorded in otherincome in the accompanying consolidated statements of operations.

**Comprehensive Income**

During the periods presented, the Company had no itemsof comprehensive income and, therefore, has not presented a statement ofcomprehensive income. 

6

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**HOME SOLUTIONS OF AMERICA, INC.NOTES TO CONSOLIDATED FINANCIALSTATEMENTSJUNE 30, 2003(Dollars and Shares in Thousands,Except Per Share Data)**

**NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES, continued**

**Per Share Data**

Basic earnings per share ("BEPS") is computedby dividing income (loss) available to common stockholders by the weightedaverage number of outstanding common shares during the period of computation.Diluted earnings per share ("DEPS") gives effect to all dilutivepotential common shares outstanding during the period of computation.   Thecomputation of DEPS does not assume conversion, exercise or contingent exerciseof securities that would have an antidilutive effect on earnings. As of June30, 2003 and 2002, the Company had the following potentially dilutivesecurities that would affect loss per share if they were to be dilutive:

|                                 | 2003                                                 |  | 2002                                                            |
|---------------------------------|------------------------------------------------------|--|-----------------------------------------------------------------|
| Options     |          797 |  |          363            |
| Warrants              |       1,067                 |  |            19 |
|                                 |                                                      |  |                                                                 |
|                                 |       1,864            |  |          382            |

**BusinessSegments**

The Company currently operates in one segment, indoorair contaminate abatement services for residential and light commercialproperties. Subsequent to June 30, 2003, upon the purchase of Fiber-Seal Systems,L.P. , the Company added another business segment of selling and franchisingthe Fiber-Seal®  furniture caresystem.

**NOTE2 - ACQUISITIONS AND DISPOSITIONS**

On February 22, 2002, the Company sold all of itsshares of its former wholly-owned subsidiary, Point To Point Network Services,Inc. ("PTP") to Point to Point of Louisiana, Inc., a Louisiana corporation (the"Buyer"). The sale price was $1,000, which the Buyer paid by issuinga Secured Promissory Note (the "Note") to the Company.  The Note had interestat 6.5% per annum, and required a payment of accrued interest on February 22,2003, and a payment of accrued interest and $100 of principal on February 22,2004, and all remaining principal and interest accrued thereon on February 22,2005. The Note was secured by the stock sold, pursuant to a Stock PledgeAgreement dated February 22, 2002.  The Note was assigned to the formerstockholder of PWS in connection with the acquisition of PWS on November 1,2002.  PTP had revenues of $253 and incurred a loss from operations of $143during the first quarter of 2002.  The loss on sale of PTP is comprised of thefollowing:

| Currentassets                    | $      | 811    |
|----------------------------------|--------|-------------|
| Propertyand equipment            |   | 476    |
| Goodwill                         |   | 837    |
| Currentliabilities               |   | (1,066)     |
| Long-term liabilities            |   | (12)        |
|                             |   |        |
| Netbook value of net assets sold |   | 1,046  |
| Legaland other transaction costs |   | 58     |
| Sale price                       |   | (1,000)     |
|                             | $      | (104)       |

Prior to the sale of PTP, the Company entered into asettlement agreement with a former employee and stockholder of PTP.  The agreementrequired the former stockholder to transfer 1,800 of the 2,000 shares of theCompany's common stock issued in the acquisition of PTP back to the Company. As a result, the Company reduced previously recorded goodwill related to PTP by$2,628, the value of the shares on the date of acquisition.

Letters of Intent

Thefollowing letter of intent is currently outstanding at the time of this 10 Qfiling:

Quality Interiors, Inc. In June 2003, the Company entered into a letter ofintent to acquire Quality Interiors, Inc., a company that provides restorationservices, for $6,750 in total consideration, including: (i) 1,333 common sharesof Home Solutions and  (ii) $2,750 in cash or seller note.

This acquisition is expected to close in the thirdquarter of 2003; however, it is subject to the satisfactory completion of ourdue diligence review, and the successful negotiation and execution ofdefinitive purchase and/or loan agreements, which will contain numerousconditions to closing. There can be no assurance that we will be able toconsummate this transaction.

The Horizon Cleaning letter of intent has expired andthe Company no longer intends to pursue this acquisition.

Wewill continue to aggressively pursue the acquisition of companies that providespecialty residential services as we proceed with our growth strategy. Ourability to acquire such businesses will be dependent upon, among other factors,our ability to obtain outside financing and/or issue shares of the Company'scommon stock as a portion of the purchase price.

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**HOME SOLUTIONS OF AMERICA, INC.NOTES TO CONSOLIDATED FINANCIALSTATEMENTSJUNE 30, 2003(Dollars and Shares in Thousands,Except Per Share Data)**

** **

**NOTE 3 - SHORT-TERM AND LONG-TERM DEBT**

Short-TermDebt 

In the sixmonths ended June 30, 2003, the Company borrowed a total of $500, of which $250was from an affiliate of a stockholder of the Company and $250 from twounrelated entities, to fund general working capital.  Of this amount, $89 hasbeen repaid to the unrelated entity.  The remaining balance of $250 from arelated party has been renewed and extended until August 31, 2003 and thebalance of $161 to unrelated entities was renewed and extended until October 1,2003.  These notes bear interest at rates between 8% and 18%.

TheCompany has a $750 note payable to a related party, dated October 29, 2002,secured by a deed of trust, which bears interest of 12% per annum, payablemonthly and the balance due on October 29, 2003.

The Company is currently negotiating a new credit facilityto re-finance its existing indebtedness of $1,312 (line of credit borrowings of$524 and term loan of $788) at a financial institution, which expired January28, 2003 (see below).

InJune 2003, the Company converted $2,242 in seller debt from the PWS transactioninto 862,479 shares of common stock of the Company.  In addition, the Companyrenewed and extended a $1,500 payment due in March 2003 to the seller of PWSinto a $1,554 promissory note payable quarterly over the next five years withan interest rate of 6%.  In addition, as part of this transaction, the Companysold $823 in non-essential assets back to the seller of PWS in exchange for a$786 reduction in debt owed to the seller and an assumption of $101 in capitallease obligations, recognizing a gain of $64.  

Long-Term DebtLong-term debt consists ofthe following as of June 30, 2003: 

| Note  payable to seller, interest at 6%, interest due monthly beginning July 1,  2003, principal payments of $74 due quarterly beginning November 1, 2003,  with final payment of remaining principal plus unpaid interest on November 1,  2008 secured by substantially all the assets of the Company.  The note  guaranteed by PWS and is subordinated to PWS's credit facility of $1,500 or  any other loan of up to $3,500 obtained by PWS or the seller.                                                                                     |  | $ 1,554                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|-----------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                             |
| Note  payable to seller, net of discount of $133, zero coupon, imputed interest at  5%, principal and interest due in equal monthly installments of $24 through  October 2007, secured by substantially all the assets of the Company.                                                                                                                                                                                                                                                                                                                 |  | 1,128                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                             |
| Note  payable to seller, interest starting June 5, 2003 at one-month LIBOR (1.31%  at June 30, 2003) plus 1%, principal payments of $107 due quarterly plus  interest beginning November 1, 2003, with final payment of $107 plus unpaid  interest on November 1, 2008, secured by substantially all of the assets of the  Company. The note is convertible into the Company's common stock at market,  is guaranteed by PWS, and is subordinated to PWS's credit facility of $1,500  or any other loan of up to $3,500 obtained by PWS or the seller. |  | 2,242                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                             |
| Note  payable to a financial institution, bearing interest at prime (4.25% at June  30, 2003) plus 0.75%, monthly principal payments of $18 plus interest,  maturing on January 28, 2007.  The Company expects to replace the note  payable through additional financing from another institution.  The Company  must maintain certain financial and non-financial covenants.  This note is  guaranteed by the former stockholder of PWS.                                                                                               |  | 788                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                             |
| Note  payable to seller, interest at 2.25%, principal payments due as accounts  receivable securing the note are collected, remaining amount (if any) due  April 1, 2003. The Company is currently in the process of renegotiating the  terms of this note to extend the maturity date.                                                                                                                                                                                                                                                                |  | 232                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                        |
| Note  payable to various financial institutions, collateralized by various  automobiles, bearing interest at various annual interest rates ranging from  prime plus 0.75% to 7.66%, principal and interest payable in monthly  installments ranging from $0.70 to $1.7 through March 28, 2009.                                                                                                                                                                                                                                                         |  |    185  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 6,129                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                             |
| Less  current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |  (1,275)               |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | $  4,854               |

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**HOME SOLUTIONS OF AMERICA, INC.NOTES TO CONSOLIDATED FINANCIALSTATEMENTSJUNE 30, 2003(Dollars and Shares in Thousands,Except Per Share Data)**

**NOTE4 - EQUITY**

**Common Stock **

Duringthe six months ended June 30, 2003, the Company issued 882 shares of commonstock (862 shares for the conversion of seller debt plus 20 net shares issuedto warrant holders who utilized a cashless exercise, as defined).  Inconnection with the issuance of the 862 shares and pursuant to the terms of thestock purchase agreement with the seller of PWS, the Company will be requiredto issue additional shares of common stock to the seller in the event that thecommon stock trades at an average price less than $2.60 per share on the fivetrading days prior to the date that the registration statement on Form S-3 isdeclared effective by the SEC.  At June 30, 2003, the Company is notobligated to issue any additional shares.

InJune 2003, the Company listed its common shares with the American StockExchange under the ticker symbol "HOM".  On June 30, 2003, the Company filed aregistration statement on Form S-3 to register 6,698 shares of common stock(some of which could be issued pursuant to warrant exercises and the conversionof debt) on behalf of selling stockholders, pursuant to contractualregistration rights with such stockholders.  The Company will not receive anyproceeds from the sale of such shares, other than the exercise prices of anywarrants exercised by warrant holders who do not utilize a cashless exercise.

**Stock Options**

The Company's Board of Directors approved the 2001Stock Plan (the "2001 Plan") on April 2, 2001. The 2001 Plan providesfor awards of incentive stock options, non-qualified stock options, andrestricted stock purchase rights. The Company has reserved 3,000 shares ofcommon stock under the 2001 Plan. The exercise price of the awards shall bedetermined by the Plan administrator at the date of grant, but shall not beless than the fair market value of the stock on the date of grant foremployees, or 85 percent of the fair market value for non-employees. Theexercise period shall be no more than 10 years and the awards will vest over aperiod of time determinable by the Board of Directors.  The number of optionsunder the 2001 Plan available for grant at June 30, 2003 was1,410.  At theCompany's 2003 annual stockholders' meeting, which was held on May 20, 2003,the Company's stockholders approved an amendment to the 2001 Plan thatincreased the options available for grant under the 2001 Plan by 1,000,bringing the total to 3,000. 

The Company's Board of Directors approved the 1998Stock Option Plan (the "1998 Plan"). The 1998 Plan covers two typesof options: incentive stock options and non-qualified stock options. Theaggregate number of shares that may be issued pursuant to the 1998 Plan may notexceed 2,000 shares. The exercise price for the options shall be determined bythe Plan administrator at the date of grant, but shall not be less than thefair market value of the stock at the date of grant. The option period can beno more than 10 years and the options will vest over a period of timedeterminable by the Board of Directors.  The number of options under the 1998Plan available for grant at June 30, 2003 was****1,117.   At the Company's2003 annual stockholders' meeting, which was held on May 20, 2003, theCompany's stockholders approved an amendment to the 1998 Plan that increasedthe options available for grant under the 1998 Plan by 1,000, bringing thetotal to 2,000.

Duringthe six months ended June 30, 2003, the Company issued options to purchase 250shares of the Company's common stock at $2.10 (fair value on the date of grant)to its officer under the 1998 Plan, and options to purchase 100 shares (at$1.65 to $1.75 per share, the fair values on the date of grant) to each of the threenew directors of the Company, with all such options vesting over a three-yearperiod.  The Company also amended the officer's 170 options to fully vest alloptions in the event that the officer is terminated prior to the expiration ofhis employment agreement. 

**Warrants**

From time to time, the Company issues warrants pursuantto various consulting and third party agreements.

During the six months ended June 30, 2003, the Companyrecorded a consulting expense of $81 related to warrants issued in the yearended December 31, 2002, and which fair value is recognized over the period ofservice.

During the six months ended June 30, 2003, the Company recordeda prepaid expense of $49 for the fair value of warrant issued for consulting feesrelated to American Stock Exchange listing (see Note 1).

During the six months ended June 30, 2003, the Companycancelled 125 warrants to purchase shares of the Company's common stock at$1.50 per share.

During the six months ended June 30, 2003, 38 warrantswere exercised as a cashless exercise for a net 20 shares of the Company'scommon stock. 

**NOTE5 - LITIGATION, COMMITMENTS AND CONTINGENCIES**

The nature and scope of the Company's businessoperations bring it into regular contact with the general public, a variety ofbusinesses and government agencies. These activities inherently subject theCompany to potential litigation, which are defended in the normal course ofbusiness. At June 30, 2003, there were various claims and disputes incidentalto the business. The Company believes that the disposition of all such claimsand disputes, individually or in the aggregate, should not have a materialadverse affect upon the Company's financial position, results of operations orcash flows. 

9

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**HOME SOLUTIONS OF AMERICA, INC.NOTES TO CONSOLIDATED FINANCIALSTATEMENTSJUNE 30, 2003(Dollars and Shares in Thousands,Except Per Share Data)**

** **

**NOTE5 - LITIGATION, COMMITMENTS AND CONTINGENCIES, continued**

An adversary proceeding was commenced on or aboutFebruary 9, 2001 by American Eco Corporation ("Plaintiff" or "AEC"),which, at the time, was a debtor-in-possession under Chapter 11 of the UnitedStates Bankruptcy Code. The Plaintiff sought the recovery of certain allegedtransfers and recovery of fees against the Company based on theories of breachof contract, promissory estoppel, quantum meruit and pursuant to Sections 542,544, 548 and 550 of the Bankruptcy Code. The Plaintiff sought a recovery inexcess of $1,300 and other equitable relief.  During the second quarter of2003, the Company was notified that this case has been dismissed. 

On or about August 1, 2002, National Union Fire Insurancecommenced an adversary proceeding against us entitled *National Union FireIns. Co. v. QHI Stephens Contractors, Inc., EIF Holdings, Inc., P.W. StephensContracts, Inc., P.W. Stephens Contractors, Inc. (CA), P.W. Stephens Services,Inc., P.W. Stephens Residential, Inc., American Temporary Sanitation, Inc.*in the United States District Court for the Northern District of California. The Company is in settlement discussions and believes its potential liabilityis no more than $150.

On or about October 3, 2002, in the Superior CriminalCourt of Los Angeles County, California a misdemeanor claim was filed againstthe Company and two employees alleging that certain events violated state andlocal regulations.  The Company is vigorously defending this suit.  At thistime, the Company cannot predict the likelihood of an unfavorable outcome norestimate the amount or range of potential loss, if any. 

Pursuant to an indemnificationagreement between the Company and Spruce MacIntyreHolding Corp.("Spruce"), the Companysettled claims brought by CIT Group/Equipment Financing, Inc. and AckstarInsurance Company, both filed in the United States District Court for theEastern District of Missouri.  The CIT settlement agreement requires Spruce tomake certain payments to the plaintiffs.  In the event that Spruce fails tomake the remaining settlement payments, the plaintiffs could seek satisfactionof their $713 consent judgment against the Company, in which case the Companywould have to seek indemnification from Spruce.

The Company has accrued $130 in the accompanyingconsolidated financial statements related to the above proceedings.  Based onmanagement's analysis, the Company believes that this amount will be sufficientto cover any potential losses that may occur.

**NOTE 6 - SUBSEQUENTEVENTS**                        

InJuly 2003, the Company closed it acquisition of Central Texas ResidentialServices, Inc.  The consideration paid by the Company included 850 commonshares of the Company, of which 600 were contingent upon meeting certainfinancial targets.  The 600 shares are not considered outstanding by theCompany as the contingency has not yet been satisfied.  

InJuly 2003, the Company closed its acquisition of Fiber Seal Systems, LP.  Theconsideration paid by the Company included 300 common shares of the Company,$520 seller note and 250 warrants contingent upon meeting certain financialtargets.  

Duringthe six months ended June 30, 2003, the Company paid fees of approximately $280related to these acquisitions, which were capitalized in other assets in theaccompanying consolidated balance sheet.  This amount will be allocated to theJuly 2003 purchases. 

The Company has not provided the proforma disclosuresrequired under SFAS 141 related to these acquisitions as the Company has not yetobtained all the required information and such disclosure is impracticable atthis time.

Subsequent to June 30, 2003, 28 warrants were exercised as acashless exercise for a net 14 shares of the Company's common stock.

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**Item 2. Management'sDiscussion and Analysis or Plan of Operation.**

**Overview           **

**           **Home Solutions of America, Inc. ("we," "us," "HomeSolutions," or the "Company") is a Delaware corporation that was incorporatedin 1998.  Our growth strategy, developed in 2002, is to become a leadingprovider of specialty residential services that protect the homeowner's singlelargest investment - their home. We seek a dominant market position through theacquisition of strategic, specialized, profitable and well-managed residentialservice companies and through the above average internal growth of theseoperations.  Home Solutions will provide services such as cleaning and fabricprotection, fire and water damage restoration, and the remediation of indoorair contaminants.

**Growth Strategy**

            HomeSolutions seeks to acquire companies or internally generate projects that willfocus on providing specialty residential services to homeowners.  EffectiveNovember 1, 2002, we closed our first acquisition as part of this strategy,acquiring PW Stephens, Inc. ("PWS"), a provider of indoor air contaminateremoval services for homeowners in California.  In July 2003 we acquiredCentral Texas Residential Services, Inc. and Fiber-Seal Systems, L.P.  We expectto continue our aggressive growth strategy with additional acquisitions.  Thefollowing is a list of the targeted services that we are pursuing:

***Cleaning and FabricProtection:***We will providefabric protection services to protect furniture, carpet and draperies fromstains and daily wear and tear.  This niche market is primarily targeted atabove-average income homeowners with an average ticket of approximately $400 ormore.  We will provide our customers with an annual fabric protection serviceagreement that will allow them to have on-site spill clean up during the lifeof the agreement.  In addition, using well-tested methods of cleaning carpet,we will offer maintenance and emergency response services to our customer baseto repair carpet damaged by common stains, pet dander, bacteria and dust.  Thisprocedure will extend the life of the homeowners' carpets and make the carpetlook its finest.  Furthermore, air duct cleaning is another under-developedmarket the Company will approach.  Particulate (organic and inorganic) materialwithin a home's heating and air conditioning systems and the transfer******airducts can cause allergic reactions and generally indicate poor air quality. Furthermore, the conditions of these systems, high moisture content and heatare often the breeding ground for many types of mold.  It is expected that aportion of our cleaning operations will generate additional opportunitiesacross our other business segments.

***Indoor AirContamination:*** Indoor aircontamination, including contamination from mold, asbestos and lead paint, is agrowing concern for the homeowner. With increased media attention regarding thehealth threat of mold, fewer insurance options, and property transfers at risk,current market conditions have created significant demand for mold inspections,certifications and remediation services.  These services consist of propertyand system inspections, surface and air testing, project design, microbialremoval, light interior demolition, repair and specialized cleaning work.  Homeinspections and testing can range from $300 to several thousand dollars. Customer opportunities are developed through a regional sales force as well asthrough referrals by real estate firms, insurance adjusters, mortgagecompanies, attorneys and nationally branded retailers.  Althoughgovernment-promulgated regulation is currently under review, industry practiceand general awareness is building momentum. The Company believes it can use itsindustry experience to give efficacy to its processes and provide homeownerswith quality assurance.  Furthermore, we plan to provide annual and quarterlymonitoring services, in which technicians will regularly inspect, test andcertify the air quality of our clients' homes.  It is expected that a portion ofour indoor air contamination operations will generate additional opportunitiesacross our other business segments. 

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***Fire and Water DamageRestoration:***As part of HomeSolutions' specialty residential services strategy, we will provide highlytrained technicians to respond to fire, water and weather-related emergenciesto inspect structural members and contents damaged by water, to determine thelikelihood or extent of mold growth, and to provide immediate cleaning, drying,moving, storage, and deodorization, among other services.  As most cases ofmold are associated with excess moisture, we believe that response to this typeof event-related damage will provide significant additional revenueopportunities.  The cost and time requirements of these projects can varydramatically from case-to-case.  It is expected that a portion of ourfire/water damage restoration operations will generate additional opportunitiesacross our other business segments.

*Use of Estimates andCritical Accounting Policies*

            Inpreparing our consolidated financial statements, we make estimates, assumptionsand judgments that can have a significant effect on our revenues, income (loss)from operations, and net income (loss), as well as on the value of certainassets on our balance sheet.  We believe that there are several accountingpolicies that are critical to an understanding of our historical and futureperformance as these policies affect the reported amounts of revenues,expenses, and significant estimates and judgments applied by management.  Whilethere are a number of accounting policies, methods and estimates affecting ourfinancial statements, areas that are particularly significant include revenuerecognition, stock-based compensation, and goodwill.  In addition, please referto Note 1 to the accompanying financial statements for further discussion ofour accounting policies.

*Revenue Recognition*

            Revenueis recognized at the time the contract and related services are performed.

*Stock-Based Compensation*

            The Company uses the intrinsic valuemethod of accounting for stock-based compensation to employees in accordancewith Accounting Principles Board Opinion ("APB") No. 25, as amended, *"Accountingfor Stock Issued to Employees."*   The Company accounts fornon-employee stock-based compensation under Statement of Financial AccountingStandards ("SFAS") No. 123, *"Accounting for Stock-BasedCompensation."* At June 30, 2003, the Company had two stock-basedemployee compensation plans, which are described more fully in Note 4 of the accompanyingconsolidated financial statements.  The Company accounts for those plans underthe recognition and measurement principles of APB 25, and relatedinterpretations.  The Company has applied the disclosure provisions in SFAS No.148 in its consolidated financial statements and the accompanying notes.  TheCompany does not anticipate adopting the fair value based method of accountingfor stock-based compensation.

*Goodwill*

            Goodwillrepresents the excess of acquisition cost over the net assets acquired in abusiness combination. Management reviews, on an annual basis, the carryingvalue of goodwill in order to determine whether impairment has occurred.Impairment is based on several factors including the Company's projection offuture undiscounted operating cash flows. If an impairment of the carryingvalue were to be indicated by this review, the Company would adjust thecarrying value of goodwill to its estimated fair value.

 12

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**Resultsof Operations (Dollars In Thousands)**

**Comparison of Three Months ended June 30, 2003to Three Months ended June 30, 2002**

*Revenue*

                Therevenue of $3,053 for the three months ended June 30, 2003 is comprised ofrevenue from PWS.  The Company had no revenue during the three months ended June30, 2002.

*Costsof Sales*

                Costsof sales were $1,712 for the three months ended June 30, 2003.  The Company hadno cost of sales during the three months ended June 30, 2002. 

*Selling,General and Administrative Expenses:*

            Selling,general and administrative expenses were $1,525 for the three months ended June30, 2003 compared to $487 for the three months ended June 30, 2002.  Thisrepresents an increase of $1,038 over 2002.  This increase is due to theaddition of PWS' administrative costs together with Home Solutions'administrative costs.

*OtherIncome (Expenses):*

             Interest income decreased from $32 in 2002 to $1 in 2003.  This is primarily aresult of lower cash balances during 2003. Interest expense was $209 in 2003compared to $4 in 2002, which is largely due to the debt incurred with theacquisition of PWS and interest on the line of credit and long-term debt atPWS.  Other income was $1,105 in 2002 and $152 in 2003, which represents a gainon extinguishment of debt. 

**Comparisonof Six Months ended June 30, 2003 to Six Months ended June 30, 2002**

*Revenue*

            Therevenue of $6,982 for the six months ended June 30, 2003 is comprised ofrevenue from PWS. For the six months ended June 30, 2002, the Company had norevenue during this period other than revenue earned by PTP, the Company'sformer wholly-owned subsidiary that was divested in February 2002, whichrevenue is included in the "Income (loss) from discontinued operations" lineitem on the consolidated statements of operations.

*Costsof Sales*

                Costsof sales were $3,784 for the six months ended June 30, 2003.  For the sixmonths ended June 30, 2002, the Company had no cost of sales during this periodother than from the Company's divested subsidiary PTP, which is included in the"Income (loss) from discontinued operations" line item on the consolidatedstatements of operations.

*Selling,General and Administrative Expenses:*

            Selling,general and administrative expenses were $3,223 for the six months ended June30, 2003 compared to $897 for the six months ended June 30, 2002.  Thisrepresents an increase of $2,326 over 2002.  This increase is due to theaddition of PWS' administrative costs together with Home Solutions'administrative costs.

 13

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*OtherIncome (Expenses):*

             Interest income decreased from $63 in 2002 to $1 in 2003.  This is primarily aresult of lower cash balances during the first six months of 2003.  Interestexpense was $358 in 2003 compared to $4 in 2002.  This is largely due to thedebt incurred with the acquisition of PWS and interest on the line of creditand long-term debt at PWS.  Other income was $156 in 2003 compared to $1,105 in2002, which represents a gain on extinguishment of debt. 

**Liquidityand Capital Resources**

            The Company's existing capital resourcesas of June 30, 2003, consisted of cash and accounts receivable totaling $2,954,compared to cash and notes receivable of $2,487 as of June 30, 2002. TheCompany believes that the financing arrangements the Company currently has inplace are sufficient throughout the next twelve months to finance its workingcapital needs.  Implementation of the Company's strategic plan of acquiringniche residential services companies will require additional capital, however. 

The Company has a credit agreement with afinancial institution.  The credit agreement includes a $788 term loan, arevolving line of credit and an equipment line of credit.  The credit agreementis guaranteed by the former stockholder of PWS, secured by substantially allPWS assets and contains a provision that requires PWS to maintain certainfinancial covenants.  The revolving line of credit expired on January 28,2003.  The Company is currently negotiating with other financial institutionsto refinance this line, the equipment line and the $788 term loan.  The balanceon the revolving line of credit was $499 at June 30, 2003.

            The equipment line of credit bearsinterest at the prime rate plus 1.00% per annum, payable monthly.  The terms ofthe agreement provide for borrowings up to $200.  The equipment line of creditexpired on January 31, 2003, at which time all outstanding amounts will berepaid over 36 equal monthly installments including principal and interestthrough February 28, 2006.  The balance at June 30, 2003 was $25.

            Duringthe six months ended June 30, 2003, the Company generated net cash fromoperating activities of $808, including a net loss of $162.  

            TheCompany's investing activities used net cash of $358, primarily due to thepurchase of property and equipment and payment of fees for pendingacquisitions.

            TheCompany's financing activities used net cash of $464, primarily due to principalpayments made on long-term debt and capital leases.

**RISKSASSOCIATED WITH FORWARD-LOOKING STATEMENT INCLUDED IN THIS FORM 10-QSB**

This Form 10-QSB contains certain forward-looking statements withinthe meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended, which areintended to be covered by the safe harbors created thereby. These statementsinclude the plans and objectives of management for future operations, includingplans and objectives relating to the Company's residential services acquisitionstrategy and availability of capital to fund such strategy. The forward-lookingstatements included herein are based on current expectations that involvenumerous risks and uncertainties. Assumptions relating to the foregoing involvejudgments with respect to, among other things, future economic, competitive andmarket conditions, regulatory framework, and future business decisions, all ofwhich are difficult or impossible to predict accurately and many of which arebeyond the control of the Company. We refer you to the section entitled"Trends, Risks and Uncertainties" in Item 6 of Part II of our annual report onForm 10-KSB for the year ended December 31, 2002, for a list of specific factorsthat could cause actual results to differ materially from those indicated by ourforward-looking statements made herein and presented elsewhere by management.Although the Company believes that the assumptions underlying theforward-looking statements are reasonable, any of the assumptions could beinaccurate and, therefore, there can be no assurance that the forward-lookingstatements included in this Form 10-QSB will prove to be accurate. In light ofthe significant uncertainties inherent in the forward-looking statementsincluded herein, the inclusion of such information should not be regarded as arepresentation by the Company or any other person that the objectives and plansof the Company will be achieved. Furthermore, we do not undertake any obligationto update forward-looking statements made herein.

14

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**Item 3. Controls and Procedures. **

As of June 30, 2003, an evaluation was carried out under the supervision and with theparticipation of the Company's management, including our Chief ExecutiveOfficer and our Chief Financial Officer (one individual currently holds bothpositions), of the effectiveness of the design and operation of our disclosurecontrols and procedures.  Based upon that evaluation, the Chief ExecutiveOfficer and the Chief Financial Officer concluded that the design and operationof these disclosure controls and procedures were effective.  No significantchanges were made in our internal controls or in other factors that couldsignificantly affect these controls subsequent to June 30, 2003.

 

 

 

 

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**PART IIOTHER INFORMATION**

**Item 1. Legal Proceedings. **

The nature and scope of our business operationsbring us into regular contact with the general public, a variety of businessesand government agencies.  These activities inherently subject us to potentiallitigation, which we defend in the normal course of business. At June 30, 2003,there were various claims and disputes incidental to the business.  The Companybelieves that the disposition of all such claims and disputes, individually orin the aggregate, should not have a material adverse affect upon our financialposition, results of operations or cash flows.

As disclosed in the Company's Form 10-KSBfor the year ended December 31, 2002, an adversary proceeding was commenced onor about February 9, 2001 by American Eco Corporation ("Plaintiff" or"AEC"), which, at the time, was a debtor-in-possession under Chapter 11 of theUnited States Bankruptcy Code. The Plaintiff sought the recovery of certainalleged transfers and recovery of fees against the Company based on theories ofbreach of contract, promissory estoppel, quantum meruit and pursuant toSections 542, 544, 548 and 550 of the Bankruptcy Code. The Plaintiff sought arecovery in excess of $1,300,000 and other equitable relief.  During the secondquarter of 2003, the Company was notified that this case has been dismissed. 

As disclosed in the Company's Form 10-KSBfor the year ended December 31, 2002, on or about August 1, 2002, NationalUnion Fire Insurance commenced an adversary proceeding against us entitled *NationalUnion Fire Ins. Co. v. QHI Stephens Contractors, Inc., EIF Holdings, Inc., P.W.Stephens Contracts, Inc., P.W. Stephens Contractors, Inc. (CA), P.W. StephensServices, Inc., P.W. Stephens Residential, Inc., American Temporary Sanitation,Inc.* in the United States District Court for the Northern District ofCalifornia.  The Company is in settlement discussions and believes itspotential liability is no more than $150,000.

**Item 2.  Changes In Securities.**

The Company issued the following shares of its commonstock without registration under the Securities Act of 1933, as amended (the"Securities Act"):

1.                  During the second quarter of 2003,the Company issued 19,732 shares of common stock, at an average exercise priceof $3.08 per share, upon the cashless exercises of various warrants outstanding.

2.                  In June 2003, the Company issued862,479 shares of common stock, at approximately $2.60 per share, upon theconversion of certain PWS seller debt into equity (see Item 5).

The above issuances were unregistered,as the Company was relying on the exemptions from registration contained inSection 4(2) of the Securities Act, and Regulation D promulgated thereunder, onthe basis that such transactions did not involve public offerings ofsecurities.

            On June 11, 2003, inconnection with obtaining a listing for its common stock on the American StockExchange, the Company filed a registration statement on Form 8-A to registerits class of common stock under Section 12(b) of the Securities Exchange Act of1934.

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            On June 30, 2003, the Company filed aregistration statement on Form S-3 toregister 6,697,960 shares of common stock (some of which could be issuedpursuant to warrant exercises and the conversion of debt) on behalf of sellingstockholders, pursuant to contractual registration rights with suchstockholders.  The Company will not receive any proceeds from the sale of suchshares, other than the exercise prices of any warrants exercised by warrantholders who do not utilize a cashless exercise.

**Item 4. Submission ofMatters to a Vote of Security Holders.**

               OnMay 20, 2003, the Company held its 2003 Annual Meeting of Stockholders.  At theAnnual Meeting, the Company's stockholders reelected Frank J. Fradella, MichaelS. Chadwick, Mark W. White, and Willard W. Kimbrell as the Company's directors(7,825,316 shares were in favor, and 0 shares abstained), approved amendmentsto the Company's 2001 Stock Plan and 1998 Stock Option Plan increasing thenumber of shares of common stock available for grant under each plan by1,000,000 shares (7,821,816 shares voted in favor, 3,000 shares voted against,and 500 shares abstained), and ratified the appointment of Corbin & CompanyLLP as the Company's independent public accountants for 2003 (7,824,816 sharesvoted in favor, 0 shares voted against, and 500 shares abstained).

**Item5. Other Information.**

On June 5, 2003, as reported in the Company's CurrentReport on Form 8-K filed on June 6, 2003, the Company entered into a FirstAmendment to Stock Purchase Agreement with the former shareholder of PWS, whichamended the Stock Purchase Agreement dated November 1, 2002, pursuant to whichthe Company acquired PWS.  Under the terms of the First Amendment andcertain agreements executed in connection therewith, the Company (i) soldcertain assets of PWS for $786,168, which was paid by reducing certain debtowed by the Company as a result of the acquisition of PWS, (ii) converted$2,242,446 of debt associated with the purchase of PWS into 862,479 (the"Converted Shares") shares of the Company's common stock, and (iii) renewed andextended the payment terms of a $1.5 million note incurred in the purchase of PWS, and issued a second replacement note (the "Convertible Note") with anoriginal principal amount of approximately $2.2 million that is convertibleinto the Company's common stock (securing both replacement notes with the stockand assets of PWS) at a conversion price equal to the average trading price ofthe Company's stock on the three trading days prior to the conversion date.  OnJune 30, 2003, The Company filed a registration statement on Form S-3 toregister the Converted Shares and shares that could be issued upon theconversion of the Convertible Note.  The Company will be required to issueadditional shares of common stock to the former shareholder of PWS in the eventthat the common stock trades at an average price less than $2.60 per share onthe five trading days prior to the date that the Form S-3 is declared effectiveby the SEC.

Pursuant to a Partnership Interest Purchase Agreementdated July 31, 2003, the Company acquired 100% of the outstanding partnershipinterests of Fiber-Seal Systems, L.P. ("Fiber-Seal"), based in Dallas, Texas,which is in the business of selling andfranchising the Fiber-Seal® furniture care system.  The two partners of Fiber-Seal prior to the acquisition received (i)an aggregate of 300,000 shares of the Company's common stock (includingpiggyback registration rights for such shares), (ii) a promissory note in theoriginal principal amount of $520,000 (the "Fiber-Seal Note"), secured by theassets of Fiber-Seal, that is due on or before December 31, 2003, and (iii) awarrant to purchase 250,000 shares of the Company's common stock, which warrantbecomes exercisable upon Fiber-Seal achieving certain revenue targets or otherevents.  In the event that either the Fiber-Seal Note is not paid on or beforeDecember 31, 2003, or the Company does not raise at least $2 million of capitalbefore such date, the former partners of Fiber-Seal will have an option, forone day on January 2, 2004, to repurchase their partnership interests inFiber-Seal by returning to the Company all consideration received in theacquisition other than the 300,000 shares of common stock.  

17

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Mr. Rick J. O'Brien, the President of Fiber-Seal, alsobecame a Vice President of the Company on July 31, 2003, and the Company andFiber-Seal entered into a three-year employment agreement with Mr. O'Brien.  Inaddition, Mr. O'Brien received an option to purchase 250,000 shares of theCompany's common stock at $2.00 per share, vested over a three-year period.

During July 2003, the Company andthe owner of Horizon Cleaning and Restoration, Inc. discontinued discussionsregarding the potential acquisition of such company by Home Solutions,  andthe letter of intent between the parties has expired.

**Item 6.            Exhibits and Reports on Form 8-K.**

|      | (a)        *Exhibits*                                                                                                                                                                                                                                                                                           |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                          |
|      |                                                                                                                                                                                                                                                                                                                                               |
| 2.1       | Agreement for Sale of Shares, dated as ofFebruary 22, 2002, between Nextgen Communications Corporation, a Delawarecorporation, and Point to Point of Louisiana, Inc., a Louisiana corporation (filedas Exhibit 2.1 to the Company's Current Report on Form 8-K filed on March 19,2002, and incorporated herein by reference).                      |
|      |                                                                                                                                                                                                                                                                                                                                          |
| 2.2  | First Amendment to Agreement for Sale ofShares, executed to be effective as of February 22, 2002, by and between Nextgen Communications Corporation and Point to Point of Louisiana, Inc. (filedas Exhibit 2.2 to the Company's Current Report on Form 8-K filed on March 19,2002, and incorporated herein by reference).                          |
|      |                                                                                                                                                                                                                                                                                                                                               |
| 2.3       | Secured Promissory Note, dated February 22,2002, issued by Point to Point of Louisiana to Nextgen CommunicationsCorporation. (filed as Exhibit 2.3 to the Company's Current Report on Form 8-Kfiled on March 19, 2002, and incorporated herein by reference).                                                                                      |
|      |                                                                                                                                                                                                                                                                                                                                               |
| 2.4       | First Amendment to Secured Promissory Note,executed to be effective as of February 22, 2002, by and between Point to Pointof Louisiana, Inc. and Nextgen Communications Corporation (filed as Exhibit 2.4to the Company's Current Report on Form 8-K filed on March 19, 2002, andincorporated herein by reference).                                |
|      |                                                                                                                                                                                                                                                                                                                                               |
| 2.5       | Stock Pledge Agreement, executed to beeffective as of February 22, 2002, by and between Point to Point of Louisiana,Inc. and Nextgen Communications Corporation (filed as Exhibit 2.5 to theCompany's Current Report on Form 8-K filed on March 19, 2002, and incorporatedherein by reference).                                                    |
|      |                                                                                                                                                                                                                                                                                                                                               |
| 2.6       | Settlement Agreement and Mutual Release ofClaims, executed to be effective as of February 20, 2002, by and among Point ToPoint Network Services, Inc., Nextgen Communications Corporation, and W.Michael Sullivan (filed as Exhibit 2.6 to the Company's Current Report on Form8-K filed on March 19, 2002, and incorporated herein by reference). |
|      |                                                                                                                                                                                                                                                                                                                                               |
| 2.7       | Repurchase Option Agreement, executed to beeffective as of February 20, 2002, by and between Nextgen CommunicationsCorporation and W. Michael Sullivan (filed as Exhibit 2.7 to the Company'sCurrent Report on Form 8-K filed on March 19, 2002, and incorporated herein byreference).                                                             |

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| 2.8    | Stock Purchase Agreement dated November 1,2002, by and between Nextgen Communications Corporation and Jane C. Barber(filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed onJanuary 17, 2003, and incorporated herein by reference).                                                                                                      |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 2.9    | Promissory Note dated November 1, 2002, inthe original principal amount of $1,500,000, issued by Nextgen CommunicationsCorporation to Jane C. Barber (filed as Exhibit 2.2 to the Company's CurrentReport on Form 8-K filed on January 17, 2003, and incorporated herein byreference).                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 2.10   | Promissory Note dated November 1, 2002, inthe original principal amount of $1,000,000, issued by Nextgen CommunicationsCorporation to Jane C. Barber (filed as Exhibit 2.3 to the Company's CurrentReport on Form 8-K filed on January 17, 2003, and incorporated herein byreference).                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 2.11   | Promissory Note dated November 1, 2002, inthe original principal amount of $1,444,100, issued by Nextgen CommunicationsCorporation to Jane C. Barber (filed as Exhibit 2.4 to the Company's CurrentReport on Form 8-K filed on January 17, 2003, and incorporated herein by reference).                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 2.12   | Secured Promissory Note dated November 1,2002, in the original principal amount of $5,200,000, issued by NextgenCommunications Corporation to Jane C. Barber (filed as Exhibit 2.5 to theCompany's Current Report on Form 8-K filed on January 17, 2003, andincorporated herein by reference).                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 2.13   | Assignment of Promissory Notes, datedNovember 1, 2002, by and between Nextgen Communications Corporation and Jane C.Barber (filed as Exhibit 2.6 to the Company's Current Report on Form 8-K filed onJanuary 17, 2003, and incorporated herein by reference).                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 2.14   | Warrant Purchase Agreement, dated November15, 2002, by and between Nextgen Communications Corporation and Jane C. Barber.(filed as Exhibit 2.16 to the Company's Annual Report on Form 10-KSB for theyear ended December 31, 2002, and incorporated herein by reference).                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 2.15   | Partnership Interest Purchase Agreement,dated July 31, 2003, by and among Home Solutions of America, Inc., FSS HoldingCorp., Grassmere Computer Products, Inc., and Merritt Computer Products, Inc. +                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 2.16   | Repurchase Option Agreement, dated July 31,2003, by and among Home Solutions of America, Inc., FSS Holding Corp.,Grassmere Computer Products, Inc., and Merritt Computer Products, Inc. +                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 3.1    | Certificate of Incorporation of theCompany, as restated on July 31, 2001 (filed as Exhibit A to the Company'sInformation Statement on Schedule 14C filed on July 9, 2001, and incorporatedherein by reference).                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 3.2    | Certificate of Amendment to the Certificateof Incorporation of Nextgen Communications Corporation, changing thecorporation's name to "Home Solutions of America, Inc.", as filed on December23, 2002 (filed as Exhibit A to the Company's Information Statement on Schedule14C filed on December 22, 2002, and incorporated herein by reference). |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| 3.3    | Bylaws of the Company, as amended on April2, 2001 (filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-QSBfor the quarter ended June 30, 2001, and incorporated herein by reference).                                                                                                                                                         |

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| 10.1 *  | 1998 Stock Option Plan (filed as Exhibit 4.1to the Company's Annual Report on Form 10-KSB for the year ended September 30,1998, and incorporated herein by reference).                                                                                                                                     |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                       |
| 10.2 *  | First Amendment to 1998 Stock Option Plan,dated May 20, 2003. +                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.3 *  | 2001 Stock Plan (filed asExhibit B to the Company's Information Statement on Schedule 14C filed on July9, 2001, and incorporated herein by reference).                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.4 *  | First Amendment to 2001 Stock Plan, dated May20, 2003. +                                                                                                                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.5 *  | Registration Rights Agreement by and betweenFrank J. Fradella and U S Industrial Services, Inc., dated April 2, 2001.(filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-QSB for thequarter ended June 30, 2001, and incorporated herein by reference).                                    |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.6 *  | Stock Option Agreement executed December 27,2001, to be effective as of October 3, 2000, by and between Frank J. Fradellaand Nextgen Communications Corporation (filed as Exhibit 2 to Amendment No. 3to Schedule 13D of Frank J. Fradella filed on January 3, 2002, and incorporatedherein by reference). |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.7*   | Stock Option Agreement by and between R.Andrew White and Nextgen Communications Corporation, dated February 1, 2002(filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-QSB for thequarter ended March 31, 2002, and incorporated herein by reference).                                     |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.8*   | First Amendment to Stock Option Agreement byand between R. Andrew White and Nextgen Communications Corporation, datedSeptember 2, 2002 (filed as Exhibit 10.10 to the Company's Quarterly Report onForm 10-QSB for the quarter ended September 30, 2002, and incorporated hereinby reference).             |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.9*   | Restricted Stock Purchase Agreement by andbetween Frank J. Fradella and US Industrial Services, Inc. dated April 2, 2001(filed as Exhibit 10.11 to the Company's Annual Report on Form 10-KSB for theyear ended December 31, 2002, and incorporated herein by reference).                             |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.10*  | Employment Agreement by and between P.W.Stephens, Inc., a California corporation, and Scott Johnson, effectiveSeptember 1, 2001 (filed as Exhibit 10.12 to the Company's Annual Report onForm 10-KSB for the year ended December 31, 2002, and incorporated herein byreference).                           |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.11   | Form of Registration Rights Agreement between Nextgen Communications Corporation and each of four accredited investors, datedNovember 19, 2002 (filed as Exhibit 10.13 to the Company's Annual Report onForm 10-KSB for the year ended December 31, 2002, and incorporated herein byreference).            |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.12   | Form of Warrant Purchase Agreement between Nextgen Communications Corporation and each of four accredited investors, datedNovember 19, 2002 (filed as Exhibit 10.14 to the Company's Annual Report onForm 10-KSB for the year ended December 31, 2002, and incorporated herein byreference).               |
|    |                                                                                                                                                                                                                                                                                                       |
| 10.13 * |  Executive Employment Agreementby and between R. Andrew White and Home Solutions of America, Inc., dated March15, 2003 (filed as Exhibit 10.15 to the Company's Quarterly Report on Form10-QSB for the quarter ended March 31, 2003, and incorporated herein byreference).                            |
|    |                                                                                                                                                                                                                                                                                                       |

20

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| 10.14 * | First Amendment to StockOption Agreement by and between R. Andrew White and Home Solutions of America,Inc., dated March 15, 2003 (filed as Exhibit 10.16 to the Company's QuarterlyReport on Form 10-QSB for the quarter ended March 31, 2003, and incorporatedherein by reference).                                          |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                          |
| 10.15 * | Second Amendment to Stock OptionAgreement by and between R. Andrew White and Home Solutions of America, Inc.,dated March 15, 2003 (filed as Exhibit 10.17 to the Company's Quarterly Reporton Form 10-QSB for the quarter ended March 31, 2003, and incorporated herein byreference).                                         |
|    |                                                                                                                                                                                                                                                                                                                          |
| 10.16 * |  Consulting Agreement by andbetween Frank J. Fradella and Home Solutions of America, Inc., dated March 15,2003 (filed as Exhibit 10.18 to the Company's Quarterly Report on Form 10-QSBfor the quarter ended March 31, 2003, and incorporated herein by reference).                                                      |
|    |                                                                                                                                                                                                                                                                                                                          |
| 10.17 * | First Amendment to RestrictedStock Purchase Agreement by and between Frank J. Fradella and Home Solutions ofAmerica, Inc., dated March 15, 2003 (filed as Exhibit 10.19 to the Company'sQuarterly Report on Form 10-QSB for the quarter ended March 31, 2003, andincorporated herein by reference).                           |
|    |                                                                                                                                                                                                                                                                                                                          |
| 10.18 * | First Amendment to StockOption Agreement by and between Frank J. Fradella and Home Solutions ofAmerica, Inc., dated March 15, 2003 (filed as Exhibit 10.20 to the Company'sQuarterly Report on Form 10-QSB for the quarter ended March 31, 2003, andincorporated herein by reference).                                        |
|    |                                                                                                                                                                                                                                                                                                                          |
| 10.19 * | Executive Employment Agreementby and among Home Solutions of America, Inc., Fiber-Seal Systems, L.P., andRick J. O'Brien, dated July 31, 2003.+                                                                                                                                                                               |
|    |                                                                                                                                                                                                                                                                                                                          |
| 10.20 * | Stock Option Agreement by andbetween Home Solutions of America, Inc. and Rick J. O'Brien, dated July 31,2003.+                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                          |
| 31.1    | Certification of Principal Executive Office pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                          |
| 31.2    | Certification of Principal Financial Office pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                          |
| 32.1    | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+                                                                                                                                                                                                                          |
|    |                                                                                                                                                                                                                                                                                                                          |
| 32.2    | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+                                                                                                                                                                                                                          |
|    | *Denotes a management contract or compensatory plan or arrangement.                                                                                                                                                                                                                                                           |
|    | +Filed herewith.                                                                                                                                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                          |
|    | (b)        *Reports on Form 8-K*                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                          |
|    |             On June 6, 2003, the Company filed a Current Report onForm 8-K, for events that occurred on June 4 and 5, 2003, to report a newcredit facility and the restructuring and conversion into equity of certaindebt owed to the former shareholder of PWS. |
|    |                                                                                                                                                                                                                                                                                                                          |

21

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SIGNATURES

            Inaccordance with the requirements of the Exchange Act, the registrant causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.

            

|                  |   | HOME SOLUTIONS OF AMERICA, INC.                                       |
|-----------------------|--------|-----------------------------------------------------------------------|
|                  |   | ** **                                                            |
|                  |   | ** **                                                            |
| Dated:August 14, 2003 | By:    | /s/ R. ANDREW WHITE                                                   |
|                  |   |      R. Andrew White                         |
|                  |   |      President, Chief Executive Officer, and |
|                  |   |      ChiefFinancial Officer (Interim)        |

 

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