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<title>Home Solutions of America Form 8-K</title>



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<p align=center style='text-align:center'><b>&nbsp;</b></p>

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<p align=center style='text-align:center'><b><font size="4">UNITED STATES<br>
SECURITIES AND EXCHANGE COMMISSION<br>
Washington,
 D.C. 20549</font></b></p>



<p align=center style='text-align:center'><b>______________________</b></p>



<p align="center"><b><font size="4">FORM 8-K</font></b></p>

<p align=center style='text-align:center'><b>CURRENT REPORT <br>
Pursuant to Section 13 or 15(d) of the<br>
Securities Exchange Act of 1934</b></p>



<p align=center style='text-align:center'><b>______________________</b></p>





<p align=center style='text-align:center'>Date of Report (date of earliest event reported):&nbsp; <b>October
26, 2006</b></p>



<p align=center style='text-align:center'><b><font size="5">Home Solutions of America, Inc.<br>
</font></b><font size="2">(Exact Name of Registrant as Specified in its Charter)</font></p>



<p align=center style='text-align:center'><b>______________________________________________________________________________</b></p>



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<p><b><font size="2">Delaware</font></b><font size="2">&nbsp;
</font></p>

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		<td align="center"> <b><font size="2">001-31711</font></b></td>
		<td align="center"> <b><font size="2">99-0273889</font></b></td>
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<p><font size="2">
(State of Incorporation)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></p>



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		<td align="center"><font size="2">(Commission File Number)</font></td>
		<td align="center"><font size="2">(IRS Employer Identification No.)</font></td>
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<p align="center"><b>1500 Dragon Street, Suite B, Dallas, Texas 75207 <br>
<i>(</i></b>Address of Principal Executive Offices<b><i>)</i></b></p>



<p>Registrant's Telephone
Number, Including Area Code:<b> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (214) 623-8446</b></p>



<p align=center style='text-align:center'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><b><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u></b>Former name of address, if changed since last report</p>



<p><font size="2">Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:</font></p>



<p style="margin-top: 0; margin-bottom: 0.001pt"><font size="2">[&nbsp;&nbsp; ] Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</font></p>

<p style="margin-top: 0; margin-bottom: 0.001pt"><font size="2">[&nbsp;&nbsp; ] Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></p>

<p style="margin-top: 0; margin-bottom: 0.001pt"><font size="2">[&nbsp;&nbsp; ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</font></p>

<p style="margin-top: 0; margin-bottom: 0.001pt"><font size="2">[ &nbsp;&nbsp;] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</font></p>



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<p style='text-align:justify'><b><font size="2">Item 1.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Entry
into a Material Definitive Agreement.</font></b></p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On October 26,
2006, the registrant, Home Solutions of America, Inc., a Delaware corporation
(&quot;Home Solutions&quot;), and its wholly-owned subsidiary, Home Solutions Restoration
of Louisiana, Inc., a Louisiana corporation (&quot;HSR of Louisiana&quot;), entered into
an agreement providing for HSR of Louisiana to acquire Associated Contractors
II, LLC, (&quot;Associated Contractors&quot;), a Louisiana limited liability company engaged
in providing construction and rebuilding services to commercial and residential
properties.&nbsp; The acquisition closed on October 26, 2006.</font></p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The acquisition
was accomplished pursuant to an Agreement and Plan of Merger among Home
Solutions, HSR of Louisiana, Associated and the prior owners of Associated
dated October 26, 2006 (the &quot;Merger Agreement&quot;) whereby Associated was merged
with and into HSR of Louisiana, with HSR of Louisiana continuing as the
surviving corporation following the merger.&nbsp; </font> </p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consideration paid
or to be paid to the prior owners of Associated in connection with the merger includes
the following: (i) up to $9,000,000 in cash to be paid from accounts receivable
of the Associated division of HSR of Louisiana (the &quot;Associated Division&quot;) collected
in the two-year period following the closing; (ii) 1,500,000 shares of Home
Solutions' common stock, issued at the closing; and (iii) additional shares of
common stock not to exceed $55,001 in value and in any event, not to exceed
900,000 shares, to be issued if and when necessary to cause the aggregate fair
market value of the common stock issued to the prior owners of Associated to exceed
by one dollar, the cash consideration paid to the prior owners of Associated under
clause (i) above.&nbsp; In addition, Home Solutions issued warrants to the prior owners
of Associated exercisable for up to 2,000,000 additional shares of common stock
at an exercise price of $.01 per share, that vest and become exercisable in
increments of 100,000 shares for every $2.5 million in earnings before
interest, taxes, depreciation and amortization (&quot;EBITDA&quot;) in excess of $9
million in EBITDA earned by the Associated Division in the two-year period
following the closing.&nbsp; Home Solutions also agreed to pay the prior owners of
Associated 5% of the net profits earned and collected by the Associated
Division related to a specified future accounts receivable.</font></p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Merger Agreement contains various customary representations, warranties,
covenants and agreements of the parties.&nbsp; Pursuant to the Merger Agreement,
Home Solutions agreed to file a registration statement with the Securities and
Exchange Commission registering the common stock issued and issuable pursuant to the Merger
Agreement, including the common stock issuable under the warrants, for resale
under the Securities Act of 1933 within 12 months after the closing.<b>&nbsp;
</b>Home Solutions agreed that HSR of Louisiana would be provided with a line
of credit of at least $15,000,000, the proceeds of which will be used for
operational activities of HSR of Louisiana.&nbsp; Home Solutions also agreed to
indemnify the prior owners of Associated from personal guarantees entered into
in connection with the business of Associated prior to the merger and to use
commercially reasonable efforts to remove such persons from the personal
guarantees after the closing.&nbsp; The prior owners of Associated agreed not to compete
with the Associated Division for two years after the closing.</font></p>
<p style='text-align:justify'>&nbsp;</p>



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<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stephen Scott Sewell, who was the president of Associated prior to the merger,
will serve as the Chairman of the Board of HSR of Louisiana, pursuant to the terms of an
Employment Agreement entered into among Mr. Sewell, HSR of Louisiana and Home
Solutions (the &quot;Employment Agreement&quot;).&nbsp; Under the Employment Agreement, Mr.
Sewell is employed by HSR of Louisiana as Chairman of the&nbsp; Board, which is the
senior officer position of HSR of Louisiana, for a five year term. &nbsp;Mr.
Sewell's annual salary is $156,000 for fiscal years 2006 and 2007, subject to
increase for future years.&nbsp; Pursuant to the terms of the Employment Agreement,
the employees of HSR of Louisiana (including Mr. Sewell) are entitled to an
annual aggregate bonus equal to 5% of HSR of Louisiana's EBITDA in a given
year, which amount shall be allocated among Mr. Sewell and the HSR of Louisiana
employees, as determined by Mr. Sewell. &nbsp;The Employment Agreement further
provides that Mr. Sewell is entitled to receive reimbursement of business
expenses, as well as employee benefits.&nbsp; The Employment Agreement may be
terminated by Mr. Sewell for good reason or by HSR of Louisiana without cause,
in which case Mr. Sewell is entitled to receive&nbsp; 12 months of salary,
bonus and health care coverage following the termination of employment.&nbsp; The
Employment Agreement may be terminated by Mr. Sewell without good reason or by HSR
of Louisiana with cause, in which case Mr. Sewell is entitled to receive his
salary through the date of termination.&nbsp; In the event of Mr. Sewell's death or
disability, he is entitled to receive his salary and health care coverage until
the earlier of (i) the end of the term of the Employment Agreement, or (ii) the
90th day following the date of his death or disability.&nbsp; Mr. Sewell agrees not
to compete with Home Solutions or its subsidiaries for any reason while employed by HSR
of Louisiana, and for a&nbsp; one-year period following the date of his termination
of employment within a specified market area.</font></p>



<p style='text-align:justify;page-break-after:avoid'><b><font size="2">Item 3.02&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unregistered
Sales of Equity Securities.&nbsp; </font> </b></p>



<p style='text-align:justify;page-break-after:avoid'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On
October 26 2006, Home Solutions issued 1,500,000 shares of its common stock to the
prior owners of Associated in connection with the merger of Associated with and
into HSR of Louisiana, a wholly-owned subsidiary of Home Solutions.&nbsp; Home
Solutions also agreed to additional shares of common stock which shall not
exceed $55,001 in value and, in any event, shall not exceed 900,000 shares, to
be issued if and when necessary to cause the aggregate fair market value of the
common stock issued to the prior owners of Associated to exceed by one dollar,
the amount of cash consideration paid to the prior owners of Associated in
connection with the merger.&nbsp; In addition, Home Solutions issued warrants to the
prior owners of Associated exercisable for up to 2,000,000 additional shares of
common stock at an exercise price of $.01 per share, that vest and become
exercisable in increments of 100,000 shares for every $2.5 million in EBITDA in
excess of $9 million in EBITDA earned by the Associated Division of HSR of
Louisiana in the two-year period following the closing of the merger.&nbsp;
</font> </p>



<p style='text-align:justify;page-break-after:avoid'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant
to the Merger Agreement, Home Solutions agreed to file a registration statement
with the Securities and Exchange Commission registering the common stock issued
and issuable pursuant to the Merger Agreement, including the common stock
issuable under the warrants.&nbsp; The common stock and the warrants were issued in
a private transaction in reliance upon the exemption from registration contained
in Section 4(2) of the Securities Act of 1933. &nbsp;For further
information regarding the merger, please see Item 1.01 above, which is hereby
incorporated by reference.</font></p>



<p style='text-align:justify'><b><font size="2">Item 5.02&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Election
of Directors; Departure of Directors or Principal Officers; Appointment of
Principal Officers.</font></b></p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On October 26,
2006, the Board of Directors of Home Solutions increased the number of the
members of its Board of Directors from six members to seven members, and, as
contemplated by the Merger Agreement, appointed Stephen Scott Sewell as a member of its Board of Directors to fill the
newly created vacant Board of Director seat, effective upon the merger of
Associated into HSR of Louisiana.&nbsp;&nbsp; Mr. Sewell is a 31% prior
owner of Associated, and in such capacity, is entitled to receive 31% of the
consideration paid and 31% of the common stock issued to the prior owners of
Associated in connection with the merger. </font> </p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effective as of
the merger, Mr. Sewell is employed by HSR of Louisiana as its Chairman of the
Board pursuant to an Employment Agreement entered into among Home Solutions, HSR
of Louisiana and Mr. Sewell.&nbsp; The position of Chairman of the Board is the
senior officer position of HSR of Louisiana.&nbsp; The terms of the Employment
Agreement are described in Item 1.01 above.</font></p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; For his services
as a member of the Board of Directors of Home Solutions, Mr. Sewell is entitled
to receive the same compensation as the other non-independent members of the
Board of Directors.&nbsp; Under the current board compensation program, during the
period from October 26, 2006 through the next annual meeting of the
stockholders of Home Solutions, Mr. Sewell will be entitled to receive (i) a quarterly
cash retainer payment equal to $5,000 for each fiscal quarter during which he
serves as a member of the Board of Directors, (ii) $1,000 per meeting of the
Board of Directors attended, (iii) if he is appointed to any committee, which
is currently not anticipated to occur, $625 for each committee meeting
attended, (iv) reimbursement of travel and other expenses related to attendance
at board and committee meetings and (v) 10,000 shares of restricted common
stock to be issued under the Home Solutions' stock plan, which shall vest
ratably during the period of service.&nbsp; The restricted shares will be subject to a lock-up
agreement, pursuant to which the first 50% of the shares may not be sold until
after December 31, 2006, and the second half of the shares may not be sold
until after December 31, 2007.&nbsp; For further information regarding the merger
and Mr. Sewell's employment agreement, please see Item 1.01 above, which is
hereby incorporated into this Item 5.02 by reference.</font></p>



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<p><b><font size="2">Item 7.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Regulation
FD Disclosure.</font></b></p>










<p style='text-align:justify;text-indent:.5in'><font size="2">On November 1,
2006, Home Solutions of America, Inc. issued a press release reporting that it
acquired Associated Contractors II, LLC.&nbsp; A copy of the November 1<sup>st</sup>
press release, attached hereto as Exhibit 99.1, is being furnished pursuant to
Regulation FD and is incorporated by reference herein.</font></p>



<p style='text-align:justify;line-height:12.0pt'><u><font size="2">Limitation on Incorporation by Reference:</font></u><font size="2">&nbsp; In accordance with general instruction B.2 of
Form 8-K, the information in this Item 7.01 shall not be deemed to be &quot;filed&quot;
for the purposes of Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to the liability of that section.</font></p>



<p><b><font size="2">Item 9.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Statements and
Exhibits.</font></b></p>



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<p style='margin-left:0in;text-indent:0in'><b><font size="2">Exhibits.</font></b></p>

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		<td valign="top"><font size="2">2.1</font></td>
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<p style='text-align:justify;'><font size="2">Agreement
and Plan of Merger by and among Home Solutions of America, Inc., Home Solutions
Restoration of Louisiana, Inc., Associated Contractors II, LLC, Stephen Scott
Sewell, William Aaron Bennett, William E. Edwards, William J. Bennett and BNOB
Construction Services, LLC, dated as of October 26, 2006.&nbsp; </font> </p>



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		<td valign="top"><font size="2">4.1</font></td>
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<p style='text-align:justify;page-break-after:avoid'><font size="2">Warrant Certificate issued by Home
Solutions of America, Inc. to Stephen Scott Sewell, William Aaron Bennett,
William E. Edwards, William J. Bennett and BNOB Construction Services, LLC,
dated as of October 26, 2006.</font></p>



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<p style='text-align:justify;page-break-after:avoid'><font size="2">Executive Employment Agreement by and among
Home Solutions Restoration of Louisiana, Inc., Home Solutions of America, Inc.
and Stephen Scott Sewell, dated as of October 26, 2006.</font></p>



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		<td valign="top"><font size="2">99.1</font></td>
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<p align="justify"><font size="2">Press Release dated November 1, 2006.</font></p>



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<p style='text-align:justify;line-height:12.0pt'><b><font size="2">FORWARD LOOKING STATEMENTS</font></b></p>



<p style='text-align:justify;line-height:12.0pt'><font size="2">This Current Report on Form 8-K, including the Exhibits
attached hereto, contain forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995 under
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. </font> </p>



<p style='text-align:justify'><font size="2">Forward-looking
statements include statements with respect to our beliefs, plans, objectives,
goals, expectations, anticipations, assumptions, estimates, intentions, and
future performance, and involve known and unknown risks, uncertainties and
other factors, which may be beyond our control, and which may cause our actual
results, performance or achievements to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. All statements other than statements of historical
fact are statements that could be forward-looking statements. You can identify
these forward-looking statements through our use of words such as
&quot;may,&quot; &quot;will,&quot; &quot;can&quot; &quot;anticipate,&quot;
&quot;assume,&quot; &quot;should,&quot; &quot;indicate,&quot;
&quot;would,&quot; &quot;believe,&quot; &quot;contemplate,&quot;
&quot;expect,&quot; &quot;seek,&quot; &quot;estimate,&quot;
&quot;continue,&quot; &quot;plan,&quot; &quot;point to,&quot;
&quot;project,&quot; &quot;predict,&quot; &quot;could,&quot;
&quot;intend,&quot; &quot;target,&quot; &quot;potential,&quot; and other
similar words and expressions of the future. Forward-looking statements may not
be realized due to a variety of factors, including, without limitation, future
economic, competitive and market conditions, regulatory framework, and future
business decisions, and the other factors referenced in our Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2006, which contains a list of
specific risk factors that could cause actual results to differ materially from
those indicated by our forward-looking statements made in this Current Report on Form 8-K, including the Exhibits
attached hereto.</font></p>

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<p align=center style='text-align:center'><b><font size="2">SIGNATURES</font></b></p>



<p style='text-align:justify'><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.</font></p>



<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Home
Solutions of America, Inc.</font></p>
<p><font size="2">&nbsp;</font></p>







<p style='margin-left:3.0in;text-indent:-3.0in'><font size="2">Date:&nbsp; November
1, 2006&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; By:&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <i><u>&nbsp;&nbsp;&nbsp;&nbsp;/s/
Frank J. Fradella&nbsp;&nbsp; </u></i></font><font size="2"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp;&nbsp;&nbsp;&nbsp; Frank
J. Fradella<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chairman
and Chief Executive Officer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font></p>







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<p align=center style='text-align:center'><b><u><font size="2">Exhibit Index</font></u></b></p>
<p align=center style='text-align:center'>&nbsp;</p>
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		<td valign="top"><font size="2">2.1</font></td>
		<td width="1145" valign="top">

<p style='text-align:justify;'><font size="2">Agreement
and Plan of Merger by and among Home Solutions of America, Inc., Home Solutions
Restoration of Louisiana, Inc., Associated Contractors II, LLC, Stephen Scott
Sewell, William Aaron Bennett, William E. Edwards, William J. Bennett and BNOB
Construction Services, LLC, dated as of October 26, 2006.&nbsp; </font> </p>



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		<td valign="top"><font size="2">4.1</font></td>
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<p style='text-align:justify;page-break-after:avoid'><font size="2">Warrant Certificate issued by Home
Solutions of America, Inc. to Stephen Scott Sewell, William Aaron Bennett,
William E. Edwards, William J. Bennett and BNOB Construction Services, LLC,
dated as of October 26, 2006.</font></p>



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		<td valign="top"><font size="2">10.1</font></td>
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<p style='text-align:justify;page-break-after:avoid'><font size="2">Executive Employment Agreement by and among
Home Solutions Restoration of Louisiana, Inc., Home Solutions of America, Inc.
and Stephen Scott Sewell, dated as of October 26, 2006.</font></p>



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		<td valign="top"><font size="2">99.1</font></td>
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<p align="justify"><font size="2">Press Release dated November 1, 2006.</font></p>



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[{"type": "8-K", "sequence": "1", "filename": "hom8k1.htm", "secsgml_size_bytes": 29113}]
{"company-data": {"conformed-name": "HOME SOLUTIONS OF AMERICA INC", "cik": "0000855424", "assigned-sic": "8741", "irs-number": "990273889", "state-of-incorporation": "DE", "fiscal-year-end": "0406"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-31711", "film-number": "061179873"}, "business-address": {"street1": "1500 DRAGON STREET - SUITE B", "street2": "-", "city": "DALLAS", "state": "TX", "zip": "75207", "phone": "214-623-8446"}, "mail-address": {"street1": "1500 DRAGON STREET - SUITE B", "street2": "-", "city": "DALLAS", "state": "TX", "zip": "75207"}, "former-company": [{"former-conformed-name": "NEXTGEN COMMUNICATIONS CORP", "date-changed": "20010814"}, {"former-conformed-name": "U S INDUSTRIAL SERVICES INC", "date-changed": "19980629"}, {"former-conformed-name": "EIF HOLDINGS INC", "date-changed": "19930621"}]}
Home Solutions of America Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
 D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
______________________
Date of Report (date of earliest event reported):
October
26, 2006
Home Solutions of America, Inc.
(Exact Name of Registrant as Specified in its Charter)
______________________________________________________________________________
Delaware
001-31711
99-0273889
(State of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
1500 Dragon Street, Suite B, Dallas, Texas 75207
(
Address of Principal Executive Offices
)
Registrant's Telephone
Number, Including Area Code:
(214) 623-8446
Former name of address, if changed since last report
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
[   ] Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[   ] Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[   ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[   ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01               Entry
into a Material Definitive Agreement.
On October 26,
2006, the registrant, Home Solutions of America, Inc., a Delaware corporation
("Home Solutions"), and its wholly-owned subsidiary, Home Solutions Restoration
of Louisiana, Inc., a Louisiana corporation ("HSR of Louisiana"), entered into
an agreement providing for HSR of Louisiana to acquire Associated Contractors
II, LLC, ("Associated Contractors"), a Louisiana limited liability company engaged
in providing construction and rebuilding services to commercial and residential
properties.  The acquisition closed on October 26, 2006.
The acquisition
was accomplished pursuant to an Agreement and Plan of Merger among Home
Solutions, HSR of Louisiana, Associated and the prior owners of Associated
dated October 26, 2006 (the "Merger Agreement") whereby Associated was merged
with and into HSR of Louisiana, with HSR of Louisiana continuing as the
surviving corporation following the merger.
Consideration paid
or to be paid to the prior owners of Associated in connection with the merger includes
the following: (i) up to $9,000,000 in cash to be paid from accounts receivable
of the Associated division of HSR of Louisiana (the "Associated Division") collected
in the two-year period following the closing; (ii) 1,500,000 shares of Home
Solutions' common stock, issued at the closing; and (iii) additional shares of
common stock not to exceed $55,001 in value and in any event, not to exceed
900,000 shares, to be issued if and when necessary to cause the aggregate fair
market value of the common stock issued to the prior owners of Associated to exceed
by one dollar, the cash consideration paid to the prior owners of Associated under
clause (i) above.  In addition, Home Solutions issued warrants to the prior owners
of Associated exercisable for up to 2,000,000 additional shares of common stock
at an exercise price of $.01 per share, that vest and become exercisable in
increments of 100,000 shares for every $2.5 million in earnings before
interest, taxes, depreciation and amortization ("EBITDA") in excess of $9
million in EBITDA earned by the Associated Division in the two-year period
following the closing.  Home Solutions also agreed to pay the prior owners of
Associated 5% of the net profits earned and collected by the Associated
Division related to a specified future accounts receivable.
The Merger Agreement contains various customary representations, warranties,
covenants and agreements of the parties.  Pursuant to the Merger Agreement,
Home Solutions agreed to file a registration statement with the Securities and
Exchange Commission registering the common stock issued and issuable pursuant to the Merger
Agreement, including the common stock issuable under the warrants, for resale
under the Securities Act of 1933 within 12 months after the closing.
Home Solutions agreed that HSR of Louisiana would be provided with a line
of credit of at least $15,000,000, the proceeds of which will be used for
operational activities of HSR of Louisiana.  Home Solutions also agreed to
indemnify the prior owners of Associated from personal guarantees entered into
in connection with the business of Associated prior to the merger and to use
commercially reasonable efforts to remove such persons from the personal
guarantees after the closing.  The prior owners of Associated agreed not to compete
with the Associated Division for two years after the closing.
2
Stephen Scott Sewell, who was the president of Associated prior to the merger,
will serve as the Chairman of the Board of HSR of Louisiana, pursuant to the terms of an
Employment Agreement entered into among Mr. Sewell, HSR of Louisiana and Home
Solutions (the "Employment Agreement").  Under the Employment Agreement, Mr.
Sewell is employed by HSR of Louisiana as Chairman of the  Board, which is the
senior officer position of HSR of Louisiana, for a five year term.  Mr.
Sewell's annual salary is $156,000 for fiscal years 2006 and 2007, subject to
increase for future years.  Pursuant to the terms of the Employment Agreement,
the employees of HSR of Louisiana (including Mr. Sewell) are entitled to an
annual aggregate bonus equal to 5% of HSR of Louisiana's EBITDA in a given
year, which amount shall be allocated among Mr. Sewell and the HSR of Louisiana
employees, as determined by Mr. Sewell.  The Employment Agreement further
provides that Mr. Sewell is entitled to receive reimbursement of business
expenses, as well as employee benefits.  The Employment Agreement may be
terminated by Mr. Sewell for good reason or by HSR of Louisiana without cause,
in which case Mr. Sewell is entitled to receive  12 months of salary,
bonus and health care coverage following the termination of employment.  The
Employment Agreement may be terminated by Mr. Sewell without good reason or by HSR
of Louisiana with cause, in which case Mr. Sewell is entitled to receive his
salary through the date of termination.  In the event of Mr. Sewell's death or
disability, he is entitled to receive his salary and health care coverage until
the earlier of (i) the end of the term of the Employment Agreement, or (ii) the
90th day following the date of his death or disability.  Mr. Sewell agrees not
to compete with Home Solutions or its subsidiaries for any reason while employed by HSR
of Louisiana, and for a  one-year period following the date of his termination
of employment within a specified market area.
Item 3.02               Unregistered
Sales of Equity Securities.
On
October 26 2006, Home Solutions issued 1,500,000 shares of its common stock to the
prior owners of Associated in connection with the merger of Associated with and
into HSR of Louisiana, a wholly-owned subsidiary of Home Solutions.  Home
Solutions also agreed to additional shares of common stock which shall not
exceed $55,001 in value and, in any event, shall not exceed 900,000 shares, to
be issued if and when necessary to cause the aggregate fair market value of the
common stock issued to the prior owners of Associated to exceed by one dollar,
the amount of cash consideration paid to the prior owners of Associated in
connection with the merger.  In addition, Home Solutions issued warrants to the
prior owners of Associated exercisable for up to 2,000,000 additional shares of
common stock at an exercise price of $.01 per share, that vest and become
exercisable in increments of 100,000 shares for every $2.5 million in EBITDA in
excess of $9 million in EBITDA earned by the Associated Division of HSR of
Louisiana in the two-year period following the closing of the merger.
Pursuant
to the Merger Agreement, Home Solutions agreed to file a registration statement
with the Securities and Exchange Commission registering the common stock issued
and issuable pursuant to the Merger Agreement, including the common stock
issuable under the warrants.  The common stock and the warrants were issued in
a private transaction in reliance upon the exemption from registration contained
in Section 4(2) of the Securities Act of 1933.  For further
information regarding the merger, please see Item 1.01 above, which is hereby
incorporated by reference.
Item 5.02               Election
of Directors; Departure of Directors or Principal Officers; Appointment of
Principal Officers.
On October 26,
2006, the Board of Directors of Home Solutions increased the number of the
members of its Board of Directors from six members to seven members, and, as
contemplated by the Merger Agreement, appointed Stephen Scott Sewell as a member of its Board of Directors to fill the
newly created vacant Board of Director seat, effective upon the merger of
Associated into HSR of Louisiana.   Mr. Sewell is a 31% prior
owner of Associated, and in such capacity, is entitled to receive 31% of the
consideration paid and 31% of the common stock issued to the prior owners of
Associated in connection with the merger.
Effective as of
the merger, Mr. Sewell is employed by HSR of Louisiana as its Chairman of the
Board pursuant to an Employment Agreement entered into among Home Solutions, HSR
of Louisiana and Mr. Sewell.  The position of Chairman of the Board is the
senior officer position of HSR of Louisiana.  The terms of the Employment
Agreement are described in Item 1.01 above.
For his services
as a member of the Board of Directors of Home Solutions, Mr. Sewell is entitled
to receive the same compensation as the other non-independent members of the
Board of Directors.  Under the current board compensation program, during the
period from October 26, 2006 through the next annual meeting of the
stockholders of Home Solutions, Mr. Sewell will be entitled to receive (i) a quarterly
cash retainer payment equal to $5,000 for each fiscal quarter during which he
serves as a member of the Board of Directors, (ii) $1,000 per meeting of the
Board of Directors attended, (iii) if he is appointed to any committee, which
is currently not anticipated to occur, $625 for each committee meeting
attended, (iv) reimbursement of travel and other expenses related to attendance
at board and committee meetings and (v) 10,000 shares of restricted common
stock to be issued under the Home Solutions' stock plan, which shall vest
ratably during the period of service.  The restricted shares will be subject to a lock-up
agreement, pursuant to which the first 50% of the shares may not be sold until
after December 31, 2006, and the second half of the shares may not be sold
until after December 31, 2007.  For further information regarding the merger
and Mr. Sewell's employment agreement, please see Item 1.01 above, which is
hereby incorporated into this Item 5.02 by reference.
3
Item 7.01               Regulation
FD Disclosure.
On November 1,
2006, Home Solutions of America, Inc. issued a press release reporting that it
acquired Associated Contractors II, LLC.  A copy of the November 1
st
press release, attached hereto as Exhibit 99.1, is being furnished pursuant to
Regulation FD and is incorporated by reference herein.
Limitation on Incorporation by Reference:
In accordance with general instruction B.2 of
Form 8-K, the information in this Item 7.01 shall not be deemed to be "filed"
for the purposes of Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to the liability of that section.
Item 9.01               Financial Statements and
Exhibits.
(d)
Exhibits.
2.1
Agreement
and Plan of Merger by and among Home Solutions of America, Inc., Home Solutions
Restoration of Louisiana, Inc., Associated Contractors II, LLC, Stephen Scott
Sewell, William Aaron Bennett, William E. Edwards, William J. Bennett and BNOB
Construction Services, LLC, dated as of October 26, 2006.
4.1
Warrant Certificate issued by Home
Solutions of America, Inc. to Stephen Scott Sewell, William Aaron Bennett,
William E. Edwards, William J. Bennett and BNOB Construction Services, LLC,
dated as of October 26, 2006.
10.1
Executive Employment Agreement by and among
Home Solutions Restoration of Louisiana, Inc., Home Solutions of America, Inc.
and Stephen Scott Sewell, dated as of October 26, 2006.
99.1
Press Release dated November 1, 2006.
FORWARD LOOKING STATEMENTS
This Current Report on Form 8-K, including the Exhibits
attached hereto, contain forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995 under
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.
Forward-looking
statements include statements with respect to our beliefs, plans, objectives,
goals, expectations, anticipations, assumptions, estimates, intentions, and
future performance, and involve known and unknown risks, uncertainties and
other factors, which may be beyond our control, and which may cause our actual
results, performance or achievements to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. All statements other than statements of historical
fact are statements that could be forward-looking statements. You can identify
these forward-looking statements through our use of words such as
"may," "will," "can" "anticipate,"
"assume," "should," "indicate,"
"would," "believe," "contemplate,"
"expect," "seek," "estimate,"
"continue," "plan," "point to,"
"project," "predict," "could,"
"intend," "target," "potential," and other
similar words and expressions of the future. Forward-looking statements may not
be realized due to a variety of factors, including, without limitation, future
economic, competitive and market conditions, regulatory framework, and future
business decisions, and the other factors referenced in our Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2006, which contains a list of
specific risk factors that could cause actual results to differ materially from
those indicated by our forward-looking statements made in this Current Report on Form 8-K, including the Exhibits
attached hereto.
4
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
Home
Solutions of America, Inc.
Date:  November
1, 2006                                                     By:
/s/
Frank J. Fradella
Name:     Frank
J. Fradella
Title:       Chairman
and Chief Executive Officer
5
Exhibit Index
2.1
Agreement
and Plan of Merger by and among Home Solutions of America, Inc., Home Solutions
Restoration of Louisiana, Inc., Associated Contractors II, LLC, Stephen Scott
Sewell, William Aaron Bennett, William E. Edwards, William J. Bennett and BNOB
Construction Services, LLC, dated as of October 26, 2006.
4.1
Warrant Certificate issued by Home
Solutions of America, Inc. to Stephen Scott Sewell, William Aaron Bennett,
William E. Edwards, William J. Bennett and BNOB Construction Services, LLC,
dated as of October 26, 2006.
10.1
Executive Employment Agreement by and among
Home Solutions Restoration of Louisiana, Inc., Home Solutions of America, Inc.
and Stephen Scott Sewell, dated as of October 26, 2006.
99.1
Press Release dated November 1, 2006.
6