October 25, 2007, Dallas, TX - (Business Wire) - Home Solutions of America, Inc. (NASDAQ: HSOA; the “Company” or “Home Solutions"), a provider of restoration, construction and interior services to commercial and residential customers, provided an update on the transactions that its Fireline Restoration, Inc. subsidiary ("Fireline") announced today that its wholly-owned subsidiary, Fireline Restoration, Inc., ("Fireline") has entered into an asset purchase and indemnity agreement ("APA") with RG America, Inc. ("RG") providing for Fireline’s acquisition of approximately $800,000 worth of equipment and vehicles for use in the restoration and construction business, RG’s PropertySMART(tm) risk management program and other assets. PropertySMART is an insurance product focused on wood structure buildings aimed at providing restoration services in the event of an insured’s catastrophic loss. Laurus also agreed to release certain other liens and claims against RGA, Home Solutions and an officer of HSOA. The release by Laurus of its liens against the assets of RG America also enhances the Company’s ability to collect accounts receivable for projects it has taken over and performed under the Consulting Agreement with RG America. For fiscal 2006, RG had audited revenue of approximately $20.3 million. The closing of the acquisition is expected to occur as promptly as practicable following the occurrence of certain conditions.

“We believe the restoration opportunities in the Southwest are important components to our growing a national foot print,” said Brian Marshall, President of the Company’s Restoration and Construction Services Division. “By utilizing the RG America customer base, combined with our exisitng PW Stephens, Inc. entity in Southern California, we hope to provide immediate response to natural disasters, such as those affecting the San Diego area. We continue to pursue opportunities generated by RG America that are now capable of being consummated under the new Home Solutions banner.” In connection with the acquisition, Home Solutions issued to Laurus Master Fund, Ltd. ("Laurus") 2,000,000 shares of its common stock in exchange for Laurus’ release of liens on the purchased assets, and entered into a Royalty Agreement with RG Risk Management, Inc.("RGRM") that becomes effective upon the consummation of the acquisition and provides for the Company’s payment to RGRM of a royalty equal to seven percent of all gross written premiums actually collected by the Company or its subsidiaries, less reasonable collection costs, that are generated under the PropertySMARTTM risk management program for a period of 10 years following the consummation of the acquisition.The Company’s management believes that the release of liens by Laurus provides the Company with the ability to develop customer relationships and expand its business opportunities.

As noted above, the Company issued to Laurus 2,000,000 shares of the Company’s common stock (the “Release Shares") under a Release Agreement. The amount of Release Shares issued to Laurus pursuant to the Release Agreement is subject to a post-closing adjustment in the event that the average daily per share closing prices for the Company’s common stock, as quoted on the NASDAQ Global Market for the 10 consecutive trading days ending on the fifth trading day preceding the first anniversary of the closing of the Release Agreement, when multiplied by 2,000,000 (such product, the “Release Adjustment Value"), is less than $11,000,000. If the Release Adjustment Value is less than $11,000,000, then Home Solutions will issue to Laurus an additional number of shares of common stock equal to the difference between $11,000,000 and the Release Adjustment Value divided by the average daily per share closing price, determined as described above, with the condition that no more than 1,666,667 shares may be issued pursuant to such adjustment.  If the Release Adjustment Value is greater than $11,000,000, there will be no adjustment.
Laurus also agreed to release certain other liens and claims against RGA, Home Solutions and an officer of HSOA.  In March 2007, Fireline, Home Solutions, RGA and certain of its subsidiaries entered into a Consulting Agreement whereby, among other things, RGA and such subsidiaries granted to Home Solutions certain rights to certain construction contracts..  Additionally, Frank J. Fradella, the Company’s chairman and chief executive officer, in April 2007 executed a personal guarantee in favor of Laurus in order to facilitate Laurus’ funding of up-front costs of projects under the Consulting Agreement.  As a result of certain disputes between and among Home Solutions, RGA and Laurus relating to the ownership of the contracts, Laurus asserted liens on such contracts pursuant to prior security agreements related to financing previously provided by Laurus to RGA, and Laurus filed in August 2007 two separate lawsuits against the Company and Mr. Fradella, asserting claims in connection with the Consulting Agreement and the related contracts.

Also in connection with the execution of the APA and the consummation of the Release Agreement, the Company entered into a Stock Purchase Agreement with Laurus, whereby Laurus purchased 1,000,000 shares of the Company’s common stock at a per share price of $3.39 (the “Purchased Shares"), for an aggregate purchase price of $3,390,000.

As with the Release Agreement, the amount of Purchased Shares issued to Laurus pursuant to the Stock Purchase Agreement is subject to a post-closing adjustment in the event that the average daily per share closing prices for the Company’s common stock, as quoted on the NASDAQ Global Market for the 10 consecutive trading days ending on the fifth trading day preceding the first anniversary of the closing of the Stock Purchase Agreement, when multiplied by 1,000,000 (such product, the “Purchase Adjustment Value"), is less than $5,500,000.  If the Purchase Adjustment Value is less than $5,500,000, then the Company will issue to Laurus an additional number of shares of common stock equal to the difference between $5,500,000 and the Purchase Adjustment Value divided by the average daily per share closing price, determined as described above, with the condition that no more than 833,333 shares may be issued pursuant to such adjustment.  If the Purchase Adjustment Value is greater than $5,500,000, there will be no adjustment.

The Company has also entered into certain other agreements related to the shares of common stock issued to Laurus described below:

Lock-Up Agreement.  The Company entered into a Lock-Up Agreement with Laurus with respect to the aggregate 3,000,000 shares of HSOA common stock initially issued pursuant to the Release Agreement and Stock Purchase Agreement (the “Shares") that prohibits Laurus, for a period of one year following acquisition of the Shares (the “Lock-Up Period"), from offering, selling, pledging or otherwise disposing of the Shares or entering into any swap, hedge or other arrangement of any Shares or any transaction that transfers any part of the economic consequences of ownership of the Shares.

Voting Agreement.  The Company also entered into a Voting Agreement among Mr. Fradella, in his capacity as the chief executive officer of the Company and as the initial voting person for the benefit of Home Solutions, and Laurus.  Pursuant to the Voting Agreement, Laurus agreed that, during the term of the Voting Agreement, its voting rights with respect to the Shares shall be exercised by the Company’s chief executive officer.  The Voting Agreement terminates upon the earlier of October 1, 2008 or the consummation of a sale of substantially all of the assets of the Company, or the merger or consolidation of Home Solutions with or into any corporation, other than a subsidiary.

Registration Rights Agreement.  The Company entered into a Registration Rights Agreement with Laurus, pursuant to which the Company has agreed, among other things, that each time Home Solutions decides to file a registration statement under the Securities Act of 1933 (the “Securities Act") with respect to its common stock, including any registration statement filed on behalf of stockholders of the Company, Home Solutions will give prompt notice thereof to Laurus, and Laurus will have the right to include all or a portion of the Shares in any such registration statement declared effective by the SEC following the Lock-Up Period. The inclusion of Laurus’ shares in any such registration statement are subject to reduction in the event an underwriter, in the case of an underwritten offering, determines that inclusion would interfere with a successful marketing or if such shares cannot be included in a registration statement due to limitations on the aggregate number of shares that may be included.

About Home Solutions of America, Inc.
Home Solutions of America, Inc. is a provider of restoration, construction and interior services to commercial and residential customers. Its Fireline subsidiary is involved in providing construction services, rebuilding, catastrophic storm response and contents restoration for commercial, industrial and residential properties. Based in Tampa, Fireline is certified in multiple aspects of the restoration industry, including smoke, fire, water and mold. The Company has operations in California, Texas, Florida, Alabama, Georgia, Louisiana, Mississippi and North Carolina. Home Solutions Restoration of Louisiana, Inc., which does business as Associated Contractors ("Associated"), is a Louisiana based commercial, industrial and residential contractor working in the governmental and private arenas. Associated has been one of the larger players in redeveloping public schools in the aftermath of Hurricane Katrina. Its clients include the State of Louisiana, the City of New Orleans, the Louisiana National Guard, the historic French Market and Louis Armstrong International Airport. For additional information, please visit the Company’s Web site at http://www.hsoacorp.com.

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Cautionary Notice

This press release contains forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws. Such forward-looking statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to them. The Company has no obligation to update such forward-looking statements. Actual results may vary significantly from these forward-looking statements based on a variety of factors. These risks and uncertainties include, but are not limited to, the Company’s future financial performance, business prospects, ability to win new contracts, the performance under existing contracts, the timing of completion of projects, ability to secure bonding, ability to secure labor in markets where it does not have a labor force, performance of subcontractors and the ability to collect accounts receivable. In addition, there can be no assurance that the actions taken or to be taken by the Company as described herein will result in increased revenues. There is no guaranty that the acquisition will close.  There is no guaranty that the Company’s revenues will increase as a result of the APA and/or the Release Agreement or the transactions contemplated by the APA and the Release Agreement over any quarterly or annual period, or that the Company’s revenues, if any, resulting from these transactions will be lesser than, equal to or greater than RG America’s 2006 revenues.  Other important factors are described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 in the section entitled “Risk Factors”.