Home System Group Reports First Quarter 2010 Financial Results

Home System Group (OTCBB: HSYT; "Home System" or the "Company"), a Chinese - based manufacturer of a variety of household appliances sold by large retailers, announced today its financial results for the three months ended March 31, 2010.

2010 First Quarter Financial Highlights

Results Commentary

Mr. Yu, Home System Group's CEO, stated, "Through the integration of our Weihe subsidiary, acquired in October of 2008, the Company has successfully expanded the sales market of fans and lightings and redistributed elements of the Company’s resources to this business segment to more fully develop the opportunities that we see in that market. In the first quarter of 2010, Home System benefited from the substantial increase in sales of ceiling fans and decorative lightings, and we are hopeful that this growth will continue in the rest of 2010. I am particularly pleased that our management team accurately anticipated the decreased order level of barbeque grills and adjusted the Company’s production and product mix quickly. I am very proud of how well the Home System team responded to this situation.”

Home System Group's first quarter 2010 revenue of $30 million benefited from the $23.1 million of revenue due to strong performance in our fans and lightings segment. This was partially offset by the lower sale of approximately $3.2 million of barbeque grills and skateboards, which was the source of the resources reallocated to fans and lightings.

Gross profit was $6.9 million compared to $3.8 million for the same period last year, an increase of 84%. Gross profit margin for the first quarter of 2010 was 23.1%, slightly decreased compared to 24.4% for the same period last year.

General selling and administrative expense for the first quarter of 2010 was $1.6 million, a relatively modest increase as compared to $1.4 million for the same period in 2009, in spite of the large increase in our sales.

As a result, income from operations for the first quarter of 2010 was $5.3 million, an increase of 125% compared with $2.4 million for the corresponding quarter of 2009. Operating margin was 17.7% for the first quarter of 2010, increasing from the 15.3% for the first quarter of 2009.

For first quarter of 2010, the Company reported other income of $832,513 compared with other income of $61,737 for the corresponding quarter last year, primarily from the sales of excess raw materials consisting of stainless steel cold coil.

Net income was $4.6 million for the first quarter of 2010, an increase of over 200% from $1.5 million of the first quarter of 2009. Basic and diluted earnings per share in first quarter of 2010 were $0.07 compared to $0.02 per basic and diluted share in the first quarter of 2009.

Mr. Yu concluded, "Home System has achieved outstanding results in the first quarter of 2010, and we look forward to seeing continued strong performance on fans and lightings segment for the upcoming quarters. Moreover, the Company plans to continue its international business platform in Hong Kong which purchases home appliances or accessories in China and sells to international buyers. We believe this channel will also have positive impact on expanding our operational subsidiaries’ sales activities and broaden the customer base. We expect to see continuing progress in our business development in the second quarter of 2010.”

Financial Condition

As of March 31, 2010, Home System Group had cash and cash equivalents of $4.0 million. Current assets and current liabilities as of March 31, 2010, were $66 million and $68 million, respectively, yielding a working capital deficit of $2 million.

On April 1, 2010, we converted debt totaling $17.5 million into common shares at the rate of $3.50. Upon this conversion, the Company’s current liabilities and debt burden have been substantially decreased, resulting in an stronger capital structure, and positive work capital.

About Home System Group

Home System Group is primarily engaged in the production of a variety of small household appliances, stainless steel gas grills and ovens, ceiling and table fans, and decorative lamps, LEDs and energy-saving lamps. Its products are sold through distributors and direct to retailers located in America, Europe, Australia, Africa, Southeast Asia and China. For more information, please visit: http://www.homesystemgroup.com.

FORWARD-LOOKING STATEMENTS:

This release contains "forward-looking statements" for purposes of the Securities and Exchange Commission's "safe harbor" provisions under the Private Securities Litigation Reform Act of 1995 and Rule 3b-6 under the Securities Exchange Act of 1934. These forward-looking statements are subject to various risks and uncertainties that could cause Home System Group's actual results to differ materially from those currently anticipated, including the risk factors identified in Home System Group's filings with the Securities and Exchange Commission.

NOTE: The above numbers may not equal the total due to rounding.

NOTE: The above numbers may not equal the total due to rounding.