Q.E.P. Settles $2.3 M of Its Put Warrant Liability

Boco Raton, FL, August 2, 2007--Q.E.P. Cosaid it had reached an agreement with The HillStreet Fund, L.P. to settle and terminate the outstanding warrants issued to HillStreet in connection with a loan transaction in 2001 and the related put obligation for a cash payment of $2.3 million in accordance with the existing warrant agreement.

On July 23, the company received written notice from HillStreet that it wanted to exercise its right to "put" to the Company its warrants in the Company pursuant to the Warrant Agreement dated April 5, 2001.

On July 31 Q.E.P. and HillStreet agreed upon a cash settlement value of $2.3 million. Q.E.P. expects that the settlement will be paid out of funds from its bank line of credit.