SOURCE: Infosmart Group, Inc.

November 24, 2008 12:28 ET

Infosmart Group, Inc. Reports Third Quarter 2008 Results

Blu-Ray Activities Ramping-Up; Initial Revenue From Blu-Ray $1.8 Million

TSUEN WAN, HONG KONG--(Marketwire - November 24, 2008) - Infosmart Group, Inc. (OTCBB: IFSG) today announced financial results for the third quarter of 2008.

Third Quarter Results

For the three-month period ended September 30, 2008, total revenues were $8.5 million from $25.6 million in the third quarter of 2007. The decrease in revenue was primarily due to the Company's exit from the flash memory market and a planned decrease in sales of DVDR and related products in China.

A breakdown of revenue for the three months ended September 30 from the sale of products is as follows: Sales of Blu-ray were $1.8 million, marking the Company's first quarter of reported revenue; Sales of CDR products were $1.2 million compared to $1.0 million in the same period last year; sales of DVDR and Related Products were $5.4 million compared to $9.0 million last year, and; sales of flash drives and memory cards were $186,130 compared to $15.6 million in September 2007.

For the quarter, the Company reported net income of $1.3 million, or $0.01 per share of common stock (basic and diluted), as compared to net income of $3.4 million, or $0.02 per share of common stock (basic and diluted), for the same period a year ago. The decrease in net income is primarily attributable to the aforementioned exit from the flash memory market and a planed decrease of DVDR sales in China.

Cash, cash equivalents and marketable securities as of September 30, 2008 were $850,232 from $1.0 million as of December 31, 2007. As of the end of September 2007, Infosmart's capital structure consisted of 161.6 million basic and 166.5 million dilutive weighted average shares compared to 142.3 million basic and dilutive weighted average shares for the same quarter in 2007. The Company's dilutive shares outstanding included 32.3 million warrants exercisable at a price of $0.261 to $0.262.

Parker Seto, the Company's chief executive officer, stated: "Our decision to exit the flash memory market and diversify sales of DVDRs from lower to higher margin markets, such as Asia and Brazil, were the primary drivers behind the decreases in our financials both sequentially and on a year-over-year basis.

"Anticipated revenue declines aside, the quarter was a successful quarter for Infosmart in every other way. Since realigning our strategy, we have devoted more resources to developing higher margin regions and products such as Blu-ray replication systems and equipment. We acquired our first set of Blu-ray DVD replication systems in China and Hong Kong, resulting in a test order that has already been successfully produced. As the only Blu-ray producer in Hong Kong and the first in China, we anticipate this market will rapidly become a significant growth driver for the Company, particularly as the higher quality Blu-ray option becomes the preferred visual media."

Mr. Seto continued, "In addition, we believe there are several trends that will help drive revenue and fuel growth for the Company. The first and longer-term driver is the downward price trend of Blu-ray players coupled with the popularity of HDTV. We believe more people will opt for Blu-ray as prices for players decline and become competitive with conventional DVD players. Second, we believe that with the global economic slowdown, people, particularly those with families, will be more likely to stay home for entertainment. Lower cash layout combined with its high-quality experience will allow for enjoyable at home entertainment.

"Momentum in Blu-ray is already building and we now have customers in Western Europe, Australia, China, and South America. We expect that we will begin to see orders for our products as we exit the testing phase," concluded Mr. Seto.

Nine-Month Results

For the nine-month period ended September 30, 2008, total revenues were $22.9 million compared to $53.0 million in the same period last year.

A breakdown of revenue for the nine months ended September 30 from the sale of products is as follows: Sales of Blu-ray were $1.8 million, marking the Company's first quarter of reported revenue; Sales of CDR products were $2.2 million compared to $2.1 million in the year ago period; sales of DVDR and Related Products were $18.5 million compared to $30.0 million last year, and; sales of flash drives and memory cards were $368,630 compared to $20.7 million in September 2007.

Net income for the period was $1.9 million, or $0.01 per share of common stock (basic and diluted), as compared to net income of $7.3 million, or $0.05 per share of common stock (basic and diluted), for the same period a year ago. There were 161.6 million basic and 166.5 million dilutive weighted average shares used in the computation of diluted earnings per share in the first half of 2008 and 142.3 million basic and 143.0 million dilutive weighted average shares in the same period in 2007.

About Infosmart Group, Inc.

Infosmart operates state-of-the-art Blu-ray®, DVDR and storage media production facilities in Hong Kong and DVDR production in Brazil. The Company is one of the largest manufacturers of DVDR discs in Brazil and all of South America and the sole supplier of Anwell produced Blu-ray® discs for Hong Kong and China. In addition to disc sales, Infosmart also maintains a strategic supply relationship for sales of Abomem flash memory.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements, as defined in the Securities Reform Act of 1995 (the "Reform Act"). The safe harbor for forward-looking statements provided to companies by the Reform Act does not apply to Infosmart Group, Inc. (the "Company"). However, actual events or results may differ from the Company's expectations on a negative or positive basis and are subject to a number of known and unknown risks and uncertainties including, but not limited to, competition with larger companies, development of and demand for a new technology, risks associated with a startup company, risks associated with international transactions, general economic conditions, availability of funds for capital expenditure by customers, availability of timely financing, cash flow, timely delivery by suppliers, ability to produce our DVDRs and their components, ability to maintain quality control, collection-related risks from international transactions, or the Company's ability to manage growth. Other risk factors attributable to the Company's business may affect the actual results achieved by the Company including those that are found in the Company's Annual Report on Form 10-K filed with the SEC on April 1, 2008, and subsequent Quarterly Reports on Form 10-Q and subsequent Current Reports filed on Form 8-K that will be included with or prior to the filing of the Company's next Quarterly or Annual Report.

Contact Information

  • Infosmart Contact:
    Parker Seto
    Chief Executive Officer
    (852) 2944-9905

    Investor Relations Contact
    Todd Fromer / Marybeth Csaby
    KCSA Strategic Communications
    212-896-1215 / 212-896-1236
    Email Contact / Email Contact