SOURCE: Infosmart Group, Inc.

May 15, 2007 18:52 ET

Infosmart Group, Inc. Reports Quarterly Record Revenue of $7.7 Million

HONG KONG -- (MARKET WIRE) -- May 15, 2007 -- Infosmart Group, Inc. ("Infosmart" or the "Company") (OTCBB: IFSG), Hong Kong's leading recordable digital versatile disk ("DVDR") manufacturing company, has announced record operating results for the quarter ended March 31, 2007.

Infosmart reported revenue of approximately $7.7 million for the quarter ended March 31, 2007, as compared to approximately $6.2 million in Q1 2006 -- a 23.5% increase. This increase was primarily attributable to the substantial growth in the Brazilian market, as well as continuous growth in the Australian, Asian and North American markets.

Infosmart reported net income (prior to deducting Series B Preferred Stock dividends) of approximately $900,000 for the three months ended March 31, 2007, as compared to approximately $920,000 in Q1 2006 -- a 1.5% decrease. The slight decrease was primarily due to the increase in administrative expenses in connection with the opening of the Company's new Brazil facility, DiscoBrás Indústria e Comércio de Electro Eletrônica Ltda., which opened on March 8, 2007.

Infosmart reported net income applicable to common shareholders for the three months ended March 31, 2007 of approximately $800,000, as compared to net income applicable to common shareholders of approximately $900,000 in Q1 2006 -- a 12.5% decrease. The decrease was attributable to increased administrative expenses in connection with the opening of DiscoBrás, as well as transitional production by DiscoBrás.

"Given that this was a significant transitional quarter for Infosmart, we are very pleased with our operating results and extremely optimistic about our Company's future," stated Mr. Andrew Chang, Chairman of Infosmart. "Shifting a significant amount of production from our Hong Kong facility to our new Brazil facility is part of our long-term strategic plan to capture higher profit margins in developing markets. Since our Brazil facility was not fully operational until late April, revenue contribution from Brazil in the first quarter was minimal. We expect Brazil's full contribution to be reflected in the second quarter results."

About Infosmart Group, Inc.

Infosmart operates state of the art DVDR production facilities in Hong Kong and Brazil and is preparing to manufacture new writable High Density media (HD-DVDR). The Company expects to become one of the largest manufacturers of DVDR discs in Brazil and all of South America this year. Optical disc media will be the storage media of choice for years to come, whether as HD-DVDR for mature markets or traditional DVDR for developing markets. No other storage media available rivals its combination of high capacity, low cost and exceptional portability.

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 most recent Quarterly Report on Form 10-QSS filed with the SEC on May 15, 2007, and subsequent Quarterly Reports on Form 10-QSB 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.


INFOSMART GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2007 and 2006
(Unaudited)
(Stated in US Dollars)


                                              Three months ended March 31,
                                              ----------------------------
                                                  2007           2006

Net sales                                     $   7,698,415  $   6,231,518

Cost of sales                                    (5,733,147)    (4,558,625)
                                              -------------  -------------

Gross profit                                      1,965,268      1,672,893

Administrative expenses                            (931,050)      (340,210)

Selling and distributing costs                      (79,516)      (121,504)
                                              -------------  -------------

Income from operations                              954,702      1,211,179

Other income                                        308,759         51,525

Interest expenses                                  (142,540)      (148,151)
                                              -------------  -------------

Income before income taxes                        1,120,921      1,114,553

Income taxes                                       (215,637)      (195,047)
                                              -------------  -------------

Net income                                    $     905,284  $     919,506
                                              -------------  -------------

Series B preferred dividend                        (125,411)             -
                                              -------------  -------------

Net income applicable to common shareholders  $     779,873  $     919,506
                                              =============  =============

Earning per share

   - basic                                    $        0.01  $        0.01
                                              =============  =============

   - dilutive                                 $        0.01  $        0.01
                                              =============  =============

Weighted average shares outstanding

   - basic                                      136,252,633    110,236,841
                                              =============  =============

   - dilutive                                   159,936,810    110,236,841
                                              =============  =============




INFOSMART GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2007 AND DECEMBER 31, 2006
(Stated in US Dollars)


                                                            As of
                                                  -------------------------
                                                   March 31,   December 31,
                                                      2007         2006
                                                  (Unaudited)   (Audited)

ASSETS
  Current assets
      Cash and cash equivalents                   $    157,322 $    206,258
      Restricted cash                                  256,839      552,193
      Trade receivables (net of allowance for
       doubtful accounts of $Nil for 2007 and
       2006)                                         9,582,732    6,171,366
      Prepaid expenses and other receivables         1,054,757      269,477
      Inventories (net of allowance of $Nil for
       2007 and 2006)                                1,662,344    1,058,039
                                                  ------------ ------------

  Total current assets                              12,713,994    8,257,333
  Deferred tax assets                                  213,534      459,823
  Plant and equipment, net                          33,055,542   33,911,540
  Intangible assets                                  2,020,958    2,092,809
                                                  ------------ ------------

TOTAL ASSETS                                      $ 48,004,028 $ 44,721,505
                                                  ============ ============

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
  Current liabilities
       Trade payables                             $  5,730,567 $  2,926,078
       Other payables and accrued liabilities        7,735,344    8,756,675
       Income tax payable                              350,027      363,645
       Current portion of bank borrowings            4,754,353    3,503,654
       Current portion of other loans                1,477,537    1,268,044
                                                  ------------ ------------

  Total current liabilities                         20,047,828   16,818,096
  Non-current portion of bank borrowings             2,458,171    2,893,927
  Non-current portion of other loans                 1,592,310    1,884,202
  Advance from a related party                         928,282      927,991
  Deferred tax liabilities                           2,931,127    3,001,360
                                                  ------------ ------------

TOTAL LIABILITIES                                 $ 27,957,718 $ 25,525,576
                                                  ------------ ------------

COMMITMENTS AND CONTINGENCIES

Series B Redeemable Convertible Preferred Stock:
 No par value-

    Authorized 1,800,000 shares; Issued and
     outstanding:
    2007 - 883,081.43 shares and 2006 -
    911,974.54 shares                             $  2,500,126 $  2,581,926
                                                  ------------ ------------

STOCKHOLDERS’ EQUITY
    Common stock: No par value
    Authorized: 300,000,000 shares; Issued and
     outstanding:
      2007 - 136,576,337.44 shares and 2006 -
       135,801,426.44 shares                         1,602,701    1,520,901
    Preferred stock: No par value
      Authorized 7,000,000 shares; Issued and
       outstanding:
      2007 and 2006 - nil shares                             -            -
    Series A Convertible Preferred Stock: No par
     value
      Authorized 1,200,000 shares; Issued and
       outstanding:
      2007 and 2006 - nil shares                             -            -
   Additional paid-in-capital                        8,118,664    8,118,664
   Accumulated other comprehensive income               89,745       19,237
    Retained earnings                                7,735,074    6,955,201
                                                  ------------ ------------

TOTAL STOCKHOLDERS’ EQUITY                          17,546,184   16,614,003
                                                  ------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY        $ 48,004,028 $ 44,721,505
                                                  ============ ============

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