SOURCE: Infosmart Group, Inc.

January 22, 2008 09:12 ET

Infosmart Group Updates Shareholders on Discobras Subsidiary Agreement With Salvador Government and 2008 Growth Initiatives

NEW YORK, NY--(Marketwire - January 22, 2008) -

--  Discobras pays a reduced VAT of only 2.28%, is exempt from ICMS
    taxes on imported raw materials, and is not subjected to 70% to
    100% tariff on imported products

--  Tax advantages applicable to Flash memory, SD Ram, Consumer
    Electronics, and Energy Saving Products

--  After successful testing period, Company expects to increase
    Flash Memory production and sales

Infosmart Group, Inc. ("Infosmart" or the "Company") (OTCBB: IFSG), a leading recordable digital versatile disc ("DVDR") manufacturer in Hong Kong and Brazil, is providing shareholders with an update on their Discobras subsidiary agreement with the Salvador Government and 2008 product diversification business model.

On March 20, 2006 Infosmart Group signed an agreement with the Salvador Government and a private party to establish Discobras Industria E Comercio De Electro Electronica Ltda, or "Discobras". This was an important agreement for the Company with significant strategic ramifications due to the favorable tax advantages which were granted and are also applicable to other electronic media storage products in Brazil. Additionally, the agreement provides strong barriers to entry, and offers superior profit margins as compared to Infosmart's legacy business in Hong Kong.

This agreement, which will last through June 2016, grants Discobras a reduction in the Value Added Tax ("VAT") required to pay for products. Discobras pays only 2.28%, as compared to a VAT of 12% in Salvador, 18% in Sao Paulo and 17% in the rest of the country for imported goods. The Company also benefits from an incentive program for foreign investment which exempts Discobras from paying Brazil's ICMS taxes on raw material it imports for production. The Brazilian subsidiary is also not subjected to the 70% to 100% tariff levied on all imported products. The 20 production lines currently make 170,000 discs per day with average gross profit margin of 25%. To combat the downward pricing pressure in DVDR in Asia, the Company intends on moving 10 production lines from Hong Kong to Brazil in 2008.

Mr. Parker Seto, Chief Executive Officer of Infosmart Group, stated, "Through our Discobras subsidiary, we have secured a footprint in Brazil, one of the fastest growing economies in the world with a population of approximately 200 million people." Mr. Seto continued, "The tax advantages we have received through our agreement with the Salvador Government not only gives us a competitive advantage and creates a strong barrier to entry, but also allows us to diversify our mix of electronic media storage products, while capturing the favorable economic incentives. We see a large growth opportunity in other products such as Flash memory, SD Ram, in addition to other consumer electronics, and energy saving products."

The overall decreasing margins in the DVD market is the reason Infosmart Group began pursuing test marketing of the electronic media storage products, most notably Flash memory, in Brazil. The Company sees significant opportunities in the Flash memory market which grew 43% to $8 billion in sales during 2006, with IDC forecasting an expansion to $18.3 billion by 2010.

Test marketing thus far has been successful and the Company expects sales of its Flash memory products to continue to increase throughout 2008, supported by Infosmart's facility, which offers easy access to Salvador's port, Brazil's key distribution point.

"As we continue to grow and mature as a Company we believe it is important to have a diversified portfolio of high end recordable media in our product mix that would mitigate our product risk and any downward pricing pressure we might face in the future." Mr. Seto continued, "We firmly believe that we have only begun to scratch the surface with the success of our initial Flash memory products marketing efforts. Additionally, we are in the final negotiations for a partnership on this front which will provide intellectual technology, competitive advantages and production cost savings. Through the combination of our already established distribution channels and tax incentives, we are on track to become a leader in the distribution of electronic media storage products in South America."

About Infosmart Group, Inc.

Infosmart operates state-of-the-art DVDR and storage media production facilities in Hong Kong and Brazil and is preparing to manufacture Flash card memory, a kind of new writable storage devices, with maximum flexibility to upgrade its production capacity to include production of High-Density (HD) Disk market. In addition, the Company is one of the largest manufacturers of DVDR discs in Brazil and all of South America. Flash memory devices will be the storage media of choice for years to come, whether the Company is being able to manufacture 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 as Infosmart's current product mix.


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-KSB filed with the SEC on April 2, 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.

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