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SOKO Fitness & Spa Group Announces Changes to Previously Issued Financial Statements
Date:1/14/2009

HARBIN, China, Jan. 14 /PRNewswire-Asia-FirstCall/ -- SOKO Fitness & Spa Group, Inc. (OTC Bulletin Board: SOKF), a leading operator of fitness clubs and spas in Northern China, today reported that the company is restating financial statements for the year ended May 31, 2008 and the first quarter ended August 31, 2008 to correct certain accounting errors discovered by the auditors. The company also announced it expects no changes to its current year-end guidance. The restatement includes:

    -- The timing of revenue recognition for non-refundable membership fees
       from the Letian Yoga club, acquired in March 2008, has been moved from
       recognition upon collection to recognition on a straight-line basis of
       estimated membership life.
    -- A non-cash adjustment relating to the reclassification of the of
       private placement warrants from liability to equity.
    -- A non-cash adjustment to the number of warrants as issued to the
       placement agent according to the warrant agreement.
    -- The reclassification of certain "other expenses" to more specific
       expense categories consistent with previous reporting.
    -- The recalculation of basic weighted average common shares for the
       fiscal year ended May 31 from 17 million shares to approximately 11.6
       million shares.  Although SOKO ended the year with 17 million shares
       outstanding, the recalculation was necessary to account for a lower
       number of shares during the period when the reverse acquisition
       occurred.
    -- There was also a recalculation of diluted weighted average common
       shares for the fiscal 2008 first quarter ended August 31 from
       approximately 20 million shares to approximately 14.5 million shares,
       again to account for a lower number of shares during the period when
       the reverse acquisition occurred.

Additional information as follows:

The non-refundable membership fee previously was recognized when it was collected. Based on Staff Accounting Bulletin ("SAB") 104, the Company revised its revenue recognition of non-refundable membership fee and initial non-refundable membership fee is recognized on a straight-line basis of estimated membership life.

The warrants to investors were classified as liability and after further review of EITF 00-19 and all the facts and circumstances associated with the issuance of the warrants to the investors, the warrants do not meet the criteria to classify to liability. The Company has reclassified the warrants as equity in the financial statements.

The number of warrants issued to the placement agent has been revised according to the warrant agreement.

The other expense classification is not consistent with the classification of fiscal year 2007 other expense, the company has reclassified sales tax from other expenses to cost of sales and made other minor adjustments.

Basic and diluted income per common share has been revised because incorrect calculation of weighted average common shares, the Company follows FASB 141 to recalculate the weighted-average number of common shares outstanding during the period in which the reverse acquisition occurred.

The impact of this restatement on the financial statements as originally reported as of May 31, 2008 is summarized below:

                                                        May 31, 2008
                                                As Reported       As Restated
    Property, plant and equipment, net          $12,788,203       $12,782,918
    Goodwill                                      1,348,359         1,505,710
    Total Assets                                 21,163,706        21,315,772
    Unearned revenue                                445,684           514,965
    Warrant liability                             1,184,628                --
    Minority Interest                               363,277           329,304
    Additional paid-in capital                    1,142,854           884,681
    Additional paid-in capital-stock
     options                                             --            18,651
    Accumulated other comprehensive
     income                                       1,619,373         1,625,829
    Retained earnings                            12,642,130        12,757,564
    Total Liabilities and Stockholders'
     Equity                                      21,163,706        21,315,772
    Net sales                                    13,736,788        13,963,130
    Cost of sales                                 4,028,853         4,119,490
    Selling, General and administrative
     expenses                                     4,285,123         4,327,700
    Other expenses                                  143,541            10,327
    Minority interest                                (2,426)          108,481
    Net income                                   $5,160,496        $5,275,930
    Net income per common share
    Basic                                             $0.30             $0.45
    Diluted                                           $0.25             $0.36
    Weighted average common share
     outstanding
    Basic                                        17,000,000        11,601,781
    Diluted                                      20,360,000        14,478,589

The impact of this restatement on the balance sheets as originally reported as of August 31, 2008 and the statement of income for the three months ended August 31, 2008 is summarized below:

                                                       August 31, 2008
                                                As Reported      As Restated
    Property, plant and equipment, net          $14,420,836      $14,415,810
    Goodwill                                      2,361,569        2,521,210
    Total Assets                                 23,742,942       23,897,557
    Unearned revenue                              1,429,347        1,671,654
    Warrant liability                             1,184,628               --
    Minority Interest                               387,548          257,997
    Additional paid-in capital                      966,640          884,681
    Additional paid-in capital-stock
     options                                             --           18,651
    Additional paid-in capital-warrant                   --        1,279,398
    Accumulated other comprehensive income        1,886,347        1,886,789
    Retained earnings                            14,428,560       14,400,905
    Total Liabilities and Stockholders'
     Equity                                      23,742,942       23,987,557

    Net sales                                     4,448,395        4,276,867
    Cost of sales                                   971,841          971,841
    Selling, General and administrative
     expenses                                     1,595,500        1,595,500
    Other expenses                                   61,324          116,934
    Minority interest                                 8,169           75,880
    Net income                                   $1,786,430       $1,643,341

    Net income per common share
                       Basic                          $0.11            $0.10
                       Diluted                        $0.09            $0.10

    Weighted average common share
     outstanding
                       Basic                     17,000,000       17,000,000
                       Diluted                   20,389,348       17,000,000

About SOKO Fitness & Spa Group, Inc.:

SOKO Fitness & Spa Group, Inc., is a leading operator of fitness clubs and spas in Northeast China. The Company provides programs, services, and products uniquely combined with exercise, education, and nutrition to help their members lead a healthy life and achieve their fitness goals. For further information, please go to http://www.sokofitness.com .

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about SOKO's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward- looking statement. SOKO does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    For more information, please contact:

     The U.S. Office:
     Mu Yan
     Tel:   +1-484-716-1081
     Email: muyan@sokofitness.com

     China Office:
     Yu Xia
     Tel:   +86-451-8770-2255
     Email: yuxia@sokofitness.com

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SOURCE SOKO Fitness & Spa Group, Inc.
Copyright©2009 PR Newswire.
All rights reserved

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