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SOKO Fitness & Spa Group Announces Second Quarter FY2009 Financial Results

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 announced its operating results for the fiscal second quarter ended November 30, 2008.

Total revenue for the quarter was $4.61 million, reflecting an increase of 38% from the prior year. For the six months ended November 30, 2008, revenues were $8.88 million, an increase of 63% from the prior year. SOKO also reaffirmed its previous FY2009 revenue guidance in a range of $16.3 to $18.3 million and its pro forma net income guidance of $6.5 to $7.1 million.

Net income during the quarter grew 57% to $1.68 million, or $0.10 EPS per diluted share. This compares to net income of $1.07 million for Q2 2008.

Revenue growth was driven by increasing sales from existing customers as well as the opening of new facilities. Sales from the more mature facilities were $4.15 million and sales from new facilities were $0.45 million.

The gross profit margin increased to 76%, compared to 64% for the prior year's quarter driven by the mix of higher margin service revenue from fitness and yoga and beauty school revenue. Management believes a sustainable gross margin will settle at an average level of 74%.

Operating expenses increased by approximately $0.66 million to $1.72 million for the three months ended November 30, 2008. This represents an increase from 32% to 37% of revenue. The increase in SG&A expense is mainly driven by the cost of being a public company and building up the management team for the new facilities.

                                   FOR THE SIX MONTHS   FOR THE THREE MONTHS
                                           ENDED                ENDED
                                        NOVEMBER 30,         NOVEMBER 30,
                                      2008       2007       2008       2007

    Revenue                     $8,885,158 $5,454,937 $4,608,291 $3,333,376

    Cost of Sales               (2,072,083)(1,715,396)(1,100,242)(1,198,587)

    Gross Profit                 6,813,075  3,739,541  3,508,049  2,134,788
    Gross Profit Margin                 77%        69%        76%        64%
    Operating expenses           3,319,689  1,708,109  1,724,190  1,066,977

    Net Income                   3,319,746  2,030,726  1,676,405  1,066,433
    Diluted Income per common
     share                           $0.20      $0.19      $0.10      $0.10
    Weighted average common
     share outstanding
          Diluted (restated)    17,000,000 10,725,000 17,000,000 10,725,000

CEO Liu, Tong, CFO Yu, Xia, and corporate secretary Mu, Yan will host a conference call for shareholders at 8 am EST on Thursday, Jan. 15, 2009 to discuss second quarter 2009 results.

    Dial-In Number(s):
     * US/Canada Toll Free Dial-in #:    (866) 811 - 8933
     * Int'l/Local Dial-In #:            +1 (706) 645 - 9773
     * North China Dial-In #:            +86 (10) 8007130924

     SOKO 2nd Quarter Earnings Conference ID # 81397571

NOTE: In order to join this conference call, all speakers and participants will be required to provide the Conference ID Number listed above.

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 .

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

     China Office:
     Yu Xia
     Tel:   +86-451-8770-2255

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

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