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SOKO Fitness & Spa Group Reports Quarterly Earnings Growth Over Fiscal 2009 First Quarter
Date:10/15/2009

HARBIN, China, Oct. 15 /PRNewswire-Asia-FirstCall/-- SOKO Fitness & Spa Group, Inc. (OTC Bulletin Board: SOKF) ("the Company"), today reported the operating results for the first quarter of financial year 2010 ended August 31, 2009. The Company's revenue grew 50% to $6.43 million from $4.28 million in the same quarter last year. Net income of the first quarter grew 68% to $2.43 million and fully diluted earnings per share were $0.13, as compared to net income of $1.44 million and fully diluted earnings per share of $0.08 in first quarter fiscal year 2009.

SOKO currently operates 13 facilities in Northeastern China, including nine beauty salons and spas, three fitness centers, and one beauty school. In addition, SOKO currently has four facilities under construction -- the Da Qing beauty salon and spa, one fitness center, a yoga center and beauty salon in the Long Dian building in Harbin.

SOKO's management reported that its growth quarter to quarter was due to the following factors:

    -- professional services revenue increased as a result of the introduction
       of new services and increase in customer base;
    -- product sales revenue increase was driven by introduction of new
       branded products and higher consumption of products by our customers;
    -- membership fee revenue increase was driven by opening a new fitness
       center Yoga Wave II in Shenyang and membership increases in our
       facilities; and
    -- the decrease in school tuition revenue was as a result of the company's
       reallocation of certain school resources to internal program for
       company employee training.

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:

     Judy Jiang
     Tel:   +86-451-8770-2280
     Email: judyjiang@sokofitness.com

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



                         SOKO FITNESS & SPA GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN US DOLLARS)

                                                AUGUST 31,         MAY 31,
                                                  2009              2009
                                              (UNAUDITED)
    ASSETS
    Current assets:
    Cash & cash equivalents                  $3,564,218.92     $1,907,640.50
    Restricted cash                                     --             7,233
    Accounts receivable, net                       258,658           110,541
    Inventories                                  1,416,436         1,391,302
    Advances to suppliers                        1,404,028           993,084
    Employee advance                               129,444            54,783
    Prepaid expense                                112,568           146,959
    Total Current Assets                         6,885,353         4,611,542

    Property, plant and equipment, net of
     accumulated depreciation                   25,076,229        19,674,394

    Other Assets
    Security Deposit                               140,957            47,853
    Deferred Rent                                  773,693           589,188
    Deposit to suppliers                         1,464,150         1,464,530
    Investment advance                                  --           399,750
    Goodwill                                     2,792,278         2,525,778
    Total Other Assets                           5,171,078         5,027,099

     Total Assets                               37,132,660        29,313,035

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
    Short-term loans                             2,576,723         2,196,795
    Accounts payable, accrued expenses
     and other payable                             893,539           471,457
    Unearned revenue                             6,605,375         1,909,755
    Taxes payable                                  363,674           360,229
    Contingent Liability                           200,000           200,000
    Total Current Liabilities                   10,639,311         5,138,236

    Stockholders' Equity
    Preferred Stock, $.001 par value;
     10,000,000 shares authorized;  - 0 -
     shares issued and outstanding at
     August 31 and May 31,2009                          --                --

    Common stock, $0.001 Par value;
     500,000,000 shares authorized;
     17,000,000 shares issued and
     outstanding at August 31 and May 31,
     2009                                           17,000            17,000

    Additional paid-in-capital                   2,354,056         2,346,397
    Additional paid-in-capital - warrants          639,253           639,253
    Accumulated other comprehensive
     income                                      1,889,470         1,910,752
    Retained earnings                           21,642,718        19,215,114
    Total Stockholders' Equity                  26,542,498        24,128,516
    No controlling interest                        (49,149)           46,283
    Total Equity                                26,493,349        24,174,799

     Total Liabilities and Stockholders'
      Equity                                   $37,132,660       $29,313,035



                         SOKO FITNESS & SPA GROUP, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                 (IN US DOLLARS)
                                   (UNAUDITED)

                                              FOR THE THREE MONTHS ENDED
                                                        AUGUST 31,
                                                  2009              2008
                                                                 (RESTATED)

    Net Sales                                   $6,430,503        $4,276,867

    Cost of Sales                               (2,188,938)       (1,425,156)

    Gross Profit                                 4,241,566         2,851,711

    Selling, General and Administrative
     Expenses:                                   1,898,374         1,342,184

    Operating income                             2,343,191         1,509,527

    Other Income and Expenses
    Interest expenses                              (32,525)          (50,008)
    Other income                                    15,523             2,415
    Other expenses                                    (471)          (69,341)
    Total Other Income and (Expense)               (17,474)         (116,934)

    Income Before Income Taxes                   2,325,718         1,392,593

    Provision for Income Taxes                      23,880            25,132

    Net Income                                   2,301,836         1,367,461
    Less: net income (loss) attributable
     to the no controlling interest               (125,767)          (75,880)

    Net Income Attributable to SOKO
     Fitness & Spa Group, Inc.                  $2,427,604        $1,443,341

    Other Comprehensive Income
    Foreign currency translation
     adjustment                                    (21,282)          242,960

    Comprehensive Income                        $2,406,322        $1,686,301

    Basic and Diluted Income per common
     share
    Basic                                            $0.14             $0.08
    Diluted                                          $0.13             $0.08

    Weighted average common share
     outstanding
    Basic                                       17,000,000        17,000,000
    Diluted                                     18,168,443        17,000,000



                         SOKO FITNESS & SPA GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN US DOLLARS)
                                   (UNAUDITED)

                                              FOR THE THREE MONTHS ENDED
                                                        AUGUST 31,
                                                   2009              2008
                                                                  (RESTATED)

    Cash Flows From Operating Activities:
    Net income                                  $2,427,604        $1,443,341
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:

    Stock based compensation                         7,660            18,651
    Depreciation and amortization                  564,191           340,255
    Minority interest                             (125,767)          (75,880)
    Liquidated damage penalty                           --            55,610

    Changes in operating assets and
     liabilities:
    Restricted cash                                  7,228                --
    Accounts receivable                           (100,774)          225,752
    Inventories                                    (16,752)          (71,190)
    Advances to suppliers                            1,469          (418,253)
    Employee advance                                48,436            27,741
    Other receivables                               96,856            38,592
    Prepaid expense                                 50,901           101,098
    Security deposit                               (93,087)         (111,113)
    Deferred Rent                                  (84,250)               --
    Deposit to suppliers                                --              (131)
    Accounts payable                                (1,102)               --
    Unearned revenue                             4,303,014         1,129,713
    Taxes payable                                   (5,476)           58,600
    Accrued expenses and other payables             36,360          (299,881)

    Cash provided by operating activities        7,116,513         2,462,905

    Cash Flows From Investing Activities:
    Addition in construction in progress        (5,709,094)       (1,356,563)
    Purchase of property and equipment            (184,055)         (193,854)
    Cash acquired from acquisition                  65,265            97,325

    Cash used in investing activities           (5,827,884)       (1,453,092)

    Cash Flows From Financing Activities:
    Proceeds from short-term loan                  380,522                --
    Repayment of short-term loan                        --          (536,126)

    Cash provided by (used in) financing
     activities                                    380,522          (536,126)

    Effect of exchange rate changes on
     cash and cash equivalents                     (12,573)           21,334

    Increase in cash and cash equivalents        1,656,578           495,020

    Cash and Cash Equivalents - Beginning
     of the period                               1,907,641         1,563,709

    Cash and Cash Equivalents - Ending of
     the period                                 $3,564,219        $2,058,729

    Supplemental disclosures of cash flow
     information:

    Interest paid                                      $--           $38,861
    Income Taxes paid                               $2,790              $417

SOURCE SOKO Fitness & Spa Group, Inc.


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

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