-- Revenue Grew 110%
-- Net Income Grew 86.5%
-- SOKO opened 3 new facilities and remodeled a fourth.
HARBIN, China, Oct. 16 /Xinhua-PRNewswire-FirstCall/-- Harbin Mege Union Beauty Management Ltd. today reported the operating results for SOKO Fitness & Spa Group, Inc. (OTC Bulletin Board: SOKF)("the Company"), for the first quarter ended August 31, 2008. Harbin Mege Union Beauty Management Ltd. is wholly owned subsidiary of SOKO Fitness & Spa Group, Inc.
The Company's first quarter 2009 revenue grew 110% to $4.45 million from $2.12 million during the same period last year. Net income during the quarter grew 86.5% to $1.79 million, or $0.09 EPS (20.4 million fully diluted shares). This compares to net income of $0.96 million, or $0.07 EPS (13.3 million fully diluted shares) per diluted share, for Q1 2008.
SOKO Fitness and Spa Group continued its growth during the quarter with openings of its Shenyang Letian Yoga Center, which at 73,200 sq. ft. is the largest yoga club in Asia, and the 7,000 sq. ft. Harbin TaiAi Lea Spa located in the five-star Sofitel Hotel, and Harbin SOKO spa which is next to the Company's SOKO fitness center. The Company also relocated its Kunlun Spa to a larger facility (14,000 sq. ft.) and completed a comprehensive remodeling. These new spas and club have generated about $1.25 million in revenue in Q1 2009 while existing spas and club contributed about $3.2 million in sales during the quarter.
Three Months Ended August 31, 2008, Financial Highlights:
Total revenue for the first quarter grew 110% to $4.45 million from $2.12 million during the same period last year, driven by sales growth in existing fitness clubs and spas and the opening new fitness clubs and spas.
Results of Operations for the Three Months Ended August 31, 2008 and 2007
2008 2007 Change
USD USD
Net Sales
Beauty and Spa $ 3,155,180 $1,976,083 $1,179,097
Fitness and Yoga $846,290 $99,458 $746,832
Others $446,925 $46,021 $400,904
Revenue $4,448,395 $2,121,562 $2,326,833
Cost of Sales $971,841 $516,809 $455,032
Gross Profit $3,476,554 $1,604,753 $1,871,801
Gross Profit Margin 78.2% 75.6% 2.60%
Operating Expenses $1,595,500 $641,133 $954,367
Net Income $1,786,430 $964,294 $822,136
Weighted average fully
diluted shares 20,389,347 13,300,000 7,089,347
EPS $0.09 $0.07 $0.02
Growth margins increased to 78.2% from 75.6% as we focused on selling more high margin products.
The Company currently maintains more than 12,000 fitness memberships and 18,000 beauty and spa memberships as of August 31, 2008.
Operating expenses consisted of selling, general and administrative expenses and increased by approximately $0.95 million to $1.60 million for the three months ended August 31, 2008 from $0.64 million for the same quarter of previous year. This represented an increase from 30% to 35% of the Company's revenue. A significant percentage of the increase in operating expenses can be attributed to the costs of being a public company. In the same period last year, the Company was not a public company.
Net income for the three months ended August 31, 2008 increased by approximately $0.83 million to $1.79 million as compared to $0.96 million for the previous year. The net income increased 86.5% quarter to quarter.
Weighted average fully diluted shares for Q1 2009 totaled 20.4 million compared to 13.3 million shares in Q1 2008.
As announced on October 13, 2008, the Company will hold a conference call tomorrow at 9:00 a.m. EDT to discuss first quarter 2009 results. CEO Liu, Tong, CFO Yu, Xia, and corporate secretary Mu, Yan will host a conference call for shareholders at 9 am EDT on Thursday, Oct. 16, 2008. A replay of the call will be available shortly after the call via the Company's Web site http://www.sokofitness.com .
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
