-- Revenue Grew 50%
-- Net Income Grew 68%
HARBIN, China, Oct. 16 /PRNewswire-Asia/-- 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
