SOKF.. $2.65 Earnings year end..
SOKO FITNESS & SPA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN US DOLLARS)
AS OF MAY 31,
2009 2008
(RESTATED)
ASSETS
Current assets:
Cash & cash equivalents $ 1,907,640 $ 1,563,709
Restricted cash 7,233 -
Accounts receivable, net 110,541 682,694
Inventories 1,391,302 1,048,788
Advances to suppliers 993,084 1,467,861
Employee advance 54,783 249,900
Prepaid expense 146,959 340,993
Total Current Assets 4,611,542 5,353,945
Property, plant and equipment, net of accumulated depreciation 19,674,394 12,782,918
Other Assets
Security Deposit 47,853 -
Deferred Rent 589,188 -
Deposit to suppliers 1,464,530 720,461
Investment advance 399,750 1,152,738
Goodwill 2,525,778 1,505,710
Total Other Assets 5,027,099 3,378,909
Total Assets 29,313,035 21,515,772
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term loans 2,196,795 2,547,244
Accounts payable, accrued expenses and other payable 471,457 1,020,232
Unearned revenue 1,909,755 514,965
Taxes payable 360,229 339,555
Contingent Liability 200,000 -
Total Current Liabilities 5,138,236 4,421,996
Stockholders' Equity
Preferred Stock, $.001 par value; 10,000,000 shares authorized;
- 0 - shares issued and outstanding at May 31,2009 and 2008 - -
Common stock, $0.001 Par value; 500,000,000 shares authorized;
17,000,000 shares issued and outstanding
at May 31, 2009 and 2008 17,000 17,000
Additional paid-in-capital 2,139,786 2,091,165
Additional paid-in-capital - Warrants 372,914 372,914
Accumulated other comprehensive income 1,910,752 1,625,829
Retained earnings 19,688,064 12,657,564
Total Stockholders' Equity 24,128,516 16,764,472
Noncontrolling interest 46,283 329,304
Total Equity 24,174,799 17,093,776
Total Liabilities and Stockholders' Equity $ 29,313,035 $ 21,515,772
The accompanying notes are an integral part of these consolidated financial statements
F-2
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SOKO FITNESS & SPA GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN US DOLLAR)
FOR THE YEARS ENDED MAY 31,
2009 2008
(RESTATED)
Net Sales $ 19,569,108 $ 13,963,130
Cost of Sales (6,591,906 ) (5,010,643 )
Gross Profit 12,977,202 8,952,487
Selling, General and Administrative Expenses: 5,902,059 3,536,547
Operating income 7,075,143 5,415,940
Other Income and Expenses
Interest expenses (66,121 ) (49,177 )
Other income 47,012 2,357
Penalty for investors' liquidated damages (200,000 ) -
Other expenses (70,731 ) (10,328 )
Total Other Income and (Expense) (289,840 ) (57,148 )
Income Before Income Taxes 6,785,303 5,358,792
Provision for Income Taxes 42,667 74,381
Net Income 6,742,636 5,284,411
Less: net income (loss) attributable to the noncontrolling interest (287,865 ) 108,481
Net Income Attributable to SOKO Fitness & Spa Group, Inc. $ 7,030,500 $ 5,175,930
Other Comprehensive Income
Foreign currency translation adjustment 284,923 1,217,693
Comprehensive Income $ 7,315,423 $ 6,393,622
Basic and Diluted Income per common share
Basic $ 0.41 $ 0.45
Diluted $ 0.41 $ 0.43
Weighted average common share outstanding
Basic 17,000,000 11,601,781
Diluted 17,297,931 11,903,589
The accompanying notes are an integral part of these consolidated financial statements
F-3
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SOKO FITNESS & SPA GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MAY 31, 2009 AND 2008
( IN US DOLLARS)
Preferred Stock Common Stock Additional Warrants Accumulated Other Total
par value $0.001 par value $0.001 Subscription Paid-in Number of Additional Comprehensive Retained Noncontrolling Stockholders'
Shares Amount Shares Amount Receivable Capital Warrants Paid in Capital Income Earnings Interest Equity
Balance at May 31,2007 - $ - 10,725,000 $ 10,725 $ (1,000,000 ) $ 1,142,854 - $ - $ 408,136 $ 7,481,634 $ - $ 8,043,349
Purchase of subsidiary shares
from a third party 218,153 218,153
Paid in capital received 1,000,000 1,000,000
Acquisition of net asset from SOKO in the reverse merger 3,000,000 3,000 (3,000 ) -
Issuance of common stock and warrants 3,275,000 3,275 951,311 2,160,000 372,914 1,327,500
Net Income 5,175,930 108,481 5,284,411
Other comprehensive income, net of tax 1,217,693 2,670 1,220,363
Foreign currency translation adjustment
Balance at May 31, 2008 (Restated) - $ - 17,000,000.00 $ 17,000 $ - $ 2,091,165 2,160,000 $ 372,914 $ 1,625,829 $ 12,657,564 $ 329,304 $ 17,093,776
Issuance of stock options 48,621 48,621
-
Net Income 7,030,500 (287,865 ) 6,742,635
Other comprehensive income, net of tax
Foreign currency translation adjustment 284,923 4,844 289,767
Balance at May 31, 2009 - $ - 17,000,000.00 $ 17,000 $ - $ 2,139,786 2,160,000 $ 372,914 $ 1,910,752 $ 19,688,064 $ 46,284 $ 24,174,799
The accompanying notes are an integral part of these consolidated financial statements
F-4
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SOKO FITNESS & SPA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
( IN US DOLLARS)
FOR THE YEARS ENDED MAY 31,
2009 2008
(RESTATED)
Cash Flows From Operating Activities:
Net income $ 7,030,500 $ 5,175,930
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock based compensation 48,621 -
Depreciation 1,719,398 1,016,855
Minority interest (287,865 ) 108,481
Liquidated damage penalty 200,000 -
Loss from disposal of fixed assets 54,809 -
Rent expense converted from leasehold improvement 163,229 -
Changes in operating assets and liabilities:
Restricted cash (7,219 ) -
Accounts receivable 605,326 (270,326 )
Inventories (302,677 ) (584,845 )
Advances to suppliers 503,705 (279,736 )
Employee advance 198,831 (163,600 )
Prepaid expense 265,225 (254,681 )
Security deposit (47,761 ) -
Deferred Rent (588,061 ) -
Deposit to suppliers (730,864 ) 6,816
Accounts payable 7,283 (33,815 )
Unearned revenue 1,367,451 6,948
Taxes payable 15,018 203,532
Accrued expenses and other payables (829,923 ) (82,086 )
Cash provided by operating activities 9,385,023 4,849,473
Cash Flows From Investing Activities:
Addition in construction in progress (5,312,845 ) (2,665,759 )
Purchase of property and equipment (3,061,979 ) (3,293,245 )
Proceeds received from disposal of fixed assets 1,316
Investment in subsidiary - (1,687,408 )
Cash acquired from subsidiaries 97,594 124,447
Investment advance (399,750 ) (1,090,545 )
Cash used in investing activities (8,675,665 ) (8,612,510 )
Cash Flows From Financing Activities:
Proceeds from capital contribution - 1,000,000
Net proceeds from issuance of common stock - 1,327,500
Proceeds from short-term loan 2,196,795 2,409,815
Repayment of short-term loan (2,588,227 ) -
Cash provided by (used in) financing activities (391,432 ) 4,737,315
Effect of exchange rate changes on cash and cash equivalents 26,005 133,316
Increase in cash and cash equivalents 343,931 1,107,594
Cash and Cash Equivalents - Beginning of the year 1,563,709 456,115
Cash and Cash Equivalents - Ending of the year $ 1,907,640 $ 1,563,709
Supplemental disclosures of cash flow information:
Interest paid $ 66,121 $ 49,042
Income Taxes paid $ 74,135 $ 9,427
Non-cash investing and financing activities:
Option issued for directors $ 109,898 $ -
The accompanying notes are an integral part of these consolidated financial statements
F-5
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SOKO FITNESS & SPA GROUP, INC.
