SOKO Fitness and Spa Group, Inc., an operator of fitness centers, spas, and beauty salons in the People’s Republic Of China, announced that it has added eight new facilities to its portfolio of majority and minority owned operations during the third quarter of fiscal 2011, which ended February 28,2011.

During the quarter, SOKO opened four new wholly owned facilities, which includes two beauty salons in Hangzhou, Zhejiang Province, a fitness center in Harbin, Heilongjiang Province, and a third beauty salon in Shenyang, Liaoning Province. SOKO also acquired minority interests in and signed management agreements to operate an additional four facilities, which includes a beauty salon in Harbin and a yoga center in Zhengzhou, Henan Province. SOKO holds a 10% minority in each of the two centers. SOKO holds a 40% minority interest in two fitness centers in Hangzhou.

“We have made significant progress toward the execution of our growth strategy, adding eight new facilities to our portfolio in the third quarter and a total of twelve during the first nine months of the fiscal year. We are entering the fourth quarter well positioned to achieve our goal of opening 16 new facilities during the fiscal year through construction, acquisition of majority or minority interest or management agreements,” said Tong Liu, Chief Executive Officer of SOKO.

“Hangzhou and Zhengzhou are the second and third new cities in which we have established a presence this fiscal year, and these new operations expand our geographic footprint to include strategic markets in Eastern and Central China. We believe we can attract a large number of customers and quickly establish our brand by building a presence in these regions similar to that which we have developed in our core markets in Northeastern China” continued Mr. Liu.

The four facilities that are located in Hangzhou occupy a space in a centrally located office complex and a luxury residential facility. Each location will include one fitness center and one beauty salon, which is in accordance with SOKO’s approach in Harbin and Shenyang. This approach will enable SOKO to cross-sell its fitness and aesthetic services to its customers in the new market and allow SOKO to quickly build its brand.

SOKO has also entered the Central China market via a management agreement to operate its first facility in Zhengzhou, Henan Province, which is located in a high traffic commercial area. With a population of approximately 7.5 million, Zhengzhou has a fast growing middle-class, which SOKO believes will bring a better reception to its high-end fitness and beauty services as they emerge.

SOKO is also expanding its presence in its core markets in Harbin and Shenyang in Northeast China. SOKO is opening its third fitness center in Harbin, and beauty salons in both Harbin and Shenyang.

The agreement model SOKO introduced in the first fiscal quarter of 2011 will allow SOKO to acquire a minority interest in a targeted facility and will assume the operations of the facility in exchange for a management fee of 6% of the facility’s gross cash sales, net of tax. In each case, excluding the two fitness centers in Hangzhou, SOKO has entered into shareholders agreements with the other shareholders in said facilities, containing options that if implemented will permit SOKO to acquire 100% ownership of the facility. SOKO’s management believes that this approach creates a potential to significantly reduce the risk that comes with entering new markets, as it eliminates the upfront investment required with the opening of a new facility. SOKO will be able to build its brand in these markets and develop the quality of the service they provide, which coincides with the level of SOKO’s wholly owned fitness, spa, and salon facilities in China.

With the new facilities that have opened, SOKO currently operates a total of 32 facilities, which includes a beauty school. Twenty-one of said facilities are wholly owned, six are majority owned, and five are minority owned, operated by SPKO under management agreements.

SOKO Fitness and Spa, which operates various fitness centers, beauty salons, and spas in the People’s Republic of China, provides programs, services, and products that combine exercise, education, and nutrition to help its clients reach their fitness and beauty goals. The beauty salons and spas provide skincare, hairdressing, manicure, pedicure, body care, massage weight loss therapy, and non-invasive medical beauty procedures. The company’s fitness centers provide programs that consist of professional training, group training, comprehensive fitness testing, educational demonstration, nutrition coaching, weight loss, yoga, and swimming. The company, founded in 2007, is based in Harbin, the People’s Republic of China.

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