UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
DC 20549




FORM
10-K /A


(Amendment
No. 1)





x           ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934




For
the fiscal year ended May 31, 2008





o          
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934


For the
transition period from   to .





Commission File No.333-132429




SOKO
FITNESS & SPA GROUP, INC.


(Exact
Name of Registrant as Specified in Its Charter)




Delaware
              
              80-0122921(State
      or Other Jurisdiction
                of  Incorporation
      or Organization)
              
              (I.R.S.
      Employer Identification No.)




No.194,Guogeli
Street, Harbin,


Heilongjing
Province, China 150001


(Address
of Principal Executive Offices, including zip code)





011-86-451-87702255


(Registrant’s
Telephone Number, Including Area Code)





Securities
registered under Section 12(b) of the Exchange Act:




None
              None(Title
      of each class)
              (Name
      of each exchange on which
registered)





Securities
registered under Section 12(g) of the Exchange Act:


Common
Stock, $0.001 par value




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


YesoNoþ





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


YesoNoþ





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past
90 days.


YesþNoo








Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (Section 229.405) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.þ
 
 Indicate
by check mark whether the registrant is a large accelerated filer, accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definitions
of “large accelerated filer," "accelerated filer” and "smaller reporting
company" in Rule 12b-2 of the Exchange Act (check one):




Large
      accelerated filer  o
                
                Accelerated
      filer  oNon-accelerated
      filer    o
                  (Do not check if a smaller reporting
      company)
                
                Smaller
      reporting company   þ





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YesoNoþ





On August
27, 2008, 17,000,000 shares of the registrant’s common stock were
outstanding.


The
aggregate market value of the voting stock held by non-affiliates as of November
30, 2007 was approximately $3,000,000.





Documents
Incorporated by Reference


None

















The
statements contained in this Annual Report on Form 10-K that are not historical
facts are “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to our financial
condition, results of operations and business, which can be identified by the
use of forward-looking terminology, such as “estimates,” “projects,” “plans,”
“believes,” “expects,” “anticipates,” “intends,” or the negative thereof or
other variations thereon, or by discussions of strategy that involve risks and
uncertainties.  Management wishes to caution the reader of the
forward-looking statements that such statements, which are contained in this
annual report, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors, including, but
not limited to, economic, competitive, regulatory, technological, key employee,
and general business factors affecting our operations, markets, growth,
services, products, licenses and other factors discussed in our other filings
with the Securities and Exchange Commission ("SEC"), and that these statements
are only estimates or predictions.  No assurances can be given
regarding the achievement of future results, as actual results may differ
materially as a result of risks facing us, and actual events may differ from the
assumptions underlying the statements that have been made regarding anticipated
events.




These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results to be materially different from
any future results expressed or implied by us in those statements. Some of these
risks are described in “Risk Factors” in Item 1A of this annual
report.




These
risk factors should be considered in connection with any subsequent written or
oral forward-looking statements that we or persons acting on our behalf may
issue. All written and oral forward looking statements made in connection with
this annual report that are attributable to us or persons acting on our behalf
are expressly qualified in their entirety by these cautionary
statements.  Given these uncertainties, we caution investors not to
unduly rely on our forward-looking statements. We do not undertake any
obligation to review or confirm analysts’ expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date of this document or to reflect the
occurrence of unanticipated events. Further, the information about our
intentions contained in this document is a statement of our intention as of the
date of this document and is based upon, among other things, the existing
regulatory environment, industry conditions, market conditions and prices, the
economy in general and our assumptions as of such date. We may change our
intentions, at any time and without notice, based upon any changes in such
factors, in our assumptions or otherwise.




PART
I




In this
Annual Report on Form 10-K, we will refer to SOKO Fitness & Spa Group, Inc.,
a Delaware corporation, as "SOKO," "our company," "we," "us," and "our" and
includes our subsidiary Wealthlink Co., Ltd. ("Wealthlink"), its wholly-owned
subsidiary, Harbin Mege Union Beauty Management Ltd. ("Mege Union") and Mege
Union's variable interest entity, Queen Group (as defined
below).  The Queen Group is defined to include Harbin Daoli Queen
Demonstration Beauty Parlor, Harbin Huang Emperor & Golden Gym Club Co.
Ltd., Harbin Queen Beauty Demonstration Center (and its branches) and Harbin
Queen Beauty Vocational Skill Training School.




Item
1.  Business.




Corporate
History




SOKO was
incorporated as a Delaware corporation on September 9, 2004 under the name
American Business Holdings, Inc. as a holding vehicle to own and control a
textile and plastic packaging company in Central and East Africa. On September
12, 2004, the company completed a transaction in which it purchased all
of the outstanding membership shares in Tissakin Ltd., a Democratic Republic of
Congo Corporation, so that Tissakin Ltd. became our wholly owned subsidiary.
Through Tissakin, the company was a manufacturer of bags for packaging
agricultural products in the Democratic Republic of Congo.




On April
11, 2008 (the “Closing Date”), we entered into a Share Exchange Agreement with
Wealthlink and the Wealthlink Shareholders pursuant to which we acquired
all of the outstanding shares of common stock of Wealthlink from the Wealthlink
Shareholders in exchange for their outstanding shares of Wealthlink common stock
and a cash payment of $300,000. Additionally, on the Closing Date, Mr. Tong Liu,
our current Chairman of the Board and Chief Executive Officer, entered into
Securities Purchase Agreements with each of Syed Idris Husain, then director of
the company, and certain other SOKO shareholders pursuant to which Mr. Liu
purchased 1,000,000 shares of common stock from Mr. Husain and an aggregate of
1,575,000 shares of common stock from other SOKO shareholders for a total
aggregate purchase price of $400,000.  These transactions are
collectively referred to as the "share exchange."




Also, on
the Closing Date, immediately prior to and as a condition to the completion of
the share exchange, the company entered into a Stock Purchase Agreement with
each of Syed Irfan Husain, the Company’s then President and Chief Executive
Officer, Syed Idris Husain, and Verifica International, Ltd. (collectively, the
“Buyers”).  Pursuant to this agreement, the Buyers purchased all
issued and outstanding shares of Tissakin Ltd., a Democratic Republic of Congo
corporation and a wholly-owned subsidiary of the company, in consideration of
79,000,000 shares of common stock of the company owned by the
Buyers.







1





Further,
in consideration of services provided to the Company in association with the
consummation of these transactions, an aggregate of 1,275,000 shares were issued
to several advisors in lieu of cash compensation.




Additionally,
on the Closing Date, SOKO entered into a Securities Purchase Agreement, Warrant,
Registration Rights Agreement and Lock-Up Agreement with three investors (the
“Purchasers”) for an aggregate of $2,000,000 (the “Financing”). Upon the terms
and subject to the conditions set forth in the Securities Purchase Agreement,
SOKO sold, and the Purchasers purchased, in the aggregate, 2,000,000 shares of
our common stock and warrants to purchase an additional 2,000,000 shares. The
warrants have an exercise price of $1.25 and are exercisable at any time through
the third anniversary of the Closing Date. Additionally, each Purchaser’s
ability to exercise the warrant is limited to the extent such Purchaser’s
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) would exceed 4.99% of the SOKO’s
outstanding common stock. From the Closing Date and through the twelve-month
anniversary of the Closing Date, certain SOKO shareholders agreed not to sell
any of their shares of our common stock. The company filed a registration
statement with respect to the shares and warrants acquired by the Purchasers
with the SEC on June 10, 2008.  This registration statement remains
subject to SEC review.





In
consideration for acting as placement agent for the Financing, SOKO agreed to
compensate E-Tech Securities Inc. with (i) a retainer of $30,000, (ii) a cash
placement fee equal to seven percent (7%) of the proceeds of the Financing
($140,000) and (iii) warrants to purchase an amount of securities equal to eight
percent (8%) of the total shares issued to the Purchasers (160,000
shares).  The warrant issued to E-Tech Securities Inc. have an
exercise price of $1.25 and are exercisable at any time through the third
anniversary of the Closing Date.





As a
result of the consummation of all of the foregoing transactions, the following
changes in the outstanding shares of the company were recorded:





·
            The
      company reacquired 79,000,000 shares from its original
      shareholders;





·
            Mr.
      Liu acquired 2,575,000 shares from two of the original shareholders of the
      company;





·
            The
      company issued an additional 10,725,000 shares to Wealthlink Shareholders
      (together with the shares held by Mr. Liu, following the consummation of
      the reverse merger, Wealthlink Shareholders hold an aggregate of
      13,300,000 shares of our common
stock);





·
            Advisors
      to the company acquired an aggregate of 1,275,000
    shares;





·
            The
      Purchasers acquired 2,000,000 shares and warrants to purchase up to an
      additional 2,000,000 shares;





·
            The
      company cancelled 65,000,000 shares;
and





·
            E-Tech
      Securities Inc. was issued a warrant to purchase up to 160,000
      shares.





An
additional 425,000 shares remain held by certain original shareholders of the
company.




On the
Closing Date, we also entered into a Consulting Agreement with Syed Idris
Husain, pursuant to which Mr. Husain agreed to provide us with such regular and
customary consulting advice as may be requested for a period of 6 months from
the Closing Date. Mr. Husain shall be paid the sum of $300,000 in consideration
of such services to be provided.




After the
completion of the transactions described above, we changed our name to SOKO
Fitness & Spa Group, Inc.




We
currently have two subsidiaries and are associated with six additional entities
comprising the variable interest entity known as the Queen Group.  
Our affiliation with the Queen Group is managed through several exclusive
agreements between the Company and each Queen Group’s entity.  As a
result of our arrangements with these entities, we effectively control each of
the Queen Group entities and, through them, we operate successful salons and
fitness centers.   For ease of reference we will refer to all of
these entities collectively as our "subsidiaries" throughout this annual report,
unless it is necessary to the understanding of the context to differentiate
among subsidiaries and the Queen Group.




Mege
Union was incorporated under the laws of the PRC on June 19, 2007 as a wholly
foreign-owned subsidiary of Wealthlink. Mege Union has not carried on any
substantive operations of its own, except for the entering of certain exclusive
agreements with the Queen Group. The entities in Queen Group were all organized
in the PRC in 1992 as either a limited liability company or sole
proprietorship.




The
paid-in capital of Queen Group was funded by our chairman, Mr. Tong Liu .
PRC law currently limits foreign ownership of companies. To comply with these
foreign ownership restrictions, on August 3, 2007, Mege Union entered into
exclusive agreements with the Queen Group and their stockholders. Pursuant to
these agreements, Mege Union provides exclusive consulting and other general
business operation services to Queen Group, in return for a consulting services
fee which is equal to Queen Group’s revenues. In addition, Queen Group’s
shareholders have pledged their equity interests in Queen Group to Mege Union,
irrevocably granted Mege Union an exclusive option to purchase, to the extent
permitted under PRC law, all or part of the equity interests in Queen Group and
agreed to entrust all the rights to exercise their voting power to the person(s)
appointed by Mege Union.





2









Through
these contractual arrangements. Mege Union has the ability to substantially
influence Queen Group’s daily operations and financial affairs, appoint its
senior executives and approve all matters requiring stockholders’
approval.




We
started our existing operations as a single beauty salon and spa in Harbin City,
Heilongjiang Province, China. Through 15 years of dedicated efforts, we have
grown five times in terms of the number of facilities and those facilities have
become the distinctive destinations that attract more than 10,000 members every
year.




Our
Business




We are in
the business of operating distinctive destination centers that offer
professional fitness, beauty salon and spa services in China. Our beauty
salons provide services that include, but are not limited to, skincare, hair
dressing, manicure, pedicure, body care, massage, and weight loss
therapy. We currently maintain more than 10,000 fitness and beauty and spa
memberships within the northeast region of China.  We have one beauty
school in Harbin, PRC. Our goal is to provide programs, services, and products
that are uniquely combined with exercise, education, and nutrition to assist our
members with achieving fitness and beauty goals that may help them achieve a
richer lifestyle.





Throughout
China, the health and fitness market has experienced significant growth, with
the top five operators in the country (representing a combined market share of
19.5%) experiencing a growth rate of about 35% from 2007 to 2008
alone.  In Harbin and Shenyang, SOKO's areas of operation, SOKO
currently has market shares of 16% and 6.5%, respectively.  The growth
potential in Harbin and Shenyang is substantial.  According to
publicly available research sources Harbin has a population of about six
million, with 50,000 individuals currently being served in 42 fitness centers
and Shenyang has a population of about 12 million, with 62,000 individuals
currently being served in 45 fitness centers.  SOKO currently has one
fitness center in Harbin and one yoga and fitness center in Shenyang, with
approximately 8,000 and 4,000 members, respectively.





With
respect to the beauty and spa market, SOKO's market research shows that in its
primary market, Harbin, SOKO has a market share of approximately 25-30% of the
overall market, with a market share of about 50% of high end
spas.  SOKO is the only multi-spa owner in the Northeast region of
China.





For
the year ended May 31, 2008, our beauty and spa operations accounted for about
83.2% of our revenue, fitness accounted for about 10.7% of our revenue and
miscellaneous activities accounted for the remaining 6.1% of our
revenue.   We believe that this revenue breakdown will continue in the
future. We generally open our facilities to members 12 hours a day, 7 days a
week.  Currently, our members average 19,800 visits per month at the
SOKO Fitness Center and 9,000 visits per month at our
spas.  We are running at maximum capacity at most of our mature
facilities.




Our
services and products are tailored to high end customers who appreciate quality,
personal service from trained professionals.  This customer base,
coupled with the growing demand for health and fitness facilities in the PRC has
positively impacted our revenues, irrespective of the recent slowdown in the
PRC's economy.  We do not anticipate that our business will be
materially negatively impacted by the current economic conditions in the
region.  However, in the event that economic conditions continue to
deteriorate, our business may be affected.




The
following chart sets forth our organizational structure and the brand names
under which we operate.  Beauty salon facilities are located in each
of our spa locations.









3















*
            The
      entities connected to Mege Union by the dotted lines above are
      collectively known as the "Queen Group" and are the variable interest
      entity associated with Mege Union.




We are
focused on generating revenue in three business
segments:  Professional Fitness and Yoga, Beauty and Spa, and Beauty
School operations. Our revenues are generated through basic membership fees,
fees for our services, the sale of products that complement and supplement our
services and the tuition we charge our students.





Our
aim is to provide programs, services, and products uniquely combined with
exercise, education, and nutrition to help lead our members into living a rich
lifestyle as well as achieve their fitness and beauty goals.  We have
elected to take advantage of the synergies among our core business lines,
locating many of our beauty salons within our spa facilities.  The
recently opened Shenyang Queen Legend Spa was opened in the same building as our
Shenyang Letian Yoga Fitness Center ("Letian").  The continued
development of these overlapping opportunities has enabled us to enhance the
value of our services to clients and attracts new clients from one area to
another.




We
believe that the health and fitness market in China provides an excellent
opportunity for growth and we are currently focused on taking advantage of this
opportunity to enhance the value of our brand through organic growth and
strategic acquisitions.  We have been expanding our business
throughout Northeast China by building new facilities and updating and modifying
our existing spas and salons.  We believe a key to our growth lies in
finding new venues in thriving metropolitan areas and upscale real estate
markets where we can target our core demographic customer. We have recently
begun tapping in to this market with the opening of the Shenyang Queen Legend
Spa in late October 2008.  We will continue to look for opportunities
to expand our operations throughout the region.





Management
is committed to the growth of the Company through both organic growth and
strategic acquisitions.  Members of management research and assess our
existing facilities and systems to ensure that they are operating efficiently
and that local employees exemplify the professional skill and dedication that
has made SOKO a brand to be respected.  In evaluating potential growth
opportunities within our existing operations, management evaluates our existing
client base and the need for additional services to meet the lifestyle of our
clients and the community at large.





Management
researches and reviews the demographic makeup of the areas in which we currently
operate, as well as other communities to determine the best way to utilize
Company resources to expand into new markets.  Our research focuses on
those areas that can support a facility that caters to upscale clientele
interested in personalized attention and superior service provided by dedicated
professionals.  Our marketing department has well developed plan for
identifying and targeting potential geographic sites for business development
and expansion.  The tools used by our marketing professionals include
reviewing independent market and demographic research and census data, as well
as conducting visual inspections and obtaining written surveys of the population
in a target area.  The company tracks the results of this research
against its business model to determine where or if an existing facility will be
upgraded or a  new facility built in any proposed
location.  Our internal market research targets growth in both
residential areas and business districts among young professionals, business
executives, government officials, business owners and other upper middle class
individuals.







4








Our
market research has shown that women, particularly professional, upper middle
class women, are more likely to prepay for fitness and beauty services and are
less likely to forego these services in an economic downturn.  Based
on this information, we have targeted our growth and expansion in areas where
women are likely to want to use our services - in upper middle class residential
areas and business districts serving large corporations and thriving small
businesses.  We believe that this business profile provides the best
opportunity for growth in the Northeast region of China and is the least
susceptible to economic stress.





This
type of research resulted in our recent opening of the Shenyang Queen Legend
Spa.





The
company may also utilize alternative methods of expanding its business in the
Northeast region of China, including partnering with existing spa owners or
establishing franchises. These strategies are under consideration and may be
opportunistically developed in the future as deemed
appropriate.





Coupled
with the desire to grow our business outlined above, we believe that it is key
to our ongoing success that all of our facilities be fitted with the most
sophisticated equipment and technology available.  It is our intention
to develop and use 21st century technology to enhance the experience of each of
our clients.  We are developing a website for our members that will
allow members to, among other things: consult with our team of professional
service providers, make appointments, hold on-line discussions with our staff
and other clients and review educational materials.  We hope to have
this site up and running by March 2009.  We will continue to update
and change our technology as new operating systems and software are introduced
so we can remain ahead of the curve.




Products
and Services




We
currently maintain more than 10,000 memberships within six fitness and spa
facilities located in the northeast region of China.  Our goal is to
provide programs, services, and products that are uniquely combined with
exercise, education, and nutrition to assist our members with achieving fitness
and beauty goals that may help them achieve a richer lifestyle.




Professional Fitness
            
            Beauty Salon
            
            Lifestyle and Spa·Cardiovascular,
      resistance and free-weight equipment;
            
            ·Hair,
      Nail and Skin Care;
            
            ·Yoga;·Professional
      training;
            
            ·Body
      Re-shaping; and
            
            ·Swimming
      Pool;·Group
      Training;
            
            ·Whirlpool,
      Sauna and Steam Room
            
            ·Therapeutic
      Massage; and Body Massage·Comprehensive
      Fitness Testing;·Educational
      Demonstrations;·Nutrition
      Coaching;·Weight
      Loss Programs;·Remix;·Fight-do;
      and·Body-Balance.




We also
offer our members high-end beauty and skin care products, including: Albion;
Albion-EXG; Syma; La Colline; SELF’SHOW; and BDO product lines.




We
generally open our facilities to members 12 hours a day, 7 days a
week.  Currently, our members average 19,800 visits per month at the
SOKO Fitness Center and 9,000 visits per month at our
spas.




We
typically experience the highest level of member activity at our fitness
facility and beauty salon and spa facilities during the hours of 11:00 a.m. –
01:00 p.m. and 05:00 p.m. – 07:00 p.m. Currently, we are running at maximum
capacity at each one of our facilities.  We believe additional
facilities are needed to optimize the usage of our facilities, to maximize the
satisfaction of our members, and to avoid inadequate space issues, such as lack
of equipment, professional trainers, spa and beauty professionals,
etc.





5





As of
the end of our most recent fiscal year, our revenues from each of our business
segments was:





May
      31, 2008
                        USD
                      
                      
                      May
      31, 2007
                        USDBeauty
      and Spa
                      
                      $
                      11,626,414
                      
                      
                      $
                      5,380,378Fitness
      and Yoga
                      
                      
                      1,497,040
                      
                      
                      
                      889,320Other(1)
                      
                      
                      839,676
                      
                      
                      
                      1,123,873Total
                      
                      $
                      13,963,130
                      
                      
                      $
                      7,393,572





(1)
            Revenue
      categorized as "Other" is derived from tuition income from our beauty
      school and sales of beauty products to
  students.




The
Queen Group




Each
of the Queen Group entities was established as an independent business in
1992.  The Queen Group entities became part of Mege Union in
2007 .  The Queen Group's revenue accounted for 86% and 100%
of our total revenue for fiscal years 2008 and 2007 ,
respectively. The Queen Group consists of independently owned variable interest
entities through which we operate successful salons and fitness
centers.   Our Chairman, Mr. Liu, is the sole owner of each of the
Queen Group entities .  The companies comprising the Queen Group
are:




·           Harbin
Huang Emperor & Golden Gym Club Co., Ltd.;




·           Harbin
Daoli Queen Demonstration Beauty Parlor;




·           Harbin
Queen Beauty Demonstration Center (and the Nangang and Kunlun branches of the
Center); and




·           Harbin
Queen Beauty Vocational Skill Training School.




Our
affiliation with the Queen Group is managed through several exclusive agreements
between the Company and each Queen Group’s entity.  These agreements
are:




·           a
Consulting Services Agreement between Mege Union and the Queen Group entity that
provides for Mege Union to exclusively provide essential services relating to
technology, human resources and research and development to the Queen Group
entity in exchange for a Consulting Services Fee.   Mr. Liu, the
sole proprietor of each of the Queen Group entities, has not charged the
company, nor has the company paid Mr. Liu, any fees under the Consulting
Services Agreement;




·           an
Operating Agreement between Mege Union and the Queen Group entity that prohibits
the Queen Group entity from taking certain material actions or entering into
material agreements, including assuming debt, selling or purchasing any assets
or rights, using the entity's assets or rights as collateral, or assigning some
or all of the business to a third party, without the prior written consent of
Mege Union;




·           an
Option Agreement among Mege Union, the Queen Group entity and the shareholders
of such entity that grants Mege Union the right to acquire all of the
shareholders' interest in the Queen Group entity when, if and to the extent
permitted by the laws of the People's Republic of China and prohibits the
shareholders from otherwise disposing of their interest in the Queen Group
entity except with the prior written consent of Mege Union;




·           an
Equity Pledge Agreement among Mege Union, the Queen Group entity and the
shareholders of such entity that grants Mege Union a pledged interest in all of
the issued and outstanding interest of the shareholders in the their shares,
including the right of Mege Union to vote such shares, as security for the
performance of the Queen Group entity's obligations under the Consulting
Services Agreement and further ; and




·           a
Proxy Agreement between Mege Union and the shareholders of the Queen Group
entity that grants the board of directors of Mege Union an irrevocable proxy for
the maximum period permitted by law, to vote the shareholders shares of the
Queen Group entity in such manner and for or against such proposals as the board
may determine.




Although
each of the Queen Group entities has its own set of agreements with us, the
terms and conditions of the agreements are identical for each
entity .  As a result of the understandings and agreements provided
in the foregoing documents, we effectively control each of the Queen Group
entities. Except as set forth in these agreements, Mr. Liu is not entitled to
any other compensation in connection with his ownership of the Queen Group
entities.







6





Key
Characteristics




Combined
with 15 years of knowledge and experience with beauty salon operations, advanced
western management, and Chinese consumers’ habit, we have has developed a
localized managing system that supports our leading position in our current
fitness & spa operations as well as our future expansion
potential.




Our
internal management systems address the following areas:




·           Working
environment;


·            Equipment;


·           Research
& Development;


·           Employee
benefits; and


·           Employee
training (professional courtesy).




Additionally,
we have dedicated managers who focus on the following external areas of
management control:




·           Marketing;


·           Financing;


·           Logistic
control; and


·           Public
relations.




We have
instituted a number of incentive plans that are designed to attract and motivate
customers, employees and strategic partners, leading to more solid relationships
and enhanced customer loyalty.




We have
set our focus on serving wealthy individuals with premium consumption powers
(mid- to upper-tier consumer group). We have also set our consumer focus on
corporate clients who are willing to compensate their employees with memberships
in our facilities as extra benefits.  However, currently we are not
reliant on corporate clients.  As of May 31, 2008, corporate clients
contributed approximately 2.7% to our total revenue.




Marketing
Strategy




We
strategically target the following individual customer groups to differentiate
ourselves from our competitors:




·           Management
level group from various enterprises (this group has the highest demands on
their lifestyle and tastes as well as the awareness of their appearances and
health conditions);




·           White-collar
group from various enterprises (this group tends to be the most active group of
population in pursuit of the newest trends in fashion and sport activities. They
also have high quality lifestyles and are considered one of the strongest
consumption power groups);




·           Government
group (this group tends to contain the more senior portion of the population
which has comparatively higher demands on their conditions); and




·           Foreigner
group (this group is the mature-stage-consumer group who usually have higher
incentives and initiatives to become the member of beauty salon and spa and
fitness center).




We not
only engage in traditional marketing tools to advertise in the marketplace, but
also develop mutually beneficial platforms through our institutional customers
to further enhance our marketing strategy:




·           Direct Telemarketing:by having access to the
contact information of wealthy individuals and households, we believe direct
telemarketing is one of most effective marketing to reach its desired target
customers. Our partner for information sharing in this sector is China Mobile
Ltd.;




·           Event Sponsorship:by engaging the major
event sponsorships with other reputable institutes, we have further increased
our market awareness and exposure within the wealthy individual and household
communities. Our partner for information sharing in this sector is Hiersun
Diamond Group;




·           Joint Sales:we jointly sell our
memberships with third party institutes to efficiently utilize the marketing
effects of other brands and eventually to achieve mutual benefits by all
parties. Some of our partners for information sharing in this sector include
China Everbright Bank, Shanghai Pudong Development Bank, China Southern Airline,
Songlei Commercial Group; and




·           Traditional Media:we also use traditional
media channels such as television, magazine, radio and newspaper advertising to
reach our target audience.





7







With
respect to the information sharing partnerships referenced above, our partners
provide us with VIP customer lists for target marketing. In return, we provide
discount group membership for our partners as part of their employee benefit
plans. In addition, we engage in promotional events with shopping malls, and
provide some shops with salon and spa discounts for customers.





Competition




China’s
health and fitness market is highly segmented and isstill at its infant
stage. No market leader has emerged in China unlike most of the mature markets
in the West or other industrially-advanced countries. Currently, no single
company in China counts for more than 3% of total nationwide
market share. Management believes that due to the change in consumer taste –
health and fitness is no longer a “hobby,” and that consumer focus on the health
and fitness market has shifted to quality and professionalism of service instead
of pricing, as was the case in the past.




Trademarks




We
currently hold registered trademarks for the following names and
symbols:












Government
Regulation




Physical
Exercise:




According
to “PRC Law on Physical
Culture and Sport,” the administrative department for physical culture
and sports under the State Council shall be in charge of the operation of
physical culture and sports throughout China. Other relevant departments under
Chinese State Council shall administer the operation of physical culture and
sports within their respective functions and powers.




China
practices a skill-grading system for social sports instructors, who guide social
sports activities.  The social sports instructors are classified into
four classes: Class III, Class II, Class I and State Level. Each class of
instructor must be trained accordingly. State Level instructors (the highest
class) must have a minimum of five years relevant experience.




According
to “Heilongjiang Provincial
Administration Regulation in respect of Physical Exercise Related
Business,” the physical exercise related business shall be qualified with
following conditions: (a) proper facilities and buildings in satisfactory with
the necessary requirement of business operation, security, fire protection,
environmental protection and hygiene; (b) necessary registered capital; (c) the
exercising facilities and instruments in compliance with the national standard
stipulated by competent institution; and (d) the trained social sports
instructors or other staffs with proper qualification for physical exercising
guidance.




Beauty
Industry




According
to “Interim Measures for the
Administration of Beauty Treatment and Hairdressing Industry” (the
“Beauty Order”) issued by Ministry of Commerce, the Ministry of Commerce shall
be in charge of the work of national beauty treatment and hairdressing
industry.




Pursuant
to the Beauty Order, business operators undertaking beauty treatment and
hairdressing operations shall meet the following basic conditions: (1) capacity
for bearing civil liabilities; (2) have a fixed place of business; (3) have
established facilities tailored to the services they provide; and (4)
professional technicians who have obtained the corresponding qualification
certificates.





The
beauticians, hairdressers and other professional technicians who undertake
beauty treatment and hairdressing services shall obtain the qualification
certificate issued by the relevant governmental department of
China.  The business operator





8





of beauty
treatment and hairdressing shall display its business license, hygienic license,
service items and charging standards in its business premises for public
viewing.




The
business premises for beauty treatment and hairdressing shall comply with the
relevant sanitation provisions and standards and have the corresponding sanitary
and sterilizing facilities and measures. The practitioner shall be subject to
the physical check-up of the administrative department of public health and can
take up an occupation with health certificate.




Our
management believes that we are compliant with all relevant applicable
government regulations, and that such regulations do not materially impact our
operations.




Employees




As of May
31, 2008, we had 420 full-time employees. Of these employees, 69 employees
are employed by Mege Union and 351 employees are employed by the Queen
Group. Our employees work in the functional units as indicated in the table
below.





Department
                
                Total
      NumberManagement
                
                41All
      administration
                
                63Sales
                
                98Beauty,
      Fitness and Spa Professionals
                
                218Total
      Employees
                
                420




We have
not experienced any work stoppages and we consider relations with our employees
to be good.










9





Item
1A.  Risk Factors.




You
should carefully consider the risks described below before making an investment
decision. The risks described below are not the only ones facing our company and
some risks and uncertainties are inherent in our business. Additional risks not
presently known to us or that we currently believe are immaterial may also
impair our business operations. Our business could be harmed by any of these
risks. The following sets forth factors related to our business, operations,
financial position or future financial performance or cash flows which could
cause an investment in our securities to decline and result in a loss. In
assessing these risks, you should also refer to the other information contained
in this Annual Report on Form 10-K, including our consolidated financial
statements and related notes.




Risks
Related to Our Business and Industry




We
face competition from other health and fitness facilities and
service-providers.




We face
formidable competition in every aspect of our business, and particularly from
other health and fitness providers seeking to attain clientele. Currently, we
consider our primary competitors to be Hosa Sports, Weider-Tera, Impulse, and
Powerhouse.  They can use their experience and resources against us in
a variety of competitive ways, including by making acquisitions, investing more
aggressively in development and competing more aggressively for marketing and
advertisers. They may also have a greater ability to attract and retain
clientele than we do. If our competitors are successful in providing similar or
better facilities, services and products, we could experience a significant
decline in clientele or members. Any such decline could negatively affect our
revenues.




Our
operating results may fluctuate, which makes our results difficult to predict
and could cause our results to fall short of expectations.




Our
operating results may fluctuate as a result of a number of factors, many outside
of our control. As a result, comparing our operating results on a
period-to-period basis may not be meaningful, and you should not rely on our
past results as an indication of our future performance. Our quarterly,
year-to-date and annual expenses as a percentage of our revenues may differ
significantly from our historical or projected rates. Our operating results in
future quarters may fall below expectations. Any of these events could cause our
stock price to fall. Each of the risk factors listed in Risk Factors, and the
following factors may affect our operating results:




·
            Our
      ability to continue to attract clientele to our health, fitness and spa
      facilities;





·
            Our
      ability to generate revenue from our members and clientele for the
      products and services we offer;





·
            Our
      ability to attract advertisers to our
programs;





·
            The
      amount and timing of operating costs and capital expenditures related to
      the maintenance and expansion of our businesses, operations and
      infrastructure;





·
            Our
      focus on long-term goals over short-term
  results;





·
            Our
      ability to keep our facilities operational at a reasonable cost;
      and








·
            Our
      ability to generate revenue from services in which we have invested
      considerable time and resources.




Because
our business is changing and evolving, our historical operating results may not
be useful to you in predicting our future operating results.




If
we do not continue to innovate and provide products and services that are useful
to users, we may not remain competitive, and our revenues and operating results
could suffer.




Our
success depends on providing products and services that make our members and
clientele in the health and fitness community enjoy a more satisfying and
enjoyable experience. Our competitors are constantly developing new facilities,
products and services. As a result, we must continue to invest in research and
development in order to enhance our facilities and our existing products and
services and introduce new products and services that people can enjoy and use.
We spent approximately $70,000 and $100,000, on research and development in
fiscal years 2007 and 2008, respectively.  If we are unable to provide
quality products and services, then our clients and members may become
dissatisfied and move to a competitor’s products and services. Our operating
results would also suffer if our innovations are not responsive to the needs of
our clients and members.







10





Our
business and operations are experiencing growth . If we fail to
effectively manage our growth, by managing our employees and operations and
developing our clientele, our business and operating results could be
harmed.




We have
experienced, and continue to experience, growth in our operations. This
has placed, and will continue to place, demands on our management, as
well as on our operational and financial infrastructure. If we do not
effectively manage our growth, the quality of our products and services could
suffer, which could negatively affect our brand and operating results. To
effectively manage this growth, we need to continue to improve our operational,
financial and management controls and our reporting systems and procedures.
These systems enhancements and improvements will require significant capital
expenditures and management resources. Failure to implement these improvements
could hurt our ability to manage our growth and our financial
position.




We
rely on highly skilled personnel and, if we are unable to retain or motivate key
personnel or hire qualified personnel, we may not be able to grow
effectively.




Our
performance largely depends on the talents and efforts of highly skilled
individuals, including trainers and managers. Our future success depends on our
continuing ability to identify, hire, develop, motivate and retain highly
skilled personnel for all areas of our organization. Our continued ability to
compete effectively depends on our ability to attract new personal fitness
trainers, skilled members of the health and fitness community, and to retain and
motivate our existing contractors.




We
may need additional capital to execute our business plan and fund operations and
may not be able to obtain such capital on acceptable terms or at
all.




Capital
requirements are difficult to plan in our rapidly changing
industry.  Although we currently expect to have sufficient funding for
the next 12 months, we expect that we will need additional capital to fund our
future growth.




Our
ability to obtain additional capital on acceptable terms or at all is subject to
a variety of uncertainties, including:




·           Investors'
perceptions of, and demand for, companies in our industry;




·           Investors'
perceptions of, and demand for, companies operating in China;




·           Conditions
of the U.S. and other capital markets in which we may seek to raise
funds;




·           Our
future results of operations, financial condition and cash flows;




·           Governmental
regulation of foreign investment in companies in particular
countries;




·           Economic,
political and other conditions in the United States, China, and other countries;
and




·           Governmental
policies relating to foreign currency borrowings.




We may be
required to pursue sources of additional capital through various means,
including joint venture projects and debt or equity financings. There is no
assurance that we will be successful in locating a suitable financing
transaction in a timely fashion or at all. In addition, there is no assurance
that we will be successful in obtaining the capital we require by any other
means. Future financings through equity investments are likely to be dilutive to
our existing stockholders. Also, the terms of securities we may issue in future
capital transactions may be more favorable for our new investors. Newly issued
securities may include preferences, superior voting rights, the issuance of
warrants or other derivative securities, and the issuances of incentive awards
under equity employee incentive plans, which may have additional dilutive
effects. Further, we may incur substantial costs in pursuing future capital
and/or financing, including investment banking fees, legal fees, accounting
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes and warrants, which will adversely impact
our financial condition.




If we
cannot raise additional funds on favorable terms or at all, we may not be able
to carry out all or parts of our strategy to maintain our growth and
competitiveness or to fund our operations.  If the amount of capital
we are able to raise from financing activities, together with our revenues from
operations, is not sufficient to satisfy our capital needs, even to the extent
that we reduce our operations accordingly, we may be required to cease
operations.




We
will incur significant costs as a result of operating as a public company, our
management will be required to devote substantial time to new compliance
initiatives.




While we
are a public company, our compliance costs to date have not been substantial in
light of our limited operations.  SOKO has never operated as a public
company.  As a public company with substantial operations, we will
incur increased legal, accounting and other expenses.  The costs of
preparing and filing annual and quarterly reports, proxy statements and other
information with the SEC and furnishing audited reports to stockholders is
time-consuming and costly.





11







It will
also be time-consuming, difficult and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley Act of
2002 (the "Sarbanes-Oxley Act").  Certain members of our management
have limited or no experience operating a company whose securities are traded or
listed on an exchange, nor with SEC rules and requirements, including SEC
reporting practices and requirements that are applicable to a publicly traded
company.  We will need to recruit, hire, train and retain additional
financial reporting, internal controls and other personnel in order to develop
and implement appropriate internal controls and reporting
procedures.  If we are unable to comply with the internal controls
requirements of the Sarbanes-Oxley Act, we may not be able to obtain the
independent accountant certifications required by the Sarbanes-Oxley
Act.




If
we fail to establish and maintain an effective system of internal control, we
may not be able to report our financial results accurately or to prevent
fraud.  Any inability to report and file our financial results
accurately and timely could harm our business and adversely impact the trading
price of our common stock.




We are
required to establish and maintain internal controls over financial reporting,
disclosure controls, and to comply with other requirements of the Sarbanes-Oxley
Act and the rules promulgated by the SEC thereunder.  Our management,
including our Chief Executive Officer and Chief Financial Officer, cannot
guarantee that our internal controls and disclosure controls will prevent all
possible errors or all fraud.  A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.  In addition, the
design of a control system must reflect the fact that there are resource
constraints and the benefit of controls must be relative to their
costs.  Because of the inherent limitations in all control systems, no
system of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within SOKO have been detected.  These
inherent limitations include the realities that judgments in decision-making can
be faulty and that breakdowns can occur because of simple error or
mistake.  Further, controls can be circumvented by individual acts of
some persons, by collusion of two or more persons, or by management override of
the controls.  The design of any system of controls also is based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions.  Over time, a control may
become inadequate because of changes in conditions or the degree of compliance
with policies or procedures may deteriorate.  Because of inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and may not be detected.




New
rules, including those contained in and issued under the Sarbanes-Oxley Act, may
make it difficult for us to retain or attract qualified officers and directors,
which could adversely affect the management of our business and our ability to
obtain or retain listing of our common stock.




We may be
unable to attract and retain those qualified officers, directors and members of
board of directors committees required to provide for our effective management
because of the rules and regulations that govern publicly held companies,
including, but not limited to, certifications by principal executive
officers.  The perceived personal risk associated with the
Sarbanes-Oxley Act may deter qualified individuals from accepting roles as
directors and executive officers.




Further,
some of these recent changes heighten the requirements for board or committee
membership, particularly with respect to an individual's independence and level
of experience in finance and accounting matters.  We may have
difficulty attracting and retaining directors with the requisite
qualifications.  If we are unable to attract and retain qualified
officers and directors, the management of our business and our ability to obtain
or retain the listing of our common stock on any stock exchange (assuming we are
successful in obtaining such listing) could be adversely affected.




We
are a holding company that depends on cash flow from Mege Union and Queen Group
to meet our obligations.




After the
consummation of the share exchange, we became a holding company with no material
assets other than the stock of Mege Union and Queen
Group.  Accordingly, all our operations are conducted by Mege
Union and Queen Group.  We currently expect that the earnings and cash
flow of our subsidiary will primarily be retained and used by us in its
operations.




Risks
Related to Conducting Our Business in the PRC




We
are subject to international economic and political risks over which we have
little or no control and may be unable to alter our business practice in time to
avoid the possibility of reduced revenues.




Our
business is conducted in the PRC. Doing business outside the United States,
particularly in the PRC, subjects us to various risks including changing
economic and political conditions, major work stoppages, exchange controls,
currency fluctuations, armed conflicts and unexpected changes in United States
and foreign laws relating to tariffs, trade restrictions, transportation
regulations, foreign investments and taxation. We have no control over most of
these risks and may be unable to anticipate changes in international economic
and political conditions. Therefore, we may be unable to alter our business
practice in time to avoid the possibility of reduced revenues.







12





The
PRC’s economic policies could affect our business.




Generally,
all of our assets are located in the PRC and our revenue is derived from our
operations in the PRC. Accordingly, our results of operations and prospects are
subject, to a significant extent, on the economic, political and legal
developments in the PRC.




While the
PRC’s economy has experienced significant growth in the past twenty years, such
growth has been uneven, both geographically and among various sectors of the
economy. The PRC's government has implemented various measures to encourage
economic growth and guide the allocation of resources. Some of these measures
benefit the overall economy of the PRC, but they may also have a negative effect
on us. For example, operating results and financial condition may be adversely
affected by the government control over capital investments or changes in tax
regulations. The economy of the PRC has been changing from a planned economy to
a more market-oriented economy. In recent years the PRC government has
implemented measures emphasizing the utilization of market forces for economic
reform and the reduction of state ownership of productive assets, and the
establishment of corporate governance in business enterprises; however, a
substantial portion of productive assets in the PRC are still owned by our
government. In addition, the PRC government continues to play a significant role
in regulating industry development by imposing industrial policies. It also
exercises significant control over the PRC’s economic growth through the
allocation of resources, the control of payment of foreign currency-denominated
obligations, the setting of monetary policy and the provision of preferential
treatment to particular industries or companies.




We
may have difficulty establishing adequate management, legal and financial
controls in the PRC.




The PRC
historically has not adopted a Western style of management and financial
reporting concepts and practices, as well as in modern banking, computer and
other control systems. We may have difficulty in hiring and retaining a
sufficient number of qualified employees to work in the PRC. As a result of
these factors, we may experience difficulty in establishing management, legal
and financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business
practices that meet Western standards.




Our
bank accounts are not insured or protected against loss.




We
maintain our cash with various banks and trust companies located in the PRC. Our
cash accounts are not insured or otherwise protected. Should any bank or trust
company holding our cash deposits become insolvent, or if we are otherwise
unable to withdraw funds, we would lose the cash on deposit with that particular
bank or trust company.




As
we have limited business insurance coverage in the PRC, any loss which we suffer
may not be insured or may be insured to only a limited extent.




The
insurance industry in the PRC is still in an early state of development and
insurance companies located in the PRC offer limited business insurance
products. In the event of damage or loss to our properties, our insurance may
not provide as much coverage as if we were insured by insurance companies in the
United States.





We
may face judicial corruption in the PRC.




Another
obstacle to foreign investment in the PRC is corruption. There is no assurance
that we will be able to obtain recourse in any legal disputes with suppliers,
customers or other parties with whom we conduct business, if desired, through
the PRC’s poorly developed and sometimes corrupt judicial systems.




If
relations between the United States and the PRC worsen, investors may be
unwilling to hold or buy our stock and our stock price may
decrease.




At
various times during recent years, the United States and the PRC have had
significant disagreements over political and economic issues. Controversies may
arise in the future between these two countries. Any political or trade
controversies between the United States and the PRC, whether or not directly
related to our business, could reduce the price of our common
stock.




The
government of the PRC could change our policies toward private enterprise or
even nationalize or expropriate private enterprises, which could result in the
total loss of our and your investment.




Our
business is subject to significant political and economic uncertainties and may
be affected by political, economic and social developments in the PRC. Over the
past several years, the government of the PRC has pursued economic reform
policies including the encouragement of private economic activity and greater
economic decentralization. The government of the PRC may not continue to pursue
these policies or may significantly alter them to our detriment from time to
time with little, if any, prior notice.







13





Changes
in policies, laws and regulations or in their interpretation or the imposition
of confiscatory taxation, restrictions on currency conversion, restrictions or
prohibitions on dividend payments to stockholders, or devaluations of currency
could cause a decline in the price of our common stock, should a market for our
common stock ever develop. Nationalization or expropriation could even result in
the total loss of your investment.




The
nature and application of many laws of the PRC create an uncertain environment
for business operations and they could have a negative effect on
us.




The legal
system in the PRC is a civil law system. Unlike the common law system, the civil
law system is based on written statutes and decided legal cases have little
value as precedents. In 1979, the PRC began to promulgate a comprehensive system
of laws and has since introduced many laws and regulations to provide general
guidance on economic and business practices in the PRC and to regulate foreign
investment. Progress has been made in the promulgation of laws and regulations
dealing with economic matters such as corporate organization and governance,
foreign investment, commerce, taxation and trade. The promulgation of new laws,
changes of existing laws and the abrogation of local regulations by national
laws could cause a decline in the price of our common stock. Since these laws,
regulations and legal requirements are relatively recent, their interpretation
and enforcement involve significant uncertainty.




We
face risks associated with currency exchange rate fluctuations.




Although
we use the United States dollar for financial reporting purposes, all of
the transactions effected by our operating subsidiaries are denominated in the
PRC’s Renminbi ("RMB"). The value of the RMB fluctuates and is subject to
changes in the PRC’s political and economic conditions. We do not currently
engage in hedging activities to protect against foreign currency risks. Even if
we chose to engage in such hedging activates, we may not be able to do so
effectively. Future movements in the exchange rate of the RMB could adversely
affect our financial condition as we may suffer financial losses when
transferring money raised outside of the PRC into the country or paying vendors
for services performed outside of the PRC.




It
will be extremely difficult to acquire jurisdiction and enforce liabilities
against our officers, directors and assets based in the PRC.




As our
executive officers and several of our directors, including the chairman of our
Board of Directors, are Chinese citizens, it may be difficult, if not
impossible, to acquire jurisdiction over these persons in the event a lawsuit is
initiated against us and/or our officers and directors by a stockholder or group
of stockholders in the United States. Also, because our operating subsidiaries
and assets are located in the PRC, it may be extremely difficult or impossible
for you to access those assets to enforce judgments rendered against us or our
directors or executive offices by United States courts. In addition, the courts
in the PRC may not permit the enforcement of judgments arising out of United
States federal and state corporate, securities or similar laws. Accordingly,
United States investors may not be able to enforce judgments against us for
violation of United States securities laws.




We
may face obstacles from the communist system in the PRC.




Foreign
companies conducting operations in the PRC face significant political, economic
and legal risks. The Communist regime in the PRC, including a cumbersome
bureaucracy, may hinder Western investment.




Capital
outflow policies in the PRC may hamper our ability to declare and pay dividends
to our shareholders.




The PRC
has adopted currency and capital transfer regulations. These regulations may
require us to comply with complex regulations for the movement of capital.
Although our management believes that we will be in compliance with these
regulations, we may not be able to pay dividends to our shareholders outside of
the PRC if these regulations or the interpretations of them by courts or
regulatory agencies change. In addition, under current PRC law, we must retain a
reserve equal to 10 percent of net income after taxes, not to exceed 50 percent
of registered capital. Accordingly, this reserve will not be available to be
distributed as dividends to our shareholders. We presently do not intend to pay
dividends in the foreseeable future. Our management intends to follow a policy
of retaining all of our earnings to finance the development and execution of our
strategy and the expansion of our business.




Risks
Related to Ownership of our Common Stock




Our
common stock price is subject to significant volatility, which could result in
substantial losses for investors.




Prices
for our shares are determined in the marketplace and may accordingly be
influenced by many factors, including, but not limited to:




·           the
depth and liquidity of the market for the shares;




·           quarter-to-quarter
variations in our operating results;





14












·           announcements
about our performance as well as the announcements of our competitors about the
performance of their businesses;




·           investors’
evaluations of our future prospects and the food industry
generally;




·           changes
in earnings estimates by, or failure to meet the expectations of, securities
analysts;




·           our
dividend policy; and




·           general
economic and market conditions.




In
addition, the stock market often experiences significant price fluctuations that
are unrelated to the operating performance of the specific companies whose stock
is traded. These market fluctuations could adversely affect the trading price of
our shares.




The price
at which investors purchase shares of our common stock may not be indicative of
the price that will prevail in the trading market. Investors may be unable to
sell their shares of common stock at or above their purchase price, which may
result in substantial losses.




Shares
of our common stock lack a significant trading market.




Shares of
our common stock are not eligible as yet for trading on any national securities
exchange. Our common stock is eligible for quotation in the over-the-counter
market on the Over-The-Counter Bulletin Board ("OTCBB") pursuant to Rule 15c2-11
of the Exchange Act. This market tends to be highly illiquid. There can be no
assurance that an active trading market in our common stock will develop, or if
such a market develops, that it will be sustained. In addition, there is a
greater chance for market volatility for securities that trade on the OTCBB as
opposed to securities that trade on a national exchange or quotation system.
This volatility may be caused by a variety of factors, including the lack of
readily available quotations, the absence of consistent administrative
supervision of “bid” and “ask” quotations, and generally lower trading
volume.




Future
sales of shares of our common stock by our stockholders could cause our stock
price to decline.




We cannot
predict the effect, if any, that market sales of shares of our common stock or
the availability of shares of common stock for sale will have on the market
price prevailing from time to time. Sales of shares of our common stock in the
public market covered under an effective registration statement, or the
perception that those sales may occur, could cause the trading price of our
common stock to decrease or to be lower than it might be in the absence of those
sales or perceptions.




We
may issue additional shares of our capital stock or debt securities to raise
capital or complete acquisitions, which would reduce the equity interest of our
stockholders.




Our
certificate of incorporation authorizes the issuance of up to 500,000,000 shares
of common stock, par value $.001 per share, and 10,000,000 shares of preferred
stock with $.001 par value. There are currently 17,000,000 shares of our
common stock and no shares of our preferred stock outstanding,  An
additional 2,160,000 shares of common stock are reserved for issuance upon the
exercise of outstanding warrants and 50,000 shares of common stock are reserved
for issuance upon the exercise of outstanding stock
options .   As a result, there are approximately 480,790,000
authorized and unissued shares of our common stock and 10,000,000 shares of our
preferred stock which have not been reserved and are available for future
issuance. Although we have no commitments as of the date of this offering to
issue our securities, we may issue a substantial number of additional shares of
our securities to complete a business combination or to raise capital. The
issuance of additional shares of our securities:




·           may
significantly reduce the equity interest of investors in this offering;
and




·           may
adversely affect prevailing market prices for our common stock.




The
application of the “penny stock” rules could adversely affect the market price
of our common stock and increase your transaction costs to sell those
shares.




Holders
of shares of our common stock may have difficulty selling those shares because
our common stock will probably be subject to the penny stock rules. Shares of
our common stock are subject to rules adopted by the SEC that regulate
broker-dealer practices in connection with transaction in “penny stocks.” Penny
stocks are generally equity securities with a price of less than $5.00 which are
not registered on a national securities exchange, provided that current price
and volume information with respect to transaction in those securities is
provided by the exchange or system. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
those rules, to deliver a standardized risk disclosure document prepared by the
SEC, which contains the following:







15










·
              a
      description of the nature and level of risk in the market for penny stocks
      in both public offerings and secondary trading;·
              a
      description of the broker’s or dealer’s duties to the customer and of the
      rights and remedies available to the customer with respect to violation to
      such duties or other requirements of securities
  laws;





·
            a
      brief, clear, narrative description of a dealer market, including “bid”
      and “ask” prices for penny stocks and the significance of the spread
      between the “bid” and “ask” price;





·
            a
      toll-free telephone number for inquiries on disciplinary
      actions;





·
            definitions
      of significant terms in the disclosure document or in the conduct of
      trading in penny stocks; and





·
            such
      other information and is in such form (including language, type, size and
      format), as the SEC shall require by rule or
  regulation.





Prior
      to effecting any transaction in penny stock, the broker-dealer also must
      provide the customer with the
following:





·
            the
      bid and offer quotations for the penny
stock;





·
            the
      compensation of the broker-dealer and our salesperson in the
      transaction;





·
            the
      number of shares to which such bid and ask prices apply, or other
      comparable information relating to the depth and liquidity of the market
      for such stock; and





·
            monthly
      account statements showing the market value of each penny stock held in
      the customer’s account.




In
addition, the penny stock rules require that, prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser.  The broker-dealer must receive the purchaser’s written
acknowledgment of the receipt of a risk disclosure statement, a written
agreement to transactions involving penny stocks, and a signed and dated copy of
a written suitability statement. These disclosure requirements may have the
effect of reducing the trading activity in the secondary market for a stock that
becomes subject to the penny stock rules.




Our
management and directors own a significant amount of our common stock, giving
them influence or control in corporate transactions and other matters, and their
interests could differ from those of other stockholders.




Our
management and directors own a large percentage of our outstanding common stock.
As a result, they are in a position to significantly influence the outcome of
matters requiring a stockholder vote, including the election of directors, the
adoption of any amendment to our articles of incorporation or bylaws, and the
approval of significant corporate transactions. Their control may delay or
prevent a change of control on terms favorable to our other stockholders and may
adversely affect your voting and other stockholders rights.




We
have not paid dividends in the past and do not expect to pay dividends in the
future.  Any return on investment may be limited to the value of our
common stock.




We have
never paid cash dividends on our common stock and do not anticipate doing so in
the foreseeable future.  The payment of dividends on our common stock
will depend on earnings, financial condition and other business and economic
factors affecting it at such time as the board of directors may consider
relevant.  If we do not pay dividends, our common stock may be less
valuable because a return on your investment will only occur if our stock price
appreciates.




Item
2.    Properties.




SOKO
and Mege Union have their corporate offices at 194 Guogeli Street, Heilongjing
Province, Harbin, China 150001.  This property is leased by
SOKO.  We currently operate through standard tenancy agreements out of
leased properties located at:




(1)
            Harbin
      Daoli Queen Demonstration Beauty Parlor (Daoli
  Spa)


24 Xishidao Street, Daoli
      District, Harbin, China;





(2)
            Harbin
      Queen Beauty Demonstration Center (Daowai
    Spa)


107 Jinyang Street, Daowai District,
      Harbin, China;








16





(3)
            Harbin
      Queen Beauty Demonstration Center Kunlun Branch (Kunlun
      Spa)


44 Tianshun Street,
      Nangang District, Harbin, China;





(4)
            Harbin
      Queen Beauty Demonstration Center Branch (Nangang
      Spa)


108 Jiejing Street, Nangang
      District, Harbin, China;





(5)
            Harbin
      Huang Emperor & Golden Gym Club
      (SOKO Fitness Center)


7 Yushan Road, Nangang District,
      Harbin, China; and





(6)
            Harbin
      Mege Union Beauty Management Ltd. (Legend
Spa)


389 Hanshui Road, Nangang
      District, Harbin, China; and





(7)
            Shenyang
      Letian Yoga Fitness Center (Yoga Wave
  Spa)


96
      Zhonghua Road, Heping District, Shenyang,
China.




We also
indirectly own property that is currently used by the Harbin Queen Beauty
Vocational Skill Training School, located at Guogeli Street, Nangang District,
Harbin, China. The classrooms that make up this property were previously leased
from an unaffiliated third party.  They were acquired in December 28,
2007 by Harbin Queen Beauty Demonstration Center, which permits the Queen Beauty
Vocational Skill Training School use the facility without fee.




We are
currently constructing a new facility located at 380 -400 Xuanhua St.,
South Nangang District, Harbin, China. We anticipate that this facility will
operate a new beauty salon and will be owned by Harbin Queen Beauty
Demonstration Center.




Item
3.  Legal Proceedings.




From
time to time, we may become involved in various lawsuits and legal proceedings,
which arise in the ordinary course of business. However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm business. We are currently not aware of
any such legal proceedings or claims that will have, individually or in the
aggregate, a material adverse affect on our business, financial condition or
operating results.  Should any liabilities incurred in the future,
they will be accrued based on management’s best estimate of the potential loss.
Furthermore, management does not believe that there are any proceedings to which
any director, officer, or affiliate of the company, any owner of record of the
beneficially or more than five percent of the common stock of the company, or
any associate of any such director, officer, affiliate of the company, or
security holder is a party adverse to the company or has a material interest
adverse to the company.




Item
4.  Submission of Matters to a Vote of Security Holders.




There
were no matters submitted to the vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year ended May 31, 2008.









17





PART
II




Item
5.  Market for Common Equity, Related Stockholder Matters and Issuer
Repurchases of Equity Securities.




Market
Information




Our
common stock trades on the OTCBB under the symbol “SOKF.” From March 13, 2007
until July 16, 2008, our common stock traded on the OTCBB under the symbol
"AMHG ." The following table sets forth the high and low intra-day prices per
share of our common stock for the periods indicated, which information was
provided by the OTCBB. Prior to May 28, 2008, shares of our common stock traded
very infrequently and the actual price information is not readily available. The
quotations set forth below reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions.




Year
      Ended May 31, 2008High
                  
                  
                  Low4th
      Quarter Fiscal 2008 (May 28, 2008 - May 31, 2008)
                  
                  $
                  12.00
                  
                  
                  $
                  1.25First
      Quarter Fiscal 2009 (June 1, 2008 - August 27,
    2008)
                  
                  $
                  2.25
                  
                  
                  $
                  0.50




On August
27, 2008, the closing price of our common stock as reported on the OTCBB was
$0.57.




As of
August 27, 2008, there were 17,000,000 shares of our common stock
outstanding held by approximately 23 shareholders of record.  The
number of our shareholders of record excludes any estimate by us of the number
of beneficial owners of shares held in street name, the accuracy of which cannot
be guaranteed.




Dividend
Policy




We
have not paid any cash dividends on our common stock to date, and we have no
intention of paying cash dividends in the foreseeable future. Whether we will
declare and pay dividends in the future will be determined by our board of
directors at their discretion, subject to certain limitations imposed under
Delaware corporate law. In addition, our ability to pay dividends may be
affected by the foreign exchange controls in the PRC. The timing, amount and
form of dividends, if any, will depend on, among other things, our results of
operations, financial condition, cash requirements and other factors deemed
relevant by our board of directors.




Securities
Authorized for Issuance under Equity Compensation Plans




Information
regarding securities authorized for issuance under our equity compensation plans
is disclosed in the section captioned, “Item 11. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters.”




Repurchases
of Equity Securities




None




Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities




In
connection with the consummation of the transactions contemplated by the share
exchange agreement, which is described in detail Item 1. Business "Corporate
History" beginning on page 1, on April 11, 2008:





·
            The
      company reacquired 79,000,000 shares from its original
      shareholders;





·
            Mr.
      Liu acquired 2,575,000 shares from two of the original shareholders of the
      company;





·
            The
      company issued an aggregate of 10,725,000 shares to Wealthlink
      Shareholders (together with the shares held by Mr. Liu, following the
      consummation of the reverse merger, Wealthlink Shareholders hold an
      aggregate of 13,300,000 shares of our common stock);
    and





·
            Advisors
      to the company acquired an aggregate of 1,275,000
    shares;





An
additional 425,000 shares remain held by certain original shareholders of the
company and 65,000,000 shares were cancelled.





18





Additionally,
in connection with the consummation of the Financing, which is described in
detail in Item 1. Business "Corporate History" beginning on page 1, on April 11,
2008, the Company issued an additional 2,000,000 shares and warrants to purchase
an additional 2,000,000 shares.





In
consideration for acting as placement agent for the Financing, SOKO agreed to
compensate E-Tech Securities Inc. with (i) a retainer of $30,000, (ii) a cash
placement fee equal to seven percent (7%) of the proceeds of the Financing
($140,000) and (iii) warrants to purchase an amount of securities equal to eight
percent (8%) of the total shares issued to the Purchasers (160,000
shares).  The warrant issued to E-Tech Securities Inc. has an exercise
price of $1.25 and is exercisable at any time through the third anniversary of
the Closing Date.





All
securities were issued pursuant to an exemption from the registration
requirements of the Securities Act, under Section 4(2) thereunder, as they were
issued in reliance on the recipients’ representation that they were accredited
(as such term is defined in Regulation D), without general solicitation and
represented by certificates that were imprinted with a restrictive
legend.  In addition, all recipients were provided with sufficient
access to company information.




Item
6.  Selected Financial Data.




Not
required.







19





Item
7.  Management’s Discussion and Analysis of Financial Condition and Results
of Operations.




Safe
Harbor Declaration




The
comments made throughout this annual report should be read in conjunction with
our financial statements and the notes thereto, and other financial information
appearing elsewhere in this document. In addition to historical information, the
following discussion and other parts of this document contain certain
forward-looking information. When used in this discussion, the words,
"believes," "anticipates," "expects," and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties, which could cause actual results to differ materially
from projected results, due to a number of factors beyond our control. SOKO does
not undertake to publicly update or revise any of its forward-looking
statements, even if experience or future changes show that the indicated results
or events will not be realized. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. Readers are also urged to carefully review and consider our discussions
regarding the various factors, which affect company business, included in this
section and elsewhere in this annual report.




Overview




We are in
the business of operating distinctive destination centers that offer
professional fitness, beauty salon and spa services in China. Our beauty
salons provide services that include, but are not limited to, skincare, hair
dressing, manicure, pedicure, body care, massage, and weight loss
therapy .  We currently maintain more than 10,000 memberships within six
fitness and spa facilities located in the northeast region of
China.  Our goal is to provide programs, services, and products that
are uniquely combined with exercise, education, and nutrition to assist our
members with achieving fitness and beauty goals that may help them achieve a
richer lifestyle.  We generally open our facilities to members 12
hours a day, 7 days a week.  Currently, our members average 19,800
visits per month at the SOKO Fitness Center and 9,000 visits per month
at our spas.  We are running at maximum capacity at each one of our
facilities.





Our
services and products are tailored to high end customers who appreciate quality,
personal service from trained professionals.  This customer base,
coupled with the growing demand for health and fitness facilities in the PRC has
positively impacted our revenues, irrespective of the recent slowdown in the
PRC's economy.  We do not anticipate that our business will be
materially negatively impacted by the current economic conditions in the
region.  However, in the event that economic conditions continue to
deteriorate, our business may be affected.




The
following chart sets forth our organizational structure and the brand names
under which we operate.  Beauty salon facilities are located in each
of our spa locations.









*
            The
      entities connected to Mege Union by the dotted lines above are
      collectively known as the "Queen Group" and are the variable interest
      entity associated with Mege Union.





20







Results
of Operation




For
the Fiscal Years Ended May 31, 2008 Compared to May 31, 2007




May
      31, 2008
                                  USD
                                
                                
                                May
      31, 2007
                                  USD
                                
                                
                                ChangeNet
      SalesBeauty
      and Spa
                                
                                $
                                11,626,414
                                
                                
                                $
                                5,380,378
                                
                                
                                $
                                6,246,036Fitness
      and Yoga
                                
                                $
                                1,497,040
                                
                                
                                $
                                889,320
                                
                                
                                $
                                607,720Other
                                
                                $
                                839,676
                                
                                
                                $
                                1,123,873
                                
                                
                                $
                                (284,197
                                )Revenue
                                
                                $
                                13,963,130
                                
                                
                                $
                                7,393,572
                                
                                
                                $
                                6,569,558Cost
      of Sales
                                
                                $
                                4,119,490
                                
                                
                                $
                                1,735,376
                                
                                
                                $
                                2,384,114Gross
      Profit
                                
                                $
                                9,843,640
                                
                                
                                $
                                5,658,196
                                
                                
                                $
                                4,185,444Gross
      Profit Margin
                                
                                
                                70%
                                
                                
                                
                                77%
                                
                                
                                
                                (7)%Operating
      Expenses
                                
                                $
                                4,327,700
                                
                                
                                $
                                2,694,681
                                
                                
                                $
                                1,633,019Other
      Income (Expenses)
                                
                                $
                                (57,148
                                )
                                
                                $
                                56,781
                                
                                
                                $
                                (113,929
                                )Income
      Tax Provision
                                
                                $
                                74,381
                                
                                
                                $
                                735
                                
                                
                                $
                                73,646Net
      Income
                                
                                $
                                5,275,930
                                
                                
                                $
                                3,019,560
                                
                                
                                $
                                2,256,370





Revenues:




Revenues
for the year ended May 31, 2008 increased by approximately $6.6 million or
89% to $14.0 million as compared to $7.4 million for the year ended May 31,
2007. Our sales growth was driven by increasing sales from our existing
customers and our continued efforts to add new customers in new and expanding
facilities.





Compared to fiscal year 2007, beauty and spa revenues increased by 116.0%,
driven by the increasing number of memberships and recognized revenues. Fitness
and yoga revenues increased by 68.3%, driven by the increase of pre-paid
memberships resulting in an increase in recognized revenue and the acquisition
of Letian.  Other revenues, which consist of beauty school tuition and
related student costs, decreased by 25.3%, driven by a shift in the offerings of
the beauty school from short- to long-term programs.  Our business is
not seasonal.




Gross
Profit:




We
achieved gross profits of $9. 8 million for the year ended May 31, 2008,
compared to $5.7 million for the previous year, representing a 72% or
approximately $4. 1 million year to year increase. Our overall gross
profit margin as a percentage of revenue was 70 % for the year ended
May 31, 2008, compared to 77% for the previous year. The slight decrease in our
gross profit margin was driven by sales growth in lower margin products and
services.




Operating
Expenses:




Operating
expenses consisted of selling, general and administrative expenses and increased
by approximately $1.6 million to $4.3 million for the year ended May 31, 2008
from $2.7 million for the previous year. This increase in selling, general and
administrative expenses by 59% is mainly attributable to the increase in
amortization of leasehold improvement. rental expenses and other expenses
relating to increasing sales.  The overall increase in our operating
expenses was in proportion to our increase in sales.




Income Tax Provision:




Our provisions for income taxes for the year ended May 31, 2008 and 2007 were
$74,381 and $735, respectively.  The major difference of income tax
between two years derived from taxable income increase in Queen Group. Queen
Group consists of five individually-owned sole proprietorships, which are
generally exempt from paying corporate level income taxes Our fitness centers
have an applicable tax rate of 3% of our total revenue, whereas the applicable
tax rate for our other facilities is 5% of fixed estimated revenue which is
assessed at the beginning of each year for the full year.





Net
Income:




Net income for the year ended May 31, 2008 increased by approximately $2.3
million to $5.3 million as compared to $3.0 million for the previous year. The
year to year net income increase of 77% was mainly attributable to increase in
our gross profit coupled with a low income tax rate.







21





In
general, our membership base turns over at a rate of about 15% per
year.  We believe that this turnover is normal and acceptable within
our target market, although we are strengthening our marketing strategies,
enhancing our facilities to provide a state of the art experience for our
members and increasing the knowledge and skill level of our staff in order to
minimize our member turnover.  We believe that our revenue for the
fiscal year ended May 31, 2009 will continue to increase primarily as a result
of our expansion of products and services, increased emphasis on enrolling new
members and improving member retention, and our strong focus on developing the
SOKO® and Queen's
Beauty®brands in the
northeast region of China.  As we develop higher margin offerings
(such as spa services), our profits and margins should be positively impacted
going forward.




We have
begun to implement significant growth and expansion plans in existing and new
facilities that we believe will result in higher net income in the long run.
However, as we undergo these changes in our business, we believe we will incur a
significant increase in our operating expenses, mainly due to construction
costs, increased salaries and benefits and sales commissions, which will impact
our bottom line, at least in the short term.







Liquidity
and Capital Resources




For
      the Fiscal Year EndedMay
      31, 2008
                    
                    
                    May
      31, 2007Cash
      provided by (used in):Operating
      Activities
                    
                    $
                    5,149,473
                    
                    
                    $
                    1,523,868Investing
      Activities
                    
                    $
                    (8,612,510
                    )
                    
                    $
                    (3,744,281
                    )Financing
      Activities
                    
                    $
                    4,437,315
                    
                    
                    
                    --





Operations




Cash
provided by operating activities totaled $ 5.1 million for the year ended
May 31, 2008 as compared to $1.5 million in the previous year. The increase in
our cash provided by operations is due to the increase in our net income,
together with a decrease in our deposit to vendors.




Investments




We
invested $ 5.9 million in fixed assets and construction in process for the
year ended May 31, 2008 as compared to $3.7 million in the previous year. The
investments are a part of our development plan which includes the leasehold
improvement of our existing stores and opening of new venues.  We
also invested $2.8 million in purchasing subsidiaries for the year ended May 31,
2008.




Financing




Cash provided by financing activities totaled $ 4.4 million for the year
ended May 31, 2008.  We did not have any financing activities for the
prior fiscal year.  Our financing cash provided during the period
included $1 million from paid in capital, approximately $1 million proceeds from
issuance of common stock and approximately $2.5 million from short term
loans, which include the following:




Balance
      atMay
      31, 2008
                    
                    
                    May
      31, 2007a)  Loan
      payable to an unrelated bank one year term from February 29, 2008 to
      January 29, 2009 at a fixed interest rate of 0.62% per
      month,
                    
                    $
                    1,729,107
                    
                    
                    $
                    -b)  Loan
      payable to an unrelated party one year term from October 23, 2007 to
      October 28, 2008 at a fixed interest payment of RMB4,000 per
      quarter
                    
                    
                    288,184
                    
                    
                    
                    -c)  Loan
      payable to a related party one year term from April 1, 2008 to March 31,
      2009 free of interest
                    
                    
                    529,953Total
                    
                    $
                    2,547,244
                    
                    
                    $
                    -




Interest
expense paid for the above short term loans totaled $49,042 and $0 for the years
ended May 31, 2008 and 2007, respectively.  The loan from an unrelated
bank is secured by a building owned by Queen Group.







22





Capital
Expenditures




On March
1, 2008, Mege Union entered into an acquisition agreement (the “Tai Ai
Agreement”) with Harbin Tai Ai Beauty Co, Ltd (“Tai Ai”) to purchase 100% of the
interest of Tai Ai.  Pursuant to the terms of the Tai Ai Agreement, Mege
Union was to pay RMB8,000,000 (equivalent to US$1,124,938 at the date of
signing) to the Tai Ai shareholders on or before June 1, 2008.  As of
May 31, 2008, Mege Union made all required payments under the Tai Ai Agreement.
Upon filing of a registration certificate with appropriate Chinese authorities,
the acquisition of Tai Ai will be deemed complete.




On March
1, 2008, Mege Union also entered into an acquisition agreement with Shenyang
Shengchao Management & Advisory Co., Ltd (“Shengchao”) to acquire 51% of
Shengchao’s interest in Shenyang Letian Yoga Fitness Center (“Letian”). The
acquisition cost was RMB12,000,000 (equivalent to US$1,687,408 at the date of
signing). The results of operations of Letian were included in the consolidated
results of operations commencing March 1, 2008.




The
general purpose of the Tai Ai and Letian acquisitions was to expand our business
presence in the Shenyang and Harbin markets, resulting in a maximization of
profits. The funds used for the acquisitions came from the following
sources:





Fund
      Source
                    
                    Amount
                    
                    
                    Percentage
      of Acquisition CostLoan
                    
                    $
                    811,125
                    
                    
                    
                    28.4
                    %Financing
                    
                    $
                    793,711
                    
                    
                    
                    27.8
                    %Existing
      Profits
                    
                    $
                    1,252,307
                    
                    
                    
                    43.8
                    %Total
                    
                    $
                    2,857,143
                    
                    
                    
                    100.0
                    %




We have
also committed to upgrade and retrofit new and existing operations in
several locations to maximum our appeal to existing and new clients in those
locations, thus increasing our potential profit for the future.   In
general, upgrading and retrofitting our facilities consists of cosmetic
renovation, purchasing state of the art equipment, if appropriate, and
reconfiguring space to add attractive amenities that are designed to appeal to a
sophisticated market. We have
estimated the costs of these initiatives to cost approximately $3.7 million for
the next fiscal year, to be allocated as follows:




Store
      Location
                  Modification
                  
                  Cost
      EstimateSOKO
                  Old
      store upgrading
                  
                  $
                  423,571Da
      Fu Yuan
                  New
      store outfitting
                  
                  $
                  1,170,000Da
      Qing
                  New
      store outfitting
                  
                  $
                  1,314,285Dao
      Wai
                  Old
      store upgrading
                  
                  $
                  379,188Headquarters
                  Old
      store upgrading
                  
                  $
                  31,442Nan
      Gang
                  Old
      store upgrading
                  
                  $
                  337,496Total
                  
                  
                  $
                  3,655,983




We
anticipate that these funds will come from short-term loans and cash flow
generated by our ongoing operations.




We
believe that our brand name has value.  As part of our long-term
growth strategy, we anticipate capitalizing on this value by establishing a
sophisticated network of salons, spas and fitness centers to expand our
territory and client base. We believe that there is significant potential for
the Company's growth going forward .


Off-Balance
Sheet Arrangements




We do not
have off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities.”




Critical
Accounting Policies




While
our significant accounting policies are more fully described in Note 1 to our
consolidated financial statements at Item 15, we believe that the following
accounting policies are the most critical to aid you in fully understanding and
evaluating this "Management's Discussion and Analysis of Financial Condition and
Results of Operations."





Basis
of presentation and consolidation




The
accompanying consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America. The
consolidated financial statements include the financial statements of SOKO, and
its direct and indirect subsidiaries, as well as the Queen Group. All
significant inter-company transactions and balances among SOKO, its subsidiaries
and the Queen Group are eliminated upon consolidation.





23









Use
of estimates




In
preparing the financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year. Significant estimates, required by management, include the
recoverability of long-lived assets and the valuation of
inventories.  Actual results could differ from those
estimates.




Accounts
and other receivables




Accounts
and other receivables are recorded at net realizable value consisting of the
carrying amount less an allowance for uncollectible amounts, as needed. The
Company uses the aging method to estimate the valuation allowance for
anticipated uncollectible receivable balances. Under the aging method, bad debt
percentages determined by management based on historical experience as well as
current economic climate are applied to customers’ balances categorized by the
number of months the underlying invoices have remained outstanding. The
valuation allowance balance is adjusted to the amount computed as a result of
the aging method. When facts subsequently become available to indicate that the
allowance provided requires an adjustment, then the adjustment will be
classified as a change in estimate.  There was no allowance for
uncollectible amounts for the years ended May 31, 2008 and 2007.




Inventories




Inventory
is mainly comprised of hair and skin care supplies . Inventories are stated
at the lower of cost, as determined on a first-in, first-out basis, or market.
Costs of inventories include unused purchases and supplies for providing beauty
treatments.




Property
and equipment




Property
and equipment are stated at cost, net of accumulated
depreciation.  Depreciation is computed using the straight-line method
over the estimated useful lives of the assets. Estimated useful lives of the
assets are as follows:




Building
      & buildings improvement
                  10
      yearsMachinery
      and equipment
                  5
      yearsComputer,
      office equipment and furniture
                  5 yearsAutomobiles
                  5 years




The
carrying value of property, plant and equipment is assessed annually and when
factors indicating impairment is present, the carrying value of the fixed assets
is reduced by the amount of the impairment. The Company determines the existence
of such impairment by measuring the expected future cash flows (undiscounted and
without interest charges) and comparing such amount to the net asset carrying
value. An impairment loss, if exists, is measured as the amount by which the
carrying amount of the asset exceeds the fair value of the asset.




Construction
in progress




Construction
in progress represents direct costs of construction or acquisition and design
fees incurred. Capitalization of these costs ceases and the construction in
progress is transferred to plant and equipment when substantially all the
activities necessary to prepare the assets for their intended use are completed.
No depreciation is provided until it is completed and ready for intended
use.




For the
years ended May 31, 2008 and 2007, the Company had total accumulated costs
involved with construction in progress of approximately $3.7 million and $0.8
million, respectively.




Goodwill




Goodwill
and other intangible assets are accounted for in accordance with the provisions
of Statement of Financial Accounting Standards ("FAS") No. 142, “Goodwill
and Other Intangible Assets.” Under FAS No. 142, goodwill, including any
goodwill included in the carrying value of investments accounted for using the
equity method of accounting, and certain other intangible assets deemed to have
indefinite useful lives are not amortized. Rather, goodwill and such
indefinite-lived intangible assets are assessed for impairment at least annually
based on comparisons of their respective fair values to their carrying values.
Finite-lived intangible assets are amortized over their respective useful lives
and, along with other long-lived assets, are evaluated for impairment
periodically whenever events or changes in circumstances indicate that their
related carrying amounts may not be recoverable in accordance with FAS
No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets.”







24





In evaluating long-lived assets for recoverability, including finite-lived
intangibles and property and equipment, the Company uses its best estimate of
future cash flows expected to result from the use of the asset and eventual
disposition in accordance with FAS No.144. To the extent that estimated
future, undiscounted cash inflows attributable to the asset, less estimated
future, undiscounted cash outflows, are less than the carrying amount, an
impairment loss is recognized in an amount equal to the difference between the
carrying value of such asset and its fair value. Assets to be disposed of and
for which there is a committed plan of disposal, whether through sale or
abandonment, are reported at the lower of carrying value or fair value less
costs to sell.




There
were no impairment losses recognized for the years ended May 31, 2008 or
2007.




Revenue recognition




The Company’s revenue recognition policies are in compliance with Staff
Accounting Bulletin (“SAB”) No. 104.  Sales revenue is generally
recognized when the services are provided and payments are received or
collections are reasonably assured. Payments received in advance from membership
fees but not yet earned are recorded as deferred revenue. Initial non-refundable
membership fees are recognized on a straight-line basis of estimated
membership life.




Foreign
currency translation




Our
functional currency is RMB but we use USD for financial reporting purposes. We
maintain our books and records in our functional currency, being the primary
currency of the economic environment in which our operations are
conducted.




In
general, for consolidation purposes, we translate our assets and liabilities
into USD using the applicable exchange rates prevailing at the balance sheet
date, and the statement of income and cash flows are translated at average
exchange rates during the reporting period. As a result, amounts related to
assets and liabilities reported on the statement of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheet. Equity accounts are translated at historical rates. Adjustments resulting
from the translation of our financial statements are recorded as accumulated
other comprehensive income.




This
quotation of the exchange rates does not imply free convertibility of RMB to
other foreign currencies. All foreign exchange transactions continue to take
place either through the People's Bank of China or other banks authorized to buy
and sell foreign currencies at the exchange rate quoted by the People's Bank of
China. The rate of exchange quoted by the People’s Bank of China at May 31, 2008
was US$1.00 = RMB6.94. A weighted average translation rate of US$1.00 =
RMB7.3358 was applied to our income statement for the twelve months ended May
31, 2008.




Recent
Accounting Pronouncements




In
February 2007, the Financial Accounting Standards Board ("FASB") issued FAS No.
159, "The Fair Value Option for Financial Assets and Financials Liabilities —
Including an Amendment of FAS No. 115." This standard permits measurement of
certain financial assets and financial liabilities at fair value. If the fair
value option is elected, the unrealized gains and losses are reported in
earnings at each reporting date. Generally, the fair value option may be elected
on an instrument-by-instrument basis, as long as it is applied to the instrument
in its entirety. The fair value option election is irrevocable, unless a new
election date occurs. FAS No. 159 requires prospective application and also
establishes certain additional presentation and disclosure requirements. The
standard is effective as of the beginning of the fiscal year that begins after
November 15, 2007. We are currently evaluating the provisions of FAS
No. 159 to determine the potential impact, if any, the adoption will have on our
financial statements.




In June
2007, FASB issued Staff Position No. EITF 07-3, “Accounting for Nonrefundable
Advance Payments for Goods or Services Received for use in Future Research and
Development Activities.” which addresses whether nonrefundable advance payments
for goods or services that used or rendered for research and development
activities should be expensed when the advance payment is made or when the
research and development activity has been performed. We have adopted EITF 07-3
and expensed the research and development as it incurred.




In
December 2007, FASB issued FAS No. 160,“Noncontrolling Interests in Consolidated
Financial Statements - an amendment of Accounting Research Bulletin No. 51,”
which establishes accounting and reporting standards for ownership interests in
subsidiaries held by parties other than the parent, the amount of consolidated
net income attributable to the parent and to the non-controlling interest,
changes in a parent’s ownership interest and the valuation of retained
non-controlling equity investments when a subsidiary is deconsolidated. The
Statement also establishes reporting requirements that provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. FAS No. 160 is effective
for fiscal years beginning after December 15, 2008. We have not determined the
effect that the application of FAS No. 160 will have on our consolidated
financial statements.







25





In December 2007,
FAS No. 141(R), "Business Combinations," was issued replacing FAS No. 141,
"Business Combinations." FAS No. 141R retains the fundamental requirements in
FAS No. 141 that the acquisition method of accounting (which FAS No. 141 called
the "purchase method") be used for all business combinations and for an acquirer
to be identified for each business combination.
FAS No. 141R requires an acquirer to recognize the assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited
exceptions. This replaces FAS No. 141’s cost-allocation process, which required
the cost of an acquisition to be allocated to the individual assets
acquired and liabilities assumed based on their estimated fair values. FAS No.
141R also requires the acquirer in a business combination achieved in stages
(sometimes referred to as a step acquisition) to recognize the identifiable
assets and liabilities, as well as the non-controlling interest in the acquiree,
at the full amounts of their fair values (or other amounts determined in
accordance with FAS No. 141R). FAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. An entity
may not apply it before that date. We have adopted FAS No.
141R.




Income
Taxes




Wealthlink
is a tax exempted company incorporated in the Cayman Islands and conducts all of
its business through its subsidiary, Mege Union, and variable interest entity,
Queen Group. The share exchange transaction between Wealthlink and American
Business Holdings, Inc. was considered a reverse merger, and the Company is a
Delaware corporation. For accounting purpose, the transaction was treated under
purchase method as a reorganization. There was no goodwill or additional value
recorded in such transaction. Therefore, the share exchange is not considered a
taxable event.





1)
            Corporate
      Income Tax





SOKO
is a Delaware corporation and conducts all of its business through Mege Union
and Queen Group, both Chinese subsidiaries. All business is conducted in
PRC.




Queens
Group consists of five individual-owned sole proprietorships, which are
generally exempt from paying corporate level income taxes, and one limited
liability company, which is subject to a statutory rate of 27% on its taxable
net income, which is fixed at 10% of annual revenue. Letian is subject to an
income tax rate of 25% on all net income.





2)
            Business
      Sales Tax





General
business sales taxes are levied on business under both Queen Group and Mege
Union.  Except Harbin Huang Emperor & Golden Fitness which is
subject to 3% of actual revenue and Letian which is subject to 5% of actual
revenue, all other business is subject to either 3% or 5% on pre-determined
fixed revenue.







Item
7A.  Quantitative and Qualitative Disclosures About Market
Risk.




We are
exposed to market risks related to changes in interest rates and foreign
currency exchange rates, however, we believe those risks to be not material in
relation to our operations. We do not have any derivative financial
instruments.




Interest
Rate Risk




As of May
31, 2008, we held no money market securities or short term available for sale
marketable securities. Due to the short term duration of our investment
portfolio, an immediate 10% change in interest rates would not have a material
effect on the fair market value of our portfolio, therefore, we would not expect
our operating results or cash flows to be affected to any significant degree by
the effect of a sudden change in market interest rates on our securities
portfolio.




Foreign
Currency Exchange Risk




All of
our revenues are denominated in RMB and, as a result, we have certain exposure
to foreign currency exchange risk with respect to current revenues. A majority
of our expenses are payable in foreign currency. We do not use forward exchange
contracts to hedge exposures denominated in foreign currencies or any other
derivative financial instruments for trading or speculative purposes. The effect
of an immediate 10% change in exchange rates would not have a material impact on
our future operating results or cash flows.









26









Item
8.  Financial Statements and Supplementary Data.




The
information required by this Item 8 is filed at Item 15. "Exhibits" as part
of this Annual Report on Form 10-K.




Report
      of Independent Registered Public Accounting FirmConsolidated
      Balance Sheets as of May 31 2008 and 2007Consolidated
      Statements of Income for the Y ears E nded May 31, 2008 and
      2007Statements
      of Changes in Stockholders’ Equity for the Y ears E nded May
      31, 2008 and 2007Statements
      of Cash Flows for the Y ears E nded May 31, 2008 and
      2007Notes
      to Consolidated Financial Statements  for the Years Ended May 31,
      2008 and 2007




Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.




Effective
as of May 14, 2008, we dismissed Gately & Associates, L.L.C. ("Gately") as
our independent accountants. Gately had previously been engaged as the principal
accountant to audit our financial statements. The reason for the dismissal of
Gately is that, following the consummation of the share exchange on April 11,
2008, (i) the former stockholders of the Wealthlink owned a significant amount
of the outstanding shares of our common stock and (ii) our primary business
became the business previously conducted by Wealthlink. The independent
registered public accountant of Wealthlink was the firm of Bagell, Josephs,
Levine & Company, LLC (“BJL”). We believe that it is in our best interest to
have BJL continue to work with our business, and we therefore retained BJL as
our new principal independent registered accounting firm, effective as May 14,
2008. BJL is located at 406 Lippincott Drive., Suite J, Marlton,
NJ 08053.  The decision to change accountants was approved by our
Board of Directors on May 13, 2008.




The
reports of Gately on our financial statements as at and for the years ended
December 31, 2006 and December 31, 2007 did not contain an adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles.




During
the two most recent fiscal years and during the period prior to the dismissal of
Gately, there were no disagreements with Gately on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of Gately, would have
caused it to make reference to the matter in connection with its
reports.




Other
than in connection with the audit of our financial statements for Wealthlink in
the ordinary course prior to the consummation of the share exchange pursuant to
the share exchange agreement, during the two most recent fiscal years and during
the period prior to the dismissal of Gately, we did not consult BJL regarding
either: (i) the application of accounting principles to a specific completed or
contemplated transaction, or the type of audit opinion that might be rendered on
our financial statements; or (ii) any matter that was the subject of a
disagreement as described in Item 304(a)(1)(iv) of Regulation S-K.




Item
9A.  Controls and Procedures.




Disclosure
Controls and Procedures




As of May
31, 2008, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act. Based upon that evaluation, our principal
executive officer and principal financial officer concluded that as of the end
of the period covered by this report, our disclosure controls and procedures
are not effective because of the material weakness in our disclosure controls
and procedures described below:




·
            We
      failed to include certain required statements in the Management’s Annual
      Report on Internal Control Over Financial Reporting in our Form 10-K filed
      on August 29, 2008.




We are
developing a plan to ensure that all information will be recorded, processed,
summarized and reported accurately, and as of the date of this report, we have
taken the following steps to address the above-referenced material weaknesses in
our disclosure controls and procedures:







27







1.
              We
      have amended the Form 10-K to include all the required statements in the
      Management’s Annual Report on Internal Control Over Financial
      Reporting;


2.
            We
      will continue to educate our management personnel to comply with the
      disclosure requirements of the Exchange Act and Regulation
      S-K;




3.
            We
      are developing a plan to improve internal controls, which is under review
      by our audit committee;




4.
            We
      intend to have adequate internal controls in place prior to the end
      of our 2009 fiscalyear,
      and




5.
            We
      will increase management oversight of accounting and reporting functions
      in the future.




Management’s
Annual Report on Internal Control over Financial Reporting.




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rule 13a-15(f)
of the Exchange Act. Under the supervision and with the participation of our
management, including our principal executive officer and principal financial
officer, we have begun to implement a system of internal control over our
financial reporting.





As a
result of the reverse acquisition, the historical financial statements of
Wealthlink became the historical financial statements of SOKO after the Share
Exchange and the internal controls over financial reporting of the Company were
largely supplanted with the internal controls of Wealthlink. However, as a
private company conducting its operations entirely within the PRC prior to April
11, 2008, Wealthlink was not subject to public company disclosure
requirements and had not developed the level of internal control over financial
reporting required by Section 404 of the Sarbanes-Oxley Act of 2002
("SOX").  Additionally, in light of the short time period between
the Share Exchange and our year-end, our management did not have sufficient time
to perform an assessment of our internal controls over financial reporting as of
May 31, 2008.




As a
result of the foregoing, we are currently not compliant with Section 404 of
SOX .  We intend to be compliant with Section 404 of SOX as soon
as practicable, but in no event later than the date we are required to report on
our internal control over financial reporting requirements in connection with
the filing of our annual report for the year ending May 31, 2009.




Item
9B.  Other Information.




None.







28





PART
III




Item
10.  Directors, Executive Officers and Corporate Governance




Executive
Officers and Directors




The
following sets forth certain biographical information concerning our directors
and executive officers as of August 1, 2008:




Name
                      Position
                      AgeTong
      Liu
                      Chief
      Executive Officer, Chairman of the Board,
      Director
                      40Xia
      Yu
                      Chief
      Financial Officer,
      Director
                      38Yang
      Chen
                      Director
                      31Su
      Zhang
                      Director
                      37Gideon
      E. Kory
                      Director
                      48


Tong Liu, 40, has served as
our Chief Executive Officer, Chairman of the Board and a Director since the
consummation of the share exchange on April 11, 2008.  Mr. Liu has
served as Chief Executive Officer and Director of Wealthlink and Harbin Mege
Union Beauty Management Ltd. ("Mege Union") since their formation in
2007.  He was the Chief Executive Officer of Harbin Queen Beauty
Demonstration Center from July 1993 until June 2007.  Mr. Liu's
experience includes management and development of professional fitness, beauty
salon and lifestyle and spa businesses.  Mr. Liu graduated from Harbin
Workingman Occupation University in 1991.




Xia Yu, 38, has served as our
Chief Financial Officer and a Director since consummation of the share exchange
on April 11, 2008.  Ms. Yu has served as Chief Financial Officer of
Wealthlink and Mege Union since their formation in 2007.  From January
2005 through May 2007, Ms. Yu served as Chief Financial Officer of Harbin Queen
Beauty Demonstration Center.  From July 2004 through December 2004,
Ms. Yu served as Deputy General Manager of Gaoyang Advertisement Co., Ltd. and
from March 2003 through June 2004, Ms. Yu was Deputy General Manager of Shiyite
Trading Co., Ltd.  Ms. Yu holds an MBA from Harbin Industry
University.




Yang Chen, 31, has served as
a Director of SOKO since the consummation of the share exchange on April 11,
2008.  Mr. Chen is an attorney and was a partner with the law firm of
Guangsheng & Partners from May 2002 through December 2007.  Mr.
Chen has an L.L.B. degree from Heilongjiang University Law School and a
bachelor's degree in management from Harbin College.




Su Zhang, 37, has served as a
Director of SOKO since the consummation of the share exchange on April 11,
2008.  Since June 2006, Mr. Zhang has served as Managing Director of
Investments for Hua-Mei 21st Century LLC, which is affiliated with Guerilla
Capital Management, L.L.C. and Hua-Mei 21st Century Partner, LP (this
relationship is more fully discussed in Item 13.  "Certain
Relationships and Related Transactions, and Director
Independence").   From December 2005 until May 2006, he served as
the Chief Operating Officer of TengTu International Ltd.  Mr. Zhang
was a founder of WeiZhXian Science and Technology Co. Ltd. and served as its
General Manager from March 2004 to November 2005.  From October 2003
through February 2004, Mr. Zhang served as the Assistant President of
Joyo.com.  From September 2002 through September 2003, Mr. Zhang was
an associate for Legend Capital.  Mr. Zhang holds an MBA from Guanghua
School of Management, Peking University.




Gideon E. Kory, 48, has served as a Director
of SOKO since the consummation of the share exchange on April 11,
2008.  Mr. Kory has been the Managing Director of Pacific Summit
Capital, an investment bank and registered broker-dealer, since June
2005.  From January 2003 through May 2005, Mr. Kory served as Senior
Research Analyst and Vice President of Mergers and Acquisitions for Roth Capital
Partners, an investment bank and registered broker-dealer.  Prior to
his involvement in the securities industry, Mr. Kory spent 15 years in
engineering and management working with government, commercial enterprises and
research institutions and as an independent consultant   Mr. Kory
is a Chartered Financial Analyst.  Mr. Kory holds a Bachelor of
Science in Electrical Engineering from the Israel Institute of
Technology.




Each of
our directors has been elected to a one year term, to serve until the 2009
annual meeting of stockholders or as soon thereafter as their successors are
duly elected and qualified.







29





Compliance with Section 16(a) of the Exchange Act




Section
16(a) of the Exchange Act requires our directors, executive officers and any
persons beneficially holding more than ten percent of our common stock to report
their ownership of common stock and any changes in that ownership to the
SEC.  The SEC has established specific due dates for these reports,
and we are required to report in this document any failure to file by these
dates.  Based solely on a review of the copies of the reports
furnished to us and written representations that no other such statements were
required, we believe that all such reports were filed on a timely basis, except
as follows:  (i) Ms. Liu did not timely file a Form 3 reflecting his
becoming a director, executive officer and beneficial holder of more than ten
percent of our common stock on April 11, 2008; (ii) Ms. Yu did not timely file a
Form 3 reflecting her becoming a director and executive officer of SOKO on April
11, 2008; and (iii) Messrs. Chen, Zhang and Kory did not timely file Form 3s
reflecting their becoming directors of SOKO on April 11, 2008.  Each
of these transactions has subsequently been reported.




Code
of Ethics




Our board
of directors understands the importance of having a well thought out and
meaningful code of conduct and ethics that applies to our directors, chief
executive officer, chief financial officer and all of our officers and
employees.  We are in the process of preparing and approving a code of
ethics that deters wrongdoing and promotes, among other things, honest and
ethical behavior.  Upon adoption we will post the text of our code of
conduct on our website at www.sokofitness.com.




Committees
of the Board of Directors




Audit
Committee




We
established our Audit Committee in May 2008. The Audit Committee consists of
Messrs. Kory (Chair), Chen and Zhang, each of whom is an independent director.
The purpose of the Audit Committee is to represent and assist our board of
directors in its general oversight of our accounting and financial reporting
processes, audits of the financial statements and internal control and audit
functions. The Audit Committee’s responsibilities include:




·
            The
      appointment, replacement, compensation, and oversight of work of the
      independent auditor, including resolution of disagreements between
      management and the independent auditor regarding financial reporting, for
      the purpose of preparing or issuing an audit report or performing other
      audit, review or attest services.





·
            Reviewing
      and discussing with management and the independent auditor various topics
      and events that may have significant financial impact on our company or
      that are the subject of discussions between management and the independent
      auditors.




The board
of directors is in the process of preparing a written charter for the Audit
Committee that sets forth the foregoing and further defined the duties and
responsibilities of the Audit Committee.




Compensation
Committee




We
established our Compensation Committee in May 2008. The Compensation Committee
consists of Messrs. Chen (Chair), Kory and Zhang, each of whom is an independent
director. The Compensation Committee is responsible for the design, review,
recommendation and approval of compensation arrangements for our directors,
executive officers and key employees, and for the administration of our equity
incentive plans, if any, including the approval of grants under such plans to
our employees, consultants and directors. The Compensation Committee also
reviews and determines compensation of our executive officers, including our
Chief Executive Officer. The board of directors is in the process of preparing a
written charter for the Compensation Committee that sets forth the foregoing and
further defined the duties and responsibilities of the Compensation
Committee.




Nominating
and Corporate Governance Committee




We
established our Nominating and Corporate Governance Committee in May 2008. The
Nominating and Corporate Governance Committee consists Messrs. Zhang (Chair),
Chen and Kory. The Nominating and Corporate Governance Committee assists in the
selection of director nominees, approves director nominations to be presented
for shareholder approval at our annual general meeting and fills any vacancies
on our board of directors, considers any nominations of director candidates
validly made by shareholders, and reviews and considers developments in
corporate governance practices. The board of directors is in the process of
preparing a written charter for the Nominating and Corporate Governance
Committee that sets forth the foregoing and further defined the duties and
responsibilities of the Nominating and Corporate Governance
Committee.




Audit
Committee Financial Expert




The board
of directors has an Audit Committee, which is comprised of Messrs. Kory, Chen
and Zhang. The board of directors has examined the composition of the Audit
Committee in light of the listing standards of the Nasdaq Stock Market and the
regulations under the Exchange Act applicable to audit committees. Based upon
this examination, the board of directors has determined that each of the Audit
Committee members is an “independent” director within the meaning of such
listing standards and the Exchange Act and the rules and regulations thereunder.
Mr. Kory qualifies as an “audit committee financial expert” as that term is
defined in applicable regulations of the SEC.





30







Item
11:      Executive Compensation




Summary
Compensation Table




The table
below summarizes all compensation awards to, earned by, or paid to our current
and former principal executive officers, our current principal financial officer
and our most highly compensated executive officer other than our current
principal executive officer (collectively, the "named executive officers") for
all services rendered in all capacities to the Company, and to Wealthlink, as
our predecessor, and its subsidiaries for the fiscal years ended May 31, 2008
and 2007.




Name
      and Principal Position
              Fiscal
                Year
              
              Salary
                  ($)
              
              
              Bonus
                  ($)
              
              
              Total
                  ($)Tong
      Liu, Chief Executive Officer (1)
              2008
              
              $
              17,291
              
              
              $
              0
              
              
              $
              17,2912007
              
              
              15,683
              
              
              
              0
              
              
              
              15,683Xia
      Yu,, Chief Financial Officer (2)
              2008
              
              $
              7,954
              
              
              $
              0
              
              
              $
              7,9542007
              
              
              7,214
              
              
              
              0
              
              
              
              7,214Syed
      Irfan Husain, Former Chief Executive Officer
              2008
              
              $
              0
              
              
              $
              0
              
              
              $
              0andChiefFinancial
      Officer (3)
              2007
              
              
              0
              
              
              
              0
              
              
              
              0
  (1)
              Prior
      to April 11, 2008, Mr. Liu served as Chief Executive Officer and director
      of Wealthlink and its subsidiaries. Mr. Liu's compensation is paid by our
      wholly-owned subsidiary Harbin Mege Union Beauty.  Mr. Liu's
      compensation is paid in RMB at the annual rate of
      RMB120,000.  For purposes of this disclosure, we have converted
      his compensation into US dollars (USD) at the following rates: at May 30,
      2008 RMB1 = USD 0.144092 and at May 31, 2007 RMB1 = USD
      0.130692.(2)
              Prior
      to April 11, 2008, Ms. Yu served as the Chief Financial Officer of
      Wealthlink and its subsidiaries.  Ms. Yu's compensation is paid
      by our wholly-owned subsidiary Harbin Mege Union Beauty.  Ms.
      Yu's compensation is paid in RMB at the annual rate of
      RMB55,200.  For purposes of this disclosure, we have converted
      her compensation into USD at the following rates: at May 30, 2008 RMB1 =
      USD 0.144092 and at May 31, 2007 RMB1 = USD 0.130692.(3)
              Mr.
      Husain served as our Chief Executive Officer and Chief Financial Officer
      until his resignation on April 11, 2008 in connection with the
      consummation of the share exchange.  Mr. Husain was our sole
      executive officer for the fiscal year ended December 31, 2007 and did not
      receive any compensation for services provided to us during that period.
      We did not have any employment or consulting agreement with Mr.
      Husain.




Employment Agreements




We do not have any written employment agreements, aside from those entered into
between our subsidiaries in China and all employees in China.





Outstanding Equity Awards at Fiscal Year-End




There
were no individual grants of stock options to purchase our common stock made to
our executive officers during the fiscal years ended May 31, 2008 and
2007.




Director
Compensation




During the year ended May 31, 2008, we did not pay any compensation to our
directors, exclusive of the salaries we paid to those directors who are named
executive officers.  For his services as a director, Mr. Kory is
entitled to receive $24,000 in cash per annum, to be paid in arrears in equal
quarterly installments.  In addition, on July 8, 2008, Mr. Kory
received an option to purchase 50,000 shares of our common stock, expiring on
July 8, 2013, at an exercise price of $1.47 per share, which price was the
volume weighted average price of our common stock for the period ended July 7,
2008.  The option vests in three equal installments, on the grant date
and the first and second anniversaries of such grant date.  No
additional compensation has been awarded to our directors for their service as
directors.










31





Item
12.      Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.




Security
Ownership of Certain Beneficial Owners and Management.




The table
below sets forth information, as of August 27, 2008, concerning (a) each person
that is known to us to be the beneficial owner of more than 5% of our common
stock; (b) each of our named executive officers; (c) each director; and (d) all
of the directors and executive officers as a group. Unless otherwise indicated,
to our knowledge, all persons listed below have sole voting and investment power
with respect to their shares, except to the extent spouses share authority under
applicable law. Beneficial ownership is determined in accordance with the rules
of the SEC. In computing the number and percentage of shares beneficially owned
by a person, shares that may be acquired by such person within 60 days of August
27, 2008 are counted as outstanding, while these shares are not counted as
outstanding for computing the percentage ownership of any other
person.  As of August 27, 2008, there were 17,000,000 shares of our
common stock outstanding.




Number
      of Shares
              
              Percent of
      SharesBeneficially
              
              BeneficiallyName
      of Beneficial Owner (1)
              
              Owned
              
              Owned (2)Guerilla
      Capital Management, LLC.(3)
                237
      Park Avenue, 9th Floor
                New
      York, New York 10017
              
              3,600,000
              
              21.18%Tong
      Liu(4)
              
              8,960,000
              
              52.71%Xia
      Yu
              
              40,000
              
              *Yang
      Chen
              
              0
              
              --Su
      Zhang
              
              0
              
              --Gideon
      E. Kory(5)
              
              16,667
              
              *All
      Directors and Executive Officers as a Group (five persons)
              
              9,016,667
              
              53.04%


__________________________




*
              Less
      than 1 percent(1)
              Except
      as otherwise indicated, the address of each beneficial owner is No .194,
      Guogeli Street, Harbin, Heilongjing Province, China
  150001.(2)
              The
      shares of our common stock beneficially owned are reported on the basis of
      regulations of the SEC governing the determination of beneficial ownership
      of securities. Under the rules of the SEC, a person is deemed to be a
      “beneficial owner” of a security if that person has or shares voting
      power, which includes the power to vote, or direct the voting of, such
      security, or investment power, which includes the power to dispose of, or
      to direct the disposition of, such security. A person is also deemed to be
      a beneficial owner of any securities of which that person has a right to
      acquire beneficial ownership within 60 days. Securities that can be
      so acquired are deemed to be outstanding for purposes of computing such
      person’s ownership percentage, but not for purposes of computing any other
      person’s percentage. Under these rules, more than one person may be deemed
      beneficial owner of the same securities and a person may be deemed to be a
      beneficial owner of securities as to which such person has no economic
      interest. Except as otherwise indicated in these footnotes, each of the
      beneficial owners has, to our knowledge, sole voting and investment power
      with respect to the indicated shares of common stock(3)
              Represents
      1,800,000 shares of our common stock, and 1,800,000 shares underlying
      warrants purchased in a private placement by us.  The
      information for Guerilla Capital Management, L.L.C., a Delaware limited
      liability company ("Guerilla Capital") and Hua-Mei 21st Century Partner,
      LP, a Delaware limited partnership (the "Partnership") is derived from a
      Schedule 13D, dated April 28, 2008, which was filed with the SEC to
      report the shares beneficially owned by such persons as of April 11, 2008.
      The Schedule 13D states that Guerrilla Capital may be deemed to be
      the beneficial owner of 3,600,000 shares and the Partnership may be deemed
      to be the beneficial owner of 2,800,000 shares. Guerrilla Capital serves
      as investment manager for the Partnership and Guerrilla Partners L.P., a
      Delaware limited partnership.  Guerrilla Capital (i) has the
      sole power to vote or direct the vote of, and sole power to dispose or
      direct the disposition of, 800,000 shares of our common stock and (ii)
      shares the power to vote or direct the vote of, to dispose or direct the
      disposition of, 2,800,000 shares of our common stock.  The
      Partnership (i) has the sole power to vote or direct the vote of, and sole
      power to dispose or direct the disposition of, no shares of our common
      stock and (ii) shares the power to vote or direct the vote of, to dispose
      or direct the disposition of, 2,800,000 shares of our common
      stock.  Peter Siris has control over management and investment
      decisions for Guerilla Capital and the Partnership.  Guerrilla
      Capital specifically disclaims beneficial ownership in the shares reported
      herein except to the extent of its pecuniary interest
    therein.
  32
  (4)
              Includes
      2,000,000 shares held in escrow by Crone Rozynko LLP under the terms of an
      Escrow Agreement dated as of April 7, 2008.(5)
              Includes
      beneficial ownership of 16,667 shares issuable upon exercise of options
      held by Mr. Kory that are exercisable within 60 days of the date
      of this table.


Equity
Compensation Plan Information




We have
no stock option plan.  However, we have granted compensatory stock
options to one of our non-management directors, as set forth in the table
below.




Plan
      category
                
                Number
      of securities
                  to
      be issued upon
                  exercise
      of
                  outstanding
      options,
                  warrants
      and rights
                
                Weighted
      average
                  exercise
      price of
                  outstanding
      options,
                  warrants
      and rights
                
                Number
      of securities
                  remaining
      available for future issuance under equity compensation plans (excluding
      securities reflected in column (a)(a)
                
                (b)
                
                (c)Equity
      compensation plans approved by security holders
                
                0
                
                
                N/A
                
                
                0Equity
      compensation plans not approved by security holders
                
                
                50,000
                
                
                $1.47
                
                
                0Total
                
                
                50,000
                
                
                $1.47
                
                
                0




Pension and Retirement Plans




Currently, we do not offer any annuity, pension or retirement benefits to be
paid to any of our officers, directors or employees.  As required by
PRC law, the Company contributes to the "insurance and public housing funds"
program defined by the Department of Labor.  These contributions are
similar to the Social Security and Medicare programs in the US. There are also
no compensatory plans or arrangements with respect to any individual named above
which results or will result from the resignation, retirement or any other
termination of employment with our company, or from a change in our
control.





Item
13.  Certain Relationships and R elated Transactions, and
Director Independence




Certain
Relationships and Related Transactions




Two of
our subsidiaries rent their premises from Mr. Tong Liu, our Chairman and CEO.
Mr. Liu has leased the following stores to us pursuant to the terms of binding
written lease agreements containing terms no less favorable to us than we could
have negotiated in an arm’s length transaction with a motivated landlord,
including substantially the following terms:




·     Harbin
Daoli Queen Demonstration Beauty Parlor: 5 years from January 1, 2008 through
December 31, 2012, for $47,300 per year, prepaid for 1 year plus an option for
additional 5 years at no more than $55,000 per year.




·     Harbin
Queen Beauty Demonstration Center: 5 years from January 1, 2008 through December
31, 2012 for $20,300 per year, prepaid for 1 year plus an option for additional
5 years at no more than $24,000 per year.




We were
granted a non-interest bearing loan in the amount of $529,953 on April 1, 2008
by an unaffiliated individual who is a close friend of Mr. Liu, our Chief
Executive Officer.  The loan is due and payable on March 31, 2009.
There is no other relationship between this individual and SOKO as of May 31,
2008.




Our Chairman, Mr. Liu, is the sole owner of each of the Queen Group
entities.  The companies comprising the Queen Group
are:




Harbin Huang Emperor & Golden Gym Club Co., Ltd.;





33





Harbin Daoli Queen Demonstration Beauty Parlor;


Harbin Queen Beauty Demonstration Center (and the Nangang and Kunlunbranches
of the Center); and


Harbin
Queen Beauty Vocational Skill Training School.




Our
affiliation with the Queen Group is managed through several exclusive agreements
between the Company and each Queen Group’s entity.  These agreements
are:




1.      a
Consulting Services Agreement between Mege Union and the Queen Group entity that
provides for Mege Union to exclusively provide essential services relating to
technology, human resources and research and development to the Queen Group
entity in exchange for a Consulting Services Fee.  Mr. Liu, sole
proprietor of each of the Queen Group entities, has not charged the Company, nor
has the Company paid Mr. Liu, any fees under the Consulting Services
Agreement;





2.      an
Operating Agreement between Mege Union and the Queen Group entity that prohibits
the Queen Group entity from taking certain material actions or entering into
material agreements, including assuming debt, selling or purchasing any assets
or rights, using the entity's assets or rights as collateral, or assigning some
or all of the business to a third party, without the prior written consent of
Mege Union;





3.      an
Option Agreement among Mege Union, the Queen Group entity and the shareholders
of such entity that grants Mege Union the right to acquire all of the
shareholders' interest in the Queen Group entity when, if and to the extent
permitted by the laws of the People's Republic of China and prohibits the
shareholders from otherwise disposing of their interest in the Queen Group
entity except with the prior written consent of Mege Union;





4.      an
Equity Pledge Agreement among Mege Union, the Queen Group entity and the
shareholders of such entity that grants Mege Union a pledged interest in all of
the issued and outstanding interest of the shareholders in the their shares,
including the right of Mege Union to vote such shares, as security for the
performance of the Queen Group entity's obligations under the Consulting
Services Agreement and further; and





5.      a
Proxy Agreement between Mege Union and the shareholders of the Queen Group
entity that grants the board of directors of Mege Union an irrevocable proxy for
the maximum period permitted by law, to vote the shareholders shares of the
Queen Group entity in such manner and for or against such proposals as the board
may determine.





Although
each of the Queen Group entities has its own set of agreements with us, the
terms and conditions of the agreements are identical for each
entity.  As a result of the understandings and agreements provided in
the foregoing documents, we effectively control each of the Queen Group
entities.  Except as set forth in these agreements, Mr. Liu is not
entitled to any other compensation in connection with his ownership of the Queen
Group entities.





Mr.
Zhang, one of our directors, is a managing director of Hua-Mei 21st Century LLC,
which is affiliated with Guerrilla Capital and the
Partnership.  Guerrilla Capital and the Partnership currently hold
approximately 21.18% of our outstanding common stock.  Mr. Zhang does
not have any authority to vote or dispose of, or direct the voting or
disposition of, the shares held by Guerrilla Capital or the
Partnership.  We have not entered into any understanding or
arrangement with Guerrilla Capital or the Partnership pursuant to which Mr.
Zhang was elected to serve on the board of directors.  Further, we do
not believe that Mr. Zhang's association with Hua-Mei 21st Century LLC
negatively impacts his status as an independent director of SOKO.




Director
Independence




Our board
has determined that each of Messrs. Chen, Kory and Zhang are independent
directors within the meaning of applicable NASDAQ Stock Market and SEC rules.
Each of Messrs. Chen, Kory and Zhang serve on our audit, compensation and
nominating and corporate governance committees.  No other directors
serve on these committees.  In considering director independence, the
board studied the shares of our common stock beneficially owned by each of the
directors. whether directly or indirectly, as set forth under “Security
Ownership of Certain Beneficial Owners and Management.”  Mr. Zhang is
a managing director of Hua-Mei 21st Century LLC, which is affiliated with
Guerrilla Capital and the Partnership.  Guerrilla Capital and the
Partnership currently hold approximately 21.18% of our outstanding common
stock.  Mr. Zhang does not have any authority to vote or dispose of,
or direct the voting or disposition of, the shares held by Guerrilla Capital or
the Partnership.  As a result, the board does not believe that Mr,.
Zhang's association with Hua-Mei 21st Century LLC negatively impacts his
independence within relevant NASDAQ Stock Market or SEC rules.




Item 14.  Principal
Accounting Fees and Services.




Gately
had been our independent accountants until we dismissed them effective as of May
14, 2008. On May 14, 2008 we appointed BJL as our independent registered
certified public accounting firm.







34





The
following table sets forth fees billed to us by BJL for professional services
rendered for fiscal year 2008 and 2007:




2008
                  
                  
                  2007Audit
      Fees
                  
                  $
                  30,000
                  
                  
                  $
                  67,400Audit-Related
      Fees
                  
                  $
                  --
                  
                  
                  $
                  --Tax
      Fees
                  
                  $
                  --
                  
                  
                  $
                  --All
      Other Fees
                  
                  $
                  --
                  
                  
                  $
                  --Total
                  
                  $
                  30,000
                  
                  
                  $
                  67,400




Audit
Fees. This category includes the aggregate fees billed for professional
services rendered for the audits of our financial statements for fiscal years
2008 and 2007, respectively, for the reviews of the financial statements
included in our quarterly reports on Form 10-Q and for services that are
normally provided by BJL in connection with statutory and regulatory filings or
engagements for the relevant fiscal year.




The audit
committee has considered the compatibility of the non-audit services performed
by and fees paid to BJL in fiscal year 2008 and has determined that such
services and fees were compatible with the independence of the accountants.
During fiscal year 2008, BJL did not utilize any personnel in connection with
the audit other than its full-time, permanent employees.




Policy for
Approval of Audit and Non-audit Services. The audit committee has adopted
an approval policy regarding the approval of audit and non-audit services
provided by the independent accountants, which approval policy describes the
procedures and the conditions pursuant to which the Audit Committee may grant
general pre-approval for services proposed to be performed by our independent
accountants. All services provided by our independent accountants, both audit
and non-audit, must be pre-approved by the Audit Committee.




In
determining whether to approve a particular audit or permitted non-audit
service, the Audit Committee will consider, among other things, whether such
service is consistent with maintaining the independence of the independent
accountant. The audit committee will also consider whether the independent
accountant is best positioned to provide the most effective and efficient
service to our company and whether the service might be expected to enhance our
ability to manage or control risk or improve audit quality.










35








PART
IV




Item
15.  Exhibits.




(a)(1)(2)
Financial Statements and Financial Statement Schedule.




The
financial statements and schedule listed in the Index to Financial Statements
are filed as part of this Annual Report on Form 10-K.




(a)(3)
Exhibits.




The
exhibits required by this item are set forth on the Exhibit Index attached
hereto.










36







SOKO
FITNESS & SPA GROUP, INC.





(FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)








TABLE
OF CONTENTS











Report
      of Independent Registered Public Accounting Firm
            F-2Consolidated
      Balance Sheets as of May 31 2008 and 2007
            F-3Consolidated
      Statements of Income for the Y ears E nded May 31, 2008 and
      2007
            F-4Statements
      of Changes in Stockholders’ Equity for the Y ears E nded May
      31, 2008 and 2007
            F-5Statements
      of Cash Flows for the Y ears E nded May 31, 2008 and
      2007
            F-6Notes
      to Consolidated Financial Statements  for the Years Ended May 31,
      2008 and 2007
            F-7-19










F-1









REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The Board
of Directors and Stockholders of


SOKO
Fitness & SPA Group, Inc.


(Formerly
American Business Holdings, Inc)





We have
audited the accompanying consolidated balance sheets of SOKO Fitness & SPA
Group, Inc. as of May 31 2008 and 2007 and the related consolidated statements
of income and other comprehensive income, changes in stockholders’ equity, and
cash flows for each of the two years ended May 31, 2008 and
2007.  These consolidated financial statements are the responsibility
of the Company’s management.  Our responsibility is to express an
opinion on these financial statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of SOKO Fitness & SPA Group, Inc.
as of May 31, 2008 and 2007 and the results of its operations, changes in
stockholders’ equity, and cash flows for each of the two years ended May 31,
2008 and 2007 in conformity with accounting principles generally accepted in the
United States of America.





As discussed in Note 18, the accompanying financial statements have been
restated.





Bagell
Josephs, Levine & Company, LLC


Bagell
Josephs, Levine & Company, LLC


Marlton,
New Jersey








August
21, 2008 (February 3, 2009 as to the effects of the restatement discussed in
Note 18)








F-2





SOKO
FITNESS & SPA GROUP, INC.


(FORMERLY
AMERICAN BUSINESS HOLDINGS, INC.)


CONSOLIDATED
BALANCE SHEETS


(IN
US DOLLARS)





AS
      OF MAY 31,2008
                  
                  
                  2007(Restated)ASSETSCurrent
      assets:Cash & cash
      equivalents
                  
                  $
                  1,563,709
                  
                  
                  $
                  456,115Accounts receivable,
      net
                  
                  
                  682,694
                  
                  
                  
                  334,692Inventories
                  
                  
                  1,048,788
                  
                  
                  
                  390,223Advances to
      supplier
                  
                  
                  1,467,861
                  
                  
                  
                  857,757Employee
      advance
                  
                  
                  249,900
                  
                  
                  
                  35,684Due from related
      party
                  
                  
                  -Prepaid
      expense
                  
                  
                  140,993
                  
                  
                  
                  51,841Total
      Current Assets
                  
                  
                  5,153,945
                  
                  
                  
                  2,126,312Property,
      plant and equipment,net of accumulated depreciation
                  
                  
                  12,782,918
                  
                  
                  
                  5,612,605Other
      AssetsDeposit
      to supplier
                  
                  
                  720,461
                  
                  
                  
                  659,993Investment
      advance
                  
                  
                  1,152,738
                  
                  
                  
                  -Goodwill
                  
                  
                  1,505,710
                  
                  
                  
                  -3,378,909
                  
                  
                  
                  659,993Total
      Assets
                  
                  
                  21,315,772
                  
                  
                  
                  8,398,910LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Short-term
      loan
                  
                  
                  2,547,244
                  
                  
                  
                  -Accounts
      payable, accrued expenses and other payable
                  
                  
                  1,020,232
                  
                  
                  
                  75,984Unearned
      revenue
                  
                  
                  514,965
                  
                  
                  
                  171,457Taxes
      payable
                  
                  
                  339,555
                  
                  
                  
                  108,120Total
      Current Liabilities
                  
                  
                  4,421,996
                  
                  
                  
                  355,561Minority
      Interest
                  
                  
                  329,304
                  
                  
                  
                  -Stockholders'
      EquityPreferred
      Stock, $.001 par value; 10,000,000 shares
      authorized;-
      0 - shares issued and outstanding at May 31,2008 and
      2007Common
      stock, $0.001 Par value; 500,000,000 shares
      authorized;17,000,000
      and 10,725,000 shares issued and outstandingat
      May 31, 2008 and 2007, respectively
                  
                  
                  17,000
                  
                  
                  
                  10,725Subscription
      receivable
                  
                  
                  
                  
                  
                  
                  (1,000,000)Additional
      paid-in-capital
                  
                  
                  884,681
                  
                  
                  
                  1,142,854Additional
      paid-in-capital -Warrants
                  
                  
                  1,279,398
                  
                  
                  
                  -Accumulated
      other comprehensive income
                  
                  
                  1,625,829
                  
                  
                  
                  408,136Retained
      earnings
                  
                  
                  12,757,564
                  
                  
                  
                  7,481,634Total
      Stockholders' Equity
                  
                  
                  16,564,472
                  
                  
                  
                  8,043,349Total
      Liabilities and Stockholders' Equity
                  
                  $
                  21,315,772
                  
                  
                  $
                  8,398,910


The
accompany notes are an integral part of these consolidated financial
statements.







F-3







SOKO
FITNESS & SPA GROUP, INC.


(FORMERLY
AMERICAN BUSINESS HOLDINGS, INC.)


CONSOLIDATED
STATEMENTS OF INCOME


(IN
US DOLLARS)


FOR
      THE YEARS ENDED MAY 31,2008
                
                
                2007(Restated)Net
      Sales
                
                $
                13,963,130
                
                
                $
                7,393,572Cost
      of Sales
                
                
                (4,119,490)
                )
                
                
                (1,735,376
                )Gross
      Profit
                
                
                9,843,640
                
                
                
                5,658,196Selling,
      General and Administrative Expenses:
                
                
                4,327,700
                
                
                
                2,694,681Operating
      income
                
                
                5,515,940
                
                
                
                2,963,515Other
      Income and ExpensesInterest
      Income (expenses)
                
                
                (49,177
                )
                
                
                -Other
      income
                
                
                2,357
                
                
                
                59,070Other
      expenses
                
                
                (10,328
                )
                
                
                (2,289
                )Total
      other income and (expense)
                
                
                (57,148
                )
                
                
                56,781Income
      Before Income Taxes and Minority Interest
                
                
                5,458,792
                
                
                
                3,020,296Provision
      for Income Taxes
                
                
                74,381
                
                
                
                735Minority
      Interest
                
                
                108,481
                
                
                
                -Net
      Income
                
                $
                5,275,930
                
                
                $
                3,019,560Other
      Comprehensive IncomeForeign Currency
      translation adjustment
                
                
                1,217,693
                
                
                
                304,996Comprehensive
      Income
                
                $
                6,493,622
                
                
                $
                3,324,556Basic
      and Diluted Income per common shareBasic
                
                $
                0.45
                
                
                $
                0.28Diluted
                
                $
                0.44
                
                
                $
                0.28Weighted
      average common share outstandingBasic
                
                
                11,601,781
                
                
                
                10,725,000Diluted
                
                
                11,903,589
                
                
                
                10,725,000


The
accompany notes are an integral part of these consolidated financial
statements .







F-4





SOKO
FITNESS & SPA GROUP, INC.


(FORMERLY
AMERICAN BUSINESS HOLDINGS, INC.)


CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


FOR
THE YEARS ENDED MAY 31, 2008 AND 2007


(IN
US DOLLARS)





Additional
                    
                    
                    Additional
                    
                    
                    AccumulatedCommon
      Stock
                    
                    
                    Subscription
                    
                    
                    Paid-in
      Capital
                    
                    
                    Paid-in
      Capital
                    
                    
                    Other
                    
                    
                    Retained
                    
                    
                    Totalpar
      value $0.001
                    
                    
                    Comprehensive
                    
                    
                    Stockholders'Shares
                    
                    
                    Amount
                    
                    
                    Receivable
                    
                    
                    
                    
                    
                    Warrants
                    
                    
                    Income
                    
                    
                    Earnings
                    
                    
                    EquityBalance
      at May 31, 2006
                    
                    
                    10,725,000
                    
                    
                    $
                    10,725
                    
                    
                    
                    
                    
                    $
                    142,854
                    
                    
                    
                    
                    
                    $
                    103,140
                    
                    
                    $
                    4,462,074
                    
                    
                    $
                    4,718,793Net
      Income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    3,019,560
                    
                    
                    
                    3,019,560Capital
      contribution receivable
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,000,000
                    )
                    
                    
                    1,000,000-Other
      Comprehensive income:
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    304,996
                    
                    
                    
                    
                    
                    
                    
                    304,996Foreign
      currency translation adjustmentBalance
      at May 31, 2007
                    
                    
                    10,725,000
                    
                    
                    
                    10,725
                    
                    
                    $
                    (1,000,000
                    )
                    
                    $
                    1,142,854
                    
                    
                    $
                    -
                    
                    
                    $
                    408,136
                    
                    
                    $
                    7,481,634
                    
                    
                    $
                    8,043,349Paid
      in Capital received
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,000,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,000,000Acquisition
      of net asset from SOKO in the reverse merger
                    
                    
                    3,000,000
                    
                    
                    
                    3,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (3,000
                    )Issuance
      of common stock to Investors
                    
                    
                    2,000,000
                    
                    
                    
                    2,000
                    
                    
                    
                    
                    
                    
                    
                    1,025,500
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,027,500Issuance
      of common stock to placement agent
                    
                    
                    1,275,000
                    
                    
                    
                    1,275
                    
                    
                    
                    
                    
                    
                    
                    (1,275
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -APIC-Warrant
      to investors
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,184,628
                    )
                    
                    
                    1,184,628
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -APIC-Warrant
      to placement agent
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (94,770
                    )
                    
                    
                    94,770
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -Net
      Income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    5,275,930
                    
                    
                    
                    5,275,930Other
      Comprehensive income, net of tax
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,217,693
                    
                    
                    
                    
                    
                    
                    
                    1,217,693Foreign
      currency translation adjustmentBalance
      at May 31, 2008
                    
                    
                    17,000,000
                    
                    
                    
                    17,000
                    
                    
                    $
                    -
                    
                    
                    $
                    884,681
                    
                    
                    $
                    1,279,398
                    
                    
                    $
                    1,625,829
                    
                    
                    $
                    12,757,564
                    
                    
                    $
                    16,564,471


The
accompany notes are an integral part of these consolidated financial
statements.









F-5





SOKO
FITNESS & SPA GROUP, INC.


(FORMERLY
AMERICAN BUSINESS HOLDINGS, INC.)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(IN
US DOLLARS)





FOR
      THE YEARS ENDED MAY 31,2008
                  
                  
                  2007(Restated)Cash
      Flows From Operating Activities:Net
      income
                  
                  $
                  5,275,930
                  
                  
                  $
                  3,019,560Adjustments to reconcile
      net income to net cashprovided by
      operating activities:Depreciation
      and amortization
                  
                  
                  1,016,855
                  
                  
                  
                  412,307Minority
      interest
                  
                  
                  108,481Changes in
      operating assets and liabilities:Accounts
      receivable
                  
                  
                  (270,326
                  )
                  
                  
                  (323,545
                  )Inventory
                  
                  
                  (584,845
                  )
                  
                  
                  123,816Advances
      to suppliers
                  
                  
                  (279,736
                  )
                  
                  
                  (803,128
                  )Employee
      advance
                  
                  
                  (163,600
                  )
                  
                  
                  (17,355
                  )Prepaid
      expense
                  
                  
                  (54,681
                  )
                  
                  
                  (2,389
                  )Deposit
      to vendor
                  
                  
                  6,816
                  
                  
                  
                  (330,118
                  )Accounts
      payable
                  
                  
                  (33,815
                  )
                  
                  
                  (14,387
                  )Unearned
      revenue
                  
                  
                  6,948
                  
                  
                  
                  58,648Taxes
      payable
                  
                  
                  203,532
                  
                  
                  
                  (632,880
                  )Accrued
      expenses and other payables
                  
                  
                  (82,086
                  )
                  
                  
                  33,339Cash
      provided by operating activities
                  
                  
                  5,149,472
                  
                  
                  
                  1,523,868Cash
      Flows From Investing Activities:Addition
      in Construction in Progress
                  
                  
                  (2,665,759
                  )
                  
                  
                  (3,708,397
                  )Purchase
      of property and equipment
                  
                  
                  (3,293,245
                  )
                  
                  
                  (35,884
                  )Investment
      in subsidiary- Letian
                  
                  
                  (1,687,408
                  )
                  
                  
                  -Cash acquired from
      subsidiary - Letian
                  
                  
                  124,447Investment
      advance
                  
                  
                  (1,090,545
                  )
                  
                  
                  -Cash
      used in investing activities
                  
                  
                  (8,612,510
                  )
                  
                  
                  (3,744,281
                  )Cash
      Flows From Financing Activities:Proceeds
      from capital contribution
                  
                  
                  1,000,000
                  
                  
                  
                  -Proceeds
      from issuance of common stock
                  
                  
                  1,027,500
                  
                  
                  
                  -Proceeds
      from short-term loan
                  
                  
                  2,409,815
                  
                  
                  
                  -Cash
      provided by financing activities
                  
                  
                  4,437,315
                  
                  
                  
                  -Effect
      of exchange rate changes on cash and cash
      equivalents
                  
                  
                  133,316
                  
                  
                  
                  118,911Increase
      (decrease) in cash and cash equivalents
                  
                  
                  1,107,594
                  
                  
                  
                  (2,101,503
                  )Cash
      and Cash Equivalents - Beginning of the year
                  
                  
                  456,115
                  
                  
                  
                  2,557,618Cash
      and Cash Equivalents - Ending of the year
                  
                  $
                  $1,563,709
                  
                  
                  $
                  456,115Supplemental
      disclosures of cash flow information:Interest
      paid
                  
                  $
                  $49,042
                  
                  
                  $
                  -Income
      Taxes paid
                  
                  $
                  $9,427
                  
                  
                  $
                  754


The
accompany notes are an integral part of these consolidated financial
statements.







F-6
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007





NOTE
1.  DESCRIPTION OF BUSINESS AND ORGANIZATION





Soko
Fitness & Spa Group, Inc., (“SOKO” or the “Company) was incorporated in the
State of  Delaware on September 9, 2004 under the original name
of  American Business Holdings, Inc. as a holding vehicle to own and
control a textile and plastic packaging company in Central and East Africa. On
September 12, 2004, the Company completed a Stock Purchase Agreement and Share
Exchange in which it purchased all of the outstanding membership shares in
Tissakin Ltd., a Democratic Republic of Congo corporation.  Through
Tissakin Ltd., the Company was a manufacturer of bags for packaging agricultural
products in the Democratic Republic of Congo.





On April
11, 2008 (the “Closing Date”), SOKO entered into a Share Exchange Agreement with
Wealthlink and the Wealthlink Shareholders pursuant to which the Company
acquired all of the outstanding shares of common stock of Wealthlink from the
Wealthlink Shareholders in exchange for their outstanding shares of Wealthlink
common stock and a cash payment of $300,000. Additionally, on the Closing Date,
Mr. Tong Liu, our current Chairman of the Board and Chief Executive Officer,
entered into Securities Purchase Agreements with each of Syed Idris Husain, then
director of the Company, and certain other SOKO shareholders pursuant to which
Mr. Liu purchased 1,000,000 shares of common stock from Mr. Husain and an
aggregate of 1,575,000 shares of common stock from other SOKO shareholders for a
total aggregate purchase price of $400,000.





Also, on
the Closing Date, immediately prior to and as a condition to the completion of
the share exchange, the Company entered into a Stock Purchase Agreement with
each of Syed Irfan Husain, the Company’s then President and Chief Executive
Officer, Syed Idris Husain, and Verifica International, Ltd. (collectively, the
“Buyers”).  Pursuant to this agreement, the Buyers purchased all
issued and outstanding shares of Tissakin Ltd., a Democratic Republic of Congo
corporation and a wholly-owned subsidiary of the Company, in consideration of
79,000,000 shares of common stock of the Company owned by the
Buyers.





As a
result of the consummation of all of the foregoing transactions, the following
changes in the outstanding shares of the Company were recorded:
 
 ·
              The
      Company reacquired 79,000,000 shares from its original
      shareholders;
 
 ·
              Mr.
      Liu acquired 2,575,000 shares from two of the original shareholders of the
      Company;
 
 ·
              The
      Company issued an additional 10,725,000 shares to Wealthlink Shareholders
      (together with the shares held by Mr. Liu, following the consummation of
      the reverse merger, Wealthlink Shareholders hold an aggregate of
      13,300,000 shares of our common
stock);
 
 ·
              Advisors
      to the Company acquired an aggregate of 1,275,000
    shares;
 
 ·
              The
      Purchasers acquired 2,000,000 shares and warrants to purchase up to an
      additional 2,000,000 shares;
 
 ·
              The
      Company cancelled 65,000,000 shares;
and
 
 ·
              E-Tech
      Securities Inc. was issued a warrant to purchase up to 160,000
      shares.
 
 An
additional 425,000 shares remain held by certain original shareholders of the
Company.





Additionally,
on the Closing Date, SOKO entered into a Securities Purchase Agreement, Warrant,
Registration Rights Agreement and Lock-Up Agreement with three investors (the
“Purchasers”) for an aggregate of $2,000,000 (the “Financing”). On the Closing
Date, upon the terms and subject to the conditions set forth in the Securities
Purchase Agreement, SOKO sold, and the Purchasers purchased, in the aggregate,
2,000,000 shares of our common stock and warrants to purchase an additional
2,000,000 shares. The warrants have an exercise price of $1.25 and are
exercisable at any time through the third anniversary of the Closing Date.
Additionally, each Purchaser’s ability to exercise the warrant is limited to the
extent such Purchaser’s beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) would exceed
4.99% of the SOKO’s outstanding common stock. From the Closing Date and through
the twelve-month anniversary of the Closing Date, certain SOKO shareholders
agreed not to sell any of their shares of our common stock. The Company is
obligated to file a registration statement with respect to the shares and
warrants acquired by the Purchasers within 60 calendar days of the Closing
Date.





As a
result of the aforementioned transactions, there has been a change in control of
the Company as the shareholders of Wealthlink became the majority shareholders
of the Company.





For
accounting purpose, the transaction has been accounted for as a reverse
acquisition under the purchase method. Accordingly, Wealthlink and its
subsidiaries are treated as the continuing entity for accounting purposes.
Following the merger, the Company changed its name from American Business
Holdings, Inc. to SOKO Fitness & Spa Group, Inc.




As a
result of the merger, the Company is now engaged in the business of operating
distinctive destination centers that offer professional fitness, beauty salon
and spa services in China. The Company provides programs, services and products
that uniquely combine exercise, education and nutrition to help their members
lead a healthy way of life and achieve their fitness goals. SOKO currently
maintains more than 10,000 memberships within our 6 facilities located in the
northeast region of China.








F-7
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007


Wealthlink
was incorporated under the laws of the Cayman Islands on March 27,
2007.  On June 19, 2007, Wealthlink invested $1,000,000 to form a
wholly-owned subsidiary, Harbin Mege Union Beauty Management Ltd. (“Mege
Union”), a wholly foreign-owned entity (“WFOE”) incorporated under the laws of
the People’s Republic of China (the “PRC” or “China”).
  Except
for its directly owned Legend Spa, and majority-owned subsidiary, Shenyang
Letian Yoga Fitness Center, Mege Union has not carried on any other
substantive operations of its own. Instead, it has entered certain exclusive
agreements with Harbin Daoli Queen Demonstration Beauty Parlor, Harbin Huang
Emperor & Golden Gym Club Co. Ltd., Harbin Queen Beauty Demonstration Center
and Harbin Queen Beauty Vocational Skill Training School (collectively, the
“Queen Group”). The entities in Queen Group are all organized in the PRC as
either limited liability companies or sole
proprietorships.




The
paid-in capital of Queen Group was funded by the majority stockholders of Mege
Union. PRC law currently has limits on foreign ownership of companies. To comply
with these foreign ownership restrictions, on August 3, 2007, Mege Union entered
into certain exclusive agreements with Queen Group and its stockholders.
Pursuant to these agreements, Mege Union provides exclusive consulting and other
general business operation services to Queen Group, in return for a consulting
services fee which is equal to Queen Group’s revenue. In addition, Queen Group’s
shareholders have pledged their equity interest in Queen Group to Mege Union,
irrevocably granted Mege Union an exclusive option to purchase, to the extent
permitted under PRC law, all or part of the equity interests in Queen Group and
agreed to entrust all the rights to exercise their voting power to the person(s)
appointed by Mege Union. Through these contractual arrangements. Mege Union has
the ability to substantially influence Queen Group’s daily operations and
financial affairs, appoint its senior executives and approve all matters
requiring stockholders’ approval.





As a
result of these contractual arrangements, which obligate Mege Union to absorb a
majority of the risk of loss from Queen Group’s activities and enable Mege Union
to receive a majority of its expected residual returns, Mege Union accounts for
Queen Group as a variable interest entity (“VIE”) under Financial Accounting
Standards Board ("FASB") Interpretation No. 46R (“FIN 46R”), “Consolidation of
Variable Interest Entities, an Interpretation of ARB No. 51”. Accordingly, Mege
Union consolidates Queen Group’s results, assets and liabilities.





Since
Mege Union and Queen Group are under common control, the consolidation of Mege
Union and Queen Group has been accounted for at historical cost and prepared on
the basis as if the aforementioned exclusive agreements between Mege Union and
Queen Group had become effective as of the beginning of the first period
presented in the accompanying consolidated financial statements.





On May
13, 2008, the Board of Directors of SOKO Fitness & Spa Group, Inc. (the
"Company" or "SOKO") approved an amendment to the Company's Bylaws to change the
Company's fiscal year from a fiscal year ending on December 31 to a fiscal year
ending on May 31.




NOTE
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis
of presentation and consolidation





The
accompanying consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of
America.





The
consolidated financial statements include the financial statements of SOKO,
Wealthlink, Mege Union and its majority-owned subsidiary Shenyang Letian Yoga
Fitness Center, as well as Mege Union's variable interest entity, Queen
Group. All significant inter-company transactions and balances among the
Company, its subsidiaries and VIEs are eliminated upon
consolidation.





Use
of Estimates





In
preparing the financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year. Significant estimates, required by management, include the
recoverability of long-lived assets and the valuation of
inventories.  Actual results could differ from those
estimates.





Cash
and Cash Equivalents





For
purposes of the statement of cash flow, the Company considers all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.





Accounts
and Other Receivables





Accounts
and other receivables are recorded at net realizable value consisting of the
carrying amount less an allowance for uncollectible amounts, as
needed.





F-8
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007





The
Company uses the aging method to estimate the valuation allowance for
anticipated uncollectible receivable balances. Under the aging method, bad debt
percentages determined by management based on historical experience as well as
current economic climate are applied to customers’ balances categorized by the
number of months the underlying invoices have remained outstanding. The
valuation allowance balance is adjusted to the amount computed as a result of
the aging method. When facts subsequently become available to indicate that the
allowance provided requires an adjustment, then the adjustment will be
classified as a change in estimate. There is no allowance for uncollectible
amounts for the years ended May 31, 2008 and 2007.




Inventories





Inventory
is mainly comprised of hair and skin care supplies .  Inventories
are stated at the lower of cost, as determined on a first-in, first-out basis,
or market. Costs of inventories include unused purchases and supplies for
providing the beauty treatment. No allowance for inventories is considered
necessary for the years ended May 31, 2008 and 2007.





Property,
Equipment and Construction in Progress





Property
and equipment are stated at cost, net of accumulated
depreciation.  Depreciation is computed using the straight-line method
over the estimated useful lives of the assets. Estimated useful lives of the
assets are as follows:




Building
      & buildings improvement
            
            10
      yearsMachinery
      and equipment
            
            5   yearsComputer,
      office equipment and furniture
            
            5   yearsAutomobiles
            
            5   years





The
carrying value of property, plant and equipment is assessed annually and when
factors indicating impairment is present, the carrying value of the fixed assets
is reduced by the amount of the impairment. The Company determines the existence
of such impairment by measuring the expected future cash flows (undiscounted and
without interest charges) and comparing such amount to the net asset carrying
value. An impairment loss, if exists, is measured as the amount by which the
carrying amount of the asset exceeds the fair value of the asset.





Construction
in progress represents direct costs of construction or acquisition and design
fees incurred. Capitalization of these costs ceases and the construction in
progress is transferred to plant and equipment when substantially all the
activities necessary to prepare the assets for their intended use are completed.
No depreciation is provided until it is completed and ready for intended
use.





For the
years ended May 31, 2008 and 2007, the Company had total accumulated costs
involved with construction in progress in the amount of $3,687,591 and $788,915,
respectively.




Goodwill




Goodwill
and other intangible assets are accounted for in accordance with the provisions
of SFAS No. 142, “Goodwill and Other Intangible Assets”. Under
SFAS 142, goodwill, including any goodwill included in the carrying value
of investments accounted for using the equity method of accounting, and certain
other intangible assets deemed to have indefinite useful lives are not
amortized. Rather, goodwill and such indefinite-lived intangible assets are
assessed for impairment at least annually based on comparisons of their
respective fair values to their carrying values. Finite-lived intangible assets
are amortized over their respective useful lives and, along with other
long-lived assets, are evaluated for impairment periodically whenever events or
changes in circumstances indicate that their related carrying amounts may not be
recoverable in accordance with SFAS No. 144, “Accounting for the Impairment
or Disposal of Long-Lived Assets”.





In
evaluating long-lived assets for recoverability, including finite-lived
intangibles and property and equipment, the Company uses its best estimate of
future cash flows expected to result from the use of the asset and eventual
disposition in accordance with SFAS No.144. To the extent that estimated
future, undiscounted cash inflows attributable to the asset, less estimated
future, undiscounted cash outflows, are less than the carrying amount, an
impairment loss is recognized in an amount equal to the difference between the
carrying value of such asset and its fair value. Assets to be disposed of and
for which there is a committed plan of disposal, whether through sale or
abandonment, are reported at the lower of carrying value or fair value less
costs to sell.





There
were no impairment losses recognized for the periods presented.





F-9
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007





Revenue
Recognition





The
Company’s revenue recognition policies are in compliance with Staff Accounting
Bulletin (“SAB”) 104.  Sales revenue is generally recognized when the
services are provided and payments of the customers are received or collections
are reasonably assured. Payments received in advance from membership fees but
not yet earned are recorded as deferred revenue.





Initial
non-refundable membership fees are recognized on a straight-line basis of
estimated membership life.




Cost
of Sales





Costs
of sales include costs of the materials and overhead. Write-down of inventory to
lower of cost or market is also recorded in cost of sales.





Selling,
General and Administrative Costs





Selling,
general and administrative costs consist primarily of salaries and commissions
for sales representatives, rent expenses, depreciation expense and salaries and
employee benefits for administrative staffs.





Comprehensive
Income





Statement
of Financial Accounting Standards ("SFAS") No. 130, “Reporting Comprehensive
Income”, requires disclosure of all components of comprehensive income and loss
on an annual and interim basis. Comprehensive income and loss is defined as the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from non-owner sources. Accumulated other
comprehensive income arose from the changes in foreign currency exchange
rates.





Income
Taxes





The
Company accounts for income tax under the provisions of SFAS No.109 "Accounting
for Income Taxes", which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns.  Under this
method, deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established,
whenever necessary, against net deferred tax assets when it is more likely than
not that some portion or all of the deferred tax asset will not be realized.
There are no deferred tax amounts at May 31, 2008 and 2007.





Fair
Value of Financial Instruments





The
Company’s financial instruments include cash and cash equivalents, accounts
receivable, advances to suppliers, other receivables, accounts payable, accrued
expenses, taxes payable, notes payable and other loans payable. Management has
estimated that the carrying amounts approximate their fair value due to the
short-term nature.




Earnings
per Share





The
Company computes earnings per share (“EPS’) in accordance with Statement of
Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS No. 128”),
and SEC Staff Accounting Bulletin No. 98 (“SAB 98”).  SFAS
No. 128 requires companies with complex capital structures to present basic
and diluted EPS.  Basic EPS is measured as net income divided by the
weighted average common shares outstanding for the period.  Diluted EPS is
similar to basic EPS but presents the dilutive effect on a per share basis of
potential common shares (e.g., convertible securities, options and warrants) as
if they had been converted at the beginning of the periods presented, or
issuance date, if later.  Potential common shares that have an
anti-dilutive effect (i.e., those that increase income per share or decrease
loss per share) are excluded from the calculation of diluted EPS.





Foreign
Currency Translation





The
Company uses the United States dollar (“US Dollars”) for financial reporting
purposes. The Company, Mege Union and Queen Group maintain their books and
records in their functional currency, being the primary currency of the economic
environment in which their operations are conducted.










F-10
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007





In
general, for consolidation purposes, the Company translates its’ subsidiary
Legend and Queen Group's assets and liabilities into US Dollars using the
applicable exchange rates prevailing at the balance sheet date, and the
statement of income and cash flows are translated at average exchange rates
during the reporting period. As a result, amounts related to assets and
liabilities reported on the statement of cash flows will not necessarily agree
with changes in the corresponding balances on the balance sheet. Equity accounts
are translated at historical rates. Adjustments resulting from the translation
of the Company’s, Mege Union's and Queen Group's financial statements are
recorded as accumulated other comprehensive income.





This
quotation of the exchange rates does not imply free convertibility of Chinese
Yuan Renminbi ("RMB") to other foreign currencies. All foreign exchange
transactions continue to take place either through the People's Bank of China or
other banks authorized to buy and sell foreign currencies at the exchange rate
quoted by the People's Bank of China. The rate of exchange quoted by the
People’s Bank of China at May 31, 2008 was US$1.00 = RMB6.94. The weighted
average translation rate of US$1.00 = RMB7.3358 was applied to the Company's 12
months income statement for 2008.




Statement
of Cash Flows





In
accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from the
Company's operations is calculated based upon the local
currencies.  As a result, amounts related to assets and liabilities
reported on the statement of cash flows may not necessarily agree with changes
in the corresponding balances on the balance sheet.





New
Accounting Pronouncements





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financials Liabilities — Including an Amendment of FASB
Statement No. 115." This standard permits measurement of certain financial
assets and financial liabilities at fair value. If the fair value option is
elected, the unrealized gains and losses are reported in earnings at each
reporting date. Generally, the fair value option may be elected on an
instrument-by-instrument basis, as long as it is applied to the instrument in
its entirety. The fair value option election is irrevocable, unless a new
election date occurs. SFAS No. 159 requires prospective application and also
establishes certain additional presentation and disclosure requirements. The
standard is effective as of the beginning of the fiscal year that begins after
November 15, 2007. We are currently evaluating the provisions of SFAS
No. 159 to determine the potential impact, if any, the adoption will have on our
financial statements.





In June
2007, the FASB issued FASB Staff Position No. EITF 07-3, “Accounting for
Nonrefundable Advance Payments for Goods or Services Received for use in Future
Research and Development Activities” (“FSP EITF 07-3”), which addresses whether
nonrefundable advance payments for goods or services that used or rendered for
research and development activities should be expensed when the advance payment
is made or when the research and development activity has been performed. The
Company has adopted FSP EITF 07-3 and expensed the research and development
as it incurred.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements - an amendment of Accounting Research Bulletin
No. 51” (“SFAS 160”), which establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent, the
amount of consolidated net income attributable to the parent and to the
non-controlling interest, changes in a parent’s ownership interest and the
valuation of retained non-controlling equity investments when a subsidiary is
deconsolidated. The Statement also establishes reporting requirements that
provide sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the non-controlling owners. SFAS
160 is effective for fiscal years beginning after December 15, 2008. The Company
has not determined the effect that the application of SFAS 160 will have on its
consolidated financial statements.




In
December 2007, Statement of Financial Accounting Standards No. 141(R), Business Combinations, was
issued. SFAS No. 141R replaces SFAS No. 141, Business Combinations.SFAS
141R retains the fundamental requirements in SFAS 141 that the acquisition
method of accounting (which SFAS 141 called the purchase method) be used for
all business combinations and for an acquirer to be identified for each business
combination. SFAS 141R requires an acquirer to recognize the assets acquired,
the liabilities assumed, and any non-controlling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited
exceptions. This replaces SFAS 141’s cost-allocation process, which required the
cost of an acquisition to be allocated to the individual assets acquired
and liabilities assumed based on their estimated fair values. SFAS 141R also
requires the acquirer in a business combination achieved in stages (sometimes
referred to as a step acquisition) to recognize the identifiable assets and
liabilities, as well as the non-controlling interest in the acquiree, at the
full amounts of their fair values (or other amounts determined in accordance
with SFAS 141R). SFAS 141R applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The Company has adopted SFAS No. 141R.





In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”)
No. 161, Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133, which requires additional
disclosures about the objectives of the derivative instruments and hedging
activities, the method of accounting for such instruments under SFAS
No. 133 and its related interpretations, and a tabular disclosure of the
effects of such instruments and related hedged items on our financial position,
financial performance, and cash flows. SFAS No. 161 is effective beginning
January 1, 2009. We are currently assessing the potential impact that
adoption of SFAS No. 161 may have on our financial statements.





F-11
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007









NOTE
3.  ADVANCES TO SUPPLIERS





The
Company makes advances to certain vendors for inventory purchases. The Advances
to Suppliers were $1,467,861 and $857,757 as of May 31, 2008 and 2007. Below is
the breakdown of advances to major suppliers:





As
      of May 31,2008
              
              
              2007Major
      supplier A
              
              $
              882,295
              
              
              $
              857,757Major
      supplier B
              
              
              164,387
              
              
              
              -Major
      supplier C
              
              
              110,690
              
              
              
              -Others
              
              
              310,488
              
              
              
              -Total
              
              $
              1,467,861
              
              
              $
              857,757





NOTE
4.  INVENTORIES





The
inventories consist of the following:





As
      of May 31,2008
                  
                  
                  2007Skin
      care supplies
                  
                  $
                  1,018,517
                  
                  
                  $
                  381,054Hair
      care supplies
                  
                  
                  30,271
                  
                  
                  
                  9,169Total
                  
                  $
                  1,048,788
                  
                  
                  $
                  390,223





No
allowance for inventories was made for the years ended May 31, 2008 and
2007.





NOTE
5 .  EMPLOYEE ADVANCE





The
Employee Advance was $249,900 and $35,684 as of May 31, 2008 and 2007,
respectively.  The Employee Advance was made to certain employees by
the Company in order for them to pay the travel expenses, office supplies
expenses or any other miscellaneous expenses in the future.





NOTE
6 .  PROPERTY AND EQUIPMENT, NET





As
      of May 31,2008
              
              
              2007Machinery
      & Equipments
              
              $
              1,830,649
              
              
              $
              1,456,744Office
      Equipment & Furniture
              
              
              526,221
              
              
              
              265,813Automobiles
              
              
              86,639
              
              
              
              5,097Buildings
              
              
              1,743,516
              
              
              
              -Leasehold
      improvements
              
              
              7,156,757
              
              
              
              4,138,126Sub-total
              
              
              11,343,781
              
              
              
              5,865,780Less:
      Accumulated Depreciation
              
              
              (2,248,454
              )
              
              
              (1,042,089
              )Construction
      in progress
              
              
              3,687,591
              
              
              
              788,915Total
              
              $
              12,782,918
              
              
              $
              5,612,605





Depreciation
and amortization expense for the years ended May 31, 2008 and May 31,
2007 was $ 1,016,855 and $412,307, respectively.





F-12
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007







NOTE
7 .  DEPOSIT TO SUPPLIER





The
Deposit to Supplier of RMB 5,000,000, $720,461 and $659,993 as of May 31, 2008
and 2007 represents deposit made to a major supplier, with whom the Company has
a long standing business relationship. In order to maintain the relationship and
purchase the products under the most favorable condition, the Company made the
deposit.  Since the Company expects the entire amount will be repaid,
no allowance has been established.





NOTE
8 .  INVESTMENT ADVANCE





On March
1, 2008, the Company’s subsidiary Mege Union (the “Purchaser”) entered into an
acquisition agreement with Harbin Tai Ai Beauty Co, Ltd (“Harbin Tai Ai, or the
“Seller”) to purchasing 100% interest of the Tai Ai.  The acquisition
cost is RMB 8,000,000, and the agreement calls for payment in advance. As of May
31, 2008, Mege Union has made full payment of RMB 8,000,000, equivalent to
approximately $1.2 million . Once the transaction is completed, the
Company will reclassify the full amount to proper accounts.





It is
expected that with the completion of this acquisition, the Company will be able
to expand its market shares in Harbin area.





NOTE
9.  GOODWILL





On
March 1, 2008, the Company’s subsidiary Mege Union entered into an acquisition
agreement with Shenyang Shengchao Management & Advisory Co., Ltd to acquire
51% of Shengchao’s interest in Letian. The consideration paid was
US$1,729,107 (including the translation difference of $41,699). The results of
operations of Letian were included in the consolidated results of operations
commencing March 1, 2008. Letian is a yoga center and health club located in
Shenyang, Liaoning Province, PRC.  The general purpose of the
acquisition of Letian is to expand SOKO's business presence in the Shenyang
market, resulting in a maximization of profit.





The
accompanying consolidated financial statements include the allocation of the
acquisition cost to the net assets acquired based on their respective fair
values. The net assets were valued by an independent third party.





Goodwill
represents the excess of the purchase price over the fair value of the net
tangible and identifiable intangible assets of the 51% interest in Letian
acquired.   None of the goodwill recognized is expected to be
deductible for income tax purposes .  The following represents the
allocation of the acquisition cost to the net assets acquired based on their
respective fair values:





Current
      assets
                
                $
                449,970Construction
      in process
                
                
                965,101Fixed
      assets
                
                
                405,723Total
      liabilities assumed
                
                
                1,382,761Net
      assets acquired
                
                
                438,033Noncontrolling
      interest in Letian
                
                
                (214,636
                )Total
      consideration paid
                
                
                1,729,107Goodwill
                
                $
                1,505,710





The
following unaudited pro forma combined statements of income for the years ended
May 31, 2008 and 2007 have been prepared as if the acquisition had occurred at
the beginning of each period presented. The unaudited pro forma combined
statements are based on accounting for the business acquisition under purchase
accounting. The unaudited pro forma information may not be indicative of the
results that actually would have occurred if the merger had been in effect from
and on the dates indicated or which may be obtained in the
future.






F-13






Unaudited
      Pro Forma
                  Combined
      Year Ended May2008
                
                
                2007Revenue
                
                $
                14,436,827
                
                
                $
                7,393,572Gross
      Profit
                
                
                10,384,824
                
                
                
                5,658,196Income
      before income tax and minority interest
                
                
                5,209,672
                
                
                
                3,020,296Minority
      interest
                
                
                (21,056
                )
                
                
                -Net
      income
                
                $
                5,156,347
                
                
                $
                3,019,560Net
      income per shareBasic
                
                $
                0.44
                
                
                $
                0.28Diluted
                
                $
                0.43
                
                
                $
                0.28Weighted
      average number of shares outstandingBasic
                
                
                11,601,781
                
                
                
                10,725,000Diluted
                
                
                11,903,589
                
                
                
                10,725,000




NOTE
10 .  TAXES





1)             Corporate
Income Tax





The
Company is a Delaware corporation and conducts all of its business through Mege
Union and Queen Group, both Chinese subsidiaries. All business is conducted in
PRC.





Queen
Group consists of five individually-owned sole proprietorships, which are
generally exempt from paying corporate level income taxes, except the Harbin
Huang Emperor & Golden fitness business whose income tax is levied at 27% of
its taxable net income which is fixed at 10% of annual revenue. Letian is
subject to a 25% income tax rate on all net income.





Our
provisions for income taxes for the year ended May 31, 2008 and 2007 were
$74,381 and $735, respectively.





2)             Business
Sales Tax





General
business sales taxes are levied on business under both Queen Group and Mege
Union.  Except the Harbin Huang Emperor & Golden fitness which is
subject to 3% of actual revenue and Letian which is subject to 5% of actual
revenue, all other business is subject to either 3% or 5% on a pre-determined
fixed revenue.





3)            Taxes
payable at May 31, 2008 and 2007 consisted of the following:




As of May 31,2008
              
              
              2007Business
      sales tax payable
              
              $
              244,680
              
              
              $
              97,404Corporate
      income tax
              
              
              68,853Other
              
              
              26,023
              
              
              
              10,716Total
      taxes payable
              
              $
              339,556
              
              
              $
              108,120







F-14
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007





The
following table reconciles the U.S. statutory rates to the Company’s effective
tax rate for the years ended May 31, 2008 and 2007




2008
                
                
                2007U.S.
      Statutory rates
                
                
                34.00
                %
                
                
                34.00
                %Foreign
      income not recognized in USA
                
                
                (34.00
                %)
                
                
                (34.00
                %)China
      Income tax
                
                
                25.00
                %
                
                
                33.00
                %Tax
      exemption
                
                
                (23.60
                %)
                
                
                (33.00
                %)Total
      provision for income tax
                
                
                1.40
                %
                
                
                0.00
                %





NOTE
11 .  SHORT TERM LOAN





The
short-term loans include the following:




Balance
      of31-May-08
                    
                    
                    31-May-07a)  Loan
      payable to an unrelated bank one year term from February 29,
      2008
                      to
      January 29, 2009 at a fixed interest rate of 0.62% per
      month,
                    
                    $
                    1,729,107
                    
                    
                    $
                    -b)  Loan
      payable to an unrelated party  one year term from October 23,
      2007
                      to
      October 28, 2008 at a fixed interest payment of RMB4,000 per
      quarter
                    
                    
                    288,184
                    
                    
                    
                    -c)  Loan
      payable to a related party one year term from April 1, 2008 to March 31,
      2009 free of interest
                    
                    
                    529,953Total
                    
                    $
                    2,547,244
                    
                    
                    $
                    -




Interest
expense paid for the above short term loans totaled $49,042 and -0- for the
years ended May 31, 2008 and 2007, respectively.




The loan
from an unrelated bank is secured by the building owned by Queen
Group.




NOTE
12 .  DEFERRED REVENUE





Deferred
revenue represents cash received from members, but not yet earned. The summary
set forth below of the activity and balances in deferred revenue at May 31, 2008
and 2007 respectively. Cash additions include all cash received for membership
fees and advance payments for services. Revenue recognized includes all revenue
earned during the periods from membership services and other
services.





A
reconciliation of deferred revenue as of May 31, 2008 is as
follows:





As
      of May 31,2007
                  
                  
                  
                  
                  
                  
                  
                  
                  2008Balance
                  
                  
                  Cash
      Additions
                  
                  
                  Revenue
      Recognized
                  
                  
                  BalanceMembership
      fees & advancepayment
      collected
                  
                  $
                  171,457
                  
                  
                  $
                  13,392,939
                  
                  
                  $
                  (13,135,192
                  )
                  
                  $
                  429,204Receipts
      collected & earnedwithout
      deferral during period
                  
                  
                  
                  
                  
                  
                  532,886
                  
                  
                  
                  (827,937
                  )171,457
                  
                  
                  
                  13,925,825
                  
                  
                  
                  (13,963,129
                  )
                  
                  
                  429,204Impact
      of foreigncurrency
      translation
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  85,761Total
                  
                  
                  $
                  514,965







F-15
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007





NOTE
13 .  SEGMENT REPORTING





The
Company has a single operating segment in accordance with the provisions of SFAS
No. 131, “Disclosures about Segments of an Enterprise and Related Information”.
Although the Company provides and markets various products and services, the
Company’s chief operating decision maker reviews and evaluates one set of
combined financial information deciding how to allocate resources and in
assessing performance.





For the
years ended May 31, 2008 and 2007, the Company’s sales revenue from various
products/services are as follows:




Twelve
      months ended May 31,2008
                  
                  
                  2007Beauty
      & Spa
                  
                  $
                  11,626,414
                  
                  
                  $
                  5,380,378Fitness
                  
                  
                  1,497,040
                  
                  
                  
                  889,321Others
                  
                  
                  839,676
                  
                  
                  
                  1,123,873Total
                  
                  $
                  13,963,130
                  
                  
                  $
                  7,393,572





The
other revenue derives from tuition income from the Beauty school and sales of
beauty products to the students.





NOTE
14 .  STOCKHOLDERS’ EQUITY





A. Issuance of Common
Stock





On April
11, 2008, in connection with the share exchange discussed in detail under NOTE
1, the Company issued an aggregate of 10,725,000 shares of our common stock
to the Wealthlink Shareholders. Additionally, the CEO Mr. Liu Tong acquired
2,575,000 shares from former stockholders in connection with the share exchange
transaction. Further, in consideration of services provided to the Company in
association with the consummation of these transactions, an aggregate of
1,275,000 shares were issued to placement agent. Additionally, on April 11,
2008, SOKO sold in the aggregate, 2,000,000 shares of its common stock to
certain accredited investors, at a purchase price of $1.00 per share. The
Company received net proceeds of $1,027,500 in connection with this private
placement after the reduction of $140,000 in legal and $832,500 other issuance
expense. As of May 31, 2008, there were 17,000,000 shares of common stock
issued and outstanding.




B. Warrants





With the
warrants attached to the stocks sold in the private placement, the investors are
entitled to purchase an aggregate of 2,000,000 shares of common stock at an
exercise price of $1.25 per share. All the warrants to investors contain a
cashless exercise provision . Moreover, placement agent is entitled to
purchase an aggregate of 160,000 shares of common stock at an exercise price of
$1.25 per share. All these warrants are exercisable for three years from
the issuance date of   April 11, 2008 . In accordance
with EITF 00-19, the warrants are classified in the equity section as an
offset to additional paid-in capital.





The fair
value of the warrants was calculated using the Black-Scholes options pricing
model using the following assumptions: Volatility 100%, risk free interest rate
3.850% and expected term of 3 years for warrants to placement agent and 3 years
for warrants to investors.





Following
is a summary of the status of warrants outstanding as of May 31,
2008:





Outstanding
      WarrantsExercise
      Price
                Number
                Remaining
      Life
                Fair
      Value1.25
                2,000,00
                2.92
                $1,184,6281.25
                160,000
                2.92
                $ 94,770Total
                2,160,000
                
                $1,279,398





NOTE
15 .  RELATED TRANSACTIONS





Two of
our subsidiaries rent their premises from Mr. Tong Liu, our Chairman and CEO.
Mr. Liu has leased the following stores to the Company pursuant to the terms of
binding written lease agreements containing terms no less favorable to the
Company than the
Company could have negotiated in an arm’s length transaction with a motivated
landlord, including substantially the following terms:





F-16
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007







1)
            Harbin
      Daoli Queen Demonstration Beauty Parlor: 5 years from January 1, 2008
      through December 31, 2012, for $47,300 per year, prepaid for 1 year plus
      an option for additional 5 years at no more than $55,000 per
      year.  2)
              Harbin
      Queen Beauty Demonstration Center: 5 years from January 1, 2008 through
      December 31, 2012 for $20,300 per year, prepaid for 1 year plus an option
      for additional 5 years at no more than $24,000 per
year.3)
              The
      non-interest loan of $529,953 was granted to the Company by a very close
      friend of Mr. Tong Liu, the CEO of the Company.  There is no
      other related transaction between this related party and the Company as of
      May 31, 2008.




NOTE
16. EARNINGS PER SHARE





Earnings
per share for the period ended May 31, 2008 and 2007 is determined by dividing
net income for the periods by the weighted average number of both basic and
diluted shares of common stock and common stock equivalents outstanding. The
following is an analysis of the differences between basic and diluted earnings
per common share in accordance with Statement of Financial Accounting Standards
No. 128, “Earnings Per Share.”


The
following demonstrates the calculation for earnings per share for the fiscal
year ended May 31, 2008 and 2007:





Year
      ended May 31,2008
                  
                  
                  2007Basic
      and diluted earning per shareNet
      income
                  
                  $
                  5,275,930
                  
                  
                  $
                  3,019,560Weighted
      average common share outstanding0Basic
                  
                  
                  11,601,781
                  
                  
                  
                  10,725,000Diluted
                  
                  
                  11,903,589
                  
                  
                  
                  10,725,000Earnings
      per shareBasic
                  
                  $
                  0.45
                  
                  
                  $
                  0.28Diluted
                  
                  $
                  0.44
                  
                  
                  $
                  0.28







At May
31, 2008 and 2007, the company had outstanding warrants of 2,160,000 and -0-,
respectively.




In
April 2008, the company entered into a reverse merger transaction. The
Company computes the weighted-average number of common shares outstanding in
accordance with FASB 141R, it gives guidance on how to calculate the weighted
average shares when reverse merger took place in the middle of the year, the
number of common shares outstanding from the beginning of that period to the
acquisition date shall be computed on the basis of the weighted-average number
of common shares of the legal acquiree (accounting acquirer) outstanding during
the period multiplied by the exchange ratio established in the merger agreement.
The number of common shares outstanding from the acquisition date to the end of
that period shall be the actual number of common shares of the legal acquirer
(the accounting acquiree) outstanding during that period.


NOTE
17 .  COMMITMENTS AND CONTINGENCIES





1)                  Commitments





The
Company leases offices and fitness facilities under non-cancellable operating
leases. The Company recognizes rent expense on a straight-line basis over the
term of the lease in accordance to SFAS No.13 “Accounting for Leases.” The
Company has entered into nine tenancy agreements for the lease of the
premises.





F-17
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007





The
Company’s commitments for minimum rental payments under these lease agreements
are as follows:





As
      of May 312009
                
                $
                378,2422010
                
                
                461,0952011
                
                
                422,6712012
                
                
                414,1212013
                
                
                340,1542014
                
                
                241,2102015
                
                
                241,2102016
                
                
                253,2712017
                
                
                253,2712018
                
                
                126,635Total
                
                $
                3,364,229




According
to the warrant agreement to investors, the warrants contain a cashless exercise
provision, which entitle the holders to receive a certificate for the number of
warrant shares if any time after 180 days from the Closing there is no effective
Registration Statement registering pursuant to the Registration Rights Agreement
entered into by the Company and the Holders, or no current prospectus available
for, the resale of the Warrant Shares by the Holders.





2)                  Contingencies





On June
1, 2008, Queen Group closed one of its beauty salon store in Harbin and decided
to relocate it to a new location.  The new store will also be changed
name to Dafuyuan store. The unamortized leasehold improvements in the amount of
$ 14,752 of will be written-off.  The new store is under decoration
and its opening date is pending.





Pursuant





a.
            Fiscal
      Year 2008 Performance Threshold means the target amounts of (a) $4.5
      million for the Company’s audited Net Income for the fiscal year ended May
      31, 2008 and (b) $0.26 per share for the Company’s audited Net Income per
      share, calculated by using 17 million shares outstanding, which should be
      constant and fixed regardless of the actual number of shares outstanding.
      The fiscal year 2008 performance threshold was achieved as of May 31,
      2008.





b.
            Fiscal
      Year 2009 Performance Threshold means the target amounts of (a) $6.0
      million for the Company’s audited Net Income for the fiscal year ended May
      31, 2009 and (b) $0.30 per share for the Company’s audited Net Income per
      share, calculated by using 20 million shares outstanding, which should be
      constant and fixed regardless of the actual number of shares
      outstanding.





Based
on the formula described in the escrow agreement, the company must disburse all
of the shares if fifty-four percent (54%) of the criteria is not achieved, and a
decreasing amount of shares for certain criteria achieved above the fifty-four
percent (54%) threshold.





The
Registration Rights Agreement between the Company and security purchaser
provides for liquidated damages to the extent that the Company does not attain
certain milestones within specified time frames. Specifically, if the Company
had failed to file a registration statement within 60 calendar days after the
Closing (a milestone which was met by the Company), or in the event that it
fails to file a pre-effective amendment and otherwise respond in writing to
comments made by the Commission in respect of such Registration Statement within
10 Trading Days after the receipt of comments by or notice from the Commission
that such amendment is required in order for such Registration Statement to be
declared effective, or registration statement is not declared effective within
180 calendar days after the Closing, or in the event that such Registration
Statement ceases for any reason to remain continuously effective as to all
Registrable Securities included in such Registration Statement, or the Holders
are otherwise not permitted to utilize the Prospectus therein to resell such
Registrable Securities, for more than 10 consecutive calendar days or more than
an aggregate of 30 calendar days during any 12-month period (which need not be
consecutive calendar days), liquidated damages amounting to approximately
$20,000.00 per month would have been payable to purchasers, and such liquidated
damages are payable for each 30 calendar day period on a daily pro-rata for any
portion of a month prior to cure of an event. The maximum amount of liquidation
damage payable to security purchaser is $200,000. As of 5/31/2008, no liquidated
damage should be accrued. As first round comment letter dated July 8, 2008,
which was responded to by September 5, 2008, liquidated damages for 43 days
delay amounting to approximately $28,810 will be accrued in the
first quarter of fiscal year 2009. In addition, the estimate effective date of
the registration statement will be November 20, 2008; we will accrue additional
liquidation damage approximately $26,800 for 40 days late effectiveness. In the
second quarter, our estimate effective date of the registration statement will
be January 20, 2008; the estimate liquidation damage accounting to approximately
$20,100 for additional 30 days delay will be accrued.





F-18
 SOKO
FITNESS & SPA GROUP, INC.
 (FORMERLY
AMERICAN BUSINESS HOLDINGS, INC)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MAY 31, 2008 AND 2007








NOTE
18.  RESTATEMENT





We
have restated the consolidated financial statements for the year ended May 31
2008 as a result of incorrect revenue recognition for the non-refundable
membership fee from the fitness business of Letian and the incorrect
classification of warrant issued to shareholders in the private
placement.





The
non-refundable membership fee previously was recognized when it was collected.
Based on Staff Accounting Bulletin (“SAB”) 104, the Company revised its revenue
recognition of non-refundable membership fee and initial non-refundable
membership fee is recognized on a straight-line basis of estimated membership
life.





The
warrants to investors were classified as liability and after further review of
EITF 00- 19 and all the facts and circumstances associated with the issuance of
the warrants to the investors, the warrants do not meet the criteria to classify
to liability. The Company has reclassified the warrants as equity in the
financial statements.





The
number of warrants issued to the placement agent has been revised according
the warrant agreement.





The
other expense classification is not consistent with the classification of fiscal
year 2007 other expense, the company has made revision.





Basic
and diluted income per common share has been revised because incorrect
calculation of weighted average common shares, the company follows FASB 141 to
recalculate the weighted-average number of common shares outstanding during the
period in which the reverse acquisition occurred.





The
impact of this restatement on the financial statements as originally reported is
summarized below:





May
      31, 2008As
      Reported
                        
                        
                        As
      RestatedProperty,
      plant and equipment, net
                        
                        $
                        12,788,203
                        
                        
                        $
                        12,782,918Goodwill
                        
                        
                        1,348,359
                        
                        
                        
                        1,505,710Total
      Assets
                        
                        
                        21,163,706
                        
                        
                        
                        21,315,772Unearned
      revenue
                        
                        
                        445,684
                        
                        
                        
                        514,965Warrant
      liability
                        
                        
                        1,184,628
                        
                        
                        
                        -Minority
      Interest
                        
                        
                        363,277
                        
                        
                        
                        329,304Additional
      paid-in capital
                        
                        
                        1,142,854
                        
                        
                        
                        884,681Additional
      paid-in capital -Warrant
                        
                        
                        -
                        
                        
                        
                        1,279,398Accumulated
      other comprehensive income
                        
                        
                        1,619,373
                        
                        
                        
                        1,625,829Retained
      earnings
                        
                        
                        12,642,130
                        
                        
                        
                        12,757,564Total
      Liabilities and Stockholders' Equity
                        
                        
                        21,163,706
                        
                        
                        
                        21,315,772Net
      sales
                        
                        
                        13,736,788
                        
                        
                        
                        13,963,130Cost
      of sales
                        
                        
                        4,028,853
                        
                        
                        
                        4,119,490Selling,
      General and Administrative expenses
                        
                        
                        4,285,123
                        
                        
                        
                        4,327,700Other
      expenses
                        
                        
                        143,541
                        
                        
                        
                        10,327(Loss
      from) Minority interest
                        
                        
                        2,426
                        
                        
                        
                        (108,481
                        )Net
      income
                        
                        $
                        5,160,496
                        
                        
                        $
                        5,275,930Net
      income per common shareBasic
                        
                        $
                        0.30
                        
                        
                        $
                        0.45Diluted
                        
                        $
                        0.25
                        
                        
                        $
                        0.44Weighted
      average common share outstandingBasic
                        
                        
                        17,000,000
                        
                        
                        
                        11,601,781Diluted
                        
                        
                        20,360,000
                        
                        
                        
                        11,903,589











F-19





SIGNATURES





Pursuant
to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on the  17th day of
February, 2009 .





SOKO
      Fitness & Spa Group, Inc./s/ Tong
      LiuTong
      LiuChief
      Executive Officer(Principal
      Executive Officer)







Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.






Signature
                            
                            Title
                            
                            Date/s/
      Tong Liu
                            
                            Chief
      Executive Officer,
                              Chairman
      of the Board
                            
                            February
      17, 2009Tong
      Liu
                            
                            (Principal
      Executive Officer)/s/
      Xia Yu
                            
                            Chief
      Financial Officer
                            
                            February
      17, 2009Xia
      Yu
                            
                            (Principal
      Financial and Accounting Officer)*
                            
                            Director
                            
                            February
      17, 2009Yang
      Chen*
                            
                            Director
                            
                            February
      17, 2009Su
      Zhang*
                            
                            Director
                            
                            February
      17, 2009Gideon
      Efim Kory




*  /s/
      Tong LiuTong
      Liu
              Attorney-in-Fact





















INDEX
TO EXHIBITS





Exhibit
            Description
      of Exhibit




31.1
            Certification
      of our Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 under
      the Securities Exchange Act of 1934, as
amended





31.2
            Certification
      of our Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 under
      the Securities Exchange Act of 1934, as
amended





32.1
            Certification
      of our Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002





32.2
            Certification
      of our Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002