UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
DC 20549




FORM
10-K





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




-1-






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 its
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 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, so that Tissakin Ltd. became our
wholly owned subsidiary. Through its wholly owned subsidiary, 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”), we 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.  These transactions are
collectively referred to as the "share exchange."






-2-




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 these transactions, the company reacquired
81,575,000 shares from its original shareholders and issued an aggregate of
13,300,000 shares of our common stock to the Wealthlink
Shareholders.  Further, in consideration of services provided to us 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.  The remaining 67,425,000 shares acquired by the company
were canceled.




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.




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.  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 as either limited liability company or sole
proprietorship.




The
paid-in capital of Queen Group was funded by the majority stockholders of Mege
Union. 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.






-3-




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 at 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. We provide
programs, services and products that uniquely combine exercise, education and
nutrition to help members lead a healthy way of life and achieve their fitness
goals.




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.




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 using several models for expansion:




·
            Direct-ownership:
      with existing experiences and successful business model, we have started
      the physical expansion grogram through constructions of new facilities or
      re-modification of existing
facilities.






-4-




·
            Franchising:
      we are planning to roll out our franchising model to expand at a higher
      speed. Through a sophisticated network with many owners of
      well-established & well-positioned beauty salons & spas, and
      fitness centers, we will initially promote franchising within the network
      because we believe those businesses are already well reached or even above
      the qualifications required by us in terms of franchising standards. The
      existing salons, spas and fitness centers, which require the minimum
      re-modifications on physical facilities and minimum re-staff, will be
      prioritized as first wave of franchising
  facilities.




·
            Luxury
      Business: besides pursuing the physical expansion under similar business
      model, we also found other business models highly attractive due to the
      high speed of expansion to metropolitan areas and real estate development
      in suburban areas, a huge potential demand for complimentary beauty salon,
      spas and fitness centers attached to mid- and high-end residential
      communities is increasing.  We have foreseen this opportunity as
      a key to further open mid- and high-end consumer market which will
      potentially bring us into another stage of high-speed
    growth.




·
            Technology
      Development: we also aim to develop our technology in order to stay on the
      top of competitions and trends. A full functioned website will be
      developed to integrate many value-added services, includes professional
      online consulting, service plan online DIY,
etc.




Expansion
      Models ComparisonDirect-own
                
                Franchise
                
                Business
      (luxury)
                
                TechnologyNarrow
      down target’s theme
                Develop
      more wholly owned stores and upgrade the owned ones.
                
                Attract
      more qualified partners joining in.
                
                Develop
      high-end market to accelerate our revenue growth.
                
                SOKO
      personalized online service, fulfills every customer’s needs, and
      integrates the SOKO comprehensive services into the online
      version.Collecting
      market data, information and sample surveys
                Surveys
      and reports
                
                Online
      approaching
                
                Large
      scale surveys in high-end neighborhoods
                
                Study
      and build upon successful online marketing casesSort
      all data
                Direct-own
      store local survey and report
                
                Evaluate
      candidate franchised stores’ potentials and determine whether to approve
      or reject the application
                
                Data
      of the income levels and consumption levels of the high-end
      neighborhoodsProvide
      business plans (BPs)
                provide
      several business plans (BPs) for each targetChoose
      one BP
                Make
      decision, choose one for each targetDetailed
      implementation plan
                Turn
      the BP into the detailed implementation planSet
      up quality control rules
                Set
      up quality control rules and evaluation standards for each
    BPAddition
                1.Budget
      and implementation table to help monitor every project’s
      status
                  2.Project
      expectation, measures the BP
                  3.
      BPs bibliography. Guarantee the reliability and feasibility of the
      BPs
                  4.Alternative
      BPs
                  5.Risk
      control, alert risk in
advance




-5-




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; andBody
      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.




The
Queen Group




The Queen
Group's revenue accounted for 86% of our total revenue during fiscal 2008. The
Queen Group consists of independently owned variable interest entities through
which we operate successful salons and fitness centers.  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:






-6-






·
            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;




·
            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.




As a
result of the understandings and agreements provided in the foregoing documents,
we effectively control each of the Queen Group entities.




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;


·
            Equipments;


·
            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.




-7-






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.




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 more than 3% of total market shares. 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.






-8-




Trademarks




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




My
Café










Queen’s
Beauty










SOKO












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.




-9-






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 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.






-10-








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 monetize (or 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;




·
            The
      results of our investments in risky
projects;






-11-




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




·
            Our
      ability to achieve revenue goals for partners to whom we guarantee minimum
      payments or pay distribution fees;
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. In addition,
advertising spending has historically been cyclical in nature, reflecting
overall economic conditions as well as budgeting and buying patterns. For
example, health, fitness and spa services tend to be seasonal.




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.




Our
business and operations are experiencing rapid 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, rapid growth in our operations, which
has placed, and will continue to place, significant demands on our management,
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 will 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.






-12-




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.




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.






-13-




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 will be 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.






-14-




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 PRCgovernment
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.




Tax
laws and regulations in the PRC are subject to substantial revision, some of
which may adversely affect our profitability.




The PRC
tax system is in a state of flux, and it is anticipated that the PRC's tax
regime will be altered in the coming years. Tax benefits that we presently enjoy
may not be available in the wake of these changes, and we could incur tax
obligations to our government that are significantly higher than anticipated.
These increased tax obligations could negatively impact our financial condition
and our revenues, gross margins, profitability and results of operations may be
adversely affected as a result.






-15-






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.




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, many 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.






-16-






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;




·
            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.






-17-




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 500,000,00 shares
of common stock, par value $.001 per share, and 10,000,000 shares of preferred
stock with $.001 par value. There are approximately 480,950,000 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:




·
            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;






-18-




·
            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.




We
currently operate out of leased properties located at:




(1)
            Harbin
      Daoli Queen Demonstration Beauty Parlor (Daoli Spa),
      No. 24 Xishidao Street, Daoli District, Harbin City,
      China;






-19-




(2)
            Harbin
      Queen Beauty Demonstration Center (Daowai Spa),
      No. 107 Jinyang Street, Daowai District, Harbin
      City, China;




(3)
            Barbin
      Queen Beauty Demonstration Center Kunlun Branch (Kunlun
      Spa), No. 44 Tianshun Street, Nangang District, Harbin
      City, China;




(4)
            Harbin
      Queen Beauty Demonstration Center Branch (Nangang Spa),
      No. 108 Jiejing Street, Nangang District, Harbin City,
      China;




(5)
            Harbin
      Huang Emperor & Golden Gym Club (SOKO Fitness Center),
      No. 7 Yushan Road, Nangang District, Harbin City,
      China; and




(6)
            Harbin
      Mege Union Beauty Management Ltd. (Legend Spa),
      No. 389 Hanshui Road, Nangang District, Harbin City,
      China; and




(7)
              Shenyang
      Letian, 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 City, 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 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.




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.






-20-








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.” 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
            
            $12.00
            
            $0.25




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 17,000,000shares 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.




Dividends




For the
year ended May 31, 2008, we did not pay dividends on our common
stock.  Additionally, we currently anticipate that any future earnings
will be retained for the development of our business and do not anticipate
paying any dividends on the common stock in the foreseeable future.




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 share exchange, which is described in detail
in Item 1. Business "Corporate History" beginning on page 1, on April 11, 2008,
the Company reacquired an aggregate of 81,575,000 from its original shareholders
and issued the following shares:




·
            an
      aggregate of 13,300,00 shares to the former Wealthlink Shareholders;
      and




·
            an aggregate of 1,275,000 shares to certain of the
      Company's service providers, in lieu of cash
    compensation.




The
remaining 67,425,000 shares that were previously issued and outstanding were
canceled as a result of the consummation of these transactions.




Additionally,
in connection with the consummation of the Financing, 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.




Item
6. Selected Financial
Data.




Not
required.






-21-




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




The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes appearing elsewhere in this annual
report.  This discussion and analysis contains forward-looking
statements that involve risks, uncertainties, and assumptions.  The
actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including but not
limited to the risks discussed in this report.




Overview




We are in
the business of operating distinctive destination centers that offer
professional fitness, beauty salon and spa services in China. 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.




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.








-22-






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
            
            $
            1,270,698
            
            
            $
            889,320
            
            
            $
            381,378Other
            
            $
            839,676
            
            
            $
            1,123,873
            
            
            $
            (284,197
            )Revenue
            
            $
            13,736,788
            
            
            $
            7,393,572
            
            
            $
            6,343,216Cost
      of Sales
            
            $
            4,028,853
            
            
            $
            1,735,376
            
            
            $
            2,293,477Gross
      Profit
            
            $
            9,707,935
            
            
            $
            5,658,196
            
            
            $
            4,049,739Gross
      Profit Margin
            
            
            71
            %
            
            
            77
            %
            
            
            (6
            )%Operating
      Expenses
            
            $
            4,285,123
            
            
            $
            2,694,681
            
            
            $
            1,590,442Net
      Income
            
            $
            5,160,496
            
            
            $
            3,019,560
            
            
            $
            2,140,936




Revenues:




Revenues
for the year ended May 31, 2008 increased by approximately $6.3 million or 86%
to $13.7 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.




Gross
Profit:




We
achieved gross profits of $9.7 million for the year ended May 31, 2008, compared
to $5.7 million for the previous year, representing a 72% or approximately $4.0
million year to year increase. Our overall gross profit margin as a
percentage of revenue was 71% 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.




Net
Income:




Net
income for the year ended May 31, 2008 increased by approximately $2.1 million
to $5.2 million as compared to $3.0 million for the previous year. The year to
year net income increase of 71% was mainly attributable to increase in our gross
profit coupled with a low income tax rate.




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.
   -23-
  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
            
            $
            4,800,903
            
            
            $
            1,523,868Investing
      Activities
            
            $
            (8,580,736
            )
            
            $
            (3,744,281
            )Financing
      Activities
            
            $
            4,575,744
            
            
            
            --


Operations




Cash
provided by operating activities totaled $4.8 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 $5.8 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 $4.6 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 a short term loan.




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:









-24-







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 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.  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
            Brand
      new store decoration
            
            $
            423,571Da
      Fu Yuan
            Brand
      new store decoration
            
            $
            1,170,000Da
      Qing
            Brand
      new store decoration
            
            $
            1,314,285Dao
      Wai
            Old
      store upgrading
            
            $
            379,188Headquarters
            Old
      store upgrading
            
            $
            31,442Nan
      Gang
            Old
      store upgrading
            
            $
            337,496Total
            
            
            $
            3,655,983




Going
forward, it is anticipated that our “franchise model” will be our major method
of expanding our territory and client base. We have developed a standard process
to identify qualified targets, including a comprehensive review of local
household income levels, consumption levels, location, management capabilities
and overall aesthetic quality of the target. Our franchise model expansion
is expected to continue long into the future.




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




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.




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.






-25-






Cash
and cash equivalents




For
purposes of the statement of cash flow, SOKO 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. 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




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 was considered
necessary for the years ended May 31, 2008 or 2007.




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
years


Machinery
and
equipment                                                                            
5 years


Computer,
office equipment and
furniture                                                   5 years


Automobiles                                                                                                    
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.






-26-






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.”




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 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 fee is recognized one-half in the first month, with the remaining
one-half recognized on a straight-line basis of estimated membership
life.




Comprehensive
income




FAS 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 FAS 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.




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




We
compute earnings per share in accordance with FAS No. 128, “Earnings per Share,”
and SAB No. 98.  FAS No. 128 requires companies with complex
capital structures to present basic and diluted earnings per share.  Basic
earnings per share is measured as net income divided by the weighted average
common shares outstanding for the period.  Diluted earnings per share is
similar to basic earnings per share 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.






-27-


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 earnings per share. There were 20,360,000 shares of common stock
equivalent available in the computation of diluted earnings per share at May 31,
2008.




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, the 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, the 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.






-28-






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.




In March
2008, the FASB issued FAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities," an amendment of FAS No. 133,
which requires additional disclosures about the objectives of the derivative
instruments and hedging activities, the method of accounting for such
instruments under FAS 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. FAS
No. 161 is effective beginning January 1, 2009. We are currently
assessing the potential impact that adoption of FAS No. 161 may have on our
financial statements.




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.




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.




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






-29-






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 Firm
              F-2Consolidated
      Balance Sheets as of May 31 2008 and 2007
              F-3Consolidated
      Statements of Income for the years ended May 31, 2008 and
      2007
              F-4Statements
      of Changes in Stockholders’ Equity for the years ended May 31, 2008 and
      2007
              F-5Statements
      of Cash Flows for the years ended May 31, 2008 and
    2007
              F-6Notes
      to Consolidated Financial Statements
              F-7-24






-30-








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, although no significant deficiencies or
material weaknesses have been found in our disclosure controls and procedures,
additional controls and procedures are required to improve our recordkeeping
systems to ensure timely and effective reporting of information.  In
addition, management also concluded that additional financial personnel are
required with experience with U.S. public companies and an appropriate level of
knowledge, experience and training in the application of generally accepted
accounting principles (“GAAP”) in the U.S.  To address such concerns,
we intend to engage a consultant to evaluate our internal controls and
procedures and to assist it in making improvements to the quality of its
controls, policies and procedures.  We are in the process of improving
supervision, education, and training of our accounting staff.




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.




SOKO
entered into a share exchange with Wealthlink and the shareholders of Wealthlink
on April 11, 2002 pursuant to which SOKO 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.






-31-






Additionally,
the Company sold a subsidiary of the Company, Tissakin Ltd., to certain former
shareholders in exchange for 79,000,000 shares of Company common stock then held
by them. The transaction was treated as a reverse acquisition in which
Wealthlink was the acquiring company for accounting purposes.




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




As a
result of the foregoing, we are currently not compliant with Section 404 of the
Sarbanes-Oxley Act of 2002.  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.




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                                                                                           
Age




Tong
Liu                        
 Chief Executive Officer, Chairman of the Board,
Director          
40




Xia
Yu                             
Chief Financial Officer,
Director                                                     
38




Yang
Chen                      Director                                                                                                31




Su
Zhang                        Director                                                                                                37




Gideon 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.




-32-








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.  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.




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:








-33-




·
            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.




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 and Chief
              Financial
      Officer (3)
            2008
            
            $
            0
            
            $
            0
            
            $
            02007
            
            
            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.






-34-




Narrative
Disclosure to Summary Compensation Table
  The
compensation provided to our named executive officers consists solely of a cash
salary.  We have not granted any stock options or other equity-based
compensation to the named executive officers.  We do not have any
employment agreements in place with our named executive
officers.


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.




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 Owner1
            
            Owned
            
            Owned2Guerilla
      Capital Management, LLC.3
              237
      Park Avenue, 9th Floor
              New
      York, New York 10017
            
            3,600,000
            
            21.18%Tong
      Liu
            
            8,960,000
            
            52.71%Xia
      Yu
            
            40,000
            
            *Yang
      Chen
            
            0
            
            --Su
      Zhang
            
            0
            
            --Gideon
      E. Kory4
            
            16,667
            
            *All
      Directors and Executive Officers as a Group (five persons)
            
            9,016,667
            
            53.04%


__________________________




*
            Less
      than 1 percent1
            Except
      as otherwise indicated, the address of each beneficial owner is No .194,
      Guogeli Street, Harbin, Heilongjing Province, China
  150001.






-35-




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 stock3
            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.4
            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






-36-








Item
13.  Certain Relationships and related 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.




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






-37-






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.






-38-






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.







-39-




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 years ended May 31, 2008 and
      2007
              F-4Statements
      of Changes in Stockholders’ Equity for the years ended May 31, 2008 and
      2007
              F-5Statements
      of Cash Flows for the years ended May 31, 2008 and
    2007
              F-6Notes
      to Consolidated Financial Statements
              F-7-24




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.








Bagell
Josephs, Levine & Company, LLC


Bagell
Josephs, Levine & Company, LLC


Marlton,
New Jersey








August
21, 2008





F-2


SOKO FITNESS & SPA GROUP, INC.(FORMERLY
      AMERICAN BUSINESS HOLDINGS, INC.)CONSOLIDATED
      BALANCE SHEETS(in
      USD Dollar)AS
      OF MAY 31,2008
              
              
              2007ASSETSCurrent
      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
              
              
              5,153,946
              
              
              
              2,126,312Property,
      plant and equipment,net of accumulated depreciation
              
              
              12,788,203
              
              
              
              5,612,605Other
      AssetsDeposit
      to supplier
              
              
              720,461
              
              
              
              659,993Investment
      advance
              
              
              1,152,738
              
              
              
              -Goodwill
              
              
              1,348,359
              
              
              
              -3,221,558
              
              
              
              659,993Total
      Assets
              
              
              21,163,706
              
              
              
              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
              
              
              445,684
              
              
              
              171,457Taxes
      payable
              
              
              339,556
              
              
              
              108,120Accrued
      expenses and other payablesWarrant
      liability
              
              
              1,184,628Total
      Current Liabilities
              
              
              5,537,343
              
              
              
              355,562Minority
      Interest
              
              
              363,277
              
              
              
              -Stockholders'
      EquityPreferred
      Stock, $.001 par value; 10,000,000 shares authorized;- 0 - shares issued and outstanding at May 31,2008 and
      2007
              
              
              -
              
              
              
              -Common
      stock, $0.001 Par value; 500,000,000 shares authorized;17,000,000 and 13,300,000 shares issued and outstandingat May 31, 2008 and 2007, respectively
              
              
              17,000
              
              
              
              13,300Additional
      paid-in-capital
              
              
              984,584
              
              
              
              140,279Accumulated
      other comprehensive income
              
              
              1,619,373
              
              
              
              408,136Retained
      earnings
              
              
              12,642,130
              
              
              
              7,481,634Total
      Stockholders' Equity
              
              
              15,263,086
              
              
              
              8,043,349Total
      Liabilities and Stockholders' Equity
              
              $
              21,163,706
              
              
              $
              8,398,910
   F-3
   SOKO
      FITNESS & SPA GROUP, INC.(FORMERLY
      AMERICAN BUSINESS HOLDINGS, INC.)CONSOLIDATED
      STATEMENTS OF INCOME(IN
      US DOLLAR)FOR
      THE YEARS ENDED MAY 31,2008
                
                
                2007Net
      Sales
                
                $
                13,736,788
                
                
                $
                7,393,572Cost
      of Sales
                
                
                (4,028,853
                )
                
                
                (1,735,376
                )Gross
      Profit
                
                
                9,707,935
                
                
                
                5,658,196Selling
      expense
                
                
                2,397,288
                
                
                
                -Genernal
      and administration expense
                
                
                1,887,836
                
                
                
                -Selling,
      General and Administrative Expenses:
                
                
                4,285,123
                
                
                
                2,694,681Operating
      income
                
                
                5,422,811
                
                
                
                2,963,515Other
      Income and ExpensesInterest
      Income (expenses)
                
                
                (49,177
                )
                
                
                -Other
      income
                
                
                2,357
                
                
                
                59,070Other
      expenses
                
                
                (143,541
                )
                
                
                (2,289
                )Total
      other income and (expense)
                
                
                (190,361
                )
                
                
                56,781Income
      Before Income Taxes and Minority Interest
                
                
                5,232,451
                
                
                
                3,020,296Provision
      for Income Taxes
                
                
                74,381
                
                
                
                735Minority
      Interest
                
                
                (2,426
                )
                
                
                -Net
      Income
                
                $
                5,160,496
                
                
                $
                3,019,560Other
      Comprehensive IncomeForeign
      Currency translation adjustment
                
                
                1,211,237
                
                
                
                304,996Comprehensive
      Income
                
                $
                6,371,732
                
                
                $
                3,324,556Basic
      and Diluted Income per common shareBasic
                
                $
                0.30
                
                
                $
                0.23Diluted
                
                $
                0.25
                
                
                $
                0.23Weighted
      average common share outstandingBasic
                
                
                17,000,000
                
                
                
                13,300,000Diluted
                
                
                20,360,000
                
                
                
                13,300,000
   F-4
   SOKO
      FITNESS & SPA GROUP, INC.(FORMERLY
      AMERICAN BUSINESS HOLDINGS, INC.)CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYFOR
      THE YEARS ENDED MAY 31, 2008 AND 2007(
      in USD)Preferred
      Stock
                
                
                Common
      Stock
                
                
                Additional
                
                
                Accumulated
      Other
                
                
                
                
                
                Totalpar
      value $0.001
                
                
                par
      value $0.001
                
                
                Paid-in
                
                
                Comprehensive
                
                
                Retained
                
                
                Stockholders'Shares
                
                
                Amount
                
                
                Shares
                
                
                Amount
                
                
                Capital
                
                
                Income
                
                
                Earnings
                
                
                EquityBalance
      at May 31, 2006
                
                
                -
                
                
                $
                -
                
                
                
                13,300,000
                
                
                $
                13,300
                
                
                $
                140,279
                
                
                $
                103,140
                
                
                $
                4,462,074
                
                
                $
                4,718,793Reorganization
      upon reverse merger
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Issuance
      of common stock upon reverse merger
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Issuance
      of common stock to investors upon reverse merger
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Issuance
      of common stock to consultant upon reverse mergerNet
      Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,019,560
                
                
                
                3,019,560Other
      Comprehensive income:
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                304,996
                
                
                
                
                
                
                
                304,996Foreign
      currency translation adjustmentBalance
      at May 31, 2007
                
                
                -
                
                
                $
                -
                
                
                
                13,300,000
                
                
                $
                13,300
                
                
                $
                140,279
                
                
                $
                408,136
                
                
                $
                7,481,634
                
                
                $
                8,043,349Paid
      in Capital
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,000,000
                
                
                
                
                
                
                
                
                
                
                
                1,000,000Issuance
      of common stock upon reverse merger
                
                
                
                
                
                
                
                
                
                
                425,000
                
                
                
                425
                
                
                
                (425
                )
                
                
                
                
                
                
                
                
                
                
                -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
                )
                
                
                
                
                
                
                
                
                
                
                -Issuance
      of warrants to investors
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,184,628
                )
                
                
                
                
                
                
                
                
                
                
                (1,184,628
                )Adjustment
      upon recognition of goodwill
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,133
                
                
                
                
                
                
                
                
                
                
                
                5,133Net
      Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,160,496
                
                
                
                5,160,496Other
      Comprehensive income, net of tax
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,211,237
                
                
                
                
                
                
                
                1,211,237Foreign
      currency translation adjustmentBalance
      at May 31, 2008
                
                
                0
                
                
                $
                -
                
                
                
                17,000,000
                
                
                $
                17,000
                
                
                $
                984,584
                
                
                $
                1,619,373
                
                
                $
                12,642,130
                
                
                $
                15,263,086
   F-5
   SOKO FITNESS & SPA GROUP, INC.(FORMERLY
      AMERICAN BUSINESS HOLDINGS, INC.)CONSOLIDATED
      STATEMENTS OF CASH FLOWS(
      in USD)FOR
      THE YEARS ENDED MAY 31,2008
                
                
                2007Cash
      Flows From Operating Activities:Net
      income
                
                $
                5,160,496
                
                
                $
                3,019,560Adjustments to
      reconcile net income to net cashprovided by
      operating activities:Depreciation
      and amortization
                
                
                967,455
                
                
                
                412,307Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                (329,369
                )
                
                
                (323,545
                )Inventory
                
                
                (658,329
                )
                
                
                123,816Advances to
      suppliers
                
                
                (484,682
                )
                
                
                (803,128
                )Employee
      advance
                
                
                (137,793
                )
                
                
                (17,355
                )Prepaid
      expense
                
                
                (72,438
                )
                
                
                (2,389
                )Deposit
      to vendor
                
                
                (60,468
                )
                
                
                (330,118
                )Accounts
      payable
                
                
                (32,420
                )
                
                
                (14,387
                )Unearned
      revenue
                
                
                257,579
                
                
                
                58,648Taxes
      payable
                
                
                216,745
                
                
                
                (632,880
                )Accrued
      expenses and other payables
                
                
                (25,872
                )
                
                
                33,339Cash
      provided by operating activities
                
                
                4,800,903
                
                
                
                1,523,868Cash
      Flows From Investing Activities:Addition in
      Construction in Progress
                
                
                (3,987,981
                )
                
                
                (3,708,397
                )Purchase of
      property and equipment
                
                
                (1,804,200
                )
                
                
                (35,884
                )Investment in
      subsidiary-Shenyang Letian
                
                
                (1,635,818
                )
                
                
                -Investment
      advance
                
                
                (1,152,738
                )
                
                
                -Cash
      used in investing activities
                
                
                (8,580,736
                )
                
                
                (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
                
                
                2,547,244
                
                
                
                -Cash
      provided by financing activities
                
                
                4,574,744
                
                
                
                -Effect
      of exchange rate changes on cash and cash equivalents
                
                
                269,847
                
                
                
                118,911Increase
      (decrease) in cash and cash equivalents
                
                
                1,064,758
                
                
                
                (2,101,503
                )Cash
      and Cash Equivalents - Beginning of the year
                
                
                498,951
                
                
                
                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
   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 these transactions, the Company reacquired
81,575,000 shares from its original shareholders and issued an aggregate of
13,300,000 shares of our common stock to the Wealthlink
Shareholders.  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.  The remaining 67,425,000 shares acquired by the Company
were cancelled.
   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
 
 NOTE
1. DESCRIPTION OF
BUSINESS AND ORGANIZATION (Continued)
 
 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.
 
 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”).
   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
  NOTE
1. DESCRIPTION OF
BUSINESS AND ORGANIZATION (Continued)
 
 Except
for Legend SPA Co., which is directly owned and newly operated, the Company 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.
   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
  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 and its wholly owned subsidiary, Mege Union and its 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.
 
 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.
   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
  NOTE
2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Inventories
 
 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.
   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
2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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.
 
 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 fee is recognized one-half in the first month, with
the remaining one-half recognized on a straight-line basis of estimated
membership life.
   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
2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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.
   F-13
   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
2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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. There are
20,360,000 shares of common stock equivalent available in the computation of
dilute earnings per share at May 31, 2008.
 
 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.
 
 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.
   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
  NOTE
2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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.
   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
2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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-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
 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. 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
5. PROPERTY AND
EQUIPMENT, NET
 
 As
      of May 31,2008
                
                
                2007Machinery
      & Equipments
                
                $
                1,835,934
                
                
                $
                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
                
                
                11,349,066
                
                
                
                5,865,780Less:
      Accumulated Depreciation
                
                
                (2,248,454
                )
                
                
                (1,042,089
                )Construction
      in progress
                
                
                3,687,591
                
                
                
                788,915Total
                
                $
                12,788,203
                
                
                $
                5,612,605
 
 Depreciation
expense for the years ended May 31, 2008 and May 31, 2007 was $967,455 and
$412,307, respectively.
   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
  NOTE
6. 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
7. 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
$1,152,738. Once the transaction is completed, the Company will reclass 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
8. GOODWILL
 
 On March
1, 2008, the Company’s subsidiary Mege Union (the
“Purchaser”)  entered into an acquisition agreement with Shenyang
Shengchao Management & Advisory Co., Ltd (“the Seller”) to acquire 51%
of  the Seller’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
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.  The following represents the allocation of the acquisition
cost to the net assets acquired based on their respective fair
values:
   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
8. GOODWILL
(Continued)
 
 Current
      assets
                
                $
                229,485Construction
      in process
                
                
                492,201Fixed
      assets
                
                
                206,919Total
      liabilities assumed
                
                
                547,857Net
      assets acquired
                
                
                380,748Total
      consideration paid
                
                
                1,729,107Goodwill
                
                $
                1,348,359
  NOTE
9. 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. Shenyang 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 Shenyang Letian Yoga fitness which is
subject to 5% of actual revenue, all other business is subject to either 3% or
5% on a pre-determined fixed revenue.
 
  F-19
   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
9. TAXES
(Continued)
 
 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
  NOTE
10. 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.
   F-20
   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
11. 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 & advance payment collected
                  
                  $
                  171,457
                  
                  
                  $
                  13,097,888
                  
                  
                  $
                  (12,908,851
                  )
                  
                  $
                  360,494Receipts
      collected & earned without deferral during
period
                  
                  
                  
                  
                  
                  
                  827,937
                  
                  
                  
                  (827,937
                  )171,457
                  
                  
                  
                  13,925,825
                  
                  
                  
                  (13,736,788
                  )
                  
                  
                  360,494Impact
      of foreign currency translation
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  85,190Total
                  
                  
                  $
                  445,684
  NOTE
12. 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.
 
  F-21
   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
12. SEGMENT REPORTING
(Continued)
 
 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
      and Spa
                
                $
                11,626,414
                
                
                $
                5,380,378Fitness
      and Yoga
                
                
                1,270,698
                
                
                
                889,321Others
                
                
                839,676
                
                
                
                1,123,873Total
                
                $
                13,736,788
                
                
                $
                7,393,572
  
 NOTE
13. 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 13,300,000 shares of our common stock to
the Wealthlink Shareholders.  Further, in consideration of services
provided to the Company in association with the consummation of these
transactions, an aggregate of 1,700,000 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. Upon completion of the placement, the Company incurred
$15,257 in legal and other issuance expenses. As of May 31, 2008, there were
17,000,000 shares of common stock issued and outstanding.
   F-22
   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. STOCKHOLDERS’ EQUITY
(Continued)
 
 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 these warrants are exercisable for three
years from the effective date of registration statement. Moreover, placement
agent is entitled to purchase an aggregate of 1,360,000 shares of common stock
at an exercise price of $1.25 per share. All these warrants are exercisable for
five years from the effective date of registration statement. Warrants to
investors contain a cashless exercise provision. Accordingly, in accordance with
EITF 00-19, the warrants are classified as liability.
 
 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 5 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 June,
2008:
 
 Outstanding
      WarrantsExercise
      Price
                Number
                Remaining
      Life
                Fair
      Value1.25
                2,000,00
                2.92
                $1,184,6281.25
                1,360,000
                4.92
                $ 995,723Total
                3,360,000
                
                $2,180,351
 
 NOTE
14. 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:
  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.
   F-23
   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
14. RELATED TRANSACTIONS
(Continued)
 
 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
15. 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.
 
 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
  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.





F-24


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 29th day of August,
2008.





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







POWER
OF ATTORNEY




In
accordance with 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. Each of the undersigned hereby appoints Tong Liu and
Xia Yu, and each of them, his true and lawful attorney-in-fact and agent, for
him and in his name and place, to sign the name of the undersigned in the
capacity or capacities indicated below to the Annual Report of SOKO Fitness
& Spa Group, Inc. on Form 10-K for the year ended May 31, 2008 and any
and all amendments to such Form 10-K and to file the same, with all
exhibits thereto and other documents in connection therewith, with all
necessary or appropriate governmental or other entities, including, but not
limited to, the Securities and Exchange Commission, granting to such
attorney-in-fact and agent full power and authority to perform each act
necessary to be done as fully to all intents and purposes as he might do in
person, hereby ratifying and confirming all that such attorney-in-fact and
agent may lawfully do or cause to be done by virtue hereof.




Signature
            
            Title
            
            Date/s/
      Tong Liu
            
            Chief
      Executive Officer,
              Chairman
      of the Board
            
            August
      29, 2008Tong
      Liu
            
            (Principal
      Executive Officer)/s/
      Xia Yu
            
            Chief
      Financial Officer
            
            August
      29, 2008Xia
      Yu
            
            (Principal
      Accounting Officer)/s/
      Yang Chen
            
            Director
            
            August
      29, 2008Yang
      Chen/s/
      Su Zhang
            
            Director
            
            August
      29, 2008Su
      Zhang/s/
      Gideon Efim Kory
            
            Director
            
            August
      29, 2008Gideon
      Efim Kory














INDEX
TO EXHIBITS







Exhibit
            Description
      of Exhibit


3(i).1
            Certificate
      of Incorporation of American Business Holdings Inc. (incorporated by
      reference to Exhibit 3.1 of SOKO's Registration Statement on Form SB-2,
      filed with the SEC on March 15, 2006 (Commission File No.
      333-132429))





3(i).2
            Certificate
      of Ownership and Merger merging SOKO Fitness & Spa Group, Inc. into
      American Business Holdings Inc. (incorporated by reference to Exhibit 3.1
      of SOKO's Current Report on Form 8-K, filed with the SEC on June 6, 2008
      (Commission File No. 333-132429))





3(ii)
            Amended
      and Restated Bylaws of SOKO Fitness & Spa Group,
  Inc.





4.1
            Specimen
      Stock Certificate





10.1
            Form of Share Exchange Agreement
      dated April 11, 2008 by and among American Business Holdings, Inc.,
      Wealthlink Co., Ltd. and each of the shareholders of Wealthlink Co., Ltd.
      (incorporated by reference to Exhibit 10.1 of SOKO's Current Report on
      Form 8-K, filed with the SEC on April 17, 2008 (Commission File No.
      333-132429))





10.2
            Form of Securities Purchase
      Agreement dated April 11, 2008 among American Business Holdings, Inc.,
      Tong Liu, and the persons listed on the signature pages thereto
      (incorporated by reference to Exhibit 10.2 of SOKO's Current Report on
      Form 8-K, filed with the SEC on April 17, 2008 (Commission File No.
      333-132429))





10.3
            Form of Registration Rights
      Agreement dated April 11, 2008 between American Business Holdings, Inc.
      and the several purchasers signatory thereto (incorporated by reference to
      Exhibit 10.3 of SOKO's Current Report on Form 8-K, filed with the SEC on
      April 17, 2008 (Commission File No.
  333-132429))





10.4
            Form of Lock-up Agreement dated
      April 11, 2008 between American Business Holdings, Inc. and the
      stockholder signatory thereto (incorporated by reference to Exhibit 10.4
      of SOKO's Current Report on Form 8-K, filed with the SEC on April 17, 2008
      (Commission File No.
333-132429))





10.5
            Form of Warrant issued by
      American Business Holdings, Inc. (incorporated by reference to Exhibit
      10.5 of SOKO's Current Report on Form 8-K, filed with the SEC on April 17,
      2008 (Commission File No.
333-132429))





10.6
            Form of Escrow Agreement dated
      April 11, 2008 between American Business Holdings, Inc., certain officers
      of the company, and Crone Rozynko, LLP (incorporated by reference to
      Exhibit 10.6 of SOKO's Current Report on Form 8-K, filed with the SEC on
      April 17, 2008 (Commission File No.
  333-132429))





10.7
            Consulting Agreement dated April
      11, 2008 between Syed Idris Husain and American Business Holdings, Inc.
      (incorporated by reference to Exhibit 10.7 of SOKO's Current Report on
      Form 8-K, filed with the SEC on April 17, 2008 (Commission File No.
      333-132429))





10.8
            Stock
      Purchase Agreement dated April 11, 2008 between American Business
      Holdings, Inc. and each of Syed Irfan Husain, Syed Idris Husain and
      Verifica International, Ltd. (incorporated by reference to Exhibit 10.8 of
      SOKO's Current Report on Form 8-K, filed with the SEC on April 17, 2008
      (Commission File No. 333-132429))





21
            List
      of Subsidiaries.





24
            Power
      of Attorney (included in signature
page)












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