Soko Fitness & Spa (OTC BB:SOKF)

	Recent 52-week high
	30% Earnings Per Share (EPS) growth rate
	10% revenue growth year over year
	Strong balance sheet
	15% minimum return on equity (ROE)
	8% minimum pre-tax margins
	Under 50 million shares outstanding
	High insider ownership
	Limited institutional ownership
	P/E at least 1/2 of EPS growth rate

Soko Fitness & Spa Group just announced the completion of a financing deal.  We are not too crazy about the pricing terms:

SOKO Fitness & Spa Group, Inc. announced the completion of a non-brokered private placement of 3,125,000 shares of common stock at a purchase price of $3.20 per share, yielding gross proceeds of $10 million to SOKO. 

The good news is that no warrants were issued and The shares issued to the investors will be required to be registered with the SEC for resale, but only beginning on the 14 month anniversary of the closing and under certain other circumstances.

I believe investors, including the GeoTeam would have accepted higher price terms.  Regardless, we have said that in the case of SOKF, we would welcome a capital raise.  The company can accelerate its it growth tract by acquiring operations that will be accretive EPS to supplement facilities that it will build from the ground up which generally take about 18 months to contribute to the bottom line.

Tong Liu, Chief Executive Officer of SOKO said, "We pursued this financing in order to accelerate the execution of our already aggressive growth plan. We are developing our business rapidly, but are still in the initial stages of our growth. This cash infusion, our first since going public two years ago, significantly augments our balance sheet and offers us the near-term flexibility to capitalize on strategic opportunities to develop and acquire additional facilities. We are constantly working to identify new opening and acquisition targets that fit well within our model of penetrating underserved markets, enabling us to quickly capture market share and achieve positive returns on our investments in new or acquired facilities. We expect that this transaction will allow us to accelerate our pursuit of these opportunities, helping us drive additional growth and enhancing long-term shareholder value."

As a result of the financing, SOKO now expects to open more facilities in calendar 2010 than its previous guidance of 7 to 9 new facilities planned for the calendar year.

Be prepared for a pullback where we plan to pick up additional shares.