UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]      QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
         OF 1934

         For the quarterly period ended September 30, 2003

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

         For the transition period from ________ to _________

                        Commission file number: 333-42036

                                Soyo Group, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Nevada                                               95-4502724
-------------------------------                           ----------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification Number)


1420 South Vintage Avenue, Ontario, California                     91761
----------------------------------------------                   ----------
(Address of principal executive offices)                         (Zip Code)


                                 (909) 937-0778
               --------------------------------------------------
               Registrant's telephone number, including area code


                 41484 Christy Avenue, Fremont, California 94538
               ---------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)

         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. Yes [X] No [ ]

         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in Rule 12b-2 of the Act). [ ]

         As of September  30, 2003,  the  registrant  had  40,000,000  shares of
common stock issued and outstanding.

         Documents incorporated by reference:  None.




<PAGE>

                         SOYO GROUP, INC. AND SUBSIDIARY

                                      INDEX


PART I.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

         Condensed  Consolidated Balance Sheets - September 30, 2003 (Unaudited)
         and December 31, 2002

         Condensed  Consolidated  Statements of  Operations  (Unaudited) - Three
         Months and Nine Months Ended September 30, 2003 and 2002

         Condensed  Consolidated  Statements  of Cash Flows  (Unaudited)  - Nine
         Months Ended September 30, 2003 and 2002

         Notes to Condensed  Consolidated  Financial  Statements  (Unaudited)  -
         Three Months and Nine Months Ended September 30, 2003 and 2002


         Item 2. Management's Discussion and Analysis of Financial Condition and
                 Results of Operations


         Item 3. Quantitative and Qualitative Disclosures about Market Risk


         Item 4. Controls and Procedures


PART II.  OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K


SIGNATURES












                                       2
<PAGE>

                         Soyo Group, Inc. and Subsidiary
                      Condensed Consolidated Balance Sheets


                                                  September 30,    December 31,
                                                       2003            2002
                                                  -------------   -------------
                                                   (Unaudited)

ASSETS

CURRENT
  Cash and cash equivalents                       $     326,657   $     623,296
  Certificate of deposit, restricted                       --         1,000,000
  Accounts receivable, net of
    allowance for doubtful accounts
    of $620,605 at September 30, 2003
    and December 31, 2002                             5,566,455       6,725,425
  Inventories, including $3,166,827
    and $9,359,190 purchased from
    Soyo Computer, Inc. at September
    30, 2003 and December 31, 2002,
    respectively                                      3,634,523      12,358,255
  Prepaid expenses                                      100,000          50,714
  Income tax refund receivable                           47,000          47,000
                                                  -------------   -------------
                                                      9,674,635      20,804,690
                                                  -------------   -------------

OTHER
  Property and equipment, net of
    accumulated depreciation and
    amortization of $43,410 and
    $31,300 at September 30, 2003 and
    December 31, 2002, respectively                      50,496          60,094
  Deposits                                               75,035          50,000
                                                  -------------   -------------
                                                        125,531         110,094
                                                  -------------   -------------
                                                  $   9,800,166   $  20,914,784
                                                  =============   =============














                                  (continued)
                                       3
<PAGE>

                         Soyo Group, Inc. and Subsidiary
                Condensed Consolidated Balance Sheets (continued)


                                                September 30,      December 31,
                                                     2003              2002
                                                -------------     -------------
                                                 (Unaudited)

LIABILITIES

CURRENT
  Accounts payable -
    Soyo Computer, Inc.                         $   5,308,826     $  12,803,935
    Other                                           1,600,254         4,554,820
  Accrued liabilities                                 779,401         1,508,224
  Advances from officer,
    director and major
    shareholder                                       240,000              --
  Revolving note payable                                 --           1,200,000
  Income taxes payable                                 90,430              --
                                                -------------     -------------
                                                    8,018,911        20,066,979
                                                -------------     -------------


NON-CURRENT
  Long-term payable - Soyo
    Computer, Inc.                                 12,000,000        12,000,000
                                                -------------     -------------


SHAREHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value
  Authorized - 10,000,000 shares
  Issued and outstanding -
    1,000,000 shares of Class A
    Convertible Preferred Stock,
    $1.00 per share stated
    liquidation value
    ($1,000,000 aggregate
    liquidation value)                                  1,000             1,000
Common stock, $0.001 par value
  Authorized - 75,000,000 shares
  Issued and outstanding -
    40,000,000 shares                                  40,000            40,000
  Additional paid-in capital                          459,000           459,000
  Accumulated deficit                             (10,718,745)      (11,652,195)
                                                -------------     -------------
                                                  (10,218,745)      (11,152,195)
                                                -------------     -------------
                                                $   9,800,166     $  20,914,784
                                                =============     =============







     See accompanying notes to condensed consolidated financial statements.
                                       4
<PAGE>

                         Soyo Group, Inc. and Subsidiary
           Condensed Consolidated Statements of Operations (Unaudited)

                                               Three Months Ended September 30,
                                               --------------------------------
                                                    2003               2002
                                               -------------      -------------

Net revenues                                   $   6,819,061      $  13,625,372
Cost of revenues, including
  inventories purchased from Soyo
  Computer, Inc. of $3,416,840
  and $11,516,460 in 2003 and
  2002, respectively                               5,654,659         13,485,301
                                               -------------      -------------
Gross margin                                       1,164,402            140,071
                                               -------------      -------------

Costs and expenses:
  Sales and marketing                                406,064            383,372
  General and administrative                         461,310            789,556
  Provision for doubtful accounts                       --              454,377
  Depreciation and amortization                        4,036              3,891
                                               -------------      -------------
    Total costs and expenses                         871,410          1,631,196
                                               -------------      -------------
Income (loss) from operations                        292,992         (1,491,125)
                                               -------------      -------------
Other income (expense):
  Interest income                                      1,028                404
  Other income                                         4,155               --
  Interest expense                                    (6,823)            (8,863)
                                               -------------      -------------
Other expense, net                                    (1,640)            (8,459)
                                               -------------      -------------
Income (loss) before income taxes                    291,352         (1,499,584)

Provision for income taxes                            25,680               --
                                               -------------      -------------
Net income (loss)                              $     265,672      $  (1,499,584)
                                               =============      =============


Net income (loss) per common share -
  Basic                                        $        0.01      $       (0.05)
                                               =============      =============
  Diluted
                                               $        0.01      $       (0.05)
                                               =============      =============

Weighted average number of common
  shares outstanding -
  Basic                                           40,000,000         28,182,750
                                               =============      =============

  Diluted                                         47,142,857         28,182,750
                                               =============      =============



     See accompanying notes to condensed consolidated financial statements.
                                       5
<PAGE>

                         Soyo Group, Inc. and Subsidiary
           Condensed Consolidated Statements of Operations (Unaudited)

                                                Nine Months Ended September 30,
                                                -------------------------------
                                                     2003              2002
                                                -------------     -------------

Net revenues                                    $  23,265,523     $  39,924,692
Cost of revenues, including
  inventories purchased from Soyo
  Computer, Inc. of $11,574,565
  and $34,136,196 in 2003 and
  2002, respectively                               19,155,211        39,972,073
                                                -------------     -------------
Gross margin (deficit)                              4,110,312           (47,381)
                                                -------------     -------------

Costs and expenses:
  Sales and marketing                                 845,087         1,025,595
  General and administrative                        2,233,144         2,253,897
  Provision for doubtful accounts                        --           1,225,001
  Depreciation and amortization                        12,110             9,633
                                                -------------     -------------
    Total costs and expenses                        3,090,341         4,514,126
                                                -------------     -------------
Income (loss) from operations                       1,019,971        (4,561,507)
                                                -------------     -------------
Other income (expense):
  Interest income                                      26,252            42,204
  Other income                                          4,155            55,225
  Interest expense                                    (26,248)          (37,871)
                                                -------------     -------------
Other income, net                                       4,159            59,558
                                                -------------     -------------
Income (loss) before income taxes                   1,024,130        (4,501,949)

Provision (benefit) for income taxes                   90,680           (61,679)
                                                -------------     -------------
Net income (loss)                               $     933,450     $  (4,440,270)
                                                =============     =============


Net income (loss) per common share -
  Basic                                         $        0.02     $       (0.16)
                                                =============     =============
  Diluted
                                                $        0.02     $       (0.16)
                                                =============     =============

Weighted average number of common
  shares outstanding -
  Basic                                            40,000,000        28,182,750
                                                =============     =============

  Diluted                                          47,142,857        28,182,750
                                                =============     =============



     See accompanying notes to condensed consolidated financial statements.
                                       6
<PAGE>

                         Soyo Group, Inc. and Subsidiary
           Condensed Consolidated Statements of Cash Flows (Unaudited)


                                                Nine Months Ended September 30,
                                                -------------------------------
                                                    2003               2002
                                                ------------       ------------

OPERATING ACTIVITIES
  Net income (loss)                             $    933,450       $ (4,440,270)
    Adjustments to reconcile net
      income (loss) to net cash
      provided by (used in)
      operating activities:
        Depreciation and
          amortization                                12,110              9,633
        Provision for doubtful
          accounts                                      --            1,225,001
        Changes in operating
          assets and liabilities:
          (Increase) decrease in:
            Accounts receivable                    1,158,970            (17,481)
            Inventories                            8,723,732          4,952,799
            Prepaid expenses                         (49,286)           (17,579)
            Deposits                                 (25,035)            41,082
          Increase (decrease) in:
            Accounts payable -
              Soyo Computer, Inc.                 (7,495,109)          (603,364)
            Accounts payable -
              other                               (2,954,566)        (1,183,031)
            Accrued liabilities                     (728,823)           266,393
            Income taxes payable                      90,430            (75,044)
                                                ------------       ------------
  Net cash provided by (used in)
    operating activities                            (334,127)           158,139
                                                ------------       ------------


INVESTING ACTIVITIES
  Purchase of property and
    equipment                                         (2,512)           (35,052)
                                                ------------       ------------
  Net cash used in investing
    activities                                        (2,512)           (35,052)
                                                ------------       ------------














                                   (continued)
                                        7
<PAGE>

                         Soyo Group, Inc. and Subsidiary
     Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)


                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                     2003               2002
                                                 ------------       ------------

FINANCING ACTIVITIES
  Advances from officer,
    director and major
    shareholder                                  $    360,000       $       --
  Repayment of advances
    from officer, director
    and major shareholder                            (120,000)              --
  Repayment of revolving
    note payable                                   (1,200,000)              --
  Decrease in restricted
    cash                                            1,000,000               --
                                                 ------------       ------------
  Net cash provided by
    financing activities                               40,000               --
                                                 ------------       ------------

CASH AND CASH EQUIVALENTS
  Net increase (decrease)                            (296,639)           123,087
  At beginning of period                              623,296            168,450
                                                 ------------       ------------
  At end of period                               $    326,657       $    291,537
                                                 ============       ============


SUPPLEMENTAL DISCLOSURE OF
  CASH FLOW INFORMATION

Cash paid for interest                           $     26,248       $     37,871
                                                 ============       ============

Cash paid for income taxes                       $      1,050       $     49,156
                                                 ============       ============



















     See accompanying notes to condensed consolidated financial statements.
                                       8
<PAGE>

                         Soyo Group, Inc. and Subsidiary
        Notes to Condensed Consolidated Financial Statements (Unaudited)
         Three Months and Nine Months Ended September 30, 2003 and 2002


1.  Organization and Basis of Presentation

Organization - Effective October 24, 2002, Vermont Witch Hazel Company,  Inc., a
Nevada  corporation  ("VWHC"),  acquired Soyo, Inc., a Nevada corporation ("Soyo
Nevada"),  from Soyo Computer,  Inc., a Taiwan  corporation  ("Soyo Taiwan),  in
exchange for the issuance of 1,000,000 shares of convertible preferred stock and
28,182,750  shares of common  stock,  and changed  its name to Soyo Group,  Inc.
("Soyo"). The 1,000,000 shares of preferred stock were issued to Soyo Taiwan and
the  28,182,750  shares of common  stock were issued to certain  members of Soyo
Nevada management.

Subsequent to this  transaction,  Soyo Taiwan  maintained an equity  interest in
Soyo,  continues to be the primary  supplier of inventory to Soyo,  and was owed
$24,803,935  at  December  31,  2002.  In  addition,  there was no change in the
management of Soyo and no new capital invested, and there is a continuing family
relationship  between certain members of the management of Soyo and Soyo Taiwan.
As a result,  this transaction was accounted for as a  recapitalization  of Soyo
Nevada,  pursuant  to  which  the  accounting  basis  of Soyo  Nevada  continued
unchanged subsequent to the transaction date.  Accordingly,  the pre-transaction
financial  statements of Soyo Nevada are now the historical financial statements
of the Company.

In conjunction with this  transaction,  Soyo Taiwan agreed to extend the payment
date to December 31, 2005 for $12,000,000 of accounts payable, without interest.
Accordingly,  $12,000,000 was reclassified from short-term  payable to long-term
payable effective October 24, 2002.

Soyo Taiwan also agreed to continue to provide  computer parts and components to
Soyo on an open account basis at the  quantities  required and on a timely basis
to enable Soyo to continue to conduct its business  operations  at budgeted 2003
levels,  which is not less than a level  consistent  with the operations of Soyo
Nevada's  business in 2001 and 2000. This supply commitment is effective through
December 31, 2005.

On December 9, 2002,  Soyo's Board of Directors  elected to change Soyo's fiscal
year end from July 31 to  December  31 to conform to Soyo  Nevada's  fiscal year
end.

Ming Tung Chok, the Company's  President,  Chief Executive  Officer and Director
and Nancy Chu, the Company's  Chief Financial  Officer,  Secretary and Director,
are husband and wife.  Andy Chu, the  President  and major  shareholder  of Soyo
Taiwan, is the brother of Nancy Chu.

Unless the context indicates  otherwise,  Soyo and its wholly-owned  subsidiary,
Soyo Nevada, are referred to herein as the "Company".

Basis  of  Presentation  - The  accompanying  condensed  consolidated  financial
statements  include  the  accounts  of Soyo and  Soyo  Nevada.  All  significant
intercompany  accounts and transactions  have been eliminated in  consolidation.
The condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States.


                                       9
<PAGE>

Comments - The accompanying interim condensed  consolidated financial statements
are  unaudited,  but in the opinion of  management  of the Company,  contain all
adjustments,  which include normal recurring  adjustments,  necessary to present
fairly the financial  position at September 30, 2003,  the results of operations
for the three months and nine months ended September 30, 2003 and 2002, and cash
flows for the nine  months  ended  September  30, 2003 and 2002.  The  condensed
consolidated balance sheet as of December 31, 2002 is derived from the Company's
audited consolidated financial statements.

Certain  information  and footnote  disclosures  normally  included in financial
statements  that have been prepared in  accordance  with  accounting  principles
generally  accepted in the United States have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission, although
management  of the Company  believes  that the  disclosures  contained  in these
condensed consolidated financial statements are adequate to make the information
presented  therein  not  misleading.  For  further  information,  refer  to  the
consolidated  financial  statements  and  the  notes  thereto  included  in  the
Company's  Annual Report on Form 10-KSB/A for the fiscal year ended December 31,
2002, as filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and  assumptions  that affect the  reported  amounts of assets and  liabilities,
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements,  and the  reported  amounts  of  revenues  and  expenses  during the
reporting period. Significant estimates primarily relate to the realizable value
of accounts  receivable,  vendor programs and inventories.  Actual results could
differ from those estimates.

The results of operations  for the three months and nine months ended  September
30,  2003 is not  necessarily  indicative  of the  results of  operations  to be
expected for the full fiscal year ending December 31, 2003.

Business - The Company sells computer components and peripherals to distributors
and retailers primarily in North,  Central and South America, as well as certain
other  locations.  The Company operates in one business  segment.  A substantial
majority of the Company's products are purchased from Soyo Taiwan pursuant to an
exclusive  distribution  agreement  effective through December 31, 2005, and are
sold under the "Soyo" brand.

Soyo Nevada was a wholly-owned  subsidiary of Soyo Taiwan during the years ended
December 31, 2000 and 2001, and the period from January 1, 2002 through  October
24, 2002.

Income  (Loss)  Per  Share - Basic  income  (loss)  per share is  calculated  by
dividing  net income  (loss) by the  weighted  average  number of common  shares
outstanding during the period.  Diluted income per share is calculated  assuming
the issuance of common  shares,  if dilutive,  resulting  from the conversion of
preferred stock. These potentially  dilutive securities were not included in the
calculation  of loss per  share  for the  three  months  and nine  months  ended
September  30, 2002 because the Company  incurred a loss during such periods and
thus their  effect  would  have been  anti-dilutive.  The loss per common  share
calculation  for the three  months and nine  months  ended  September  30,  2002
reflects the  retroactive  restatement  of the  shareholders'  equity section to
reflect the October 2002 recapitalization.

As of September 30, 2003 and December 31, 2002,  potentially dilutive securities
consisted  of  1,000,000  shares of  convertible  preferred  stock with a stated
liquidation  value of $1.00 per share that are convertible  into common stock at
the fair value of the  underlying  common  stock.  For the three months and nine
months ended September 30, 2003,  7,142,857 shares of common stock were issuable
upon conversion of the convertible  preferred stock,  based on the trading price
of the common stock on September 30, 2003 of $0.14 per share,  which information
was utilized to calculate diluted income per share.


                                       10
<PAGE>

Comprehensive  Income  (Loss) - Since  the  Company  did not  have any  items of
comprehensive  income  (loss)  during  the three  months and nine  months  ended
September 30, 2003 and 2002, a statement of  comprehensive  income (loss) is not
presented.

Significant  Risks  and  Uncertainties  -  The  Company  operates  in  a  highly
competitive industry subject to aggressive pricing practices, pressures on gross
margins,  frequent  introductions  of new  products,  short product life cycles,
rapid technological advances, continual improvement in product price/performance
characteristics, and changing consumer demand.

As a result of the  dynamic  nature of the  business,  it is  possible  that the
Company's  estimates  with  respect  to the  realizability  of  inventories  and
accounts  receivable  may be materially  different  from actual  amounts.  These
differences  could  result in higher than  expected  allowance  for bad debts or
inventory  reserve  costs,  which could have a materially  adverse effect on the
Company's financial position and results of operations.

Pro Forma  Financial  Disclosure  - Since the  Company  has not  adopted a stock
option  plan,  nor has it issued  any  stock  options,  no pro  forma  financial
disclosure has been presented.

Reclassification  - Certain amounts have been reclassified in 2002 to conform to
the presentation in 2003.


2.  Advances from Officer, Director and Major Shareholder

During March 2003, Nancy Chu, the Company's Chief Financial Officer, director
and major shareholder, made short-term advances to the Company of $360,000 for
working capital purposes, of which $120,000 was repaid during September 2003.
The Company expects to repay the remainder during the three months ending
December 31, 2003.

3.  Revolving Loan Agreement

The  Company  had a  revolving  loan  agreement  with  a  financial  institution
providing for borrowings of up to $1,200,000,  with interest at 3.75% per annum.
Borrowings  under the  revolving  loan  agreement  were  secured by a $1,000,000
certificate of deposit,  with Soyo Taiwan  guaranteeing the remaining  $200,000.
The  Company  did not renew the  revolving  loan  agreement  when it  expired in
September  2003.  The proceeds from the  $1,000,000  certificate of deposit were
used to repay the balance outstanding on the revolving loan agreement.


4.  Significant Concentrations

a.  Customers

The  Company  sells to both  distributors  and  retailers.  Sales  through  such
distribution channels are summarized as follows:

                             Three Months Ended           Nine Months Ended
                                September 30,                September 30,
                        --------------------------    -------------------------
                            2003           2002           2003          2002
                        -----------    -----------    -----------    -----------
Revenues
  Distributors          $ 1,174,315    $ 4,194,560    $ 4,202,342    $ 8,165,328
  Retailers               5,644,746      9,430,812     19,063,181     31,759,364
                        -----------    -----------    -----------    -----------
                        $ 6,819,061    $13,625,372    $23,265,523    $39,924,692
                        ===========    ===========    ===========    ===========


                                       11
<PAGE>

During the three months ended  September 30, 2003 and 2002, the Company  offered
price  protection  to certain  customers  under  specific  programs  aggregating
$601,564 and  $187,569,  respectively,  which  reduced net revenues and accounts
receivable  accordingly.  During the nine months  ended  September  30, 2003 and
2002, the Company offered price  protection to certain  customers under specific
programs aggregating  $2,074,564 and $403,409,  respectively,  which reduced net
revenues and accounts receivable accordingly.

Information  with respect to  customers  that  accounted  for 10% or more of the
Company's revenues is presented below.

During the three months ended  September 30, 2003, the Company had two customers
that  accounted for revenues of $1,472,178 and  $1,273,130,  equivalent to 21.6%
and 18.7% of net revenues, respectively. During the three months ended September
30,  2002,  the Company  had three  customers  that  accounted  for  revenues of
$3,955,875,  $1,642,923 and $1,579,670,  equivalent to 29.0%, 12.1% and 11.6% of
net revenues, respectively.

During the nine months ended  September 30, 2003,  the Company had two customers
that  accounted for revenues of $5,564,669 and  $2,359,379,  equivalent to 23.9%
and 10.1% of net revenues, respectively.  During the nine months ended September
30,  2002,  the  Company  had two  customers  that  accounted  for  revenues  of
$10,005,165  and  $4,897,258,  equivalent  to 25.1% and  12.3% of net  revenues,
respectively.


b.  Geographic Segments

Financial information by geographic segments is summarized as follows:

                               Three Months Ended          Nine Months Ended
                                  September 30,               September 30,
                           -------------------------   -------------------------
                               2003          2002          2003          2002
                           -----------   -----------   -----------   -----------

Revenues
  North America            $ 4,706,692   $10,766,654   $18,624,355   $34,266,896
  Central and
    South America              655,189       952,774     2,910,104     3,219,642
  Other locations            1,457,180     1,905,944     1,713,064     2,438,154
                           -----------   -----------   -----------   -----------
                           $ 6,819,061   $13,625,372   $23,265,523   $39,924,692
                           ===========   ===========   ===========   ===========


c.  Suppliers

A substantial  majority of the Company's  inventories  are  manufactured by Soyo
Taiwan and are  purchased  from Soyo Taiwan or an affiliate of Soyo Taiwan on an
open account basis.

Through  October 24, 2002,  Soyo Nevada was a  wholly-owned  subsidiary  of Soyo
Taiwan (Note 1).  Subsequent to that date,  Soyo Taiwan has continued to provide
inventory to Soyo, and has agreed to continue to provide inventory to Soyo on an
open account basis through December 31, 2005.

The following is a summary of the Company's  transactions and balances with Soyo
Taiwan as of September 30, 2003 and December 31, 2002,  and for the three months
and nine months ended September 30, 2003 and 2002:


                                       12
<PAGE>

                            Three Months Ended             Nine Months Ended
                               September 30,                 September 30,
                        --------------------------    --------------------------
                            2003           2002           2003           2002
                        -----------    -----------    -----------    -----------

Purchases from
  Soyo Taiwan           $ 1,417,416    $ 6,762,430    $ 8,252,529    $28,951,260
Payments to
  Soyo Taiwan             2,112,470      8,717,000     14,979,470     29,056,109


                                 September 30,           December 31,
                                      2003                   2002
                                 -------------          -------------

Accounts payable
  to Soyo Taiwan                 $   5,308,826          $  12,803,935
Long-term payable
  to Soyo Taiwan                    12,000,000             12,000,000


During the nine months ended  September  30, 2003,  the Company  received  price
protection from Soyo Taiwan aggregating $435,415,  which reduced inventories and
accounts  payable to Soyo  Taiwan  accordingly.  The Company did not receive any
price  protection  from Soyo Taiwan during the three months ended  September 30,
2003, or during the three months and nine months ended September 30, 2002.
















                                       13
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Cautionary   Statement  Pursuant  to  Safe  Harbor  Provisions  of  the  Private
Securities Litigation Reform Act of 1995:

This Quarterly  Report on Form 10-Q for the quarterly period ended September 30,
2003 contains "forward-looking  statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended,  including  statements  that include the
words  "believes",  "expects",  "anticipates",  or  similar  expressions.  These
forward-looking   statements  include,   but  are  not  limited  to,  statements
concerning   the   Company's   expectations   regarding   its  working   capital
requirements,  financing requirements,  business prospects, and other statements
of expectations,  beliefs,  future plans and strategies,  anticipated  events or
trends,  and similar  expressions  concerning  matters  that are not  historical
facts. The forward-looking  statements in this Quarterly Report on Form 10-Q for
the quarterly  period ended  September 30, 2003 involve known and unknown risks,
uncertainties and other factors that could cause the actual results, performance
or achievements  of the Company to differ  materially from those expressed in or
implied by the forward-looking statements contained herein.

Background and Overview:

The Company sells  computer  components  and  peripherals  to  distributors  and
retailers  in  North,  Central  and  South  America,  as well as  certain  other
locations.  The Company operates in one business segment. A substantial majority
of the  Company's  products  are  purchased  from  Soyo  Taiwan  pursuant  to an
exclusive  distribution  agreement  effective through December 31, 2005, and are
sold under the "Soyo" brand.

Effective  October  24,  2002,  Vermont  Witch  Hazel  Company,  Inc.,  a Nevada
corporation ("VWHC"), acquired Soyo, Inc., a Nevada corporation ("Soyo Nevada"),
from Soyo Computer,  Inc., a Taiwan corporation ("Soyo Taiwan),  in exchange for
the issuance of 1,000,000  shares of convertible  preferred stock and 28,182,750
shares of common stock, and changed its name to Soyo Group, Inc.  ("Soyo").  The
1,000,000  shares  of  preferred  stock  were  issued  to  Soyo  Taiwan  and the
28,182,750  shares of common stock were issued to certain members of Soyo Nevada
management.  During  October  2002,  certain  members of the  management of Soyo
Nevada also separately  purchased  6,026,798 shares of the 11,817,250  shares of
common stock of VWHC outstanding prior to VWHC's acquisition of Soyo Nevada, for
$300,000  in  personal  funds.  The  6,026,798  shares  represented  51%  of the
outstanding  shares of VWHC  common  stock.  Accordingly,  Soyo  Taiwan and Soyo
Nevada  management  currently own 34,209,548  shares of the 40,000,000 shares of
the Company's common stock outstanding at September 30, 2003.

Subsequent to this  transaction,  Soyo Taiwan  maintained an equity  interest in
Soyo,  continues to be the primary  supplier of inventory to Soyo,  and was owed
$24,803,935  at  December  31,  2002.  In  addition,  there was no change in the
management of Soyo and no new capital invested, and there is a continuing family
relationship  between certain members of the management of Soyo and Soyo Taiwan.
As a result, for financial  reporting  purposes,  this transaction was accounted
for as a recapitalization of Soyo Nevada, pursuant to which the accounting basis
of  Soyo  Nevada  continued  unchanged   subsequent  to  the  transaction  date.
Accordingly, the pre-transaction financial statements of Soyo Nevada are now the
historical financial statements of the Company.

In conjunction with this  transaction,  Soyo Taiwan agreed to extend the payment
date to December 31, 2005 for $12,000,000 of accounts payable, without interest.
Accordingly,  $12,000,000 was reclassified from short-term  payable to long-term
payable effective October 24, 2002.


                                       14
<PAGE>

Soyo Taiwan also agreed to continue to provide  computer parts and components to
Soyo on an open account basis at the  quantities  required and on a timely basis
to enable Soyo to continue to conduct its business  operations  at budgeted 2003
levels,  which is not less than a level  consistent  with the operations of Soyo
Nevada's  business in 2001 and 2000. This supply commitment is effective through
December 31, 2005.

On December 9, 2002,  the  Company's  Board of  Directors  elected to change the
Company's  fiscal  year end  from  July 31 to  December  31 to  conform  to Soyo
Nevada's fiscal year end.

Ming Tung Chok, the Company's  President,  Chief Executive  Officer and Director
and Nancy Chu, the Company's  Chief Financial  Officer,  Secretary and Director,
are husband  and wife,  and are the  primary  members of Soyo Nevada  management
referred to above. Andy Chu, the President and major shareholder of Soyo Taiwan,
is the brother of Nancy Chu.

Unless the context indicates  otherwise,  Soyo and its wholly-owned  subsidiary,
Soyo Nevada, are referred to herein as the "Company".

The Company sells to both distributors and retailers.

Sales to  distributors  were  $1,174,315  (17.2%)  during the three months ended
September 30, 2003, as compared to $4,194,560 (30.8%) for the three months ended
September 30, 2002.  Sales to distributors  were  $4,202,342  (18.1%) during the
nine months ended September 30, 2003, as compared to $8,165,328  (20.5%) for the
nine months ended September 30, 2002.

Sales to  retailers  were  $5,644,746  (82.8%)  during  the three  months  ended
September 30, 2003, as compared to $9,430,812 (69.2%) for the three months ended
September 30, 2002. Sales to retailers were $19,063,181  (81.9%) during the nine
months ended September 30, 2003, as compared to $31,759,364 (79.5%) for the nine
months ended September 30, 2002.

During the three months ended  September 30, 2003, the Company had two customers
that  accounted for revenues of $1,472,178 and  $1,273,130,  equivalent to 21.6%
and 18.7% of net revenues, respectively. During the three months ended September
30,  2002,  the Company  had three  customers  that  accounted  for  revenues of
$3,955,875,  $1,642,923 and $1,579,670,  equivalent to 29.0%, 12.1% and 11.6% of
net revenues, respectively.

During the nine months ended  September 30, 2003,  the Company had two customers
that  accounted for revenues of $5,564,669 and  $2,359,379,  equivalent to 23.9%
and 10.1% of net revenues, respectively.  During the nine months ended September
30,  2002,  the  Company  had two  customers  that  accounted  for  revenues  of
$10,005,165  and  $4,897,258,  equivalent  to 25.1% and  12.3% of net  revenues,
respectively.

During the three months ended  September 30, 2003,  revenues from North America,
Central and South America, and other locations were $4,706,692 (69.0%), $655,189
(9.6%) and  $1,457,180  (21.4%),  respectively.  During the three  months  ended
September 30, 2002, revenues from North America,  Central and South America, and
other  locations  were  $10,766,654  (79.0%),  $952,774  (7.0%)  and  $1,905,944
(14.0%), respectively.

During the nine months ended  September 30, 2003,  revenues from North  America,
Central  and  South  America,  and other  locations  were  $18,642,355  (80.1%),
$2,910,104 (12.5%) and $1,713,064 (7.4%),  respectively.  During the nine months
ended  September  30,  2002,  revenues  from North  America,  Central  and South
America,  and other locations were $34,266,896  (85.8%),  $3,219,642  (8.1%) and
$2,438,154 (6.1%), respectively.


                                       15
<PAGE>

Financial Outlook:

During the years ended December 31, 2000 and 2001, the Company  generated  sales
in excess of $62,000,000 in each such year,  with gross margins  ranging from 5%
to 7%. The Company  incurred a net loss and a negative cash flow from operations
in each such year.

During the year ended December 31, 2002, the Company had sales of $49,664,417, a
negative net margin of $(4,003,972), and a net loss of $(10,733,459). Operations
during 2002 indicated a developing  negative trend, with a negative gross margin
and an increasing net loss. During the three months ended December 31, 2002, the
Company  experienced extreme pressures on its sales and gross margin as a result
of the effect of the West Coast dock strike in September and early October 2002.
The impact of the initial supply interruption,  combined with the abrupt release
of large  amounts of  inventory,  caused a short-term  price war in November and
December  2002.  This price war resulted in the Company having to sell inventory
at below cost. The price war abated during January 2003, and the Company's gross
margin has returned to more normal levels.

As of September 30, 2003 and December 31, 2002, the Company was reliant upon the
cash flows from its operations.  The Company does not have any external  sources
of  liquidity,   other  than  advances  from  an  officer,  director  and  major
shareholder.

Since  October  24,  2002,  the date  that  Soyo  Nevada  became a  wholly-owned
subsidiary  of VWHC,  Soyo has  implemented  or  intends  to  implement  various
measures  designed to improve its  operating  results,  cash flows and financial
position, including the following:

- The Company has  reviewed  its product  mix, and has revised its sales plan to
focus on higher margin products.

- The  Company is  attempting  to expand  the  number and credit  quality of its
customer accounts.

- The Company is attempting to arrange  additional  supply sources and to reduce
its reliance on inventory purchases from Soyo Taiwan.

- The  Company  is  reviewing  its  management  structure  with a  view  towards
retaining additional executives with industry experience.

- The Company  moved its office and  warehouse  operations  into a larger,  more
efficient facility in September 2003.

- The Company has deferred  the payment of  $12,000,000  of accounts  payable to
Soyo Taiwan until December 31, 2005.

- The Company is attempting to increase its operating liquidity by exploring the
availability of outside debt and equity financing, to the extent such funding is
available under reasonable terms and conditions.

There can be no assurances  that these measures will result in an improvement in
the  Company's  operations  or  liquidity.  To the  extent  that  the  Company's
operations  or liquidity  does not improve,  the Company may be forced to reduce
operations to a level consistent with its available  working capital  resources.
The  Company may also have to  consider a formal or  informal  restructuring  or
reorganization.

As a result of these factors, as of December 31, 2002, the Company's independent
accountants  expressed substantial doubt about the Company's ability to continue
as a going concern. The accompanying condensed consolidated financial statements
have been prepared  assuming that the Company will continue as a going  concern,


                                       16
<PAGE>

which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The carrying amounts of assets and liabilities
presented in the condensed  consolidated  financial statements do not purport to
represent  the  realizable  or  settlement   values,  and  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies:

The  Company  prepared  its  condensed   consolidated  financial  statements  in
accordance with accounting  principles  generally accepted in the United States.
The preparation of these financial  statements requires the use of estimates and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period.  Management  periodically  evaluates the  estimates and judgments  made.
Management  bases its estimates and  judgments on historical  experience  and on
various  factors that are  believed to be  reasonable  under the  circumstances.
Actual  results  may  differ  from  these  estimates  as a result  of  different
assumptions or conditions.

The Company  operates in a highly  competitive  industry  subject to  aggressive
pricing  practices,  pressures on gross margins,  frequent  introductions of new
products,  rapid  technological  advances,   continual  improvement  in  product
price/performance characteristics, and changing consumer demand.

As a result of the  dynamic  nature of the  business,  it is  possible  that the
Company's  estimates  with  respect  to the  realizability  of  inventories  and
accounts  receivable  may be materially  different  from actual  amounts.  These
differences  could  result in higher than  expected  allowance  for bad debts or
inventory  reserve  costs,  which could have a materially  adverse effect on the
Company's financial position and results of operations.

The following critical accounting policies affect the more significant judgments
and estimates used in the  preparation of the Company's  condensed  consolidated
financial statements.

Vendor Programs:

Funds received from vendors for price protection, product rebates, marketing and
training,  product  returns and  promotion  programs are  generally  recorded as
adjustments to product costs,  revenue or sales and marketing expenses according
to the nature of the  program.  The  Company  records  estimated  reductions  to
revenues for incentive offerings and promotions. Depending on market conditions,
the Company may  implement  actions to increase  customer  incentive  offerings,
which  may  result  in an  incremental  reduction  of  revenue  at the  time the
incentive is offered.

Accounts Receivable:

The Company  recognizes  revenue  when  persuasive  evidence  of an  arrangement
exists,  delivery has occurred,  the sales price is fixed or  determinable,  and
collectibility is probable.

The Company records estimated  reductions to revenue for incentive offerings and
promotions. Depending on market conditions, the Company may implement actions to
increase  customer  incentive  offerings,  which may  result  in an  incremental
reduction of revenue at the time the incentive is offered.

In order to  determine  the  value of the  Company's  accounts  receivable,  the
Company  records a provision  for  doubtful  accounts to cover  probable  credit
losses.  Management  reviews and adjusts this  allowance  periodically  based on
historical  experience and its evaluation of the  collectibility  of outstanding
accounts receivable.


                                       17
<PAGE>

Inventories:

Inventories  are stated at the lower of cost or market.  Cost is  determined  by
using the  average  cost  method.  The Company  maintains a perpetual  inventory
system which  provides for  continuous  updating of average  costs.  The Company
evaluates  the market value of its  inventory  components on a regular basis and
reduces the computed  average cost if it exceeds the  component's  market value.
Inventories  consist  primarily of computer parts and components  purchased from
Soyo Taiwan.

Income Taxes:

The Company  records a valuation  allowance to reduce its deferred tax assets to
the amount that is more likely than not to be realized. In the event the Company
was to determine that it would be able to realize its deferred tax assets in the
future in excess of its  recorded  amount,  an  adjustment  to the  deferred tax
assets  would be credited to  operations  in the period such  determination  was
made.  Likewise,  should  the  Company  determine  that it would  not be able to
realize all or part of its deferred tax assets in the future,  an  adjustment to
the  deferred  tax  assets  would be charged to  operations  in the period  such
determination was made.

Results of Operations:

Three Months Ended September 30, 2003 and 2002:

Net Revenues.  Net revenues  decreased by $6,806,311 or 50.0%,  to $6,819,061 in
2003,  as compared to  $13,625,372  in 2002.  The decrease in net revenues was a
result of a general  slow-down  in the  market  and the  Company's  decision  to
de-emphasize sales volume and focus on the sale of higher margin products.

During the three months ended  September 30, 2003 and 2002, the Company  offered
price  protection  to certain  customers  under  specific  programs  aggregating
$601,564 and  $187,569,  respectively,  which  reduced net revenues and accounts
receivable accordingly.

Gross  Margin.  Gross  margin was  $1,164,402  or 17.1% in 2003,  as compared to
$140,071 or 1.0% in 2002.  The Company did not record any inventory  write downs
during  the  three  months  ended  September  30,  2003 and 2002.  Gross  margin
increased  in 2003 as  compared to 2002 as a result of the change in product mix
to higher margin products.

Sales and  Marketing  Expenses.  Selling and  marketing  expenses  increased  by
$22,692  or  5.9%,  to  $406,064  in 2003  as  compared  to  $383,372  in  2002.
Co-operative  marketing  program  expense was  $272,859 in 2003,  as compared to
$81,252 in 2002, an increase of $191,607 or 235.8%.

General  and  Administrative  Expenses.   General  and  administrative  expenses
decreased by $328,246 or 41.6%,  to $461,310 in 2003, as compared to $789,556 in
2002, primarily as a result of a reduction in various general and administrative
expense categories.

Provision for Doubtful  Accounts.  The Company recorded a provision for doubtful
accounts of $454,377 for the three months ended  September 30, 2002. The Company
did not record a provision  for  doubtful  accounts  for the three  months ended
September 30, 2003.

Depreciation  and  Amortization.  Depreciation  and amortization of property and
equipment was $4,036 in 2003, as compared to $3,891 in 2002.

Income (Loss) from Operations. Income from operations was $292,992 for the three
months  ended  September  30,  2003,  as compared to a loss from  operations  of
$1,491,125 for the three months ended September 30, 2002.

Interest Expense. Interest expense decreased to $6,823 in 2003, as compared to
$8,863 in 2002, as a result of a reduction in the interest rate on the revolving
note payable.


                                       18
<PAGE>

Interest  Income.  Interest  income was $1,028 in 2003,  as  compared to $404 in
2002.

Other  Income.  Other  income was $4,155 in 2003.  There was no other  income in
2002.

Income (Loss)  Before Income Taxes.  Income before income taxes was $291,352 for
the three months ended  September  30,  2003,  as compared a loss before  income
taxes of $1,499,584 for the three months ended September 30, 2002.

Provision for Income Taxes.  The provision for income taxes was $25,680 in 2003.
There was no provision for income taxes in 2002.

Net Income (Loss).  Net income was $265,672 for the three months ended September
30,  2003,  as compared to a net loss of  $1,499,584  for the three months ended
September 30, 2002.


Nine Months Ended September 30, 2003 and 2002:

Net Revenues.  Net revenues decreased by $16,659,169 or 41.7%, to $23,265,523 in
2003,  as compared to  $39,924,692  in 2002.  The decrease in net revenues was a
result of a general  slow-down  in the  market  and the  Company's  decision  to
de-emphasize sales volume and focus on the sale of higher margin products.

During the nine months  September 30, 2003 and 2002,  the Company  offered price
protection to certain customers under specific programs  aggregating  $2,074,564
and $403,409,  respectively,  which reduced net revenues and accounts receivable
accordingly.

Gross Margin (Deficit).  Gross margin (deficit) was $4,110,312 or 17.7% in 2003,
as  compared  to  $(47,381)  or (0.1)% in 2002.  During  the nine  months  ended
September 30, 2003, the Company recorded  inventory  write-downs of $30,000,  as
compared to  $1,700,001  for the nine months ended  September  30,  2002.  Gross
margin  increased  in 2003 as  compared  to 2002 as a result  of the  change  in
product  mix to higher  margin  products  and  substantially  reduced  inventory
write-downs.

Sales and  Marketing  Expenses.  Selling and  marketing  expenses  decreased  by
$180,508  or 17.6%,  to $845,087 in 2003,  as  compared to  $1,025,595  in 2002,
reflecting  reduced vendor support  programs funded by the Company,  since these
programs are generally  based on a percentage of revenues.  The Company has also
reduced sales and marketing expenses in response to the general slow-down in the
market. Co-operative marketing program expense was $691,065 in 2003, as compared
to $444,304 in 2002, an increase of $246,761 or 55.5%.

General  and  Administrative  Expenses.   General  and  administrative  expenses
decreased by $20,753 or 0.9%,  to  $2,233,144 in 2003, as compared to $2,253,897
in 2002.

Provision for Doubtful  Accounts.  The Company recorded a provision for doubtful
accounts of $1,225,001 for the nine months ended September 30, 2002. The Company
did not record a provision  for  doubtful  accounts  for the nine  months  ended
September 30, 2003.

Depreciation  and  Amortization.  Depreciation  and amortization of property and
equipment was $12,110 in 2003, as compared to $9,633 in 2002.

Income (Loss) from  Operations.  Income from  operations  was $1,019,971 for the
nine months ended  September 30, 2003, as compared to a loss from  operations of
$4,561,507 for the nine months ended September 30, 2002.


                                       19
<PAGE>

Interest Expense.  Interest expense decreased to $26,248 in 2003, as compared to
$37,871  in  2002,  as a  result  of a  reduction  in the  interest  rate on the
revolving note payable.

Interest Income.  Interest income was $26,252 in 2003, as compared to $42,204 in
2002.

Other Income.  Other income was $4,155 in 2003, as compared to $55,225 in 2002.

Income (Loss) Before Income Taxes. Income before income taxes was $1,024,130 for
the nine months ended September 30, 2003, as compared a loss before income taxes
of $4,501,949 for the nine months ended September 30, 2002.

Provision (Benefit) for Income Taxes. The provision for income taxes was $90,680
in 2003, as compared to a benefit from income taxes of $61,679 in 2002.

Net Income (Loss).  Net income was $933,450 for the nine months ended  September
30,  2003,  as compared to a net loss of  $4,440,270  for the nine months  ended
September 30, 2002.


Financial Condition - September 30, 2003:

Liquidity and Capital Resources:

Transactions  with Soyo  Taiwan.  Since the  formation of Soyo Nevada in October
1998,  the  Company  has relied on the  financial  support  from Soyo Taiwan for
inventory and capital to provide the resources  necessary to conduct operations.
Through  October 24, 2002,  Soyo Nevada was a  wholly-owned  subsidiary  of Soyo
Taiwan.  Subsequent to that date, Soyo Taiwan continues to provide  inventory to
Soyo, and has agreed to continue to provide inventory to Soyo on an open account
basis through December 31, 2005.

In  conjunction  with the October  2002  transaction,  Soyo  Nevada  transferred
$12,000,000  of accounts  payable to Soyo Taiwan to long-term  payable,  without
interest,  due December 31, 2005. Soyo Taiwan also agreed to continue to provide
computer parts and components to Soyo on an open account basis at the quantities
required  and on a timely  basis to  enable  Soyo to  continue  to  conduct  its
business  operations  at budgeted  2003  levels,  which is not less than a level
consistent with the operations of Soyo Nevada's  business in 2001 and 2000. This
supply commitment is effective through December 31, 2005.

During the three months ended September 30, 2003 and 2002, the Company purchased
inventory from Soyo Taiwan aggregating $1,417,416 and $6,762,430,  respectively.
During the nine months ended September 30, 2003 and 2002, the Company  purchased
inventory from Soyo Taiwan aggregating $8,252,529 and $28,951,260, respectively.

At  September  30, 2003,  the Company had  short-term  accounts  payable to Soyo
Taiwan of $5,308,826 and a long-term  payable to Soyo Taiwan of $12,000,000.  At
December 31, 2002, the Company had short-term accounts payable to Soyo Taiwan of
$12,803,935 and a long-term payable to Soyo Taiwan of $12,000,000.

During the nine months ended  September  30, 2003,  the Company  received  price
protection from Soyo Taiwan  aggregating  $435,415.  The Company did not receive
any price  protection  from Soyo Taiwan during the three months ended  September
30, 2003,  or during the three months and nine months ended  September 30, 2002.
Such price  protection  reduced  inventories and accounts payable to Soyo Taiwan
accordingly.  The Company  does not have any formal price  protection  agreement
with  Soyo  Taiwan.  The  Company   periodically   negotiates  price  protection
adjustments with Soyo Taiwan based on current market conditions.


                                       20
<PAGE>

Operating  Activities.  The  Company  utilized  cash of  $334,127  in  operating
activities  during the nine months  ended  September  30,  2003,  as compared to
generating  cash of $158,139  during the nine months ended  September  30, 2002,
primarily as a result of cash being used to reduce  operating  liabilities  at a
rate in excess of cash being generated from operating assets in 2003.

At September 30, 2003, the Company had cash and cash equivalents of $326,657, as
compared to $623,296 at December  31, 2002.  The Company had working  capital of
$1,655,724  at September 30, 2003, as compared to $737,711 at December 31, 2002,
resulting  in  current  ratios of 1.21:1 and 1.04:1 at  September  30,  2003 and
December 31, 2002, respectively.

Accounts  receivable  decreased to $6,187,060 at September 30, 2003, as compared
to  $7,346,030  at December 31, 2002, a decrease of  $1,158,970  or 15.8%,  as a
result of a combination of reduced sales and increased cash  collections  during
the nine months ended  September 30, 2003. The Company  recorded a provision for
doubtful  accounts of $1,225,001  for the nine months ended  September 30, 2002.
The Company did not record a provision for doubtful accounts for the nine months
ended September 30, 2003.

Inventories  decreased  to  $3,634,523  at September  30,  2003,  as compared to
$12,358,255 at December 31, 2002, a decrease of $8,723,732 or 70.6%, as a result
of reduced inventory  purchases during the nine months ended September 30, 2003,
reflecting  decreased  sales  during  such  period  and  the  implementation  of
management's  plans in 2003 to  increase  inventory  turnover  of higher  margin
products. At September 30, 2003 and December 31, 2002, $3,166,827 and $9,359,190
of such inventories had been purchased from Soyo Taiwan.

Accounts  payable - Soyo  Computer,  Inc.,  excluding  $12,000,000  of  accounts
payable for which payment has been deferred until  December 31, 2005,  decreased
to $5,308,826 at September 30, 2003, as compared to  $12,803,935 at December 31,
2002,  a decrease  of  $7,495,109  or 58.5%,  as a result of  reduced  inventory
purchases, reflecting reduced sales and attempts to improve inventory turnover.

Accounts  payable - other  decreased to  $1,600,254  at September  30, 2003,  as
compared to  $4,554,820 at December 31, 2002, a decrease of $2,954,566 or 64.9%,
as a result  of  reduced  inventory  purchases,  reflecting  reduced  sales  and
attempts to improve inventory turnover.

Accrued liabilities  decreased to $779,401 at September 30, 2003, as compared to
$1,508,224 at December 31, 2002, a decrease of $728,823 or 48.3%.

Income taxes  payable were  $90,430 at September  30, 2003.  The Company did not
have any income taxes payable at December 31, 2002.

Investing Activities.  The Company expended $2,512 and $35,052 in 2003 and 2002,
respectively, for the purchase of property and equipment.

Financing  Activities.  The  Company  had a  revolving  loan  agreement  with  a
financial  institution  providing  for  borrowings  of  up to  $1,200,000,  with
interest at 3.75% per annum.  Borrowings under the revolving loan agreement were
secured by a $1,000,000  certificate of deposit,  with Soyo Taiwan  guaranteeing
the remaining  $200,000.  The Company did not renew the revolving loan agreement
when it expired in September 2003. The proceeds from the $1,000,000  certificate
of deposit  were used to repay the balance  outstanding  on the  revolving  loan
agreement.


                                       21
<PAGE>

During March 2003,  Nancy Chu, the Company's Chief Financial  Officer,  director
and major shareholder,  made short-term  advances to the Company of $360,000 for
working capital  purposes,  of which $120,000 was repaid during  September 2003.
The  Company  expects  to repay the  remainder  during the three  months  ending
December 31, 2003.

As of  September  30,  2003,  the Company  did not have any capital  expenditure
commitments outstanding.

Recent Accounting Pronouncements:

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical  Corrections".
SFAS No. 145 rescinds the  provisions of SFAS No. 4 that  requires  companies to
classify  certain gains and losses from debt  extinguishments  as  extraordinary
items,  eliminates  the  provisions  of SFAS No. 44 regarding  transition to the
Motor  Carrier Act of 1980 and amends the  provisions  of SFAS No. 13 to require
that certain lease modifications be treated as sale leaseback transactions.  The
provisions of SFAS No. 145 related to classification of debt extinguishments are
effective for fiscal years beginning after May 15, 2002. Earlier  application is
encouraged.  The adoption of SFAS No. 145 did not have a  significant  effect on
the Company's financial statement presentation or disclosures.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities,"  which requires companies to recognize costs
associated  with exit or disposal  activities when they are incurred rather than
at the date of a commitment to an exit or disposal  plan.  Such costs covered by
SFAS No. 146 include  lease  termination  costs and certain  employee  severance
costs that are associated with a restructuring,  discontinued  operation,  plant
closing, or other exit or disposal activity.  SFAS No. 146 replaces the previous
accounting  guidance provided by the EITF No. 94-3,  "Liability  Recognition for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including  Certain Costs Incurred in a  Restructuring)."  SFAS No. 146 is to be
applied  prospectively to exit or disposal  activities  initiated after December
31, 2002. The adoption of SFAS No. 146 did not have a significant  effect on the
Company's financial statement presentation or disclosures.

In  October  2002,  the FASB  issued  SFAS No.  147,  "Acquisitions  of  Certain
Financial Acquisitions of Financial Institutions, Except Transactions Between or
More Mutual  Enterprises".  The  Company  does not expect that SFAS No. 147 will
have any effect on its financial statement presentation or disclosures.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation  - Transition  and  Disclosure".  SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based  Compensation",  to provide  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for  stock-based  employee  compensation.  In addition,  SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results. SFAS No. 148 is effective for fiscal years beginning after December 15,
2002.  The interim  disclosure  provisions  are effective for financial  reports
containing financial statements for interim periods beginning after December 15,
2002.  The  adoption  of SFAS No. 148 did not have a  significant  effect on the
Company's financial statement presentation or disclosures.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities".  SFAS  No.  149  amends  and
clarifies  under what  circumstances  a contract with an initial net  investment
meets the  characteristics  of a  derivative  and when a  derivative  contains a
financing component.  The clarification  provisions of SFAS No. 149 require that
contracts with comparable  characteristics be accounted for similarly.  SFAS No.
149 is effective for contracts entered into or modified after June 30, 2003. The
adoption  of SFAS No.  149 did not have a  significant  effect on the  Company's
financial statement presentation or disclosures.


                                       22
<PAGE>

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics of both Liabilities and Equity".  SFAS No. 150
establishes standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities  and  equity.  SFAS No.  150  requires  that an  issuer  classify  a
financial  instrument  that is within its scope as a  liability  (or an asset in
some circumstances)  because that financial instrument embodies an obligation of
the issuer. SFAS No. 150 is effective for financial  instruments entered into or
modified  after May 31, 2003 and  otherwise is effective at the beginning of the
first  interim  period  beginning  after  June 15,  2003.  SFAS No. 150 is to be
implemented  by  reporting  the  cumulative  effect  of a change  in  accounting
principle for financial instruments created before the issuance date of SFAS No.
150 and still  existing  at the  beginning  of the interim  period of  adoption.
Restatement  is not  permitted.  The  adoption  of SFAS  No.  150 did not have a
significant  effect  on  the  Company's  financial  statement   presentation  or
disclosures.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the existing disclosure
requirements  for most  guarantees,  including loan  guarantees  such as standby
letters  of  credit.  It also  clarifies  that at the  time a  company  issues a
guarantee,  a company must  recognize an initial  liability  for the fair market
value of the  obligations it assumes under that guarantee and must disclose that
information  in  its  interim  and  annual  financial  statements.  The  initial
recognition and measurement provisions of FIN 45 apply on a prospective basis to
guarantees  issued or modified after December 31, 2002. The Company  implemented
the  disclosure  provisions  of FIN 45 in its  December  31,  2002  consolidated
financial statements, and the measurement and recording provisions of FIN No. 45
effective January 1, 2003.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest Entities (an Interpretation of ARB No. 51)" ("FIN 46"). FIN 46
requires that the primary  beneficiary in a variable interest entity consolidate
the entity  even if the  primary  beneficiary  does not have a  majority  voting
interest.  The  consolidation   requirements  of  FIN  46  are  required  to  be
implemented  for any variable  interest  entity  created on or after January 31,
2003.  In  addition,   FIN  46  requires  disclosure  of  information  regarding
guarantees  or  exposures  to loss  relating  to any  variable  interest  entity
existing prior to January 31, 2003 in financial  statements issued after January
31, 2003. The  implementation  of the provisions of FIN 46 effective January 31,
2003 did not have a significant effect on the Company's  consolidated  financial
statement presentation or disclosures.




















                                       23
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company  does not have any  market  risk with  respect  to such  factors as
commodity  prices,  equity  prices,  and other market changes that affect market
risk sensitive investments.

As the  Company's  debt  obligations  are  primarily  short-term  in nature  and
non-interest  bearing,  the  Company  does not have any risk from an increase in
interest  rates.   However,   to  the  extent  that  the  Company  arranges  new
interest-bearing borrowings in the future, an increase in current interest rates
would cause a  commensurate  increase in the  interest  expense  related to such
borrowings.

The Company does not have any foreign currency risk, as its revenues and
expenses, as well as its debt obligations, are denominated and settled in United
States dollars.


ITEM 4.  CONTROLS AND PROCEDURES

(a)  Evaluation of Disclosure Controls and Procedures

Disclosure  controls  and  procedures  are  designed to ensure that  information
required to be  disclosed in the reports  filed or submitted  under the Exchange
Act of 1934 is recorded,  processed,  summarized  and reported,  within the time
periods  specified  in the  rules  and  forms  of the  Securities  and  Exchange
Commission.  Disclosure  controls and procedures  include,  without  limitation,
controls  and  procedures  designed  to ensure that  information  required to be
disclosed in the reports filed under the Exchange Act of 1934 is accumulated and
communicated to the Company's management,  including its principal executive and
financial officers, as appropriate, to allow timely decisions regarding required
disclosure.

The  Company  carried  out an  evaluation,  under the  supervision  and with the
participation of the Company's management, including its principal executive and
financial  officers,  of the  effectiveness  of the design and  operation of the
Company's disclosure controls and procedures as of the end of the period covered
by this report. Based upon and as of the date of that evaluation,  the Company's
principal   executive  and  financial  officers  concluded  that  the  Company's
disclosure  controls and  procedures  are  effective to ensure that  information
required to be disclosed in the reports the Company  files and submits under the
Exchange Act of 1934 is recorded, processed,  summarized and reported within the
time periods  specified in the  Securities and Exchange  Commission's  rules and
forms.

(b)  Changes in Internal Controls

There were no changes in the  Company's  internal  controls or in other  factors
that could have significantly  affected those controls subsequent to the date of
the Company's most recent evaluation.









                                       24
<PAGE>


                           PART II. OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

         A list of  exhibits  required to be filed as part of this report is set
         forth  in the  Index  to  Exhibits,  which  immediately  precedes  such
         exhibits, and is incorporated herein by reference.

         (b)      Reports on Form 8-K

         Three Months Ended September 30, 2003: None




































                                       25
<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  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.




                                                 SOYO GROUP, INC.
                                             ------------------------
                                                   (Registrant)




DATE:  November 13, 2003                By:  /s/ MING TUNG CHOK
                                             -----------------------
                                             Ming Tung Chok
                                             President and Chief
                                             Executive Officer







DATE:  November 13, 2003                By:  /s/ NANCY CHU
                                             -----------------------
                                             Nancy Chu
                                             Chief Financial Officer





















                                       26
<PAGE>

                                INDEX TO EXHIBITS



Exhibit
Number      Description of Document
------      -----------------------

31.1        Certification  pursuant to Section 302 of the  Sarbanes-Oxley Act of
            2002 - Ming Tung Chok

31.2        Certification  pursuant to Section 302 of the  Sarbanes-Oxley Act of
            2002 - Nancy Chu

32          Certification  pursuant to Section 906 of the  Sarbanes-Oxley Act of
            2002































                                       27