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 March 31, 2005

[_]      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) 292-2500
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


                                 Not Applicable
               ---------------------------------------------------
              (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 May 15, 2005,  the  registrant  had  40,530,000  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 - March 31, 2005
                  (Unaudited) and December 31, 2004

                  Condensed Consolidated Statements of Operations (Unaudited) -
                  Three Months Ended March 31, 2005 and 2004

                  Condensed Consolidated Statements of Cash Flows (Unaudited) -
                  Three Months Ended March 31, 2005 and 2004

                  Notes to Condensed Consolidated Financial Statements
                  (Unaudited) - Three Months Ended March 31, 2005 and 2004


         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 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of
                  Equity Securities

         Item 6.  Exhibits and Reports on Form 8-K


SIGNATURES










                                       2
<PAGE>

                         SOYO Group, Inc. and Subsidiary
                      Condensed Consolidated Balance Sheets


                                                     March 31,     December 31,
                                                       2005            2004
                                                   ------------    ------------
                                                    (Unaudited)

ASSETS

CURRENT
  Cash and cash equivalents                        $    513,339    $  1,288,351
  Accounts receivable, net of
    allowance for doubtful accounts
    of $1,105,264 and $1,074,550 at
    March 31, 2005 and December 31,
    2004, respectively                                2,638,847       2,076,882
  Inventories, including $0
    and $1,893,442 purchased from
    SOYO Computer, Inc. at March 31,
    2005 and December 31, 2004,
    respectively                                      2,819,715       3,861,911
  Prepaid expenses                                       28,919          25,416
  Income tax refund receivable                           47,000          47,000
                                                   ------------    ------------
                                                      6,047,820       7,300,560
                                                   ------------    ------------

Property and equipment                                  188,491         245,153
Less:  accumulated depreciation
  and amortization                                      (88,836)        (80,087)
                                                   ------------    ------------
                                                         99,655         165,066
                                                   ------------    ------------

Deposits                                                 18,971          34,811
                                                   ------------    ------------
                                                   $  6,116,446    $  7,500,437
                                                   ============    ============














                                   (continued)


                                       3
<PAGE>

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


                                                     March 31,     December 31,
                                                       2005            2004
                                                   ------------    ------------
                                                    (Unaudited)
LIABILITIES

CURRENT
  Accounts payable -
    SOYO Computer, Inc.                            $    195,557    $  1,314,910
    Other                                             7,472,781       8,259,762
  Accrued liabilities                                   574,711         829,043
  Advances from officer,
    director and major
    shareholder                                         180,000         240,000
  Note payable                                          913,750         913,750
                                                   ------------    ------------
                                                      9,336,799      11,557,465
                                                   ------------    ------------

NON-CURRENT
  Long-term payable - SOYO
    Computer, Inc.                                         --              --
                                                   ------------    ------------

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
    2,653,408 shares of Class B
      Convertible Preferred Stock,
      $1.00 per share stated
      liquidation value
      ($2,500,000 aggregate
      liquidation value)                              1,566,946       1,527,733
Common stock, $0.001 par value
  Authorized - 75,000,000 shares
  Issued and outstanding -
    40,500,000 shares                                    40,500          40,000
  Additional paid-in capital                         11,654,500      11,155,000
  Accumulated deficit                               (16,433,299)    (16,780,761)
                                                   ------------    ------------
                                                     (3,170,353)     (4,057,028)
                                                   ------------    ------------
                                                   $  6,116,446    $  7,500,437
                                                   ============    ============



     See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>

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

                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        2005            2004
                                                    ------------    ------------

Net revenues                                        $  3,962,520    $  8,594,302
Cost of revenues, including
  inventories purchased from SOYO
  Computer, Inc. of $0
  and $3,948,177 in 2005 and
  2004, respectively                                   3,440,485       7,481,134
                                                    ------------    ------------
Gross margin                                             522,035       1,113,168
                                                    ------------    ------------

Costs and expenses:
  Sales and marketing                                    239,465          37,152
  General and administrative                             933,973         810,383
  Provision for doubtful accounts                         31,124         166,873
  Depreciation and amortization                            8,749           4,055
                                                    ------------    ------------
    Total costs and expenses                           1,213,311       1,018,463
                                                    ------------    ------------
Income from operations                                  (691,276)         94,705
                                                    ------------    ------------

Other income (expense):
  Interest income                                           --              --
  Interest expense                                        11,221            --
  Miscellaneous revenue                                1,089,172)
                                                    ------------    ------------
Other expense, net                                     1,077,951            --
                                                    ------------    ------------
Income before provision for
  income taxes                                           386,675          94,705

Provision for income taxes                                  --              --
                                                    ------------    ------------
Net income                                          $    386,675    $     94,705
                                                    ============    ============

Less: Dividends on Class B
      Convertible Preferred Stock                         39,213            --

Net Income attributable to
    Common Shareholders                             $    347,462    $     94,705

Net income per common share -
  Basic                                             $       0.01    $       --
  Diluted                                           $       0.01    $       --


Weighted average number of
  common shares outstanding -
  Basic                                               40,530,000      40,000,000
  Diluted                                             44,748,149      46,666,667




     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

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


                                                   Three Months Ended March 31,
                                                   ----------------------------
                                                       2005            2004
                                                   ------------    ------------

OPERATING ACTIVITIES
  Net income                                       $    386,675    $     94,705
    Adjustments to reconcile net
      income to net cash used in
      operating activities:
        Depreciation and
          amortization                                    8,749           4,055
        Provision for doubtful
          accounts                                       31,124         166,873
        Changes in operating
          assets and liabilities:
          (Increase) decrease in:
            Accounts receivable                        (593,089)       (328,111)
            Inventories                               1,043,196      (1,065,366)
            Prepaid expenses                             (3,503)         (2,500)
            Deposits                                     15,840            --
          Increase (decrease) in:
            Accounts payable -
              SOYO Computer, Inc.                    (1,119,353)        701,490
            Accounts payable -
              other                                    (786,981)       (500,948)
            Accrued liabilities                        (254,332)        160,139
            Income taxes payable                           --              --
                                                   ------------    ------------
  Net cash used in operating
    activities                                       (1,271,674)       (769,663)
                                                   ------------    ------------


INVESTING ACTIVITIES
  Purchase of property and
    equipment                                              --            (3,500)
  Proceeds from sale of equipment                        56,662            --
                                                   ------------    ------------
  Net cash used in investing
    activities                                           56,662          (3,500)
                                                   ------------    ------------






                                   (continued)


                                       6
<PAGE>

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


                                                   Three Months Ended March 31,
                                                   ----------------------------
                                                       2005            2004
                                                   ------------    ------------

FINANCING ACTIVITIES
  Advances from officer,
    director and major
    shareholder                                    $    (60,000)   $       --
  Proceeds from issuance
    of note payable                                        --           213,750
  Proceeds from issuance of
  Common Stock                                          500,000            --
                                                   ------------    ------------
  Net cash provided by
    financing activities                                440,000         213,750
                                                   ------------    ------------

CASH AND CASH EQUIVALENTS
  Net decrease                                         (775,012)       (559,413)
  At beginning of period                              1,288,351         717,196
                                                   ------------    ------------
  At end of period                                 $    513,339    $    157,783
                                                   ============    ============


SUPPLEMENTAL DISCLOSURE OF
  CASH FLOW INFORMATION

Cash paid for -
  Interest                                         $       --      $       --
  Income taxes                                     $       --      $       --



NON-CASH INVESTING AND
  FINANCING ACTIVITIES

Issuance of 2,500,000
  shares of Class B
  Convertible Preferred
  Stock as settlement of
  $12,000,000 long-term
  payable -
    Preferred stock                                $       --      $  1,304,000
    Additional paid-in
      capital                                      $       --      $ 10,696,000

  Non-Cash dividends                               $     39,213    $       --









     See accompanying notes to condensed consolidated financial statements.


                                       7
<PAGE>

                         SOYO Group, Inc. and Subsidiary
        Notes to Condensed Consolidated Financial Statements (Unaudited)
                   Three Months Ended March 31, 2005 and 2004


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, continued to be the primary supplier of inventory to SOYO, and was a major
creditor. In addition,  there was no change in the management of SOYO and no new
capital invested, and there was 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 Nevada  transferred  $12,000,000 of
accounts  payable to SOYO Taiwan to long-term  payable,  without  interest,  due
December  31, 2005.  During the three  months ended March 31, 2004,  the Company
agreed with a third  party to convert the  long-term  payable  into  convertible
preferred stock.

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
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.

On October 24, 2002,  the primary  members of SOYO Nevada  management  were Ming
Tung Chok, the Company's  President,  Chief Executive Officer and Director,  and
Nancy Chu, the Company's Chief Financial  Officer.  Ming Tung Chok and Nancy Chu
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".


                                       8
<PAGE>

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 United States generally accepted accounting principles.

Interim Financial Statements - 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 March 31,  2005,  the
results of  operations  for the three months ended March 31, 2005 and 2004,  and
cash flows for the three  months  ended March 31, 2005 and 2004.  The  condensed
consolidated balance sheet as of December 31, 2004 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-K for the fiscal  year ended  December  31,
2004, as filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with United States general
accepted  accounting  principles  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  ended  March 31, 2005 is not
necessarily  indicative of the results of operations to be expected for the full
fiscal year ending December 31, 2005.

Business - The Company sells computer components and peripherals to distributors
and retailers primarily in North, Central and South America.

Earnings  Per Share -  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings Per Share",  requires presentation of basic earnings per share ("Basic
EPS") and diluted earnings per share ("Diluted EPS").  Basic income per share is
computed by dividing net income available to common shareholders by the weighted
average number of common shares  outstanding  during the period.  Diluted income
per share gives  effect to all  dilutive  potential  common  shares  outstanding
during the period.  Potentially  dilutive  securities consist of the outstanding
shares of preferred stock.

As of March 31, 2005,  potentially  dilutive  securities  consisted of 1,000,000
shares of Class A Convertible Preferred Stock with a stated liquidation value of
$1.00 per share that are convertible into common stock at fair market value, and
2,653,408  shares  of  Class  B  Convertible   Preferred  Stock  with  a  stated
liquidation  value of $1.00 per share that are convertible  into common stock at
fair market value, but not less than $0.25 per share.

As of March 31,  2005,  4,248,149  shares of common  stock  were  issuable  upon
conversion  of  the  Class  A  Convertible  Preferred  Stock  and  the  Class  B
Convertible  Preferred  Stock,  consisting  of 1,162,791  shares of common stock


                                       9
<PAGE>

issuable upon conversion of the Class A Convertible  Preferred  Stock,  based on
the closing  price of $0.86 per common  share at March 31, 2005,  and  3,085,358
shares of common  stock  issuable  upon  conversion  of the Class B  Convertible
Preferred Stock, based on the $0.86 per share conversion price.

As of March 31,  2004,  16,666,667  shares of common  stock were  issuable  upon
conversion  of the Class A  Convertible  Preferred  Stock,  based on the closing
price of $0.19 per common share during the three months ended March 31, 2004.

Comprehensive Income (Loss) - The Company displays comprehensive income or loss,
its  components  and  accumulated   balances  in  its   consolidated   financial
statements.  Comprehensive  income or loss includes all changes in equity except
those  resulting from  investments by owners and  distributions  to owners.  The
Company did not have any items of  comprehensive  income (loss) during the three
months ended March 31, 2005 and 2004.

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,  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.

Stock-Based  Compensation  - The  Company  has adopted  Statement  of  Financial
Accounting Standards No. 123,  "Accounting for Stock-Based  Compensation" ("SFAS
No. 123"),  which  establishes a fair value method of accounting for stock-based
compensation plans, as amended by Statement of Financial Accounting Standard No.
148,  "Accounting  for  Stock-Based  Compensation - Transition  and  Disclosure"
("SFAS No. 148").

The  provisions of SFAS No. 123 allow  companies to either expense the estimated
fair value of stock options or to continue to follow the intrinsic  value method
set forth in Accounting  Principles Board Opinion No. 25,  "Accounting for Stock
Issued to  Employees",  but to disclose the pro forma effect on net loss and net
loss per  share had the fair  value of the stock  options  been  exercised.  The
Company has elected to continue to account for  stock-based  compensation  plans
utilizing the intrinsic value method.  Accordingly,  compensation cost for stock
options will be measured as the excess,  if any, of the fair market price of the
Company's  common  stock at the date of grant above the amount an employee  must
pay to acquire the common stock.

In  accordance  with SFAS No. 123, as amended by SFAS No. 148,  the Company will
provide  prominent  footnote  disclosure  with respect to  stock-based  employee
compensation,  and the effect of the method used on reported results.  The value
of a stock-based award will be determined using the Black-Scholes option-pricing
model, whereby compensation cost is the fair value of the award as determined by
the pricing  model at the grant date or other  measurement  date.  The resulting
amount will be charged to expense on the straight-line  basis over the period in
which the Company  expects to receive  benefit,  which is generally  the vesting
period. Stock options issued to non-employee directors at fair market value will
be accounted for under the intrinsic value method.



                                       10
<PAGE>

The Company has not issued any stock-based compensation to date. Accordingly, no
pro forma financial disclosure has been presented.


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 and
$60,000 was repaid during March 2005.



3.  Note Payable

On March 29, 2004, LGT Computer, Inc. loaned the Company $213,750 pursuant to an
unsecured note payable due March 28, 2005, with interest at 4% per annum. On May
29, 2004, LGT Computer,  Inc. loaned the Company an additional $700,000 pursuant
to an unsecured note payable due May 29, 2005, with interest at 4% per annum. On
March 28, 2005,  by mutual  agreement of the parties,  the due date of the notes
were extended one year at the same interest  rate. The new due date of the first
loan is March 28, 2006. The new due date of the second loan is May 29, 2006.



4.  Equity-Based Transactions

Effective  December 30,  2003,  SOYO Taiwan  entered  into an agreement  with an
unrelated  third party to sell the $12,000,000  long-term  payable due it by the
Company. As part of the agreement, SOYO Taiwan required that the purchaser would
be limited to  collecting a maximum of $1,630,000  of the  $12,000,000  from the
Company  without the prior  consent of SOYO Taiwan.  In  substance,  SOYO Taiwan
forgave debt in an amount equal to the difference  between the  $12,000,000  and
the  value of the  preferred  stock  issued in  settlement  of this  debt.  This
forgiveness of debt was treated as a capital transaction. Payment from the third
party was received by SOYO Taiwan in February and March 2004.  An agreement  was
reached during the three months ended March 31, 2004 whereby 2,500,000 shares of
Class B preferred  stock would be issued by the Company to the  unrelated  third
party in exchange for the long-term payable.

The Class B preferred  stock has a stated  liquidation  value of $1.00 per share
and a 6% dividend, payable quarterly in arrears, in the form of cash, additional
shares of preferred  stock, or common stock,  at the option of the Company.  The
Class B preferred  stock has no voting  rights.  The shares of Class B preferred
stock are  convertible,  in increments of 100,000 shares,  into shares of common
stock based on the $1.00 stated  value,  at any time through  December 31, 2008,
based on the fair  market  value of the common  stock,  subject,  however,  to a
minimum  conversion  price of $0.25 per share.  No more than  500,000  shares of
Class B preferred  stock may be converted  into common stock in any one year. On
December  31,  2008,  any   unconverted   shares  of  Class  B  preferred  stock
automatically convert into shares of common stock based on the fair market value
of the common stock,  subject,  however,  to a minimum conversion price of $0.25
per share. Beginning one year after issuance,  upon ten days written notice, the
Company or its designee will have the right to  repurchase  for cash any portion
or all of the  outstanding  shares  of  Class B  preferred  stock  at 80% of the
liquidation  value ($0.80 per share).  During such notice period,  the holder of
the preferred stock will have the continuing right to convert any such preferred
shares  pursuant to which  written  notice has been  received  into common stock
without regard to the  conversion  limitation.  The Class B preferred  stock has
unlimited piggy-back registration rights, and is non-transferrable.



                                       11
<PAGE>

The Company  recorded  the  issuance of the Class B preferred  stock at its fair
market  value on March  31,  2004 of  $1,304,000,  which  was  determined  by an
independent  investment  banking firm. The  $10,696,000  difference  between the
$12,000,000  long-term payable and the $1,304,000 fair market value of the Class
B preferred  stock was credited to additional  paid-in  capital.  The difference
between the fair market value and the liquidation value of the Class B preferred
stock is being  recognized  as an  additional  dividend to the Class B preferred
stockholder,  and as a reduction to earnings  available to common  stockholders,
and will be accreted from April 1, 2004 through December 31, 2008.


5.  Significant Concentrations

a.  Customers

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

                                Three Months Ended March 31,
                                ----------------------------
                                   2005               2004
                                ------------    ------------
Revenues
  Distributors                  $  2,821,181    $  5,713,801
  Retailers                        1,141,339       2,880,501
                                ------------    ------------
                                $  3,962,520    $  8,594,302
                                ============    ============


During the three months ended March 31, 2005 and 2004, the Company offered price
protection to certain customers under specific programs  aggregating $99,272 and
$3,636,  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  March 31,  2005 and 2004,  the  Company had two
customers that accounted for revenues of $1,673,160 and  $2,697,593,  equivalent
to 34.2% and 31.4% of net revenues,  respectively.  The two  customers  were E23
Inc. and RJD Computer Inc.

b.  Geographic Segments

Financial information by geographic segments is summarized as follows:

                                Three Months Ended March 31,
                                ----------------------------
                                   2005              2004
                                ------------    ------------

Revenues
  North America                 $  1,560,833    $  6,315,640
  Central and South America          280,623       2,310,889
  Other locations                  2,121,064         (32,227)
                                ------------    ------------
                                $  3,962,520    $  8,594,302
                                ============    ============



                                       12
<PAGE>

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 (see Note 1).  Subsequent to that date, SOYO Taiwan has agreed 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 March 31, 2005 and  December  31,  2004,  and for the three  months
ended March 31, 2005 and 2004:

                                     March 31,     December 31,
                                       2005            2004
                                   ------------    ------------

Accounts payable to SOYO Taiwan    $    195,557    $  1,314,910
Long-term payable to SOYO Taiwan           --              --



                                   Three Months Ended March 31,
                                   ----------------------------
                                      2005               2004
                                   ------------    ------------

Purchases from SOYO Taiwan         $       --      $  4,482,944
Payments to SOYO Taiwan                 873,050       5,345,067


During the three  months  ended  March 31,  2005 and 2004,  the  Company did not
receive any price protection from SOYO Taiwan.


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 March 31, 2005
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 March 31, 2005  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.



                                       13
<PAGE>

Background and Overview:

Historically,  the Company  has sold  computer  components  and  peripherals  to
distributors and retailers  primarily in North,  Central and South America.  The
Company  operated  in  one  business  segment.  A  substantial  majority  of the
Company's  products  were  purchased  from SOYO Taiwan  pursuant to an exclusive
distribution  agreement effective through December 31, 2005, and were 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.

Subsequent to this  transaction,  SOYO Taiwan  maintained an equity  interest in
SOYO, continued to be the primary supplier of inventory to SOYO, and was a major
creditor. In addition,  there was no change in the management of SOYO and no new
capital invested, and there was 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.

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

In 2004, the Company decided to make a significant  change in the core offerings
for sale. The emphasis  switched from  motherboards and hardware to peripherals,
leading to a more diverse product offering. Also in 2004, the Company introduced
its VoIP products.  SOYO Group, Inc. is entering the LCD display market with the
introduction  of 17- and 19-inch LCD monitors which are expected to be available
in Q2 of 2005.

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

                                              Three Months Ended March 31,
                                     -------------------------------------------
                                              2005                   2004
                                     --------------------   --------------------
                                       Amount        %        Amount        %
                                     ----------   -------   ----------   -------
Revenues
  Distributors                       $2,821,181      71.2 $6,441,864        75.0
  Retailers                           1,141,340      28.8  2,152,438        25.0
                                     ----------   -------   ----------   -------
                                     $3,962,520     100.0 $8,594,302       100.0
                                     ==========   =======   ==========   =======




                                       14
<PAGE>

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

During the three  months  ended  March 31,  2005 and 2004,  the  Company had two
customers that accounted for revenues of $1,673,160 and  $2,697,593,  equivalent
to 34.2% and 31.4% of net revenues, respectively. Those customers are E23, Inc.,
and RJD Computer, Inc.

Financial information by geographic segments is summarized as follows:

                                            Three Months Ended March 31,
                                  ---------------------------------------------
                                            2005                    2004
                                  ---------------------  ----------------------
                                     Amount        %        Amount         %
                                  -----------   -------  -----------    -------

Revenues
  North America                   $ 1,560,832     39.38  $ 6,315,640       73.5
  Central and South America           280,624      7.08    2,310,889       26.9
  Other locations                   2,121,064     53.54    (32,227)        (0.4)
                                  -----------   -------  -----------    -------
                                  $ 3,962,520     100.0  $ 8,594,302      100.0
                                  ===========   =======  ===========    =======

Financial Outlook:


As of March 31,  2005,  the  Company  is  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 and loans from a
private lender.

Since  October  24,  2002,  the date  that  SOYO  Nevada  became a  wholly-owned
subsidiary of VWHC, SOYO has attempted 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  moved its office and  warehouse  operations  into a larger,  more
efficient facility in September 2003.

- 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.

On March 28, 2005 the Company announced that an accredited investor,  Ever-Green
Technology (Hong Kong) Co., Ltd.,  purchased 500,000  unregistered shares of its
common  stock,  $0.001  par value per share  (the  "Shares")  and  common  stock
purchase  warrants to purchase 100,000 shares of its common stock exercisable at
$1.50 per share at any time until  March 22,  2008 (the  "Warrants").  The total
offering price was $500,000, which was paid in cash.



                                       15
<PAGE>

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  and  liquidity do 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.  The equity  financing  deal closed  during the first quarter of
2005 is expected to provide the Company with sufficient  proceeds to operate the
business at least  through  the end of 2005,  as the  Company  continues  to cut
expenses and expand revenue streams.


Critical Accounting Policies:

The  Company  prepared  its  condensed   consolidated  financial  statements  in
accordance with accounting principles generally accepted in the United States of
America.  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.



                                       16
<PAGE>

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.

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 March 31, 2005 and 2004:

Net Revenues. Net revenues decreased by $4,631,782,  or 53.89%, to $3,962,520 in
2005, as compared to $8,594,302 in 2004. The decrease in net revenues in 2005 as
compared to 2004 was a  continuing  result of the  Company's  changing  its core
sales offerings, reducing inventory, and focusing primarily on selling off older
inventory  and opening  markets for the LCD  products,  which are expected to be
available for sale in May 2005.

During the three  months  March 31,  2005 and 2004,  the Company  offered  price
protection to certain customers under specific programs  aggregating $99,272 and
$3,636,  respectively,  which  reduced  net  revenues  and  accounts  receivable
accordingly.

Gross  Margin.  Gross  margin was  $522,035  or 13.17% in 2005,  as  compared to
$1,113,168 or 12.9% in 2004.

Sales and  Marketing  Expenses.  Selling and  marketing  expenses  increased  by
$202,313 to $239,465 in 2005,  as compared to $37,152 in 2004.  The  increase is
due to the hiring of sales people in the LCD and VoIP divisions.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased by $123,590 to $933,973 in 2005, as compared to $810,383 in 2004.  The
increase  is also  due to the  hiring  of  sales  people  in the  LCD  and  VoIP
divisions.

Provision for Doubtful  Accounts.  The Company recorded a provision for doubtful
accounts  of $31,124 for the three  months  ended  March 31,  2005.  The Company
recorded a provision  for  doubtful  accounts of $166,873  for the three  months
ended March 31, 2004.


                                       17
<PAGE>

Depreciation  and  Amortization.  Depreciation  and amortization of property and
equipment was $8,749 in 2005,  as compared to $4,055 in 2004.  The increase is a
result of the use of leasehold  improvements  provided by the landlord after the
move from Fremont to Ontario, CA.

Income from  Operations.  The loss from  operations was $(929,050) for the three
months ended March 31, 2005,  as compared to income from  operations  of $94,705
for the three  months  ended  March  31,  2004.  This is a direct  result of the
reduced sales during the quarter, leading to a very small contribution margin.

Miscellaneous  Income.  Miscellaneous income was $1,089,172 for the three months
ended March 31,  2005.  There was no  miscellaneous  income in the three  months
ended March 31, 2004.  During the three months ended March 31, 2005, the Company
was  able to reach a final  resolution  with a vendor  over a  dispute  that had
arisen. The Company had purchased $10,663,206 of products from this vendor since
2002. The Company found that RMA requests on these products were unusually high,
and customer and distributor returns were also above normal. During the quarter,
SOYO resolved these problems with Customers and Distributors for the Vendor, and
the Company and the Vendor reached an agreement whereby the Company's payable of
$1,106,781 to the Vendor was cancelled.

Interest Income.  There was no interest income in 2004 or in 2005.

Interest  Expense.  Interest  expense was $11,221 in 2005. There was no interest
expense in 2004.

Provision for Income  Taxes.  There was no provision for income taxes in 2004 or
in 2005.

Net Income.  Net income was  $386,675 for the three months ended March 31, 2005,
as compared to net income of $94,705 for the three  months ended March 31, 2004.
This is a result of the  misc.  income  referred  to above.  Without  that,  the
Company would have suffered a substantial loss.

Financial Condition - March 31, 2004:

Liquidity and Capital Resources:

Transactions  with SOYO  Taiwan.  Since the  formation of SOYO Nevada in October
1998,  through the end of 2004, the Company 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  continued to
provide inventory to SOYO through 2004.

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  levels,  which  is not  less  than  a  level
consistent with the operations of SOYO Nevada's  business in 2001 and 2000. This
supply commitment was to be effective through December 31, 2005.

During the three  months  ended March 31,  2005,  the  Company did not  purchase
inventory  from SOYO  Taiwan.  During the three  months ended March 31, 2004 the


                                       18
<PAGE>

Company  purchased  $4,482,944.  At March 31, 2005,  the Company had  short-term
accounts  payable to SOYO Taiwan of $195,557.  At December 31, 2004, the Company
had short-term  accounts  payable to SOYO Taiwan of $1,314,910.  At neither date
were there any long-term payable to SOYO Taiwan.

During the three  months  ended  March 31,  2004 and 2005,  the  Company did not
receive any price  protection  from SOYO  Taiwan.  The Company does not have any
formal price protection agreement with SOYO Taiwan.

Effective  December 30,  2003,  SOYO Taiwan  entered  into an agreement  with an
unrelated  third party to sell the $12,000,000  long-term  payable due it by the
Company. As part of the agreement, SOYO Taiwan required that the purchaser would
be limited to  collecting a maximum of $1,630,000  of the  $12,000,000  from the
Company  without the prior  consent of SOYO Taiwan.  In  substance,  SOYO Taiwan
forgave debt in an amount equal to the difference  between the  $12,000,000  and
the  value of the  preferred  stock  issued in  settlement  of this  debt.  This
forgiveness of debt was treated as a capital transaction. Payment from the third
party was received by SOYO Taiwan in February and March 2004.  An agreement  was
reached during the three months ended March 31, 2004 whereby 2,500,000 shares of
Class B preferred  stock would be issued by the Company to the  unrelated  third
party in exchange for the long-term payable.

The Class B preferred  stock has a stated  liquidation  value of $1.00 per share
and a 6% dividend, payable quarterly in arrears, in the form of cash, additional
shares of preferred  stock, or common stock,  at the option of the Company.  The
Class B preferred  stock has no voting  rights.  The shares of Class B preferred
stock are  convertible,  in increments of 100,000 shares,  into shares of common
stock based on the $1.00 stated  value,  at any time through  December 31, 2008,
based on the fair  market  value of the common  stock,  subject,  however,  to a
minimum  conversion  price of $0.25 per share.  No more than  500,000  shares of
Class B preferred  stock may be converted  into common stock in any one year. On
December  31,  2008,  any   unconverted   shares  of  Class  B  preferred  stock
automatically convert into shares of common stock based on the fair market value
of the common stock,  subject,  however,  to a minimum conversion price of $0.25
per share. Beginning one year after issuance,  upon ten days written notice, the
Company or its designee will have the right to  repurchase  for cash any portion
or all of the  outstanding  shares  of  Class B  preferred  stock  at 80% of the
liquidation  value ($0.80 per share).  During such notice period,  the holder of
the preferred stock will have the continuing right to convert any such preferred
shares  pursuant to which  written  notice has been  received  into common stock
without regard to the  conversion  limitation.  The Class B preferred  stock has
unlimited piggy-back registration rights, and is non-transferable.

The Company  recorded  the  issuance of the Class B preferred  stock at its fair
market  value on March  31,  2005 of  $1,304,000,  which  was  determined  by an
independent  investment  banking firm. The  $10,696,000  difference  between the
$12,000,000  long-term payable and the $1,304,000 fair market value of the Class
B preferred  stock was credited to additional  paid-in  capital.  The difference
between the fair market value and the liquidation value of the Class B preferred
stock is being  recognized  as an  additional  dividend to the Class B preferred
stockholder,  and as a reduction to earnings  available to common  stockholders,
and will be accreted from April 1, 2004 through December 31, 2008.

Operating  Activities.  The Company  utilized  cash of  $1,271,674  in operating
activities during the three months ended March 31, 2005, as compared to $769,663
in operating activities during the three months ended March 31, 2004.



                                       19
<PAGE>

At March 31, 2005,  the Company had cash and cash  equivalents  of $513,339,  as
compared to $1,288,351 at December 31, 2004.

The Company had a working capital deficiency of $3,288,979 at March 31, 2005, as
compared to a working capital deficiency of $4,256,906 at December 31, 2004,
resulting in current ratios of .65:1 and .63:1 at March 31, 2005 and December
31, 2004, respectively.

Accounts  receivable  increased to  $2,638,847 at March 31, 2005, as compared to
$2,076,882 at December 31, 2004, an increase of $561,965 or 27.1%. The Company's
provision  for doubtful  accounts  stood at  $1,105,264 as of March 31, 2005, as
compared to $1,074,550 at March 31, 2004.

Inventories decreased to $2,819,715 at March 31, 2005, as compared to $3,862,911
at December 31, 2004, a decrease of  $1,043,196  or 27% as a result of decreased
inventory purchases;  during the three months ended March 31, 2005. During three
months ending March 31, 2005, the company did not purchase any inventories  from
SOYO Taiwan.

Accounts payable - SOYO Computer,  Inc. decreased to $195,557 at March 31, 2005,
as compared to  $1,314,910  at December 31, 2004,  a decrease of  $1,119,353  or
85.1%, as a result of decreased inventory purchases.

Accounts  payable - other decreased to $7,358,177 at March 31, 2005, as compared
to $8,230,455 at December 31, 2004, a decrease of $872,278 or 10.6%, as a result
of  reduced  inventory  purchases,  and the  forgiveness  of debt by a  supplier
referenced on page 19.

Accrued  liabilities  decreased  to $574,711 at March 31,  2005,  as compared to
$829,043 at December 31,  2004, a decrease of $254,332 or 30.7%,  as a result of
decreased accruals with respect to interests, commissions and general costs.

Investing  Activities.  The Company received $56,662 in 2005 for the purchase of
property and equipment from the landlord in accordance with the terms of the new
headquarters  in Ontario,  CA, as  compared  to spending  $3,500 in 2004 for the
purchase of property and equipment.

Financing  Activities.  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 and $60,000 was paid during March 2005.

On March 29, 2004, LGT Computer, Inc. loaned the Company $213,750 pursuant to an
unsecured note payable due March 28, 2005, with interest at 4% per annum. On May
29, 2004, LGT Computer,  Inc. loaned the Company an additional $700,000 pursuant
to an unsecured note payable due May 29, 2005, with interest at 4% per annum. On
March 28, 2005, by mutual agreement of the parties,  the due dates of both notes
were extended one year at the same interest  rate. The new due date of the first
loan is March 28, 2006.

On March 28, 2005 the Company announced that an accredited investor,  Ever-Green
Technology (Hong Kong) Co., Ltd.,  purchased 500,000  unregistered shares of our
common  stock,  $0.001  par value per share  (the  "Shares")  and  common  stock
purchase  warrants to purchase 100,000 shares of our common stock exercisable at
$1.50 per share at any time until  March 22,  2008 (the  "Warrants").  The total
offering price was $500,000, which was paid in cash.



                                       20
<PAGE>
<TABLE>
<CAPTION>

Principal Commitments:

A summary of the Company's contractual cash obligations as of March 31, 2005 is
as follows:


                                                   Payments Due By Period
                                                   ----------------------

Contractual                            Less than     Between      Between      After
Cash Obligations            Total       1 year      1-2 years    3-5 years    5 years
----------------         ----------   ----------   ----------   ----------   ----------
<S>                      <C>          <C>          <C>          <C>          <C>
Operating leases         $  557,774   $  203,294   $  212,688   $  141,792   $     --
Note payable                913,750      913,750         --           --           --

Advances from officer,
  director and major

  shareholder               180,000      180,000         --           --           --
                         ----------   ----------   ----------   ----------   ----------
Total contractual cash

  obligations            $1,651,524   $1,297,044   $  212,688   $  141,792   $     --
                         ==========   ==========   ==========   ==========   ==========
</TABLE>


Off-Balance Sheet Arrangements:

At March 31, 2005,  the Company did not have any  transactions,  obligations  or
relationships that could be considered off-balance sheet arrangements.

Commitments and Contingencies:

At March 31, 2005, the Company did not have any material commitments for capital
expenditures.

Recent Accounting Pronouncements:

In  December  2004,  the FASB issued SFAS No.  153,  "Exchanges  of  Nonmonetary
Assets,  an amendment of APB Opinion No. 29". SFAS 153 addresses the measurement
of exchanges of nonmonetary  assets. It eliminates the exception from fair value
measurement for nonmonetary  exchanges of similar productive assets in paragraph
21(b)  of APB  Opinion  No.  29,  Accounting  forNonmonetary  Transactions,  and
replaces  it  with an  exception  for  exchanges  that  do not  have  commercial
substance.  SFAS  153  specifies  that a  nonmonetary  exchange  has  commercial
substance  if the  future  cash  flows of the  entity  are  expected  to  change
significantly as a result of the exchange.

The exception under APB 29 required that some  nonmonetary  exchanges,  although
commercially substantive,  be recorded on a carryover basis. SFAS 153 eliminates
the  exception  to fair value for  exchanges  of similar  productive  assets and
replaces it with a general exception for exchange  transactions that do not have
commercial  substance--that  is, transactions that are not expected to result in
significant changes in the cash flows of the reporting entity.

SFAS 153 is  effective  on  January  1, 2006.  The  adoption  of SFAS 153 is not
expected to have an impact on the Company's consolidated financial statements or
disclosures.

On December 16,  2004,  the FASB issued SFAS No.  123R,  "Share-Based  Payment,"
("SFAS 123R") which is a revision of SFAS No. 123,  "Accounting  for Stock-Based
Compensation"  ("SFAS  123").  Statement  123R  supersedes  APB  Opinion No. 25,
"Accounting for Stock Issued to Employees,"  and amends SFAS No. 95,  "Statement
of Cash Flows." Generally,  the approach in SFAS 123R is similar to the approach
described in SFAS 123. SFAS 123R requires all share-based  payments to employees


                                       21
<PAGE>

to be recognized in the income  statement  based on their grant date fair values
over the  corresponding  service  period  and also  requires  an  estimation  of
forfeitures when calculating  compensation  expense. The Company must adopt SFAS
123R no later than January 1, 2006. SFAS 123R permits public  companies to adopt
its requirements using one of three methods: the "modified  prospective" method,
the  "modified  retrospective"  method to  January  1,  2005,  or the  "modified
retrospective"  method to all prior years for which SFAS 123 was effective.  The
Company  has not yet  determined  which  adoption  method it will  utilize.  The
Company has not yet decided whether it will adopt the provisions of SFAS 123R on
January 1, 2006 as required, or earlier, as allowed.

In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs, an amendment
of ARB No. 43,  Chapter 4." SFAS 151 amends the guidance in ARB No. 43,  Chapter
4, "Inventory  Pricing," to clarify the accounting for abnormal  amounts of idle
facility  expense,  freight,  handling costs,  and wasted  material  (spoilage).
Paragraph  5 of ARB 43,  Chapter  4,  previously  stated  that ". . . under some
circumstances,  items such as idle facility expense,  excessive spoilage, double
freight,  and  rehandling  costs may be so abnormal as to require  treatment  as
current period charges.  . . ." SFAS 151 requires that those items be recognized
as current-period  charges  regardless of whether they meet the criterion of "so
abnormal." In addition,  SFAS 151 requires that  allocation of fixed  production
overheads  to the costs of  conversion  be based on the normal  capacity  of the
production facilities.

SFAS 151 is effective on January 1, 2006.  Earlier  application is permitted for
inventory costs incurred  beginning  January 1, 2005. The provisions of SFAS 151
shall be applied prospectively. The adoption of SFAS 151 is not expected to have
an impact on the Company's consolidated financial statements or disclosures.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets",  which  addresses  financial  accounting  and
reporting for the  impairment or disposal of long-lived  assets.  While SFAS No.
144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of", it retains many of the fundamental
provisions of that statement. The Company adopted SFAS No. 144 effective January
1, 2002.  The adoption of SFAS No. 144 did not have a significant  effect on the
Company's financial statement presentation or disclosures.

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  SFAS 4,  which  required  all  gains  and  losses  from
extinguishment  of debt to be  aggregated  and, if  material,  classified  as an
extraordinary  item, net of related income tax effect. Upon adoption of SFAS No.
145,  the Company  will be required to apply the criteria in APB Opinion No. 30,
"Reporting  the Results of  Operations--  Reporting the Effects of Disposal of a
Segment of a Business,  and  Extraordinary,  Unusual and Infrequently  Occurring
Events and Transactions"  (Opinion No. 30), in determining the classification of
gains and losses resulting from the extinguishment of debt.  Additionally,  SFAS
No. 145 amends SFAS No. 13 to require that certain lease modifications that have
economic effects similar to  sale-leaseback  transactions to be accounted for in
the same manner as sale-leaseback transactions. The Company adopted SFAS No. 145
effective  January 1, 2003. The adoption of SFAS No. 145 for  long-lived  assets
held  for use did not  have a  significant  effect  on the  Company's  financial
statement presentation or disclosures.



                                       22
<PAGE>

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit and Disposal Activities".  SFAS No. 146 nullifies Emerging Issues Task
Force  ("EITF")  Issue No. 94-3,  "Liability  Recognition  for Certain  Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs Incurred in a Restructuring)".  Under EITF Issue No. 94-3, a liability for
an exit cost is  recognized  at the date of an  entity's  commitment  to an exit
plan.  Under SFAS No. 146, the  liabilities  associated with an exit or disposal
activity  will be measured at fair value and  recognized  when the  liability is
incurred  and meets the  definition  of a  liability  in the  FASB's  conceptual
framework.  SFAS No. 146 is effective for exit or disposal activities  initiated
after  December  31, 2002.  The adoption of SFAS 146 did not have a  significant
effect on the Company's financial statement presentation or disclosures.

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 to Others" ("FIN 45"), an interpretation of FASB Statements Nos. 5,
57 and 107 and a rescission of FASB  Interpretation No. 34. FIN 45 elaborates on
the  disclosures  to be made by a guarantor in its interim and annual  financial
statements about its obligations under guarantees  issued. FIN 45 also clarifies
that a guarantor  is required to  recognize,  at  inception  of a  guarantee,  a
liability  for  the  fair  value  of  the  obligation  undertaken.  The  initial
recognition  and  measurement  provisions of FIN 45 are applicable to guarantees
issued or modified after December 31, 2002. The disclosure  requirements  of FIN
45 are effective for  financial  statements of interim and annual  periods ended
after  December  15,  2002.  The  adoption of FIN 45 did not have a  significant
effect on the Company's financial statement presentation or disclosures.

In November 2002, the FASB's Emerging Issues Task Force ("EITF") issued EITF No.
00-21  "Revenue  Arrangements  with  Multiple  Deliverables".   EITF  No.  00-21
addresses  certain aspects of the accounting by a vendor for arrangements  under
which it will perform multiple revenue-generating activities. Specifically, EITF
No. 00-21 addresses how to determine whether an arrangement  involving  multiple
deliverables  contains  more than one unit of  accounting.  In applying EITF No.
00-21,  separate  contracts  with the same  entity or related  parties  that are
entered into at or near the same time are presumed to have been  negotiated as a
package  and  should,  therefore,  be  evaluated  as  a  single  arrangement  in


                                       23
<PAGE>

considering whether there are one or more units of accounting.  That presumption
may be overcome if there is sufficient evidence to the contrary.  EITF No. 00-21
also addresses how arrangement consideration should be measured and allocated to
the separate  units of accounting in the  arrangement.  The guidance in EITF No.
00-21 is  effective  for revenue  arrangements  entered  into in fiscal  periods
beginning after June 15, 2003. The Company adopted EITF No. 00-21 effective July
1, 2003. The adoption of EITF No. 00-21 did not have a significant effect on the
Company's financial statement presentation or disclosures.


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 at March 31, 2005 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:

In conjunction with the audit of the Company's financial statements for the year
ended December 31, 2003,  the Company's  Chief  Executive  Officer and its Chief
Financial  Officer  reviewed and  evaluated the  effectiveness  of the Company's
disclosure  controls and  procedures  (as defined in Exchange Act Rule 13a-15(e)
and  15d-15(e)),  which are  designed to ensure that  material  information  the
Company must  disclose in its reports  filed or submitted  under the  Securities
Exchange Act of 1934, as amended (the "Exchange  Act"), is recorded,  processed,
summarized  and reported on a timely basis,  and have  concluded,  based on that
evaluation,  that  as of  such  date,  the  Company's  disclosure  controls  and
procedures were not adequate.  In addition,  the Company's  automated  financial
reporting  systems are overly  complex,  poorly  integrated  and  inconsistently
implemented.

The Company's  Chief Executive  Officer and Chief  Financial  Officer arrived at
this  conclusion  based on a number of  factors,  including  that the  Company's
system of internal  control  during 2003 did not: (1) properly  record  accounts
payable to vendors for  purchases  of  inventory,  (2) did not  properly  record
adjustments to inventory per the general ledger to physical  inventory  balances
(3) did not properly record inventory adjustments to the lower of cost or market
using the average  inventory  method,  (4) did not  periodically  reconcile  the
Company's  main bank  account  between  August 2003 and December  2003,  (5) did
nothave adequate controls over interim physical  inventory  procedures,  and (6)
did not generate  timely and  accurate  financial  information  to allow for the
preparation  of timely and complete  financial  statements.  The Company did not
have an  adequate  financial  reporting  process  because of the  aforementioned
material weaknesses,  including the difficulty in identifying and assembling all
relevant  contemporaneous  documentation for ongoing business transactions,  and
significant  turnover  in the  Company's  financial  staff.  In  addition to the


                                       24
<PAGE>

foregoing,  a former employee  withheld  information from the auditor during the
2003 audit.  Accordingly,  the Company's Chief Executive  Officer rezalized that
there were  significant  deficiencies,  including  material  weaknesses,  in the
Company's  internal  controls  over its  financial  reporting  at the end of the
fiscal period ended December 31, 2003.

In view of the fact that the financial  information presented in the 2003 annual
report was prepared in the absence of adequate  internal controls over financial
reporting, the Company devoted a significant amount of time and resources to the
analysis of the financial information and documentation underlying the financial
statements  contained  in this annual  report,  including  the  related  interim
financial statements,  resulting in the restatement of certain interim financial
statements. In particular, the Company reviewed all significant account balances
and transactions  underlying  financial statements to verify the accuracy of the
financial statements contained in the 2003 annual report.

When the  Company's  senior  management  realized  that there  were  significant
deficiencies,  including material weaknesses,  in our 2003 internal control over
financial  reporting,  we  retained  outside  advisors  to assist  the  Company'
financial staff in preparing the Company's financial  statements,  including the
restated interim periods.


To address these weaknesses,  the Company took the following  corrective actions
in 2004:

     o    The  Company  hired  a  new  Accounting  Manager,  then  replaced  the
          Accounting  Manager  with a more  skilled  professional.  The  Company
          retained an outside  consultant to focus on financial  accounting  and
          reporting issues, then hired the Consultant onto the staff.

     o    Each  month,   the  Company's   Accounting   Manger   supervises   the
          reconciliation  of the accounts  payable  subsidiary  ledgers with the
          general  ledger,  and  approves  adjustments  to  inventory  based  on
          reconciliation  of the general  ledger to physical  inventory  counts.
          Each quarter, the Accounting Manager records inventory  adjustments to
          the lower of cost or market.

     o    Every month, the controller  reconciles the bank accounts and compares
          the bank  reconciliation  with the balance per general  ledger and the
          daily cash  report,  reviews  the  recording  of  accounts  payable to
          vendors  for   purchases  of   inventory,   and   prepares   financial
          adjustments.

     o    During  the  quarter  ended  September  30,  2004  cycle  count of its
          inventory,  with the fifty  fastest-moving items of "Type A" inventory
          physically  counted and  reconciled  every  morning  with the recorded
          quantities and amounts.  All "Type A" inventory is physically  counted
          reconciled every Monday.

     o    A complete  inventory is physically  counted and reconciled at the end
          of every month.

In conjunction with the audit of the Company's financial statements for the year
ended December 31, 2004,  the Company's  Chief  Executive  Officer and its Chief
Financial  Officer  reviewed and evaluated the corrective  actions listed above.
Such officers believe that such corrective actions minimize the risk of material
misstatement,   but  the  corrective   actions  continued  to  have  significant
deficiencies.  The Company is currently  evaluating new accounting software that
it believes  will address the Company's  automated  financial  reporting  system
requirements. The Company expects the new accounting software to be in place and
operational during the third quarter of fiscal year 2005.



                                       25
<PAGE>

As of December  31,  2004,  The  Company's  finance  operations  continued to be
understaffed  and its personnel  lacked  comprehensive  accounting  policies and
procedures to follow.  In addition,  the Company's  personnel need to be further
trained  with  respect to  procedures  and  systems.  With the hiring of the new
Accounting  Manager  and the  Consultant,  the  Company  believes it has finally
addressed those areas and resolved the problem.



                           PART II. OTHER INFORMATION



ITEM 2. CHANGES IN  SECURITIES,  USE OF PROCEEDS AND ISSUER  PURCHASES OF EQUITY
        SECURITIES

Effective  December 30,  2003,  SOYO Taiwan  entered  into an agreement  with an
unrelated  third party to sell the $12,000,000  long-term  payable due it by the
Company.  Payment  from the third party was  received by SOYO Taiwan in February
and March 2004. An agreement was reached during the three months ended March 31,
2004 whereby  2,500,000 shares of Class B preferred stock would be issued by the
Company to the unrelated third party in exchange for the long-term payable.

The Class B preferred  stock has a stated  liquidation  value of $1.00 per share
and a 6% dividend, payable quarterly in arrears, in the form of cash, additional
shares of preferred  stock, or common stock,  at the option of the Company.  The
Class B preferred  stock has no voting  rights.  The shares of Class B preferred
stock are  convertible,  in increments of 100,000 shares,  into shares of common
stock based on the $1.00 stated  value,  at any time through  December 31, 2008,
based on the fair  market  value of the common  stock,  subject,  however,  to a
minimum  conversion  price of $0.25 per share.  No more than  500,000  shares of
Class B preferred  stock may be converted  into common stock in any one year. On
December  31,  2008,  any   unconverted   shares  of  Class  B  preferred  stock
automatically convert into shares of common stock based on the fair market value
of the common stock,  subject,  however,  to a minimum conversion price of $0.25
per share. Beginning one year after issuance,  upon ten days written notice, the
Company or its designee will have the right to  repurchase  for cash any portion
or all of the  outstanding  shares  of  Class B  preferred  stock  at 80% of the
liquidation  value ($0.80 per share).  During such notice period,  the holder of
the preferred stock will have the continuing right to convert any such preferred
shares  pursuant to which  written  notice has been  received  into common stock
without regard to the  conversion  limitation.  The Class B preferred  stock has
unlimited piggy-back registration rights, and is non-transferrable.

The shares of preferred stock were issued without  registration in reliance upon
the  exemption  afforded  by  Section  4(2) of the  Securities  Act of 1933,  as
amended, based on certain representations made to the Company by the recipient.

On March 28, 2005 the Company announced that an accredited investor,  Ever-Green
Technology (Hong Kong) Co., Ltd.,  purchased 500,000  unregistered shares of our
common  stock,  $0.001  par value per share  (the  "Shares")  and  common  stock
purchase  warrants to purchase 100,000 shares of our common stock exercisable at
$1.50 per share at any time until  March 22,  2008 (the  "Warrants").  The total
offering price was $500,000, which was paid in cash.



                                       26
<PAGE>

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 March 31, 2005:

The Company  filed a Report on Form 8-K on March 22,  2005,  detailing a sale of
securities  in a private  placement to Ever-Green  Technology  Co. of Hong Kong,
which is incorporated herein by reference.



                                   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:  May 16, 2005                    By: /s/ Ming Tung Chok
                                          -----------------------
                                          President and Chief
                                          Executive Officer







DATE:  May 16, 2005                    By: /s/ Nancy Chu
                                          -----------------------
                                          Nancy Chu
                                          Chief Financial Officer














                                       27
<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 - Ming Tung Chok and Nancy Chu














                                       28