SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q


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

     For the fiscal quarter ended September 30, 2006


[_]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE 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                    (I.R.S. Employer
    of Incorporation or Organization)              Identification Number)


            1420 South Vintage Avenue, Ontario, California 91761-3646
--------------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (909) 292-2500
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:  None


     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required  to be filed by  Section  13 or 15(d) of the  Exchange  Act  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). Yes [ ] No [X]


                                       1
<PAGE>

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Act). [ ] Yes [X] No

     Indicate  the  number of  shares  outstanding  of each of the  Registrant's
classes of Common Stock as of the latest practicable date.

     As of November 14, 2006, there were 49,025,511 shares Outstanding.

     Documents Incorporated by Reference: None

























                                       2
<PAGE>

                         SOYO GROUP, INC. AND SUBSIDIARY

                                      INDEX


PART I.   FINANCIAL INFORMATION

     Item 1. Financial Statements

             Condensed Consolidated Balance Sheets - September 30, 2006
             (Unaudited) and December 31, 2005

             Condensed Consolidated Statements of Operations (Unaudited) -
             Three Months and Nine Months Ended September 30, 2006 and 2005

             Condensed Consolidated Statements of Cash Flows (Unaudited) -
             Nine Months Ended September 30, 2006 and 2005

             Notes to Condensed Consolidated Financial Statements
             (Unaudited) - Three Months and Nine Months Ended September 30,
             2006 and 2005


     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 1. Legal Proceedings

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

     Item 6. Exhibits and Reports on Form 8-K


SIGNATURES












                                       3
<PAGE>

                         SOYO Group, Inc. and Subsidiary
                      Condensed Consolidated Balance Sheets


                                          September 30,    December 31,
                                               2006             2005
                                          -------------    -------------
                                           (Unaudited)

ASSETS

CURRENT
  Cash and cash equivalents               $   1,355,869    $     828,294
  Accounts receivable, net of
    allowance for doubtful accounts
    of $256,203 and $589,224 at
    September 30, 2006 and December 31,
    2005, respectively                        7,003,019        7,278,520
  Inventories                                 5,151,859        7,991,030
  Prepaid expenses                                    0           20,984
                                          -------------    -------------
                                             13,510,747       16,118,828
                                          -------------    -------------

Property and equipment                          976,570          867,122
Less:  accumulated depreciation
  and amortization                             (194,976)        (115,480)
                                          -------------    -------------
                                                781,594          751,642
                                          -------------    -------------

Deposits                                        414,726           36,920
                                          -------------    -------------
                                          $  14,707,067    $  16,907,390
                                          =============    =============









                                   (continued)


                                       4
<PAGE>

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


                                     September 30,    December 31,
                                          2006             2005
                                     -------------    -------------
(Unaudited)

LIABILITIES

CURRENT
  Accounts payable                      11,544,635       13,977,579
  Accrued liabilities                      282,182        1,287,108
  Note payable                             100,000          165,000
                                     -------------    -------------
                                        11,926,817       15,429,687
                                     -------------    -------------


SHAREHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value
  Authorized - 10,000,000 shares
  Issued and outstanding -
      3,000,940 shares of Class B
      Convertible Preferred Stock,
      (2,788,948 shares in 2005)
      $1.00 per share stated
      liquidation value
      ($2,500,000 aggregate
      liquidation value)                 1,860,431        1,702,486
Preferred Stock Backup Withholding        (132,383)         (84,999)
Common stock, $0.001 par value
  Authorized - 75,000,000 shares
  Issued and outstanding -
    49,025,511 shares,
   (48,681,511 in 2005)                     49,026           48,682
  Additional paid-in capital            17,743,758       17,225,738
  Accumulated deficit                  (16,740,582)     (17,414,204)
                                     -------------    -------------
                                         2,780,520        1,477,703
                                     -------------    -------------
                                     $  14,707,067    $  16,907,390
                                     =============    =============




     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

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

                                       Three Months Ended September 30,
                                       --------------------------------
                                            2006              2005
                                       --------------    --------------

Net revenues                           $   10,005,084    $    9,233,430
Cost of revenues                            7,771,723         9,026,659
                                       --------------    --------------
Gross margin                                2,233,361           206,771
                                       --------------    --------------

Costs and expenses:
  Sales and marketing                         231,272           256,259
  General and administrative                1,427,441           886,500
  Provision for doubtful accounts              20,635                 0
  Depreciation and amortization                27,107             8,653
                                       --------------    --------------
    Total costs and expenses                1,706,455         1,151,412
                                       --------------    --------------
Income (loss) from operations                 526,906          (944,641)
                                       --------------    --------------

Other income (expense):
  Interest income                                   0             1,202
  Interest expense                           (200,939)          (36,353)
Miscellaneous revenue                          (6,399)          600,000
State Tax Refund                                    0            17,600
                                       --------------    --------------
Other income (expense), net                  (207,338)          582,449
                                       --------------    --------------

Income before provision for
  Income taxes                                319,568          (362,192)

Provision for income taxes                       --                --
                                       --------------    --------------

Net income (loss)                      $      319,568    $     (362,192)
                                       ==============    ==============

Less: Dividends on Class B
         Convertible Preferred Stock          (55,491)          (42,935)
Net Income attributable to
         Common Shareholders           $      264,077    $     (405,127)

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


Weighted average number of
  common shares outstanding -
  Basic                                    49,006,511        47,461,999
  Diluted                                  58,591,295        47,461,999

     See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>

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

                                       Nine Months Ended September 30,
                                       -------------------------------
                                            2006              2005
                                       -------------     -------------

Net revenues                           $  32,340,785     $  21,690,260
Cost of revenues                          26,149,583        20,206,584
                                       -------------     -------------
Gross margin                               6,191,202         1,483,676
                                       -------------     -------------

Costs and expenses:
  Sales and marketing                        628,286           619,753
  General and administrative               4,182,118         2,701,828
  Provision for doubtful accounts            123,819            34,513
  Depreciation and amortization               79,496            26,740
                                       -------------     -------------
    Total costs and expenses               5,013,719         3,382,834
                                       -------------     -------------
Income from operations                     1,177,483        (1,899,158)
                                       -------------     -------------

Other income (expense):
  Interest income                              6,607             1,202
  Interest expense                          (351,408)          (59,731)
  Miscellaneous revenue                       (1,115)        2,066,688
  State Tax Refund                              --              17,600
                                       -------------     -------------
Other income (expense), net                 (345,916)        2,025,759
                                       -------------     -------------
Income before provision for
  income taxes                               831,567           126,601

Provision for income taxes                      --                --
                                       -------------     -------------
Net income                             $     831,567     $     126,601
                                       =============     =============


Less: Dividends on Class B
         Convertible Preferred Stock        (157,945)         (119,648)

Net Income attributable to
         Common Shareholders           $     673,622     $       6,953
Net income per common share -
  Basic                                $        0.01     $        0.00
  Diluted                              $        0.01     $        0.00


Weighted average number of
  common shares outstanding -
  Basic                                   49,006,511        47,461,999
  Diluted                                 58,591,295        51,785,230

     See accompanying notes to condensed consolidated financial statements.


                                       7
<PAGE>

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


                                       Nine Months Ended September 30,
                                       -------------------------------
                                            2006              2005
                                       -------------     -------------


OPERATING ACTIVITIES
  Net income                           $     831,567     $     126,601
    Adjustments to reconcile net
      income to net cash used in
      operating activities:
        Depreciation and
          amortization                        79,496            26,740
        Provision for doubtful
          accounts                           123,819          (623,092)
        Stock Based Compensation             398,484              --
        Non cash payments for
            Director's compensation           37,110              --
        Non cash payments for public
            Relations and promotion           82,770              --
        Changes in operating
          assets and liabilities:
          (Increase) decrease in:
            Accounts receivable              151,682        (3,126,009)
            Inventories                    2,839,171          (503,567)
            Prepaid expenses                  20,984             5,958
                  Deposits                  (377,806)            1,670
          Increase (decrease) in:
            Accounts Payable- SOYO
                Computer Inc.                   --          (1,314,910)
            Accounts payable-other        (2,432,944)        1,324,672
            Accrued liabilities           (1,004,926)         (323,402)
            Income taxes payable                --                --
                                       -------------     -------------
  Net cash provided by (used in)
      Operating activities                   749,407        (4,405,339)
                                       -------------     -------------


INVESTING ACTIVITIES
  Purchase of property and
    equipment                               (109,448)           35,935
  Proceeds from sale of equipment               --
                                       -------------     -------------
  Net cash provided by (used in)
    Investing activities                    (109,448)           35,935
                                       -------------     -------------


                                  (continued)


                                       8
<PAGE>

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


                                      Nine Months Ended September 30,
                                      -------------------------------
                                           2006              2005
                                      -------------     -------------

FINANCING ACTIVITIES
Advances from officer,
   director and major
   shareholder                                 --       $    (215,000)
Proceeds from issuance of
   Note payable                                --             200,000
Payment of note payable                     (65,000)             --
  Payment of backup withholding tax
    on accreted dividends on
    preferred stock                         (47,384)             --
  Proceeds from issuance of
  Common Stock                                 --           3,559,246
                                      -------------     -------------
  Net cash provided by (used in)
    Financing activities                   (112,384)        3,544,246
                                      -------------     -------------

CASH AND CASH EQUIVALENTS
  Net decrease                              527,575          (825,158)
  At beginning of period                    828,294         1,288,351
                                      -------------     -------------
  At end of period                    $   1,355,869     $     463,193
                                      =============     =============





NON-CASH INVESTING AND
  FINANCING ACTIVITIES

 Conversion of Business Loan of
$913,750 and accrued interest of
$51,552 to common stock               $        --       $     965,302

Conversion of accounts payable
Of $554,871 to common stock                    --             554,871


Accretion of discount
    on preferred stock                $     157,945     $     119,648


     See accompanying notes to condensed consolidated financial statements.


                                       9
<PAGE>

                         SOYO Group, Inc. and Subsidiary
        Notes to Condensed Consolidated Financial Statements (Unaudited)
         Three Months and Nine Months Ended September 30, 2006 and 2005


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.

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".

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


                                       10
<PAGE>

Company,  contain all adjustments,  which include normal recurring  adjustments,
necessary to present  fairly the financial  position at September 30, 2006,  the
results of operations for the three and nine months ended September 30, 2006 and
2005, and cash flows for the nine months ended  September 30, 2006 and 2005. The
condensed consolidated balance sheet as of December 31, 2005 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,
2005, as filed with the Securities and Exchange Commission.

The  preparation  of  financial  statements  in  conformity  with United  States
generally 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 and nine months ended September 30, 2006
are not  necessarily  indicative of the results of operations to be expected for
the full fiscal year ending December 31, 2006. The largest part of the Company's
business,  the  importing  and  resale of  consumer  electronic  products,  is a
seasonal  business.  The busiest time of the year is the holiday  season,  which
occurs at the end of the year. Accordingly, sales for the year should improve as
the year passes, culminating in strongest sales in the fourth quarter.

Business - The Company sells products under three  different  product lines:  1)
Computer   Components   and   Peripherals   2)  Consumer   Electronics   and  3)
Communications Equipment and Services. The products are sold to distributors and
retailers primarily in North 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 and options.

As of September 30, 2006, potentially dilutive securities consisted of 3,061,051
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 September  30, 2006,  9,565,784  shares of common stock were issuable upon
conversion  of the Class B  Convertible  Preferred  Stock,  based on the closing
price of $0.32 per common share at September 30, 2006.


                                       11
<PAGE>

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
or nine months ended September 30, 2006 and 2005.

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").

SFAS No. 123(R) requires that companies  recognize all  share-based  payments to
employees,  including  grants  of  employee  stock  options,  in  the  financial
statements.  The cost will be based on the fair value of the equity or liability
instruments  issued and  recognized  over the  respective  vesting period of the
stock option. Pro forma disclosure of this cost will no longer be an alternative
under SFAS No.  123(R).  SFAS 123(R) is  effective  for public  companies at the
beginning of the first fiscal year that begins after June 15, 2005.

Transition  methods  available to public  companies  include either the modified
prospective  or  modified  retrospective   adoption.  The  modified  prospective
transition method requires that compensation cost be recognized beginning on the
effective  date, or date of adoption if earlier,  for all  share-based  payments
granted after the date of adoption and for all unvested  awards  existing on the
date of adoption. The modified  retrospective  transition method, which includes
the requirements of the modified  prospective  transition  method,  additionally
requires the restatement of prior period financial  information based on amounts
previously recognized under SFAS No. 123 for purposes of pro-forma  disclosures.
The Company  adopted  SFAS No.  123(R)  effective  January 1, 2006.  The Company
adopted the modified  prospective  method. As a result, the Company recognized a
charge  against  earnings of $126,924 for the three months ended  September  30,
2006. For further information, refer to note 4, Stock based Compensation on page
14.

On March 7, 2005,  the Company  registered its 2005 Stock  Compensation  Plan on
Form S-8 with the Securities and Exchange  Commission,  registering on behalf of
our employees,  officers,  directors and advisors up to 5,000,000  shares of our
common stock  purchasable by them pursuant to common stock options granted under
our 2005 Stock  Compensation  Plan.  The plan was approved by  shareholder  vote
during a special meeting of shareholders  on February 17, 2006.  However,  since
Mr. Chok and Ms. Chu,  husband and wife,  are directors who own more than 50% of
the Company,  shareholder  approval is essentially a formality,  hence the grant
date of the stock options is July 22, 2005.


                                       12
<PAGE>

On July 22, 2005, the Company issued  2,889,000  option grants to employees at a
strike price of $.75.  One third of those options will vest and be available for
purchase on July 22, 2006, one third on July 22, 2007, and one third on July 22,
2008. The grants will expire if unused on July 22, 2010.

As of September  30, 2006,  10 employees  who had been granted stock options had
left the Company,  and grants  totaling  462,000  options  were  returned to the
Company.  As of September 30, 2006, the Company has not issued any option grants
to employees other than the 2,889,000 option grants issued on July 22, 2005.


2.  Short Term Loan

In October 2005,  the Company  borrowed  $165,000 from an individual for working
capital purposes. As of September 30, 2006, $65,000 of the loan had been repaid,
and $100,000 is still outstanding.



3.  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.


                                       13
<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.

4.  Stock-Based Compensation

Prior to  January  1, 2006,  the  Company  accounted  for  employee  stock-based
compensation  using  the  intrinsic  value  method  supplemented  by  pro  forma
disclosures in accordance  with APB 25 and SFAS 123  "Accounting for Stock-Based
Compensation" ("SFAS 123"). Under the intrinsic value based method, compensation
cost is the  excess,  if any, of the quoted  market  price of the stock at grant
date or other  measurement  date over the amount an employee must pay to acquire
the stock.

Effective  January 1, 2006 the  Company  adopted  SFAS 123R  using the  modified
prospective  approach and  accordingly  prior  periods have not been restated to
reflect the impact of SFAS 123R.  Under SFAS 123R,  stock-based  awards  granted
prior to its  adoption  will be  expensed  over the  remaining  portion of their
vesting  period.   These  awards  will  be  expensed  under  the  straight  line
amortization  method using the same fair value  measurements  which were used in
calculating  pro forma  stock-based  compensation  expense  under SFAS 123.  For
stock-based  awards  granted  on or after  January  1, 2006,  the  Company  will
amortize  stock-based  compensation  expense on a  straight-line  basis over the
requisite service period, which is generally a three-year vesting period.

SFAS 123R requires forfeitures to be estimated at the time of grant and revised,
if necessary,  in subsequent  periods if actual  forfeitures differ from initial
estimates.  Stock-based  compensation expense has been recorded net of estimated
forfeitures  for the period  ended  September  30,  2006 such that  expense  was
recorded only for those stock-based awards that are expected to vest. Previously
under  APB  25 to the  extent  awards  were  forfeited  prior  to  vesting,  the
corresponding  previously  recognized  expense  was  reversed  in the  period of
forfeiture.

If the fair  value  based  method  under  FAS123 had been  applied in  measuring
stock-based  compensation  expense for the nine-month period ended September 30,
2005,  the pro forma net  income  and net  income  per share  would have been as
follows:

                                                                Nine-month
                                                               Period ended
                                                             September 30, 2005
     Net income, as reported                                 $          126,601
     Add:  Stock-based employee compensation expense
           included in reported net income, net of
           related tax effect                                              --
     Deduct:  Total stock-based employee compensation
           expense determined under fair-value based
           method for all awards not included in net
           income                                                       (89,968)
                                                             ------------------
     Pro forma net income                                    $           36,633
                                                             ==================

     Income (loss) per share:
       Basic/diluted - as reported                           $     0.00 / $0.00
                                                             ------------------
       Basic/diluted - pro forma                             $     0.00 / $0.00
                                                             ------------------


                                       14
<PAGE>

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 Sept. 30,   Nine Months Ended Sept. 30,

                 ----------------------------   ----------------------------

                     2006            2005            2006            2005

                 ------------    ------------   ------------    ------------
Revenues
  Distributors   $  7,570,129    $  1,113,584   $ 23,113,748    $  4,701,601
  Retailers         2,068,429       8,094,398      8,264,126      17,216,232
  Others              366,526          25,448        962,911        (227,573)
                 ------------    ------------   ------------    ------------
                 $ 10,005,084    $  9,233,430   $ 32,340,785    $ 21,690,260
                 ============    ============   ============    ============

During the three months ended  September 30, 2006 and 2005, the Company  offered
price  protection  to certain  customers  under  specific  programs  aggregating
$95,752 and  $7,142,  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, 2006,  the Company had one customer
that accounted for revenues of $1,319,350,  equivalent to 13.2% of net revenues.
The customer was D & H  Distributing,  Inc.  The customer is a  distributor  who
sells the Company's products to retailers in the United States.

b.  Geographic Segments

Financial information by geographic segments is summarized as follows:

                    Three Months Ended Sept. 30,  Nine Months Ended Sept. 30,
                    ----------------------------  ---------------------------
                        2006           2005           2006           2005
                    ------------   ------------   ------------   ------------

Revenues
  United States     $  5,292,158   $  4,868,531   $ 22,751,676   $ 10,162,922
  Canada               1,660,253      2,500,052
  Central and
  South America        3,046,713        365,239      6,790,067        893,791
  Other locations          5,960      3,999,660        298,990     10,633,547
                    ------------   ------------   ------------   ------------
                    $ 10,005,084   $  9,233,430   $ 32,340,785   $ 21,690,260
                    ============   ============   ============   ============

NOTE: Prior to 2006, the Company reported all United States and Canadian revenue
as a single line item under the caption  North  America.  As such,  the breakout
between US and Canadian  revenue is not available.  The 2005 revenue reported as
US revenue includes sales to Canada.


                                       15
<PAGE>

c. During the quarter  ended June 30, 2006,  the Company began  calculating  net
revenue by product line for financial reporting purposes.  2006 sales by product
line are as follows:

                  Three Months Ended Sept. 30,      Nine Months Ended Sept. 30,

                  ----------------------------    -----------------------------

                     2006              2005          2006               2005

                  ----------        ----------    ----------         ----------
Revenues
  Consumer
   Electronics    $ 7,803,431          NOT        $27,093,098           NOT
  Computer
   Products         1,760,853       AVAILABLE       4,862,719        AVAILABLE
  VOIP                440,800                         384,968
                  -----------                     -----------
                  $10,005,084                     $32,340,785
                  ===========                     ===========

d.  Suppliers

Of the products the Company sold in 2005,  no more than 39% of the products were
produced by any one vendor. The Company is working to reduce that dependency and
expects that no more than 25% of any  products  sold in 2006 will be produced by
one vendor.

6. Income Taxes

The Company has calculated federal and state income taxes due for the nine-month
period ended  September 30, 2006.  The Company  believes that federal income tax
due for this period is offset by federal net operating loss  carryforward  which
had a balance of $4,500,000  as of December 31, 2005,  expiring in various years
through 2024. The Company  believes that any state income taxes due for the nine
month period  ending  September  30, 2006 would be offset by state net operating
loss  carryforwards,  and that if any  balance  were due,  the  amount  would be
immaterial to this report.  For the nine-month  period ended September 30, 2005,
the Company  believes  that all income taxes due are offset by federal and state
net operating loss  carryforwards.  The state net operating loss carryforward of
$157,000  has been  reduced to $0 as of  September  30,  2006.  No deferred  tax
benefit for the remaining  federal  operating  losses has been recognized in the
consolidated   financial   statements  due  to  the   uncertainty  as  to  their
realizability in future periods.

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,
2006 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, 2006 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:

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.


                                       16
<PAGE>

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 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. In 2005, SOYO Group, Inc. entered the LCD display market with
the  introduction  of 17- and  19-inch  LCD  monitors,  and 32 and 37  inch  LCD
televisions.  Both  products  were  introduced  in the  second  quarter of 2005.
Currently,  the Company sells products under three  different  product lines: 1)
Computer   Components   and   Peripherals   2)  Consumer   Electronics   and  3)
Communications Equipment and Services. The products are sold to distributors and
retailers primarily in North, Central and South America.




Financial Outlook:


On  August  29,  2006,  the  Company   issued  a  press  release   announcing  a
multi-million  dollar  agreement  with GE  Capital  Solutions  to  provide  both
manufacturing  and retailer  finance  options.  The agreement is the first major
financing commitment the Company has secured. The Company continues to negotiate
with outside parties to secure additional financing and product commitments.

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  changed  its  product  mix  substantially  in the past two
     years, and has changed its sales plan to focus on higher margin products.


                                       17
<PAGE>

-    The  Company has  expanded  the number and credit  quality of its  customer
     accounts.

-    The Company is negotiating  with additional  suppliers,  but the ability to
     buy goods from those suppliers is reliant on cash flows.

-    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.


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.

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:

Firm agreements with 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


                                       18
<PAGE>

incentive is offered.  The Company records the  corresponding  effect in cost or
expense at the time it has a firm agreement with a vendor.


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.  The Company  records
the  corresponding  effect on receivable and revenue when the Company offers the
incentive to customers.  All accruals  estimating sales incentives,  warranties,
rebates  and  returns  are  based  on  historical  experience  and  the  Company
management's  collective  experience in anticipating  customers  actions.  These
amounts  are  reviewed  and updated  each month when  financial  statements  are
generated.

Complicating  these estimates is the Company's  different return  policies.  The
Company does not accept  returns  from  customers  for refunds,  but does repair
merchandise as needed.  The cost of the shipping and repairs may be borne by the
customer or the  Company,  depending on the amount of time that has passed since
the sale and the product warranty.

The Company has different  return policies with different  customers.  While the
Company does not  participate in "guaranteed  sales"  programs,  the Company has
begun to sell products to several  national retail chains.  Some of these chains
have standard  contracts  which require the Company to accept returns for credit
within standard return periods,  usually sixty days. While these return policies
are more  generous  than the Company  usually  offers,  management  has made the
decision to accept the policies and sell the products to these  national  chains
for both the business volume and exposure such sales generate.  These sales have
been taking  place since late 2005,  and returns  have  consistently  been below
management's expectations. Therefore, no adjustments to the financial statements
have been necessary.

Each month,  management reviews the accounts receivable aging report and adjusts
the allowance for bad debts based on that review.  The  adjustment is made based
on historical  experience and management's  evaluation of the  collectibility of
outstanding  accounts  receivable over 90 days. At all times,  the allowance for
bad debts is large  enough  to cover  all  receivables  that  management  is not
certain  it  will  collect,  plus  another  one  percent  of  the  net  accounts
receivable. At September 30, 2006, the allowance was $256,203. Since the net A/R
balance  was  approximately  $7.0  million,  the amount the  Company  considered
uncollectible was under $180,000.


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.


                                       19
<PAGE>

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.

Prior Year's Purchases and Discounts

Soyo  negotiated  with its suppliers for  discounts  and  allowances  related to
purchases  made in 2004.  Soyo and its suppliers  settled their  differences  in
2005.  Soyo  accounted  in 2005 for the  settlement  as a gain  contingency,  in
accordance with FAS 5, Accounting for Contingencies.

Soyo also accounted in 2005 for its  settlement  with suppliers of discounts and
allowances as a reduction of cost of goods sold because  purchase  discounts and
allowances are of a "character typical of the customary  business  activities of
the  entity"  in  accordance  with APB 9, as amended  by APB 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.


Results of Operations:

Three Months Ended September 30, 2006 and 2005:

Net Revenues.  Net revenues increased by $771,654 or 8.4%, to $10,005,084 in the
three months ended  September 30, 2006,  as compared to $9,233,430 in 2005.  The
increase in the net revenues was due to the  Company's  strong sales of consumer
electronics.  The  Company  began to sell the LCD  products  during  the  second
quarter of 2005,  and in the past year has  greatly  expanded  its  distribution
channel. The Company continues to sell products to new customers.  Customers who
bought  products  from the Company in the three months ended  September 30, 2006
that had not previously  purchased our products  included  4Sure.com,  Shop NBC,
Time Import Corporation, Boston Inc. and DBL Distributing, Inc.

Gross  Margin.  Gross  margin was  $2,233,361  or 22.3% in 2006,  as compared to
$206,771 or 2.2% in 2005.  The increase in the gross  margin as a percentage  of
sales can be attributed  entirely to the consumer  electronics  products,  which
were sold at a high  margin.  The  Company  believes  that  gross  margins  will
stabilize around 16% in the future.

Sales and  Marketing  Expenses.  Selling and  marketing  expenses  decreased  by
$24,987 to $231,272 in 2006,  as compared to $256,259 in 2005.  The  decrease is
entirely due to the Company  sponsoring fewer sales programs in 2006. The market
demand is strong  enough that large rebate  programs and other sales  incentives
are not needed to generate sales.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased by $540,941 to  $1,427,441  in 2006,  as compared to $886,500 in 2005.
The increase can be explained by three distinct factors.


The  first  factor  in the  increased  G&A  costs  was the  Company's  mandatory
implementation  of SFAS No. 123(R).  In December 2004, the FASB issued Statement
of Financial  Accounting  Standards No. 123 (revised 2004),  Share-Based Payment


                                       20
<PAGE>

("SFAS No.  123(R)")  which replaces SFAS No. 123,  Accounting  for  Stock-Based
Compensation  and supersedes APB Opinion No. 25,  Accounting for Stock Issued to
Employees.  SFAS No. 123(R)  requires that companies  recognize all  share-based
payments to  employees,  including  grants of  employee  stock  options,  in the
financial statements.  The cost will be based on the fair value of the equity or
liability  instruments  issued and recognized over the respective vesting period
of the  stock  option.  Pro forma  disclosure  of this cost will no longer be an
alternative  under  SFAS No.  123(R).  SFAS  123(R)  was  effective  for  public
companies  at the  beginning of the first fiscal year that begins after June 15,
2005.

The Company  adopted  SFAS No.  123(R)  effective  January 1,  2006.The  Company
adopted the modified  prospective  method. As a result, the Company recognized a
charge  against  earnings of $126,924 for the three months ended  September  30,
2006.

The second factor leading to increased costs during the quarter were legal fees.
The Company's fees for legal expenses rose by $141,000  during the quarter.  The
fees were due to work  performed on the Normandan  case (see legal  proceedings)
and additional  work done for state  regulators  regarding the Company's  rebate
programs.

The 3rd factor that led to increased  costs during the quarter is increased  use
of consultants and contractors.  The Company's business is growing rapidly,  and
the Company is actively searching for additional  financing  opportunities.  The
Company has also begun to set up quality  control  checkpoints in Asia to ensure
that all goods purchased meet Company quality requirements.  Lastly, the Company
has hired a consultant  to review and evaluate the  Company's  sales efforts and
efficiency.  Taken together,  the Company spent over $100,000 during the quarter
on these  projects,  but management  believes the efforts are required to manage
the Company's growth.

These three items  accounted  for over  $400,000  additional  expenses  over the
comparable quarter in 2005.


Provision for Doubtful  Accounts.  The Company recorded a provision for doubtful
accounts of $20,635 in the three months ended  September  30, 2006.  The Company
did not record a provision  for  doubtful  accounts  for the three  months ended
September 30, 2005. As of September 30, 2006, the Company believes its provision
for doubtful accounts is adequate.

Depreciation  and  Amortization.  Depreciation  and amortization of property and
equipment was $27,107 for the three months ended September 30, 2006, as compared
to $8,653 in 2005. The increase is a result of the use of leasehold improvements
provided  by the  landlord  after the move from  Fremont  to  Ontario,  CA,  and
depreciable assets purchased in December 2005 in China for the VoIP business.

Income from  Operations.  The income from  operations was $526,906 for the three
months  ended  September  30,  2006,  as compared to a loss from  operations  of
$944,641 for the three months ended  September 30, 2005. This is a result of the
improved sales volume and strong operating margins described above.

Miscellaneous  Income.  Miscellaneous  income was a loss of $6,399 for the three
months ended September 30, 2006.  Miscellaneous income was $600,000 in the three
months ended September 30, 2005.

Interest Income. The Company earned no interest income in the three months ended
September 30, 2006. Interest income in 2005 was $1,202.


                                       21
<PAGE>

Interest  Expense.  Interest  expense was  $200,939  for the three  months ended
September  30,  2006.  Interest  expense was $36,353 for the three  months ended
September  30, 2005.  The increase  was due to several  factors.  The Company is
factoring all  receivables  to improve cash flow and has also entered into a new
financing  arrangement  with GE Capital.  Both of these  programs are  extremely
expensive,  but were necessary to guarantee the uninterrupted flow of goods from
our suppliers overseas.

Provision for Income  Taxes.  There was no provision for income taxes in 2006 or
in 2005.

Net Income. Net income was $319,568 for the three months ended September 30,
2006, as compared to a loss of $362,192 for the three months ended September 30,
2005.

Nine Months Ended September 30, 2006 and 2005:

Net Revenues.  Net revenues increased by $10,650,525 or 49.1%, to $32,340,785 in
2006, as compared to $21,690,260 in 2005. The large increase in the net revenues
was due entirely to the Company's consumer  electronics  business.  Sales of LCD
televisions  exceeded  $5,000,000 during the quarter,  and sales of LCD monitors
exceeded $2,600,000 during the quarter.

Gross  Margin.  Gross margin was  $6,191,202  or 19.1% for the nine months ended
September 30, 2006,  as compared to  $1,483,676 or 6.8% in 2005.  The 2005 gross
margin was  negatively  affected by the  settlement  of a dispute with a vendor,
resulting in large  returns  during the period that  depressed the gross margin.
The Company believes that as the LCD market becomes more mature, gross margin is
likely to stabilize in the 15-16% range.


Sales and Marketing Expenses. Selling and marketing expenses increased by $8,533
to  $628,286  in 2006,  as  compared  to  $619,753  in  2005.  The  increase  of
approximately 1% is insignificant.  The Company has added sales  representatives
and spent  additional  funds on travel to  customers  and road shows,  but those
costs have been offset by reduced costs of direct sales incentive plans.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased by  $1,480,290  to  $4,182,118  in 2006,  as compared to $2,701,828 in
2005. The increase is primarily due to five factors.

First, the cost of the annual audit increased by approximately  $75,000 over the
prior year.  The increase was primarily  due to the  Company's  untimely loss of
accounting  personnel as  described in Item 9A of report 10K dated  December 31,
2005.  The Company  believes the problem has been  solved,  and expects that the
cost of future audits will be in line with prior years.

Second,  on April 14, 2005 a lawsuit was filed in Superior Court of the State of
California,  County of San Bernardino,  entitled Afshin Pourvajdi v. SOYO Group,
Inc.,  Nancy Chu and various Doe  defendants.  Case RCV  086992.  The  complaint
alleged  causes of action for: 1) Double  damages  for  violation  of labor code
Section  970; 2)  Misrepresentation;  3)  Intentional  Infliction  of  Emotional
Distress;  4) Breach of Contract.  The prayer for relief in the Complaint sought
damages of no less than $200,000 on the first and second causes of action,  plus
an unspecified  amount of punitive damages and an unspecified  amount of general
and punitive  damages on the third cause of action and an unspecified  amount of
general  and  punitive  damages on the fourth  cause of action.  Plaintiff  also
sought to recover all costs and attorney  fees. The case arose from a consultant
who worked for the Company in 2004 and whose  contract was not  renewed.  During


                                       22
<PAGE>

the second quarter, the Company settled the case for $70,000,  which it believed
to be less  than  the  cost of the  upcoming  trial.  As a  result,  the  entire
settlement  amount was accrued and expensed  during the  quarter,  and the legal
fees spent  preparing  for the case were paid and expensed  during the period as
well.

The third factor leading to increased  costs during the nine months were a large
increase in other legal fees.  The  Company's  fees for legal  expenses  rose by
$141,000  during the 3rd quarter  alone.  The fees were due to work performed on
the Normandan case (see legal  proceedings)  and additional  work done for state
regulators regarding the Company's rebate programs.

The 4th factor that led to increased  costs during the year is increased  use of
consultants and contractors.  The Company's business is growing rapidly, and the
Company is  actively  searching  for  additional  financing  opportunities.  The
Company has also begun to set up quality  control  checkpoints in Asia to ensure
that all goods purchased meet Company quality requirements.  Lastly, the Company
has hired a consultant  to review and evaluate the  Company's  sales efforts and
efficiency.  Taken  together,  the Company  spent over  $100,000  during the 3rd
quarter on these  projects,  and has spent  almost  $200,000  in the first three
quarters of the fiscal  year.  Management  believes  the efforts are required to
manage the Company's growth.


The  biggest  factor in the  increased  G&A costs  was the  Company's  mandatory
implementation  of SFAS No. 123(R).  In December 2004, the FASB issued Statement
of Financial  Accounting  Standards No. 123 (revised 2004),  Share-Based Payment
("SFAS No.  123(R)")  which replaces SFAS No. 123,  Accounting  for  Stock-Based
Compensation  and supersedes APB Opinion No. 25,  Accounting for Stock Issued to
Employees.  SFAS No. 123(R)  requires that companies  recognize all  share-based
payments to  employees,  including  grants of  employee  stock  options,  in the
financial statements.  The cost will be based on the fair value of the equity or
liability  instruments  issued and recognized over the respective vesting period
of the  stock  option.  Pro forma  disclosure  of this cost will no longer be an
alternative  under  SFAS No.  123(R).  SFAS  123(R)  was  effective  for  public
companies  at the  beginning of the first fiscal year that begins after June 15,
2005.

The Company  adopted  SFAS No.  123(R)  effective  January 1,  2006.The  Company
adopted the modified  prospective  method. As a result, the Company recognized a
charge  against  earnings of $134,952 for the three months ended March 31, 2006,
$121,573 for the three  months  ended June 30, 2006,  and $126,924 for the three
months ended  September  30,2006.  The complete effect of the adoption was a non
cash charge  against  earnings  of  approximately  $380,000  over the nine month
period.


Provision for Doubtful  Accounts.  The Company recorded a provision for doubtful
accounts of $123,819 for the nine months ended  September 30, 2006.  The Company
recorded a provision for doubtful  accounts of $34,513 for the nine months ended
September 30, 2005.The increase in the provision is directly attributable to the
large sales  increase,  and the  Company's  conservative  approach.  The Company
believes that the provision for doubtful  accounts is sufficient as of September
30, 2006.


Depreciation  and  Amortization.  Depreciation  and amortization of property and
equipment was $79,496 for the nine months ended  September 30, 2006, as compared
to $26,740 in 2005.  The  increase is a result of the  purchase  of  depreciable
equipment in December 2005 in China for the VoIP business.


                                       23
<PAGE>

Income from  Operations.  The income from operations was $1,177,483 for the nine
months  ended  September  30,  2006,  as compared to a loss from  operations  of
$1,899,158 for the nine months ended September 30, 2005. This is a direct result
of the increased sales volumes and strong margins.

Miscellaneous  Income.  Miscellaneous  income  was a loss of $1,115 for the nine
months ended September 30, 2006.

Interest Income.  Interest income was $6,607 for the nine months ended September
30, 2006, as opposed to $1,202 in 2005.

Interest  Expense.  Interest  expense was  $351,408  for the nine  months  ended
September  30,  2006.  Interest  expense was  $59,731 for the nine months  ended
September  30, 2005.  The increase was due to several  factors.  The Company has
been aggressively borrowing funds on a short term basis as needed to support its
growth.  The Company is factoring all  receivables  to improve cash flow and has
entered into a long term financing  arrangement  with GE Capital.  Both of these
programs were  necessary to guarantee the  uninterrupted  flow of goods from our
suppliers overseas. The sale of all invoices is done with recourse,  which means
that if the factor is not paid,  they can charge back the Company for the unpaid
invoice plus interest.

Provision for Income  Taxes.  There was no provision for income taxes in 2006 or
in 2005.

Net Income.  Net income was  $831,567 for the nine months  ended  September  30,
2006, as compared to $126,601 for the nine months ended  September 30, 2005. The
2006 numbers  include the charges for the adoption of SFAS 123R.  Looking at the
numbers on a comparable basis, the 2006 numbers are significantly  better, which
is a result of strong sales volume and strong operating margins.

Financial Condition - September 30, 2006:

Liquidity and Capital Resources:
On  August  29,  2006,  the  Company   issued  a  press  release   announcing  a
multi-million  dollar  agreement  with GE  Capital  Solutions  to  provide  both
manufacturing  and retailer  finance  options.  The agreement is the first major
financing commitment the Company has secured. The Company continues to negotiate
with outside parties to secure financing and product commitments.

Operating  Activities.  The Company  generated  cash of  $749,407  in  operating
activities  during the nine months  ended  September  30,  2006,  as compared to
utilizing  cash of  $4,405,339  in operating  activities  during the nine months
ended September 30, 2005.

At September 30, 2006, the Company had cash and cash  equivalents of $1,355,869,
as compared to $828,294 at December 31, 2005.

The Company had working capital of $1,583,930 at September 30, 2006, as compared
to working capital of $689,141 at December 31, 2005, resulting in current ratios
of 1.13:1 and 1.04:1 at September 30, 2006 and December 31, 2005, respectively.

Accounts  receivable  decreased to $7,003,019 at September 30, 2006, as compared
to  $7,278,520  at December  31, 2005,  a decrease of  $275,501.  The  Company's
provision for doubtful  accounts  stood at $256,203 as of September 30, 2006, as
compared to $589,224 at December 31, 2005.

Inventories  decreased  to  $5,151,859  at September  30,  2006,  as compared to
$7,991,030 at December 31, 2005, a decrease of $2,839,171 or 35.5%.  As detailed


                                       24
<PAGE>
<TABLE>
<CAPTION>

in this report, the Company signed a financing agreement during the quarter with
GE Capital  Solutions for the financing of inventory.  The Company  continues to
negotiate  with  outside  parties  to  establish   credit  lines  for  inventory
purchasing.

Accounts payable  decreased to $11,544,635 at September 30, 2006, as compared to
$13,977,579 at December 31, 2005, a decrease of  $2,432,944,  as a direct result
of reduced  inventory  purchases.  The decrease in payables is comparable to the
decrease in inventory levels as older purchases were paid for and newer purchase
volumes declined.

Accrued liabilities  decreased to $282,182 at September 30, 2006, as compared to
$1,287,108  at December  31,  2005,  a decrease of  $1,004,926  or 78%. The main
reason  for the  decrease  is reduced  accruals  for RMA  returns.  Now that the
Company has been  selling the LCD  products  for a full year,  the Company has a
track record at estimating returns and repairs. The Company believes its current
accruals are sufficient to handle all expected returns and reserves.

Financing  Activities.  In October 2005, the Company  borrowed  $165,000 from an
individual for working capital purposes.  As of September 30, 2006,  $100,000 is
owed to that individual.



Principal Commitments:

A summary of the Company's contractual cash obligations as of September 30, 2006
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         $  456,748   $  212,692   $  244,056   $    --     $   --
Note payable                100,000      100,000         --          --         --
Purchase Commitments      2,682,012    2,682,012         --          --         --
Total contractual cash
  obligations            $3,238,760   $2,994,704   $  244,056   $    --     $   --
                         ----------   ----------   ----------   ---------   --------
</TABLE>

Purchase Commitments:

At September 30, 2006, the Company had purchased  inventory  costing  $2,682,012
that had not yet arrived in the warehouse. The Company had no other long-term or
short-term purchase commitments.

Off-Balance Sheet Arrangements:

At September 30, 2006, the Company did not have any transactions, obligations or
relationships that could be considered off-balance sheet arrangements.

Commitments and Contingencies:

At September  30, 2006,  the Company did not have any material  commitments  for
capital expenditures.


                                       25
<PAGE>

Recent Accounting Pronouncements:

In May 2005, FASB issued SFAS No. 154, Accounting Changes and Error Corrections,
a replacement  of APB Opinion No. 20 and FASB  Statement No. 3. SFAS 154 applies
to all voluntary  accounting principle changes as well as the accounting for and
reporting of such  changes.  SFAS 154 is effective  for  accounting  changes and
corrections of errors made in fiscal years beginning after December 15, 2005.

SFAS 154 requires  voluntary changes in accounting  principle be retrospectively
applied to financial statements from previous periods unless such application is
impracticable.   Changes  in  depreciation,   amortization,   or  depletion  for
long-lived,  non-financial  assets are  accounted  for as a change in accounting
estimate that is affected by a change in accounting  principle,  under the newly
issued standard.

SFAS 154 replaces  APB Opinion No. 20 and SFAS 3. SFAS 154 carries  forward many
provisions of Opinion 20 and SFAS 3 without change  including  those  provisions
related to  reporting a change in  accounting  estimate,  a change in  reporting
entity,  correction  of an error and  reporting  accounting  changes  in interim
financial statements. The FASB decided to completely replace Opinion 20 and SFAS
3 rather than amending them in keeping to the goal of simplifying U.S. GAAP. The
provisions  of SFAS No. 154 are not  expected  to have a material  effect on the
Company's consolidated financial position or results of operation.

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.

In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
No. 123 (revised 2004),  Share-Based  Payment ("SFAS No. 123(R)") which replaces
SFAS No. 123, Accounting for Stock-Based Compensation and supersedes APB Opinion
No. 25, Accounting for Stock Issued to Employees.  SFAS No. 123(R) requires that
companies recognize all share-based  payments to employees,  including grants of
employee stock options, in the financial  statements.  The cost will be based on
the fair value of the equity or liability instruments issued and recognized over
the respective  vesting period of the stock option. Pro forma disclosure of this
cost will no longer be an  alternative  under SFAS No.  123(R).  SFAS  123(R) is
effective  for public  companies at the  beginning of the first fiscal year that
begins after June 15, 2005.


                                       26
<PAGE>

Transition  methods  available to public  companies  include either the modified
prospective  or  modified  retrospective   adoption.  The  modified  prospective
transition method requires that compensation cost be recognized beginning on the
effective  date, or date of adoption if earlier,  for all  share-based  payments
granted after the date of adoption and for all unvested  awards  existing on the
date of adoption. The modified  retrospective  transition method, which includes
the requirements of the modified  prospective  transition  method,  additionally
requires the restatement of prior period financial  information based on amounts
previously recognized under SFAS No. 123 for purposes of pro-forma  disclosures.
The Company  adopted  SFAS No.  123(R)  effective  January 1,  2006.The  Company
adopted the modified  prospective  method. As a result, the Company recognized a
charge  against  earnings of $383,449  for the nine months ended  September  30,
2006.

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.



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 September 30, 2006 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

Evaluation of Disclosure and Control Procedures
-----------------------------------------------

Based on a current  evaluation under the supervision and with the  participation
of the Company's  management,  the  Company's  principal  executive  officer and
principal  financial  officer  have  concluded  that  the  Company's  disclosure


                                       27
<PAGE>

controls and  procedures as defined in rules  13a-15(e) and 15d-15(e)  under the
Securities Exchange Act of 1934, as amended (Exchange Act) were not effective as
of  September  30,  2006 and did not  ensure  that  information  required  to be
disclosed by the Company in reports that it files or submits  under the Exchange
Act is (i) recorded, processed,  summarized and reported within the time periods
specified in the  Securities  and Exchange  Commission  rules and forms and (ii)
accumulated  and  communicated  to  the  Company's  management,   including  its
principal  executive officer and principal  financial officer, as appropriate to
allow timely decisions regarding required disclosure.  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  the fact  that the
Company's system of internal control requires  considerable  manual intervention
to do the  following:  (1) to properly  record  accounts  payable to vendors for
purchases of inventory,  (2) to properly record adjustments to inventory per the
general ledger to physical inventory balances,  (3) to properly record inventory
adjustments to the lower of cost or market using the average  inventory  method,
(4)to have adequate controls over interim physical inventory procedures,  and 5)
to  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
relevant  contemporaneous  documentation for ongoing business transactions,  and
significant  turnover  in  the  Company's  financial  staff.  Accordingly,   the
Company's Chief Executive  Officer and Chief  Financial  Officer  concluded that
there were  significant  deficiencies,  including  material  weaknesses,  in the
Company's  internal  controls  over its  financial  reporting  at the end of the
period ended September 30, 2006.

A significant  deficiency  should be  classified  as a material  weakness if, by
itself or in  combination  with other control  deficiencies,  it results in more
than a remote likelihood that a material misstatement in the company's annual or
interim financial statements will not be prevented or detected.

To address these significant  deficiencies and material weaknesses,  the Company
took the following corrective actions:

     >>   The  Company  hired  a  new  Accounting  Manager,  then  replaced  the
          Accounting  Manager with a more  qualified  candidate.  That  employee
          recently left the Company to return  overseas for a family  emergency.
          The employee will not be returning to the Company, which means that as
          of September 30, 2006, the Company is operating  without an Accounting
          Manager  or   Controller.   While  the  Company  is  searching  for  a
          replacement,  the Company  has  retained a  financial  consultant  and
          former  CPA to oversee  the day to day  management  of the  accounting
          department.  The Company has recently  added  additional  personnel to
          complete the day to day  accounting  tasks.  The Company  needs and is
          seeking to  immediately  hire an  Accounting  Manager  and  additional
          personnel to focus on financial accounting and reporting issues.

     >>   Each  month,   the  Company's   Accounting   Manager   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


                                       28
<PAGE>

          the lower of cost or market.  These  tasks will be  supervised  by the
          financial consultant until the new Accounting Manager is hired.

     >>   Every month, the Accounting  Manager  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
          statements  with a complete  set of  adjustments.  These tasks will be
          supervised  by the  financial  consultant  until  the  new  Accounting
          Manager is hired.

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



Changes in Internal Control over Financial Reporting
----------------------------------------------------
We made  changes  during  our most  recently  completed  fiscal  quarter  in our
internal control over financial reporting that have materially affected , or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

In light of the foregoing,  in 2006,  management  took the following  actions to
rectify the significant deficiencies and material weaknesses as described above.

     >>   Management  hired  experts  to  assist  with the  financial  reporting
          required,  and to train Company employees to perform such tasks in the
          future.

     >>   Management   hired   experts   to   assist  in  the   evaluation   and
          implementation  of  new  accounting   software.   The  evaluation  was
          completed,  and the  software  has been paid for. The Company has been
          testing and  customizing  the  software  for the last few months,  and
          expects that the software will be installed and operational during the
          first quarter of 2007.


In conjunction with the audit review of the Company's  financial  statements for
the quarter ended September 30, 2006, the Company's Chief Executive  Officer and
its Chief Financial Officer reviewed and evaluated the corrective actions listed
above. The officers  believed that such corrective  actions minimize the risk of
material misstatement,  but the corrective actions continued to have significant
deficiencies.

As of September  30,  2006,  the Company is working  quickly to hire  additional
finance  personnel.  The Chief Executive Officer and the Chief Financial Officer
are satisfied that with the personnel in place, and with the additional  efforts
of the  Financial  Consultant/  CPA,  that  the  books  and  records  portray  a
completely  accurate  picture of the Company's  financial  position and that all
transactions  are being captured and reported as required.  The Company believes
that  once the new  software  is  installed  and  operational,  all  significant
deficiencies will have been addressed and corrected.


                                       29
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

On August 2, 2004, a lawsuit was filed in  California  Superior  Court  entitled
Gerry Normandan.  et al, v. SOYO Inc. Case No. RCV 082128.  The case seeks class
action status and alleges defects in motherboards  which Soyo  distributes,  and
that the  Company  misrepresented  and omitted  material  facts  concerning  the
motherboards.  The plaintiff seeks  restitution and  disgorgement of all amounts
obtained by defendant as a result of alleged misconduct,  plus interest,  actual
damages,  punitive  damages  and  attorneys'  fees.  The  Company is  vigorously
defending  the lawsuit and  believes  that it will be resolved  with no material
adverse effect on the Company.

There are no other legal proceedings that have been filed against the Company.

None of the Company's directors,  officers or affiliates,  or owner of record of
more than five  percent  (5%) of its  securities,  or any  associate of any such
director, officer or security holder, is a party adverse to the Company or has a
material interest adverse to the Company in reference to pending litigation.

ITEM 1A:  RISK FACTORS

     In addition to the other  information set forth in this report,  you should
carefully  consider the factors  discussed in Part I, "Item 1A. Risk Factors" in
our Annual Report on Form 10-K for the year ended December 31, 2005, which could
materially affect our business, financial condition or future results. The risks
described  in our Annual  Report on Form 10-K are not the only risks  facing our
Company. Additional risks and uncertainties not currently known to us or that we
currently  deem to be  immaterial  also  may  materially  adversely  affect  our
business, financial condition and/or operating results.


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

None


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

None





                                       30
<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 14, 2006                                 By: /s/ Ming Tung Chok
                                                         -----------------------
                                                         Ming Tung Chok
                                                         President and Chief
                                                         Executive Officer



DATE:  November 14, 2006                                 By: /s/ Nancy Chu
                                                         -----------------------
                                                         Nancy Chu
                                                         Chief Financial Officer



DATE:  November 14, 2006                              By /s/ Paul F. Risberg
                                                      --------------------------
                                                      Name: Paul F. Risberg
                                                      Title: Director

DATE:  November 14, 2006                              By /s/ Chung Chin Keung
                                                      --------------------------
                                                      Name: Chung Chin Keung
                                                      Title: Director

DATE:  November 14, 2006                              By /s/ Zhi Yang Wu
                                                      --------------------------
                                                      Name: Zhi Yang Wu
                                                      Title: Director









                                       31
<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

























                                       32