Edgar Filing: SOYO GROUP INC

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 June 30, 2008

[ ] 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
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(Address of Principal Executive Offices) (Zip Code)

(909) 292-2500
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(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]

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 August 14, 2008 there were 55,813,656 shares Outstanding.

Documents Incorporated by Reference: None

SOYO GROUP, INC. AND SUBSIDIARY

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets - June 30, 2008
(Unaudited) and December 31, 2007...................................3

Condensed Consolidated Statements of Operations (Unaudited) -
Three and Six Months Ended - June 30, 2008 and 2007................4

Condensed Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended - June 30, 2008 and 2007..........................6

Notes to Condensed Consolidated Financial Statements (Unaudited)
- Three and Six Months Ended - June 30, 2008 and 2007..............7

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..............................................19

Item 3. Quantitative and Qualitative Disclosures about Market Risk.........32

Item 4. Controls and Procedures............................................32

PART II. OTHER INFORMATION

Item 1. Legal Proceedings..................................................33

Item 1A. Risk Factors.....................................................34

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of
Equity Securities..................................................34

Item 3. Defaults upon Senior Securities....................................34

Item 4. Submission of Matters to a Vote of Security Holders................34

Item 5. Other Information..................................................34

Item 6. Exhibits and Reports on Form 8-K...................................35

SIGNATURES....................................................................35

SOYO Group, Inc. and Subsidiary
Condensed Consolidated Balance Sheets

Consolidated Balance Sheets

June 30, December 31,
2008 2007
------------ ------------
(Unaudited) (Restated)
ASSETS
Current Assets
Cash and cash equivalents 571,855 1,848,249
Accounts receivable, net of allowance
for doubtful accounts of $ 1,134,900 and
$783,573 at June 30, 2008 and December 31,
2 007 respectively 30,261,898 27,123,985
Inventories, net of allowance for inventory
obsolescence of $222,044 and $88,114 at
June 30, 2008and December 31, 2007 respectively 14,960,525 12,221,265
Prepaid expenses 700,160 187,749
Deferred income tax assets 575,000 544,688
Deposits 4,151,958 8,808,408
------------ ------------
Total Current Assets 51,221,396 50,734,344
------------ ------------

Investment in 247 MGI 400,000 400,000

Property and equipment 326,009 316,287
Less accumulated depreciation
and amortization (166,777) (141,613)
------------ ------------
159,232 174,674

Deferred income tax - noncurrent 677,000 658,312
Total noncurrent assets 1,236,232 1,232,986

Total Assets $ 52,457,628 $ 51,967,330
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 8,327,606 $ 14,336,196
Accrued liabilities 742,202 789,526
Commercial Loans due to UCB 23,907,492 27,824,490
Gateway Trade Finance 3,198,539

Income Tax Payable 1,088,697 889,518

------------ ------------
Total current liabilities 37,264,536 43,839,730
------------ ------------

Long term payable 0
------------ ------------
Total liabilities 37,264,536 43,839,730
------------ ------------

EQUITY
Class B Preferred stock, $0.001 par value,
authorized - 10,000,000 shares, Issued
and outstanding - 2,750,000 shares in 2008
and 2,797,738 shares in 2007 2,344,400 2,187,165
Preferred stock backup withholding (277,572) (230,402)
Common stock, $0.001 par value.
Authorized - 75,000,000 shares, Issued and
outstanding - 52,179,656 shares in 2008
and 52,004,656 shares in 2007 58,964 52,005
Additional paid-in capital 27,666,380 20,233,500
Accumulated deficit (13,879,080) (14,114,668)
Subscriptions Receivable (720,000) 0
------------ ------------
Total shareholders' Equity 15,193,092 8,127,600
------------ ------------

Total liabilities and shareholders' equity $ 52,457,628 $ 51,967,330
============ ============
0 0

See accompanying notes to the unaudited condensed
consolidated financial statements

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

Three months ended - June 30,
2008 2007
------------ ------------

Net revenues $ 32,194,960 $ 24,202,395
Cost of revenues 27,208,878 20,399,303
------------ ------------
Gross margin 4,986,082 3,803,092
------------ ------------
Costs and expenses:
Sales and marketing 1,140,379 1,124,882
General and administrative 2,086,432 2,168,198

Provision for doubtful accounts 729,037 125,063
Depreciation and amortization:
Property and equipment 12,529 22,409
------------ ------------
Total costs and expenses 3,968,377 3,440,552
------------ ------------
Income from operations 1,017,705 362,540
Other income (expense):
Interest income 363 17,409
Interest expense (739,790) (322,166)
Other income (expense) (312,983) (16,876)
------------ ------------
Other income (expense), net (1,052,410) (321,633)
Income before provision for income (34,705) 40,907
taxes
Provision for income taxes 24,820 129,775
Deferred income tax benefit 8,000 (439,802)
Net income (loss) (67,525) 350,934

Less: dividends on convertible (97,403) 65,160
preferred stock
Net income (loss) attributable to 29,878 285,174
common shareholders
Net income (loss) per common share - .00 .01
Basic and diluted .00 .01

Weighted average number of shares of 52,324,723 49,039,156
common stock outstanding - Basic and 57,357,723 56,541,914
diluted

See accompanying notes to unaudited condensed
consolidated financial statements.

Six months ended - June 30,
2008 2007
------------ ------------

Net revenues $ 56,990,275 $ 38,893,505
Cost of revenues 48,898,089 32,482,217
------------ ------------
Gross margin 8,092,186 6,411,288
------------ ------------
Costs and expenses:
Sales and marketing 1,568,014 1,715,738
General and administrative 3,490,609 3,746,372
Provision for doubtful accounts 1,181,127 126,501
Depreciation and amortization:
Property and equipment 25,164 45,700
Total costs and expenses 6,264,914 5,634,311
------------ ------------
Income from operations 1,827,272 776,977
------------ ------------
Other income (expense):
Interest income 12,470 48,794
Interest expense (1,124,937) (381,881)
Other income (expense) 87,017 (104,566)
Other income (expense), net (1,025,450) (437,653)
Income before provision for 801,822 339,324
income taxes
Provision for income taxes 458,000 192,860
Deferred income tax benefit (49,000) (726,660)
Net income (loss) 392,822 873,124

Less: dividends on convertible 157,235 126,923
preferred stock
Net income (loss) attributable to 235,587 746,201
common shareholders
Net income (loss) per common share - 01 02
Basic and diluted 01 02

Weighted average number of shares of 52,192,584 49,039,156
common stock outstanding - Basic and 57,225,584 56,541,914
diluted

See accompanying notes to unaudited condensed
consolidated financial statements.

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

Six months ended June 30,
2008 2007
----------- -----------

OPERATING ACTIVITIES
Net Income (loss) 392,822 873,124
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and Amortization 25,164 45,700
Unrealized gain (loss) on investment in 247MGI
Non cash payments for director's compensation
Non cash payments for public relations 6,825
Stock based compensation 366,761 959,230
Provision for doubtful accounts 1,069,877 126,501
Provision for Inventory Obsolescence 53,444
Payment of long term debt (3,735,198)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts Receivable (4,207,790) (5,587,034)
Inventories (2,792,704) (3,269,060)
Prepaid expenses (512,411) 6,972
Deposits 4,656,450 (4,794,294)
Deferred income tax asset - current (30,312) (726,660)
Deferred income tax asset - non current (18,688)
Increase (Decrease) in:
Accounts payable (4,562) (241,251)
Accrued liabilities (47,324) 92,582
Income tax payable 199,179
----------- -----------
Net cash used in operating activities (850,094) (16,242,562)
----------- -----------
INVESTING ACTIVITIES
Purchase of property and equipment (9,722) (18,839)
Proceeds from sale of equipment
----------- -----------
Net cash used in investing activities (18,839)
----------- -----------

FINANCING ACTIVITIES

Proceeds from business loan - net (718,458) 15,983,324
Payment of backup withholding tax on accreted
dividends on preferred stock (47,170) (38,077)
Proceeds from Issuance of Common Stock 349,050
Payment of Short term loan (100,000)
----------- -----------
Net cash provided by (used in) financing activities (416,578) 15,845,247
----------- -----------

CASH AND CASH EQUIVALENTS
Net Increase (Decrease) (1,276,394) (416,154)
At beginning of Period 1,848,249 1,501,040
----------- -----------
At End of Period 571,855 1,084,886
=========== ===========

Non cash investing and financing activities
Accretion of discount on Class B preferred stock 157,235 126,923

Stock Option Compensation 357,425 959,230
Non Cash- conversion of accounts payable to 6,004,028
common stock

Supplemental Disclolsure of
Cash Flow Information
Cash paid for interest 258,821 381,881
Cash paid for income taxes 458,000 --

See accompanying notes to unaudited condensed
consolidated financial statements.

SOYO Group, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Six Months Ended June 30, 2008 and 2007

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.

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 unaudited condensed consolidated
financial statements include the accounts of SOYO and SOYO Nevada. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The unaudited condensed consolidated financial statements have
been prepared in accordance with United States generally accepted accounting
principles, and with the instructions to Form 10-Q and Rule 10-1 of Regulation
S-X.

Interim Financial Statements - The accompanying interim unaudited condensed
consolidated financial statements are unaudited, but in the opinion of
management of the Company, contain all adjustments, which include normal
recurring adjustments, necessary to present fairly the financial position at
June 30, 2008, the results of operations for the three and six months ended June
30, 2008 and 2007, and cash flows for the six months ended June 30, 2008 and
2007. The condensed consolidated balance sheet as of December 31, 2007 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,
2007, as filed with the Securities and Exchange Commission.

The results of operations for the three and six months ended June 30, 2008 are
not necessarily indicative of the results of operations to be expected for the
full fiscal year ending December 31, 2008. 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 third and fourth
quarters.

Business - Through 2007, The Company sold products under four different product
lines: 1) Computer products ; 2) Consumer Electronics; 3) Furniture 4)
Communcations (VoIP).

The Company began selling furniture under the Levello brand name during the
second quarter of 2007. A series of wood and glass tables and stands, the
Levello products are meant to enhance the physical appearance of the Company's
consumer electronics products. The Levello furniture is a series of pieces that
can be sold independently, or bundled with large screen televisions. During the
initial product roll out during the second quarter, the Company began selling
the Levello series to Costco.com, as well as furniture distributors in the
United States and Mexico. In the last year, the line has matured, and the
products are now available to customers at various brick and mortar stores as
well as online retailers. After one year, the furniture line still comprises
less than one half of one percent of the Company's revenues.

On December 31, 2007, the Company sold all of the assets related to the VoIP
business to 247MGI of Fort Lauderdale, Florida for 40,000,000 shares of 247MGI's

common stock. The stock is traded on the OTC pink sheets. The Company has no
plans to dispose of the 247MGI stock, and intends to hold it long-term as an
investment.

The Company's products are sold to distributors and retailers primarily in North
and South America.

SOYO Group Inc. has signed a license agreement with Honeywell International
Inc., effective January 1, 2007, under which SOYO will create and market certain
consumer electronics products under the Honeywell Brand.

The agreement is for a minimum period of 6.5 years and calls for the payment of
MINIMUM royalties by SOYO to Honeywell totaling $3,840,000 (Three Million, Eight
Hundred and Forty Thousand Dollars U.S.). Sales levels in excess of minimum
agreed targets will result in associated increases in the royalty payments due.
Minimum royalty payments due under the agreement were $353,000 through December
31, 2007, and $469,000 through December 31, 2008. The Company made the required
payments in 2007, and through June 30, had paid $255,000 in royalties in 2008.

Through this agreement, SOYO is planning to develop and market consumer
electronics products under the Honeywell brand. Over the life of the contract,
SOYO has the right to create and bring to market LCD monitors and televisions,
front and rear projectors, home audio and video DVD (receivers, AMPS, tuners,
VHS recorders, DVD players and recorders, clock radio, bookshelf systems,
speakers and audio intercom), portable audio/video DVD (boom boxes, portable
CD/DVD players, MP3, MPEG, camcorders/ digital recorders) and accessories for TV
monitors and audio visual products such as cables, surge protectors, Bluetooth,
antennas, headphones (wireless and wired) remote controls, multimedia speakers,
IPOD and PC accessories including portable hard drives and flash drives, wall
mounts, set top boxes and PC embedded boxes. Since there are many market factors
at play in the consumer electronics world, including consumer preferences,
pricing and other market conditions, SOYO plans to spend the majority of its
time and money on the most profitable products. There can be no assurance that
SOYO will bring all of these products to market in a timely fashion, or at all.

Accounting Estimates - 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.

2. 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 (loss) per share is computed by
dividing net income (loss) 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 stock options granted to employees in 2005 and
2007. The calculation of fully diluted shares is as follows:

Weighted average Shares outstanding
at 6/30/2008 52,192,584
Add: Conversion of Preferred Stock
2,750,000 shares (see footnote 7b) 2,750,000
Vested in the money options 2,283,000

Total fully diluted shares at 6/30/2008 57,225,584

On August 7, 2008, the Company reached an agreement with the independent 3rd
party that owned the Class B preferred stock to fix the conversion of the Class
B preferred stock to common stock at 2,750,000 common shares. With the mandatory
conversion date less than six months away, recent volatility of the Company's
share price, weakness in the stock market and perceived market uncertainty, the
Company believed it was prudent to fix the conversion at this time. Based on
these factors, the Company believes that it made a very favorable deal.

As of June 30, 2008, potentially dilutive securities consisted of 2,750,000
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 June 30, 2007, 5,902,758 shares of common
stock were issuable upon conversion of the Class B Convertible Preferred Stock
based on the $0.55 per share conversion price.

The Company applies the treasury stock method to each individual compensation
grant. If a grant is out-of-the-money based on the stated exercise price, the
effects of including any component of the assumed proceeds associated with that
grant in the treasury stock method calculation would be antidilutive. A holder
would not be expected to exercise out-of-the money awards. For the period ended
June 30, 2008, the stock options granted in 2007 were "in the money" and
therefore are included in the computation of diluted EPS.

Comprehensive Income (Loss) - The Company reports 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
and six months ended June 30, 2008 and 2007.

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,
continuous 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 Options and Warrants - As of December 31, 2007, the Company had both
warrants and options outstanding. The outstanding warrants were those issued to
Evergreen Technology as part of the private placement completed in March 2005.
The warrants expired unexercised on March 20, 2008.

On July 22, 2005, the Company issued 2,889,000 option grants to employees at a
strike price of $0.75. One third of those options vested and were available for
purchase on July 22, 2006, one third vested on July 22, 2007, and one third will
vest on July 22, 2008. The grants will expire if unused on July 22, 2010. As of
June 30, 2008, none of the options had been exercised, none were "in the money"
and 1,200,000 options issued to Ming Chok and Nancy Chu had been returned to the
Company. Seventeen employees who were issued stock options in 2005 had left the
Company, and those 17 employees forfeited 714,000 options. Of the remaining
987,000 outstanding options, 662,000 were vested as of June 30, 2008. The
remaining 325,000 will vest on July 22, 2008. If not exercised, all 987,000
options will expire on July 22, 2010.

The Company did not grant any stock options to employees, officers or directors
in 2006. On February 2, 2007, the Company issued 4,805,000 option grants to
employees at a strike price of $0.35. One third of those options were
immediately vested and available for purchase on February 2, 2007, one third
vested on February 2, 2008, and the remaining one third will vest on February 2,
2009. The grants will expire if unused on February 2, 2012.

During 2007, 674,500 of the options granted in 2007 were exercised. During the
six months ended June 30, 2008, 283,000 stock options were exercised. As of June
30, 2008, nine individuals who were granted options in 2007 had left the
Company. Those individuals exercised a total of 232,000 options, and forfeited
an additional 621,000 options.

As of June 30, 2008, employees held 3,460,500 options of the options granted in
2007, of which 2,250,000 have vested. The Company also issued 100,000 options to
three new employees later in 2007. One of those employees left the Company and
surrendered 50,000 options. Of the 50,000 remaining options, 33,000 have vested.

For the three months ended June 30, 2008 and 2007, the Company recorded $144,594
and $649,295 respectively, in compensation costs relating to stock options
granted to employees. The amounts recorded represent equity-based compensation

expense related to options that were issued in 2005 and 2007. The compensation
costs are based on the fair value at the grant date.

The fair value of the options issued in July 2005 was estimated using the
Black-Scholes option-pricing model with the following assumptions: risk free
interest rate of 4.04 %, expected life of five (5) years and expected volatility
147%. The fair value of the options issued in February 2007 was estimated using
the Black-Scholes option-pricing model with the following assumptions: risk free
interest rate of 4.82 %, expected life of five (5) years and expected volatility
129%.

Revenue Recognition

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 recognizes product sales generally at the time the product is
shipped, although under certain circumstances the Company recognizes product
sales at the time the product reaches its destination. Concurrent with the
recognition of revenue, the Company provides for the estimated cost of product
warranties and reduces revenue for estimated product returns. Sales incentives
are generally classified as a reduction of revenue and are recognized at the
later of when revenue is recognized or when the incentive is offered. When other
significant obligations remain after products are delivered, revenue is
recognized only after such obligations are fulfilled. Shipping and handling
costs are included in cost of goods sold.

3. Investment in 247MGI

On December 31, 2007, the Company completed the sale of all assets of the VoIP
division to 247MGI, Inc., a Miami, Florida based publicly traded corporation
just beginning operations. The sales price of the assets was $1,000,000, which
was paid by 40,000,000 shares of 247MGI's restricted common stock. As of March
31, 2008, the shares had not been registered under the Securities Act of 1933,
and any future sale of the shares was restricted completely for one year, and
subject to volume restrictions after that. The Company has no management
participation in 247MGI's business. At December 31, 2007, 247MGI had only
75,272,814 common shares outstanding, so the Company owned a majority of the
outstanding shares. In February, 2008, 247MGI issued 335,000,000 common shares,
diluting our holding to approximately 10% of the outstanding common shares. The
Company intends to hold the 247MGI shares as a long-term investment.

Since the Company's shares are unregistered and illiquid, the net realizable
value of the Company's investment is difficult to calculate. The Company has
initially recorded the investment for $400,000 and will mark the investment to
market each quarter. At June 30, 2008, the share price was identical to the

share price on the date of the transaction, so the Company has valued the
investment at $400,000, resulting in no gain or loss on a YTD basis.

4. Accounts Payable

During the quarter, the Company was able to reach an agreement with a supplier
over unpaid debts. To settle the debt, the Company issued 5,900,000 shares of
its restricted common stock to the supplier in return for the retirement of
$6,004,028 of debt. The Company took this step to improve its balance sheet and
financial ratios as it continues to negotiate a large financing line. The
Company has negotiated a buy back provision, at its sole discretion, with the
supplier, and intends to buy back all of the shares issued within the next five
years.

5. Commercial Loans Due to UCB

At June 30, 2008, Commercial loans due to UCB consisted of:

----------------------------- --------------
Asset based financing $ 23,907,492
----------------------------- --------------
Purchase Order financing 0
----------------------------- --------------
Total $ 23,907,492
----------------------------- --------------

In March 2007, the Company announced that it had secured a $12 million Asset
Based Credit Facility from a California bank to provide funding for future
growth. The agreement stated that UCB would provide SOYO with a revolving
financing facility of up to $12 million to finance working capital, letters of
credit or other capital needs. The maximum amount of the facility to be extended
at any point in time based on the Company's accounts receivable and inventory,
which would serve as collateral for the loan.

In April 2007, by mutual agreement of the parties, the maximum loan balance was
increased from $12 million to $14 million. The maximum loan balance was
increased in December 2007 to $17 million, and then to $18 million. All other
terms of the agreement, including the interest rate, maturity date and method of
evaluating the Company's inventory and receivables to determine eligible
collateral were left unchanged during the increases.

In June 2007, UCB offered to provide the Company with an alternative source of
financing- Purchase Order financing. This line differed from all other forms of
financing in that the bank was offering to advance funds against our customers
specific purchase orders, provided the customer met the bank's stringent credit
requirements. The end result is that the Company can use this credit line only

by obtaining purchase orders from large customers before ordering the
merchandise. The funds would then be advanced to the manufacturer after product
was shipped, and once the product was delivered to the customer, and the status
of the order was changed from a purchase order to a receivable, the loan would
have to be paid back, or the balance transferred to the asset based credit line.
The Company began buying merchandise under the Purchase Order financing line in
June 2007.

In June 2008, the Purchase Order finance line and the Asset Based Finance line
were consolidated as an Asset Based Finance Line with a $24 million limit. At
June 30, 2008, the balance of the loan due to UCB was $23,907,492.

6. Gateway Trade Finance

During March 2008, the Company received a large order from a customer that could
not be financed by its current credit facilities. The Company negotiated for
Gateway Trade Finance to issue a letter of credit to a vendor to guarantee
payment of the production run. The letter of credit was paid off during the
second quarter. The Company has used Gateway's financing during the second
quarter as needed to pay for goods that were not able to be financed using
traditional methods. The terms of each letter of credit are negotiated
independently. The interest rate, commission rate, and other variables change
for each addendum. At June 30, 2008, the Company owed Gateway $3,198,539. The
Company does not plan to utilize external financing like this for future
purchases due to the high cost, but may do so on a limited basis if the
transaction warrants it.

7 Shareholders' Equity

a. Common Stock

As of December 31, 2002, the Company had authorized 75,000,000 shares of common
stock with a par value of $0.001 per share.

Effective October 24, 2002, the Company issued 28,182,750 shares of common stock
to Ming Tung Chok and Nancy Chu, who are members of SOYO Nevada management (see
Note 1). The shares of common stock were valued at par value, since the
transaction was deemed to be a recapitalization of SOYO Nevada. During October
2002, 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 common stock. When the transaction
was complete, and control of the Company was transferred, SOYO Nevada management
owned 34,209,548 shares of the 40,000,000 outstanding shares of the Company's
common stock. Subsequent to the transaction, management distributed 8,000,000
shares of common stock to various brokers, bankers and other individuals that
assisted with the transaction. In 2007, Mr. Chok gave a gift of 1,000,000 shares
to an individual. In March, 2008, Mr. Chok announced that he and his wife bought
776,000 shares of the Company's common stock in a private placement at $1.25 per

share. No one individual or corporation other than those named in Item 12 of
this report ever owned more than 5% of the common shares outstanding.

b. Preferred Stock

Through the bylaws, the Company has authorized 10,000,000 shares of preferred
stock with a par value $0.001 per share.

The Board of Directors is vested with the authority to divide the authorized
shares of preferred stock into series and to determine the relative rights and
preferences at the time of issuance of the series.

During the first quarter of 2004, 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. SOYO Taiwan forgave debt in an
amount equal to the difference between $12,000,000 and the value of the
preferred stock. This forgiveness will be treated as a capital transaction.

Payment was received by SOYO Taiwan in February and March 2004. An agreement was
reached whereby 2,500,000 shares of Class B cumulative Preferred stock would be
issued by the Company to the unrelated third party in exchange for the long-term
payable.

The Class B cumulative 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 cumulative Preferred stock has no voting rights. The shares
of Class B cumulative Preferred stock are convertible, in increments of 100,000
shares, into shares of common stock 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
cumulative Preferred stock may be converted into common stock in any one year.
On December 31, 2008, any unconverted shares of Class B cumulative 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 cumulative 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 cumulative Preferred stock has unlimited piggy-back registration rights,
and is non-transferrable.

8 Income Taxes

Components of the provision (benefit) for income taxes for the periods ended:

Six
Year Year Months
Ended Ended Ended
12/31/2006 12/31/2007 6/30/2008
----------- ----------- -----------
Current:
Federal $ 1,000 $ 515,000 $ 381,000
State 52,000 324,000 77,000
----------- ----------- -----------
Total 53,000 839,000 458,000
----------- ----------- -----------

Deferred:
Federal -- (1,038,000) (38,000)

State -- (165,000) (11,000)
----------- ----------- -----------
Total -- (1,203,000) (49,000)
----------- ----------- -----------

Total $ 53,000 $ (364,000) $ 409,000
=========== =========== ===========

Components of deferred income taxes as of:

12/31/2006 12/31/2007 6/30/2008
----------- ----------- -----------

Net operating loss carryforwards $ 1,310,000 $ -- $ --
Depreciation 288,000 214,000 202,000
Reserves and allowances 214,000 442,000 501,000

Shares-based compensation -- 444,000 475,000
State income taxes 69,000 103,000 74,000
----------- ----------- -----------
Total deferred tax assets 1,881,000 1,203,000 1,252,000
Valuation allowance (1,881,000) -- --
----------- ----------- -----------

Net deferred tax assets $ -- $ 1,203,000 $ 1,238,000
=========== =========== ===========

Reconciliation of federal income tax rate:
Six
Year Year Months
Ended Ended Ended
12/31/2006 12/31/2007 6/30/2008
---------- ---------- -----------

Federal statutory rate 34.0% 34.0% 34.0%
Stock-based compensation 33.0% 9.5% 12.3%
State income taxes 6.5% 3.6% 5.5%
Non-deductible expenses 2.9% 0.6% 0.3%
Change in valuation allowance -67.2% -60.0% 0.0%
Other 0.8% 0.0% -1.1%
---------- ---------- -----------

Effective tax rate 10.0% -12.3% 51.0%
========== ========== ===========

9 Significant Concentrations

a. Customers

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

Three Months Ended June 30,
--------------------------------------------- ----------- ------------- ----------- -----------
2008 % 2007 %
--------------------------------------------- ----------- ------------- ----------- -----------

Revenues:
--------------------------------------------- ----------- ------------- ----------- -----------
Distributors $22,732,206 70.61 $14,253,365 58.89
--------------------------------------------- ----------- ------------- ----------- -----------
Retailers 6,407,805 19.90 7,826,878 32.33
--------------------------------------------- ----------- ------------- ----------- -----------
Others 3,054,949 9.49 2,122,152 8.78
--------------------------------------------- ----------- ------------- ----------- -----------
Total $32,194,960 100.00 $24,202,395 100.00
--------------------------------------------- ----------- ------------- ----------- -----------

Six Months Ended June 30,
--------------------------------------------- ----------- ------------- ----------- -----------
2008 % 2007 %
--------------------------------------------- ----------- ------------- ----------- -----------
Revenues:
--------------------------------------------- ----------- ------------- ----------- -----------
Distributors $35,549,427 62.38 $26,136,700 67.20
--------------------------------------------- ----------- ------------- ----------- -----------
Retailers 17,039,249 29.90 8,768,291 22.54
--------------------------------------------- ----------- ------------- ----------- -----------
Others 4,401,599 7.72 3,988,514 10.26
--------------------------------------------- ----------- ------------- ----------- -----------
Total $56,990,275 100.00 $38,893,505 100.00
--------------------------------------------- ----------- ------------- ----------- -----------

During the three months ended June 30, 2008 and 2007, the Company offered price
protection to certain customers under specific programs aggregating $ 198,000
and $434,475 respectively, which reduced net revenues and accounts receivable
accordingly.

During the three months ended June 30, 2008, the Company had no customers that
accounted for more than 10% of net revenues during the quarter.

During the three months ended June 30, 2007, the Company had no customers that
accounted for more than 10% of net revenues during the quarter.

b. Geographic Segments

Financial information by geographic segments is summarized as follows:

Three Months Ended June 30,
------------------------------------ ------------ ------------ ------------ ----------------
2008 % 2007 %
------------------------------------ ------------ ------------ ------------ ----------------
Gross revenues:
------------------------------------ ------------ ------------ ------------ ----------------
United States $ 18,330,448 56.94 $ 15,802,272 65.29
------------------------------------ ------------ ------------ ------------ ----------------
Canada (1,163,136) (3.61) 3,750,830 15.49
------------------------------------ ------------ ------------ ------------ ----------------
Central and South America 1,201,867 3.73 4,635,606 19.15
------------------------------------ ------------ ------------ ------------ ----------------
Others 13,825,781 42.94 13,687 0.07
------------------------------------ ------------ ------------ ------------ ----------------
Total $ 32,194,960 100.00 $ 24,202,395 100.00
------------------------------------ ------------ ------------ ------------ ----------------

Six Months Ended June 30,
------------------------------------ ------------ ------------ ------------ ----------------
2008 % 2007 %
------------------------------------ ------------ ------------ ------------ ----------------
Gross revenues:
------------------------------------ ------------ ------------ ------------ ----------------
United States $ 38,509,745 67.57 $ 28,723,443 73.85
------------------------------------ ------------ ------------ ------------ ----------------
Canada (239,740) (.42) 3,715,965 9.55
------------------------------------ ------------ ------------ ------------ ----------------
Central and South America 2,733,399 4.80 5,199,902 13.38
------------------------------------ ------------ ------------ ------------ ----------------
Asia and Others 15,986,871 28.05 1,254,195 3.22
------------------------------------ ------------ ------------ ------------ ----------------
Total $ 56,990,275 100.00 $ 38,893,505 100.00
------------------------------------ ------------ ------------ ------------ ----------------

Three Months Ended June 30,
------------------------------------ ------------ ------------ ------------ ----------------
2008 % 2007 %
------------------------------------ ------------ ------------ ------------ ----------------
Revenues:
------------------------------------ ------------ ------------ ------------ ----------------
Computer Parts and Peripherals $ 26,204,643 81.40 $ 12,091,899 49.96
------------------------------------ ------------ ------------ ------------ ----------------
Consumer Electronics 5,875,953 18.25 12,074,241 49.89
------------------------------------ ------------ ------------ ------------ ----------------
VoIP 17,773 .07
------------------------------------ ------------ ------------ ------------ ----------------
Furniture 114,364 .35 18,482 .08
------------------------------------ ------------ ------------ ------------ ----------------
Total $ 32,194,960 100.00 $ 24,202,395 100.00
------------------------------------ ------------ ------------ ------------ ----------------

Six Months Ended June 30,
------------------------------------ ------------ ------------ ------------ ----------------
2008 % 2007 %
------------------------------------ ------------ ------------ ------------ ----------------
Revenues:
------------------------------------ ------------ ------------ ------------ ----------------
Computer Parts and Peripherals $ 44,941,025 78.87 $ 23,775,318 61.07
------------------------------------ ------------ ------------ ------------ ----------------
Consumer Electronics 11,628,194 20.40 15,055,439 38.70
------------------------------------ ------------ ------------ ------------ ----------------
VoIP 44,266 .17
------------------------------------ ------------ ------------ ------------ ----------------
Furniture 421,056 .73 18,482 .06
------------------------------------ ------------ ------------ ------------ ----------------
Total $ 56,990,275 100.00 $ 38,893,505 100.00
------------------------------------ ------------ ------------ ------------ ----------------

d. Suppliers

As of June 30, 2008, no more than 37% of the products distributed by the SOYO
Group in 2008 were being supplied by any one supplier. Other than that single
supplier, no other vendor supplied more than 27% percent of the Company's
inventory available for sale. SOYO Group, Inc. is establishing new partnerships
with other OEM manufacturers in the North America and Asia Pacific Regions in
order to provide innovative products for consumers.

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 June 30, 2008
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 June 30, 2008 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.

Financial Outlook:

For the six months ended June 30, 2008, the Company earned $392,822 or $0.01 per
share before dividends on preferred stock.

For the six months ended June 30, 2007, The Company earned $873,124, or .02 per
share before dividends on preferred stock.

As a general rule, the Company has been totally reliant upon the cash flows from
its operations to fund future growth. In the last few years, the Company has
begun and continues to implement the following steps to increase its financial
position, liquidity, and long term financial health:

In 2005, the Company completed a small private placement, began factoring
invoices to improve cash flows, and converted several million dollars of debt to
equity, all of which improved the Company's financial condition.

In 2006, the Company changed factors to a more beneficial arrangement, and
entered into a Trade Finance Flow facility with GE Capital to fund "Star"
transactions. The agreement provided for GE Capital to guarantee payment, on the
Company's behalf, for merchandise ordered from GE Capital approved manufacturers
in Asia. GE Capital guarantees the payment subject to a purchase order from one
of our customers. The Company accepts delivery of the goods in the US, and then
has the option to either pay for the goods or sell the receivable (from the
customer) to our factor, which pays GE Capital.

In March 2007, the Company announced that it had secured a $12 million Asset
Based Credit Facility from UCB, a California bank, to provide funding for future
growth.

During the first quarter of 2007, the Company began to use the $12 million asset
based credit facility arranged with United Commercial Bank (see Form 8-K dated
March 2, 2007). The agreement calls for UCB to provide funds for SOYO to
purchase inventory in an amount determined by an evaluation of SOYO's current
inventory and accounts receivable. According to the terms of the agreement, all
accounts receivable sold to other factors were purchased by UCB.

In April 2007, by mutual agreement of the parties, the maximum loan balance was
increased several times. All other terms of the agreement, including the
interest rate, maturity date and method of evaluating the Company's inventory
and receivables to determine eligible collateral were left unchanged. For
reporting purposes, the loan has been segregated from other payables and
reported as a separate line item on the balance sheet.

was shipped, and once the product was delivered to the customer, and the status
of the order was changed from a purchase order to a receivable, the loan would
have to be paid back, or the balance transferred to the asset based credit line.
The Company began buying merchandise under the Purchase Order financing line in
June 2007.

In September 2007, the Company announced to shareholders that it was negotiating
with several independent third parties to raise capital. The capital would be
used to improve the balance sheet and increase the Company's borrowing
capabilities. The Company further stated that with the large increases in sales
during the year, all of the Company's credit had been utilized, and that the
Company was having difficulties purchasing enough products to maintain the 2007
level of sales growth. As of the date of this report, the Company had not yet
finalized any capital transaction with an outside party.

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.

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. Depending on market conditions, the Company may
implement actions to increase customer incentive offerings, which may result in
a reduction of revenue at the time the incentive is offered. The Company records
the corresponding 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.

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.

Income Taxes:

The Company accounts for income taxes using the asset and liability method
whereby deferred income taxes are recognized for the tax consequences of
temporary differences by applying statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
bases of certain assets and liabilities. Changes in deferred tax assets and
liabilities include the impact of any tax rate changes enacted during the year.
Through 2006, a valuation allowance was provided for the amount of deferred tax
assets that, based on available evidence, were not expected to be realized.
Beginning in 2007, the Company discontinued the use of the valuation allowance.
Based on its current financial condition, current business and profitability
forecasts, the Company believes that the benefits accrued as deferred tax assets
were more likely than not to be realized in future periods.

Results of Operations:

Three Months Ended June 30, 2008 and 2007::

Net Revenues. Net revenues increased by $7,992,565 or 33.0%, to $32,194,960 in
the three months ended June 30, 2008, as compared to $24,202,395 in 2007. The
increase in revenues was mainly due to opening new accounts, the strong
relationship with Office Max that began in 2007, and increased sales of
components in Asia.

Gross Margin. Gross margin was $4,986,082 or 15.4% in 2008, as compared to
$3,803,092 or 15.7% in 2007. Gross margins decreased on a percentage basis as
the Company increased sales to larger national retail chains, and the cost of
shipping goods increased substantially as a result of higher fuel costs. The
Company's internal analysis shows that shipping costs during the quarter were
more than $1.3 million above forecast for the volume of goods shipped. The
Company expects gross margins to stabilize around 15% and remain there
throughout the year, as sales of higher margin products increase. However, if
the price of fuel continues to increase, leading to higher shipping costs, the

Company is going to be forced to pass those costs on to buyers, possible
affecting sales volumes.

Sales and Marketing Expenses. Selling and marketing expenses increased by
$15,497 to $1,140,379 in 2008, as compared to $1,124,882 in 2007. The increase
is due entirely to the product development cost of creating and rolling out the
new Honeywell brand of consumer electronics products. During the quarter, the
first computer monitors were shipped from the factory to the Company, and the
planning and development of the televisions was completed.

General and Administrative Expenses. General and administrative expenses
decreased by $81,766 to $2,086,432 in 2008, as compared to $2,168,198 in 2007.
During the first part of 2007, the Company was defending itself against several
lawsuits and investigations filed by various entities accusing the Company of
not processing rebate claims correctly. The Company cooperated with the
investigations, but the cost of defending the investigations and fixing the
rebate problems was substantial. The Company has spent a substantially lower
amount on legal fees in 2008. That decrease is partially offset by the cost of
organizing and staging a proxy vote and an annual meeting, and increased payroll
costs for adding two executives to manage and supervise the roll out of the
Honeywell line of consumer electronics. .

Bad Debts. The Company recorded a provision for doubtful accounts of $729,037 in
the three months ended June 30, 2008, and $125,063 for the three months ended
June 30, 2007. The provision has increased substantially as the Company's
revenues have grown, and as the Company has had trouble collecting from some
smaller independent accounts during the quarter. The problem began in the first
quarter, and has carried over to the second quarter. As a result, the Company
has tightened its credit policies to protect against bad debts, cut credit
limits to several customers, and has been negotiating with several external
parties in an attempt to obtain credit insurance at a reasonable price.

Depreciation and Amortization. Depreciation and amortization of property and
equipment was $12,529 for the three months ended June 30, 2008, as compared to
$22,409 for the three months ended June 30, 2007. The decrease was caused by the
sale of the VoIP assets in December 2007. The Company owns less property and
equipment subject to depreciation.

Income from Operations. The income from operations was $1,017,705 for the three
months ended June 30, 2008, as compared to $362,540 for the three months ended
June 30, 2007 This is a result of the increased revenues and gross margins
described above.

Miscellaneous Income (Loss). The miscellaneous income (loss)for the three months
ended June 30, 2008 was a loss of $312,983. That was due to a $400,000
unrealized loss on investment in 247MGI which was marked-to-market.
Miscellaneous income was a loss of $16,867 for the three months ended June 30,
2007.

Interest Income. Interest income was $363 for the three months ended June 30,

2008, as compared to $17,409 for the three months ended June 30, 2007. The
decrease, while insignificant, is due to the Company having less cash on hand
due to very tight credit constraints. All available cash is being used to
purchase inventory.

Interest Expense. Interest expense was $739,790 for the three months ended June
30, 2008. Interest expense was $322,166 for the three months ended June 30,
2007. The increase was due to a single factor. The Company's revenues have grown
significantly throughout the last year, as has the need for capital. The Company
is borrowing more money under its credit lines. Additionally, to finance
customer purchase orders, the Company has borrowed money from non traditional
sources such as Gateway Finance, which is a much more expensive source than
using banks.

Provision for Income Taxes. The Company's provision for income taxes
For the three months ended June 30, 2008 is $24,820. The reduction was permitted
by the flat earnings during the quarter. The Company's provision and income tax
liability are correctly stated on the Company's interim balance sheet as of June
30, 2008

Deferred Income Tax Benefit/ (Expense): The deferred income tax benefit
(expense) was ($8,000) for the three months ended June 30, 2008. This is a
result of timing differences between GAAP income and taxable income.

Net Income (loss). Net income (loss) was $29,878 for the three months ended June
30, 2008, as compared to $285,174 for the three months ended June 30, 2007.

Six Months Ended June 30, 2008 and 2007::

Net Revenues. Net revenues increased by $18,096,770 or 46.6%, to $56,990,275 in
six Months Ended June 30, 2008, as compared to $38,893,505 in 2007. The increase
in revenues was mainly due to strong US sales, and several new accounts opened
during the first half of the year. The Company managed to increase revenue by
over 46 percent despite having no single customers that accounted for over 10%
of revenues.

Gross Margin. Gross margin was $8,092,186 or 14.2% in 2008, as compared to
$6,411,288 or 16.5% in 2007. Gross margins decreased on a percentage basis as
the cost of delivering goods to customers was markedly higher than in prior
periods due to increased fuel prices. The Company's cost of delivering goods was
significantly higher than forecast, leading to profit shortfalls.

Sales and Marketing Expenses. Selling and marketing expenses decreased by
$147,724 to $1,568,014 in 2008, as compared to $1,715,738 in 2007. The decrease
is due to the Company not sponsoring MMA marketing programs during the period.
The Company plans to use its marketing budget to publicize the roll out of the
Honeywell product line. The Company continued to use outside sales reps during
the period. The Company began using outside sales reps to open new markets in

2006, and as the sales have grown, the commissions grew through 2007. The
Company has not employed a lot of new outside sales reps over the last few
quarters, although that number will grow again when the Honeywell products are
available for sale in the second half of 2008. The Company continues to believe
this is a cost effective way to obtain shelf space at various retailers, so the
outside commissions are likely to continue to grow larger as the business
continues to grow and mature.

General and Administrative Expenses. General and administrative expenses
decreased by $255,763 to $3,490,609 in 2008, as compared to $3,746,372 in 2007.
The primary reason for the decrease is the lower expense recorded for stock
options issued to employees. Over the six month period, the amount dropped by
approximately $500,000 due to the amount of options previously exercised, and
the relatively small amount of options issued in the last twelve months. That
decrease is partly offset by higher bank charges and insurance costs. Rental
expense will rise significantly beginning later this year when the Company moves
to a new corporate headquarters, doubling both the size of the warehouse and the
rental expense. (see the principal commitments section of this report for more
details).

Bad Debts. The Company recorded a provision for bad debts of $1,181,127 in the
six months ended June 30, 2008, and $126,501 for the six months ended June 30,
2007. The provision has jumped as the Company's revenues have increased 46% in
the comparable period. Additionally, the Company has had trouble collecting from
some smaller accounts during the quarter. As a result, the Company has tightened
its credit policies to protect against bad debts.

Depreciation and Amortization. Depreciation and amortization of property and
equipment was $25,164 for the six months ended June 30, 2008, as compared to
$45,700 for the six months ended June 30, 2007. The decrease was caused by the
sale of the VoIP assets in December 2007. The Company owns less property and
equipment subject to depreciation.

Income from Operations. The income from operations was $1,827,272 for the six
months ended June 30, 2008, as compared to $776,977 for the six months ended
June 30, 2007 This is a result of the increased revenues and gross margins
described above.

Miscellaneous Income. The miscellaneous income for the six months ended June 30,
2008 amounted to $87,017. Miscellaneous income was a loss of $104,566 for the
six months ended June 30, 2007.

Interest Income. Interest income was $12,470 for the six months ended June 30,
2008, as compared to $48,794 for the six months ended June 30, 2007. The
decrease, while insignificant, is due to the Company having less cash on hand
due to very tight credit constraints. All available cash is being used to
purchase inventory.

Interest Expense. Interest expense was $1,124,937 for the six months ended June
30, 2008. Interest expense was $381,881 for the six months ended June 30, 2007.

The increase was due to a single factor. The Company's revenues have grown
significantly throughout the last year, as has the need for capital. The Company
is borrowing more money under its credit lines, and is not getting as favorable
terms on its borrowings. The Company has even used non traditional lenders such
as Gateway Finance Corp. to meet its obligations to its customers.

Provision for Income Taxes. The Company recognized a provision for income taxes
of $458,000 in 2008, as compared to $192,860. The provision is now necessary as
net operating loss carry forwards will no longer offset all of the Company's tax
liabilities.

Deferred Income Tax Benefit/ (Expense): The deferred income tax benefit
(expense) was $49,000 for the six months ended June 30, 2008. This is a result
of timing differences between GAAP income and taxable income. The deferred
income tax benefit was $726,660 in the six months ended June 30, 2007. The
difference is mainly due to the decreased cost related to employee stock
options, from which a large portion of the deferred tax benefit is generated.

Net Income. Net income was $235,587 for the six months ended June 30, 2008, as
compared to $746,201 for the six months ended June 30, 2007.

Financial Condition - June 30, 2008:

Liquidity and Capital Resources:

In 2005, The Company completed a small private placement, began factoring
invoices to improve cash flows, and converted several million dollars of debt to
equity, all of which improved the Company's financial condition.

In March 2007, the Company announced that it had secured a $12 million Asset
Based Credit Facility from a California bank to provide funding for future
growth.

In September 2007, the Company announced to shareholders that it was negotiating

with several independent third parties to raise capital. The capital would be
used to improve the balance sheet and increase the Company's borrowing
capabilities. The Company further stated that with the large increases in sales
during the year, all of the Company's credit had been utilized, and that the
Company was having difficulties purchasing enough products to maintain the 2007
level of sales growth. As of the date of this report, the Company had not yet
agreed with any outside party on any capital transaction.

In March 2008, Ming Chok, Chief Executive Officer, purchased 776,000 shares of
the Company's common stock in a private placement at $1.25 per share, At the
same time, he announced plans to invest approximately another $1 million in the
Company's common stock during the second quarter of 2008.

Operating Activities. The Company utilized cash of $850,094 from operating
activities during the six months ended June 30, 2008, as compared to utilizing
cash of $16,242,562 in operating activities during the six months ended June 30,
2007.

At June 30, 2008, the Company had cash and cash equivalents of $571,855, as
compared to $1,848,249 at December 31, 2007.

The Company had working capital of $14,142,823 at June 30, 2008, as compared to
working capital of $6,894,614 at December 31, 2007, resulting in current ratios
of 1.37:1 and 1.16:1 at June 30, 2008 and December 31, 2007, respectively.

Accounts receivable increased to $30,211,898 at June 30, 2008, as compared to
$27,123,985 at December 31, 2007, an increase of $3,087,913. The Company's
provision for doubtful accounts increased to $1,134,900 as of June 30, 2008.

Inventories increased to $14,960,525 at June 30, 2008, as compared to
$12,221,265 at December 31, 2007, an increase of $2,739,260. Inventory in
transit was $2,462,192 at June 30, 2008.

Accounts payable decreased to $8,327,606 at June 30, 2008, as compared to
$14,336,196 at December 31, 2007, a decrease of $5,788,590. During the quarter,
the Company was able to reach an agreement with a former supplier over unpaid
debts. To settle the debt, the Company issued 5,900,000 shares of its restricted
common stock to the supplier in return for the retirement of $6,004,028 of debt.

Accrued liabilities decreased to $742,202 at June 30, 2008, as compared to
$789,526 at December 31, 2007, a decrease of $47,324 or less than eight percent.

Commercial loans due to UCB decreased to $23,907,492 at June 30, 2008 from
$27,824,490 at December 31, 2007. The decrease is due to payments the Company
made on the Purchase Order financing line.

Due to Gateway Trade Finance was $3,198,539 at June 30, 2008. During March 2008,
the Company received a large order from a customer that could not be financed by
its current credit facilities. The Company negotiated for Gateway Trade Finance
to guarantee payment of the production run. This balance was paid off during the
second quarter, however the Company ran into the same issues with credit lines,
and again turned to a non conventional lender. The Company does not plan to
utilize external financing like this for future purchases due to the high cost,
but may do so on a limited basis if the transaction warrants it.

Principal Commitments:

A summary of the Company's contractual cash obligations as of June 30, 2008, is
as follows:

Less than 1
Contractual Cash Obligations year 2-3 years 4-5 years Over 5 years
---------------- ---------------- ------------------- ----------------

Operating Leases $236,119 $909,632 $1,047,916 $122,322
Advances from Directors N/A N/A N/A N/A
Notes Payable/ Short Term Loan N/A N/A N/A N/A
Purchase Commitments $2,462,192 N/A

Royalty Payments Due $479,000 $1,287,500 $1,250,500
Long-Term Debt -- -- -- --
---------------- ---------------- ------------------- ----------------
Total $3,177,311 $2,1,97,132 $2,298,416 $122,322
================ ================ =================== ================

At June 30, 2008, the Company did not have any long-term purchase commitment
contracts to honor. The only purchase commitments were for inventory already
purchased and in transit of $5,062,989.

On July 15, 2008, the Company announced that it had signed a five-year agreement
to lease a 74,731 square foot multi-purpose facility, which will nearly double
its headquarters, operations and warehouse space. The lease term begins on
September 15, 2008 and extends for five years.

At June 30, 2008, the Company did not have any material commitments for capital
expenditures or have any transactions, obligations or relationships that could
be considered off-balance sheet arrangements.

On February 8, 2007, SOYO Group announced that the Company had entered into a
licensing agreement with Honeywell International Inc., effective January 1st
2007, under which SOYO will supply and market certain consumer electronics
products under the Honeywell Brand.

The agreement is for a minimum period of 6.5 (six point five) years and calls
for the payment of MINIMUM royalties by SOYO to Honeywell International Inc.
totaling $3,840,000 (Three Million, Eight Hundred and Forty Thousand Dollars
U.S.). Sales levels in excess of minimum agreed targets will result in
associated increases in the royalty payments due. Minimum royalty payments due
under the agreement are $424,000 in 2008. Although the Company signed the
agreement in 2007 and no sales of Honeywell branded products were made in 2007,
$383,000 in royalties were paid to Honeywell International Inc. in 2007, and
$255,000 has been paid in 2008.

Off-Balance Sheet Arrangements:

At June 30, 2008, the Company did not have any transactions, obligations or
relationships that could be considered off-balance sheet arrangements.

Commitments and Contingencies:

At June 30, 2008, the Company did not have any material commitments for capital
expenditures.

Recent Accounting Pronouncements:

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements . SFAS
No. 157 provides accounting guidance on the definition of fair value,
establishes a framework for measuring fair value and requires expanded
disclosures about fair value measurements. SFAS 157 is effective for the Company
starting January 1, 2008 and did not have an impact on the Company as the
Company does not have financial instruments subject to the expanded disclosure
requirements of SFAS 157. In February 2008, the FASB issued FASB Staff Position
FAS 157-2, Effective Date of FASB Statement No. 157, which provides a one year
delay of the effective date of FAS 157 as it relates to nonfinancial assets and
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The provisions of
SFAS 157 relating to nonfinancial assets and liabilities will be effective as of
the beginning of the Company's 2009 fiscal year.

Effective January 1, 2008, the Company adopted SFAS No. 159 ("FAS 159"), "The
Fair Value Option for Financial Assets and Financial Liabilities - Including an
Amendment of FASB Statement No. 115." FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value, and
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. The adoption of FAS 159 had no impact
on the Company's financial statements as the Company did not elect the fair
value option.

In December 2007, the FASB issued Statement No. 141 (revised 2007), "Business
Combinations." The new standard requires the acquiring entity in a business
combination to recognize all (and only) the assets acquired and liabilities
assumed in the transaction; establishes the acquisition-date fair value as the
measurement objective for all assets acquired and liabilities assumed; and
requires the acquirer to disclose to investors and other users all of the
information they need to evaluate and understand the nature and financial effect
of the business combination. This statement is effective for fiscal years
beginning January 1, 2009 and the Company believes this will have no impact on
its financial statements.

In December, 2007, the FASB issued Statement No. 160, "Noncontrolling Interests
in Consolidated Financial Statements--an amendment of ARB No. 51." This
statement establishes accounting and reporting standards for the noncontrolling

interest in a subsidiary and for the deconsolidation of a subsidiary. This
statement is effective prospectively, except for certain retrospective
disclosure requirements, for fiscal years beginning after December 15, 2008. The
Company believes this will have no impact on its financial statements.

In March 2008, the Financial Accounting Standards Board (FASB) issued Statement
No. 161, "Disclosures about Derivative Instruments and Hedging Activities." This
statement requires companies with derivative instruments to disclose information
that should enable financial statement users to understand how and why a company
uses derivative instruments, how derivative instruments and related hedged items
are accounted for under FASB Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" and how derivative instruments and related
hedged items affect a company's financial position, financial performance and
cash flows. This statement is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008 and the
Company believes this will have no impact on its financial statements.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles ("SFAS No. 162"). SFAS 162 identifies a consistent
framework, or hierarchy, for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with U.S.
generally accepted accounting principles for nongovernmental entities (the
"Hierarchy"). The Hierarchy within SFAS 162 is consistent with that previously
defined in the AICPA Statement on Auditing Standards No. 69, "The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting Principles"
("SAS 69"). SFAS 162 is effective 60 days following the United States Securities
and Exchange Commission's (the "SEC") approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles". The adoption of SFAS
162 will not have a material effect on the Consolidated Financial Statements
because the Company has utilized the guidance within SAS 69.

In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee
Insurance Contracts--an interpretation of FASB Statement No. 60 ("SFAS No.
163"). SFAS 163 requires recognition of an insurance claim liability prior to an
event of default when there is evidence that credit deterioration has occurred
in an insured financial obligation. SFAS 163 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and all
interim periods within those fiscal years. Early application is not permitted.
The Company's adoption of SFAS 163 will not have a material effect on the
Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Through December 31, 2007, Company did 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. On December 31, 2007, the Company sold
all of the assets related to the VoIP business to 247MGI of Fort Lauderdale,
Florida for 40,000,000 shares of 247MGI's common stock. The stock is traded on
the OTC pink sheets. The Company has no plans to dispose of the 247MGI stock,
and intends to hold it as a long-term investment.

The Company's debt obligations at June 30, 2008 were primarily short-term in
nature. As of June 30, 2008, The Company does not have any long-term debt.
However, the Company does have $23,907,492 of debt at a variable interest rate.
As a result, the Company does have some financial risk from an increase in
interest rates. 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.

Through 2006, The Company had absolutely no foreign currency risk, as its
revenues and expenses, as well as its debt obligations, are denominated and
settled in United States dollars. In 2007, the Company began selling product to
a Canadian vendor who paid in Canadian dollars. The Company believes that risk
is immaterial to its overall business, and has no plans to hedge that risk in
2008. If the risk grows, or the Company begins to sell product to other
customers in non US dollar related transactions, the Company may reevaluate that
position.

4. CONTROLS AND PROCEDURES

Evaluation of Disclosure and Control Procedures

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act. Our internal control system was designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes, in accordance
with United States generally accepted accounting principles. Because of inherent
limitations, a system of internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate due to change in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

An internal control material weakness is a significant deficiency, or
combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the financial statements will not be
prevented or detected.

Our management, including our principal executive officer and principal
accounting officer, conducted an evaluation of the effectiveness of our internal
controls as of December 31, 2007, and this assessment identified material
weaknesses in our internal control over the financial reporting process. In
particular, our accounting system can not be relied upon to properly value
inventory, or to generate timely and accurate financial information to allow for
the preparation of timely and complete financial statements. The system's output
has been reviewed, and our financial statements for the period ended June 30,
2008 properly reflect the Company's financial position.

In making the assessment of internal control over financial reporting management
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework. Because of
the material weakness described in the preceding paragraph, our management
concluded that our internal control over financial reporting was not effective
as of June 30, 2008.

We are actively engaged in the implementation of remediation efforts to address
the material weakness in internal control over financial reporting. These
remediation efforts include devising and implementing effective controls to
review and monitor the system output, and to replace our current accounting
software with new software. Management hired experts to assist in the evaluation
and implementation of new accounting software. The evaluation was completed, the
software has been paid for, and significant customization has been performed to
adapt the software to the Company's business. All employees, managers and other
system users have been trained and tested on the use of the new software. The
Company has begun parallel testing of the software, and the software is not yet
stable enough to "go live". The software will be "live" once all deficiencies
have been addressed..

The Company believes that once the new software is installed and operational,
all significant deficiencies will have been addressed and corrected.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934) during the fiscal quarter ended June 30, 2008 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On January 26, 2007, the Company filed a lawsuit against Astar Electronics
USA, Inc., KXD Technology, Inc. and Does 1 - 25 in the Superior Court of
California for the County of Los Angeles, Central District (Case No. BC365349).
The Company alleges claims for breach of contract, fraud, and tortuous
interference with economic relations and seeks compensatory and punitive
damages. Both named defendants were served on January 26, 2007. On May 17, 2007,
the Company filed a First Amended Complaint against Defendants alleging
additional claims for trademark infringement, trademark dilution, unfair
competition and false advertising. In or about June 2007, Astar Electronics USA,
Inc. and KXD Technology, Inc. answered and KXD Technology, Inc. filed a
cross-complaint against the Company and two of its officers, Nancy Chu and Ming
Chok alleging claims for breach of contract, fraud, tortuous interference with
economic relations and common counts. In or about July 2007, Astar Electronics
USA, Inc. filed a notice of dissolution with the California Secretary of State.
On August 15, 2007, KXD Technology, Inc. filed for bankruptcy protection in the
United States Bankruptcy Court, Central District of California. On September 13,
2007, the Court entered an order sua sponte to stay the entire action pending
the resolution of the bankruptcy proceeding. No trial date has been set.

On November 11, 2007, the Company filed a lawsuit against MDG Computers Canada,
Inc. in the Ontario Superior Court of Justice in Canada. The Company alleges
claims for trademark infringement, passing off and false designation related to
the sales of televisions by MDG Computers Canada, Inc. bearing the Company's
trademarks. On December 18, 2007, MDG Computers Canada, Inc. filed an answer to
the complaint. The Company shall continue to vigorously pursue its claims
against MDG Computers Canada, Inc. No trial date has been set.

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, 2007, 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 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

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

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: August 14, 2008 By: /s/ Ming Tung Chok
-----------------------
Ming Tung Chok
President and Chief
Executive Officer

DATE: August 14, 2008 By: /s/ Nancy Chu
-----------------------
Nancy Chu
Chief Financial Officer

DATE: August 14, 2008 By /s/ Jay Schrankler
--------------------------
Name: Jay Schrankler
Title: Director

DATE: August 14, 2008 By /s/ Chung Chin Keung
--------------------------
Name: Chung Chin Keung
Title: Director

DATE: August 14, 2008 By /s/ Henry Song
--------------------------
Name: Henry Song
Title: Director

INDEX TO EXHIBITS

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

10.6 SOYO Group Agreement with UCB Bank, dated March 2, 2007

10.7 SOYO Group Agreement with Urmstrom Capital dated August 7, 2008

10.8 SOYO Group Agreement with Tatung dated June 27, 2008

23.1 Consent of Independent Registered Public Accounting Firm, Vasquez &
Company LLP

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

32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 - Ming Tung Chok

32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 - Nancy Chu