SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





_________________





FORM 10-K





(Mark
One)








S           ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For The
Fiscal Year Ended March 31, 2009





£           TRANSITION
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
transition period from ___________ to _____________





Commission
File No: 000-52116





SOUND
WORLDWIDE HOLDINGS, INC.


(Exact
name of issuer as specified in its charter)





DELAWARE
            20-5153419(State
      or other jurisdiction of
            (I.R.S.
      Employerincorporation
      or organization)
            Identification
      No.)





Flat K,
13/F (Phase 2)


Superluck
Industrial Centre


57 Sha
Tsui Road,


Tsuen
Wan, N.T.


Hong
Kong, China





(Address
of principal executive offices, including zip code)





Registrant’s
      telephone number, including area code:
                        (852)
      2414-1831Securities
      registered pursuant to Section 12(b) of the Act:
                        NoneSecurities
      registered pursuant to Section 12(g) of the Act:
                        $0.0001
      par value common
stock





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes£NoS





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes£NoS





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months (or 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 SNo £





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this
chapter) during the preceding 12months (or for such shorter period that the
registrant was required to submit and post such files). Yes£NoS








Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-K.£





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated
filer,” “accelerated
filer” and
“smaller
reporting company” in Rule 12b-2 of
the Exchange Act.




Large
accelerated filer £                                                                Accelerated
filer £


Non-accelerated
filer (Do not check if a smaller reporting company) £


Smaller
reporting company S





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).


Yes £ No S





State
issuer's revenues for its most recent fiscal year: $4,227,552.





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of June
29, 2009: $0.00




Indicate
the number of shares outstanding of each of the registrant's classes of common
stock as of March 31, 2009: 14,336,250 shares of common stock.





Documents
incorporated by reference: None.











PART
I





ITEM 1. BUSINESS.





FORWARD-LOOKING
STATEMENTS





Certain
statements made in this Annual Report on Form 10-K are “forward-looking
statements” (within the meaning of the Private Securities Litigation Reform Act
of 1995) regarding the plans and objectives of management for future operations.
Such statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of Sound Worldwide
Holdings, Inc., a Delaware corporation (the “Company”) to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. The forward-looking statements
included herein are based on current expectations that involve numerous risks
and uncertainties. The Company’s plans and objectives are based, in part, on
assumptions involving the continued expansion of business. Assumptions relating
to the foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes its assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could prove inaccurate and, therefore, there can be no assurance the
forward-looking statements included in this Report will prove to be accurate. In
light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.








The
Company





We are a
holding company formed in the state of Delaware engaged in the manufacturing of
denim fabrics in China and, through our subsidiary, Asian Point Investment
Limited, in the sale of those fabrics to vendors located throughout the
world.





Our
business operations are conducted through our wholly-owned subsidiary, Sound
Worldwide Limited, or SWL, a British Virgin Islands corporation, and its
subsidiaries. At the fiscal year ended, March 31, 2008 and until April 1, 2008,
SWL had two subsidiaries, Asian Point Investment Limited, or Asian Point, and
Best Allied Industrial Limited, or Best Allied. SWL is a textile and garment
manufacturer with facilities in Hong Kong and China.




As
previously reported on a Current Report on Form 8-K which we filed with the
Securities and Exchange Commission on May 30, 2008, on May 27, 2008, we entered
into a Share Purchase and Exchange Agreement, or the Exchange Agreement, with
Best Allied and Ms. Ivy S.K. Lam, a director and officer of Best Allied and a
then stockholder of 6,063,750 shares of our Common Stock. Pursuant to the
Exchange Agreement, on May 30, 2008, Ms. Lam purchased from our company 10,000
shares of Common Stock of Best Allied owned by SWL, which constituted 100% of
the issued and outstanding shares of Best Allied, in exchange for the 6,063,750
shares our common stock held by Ms. Lam. The effective date of the exchange was
April 1, 2008, or the Effective Date.





In
connection with the exchange, the Company and Ms. Lam also entered into a
Settlement Agreement and Release, dated May 30, 2008, pursuant to which each
party released the other from any and all liabilities.








Organizational
History





On
October 25, 2007, we merged with Freedom 3, Inc., or Freedom, a Delaware
corporation. On such date, Freedom redeemed 100,000 shares of its common stock,
which was all of its issued and outstanding common stock, from its then current
stockholder in exchange for 300,000 shares of restricted common stock of the
resultant issuer after the merger as per the redemption agreement. Freedom then
sold one share of its common stock to SWL for $1.00. This resulted in SWL owning
100% of Freedom. SWL and Freedom then entered into a Share Exchange Agreement or
the Exchange Agreement, dated October 25, 2007, pursuant to which each share of
common stock and preferred stock of SWL was converted into 350 shares of
Freedom’s common stock and one share of Freedom’s preferred stock,
respectively and all of the issued and outstanding shares of SWL’s common stock
were retired and cancelled. This resulted in the stockholders of SWL to become
stockholders of Freedom. The previous stockholder of Freedom was then issued
300,000 shares of Freedom as agreed previously. The one share of Freedom’s
common stock held by SWL was then cancelled and SWL sold one share of its common
stock to Freedom, which resulted in Freedom owning 100% of SWL. Freedom then
changed its name to Sound Worldwide Holdings, Inc.





1


Prior the
exchange, Freedom had no operations and nominal assets and was in the
development stage.





The
following summarizes the organizational history and location of our subsidiaries
as of March 31, 2009:




- Sound
  Worldwide Limited, or SWL, was formed in July 1999 and was the holding company
  for Asian Point Investment Limited and Best Allied Industrial Limited. SWL is
  currently the holding company of Asian Point. As described above, as of April
  1, 2008, Best Allied is no longer a subsidiary of SWL.
- Asian
  Point Investment Limited, or Asian Point, which leases Heyuan Yuenya Weaving
  Factory in Heyuan, Guangdong Province, was registered in June
  1999.

Introduction
to Freedom





SWL was
introduced to Freedom by a group of businessmen. It was originated by Mr.
Vincent Lau of International Professional Accountants Co. Ltd. of Hong Kong, or
IPAC. IPAC has been providing accounting services to Sound Worldwide since the
1990. In 2005, Mr. Lau introduced Sound Worldwide to Mr. Alan Chan of Calgary,
Alberta, Canada and indicated that Sound Worldwide wished to become a public
company. Subsequently, Mr. Chan introduced Sound Worldwide to Mr. Larry Fortman
of Oxford Group of Charlotte, North Carolina. Collectively, the three
businessmen assisted Sound Worldwide throughout the whole process in becoming a
public company. This included finding it a suitable reporting shell company
in the U.S., helping it with its business plan, performing the necessary due
diligence prior to introducing it to Freedom, negotiating a merger agreement
with Freedom, and helping it throughout the merger process with
Freedom.





For
providing all of the above services, the group and their nominees were given an
opportunity to acquire 2,000,000 shares of Sound Worldwide Holdings, Inc. at a
cost of $0.0001 per share. As well, the group is also to receive compensation
for other services, such as accounting services, administration and
reimbursement for traveling expenses.





Change
in Fiscal Year





On
December 21, 2007, the Board of Directors of the Company, by unanimous written
consent, approved to change the Company’s fiscal year end from December 31st to
March 31st.





Our
Business





Our
Principal Products and Services





Asian
Point, our indirectly held subsidiary, is engaged in the manufacturing of denim
fabrics in China and in the sale of those fabrics to vendors, such as GAP,
Levis, ECKO and Giordano, located throughout the world. Over 50% of our products
are exported to the U.S. marketplace and the rest throughout Western Europe and
other countries.





Business
Objectives





Our
business objective is to become a cost-effective denim fabric and garment
manufacturer with high quality, competitive prices and a comprehensive product
range. We eventually want to expand our market share through advanced production
technology, effective cost controls, superior quality control systems, and
marketing efforts.





Growth
Strategy





To ensure
steady growth and income earnings during the future development of the Company,
we anticipate implementing the following plans:





2


Increasing
Operations





We intend
to acquire state-of-the art machinery that we believe will the increase our
production and processing efficiency. We also plan on increasing the number of
weaving machines from 50 sets to 100 sets to meet anticipated
demand.





We also
intend to create a marketing team for the purpose of attracting additional
clients. The current channels that we have used to develop our business have
been adequate, but we believe an internal marketing team could offer more
opportunities, especially in Eastern Europe.


Vertical
Integration





Our
future plan also includes eventually controlling all of the steps in the
production process, from the extraction of raw materials through the manufacture
and sale of the final products, known as vertical integration. We believe that a
vertically integrated company that controls all of the steps of production, from
supplying the raw materials to manufacturing the finished product has a very
strong competitive advantage. By being vertically integrated, we would not have
to depend on outside entities to add value to our products. We would be able to
manage the quality of its product throughout the whole process, which we believe
would result in superior products at reasonable price points.





In Asian
Point, our textile manufacturing subsidiary, we believe can achieve upstream
integration by acquiring a factory to prepare and size the yarn using a warp
beam. When weaving with a loom, the vertical yarns are attached to a warp beam
before weaving begins. With its own facilities, Asian Point can minimize average
production costs of the textiles.





Summary
Financial Information





The table
below summarizes (i) our audited balance sheet at March 31, 2009 and 2008 and
(ii) our statement of operations for the audited years ended March 31, 2009,
2008 and 2007.





As
      at:March 31, 2009
                          (Audited)
                        
                        
                        March 31, 2008
                          (Audited)Balance Sheet:Cash
                        
                        $
                        7,989
                        
                        
                        $
                        288,356Total
      Assets
                        
                        $
                        3,576,294
                        
                        
                        $
                        5,502,308Total
      Liabilities
                        
                        $
                        587,750
                        
                        
                        $
                        2,168,914Total
      Stockholders’ Equity
                        
                        $
                        2,988,544
                        
                        
                        $
                        3,333,394




For the Year Ended:March 31, 2009
                      (Audited)
                    
                    
                    March 31, 2008
                      (Audited)
                    
                    
                    March 31, 2007
                      (Audited)Statement of Operations:Revenue
                    
                    $
                    4,227,552
                    
                    
                    $
                    17,652,601
                    
                    
                    $
                    14,840,870Net
      (Loss)/Income
                    
                    $
                    (380,290
                    )
                    
                    $
                    1,500,424
                    
                    
                    $
                    1,579,341(Loss)/Earnings
      Per Share of Common Stock
                    
                    $
                    (0.03
                    )
                    
                    $
                    0.08
                    
                    
                    
                    0.09








Products
and Production





The
current machinery installed in our production plants provides flexibility and
efficiency for the production processes. We are therefore able to adjust our
production schedule in response to the demand of the market and customers,
without incurring any significant additional costs or expenses.





Product
Characteristics





We are
able to provide a number of different types of denim fabrics through special
procedures. In recent years, the denim clothing market has become even more
fashionable and brand driven. Different denim fabrics are currently manufactured
using pigment-dyed, stone-washed, and stretch-and-blend techniques, which
produce more varieties of denim fabrics such as ring denim, stretch denim,
cowboy corduroy and colored denim (e.g., yellow and green
shades).


3





Production
Lines





Given
that SWL manufactures denim fabrics through Asian Point and until the Effective
Date, also manufactured garments through Best Allied, it is essential to
understand the production process of both these subsidiaries.





Asian
Point:





The
following is the “step-by-step” production process for Asian Point:





Step
1. Stored Yarn & Pre-weaving Preparation





In the
initial stage, Asian Point purchases material and yarn. The raw materials are
then made ready for the weaving process which is outsourced to an external
company. This preparation occurs at an external sizing factory, which uses warp
beams to prepare the yarn. All specifications for the denim are predetermined by
Asian Point’s clients.





Step
2. Weaving





Once the
process of sizing is finished, the semi-finished product is transported back to
Asian Point for weaving.





Step
3. Inspection





Since
Asian Point’s goal is to provide a high quality product, inspection is a very
important step to ensure quality standards are met before storage. All denim is
sent to the quality control department for inspection before it moves on to the
next stage.





Step
4. Storage





The
product, which is now ready for delivery, is then stored in the factory. Here
clients have the chance to inspect the finished product before they take
possession of the material.





Step
5. Retail





Most of
the denim is sold to garment manufacturers, while some will end up in the retail
sector.




Best
Allied:




Once
orders are received from a client, Best Allied’s production process begins with
making a pattern on a computer, called automated marking, and then plotting
full-size or scaled patterns and markers on the fabric. Meanwhile, purchases of
raw material and inspection of raw material are performed in order to comply
with the client’s specifications as well as desired quality. Once computer
marking and plotting are done, the material then undergoes the process of
inspection, cutting and sewing. Fusing and ironing are the finishing touches
that are made before delivering the garments to the clients. The following
depicts the “step-by-step” production process of Best Allied:





Step 1.
Computer Marking


â


Step 2.
Computer Plotting


â


Step 3.
Fabric Inspection


â


Step 4.
Cutting


â


Step 5.
Sewing


â


Step 6.
Fusing


â


Step 7.
Ironing





4


Quality
Control and Assurance





We place
significant focus on quality control throughout the entire production process.
This is done to ensure the delivery of a consistently high quality finished
product to the customer. Our main quality control procedures are outlined
below.





1. Inspection and testing of incoming
materials




The
quality of all raw materials, components, and spare parts that have been
purchased are subject to sample inspections in order to ensure that they meet
the requirements of China’s government, the industry and the
client.





2.
Inspection and testing of semi-finished products





Semi-finished
products undergo inspection to ensure that they comply with specific technical
requirements.





3.
Final inspection and testing





Quality
control procedures are also applied after both the textile and garment processes
are finished to ensure that the color, weight, width and the characteristics of
the processed denim fabrics and garments comply with the customer’s
specifications before they are packaged and delivered to the customer. As a
result of strict quality control procedures, we experience a minimal return rate
on our fabrics and garments.





Significant Suppliers and
Clients:





Asian
Point’s largest customers accounted for approximately 50%, 29% and 25% of its
net sales in fiscal 2009, 2008 and 2007. We do not have any minimum purchase
obligations or other contractual obligations with our suppliers.





Best
Allied’s significant suppliers and clients are:





Suppliers:
Nan Fung Textiles Ltd., Central Textiles (H.K.) Ltd., Tai Hing Cotton Mill
Ltd.





Clients:
Lauren (Division of Polo Ralph Lauren Corporation), Polo Children Wear, Liz
Claiborne,


American
Eagle Outfitters, Abercrombie & Fitch, and Rugby.





Environmental
and Production Safety Regulations on Production





Asian
Point’s production facilities are located in Heyuan City, China and Best
Allied’s production facilities are located in Kwon Tong, Honk Kong and are
subject to the environmental and production regulations of the PRC. The main
pollutants resulting from production in the manufacturing factory of Asian Point
are noise and dust particles to the surrounding areas. To tackle this problem,
we have taken necessary measures during the setting up of our manufacturing
plant to minimize the level of noise, so that it is aligned with the
requirements of the applicable environmental laws and regulations. In addition,
we carry out regular on-site environmental testing to ensure that our operations
comply with regulatory requirements and standards. In regards to our production
safety issues, we take strict measures that comply with the production safety
regulations of the PRC and Hong Kong. Since our clients are highly regarded
around the world, each client has already performed its own audit of our
processes. These production audits ensure reasonable working conditions and an
adherence to western labor laws.





Market
Analysis





Demand
for Textiles and Garments





The
textile and garment industries have become a basic part of global economics. We
believe that the demand for textiles and garments is sensitive to the
expenditure behavior of consumers as well as the price point of products but
that changes in income do not have any significant effects on consumers’ buying
habits of denim products.




World
Textile and Garment Demand





Over the
past ten years, we believe that the textile and garment industries have played
major part of global trade. Based on our experienceinthese industries, we
believe that although world spending on textiles and garments is significant,
developed countries do not have the capacity to produce textile and garments to
satisfy their demand. We believe that companies in developed countries, such as
the U.S. and European countries, are able to satisfy their unmet demand for
textiles and garments by importing these products from countries, such as China
and Hong Kong, where Production costs are relatively low.





5


China
Textile and Garment Industry





The PRC
is one of the world’s largest manufacturers of textiles and garments. According
to the PRC’s industrial production figures for December 2006 as prepared by
National Bureau of China, total production of textile products is as
follow:





Item
                Unit
                AnnualProduction
                %
      Change YearOver YearYarn
                10
      Thousand Tons
                1,001
                8.4Cloth
                100
      Million Meters
                462.37
                8.2Silk
      Fabric
                10
      Thousand Meters
                781,573
                9.6





Production
and processing of fabrics have become one of the major businesses in the PRC. In
2006, the PRC’s total export of garments and clothing accessories amount to
$81.2 billion, which represents a 7.1% increase from 2005. The textile yarn and
fabrics exports totaled $58.4 billion in 2006, which represented a 7.9% increase
from 2005.





According
to “China Textile Industry Profile: 2006,” in the past, industrial traders in
the PRC have mainly exported low to medium grade textiles and garments to
Africa, South America and developed countries. This has changed in recent years.
The industry has seen an increase in the demand for value added fabrics and
textiles consisting of higher grade material.





Under the
Tenth Five Year Plan covering 2001 to 2005, which was approved in the fourth
meeting of the Ninth PRC National People’s Congress held on March 15, 2001, PRC
authorities intended to further expand production levels and upgrade production
standards within PRC textileindustry.





Factors
Contributing to the Development of PRC Textile industry:





- Skilled
  and inexpensive labor;
- Relatively
  low value of RMB compared to other currencies;
- Inexpensive
  raw materials; and
- Relatively
  low shipment costs.




Hong
Kong Textile and Garment Industry





Since
1950, when Hong Kong first emerged as a manufacturing hub, its textile industry
has grown steadily. Hong Kong’s textile industry serves not only the local
clothing manufacturers, but also those on the Chinese mainland and other
offshore production bases. Capitalizing on its experience in textiles
manufacturing, many Hong Kong companies are also engaged in trading textiles.
Hong Kong’s textiles industry is reputed as a supplier of quality dyed and
printed fabrics. It is also a leader in cotton spinning, denim wearing,
knit-to-shape panel knitting, and fine-gauge cotton knit
manufacturing.





According
to the Hong Kong Trade Development Council’s article ‘Profiles of Hong Kong
Major Manufacturing Industries’, (January 30, 2007), the textile industry has a
total of 889 manufacturing establishments as of September 2006, 10,599 workers,
or 7.2% of the local manufacturing workforce. The article also states that
textiles industry is one of Hong Kong's major export earners, accounting for
3.1% of total domestic exports in 2006 and that Asia is the main destination for
textiles produced in Hong Kong. Approximately 90% of Hong Kong’s textiles remain
in the region. The articles further states, that Chinese mainland is the
predominant export market, accounting for 70% of Hong Kong’s textile exports in
2006.





Marketing
and Business Strategies





Marketing
Strategies





China and
Hong Kong exports are expected to continue to increase due to China’s entry into
the WTO and Closer Economic Partnership Arrangement (“CEPA”) between China and
Hong Kong. Since SWL’s main export targets are the United States and the
European Union, China’s entry into the WTO has had a positive impact on its
competitiveness against other competitors in these markets. Moreover, the CEPA
between Hong Kong and China removes tariffs on Hong Kong products, which
provides an opportunity for the Hong Kong garment and textile industry to
develop its business in the PRC. We will take advantage of these opportunities
to develop the Chinese and the world markets by implementing the following
marketing strategies:





6


þ Continue to strengthen
relationships with major downstream clients in the United States and Japan. We
believe that this will ensure the stability of our sales and prestige when
negotiating with new clients.





þ Expand our marketing
team for the Eastern European market, including but not limited to Russia),
which we believe has huge potential for textile and garment
consumption.





þ Develop our marketing
network with reputable trading companies, such as Li & Fung Trading Limited,
which has a strong textile and garment sales network with international clients.
We believe that this will help increase our sales and widen our geographical
network.





þ Develop our own
garment-retailing network in China. Seeing as Hong Kong textile and garment
products are favored by Chinese consumers, we believe that developing our own
garment label and retailing network will enhance our profitability.





Business
Strategies





Our
short-term, mid-term and long-term strategies to implement our business plan are
as follows:





Short-Term
Strategies (within5years)





We intend
to take advantage of the opportunities provided by CEPA and trade liberalization
of the WTO. In the short term, we intend to focus on increasing our
competitiveness by expanding our business in China and Eastern
Europe.





Different
short-term strategies will be carried out inthe Company’s
subsidiaries.





In order
to achieve our goal of expanding our business and remain competitive, Asian
Point intends to acquire more advanced machinery, reorganize human resources,
and expand its marketing team. In the short term, we believe that this will
allow Asian Point to minimize increasing production costs and enhance efficiency
and profitability. Since the production of textiles is labor-intensive and there
are signs of a possible labor shortage arising in the Guangdong Province, it is
important for Asian Point to take the above-mentioned short-term strategies.
These strategies will not only ensure the stability and profitability of Asian
Point, but also allow Asian Point to benefit from economies of scale. With trade
liberalization factored by China’s entry into the WTO, Asian Point also intends
to expand its marketing team to develop its overseas market.





Mid-Term Strategies
(5to7years)





We had
intended to focus on the vertical integration of our subsidiaries. We believed
and continue to believe that we can further improve our profitability by taking
advantage of upstream and downstream opportunities. Below summarizes our
vertical integration strategies planned for Asian Point





In the
mid-term (within 5 to 7 years), Asian Point will focus on upstream activities by
acquiring a sizing factory and a shrinkage factory, which would be used to
pre-shrink the denim. We believe that vertical integration of Asian Point will
minimize production costs since Asian Point will not have to depend on outside
suppliers. By controlling all aspects of production, issues such as product
quality and delivery deadlines will no longer be a problem for Asian
Point.





Long-Term Strategies
(7years and
beyond)




Our
long-term strategies are to further increase asset turnover and increase
productivity. The long-term business strategies of Asian Point are as
follows:


7





We expect
that Asian Point will develop an additional manufacturing base in XinTang,
Guangdong Province, which it is a hub for wholesalers and buyers of denim
products from all across China. Asian Point currently has extensive connections
with buyers from various provinces around China. Once Asian Point has the
capacity, we anticipate it to take the initiative and enlarge its production and
sales network. It could go as far as expanding into retail outlets in XinTang,
which serves as the center of the garment and textile industry in Guangdong
province.





Employees





We
currently employ 200 persons, five of whom are part of management.




We
operate a Mandatory Provident Fund Scheme for all qualifying employees in Hong
Kong. The assets of the plan are held separately from those of the Company by
the trustees of the plan. We contribute 5% of the relevant payroll costs to the
plan, which contribution is matched by employees. The contributions paid by the
Company for the fiscal year ended March 31, 2009, 2008 and 2007 were $Nil,
$42,579 and $29,328, respectively.





Our
employees are not represented by a labor union. We have not experienced work
stoppages and consider our employee relations to be good.





Available
Information





We are
subject to the information reporting requirements of the Exchange Act, and,
accordingly, are required to file periodic reports, including quarterly and
annual reports and other information with the Securities and Exchange
Commission. Such reports and other information may be inspected and copied at
the public reference facilities maintained by the Commission at 100 F Street,
N.E., Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition,
the SEC maintains an Internet website that contains reports, proxy and
information statements and other information regarding registrants that file
electronically. The address of the website is http://www.sec.gov.





ITEM 1(A) RISK
FACTORS.





RISK
FACTORS





Risks
Relating to Our Company





We
have a limited operating history that may not be an indicator of our future
results.





As a
result of our limited operating history, our plan for rapid growth, and the
increasingly competitive nature of the markets in which we operate, our
historical financial data is of limited use in evaluating our future revenue and
operating expenses. Our planned expense levels will be based in part on
expectations concerning future revenue, which is difficult to forecast
accurately based on current plans of expansion and growth. We may be unable to
adjust spending in a timely manner to compensate for any unexpected shortfall in
revenue. Further, general and administrative expenses may increase significantly
as we expand operations. To the extent that these expenses are incurred before,
or are not rapidly followed by, a corresponding increase in revenue, our
business, operating results, and financial condition could suffer.





Our
success is dependent on the success, strategies and reputation of our
customers.





Our
business is dependent on our customers’ ability to market their brands through
multiple channels and multiple price points. Our customers’ products are
targeted towards different market segments based on consumer demographics,
design, suggested pricing and channel of distribution. If any of our customers
decide to ‘‘reposition’’ its products under its brands, introduce similar
products under similar brand names or otherwise change the parameters of design,
pricing, distribution, target market or competitive set, we could experience a
significant downturn in that customer’s business, adversely affecting our sales
and profitability. In addition, as products may be personally associated with
designers or celebrities, our sales of those products could be materially and
adversely affected if any of those individuals’ image, reputation or popularity
were to be negatively impacted.





If
we are unable to successfully translate market trends into attractive product
offerings, our sales and profitability could suffer.


8





Our
ability to successfully compete depends on a number of factors, including our
ability to effectively anticipate, gauge and respond to changing consumer
demands and tastes across multiple product lines and tiers of distribution. We
are required to translate market trends into attractive product offerings and
operate within substantial production and delivery constraints. We cannot be
sure we will continue to be successful in this regard.





Expansion
of our product offerings involves significant costs and uncertainty and could
adversely affect our results of operations.





An
important part of our strategy is to expand the territories in which we sell our
products. We intend to continue to add additional product lines in the future.
As is typical with new products and new territories, demand and market
acceptance for any new products we introduce will be subject to uncertainty.
Producing and marketing new products require substantial expenditures. We cannot
be certain that our efforts and expenditures will successfully generate
sufficient sales or that sales that are generated will be sufficient to cover
our expenditures.





If
our customers change their buying patterns, request additional allowances or
change or develop their own production facilities, our sales to these customers
could be materially adversely affected.





Our
customers’ buying patterns, as well as the need to provide additional allowances
to vendors, could have a material adverse effect on our business, results of
operations and financial condition. Customers’ strategic initiatives, including
changing or developing their own production facilities and reducing the number
of vendors they purchase from, could also impact our sales to these
customers.





We
have significant customer concentration, and the loss of one of our
subsidiaries’ large customers could adversely affect our business.





Asian
Point’s largest customers accounted for 29.16% of its net sales in fiscal 2008
We do not have long-term contracts with any customers, and sales to customers
generally occur on an order-by-order basis that may be subject to cancellation
or rescheduling by the customer. A decision by our major customers to decrease
the amount of merchandise purchased from us, to increase the use of their own
private label brands or to change the manner of doing business with us could
reduce our revenues and materially adversely affect our results of
operations.





If
we miscalculate the market for our products, we may end up with significant
excess inventories for some products and missed opportunities for
others.





We often
produce garments to hold in inventory in order to meet our customers’ delivery
requirements and to be able to quickly fulfill reorders. If we misjudge the
market for our products, we may be faced with significant excess inventories for
some products and missed opportunities for others. In addition, weak sales and
resulting markdown requests from customers could have a material adverse effect
on our results of operations.





We
are dependent upon outside suppliers.





All of
our products are purchased from independent suppliers. The failure of these
suppliers to ship products to us in a timely manner or to meet required quality
standards could cause us to miss the delivery date requirements of our
customers. The failure to make timely deliveries could cause customers to cancel
orders, refuse to accept delivery of products or demand reduced prices, any of
which could have a material adverse effect on our business. We do not have
long-term written agreements with any of our suppliers. As a result, any of
these suppliers may unilaterally terminate its relationship with us at any
time.





We are
also dependent on these suppliers for compliance with our policies and the
policies of our customers regarding labor practices employed by factories that
produce product for us. Any failure by these suppliers to comply with required
labor standards or any other divergence in their labor or other practices from
those generally considered ethical in the United States, and the potential
negative publicity relating to any of these events, could harm us and our
reputation which could result in a loss of customers.





We
are subject to the risks of doing business abroad.





All of
our operations are located in China and Hong Kong and are subject to the usual
risks of doing business abroad, including currency fluctuations, political or
labor instability and potential import restrictions, duties and tariffs. We do
not maintain insurance for the potential lost profits due to disruptions of our
factories. Because our products are produced abroad, political or economic
instability in the People’s Republic of China, or China or the PRC, or elsewhere
could cause substantial disruption in our business. This could materially
adversely affect our financial condition and results of operations. Heightened
terrorism security concerns could subject exported goods to additional, more
frequent or more thorough inspections. This could delay deliveries or increase
costs, which could adversely impact our results of operations. In addition,
since we negotiate our purchase orders with customers in United States dollars,
the value of the United States dollar against local currencies could impact our
cost in dollars of production from these manufacturers. We are not currently
engaged in any hedging activities to protect against these currency risks. If
there is downward pressure on the value of the dollar, our customers’ purchase
prices for our products could increase. We may not be able to offset an increase
in production costs with a price increase to our customers.





9


Fluctuations
in the price, availability and quality of materials used in our products could
have a material adverse effect on our cost of goods sold and our ability to meet
our customers’ demands.





Fluctuations
in the price, availability and quality of the materials used in our products
could have a material adverse effect on our cost of sales or our ability to meet
our customers’ demands. We compete with numerous entities for supplies of
materials. The prices for denim and other fabrics used in our products depend
largely on the market prices for the raw materials used to produce them, such as
raw wool or cotton, which are vulnerable, in part, to natural disasters. We may
not be able to pass on all or any portion of higher material prices to our
customers.





We
depend on inexpensive labor to produce our products. Our failure to retain our
employees could decrease our output and harm our business.





The
production of textiles is labor-intensive. We depend on inexpensive labor
available in the Guangdong province of China. However, there are signs of a
labor shortage in the Guangdong province. Due to the development of other
provinces in China, there are fewer migrant workers in Guangdong. In order for
us to retain our current staff and add additional staff, the Company will have
to offer a moderately higher wage. It is important for us to expand our
human capital to achieve the goal of increasing competitiveness.




Our
failure to comply with environmental and production safety regulations would
harm our business operations.





Our
production facilities are located in Hong Kong and China and are subject to the
environmental and production regulations of those areas. The main pollutants
resulting from production in the manufacturing factory of Asian Point are noise
and dust particles to the surrounding areas. To tackle this problem, we
have taken necessary measures during the setting up of our manufacturing plant
to minimize the level of noise, so that it is aligned with the requirements of
the applicable environmental laws and regulations. In addition, we carry out
regular on-site environmental testing to ensure that our operations comply with
regulatory requirements and standards. In regards to our production safety
issues, we take strict measures that comply with the production safety
regulations of the PRC and Hong Kong. These production audits ensure reasonable
working conditions and an adherence to western labor laws. The failure of us to
maintain compliance with applicable environmental and safety laws and
regulations could cause a temporary shut down of our operations which would
delay shipments, divert management’s attention from our business and cause us to
incur applicable fees and penalties, all or any of which would harm or
operations.





If
we lose the services of our key personnel, our business will be
harmed.





Our
future success depends on our executive officers. Our executive officers have
substantial experience and expertise in our business and the loss of the
services of any or all of our executives and any negative market or industry
perception arising from the loss of their services could have a material adverse
effect on us.





We
may need additional financing to continue to grow.





The
continued growth of our business depends on our access to sufficient funds to
support our growth. Our growth is dependent on our ability to extend and
increase the line of credit and may be dependent on our ability to refinance the
term loan if we do not generate sufficient cash to make the payments due under
the term loan. If we are unable to refinance our debt, we cannot be sure we will
be able to secure alternative financing on satisfactory terms or at all. At
March 31, 2008, our banking facilities consisting of bank loans and other credit
facilities were $3,031,626, of which $1,279,745 has been drawn down and
$1,751,882 remains available. Our banking facilities are personally guaranteed
by Mr. Roger K.W. Fan, our Chief Executive Officer, President and Chairman, and
Ms. Mei Ling Szeto, our Secretary.





10


We
are dependent on sales during the certain of months each year for the
substantial majority of our net sales and net income.





Retail
sales of our denim products have traditionally been seasonal in nature. As a
result, we are dependent on our sales certain months each of year for the
substantial majority of our net sales and net income. Asian Point’s net sales
for the month of March 2008 accounted for approximately 19.03% in fiscal 2008.
Any difficulties we may encounter during this period as a result of weather or
disruption of manufacturing or transportation of our products will have a
magnified effect on our net sales and net income for the year. In addition,
because of the large amount of outerwear we sell, unusually warm weather
conditions during the peak fall selling season could have a material adverse
effect on our results of operations.





Synthetic
fibers have grown in popularity during the last couple of years which could have
an adverse affect on the demand for our products.





Synthetic
fiber fabrics, particularly polyester and polyester blends, have grown in
popularity during the past years. . The growth in demand for polyester is partly
due to the technical improvements achieved over the last few years, particularly
in respect of moisture absorption.





In
addition, innovative new fibers and fabrics have increased demand in many
different areas. The successful fabrics which appear to have answered the needs
of consumers include the wrinkle-free, water-resistant, more washable,
soft-stretch fabrics and environmental friendly. For example, cellulosic fibers,
including viscose, lyocell and acetate, have gained greater popularity.
Also, microfibers have been getting more and more attention. The major benefits
of textile products made of microfibers are its light in weight and superior
performance in keeping warm. In the field of furnishings, microfibers are more
often used in the area of decorative fabrics and drapery.





If
consumers increase their purchase of garments made from synthetic fibers as
compared to garments made of cotton fibers, our business could be adversely
affected.





Risk
Factors Relating to the Apparel Industry





The
competitive nature of the apparel industry may result in lower prices for our
products and decreased gross profit margins.





The
apparel business is highly competitive. We have numerous competitors with
respect to the production and sale of apparel, including distributors that
import apparel from abroad and domestic retailers with established foreign
manufacturing capabilities. Many of our competitors have greater financial and
marketing resources and greater manufacturing capacity than we do. We also
compete with vertically integrated apparel manufacturers that also own retail
stores. The general availability of contract manufacturing capacity also allows
ease of access by new market entrants. The competitive nature of the apparel
industry may result in lower prices for our products and decreased gross profit
margins, either of which may materially adversely affect our sales and
profitability. Sales of our products are affected by style, price, quality,
brand reputation and general fashion trends.





If
major department, mass merchant and specialty store chains continue to
consolidate, our business could be negatively affected.





We sell
our products to major department, mass merchant and specialty store chains.
Continued consolidation in the retail industry, such as the recent purchase of
May Department Store Company by Federated Department Stores, Inc., could
negatively impact our business. Consolidation could reduce the number of our
customers and potential customers. With increased consolidation in the retail
industry, we are increasingly dependent on retailers whose bargaining strength
may increase and whose share of our business may grow. As a result, we may face
greater pressure from these customers to provide more favorable terms. If
purchasing decisions become more centralized, the risks from consolidation would
increase. Customers may also concentrate purchases among a narrowing group of
vendors. This could adversely affect our business.





The
cyclical nature of the apparel industry and uncertainty over future economic
prospects and consumer spending could have a materially adverse effect on our
results of operations.





The
apparel industry is cyclical. Purchases of outerwear, sportswear and other
apparel tend to decline during recessionary periods and may decline for a
variety of other reasons, including changes in fashion trends and the
introduction of new products or pricing changes by our competitors.
Uncertainties regarding future economic prospects could affect consumer-spending
habits and have an adverse effect on our results of operations. Uncertainty with
respect to consumer spending as a result of weak economic conditions has in the
past caused our customers to delay the placing of initial orders and to slow the
pace of reorders during the seasonal peak of our business. Weak economic
conditions have had a material adverse effect on our results of operations at
times in the past and could have a material adverse effect on our results of
operations in the future as well.


11





The
significant increase in fuel prices could adversely affect our results of
operations.





Fuel
prices have increased significantly during the past few years. Increased
gasoline prices could adversely affect consumer spending, including
discretionary spending on apparel. In addition, higher fuel prices could cause
our operating expenses to increase, especially with respect to warehousing and
freight. Any significant decrease in sales or increase in expenses as a result
of higher fuel prices could adversely affect our results of
operations.





If
new legislation restricting the importation or increasing the cost of textiles
and apparel produced abroad is enacted, our business could be adversely
affected.





Legislation
that would restrict the importation or increase the cost of textiles and apparel
produced abroad has been periodically introduced in the U.S. Congress. The
enactment of new legislation or international trade regulation, or executive
action affecting international textile or trade agreements, could adversely
affect our business. International trade agreements that can provide for tariffs
and/or quotas can increase the cost and limit the amount of product that can be
imported.





The quota
system established by the World Trade Organization was eliminated on December
31, 2004. We cannot be certain of the full impact that this elimination will
have on international trade in general and the apparel industry in particular.
We also cannot be certain of the impact of quota elimination on our
business, including increased competition that could result from the importation
of an increasing amount of lower priced apparel into the United States.
Notwithstanding quota elimination, China’s accession agreement for membership in
the WTO provides that WTO member countries, including the United States, may
re-impose safeguard quotas on specific products. In May 2005, the United States
imposed unilateral quotas on several product categories, limiting growth in
imports of these categories to 7.5% a year. The safeguard quotas in several
categories have been extended by the United States government and will likely
continue through 2008. These limitations apply to a limited number of products
imported by us from China. We are unable to assess the potential for additional
action by the United States government with respect to these or other product
categories in the event that the quantity of imported apparel significantly
disrupts the apparel market in the United States. Additional action by the
United States in response to a disruption in its apparel markets could limit our
ability to import apparel and increase our costs.





Risks
Relating to Ownership of Our Common Stock





Our
executive officers are in a position to substantially control matters requiring
a stockholder vote.





As of the
date of this Annual Report, our executive officers beneficially owned an
aggregate of approximately 88.34% of our outstanding common stock. As a result,
if they vote together, they may have the ability to control the outcome on all
matters requiring stockholder approval including, but not limited to, the
election of directors and any merger, consolidation or sale of all or
substantially all of our assets. They also have the ability to control our
management and affairs.





The
failure to comply with the internal control evaluation and certification
requirements of Section 404 of Sarbanes-Oxley Act could harm our operations and
our ability to comply with our periodic reporting obligations.





We are in
the process of determining whether our existing internal controls over financial
reporting systems are compliant with Section 404. This process may divert
internal resources and will take a significant amount of time, effort and
expense to complete. If it is determined that we are not in compliance with
Section 404, we may be required to implement new internal control procedures and
reevaluate our financial reporting. We may experience higher than anticipated
operating expenses as well as outside auditor fees during the implementation
of these changes and thereafter. Further, we may need to hire additional
qualified personnel in order for us to be compliant with Section 404. If we are
unable to implement these changes effectively or efficiently, it could harm our
operations, financial reporting or financial results and could result in our
being unable to obtain an unqualified report on internal controls from our
independent auditors, which could adversely affect our ability to comply with
our periodic reporting obligations under the Securities Exchange Act of 1934, as
amended, or Exchange Act, and the rules of the Nasdaq Global
Market.


12





Our
common stock is subject to the "Penny Stock" rules of the SEC and the trading
market in our securities is limited, which makes transactions in our stock
cumbersome and may reduce the value of an investment in our stock.





The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require:





●
            that
      a broker or dealer approve a person's account for transactions in penny
      stocks; and





●
            the
      broker or dealer receives from the investor a written agreement to the
      transaction, setting forth the identity and
              quantity
      of the penny stock to be purchased.




In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:




●
            obtain
      financial information and investment experience objectives of the person;
      and





●
            make
      a reasonable determination that the transactions in penny stocks are
      suitable for that
              person
      and the person has sufficient knowledge and experience in financial
      matters to be capable of
              evaluating
      the risks of transactions in penny
stocks.





The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:





●
            sets
      forth the basis on which the broker or dealer made the suitability
      determination; and





●
            that
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.





Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our
stock.





Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.





ITEM
1(B) UNRESOLVED STAFF COMMENTS.





None.





ITEM
2. DESCRIPTION OF PROPERTY.





Our
principal executive offices are located Superluck Industrial Centre, Flat K,
13/F (Phase 2), 57 Sha Tsui Road, Tsuen Wan, N.T. Hong Kong, China and our
telephone number is (852) 2414-1831. Through Best Allied, we owned production
plants in the Kwun Tong District of Hong Kong and through Asian Point, we
currently own a production plant in the city of Heyuan, which is in the
Guangdong Province of the PRC.





The
following is a description of our properties as of the fiscal year ended March
31, 2009. The information provided below for Asian Point, as of the date of
filing this Annual Report.





13





Lessor
                Location
                ApproximateSq.
                UseFootageAsian
      Point (1)
                Heyuan
      Foreign Economic
                27,500
      sq. ft.
                Manufacturing
      andDevelopment
      Area
                
                trading
      of denim fabrics205
      Heyuan RoadHeyuan
      City, China





(1) Asian
Point rents this space pursuant to a lease with Heuyan Foreign Economic
Development for a period commending on July 1, 1999 and expiring on June 30,
2010 for a monthly rent of approximately $2,121.





In
general, all facilities are in good condition and are operating at capacities
that range from 80% to 100%. All facilities are leased under operating leases.
In comparison to similar facilities in the area, we believe the terms of the
lease are fair, and the monthly lease rate is at or below the cost for
comparable space.





ITEM
3. LEGAL PROCEEDINGS.





None.





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





No
matters were submitted to a vote of our security holders during the year ended
March 31, 2009.








PART
II





ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.





Under our
Certificate of Incorporation, we are authorized to issue an aggregate of
110,000,000 shares of capital stock, of which 100,000,000 are shares of common
stock, par value $0.0001 per share, or Common Stock and 10,000,000 are preferred
stock, par value $0.0001 per share, or Preferred Stock. As of the date hereof,
13, shares of our common stock are issued and outstanding, and there are
approximately 14,336,250 holders of record of our Common Stock.





Common
Stock




Pursuant
to our bylaws, our common stock is entitled to one vote per share on all matters
submitted to a vote of the stockholders, including the election of directors.
Except as otherwise required by law or provided in any resolution adopted by our
board of directors with respect to any series of preferred stock, the holders of
our common stock possess all voting power. Generally, all matters to be voted on
by stockholders must be approved by a majority (or, in the case of election of
directors, by a plurality) of the votes entitled to be cast by all shares of our
common stock that are present in person or represented by proxy, subject to any
voting rights granted to holders of any preferred stock. Holders of our common
stock representing one-percent (1%) of our capital stock issued, outstanding and
entitled to vote, represented in person or by proxy, are necessary to constitute
a quorum at any meeting of our stockholders. A vote by the holders of a majority
of our outstanding shares is required to effectuate certain fundamental
corporate changes such as liquidation, merger or an amendment to our Certificate
of Incorporation. Our Certificate of Incorporation do not provide for cumulative
voting in the election of directors.





Subject
to any preferential rights of any outstanding series of preferred stock created
by our board of directors from time to time, the holders of shares of our common
stock will be entitled to such cash dividends as may be declared from time to
time by our board of directors from funds available therefore.





Subject
to any preferential rights of any outstanding series of preferred stock created
from time to time by our board of directors, upon liquidation, dissolution or
winding up of our company, the holders of shares of our common stock will be
entitled to receive, on a pro rata basis, all assets of our company available
for distribution to such holders.





In the
event of any merger or consolidation of our company with or into another company
in connection with which shares of our common stock are converted into or
exchangeable for shares of stock, other securities or property (including cash),
all holders of our common stock will be entitled to receive the same kind and
amount of shares of stock and other securities and property (including cash), on
a pro rata basis.





Holders
of our common stock have no pre-emptive rights, no conversion rights and there
are no redemption provisions applicable to our common stock.





14


Preferred
Stock




Our
Certificate of Incorporation authorizes our board of directors to issue up to
10,000,000 shares of preferred stock in one or more designated series, each of
which shall be so designated as to distinguish the shares of each series of
preferred stock from the shares of all other series and classes. Our board of
directors is authorized, within any limitations prescribed by law and our
Certificate of Incorporation, to fix and determine the designations, rights,
qualifications, preferences, limitations and terms of the shares of any series
of preferred stock including but not limited to the following:





(a)     the
rate of dividend, the time of payment of dividends, whether dividends are
cumulative, and the date from which any dividends shall accrue;





(b)     whether
shares may be redeemed, and, if so, the redemption price and the terms and
conditions of redemption;





(c)     the
amount payable upon shares of preferred stock in the event of voluntary or
involuntary liquidation;





(d)     sinking
fund or other provisions, if any, for the redemption or purchase of shares of
preferred stock;





(e)     the
terms and conditions on which shares of preferred stock may be converted, if the
shares of any series are issued with the privilege of conversion;





(f)     voting
powers, if any, provided that if any of the preferred stock or series thereof
shall have voting rights, such preferred stock or series shall vote only on a
share for share basis with our common stock on any matter, including but not
limited to the election of directors, for which such preferred stock or series
has such rights; and





(g)     subject
to the above, such other terms, qualifications, privileges, limitations,
options, restrictions, and special or relative rights and preferences, if any,
of shares or such series as our board of directors may, at the time so acting,
lawfully fix and determine under the laws of the State of Delaware.





In the
event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of our company. Although there are no shares of preferred stock
currently issued and outstanding and we have no present intention to issue any
shares of preferred stock, no assurance can be given that it will not do so in
the future.





Holders
of Our Preferred Stock





As of
March 31, 2009, we had 0 holders of record of our preferred stock.





Illiquid
Trading Market





Our
common stock trades on the OTC Bulletin Board under the symbol “SWWH.” However,
since our registration statement on Form S-1 became effective on April 23, 2008,
no active trading market for sellers or buyers has developed for our common
stock. We consider our stock to be “thinly traded” and the fact that there are
no reported sale prices for our common stock may not be a true market-based
valuation of the stock. Some of the bid quotations from the OTC Bulletin Board
set forth below may reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions.





The
Securities and Exchange Commission has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a price of less than $5.00, other than
securities registered on certain national securities exchanges or quoted on the
NASDAQ system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or quotation
system. The penny stock rules require a broker-dealer, prior to a transaction in
a penny stock, to deliver a standardized risk disclosure document prepared by
the SEC, that: (a) contains a description of the nature and level of risk in the
market for penny stocks in both public offerings and secondary trading; (b)
contains a description of the broker's or dealer's duties to the customer and of
the rights and remedies available to the customer with respect to a violation to
such duties or other requirements of Securities' laws; (c) contains a brief,
clear, narrative description of a dealer market, including bid and ask prices
for penny stocks and the significance of the spread between the bid and ask
price; (d) contains a toll-free telephone number for inquiries on disciplinary
actions; (e) defines significant terms in the disclosure document or in the
conduct of trading in penny stocks; and (f) contains such other information and
is in such form, including language, type, size and format, as the Securities
and Exchange Commission shall require by rule or regulation. The broker-dealer
also must provide, prior to effecting any transaction in a penny stock, the
customer with: (a) bid and offer quotations for the penny stock; (b) the
compensation of the broker-dealer and its salesperson in the transaction; (c)
the number of shares to which such bid and ask prices apply, or other comparable
information relating to the depth and liquidity of the market for such stock;
and (d) monthly account statements showing the market value of each penny stock
held in the customer's account. In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from those rules;
the broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive the purchaser's written
acknowledgment of the receipt of a risk disclosure statement, a written
agreement to transactions involving penny stocks, and a signed and dated copy of
a suitably written statement.




15


These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock if it becomes subject to these penny stock
rules. Therefore, if our common stock becomes subject to the penny stock rules,
stockholders may have difficulty selling those securities.





As of
March 31, 2009, there were approximately 14,336,250 record holders of our common
stock.





Securities
Authorized for Issuance Under Equity Compensation Plans.





On March
9, 2009 we instituted and put into place the 2009 Stock Incentive Plan. The
Plan’s termination date is December 14, 2019. A description of the Plan was
included in a Form S-8 Registration Statement filed with the Securities and
Exchange Commission on March 9, 2009. The purpose of the 2009 Stock Incentive
Plan of is to further align the interests of employees, directors and
non-employee Consultants with those of the stockholders by providing incentive
compensation opportunities tied to the performance of the Common Stock and by
promoting increased ownership of the Common Stock by such individuals. The Plan
is also intended to advance the interests of the Company and its stockholders by
attracting, retaining and motivating key personnel upon whose judgment,
initiative and effort the successful conduct of the Company’s business is
largely dependent.





The Plan
shall be administered by a Committee comprised of one or more members of the
Board, or if no such committee exists, the Board. The Committee shall have the
right, from time to time, to delegate to one or more officers of the Company the
authority of the Committee to grant and determine the terms and
conditions of Awards granted under the Plan, subject to the requirements of
state law and such other limitations as the Committee shall determine. The
maximum aggregate number of shares of Common Stock that may be issued and sold
under all Awards granted under the Plan is Six Million (6,000,000) shares.
Shares of Common Stock issued and sold under the Plan may be either authorized
but unissued shares or shares held in the Company’s treasury.





All
Eligible Persons are eligible to be designated by the Committee to receive
Awards and become Participants under the Plan. The Committee has the authority,
in its discretion, to determine and designate from time to time those Eligible
Persons who are to be granted Awards, the types of Awards to be granted and the
number of shares of Common Stock or units subject to Awards granted under the
Plan. In selecting Eligible Persons to be Participants and in determining the
type and amount of Awards to be granted under the Plan, the Committee shall
consider any and all factors that it deems relevant or appropriate.





The Plan
allows for the Company to issue stock options as well as common stock. A Stock
Option may be granted to any Eligible Person selected by the Committee and shall
be designated, in the discretion of the Committee, as an Incentive Stock Option.
The exercise price per share of a Stock Option shall not be less than 85 percent
of the Fair Market Value of the shares of Common Stock on the Date of Grant,
provided that the Committee may in its discretion specify for any Stock Option
an exercise price per share that is higher than the Fair Market Value on the
Date of Grant, except that the price shall not be less than 110 percent of the
Fair Market Value in the case of any person who owns securities possessing more
than 10 percent of the total combined voting power of all classes of securities
of the Company.





Share
Purchase Warrants





We have
not issued and do not have outstanding any warrants to purchase shares of our
common stock.





Options





We do not
have any outstanding exercisable for shares of our common stock.





Convertible
Securities





We have
not issued and do not have outstanding any securities convertible into shares of
our common stock or any rights convertible or exchangeable into shares of our
common stock.





16


Dividend
Policy





We do not
anticipate paying any cash dividends in the foreseeable future.





Transfer
Agent





Our
transfer agent is Continental Stock Transfer, 17 Battery Place, New York, NY
10004


Telephone:
(212) 509-4000.





RECENT
SALES OF UNREGISTERED SECURITIES





As
previously reported on a Current Report on Form 8-K filed with the Securities
and Exchange Commission on May 30, 2008, on May 27, 2008, the Company and SWL,
entered into a Share Purchase and Exchange Agreement (the “Exchange Agreement”)
with Best Allied, a wholly-owned subsidiary of SWL, and Ms. Ivy S.K. Lam, a
director and officer of Best Allied and a stockholder of an aggregate of
6,063,750 shares of the Company’s Common Stock. Pursuant to the Exchange
Agreement, at a closing held on May 30, 2008, Ms. Lam purchased from the Company
and SWL 10,000 shares of Common Stock of Best Allied owned by SWL, which
constituted 100% of the issued and outstanding shares of Best Allied, in
exchange for 6,063,750 shares of the Company’s Common Stock held by Ms. Lam,
which constituted 100% of the shares of the Company’s Common Stock held by Ms.
Lam (the “Exchange”). The effective date of the Exchange is April 1, 2008.
Pursuant to the agreement, Ms Lam had agreed to the return and cancellation of
6,063,750 shares of our common stock held by her.





ITEM 6. SELECTED FINANCIAL
DATA




Not
Applicable to this Issuer.





ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.





You
should read the following discussion together with "Selected Historical
Financial Data" and our consolidated financial statements and the related notes
included elsewhere in this Annual Report. This discussion contains
forward-looking statements, which involve risks and uncertainties. Our actual
results may differ materially from those we currently anticipate as a result of
many factors, including the factors we describe under "Risk Factors," and
elsewhere in this Annual Report.





ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK. Not applicable to this
Issuer.





Forward
Looking Statements





Some of
the information in this section contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "will," "expect," "anticipate," "believe,"
"estimate" and "continue," or similar words. You should read statements that
contain these words carefully because they:





●
            discuss
      our future expectations;





●
            contain
      projections of our future results of operations or of our financial
      condition; and





●
            state
      other "forward-looking"
information.





We
believe it is important to communicate our expectations. However, there may be
events in the future that we are not able to accurately predict or over which we
have no control. Our actual results and the timing of certain events could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth under "Risk Factors,"
"Business" and elsewhere in this Annual Report. See "Risk Factors."





17


Unless
stated otherwise, the words “we,” “us,” “our,” “the Company” or “Sound
Worldwide” in this Annual Report collectively refers to the Company and its
subsidiaries.





Overview





Business
Operations





We are a
holding company formed in the state of Delaware. On October 25, 2007, we merged
with a registered company, Freedom 3, Inc., or Freedom, a Delaware
corporation.





Through
our wholly-owned subsidiary, Sound Worldwide Limited, or Sound Worldwide or SWL,
a British Virgins Island corporation, and its two subsidiaries, we manufacture
and sell denim fabrics and garments from our facilities in Hong Kong and China.
SWL’s two subsidiaries are Asian Point Investment Limited, or Asian Point, and
Best Allied Industrial Limited, or Best Allied.





As
previously reported on a Current Report on Form 8-K which we filed with the
Securities and Exchange Commission on May 30, 2008, on May 27, 2008, we entered
into a Share Purchase and Exchange Agreement, or the Exchange Agreement, with
Best Allied and Ms. Ivy S.K. Lam, a director and officer of Best Allied and a
then stockholder of 6,063,750 shares of our Common Stock. Pursuant to the
Exchange Agreement, on May 30, 2008, Ms. Lam purchased from our company 10,000
shares of Common Stock of Best Allied owned by SWL, which constituted 100% of
the issued and outstanding shares of Best Allied, in exchange for the 6,063,750
shares our common stock held by Ms. Lam. The effective date of the exchange was
April 1, 2008, or the Effective Date.





In
connection with the exchange, we and Ms. Lam also entered into a Settlement
Agreement and Release, dated May 30, 2008, pursuant to which each party released
the other from any and all liabilities.




Due to
the fact that the exchange with Ms. Lam and our divestiture of Best Allied was
consummated after our fiscal year end, information in this Annual Report
contains disclosure regarding our operations as of such date and therefore,
includes certain information of Best Allied.





Asian
Point is based in a 27,500 square foot production plant located in the city of
Heyuan, which is in the Guangdong Province of the People’s Republic of China, or
PRC or China, and is engaged the production of denim fabric for clients and for
Best Allied.





Best
Allied is based in a 13,000 square foot production plant located in the Kwun
Tong District of Hong Kong and is engaged in the production of garment products.
We intend to continue our focus on the vertical integration of our
operations.





Through
our subsidiaries, Sound Worldwide is able to produce various types of fabric and
garment products. Additionally, Sound Worldwide is a garment contractor for a
number of well known brands such as GAP, Levis, ECKO, and Giordano. The
Company’s products are sold to customers worldwide, with over 50% exported to
the U.S. marketplace and the rest throughout Western Europe and other countries.
Sound Worldwide has been devoting resources to enhance its fabric and garment
production technology, capacity, efficiency, and flexibility. This is intended
to help Sound Worldwide to meet the perceived increasing and changing demand of
the textile and garment market.





Our
Subsidiaries’ Organizational History




The
following summarizes the organizational history:





●
            SWL
      was formed in July 1999.●
            Best
      Allied was formed in April 1997.●
            Asian
      Point was registered in China in June
1999.





Business
Objective





Our
business objective is to become a cost-effective denim fabric and garment
manufacturer with high quality, competitive prices, a comprehensive product
range and eventually expand the market share by advanced production technology,
effective cost control techniques, superior quality control system, strong
marketing effort and excellent management experience.


18





Market
Forecast1




Whereas
it is expected that world spending on textiles and garments will continue to
increase by 4% to 5% per year due to the economic growth of developed countries,
the industry expects textile and garment exports from China and Hong Kong will
increase by more than 5% per year.





China:





China
enters Word Trade Organization (WTO)





Due to
PRC’s entry into the WTO in December 2001, the average tariff rates on imported
textiles have dropped from approximately 22% - 25 % pre-WTO entry to
approximately 14% -16% in 2005. Pursuant to the Agreement on Textile and
Clothing (ATC) implemented under the WTO, the historic quota system imposed by
other counties on the importing of PRC textile products on select product
categories has been phased out in 2005. This is expected to continue to boost
the textile processing and manufacturing volumes in the PRC as well as the
export of clothing manufactured in the PRC.





1 Source:
CEPA-A Survey of Garment Shoppers in Southern, Central and Western China, 2004
and CEPA- A Survey of Garment Shoppers in Eastern and Northern China,
2004.





Hong
Kong:





Benefits
from China’s entry to WTO





The
complete removal of quotas worldwide under the ATC has and is expected to speed
up the rationalization of globalize clothing manufacturing. Clothing production
in the Asian region is set to expand. As such, Hong Kong’s textiles export to
other Asian markets, particularly the PRC, is anticipated to increase in the
future. China’s entry into the WTO is widely believed to offer good
opportunities for Hong Kong’s textiles industry. Quota elimination on imports of
China-origin textiles from trade liberalization encourages Hong Kong
manufacturers to shift more of their production to the mainland, thereby
enhancing their cost competitiveness. On the other hand, China’s commitment to
further opens its domestic market facilitates Hong Kong’s textiles manufacturers
and traders contemplating or expanding sales in the Chinese market. Together
with steady improvements in the general living standard in the PRC, it is
anticipated that demand for foreign made clothing will increase in the PRC
market.





Closer
Economic Partnership Agreement (CEPA)





The
Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was
brought into effect in June 2003. A total of 50 Hong Kong-made textile items,
subject to the CEPA’s rules of origin, enjoy duty-free access to the Chinese
mainland as of January 1, 2004, whereas non-Hong Kong made counterparts will
remain subject to tariffs ranging from 5 to 18.7%. Eligible items include
products under HS codes defined by the Mainland Customs. In 2006, Hong Kong’s
domestic exports of these eligible items to the mainland amounted to about $464
million.





Chinese
textile and garment consumption trend towards Hong Kong products





According
to a survey taken by Hong Kong Trade Development Council on consumption trend of
textile and garment in China, the result concluded that Chinese consumers have a
strong desire for Hong Kong textile and garment products, seeing that the
average spending on textile and garment products is $406.50 per person in the
PRC.





Industry
Trends





China2




China's
textile industry has returned to a regular growth after the period of high-speed
growth which followed the country's entry into the World Trade Organization
(WTO). According to the latest statistics jointly issued by the Industry
Department and the Statistics Centre of the China National Textile and Apparel
Council (CNTAC), in the nine months ended December 31, 2007 versus the same
period ended December 31, 2006, the operation of China's textile industry
demonstrated steady growth of production, slower export growth and change of
growth method, import volume reduction.




19


Several
factors influenced the operations of the industry. Firstly, the growing demand
in China and abroad. In 2007, the demand on the international market is steady;
developing countries in Asia and Africa have become the new engine for the
increase in the textile industry's export. Statistics show that China is export
to the United States increased 27.11% in the nine months ended December 31, 2007
versus the same period in 2006; that to the 25 countries of the EU, up 26.67%;
Japan, up 4.11%; and that to African countries increased rapidly to 38.55% and
40.1%, respectively, contributing 25% to the country's export growth. At the
same time, the domestic demand remained strong. The output value for domestic
sales of large textile enterprises accounted for 74.86% of the total industrial
sales output value, 17.3% higher than that in the same period of last
year.





Secondly,
the adjustment and upgrading of industrial structure have started taking effect.
China's textile industry has achieved consistent improvement of equipment in the
nine months in 2007 versus the same period in 2006. Its total import of textile
machinery and parts reached US$3.172 billion in January-August, rising 21.81%
year over year. The per capita labor productivity of large textile enterprises
rose 22% year over year.





2 Source:
tdctrade.com article, “Textile Industry’s Growth Steady in 1st Three
Quarters,” (December 3, 2007)




Hong Kong3





According
to the Hong Kong Trade Development Council’s article ‘Profiles of Hong Kong
Major Manufacturing Industries’, (January 30, 2007), in recent years, with
rising production costs inflated in part by stringent environmental regulations,
Hong Kong's textiles manufacturers have established offshore production
facilities in low-cost countries, particularly on the Chinese mainland and in
Southeast Asian countries. A few companies have also set up offshore production
in Latin America, including Mexico, to take advantage of preferential treatments
allowed by trade agreements between these countries and their trading partners,
typically the US.





In the
face of fierce competition in the global market, Hong Kong's textiles industry
is moving up-market to supply sophisticated textile products with original
designs. Today, the operation of the textiles industry in Hong Kong is focused
on higher value-added activities such as sales and marketing, quality control,
designs and development while offshore plants are specialized in lower
value-added operations.





The
textiles industry has invested heavily in capital-intensive and advanced
machinery to keep up with the latest technology know-how. Advanced production
technologies are sourced mostly from vendors from Germany, Switzerland and
Japan. Modern machinery has been widely adopted by local manufacturers. As such,
Hong Kong textiles manufacturers are able to offer a wide range of fibers
and fabrics to clients.





Product Trends4





Cotton
remains the preferred fiber for most consumers. Europeans, in particular, are
enthusiastic about the environmentally friendly properties of biodegradable
natural fibers. Consumers also tend to buy more manmade fiber fabrics,
particularly polyester and polyester blends. The growth in demand for polyester
is partly due to the technical improvements achieved over the last few years,
particularly in respect of moisture absorption.





In
addition, innovative new fibers and fabrics have buoyed demand in many different
areas. The successful fabrics which appear to have answered the needs of
consumers include the wrinkle-free, water-resistant, more washable, soft-stretch
fabrics and environmental friendly. For example, cellulosic fibers, including
viscose, lyocell and acetate, have gained greater popularity.





Microfibers
have been getting more and more attention. The major benefits of textile
products made of microfibers are its light in weight and superior performance in
keeping warm. In the field of furnishings, microfibers are more often used in
the area of decorative fabrics and drapery.





Additional
Challenges





The
following are additional challenges facing our company:





●
            Signs
      of a labor shortage in Guangdong
Province




20


In the
last few years, there have been signs of a labor shortage in the Guangdong
Province in the PRC due to the rapid development of other parts of China. Due to
the fact that textile and garment manufacturing is relatively labor intensive, a
shortage of labor could cause an increase in production costs and weaken our
profitability.





●
            Appreciation
      of the Renminbi (RMB) versus the U.S.
Dollar





Other
than increasing production costs in China, the appreciation of the RMB, the
currency of mainland China, against foreign currencies, mainly the U.S. Dollar,
could harm the competitiveness of China-made textile and garment products. The
U.S. Dollar has been currently depreciating against the RMB and other foreign
currencies, making it more expensive for U.S. importers of foreign goods. As the
value of the RMB increases against other currencies of major exporting partners,
buyers would turn to other countries to manufacture lower priced
products.







3 Source:
Hong Kong Trade Development Council’s article ‘Profiles of Hong Kong Major
Manufacturing Industries’, (January 30, 2007),


4 Source:
Hong Kong Trade Development Council’s article ‘Profiles of Hong Kong Major
Manufacturing Industries’, (January 30, 2007),




Strengths, Weakness, Opportunities
and Threats (SWOT) Analysis and Control Policies





SWOT
Analysis





We
believe our Strengths, Weaknesses, Opportunities and Targets (SWOT) are the
following:





Strengths:





●
            Advanced
      production facilities:





Our newly
acquired weaving machinery and technology for production meet market
standards.





●
            Experienced
      management team:





We employ
a professional management team with substantial experience in the denim fabrics
industry, particularly in terms of applying advanced technology to improve
product quality and production efficiency.





●
            Excellent
      quality of product with a good
reputation:




We
believe we maintain an excellent quality of product in order to uphold our
reputation amongst our globally recognized name brands and clients. Our quality
control standards have always been strictly enforced.





●
            Solid
      distribution network:





We have
maintained solid relationships with many large suppliers, buyers and direct
users around the world. Our sales are largely based on its enduring business
foundation.





We are a
holding company formed in the state of Delaware. On October 25, 2007, we merged
with a registered shell company, Freedom 3, Inc., or Freedom, a Delaware
corporation.





Through
our wholly-owned subsidiary, Sound Worldwide Limited, or Sound Worldwide or SWL,
a British Virgins Island corporation, and its two subsidiaries, we manufacture
and sell denim fabrics and garments from our facilities in Hong Kong and China.
SWL’s two subsidiaries are Asian Point, and Best Allied.





Asian
Point is based in a 27,500 square foot production plant located in the city of
Heyuan, which is in the Guangdong Province of the People’s Republic of China, or
PRC or China, and is engaged the production of denim fabric for clients and for
Best Allied.





Best
Allied is based in a 13,000 square foot production plant located in the Kwun
Tong District of Hong Kong and is engaged in the production of garment products.
We intend to continue our focus on the vertical integration of our
operations.


21





Through
our subsidiaries, Sound Worldwide is able to produce various types of fabric and
garment products. Additionally, Sound Worldwide is a garment contractor for a
number of well known brands such as GAP, Levis, ECKO, and Giordano. The
Company’s products are sold to customers worldwide, with over 50% exported to
the U.S. marketplace and the rest throughout Western Europe and other countries.
Sound Worldwide has been devoting resources to enhance its fabric and garment
production technology, capacity, efficiency, and flexibility. This is intended
to help Sound Worldwide to meet the perceived increasing and changing demand of
the textile and garment market.





Weaknesses:





●
            Non-diversified
      geographical marketing:





Although
have a number of well-known clients, sales of our products is limited to the
U.S., Western Europe and Japan. We believe we need to diversify our sales to
different geographic locations so that fluctuation in sales will be minimized.
These fluctuations are generally caused by economic downturns and a change in
preferences for garments and textiles.




●
            Insufficient
      production backup:





Our
production chain, from raw materials to textiles and garments, requires
separated production backups of weaving (sizing factories) and shrinking
(shrinkage factories). Currently, weout-source these
operations to our affiliates. Future concerns regarding stability in production
timing and quality control may not allow us to operate at our full
potential.





Opportunities:





●
            China
      entry to WTO





Following
China’s entry into the WTO, average tariff rates on imported textiles have
dropped from approximately 22%-25 % pre-WTO entry to approximately 14% - 16% in
2005. Eventually, these tariffs will be eliminated sometime in the future.
Moreover, the Agreement on Textile and Clothing (ATC) implemented under the WTO
in 2005 phased out the historic quota system imposed by other counties on the
importing of certain PRC textile products. This is expected to continue to boost
textile processing and manufacturing volumes in the PRC.





●
            Opportunities
      of CEPA





The PRC
and Hong Kong Closer Economic Partnership Arrangement (CEPA) was concluded in
June 2003. Subject to the CEPA’s rules of origin, Hong Kong products have
enjoyed duty-free access to the Chinese mainland since January 2004, whereas
non-Hong Kong made counterparts have remained subject to tariffs ranging from
5%-18.7%. This has provided a comparative advantage to our products against
foreign-made textiles and garments.





Policies





In order
to mitigate any damages to the future prospects of the Company, which may result
from the industry and product trends and other threats and weaknesses previously
outlined, we intend to implement the following policies:





●
            Expand
      the sales and marketing teams in order to develop Eastern European
      markets.We
      believe that this should allow product sales to diversify into different
      geographical areas.





●
            Acquiring
      more advanced equipment to transform our operations from labor-intensive
      to capital intensive.This
      should not only allow us to avoid the effects of increased production
      costs caused by lack of labor,but
      also enhance the efficiency of
production.





●
            Vertical
      integration to provide stability as well as improve our profitability by
      reducing our margins.





●
            We
      anticipate putting in place currency hedging strategy so that fluctuations
      in the RMB orU.S.
      dollar should not have a significant effect on our
      profitability.





We
believe that the above-mentioned control policies, to a large extent, should
minimize the volatility of the threats and weaknesses encountered by SWL.
However, to the extent consumers replace, rather than supplement, their
purchases of garments made from cotton fibers with synthetic fibers, we will be
further pressured to decrease our margins in order to be
profitable.





22


Revenue Recognition
Policies





We
recognize revenue when goods are delivered and the customer takes ownership and
assumes risk of loss, collections of the relevant receivable is probable,
persuasive evidence of an arrangement exists and the sales price is fixed or
determinable.




Sales of
goods represent the invoiced value of goods, net of sales returns, trade
discounts and allowances.





Critical Accounting
Policies





The
Company’s consolidated financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of America,
which require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities, at the date of the financial statements and reported amount of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Management uses its best judgment in valuing these
estimates and may, as warranted, solicit external professional advice and other
assumptions believed to be reasonable. In addition, other companies may utilize
different estimates, which may impact the comparability of our results of
operations to those of companies in similar businesses. The following critical
accounting policies, some of which are impacted significantly by judgments,
assumptions and estimates, affect the Company’s consolidated financial
statements.





Revenue
Recognition




The
Company recognizes revenue when the following fundamental criteria are met:
(i) persuasive evidence that an arrangement exists, (ii) delivery has
occurred, (iii) our price to the customer is fixed or determinable and
(iv) collection of the resulting accounts receivable is reasonably assured.
These criteria are usually met at the time of product shipment. The Company does
not recognize revenue until all customer acceptance requirements have been met
and no significant obligations remain, when applicable. Customer purchase orders
and/or contracts are generally used to determine the existence of an
arrangement. Shipping documents are used to verify product delivery. We assess
whether a price is fixed or determinable based upon the payment terms associated
with the transaction and whether the sales price is subject to refund or
adjustment. We assess the collectibility of our accounts receivable based
primarily upon the creditworthiness of the customer as determined by credit
checks and analysis, as well as the customer’s payment history.




Sales of
goods represent the invoiced value of goods, net of sales returns, trade
discounts and allowances. The Company records reductions to revenue for
estimated product returns and pricing adjustments in the same period that the
related revenue is recorded. The amount of these reductions is based on
historical sales returns, analysis of credit memo data, and other factors known
at the time.





Trade
Accounts Receivable





Accounts
receivable are stated at original amount less allowance made for doubtful
receivables, if any, based on a review of all outstanding amounts at the year
end. An allowance is also made when there is objective evidence that the Company
will not be able to collect all amounts due according to original terms of
receivables. Bad debts are written off when identified. Asian Point and
Best Allied extend unsecured credit to customers in the normal course of
business and believes all accounts receivable in excess of the allowances for
doubtful receivables to be fully collectible. They do not accrue interest on
trade accounts receivable.





Inventory





Inventories,
which primarily consist of yarns, denim fabrics, garments and other textile
materials and products, are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method. Write down of potentially obsolete
or slow-moving inventory is recorded based on management’s assumptions about
future demand and market conditions.





23


Income
Taxes





Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.




Share-based
Compensation





Effective
January 1, 2006, the Group adopted Statements of Financial Accounting
Standards (“SFAS”) No. 123R, Share-Based Payment (“SFAS
No. 123R”). Under SFAS No. 123R, the Group measures the cost of
employee and consultant services received in exchange for an award of equity
instruments based on the grant-date fair value of the award and recognizes the
costs over the period the employee or consultant is required to provide service
in exchange for the award, which generally is the vesting period.





Share-based
compensation expense of $17,214, $nil and $nil for the years ended
March 31, 2009, 2008 and 2007, respectively. Since share-based compensation
is not tax deductible in Hong Kong, the PRC and the United States, no related
tax benefit has been recognized.





Recently
Issued Accounting Pronouncements





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”and
SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment to ARB No. 51”.SFAS No. 141(R) and SFAS No. 160 require most identifiable
assets, liabilities, noncontrolling interests and goodwill acquired in a
business combination to be recorded at “full fair value” and require
noncontrolling interests (previously referred to as minority interest) to be
reported as a component of equity, which changes the accounting for transactions
with noncontrolling interest holders. Both statements are effective for periods
beginning on or after December 15, 2008, and earlier adoption is
prohibited. SFAS No. 141(R) will be applied to business combinations
occurring after the effective date. SFAS No. 160 will be applied
prospectively to all noncontrolling interests, including any that arose before
the effective date. The Company does not expect the initial adoption of SFAS No.
160 will have a material effect on the Company’s consolidated financial
statements.


In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”, which requires enhanced disclosures
about an entity’s derivatives and hedging activities. This Statement is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Since SFAS No. 161 only provides for
additional disclosure requirements, management assessed that there will be no
impact on the results of operations and financial position.




Basis
of Presentation





Prior to
its merger with SWL on October 25, 2007, Freedom was a reporting shell company
with no operations and nominal operations. The sole founder and stockholder of
Freedom funded Freedom’s pre-merger operations from such stockholder’s personal
funds. Therefore, the Results of Operations in this MD&A for the fiscal
years ended March 31, 2007 and March 31, 2006 and the three and nine months
ended December 31, 2007 and 2006 (pro forma) reflect the consolidated business
assets and operations of Sound Worldwide. We believe such information is
beneficial to potential investors in order to allow them to make an informed
investment decision in our common stock.





Results
of Operations





Comparison of Results of
Operations for the Fiscal Years Ended March 31,
2009and 2008





Revenues





Our
revenues decreased by $13,425,049, or 76.1%, from $4,227,552 in the fiscal year
ended March 31, 2008 to $17,652,601 in the fiscal year ended March 31,
2009. The decrease was mainly attributable to the decrease in sales volume,
which resulted from the disposal of Best Allied on April 1,
2008.


24





Cost of
Revenues





For the
fiscal year ended March 31, 2009, our total cost of revenues decreased by
$10,731,040, or 73.3%, to $3,907,813 from $14,638,853 for the fiscal year ended
March 31, 2008. This decrease was primarily due to the decrease in sales volume,
which resulted from the disposal of Best Allied on April 1, 2008.





Gross
Profit





Our gross
profit amount decreased by $2,694,009, or 89.4%, from $3,013,748 for the fiscal
year ended March 31, 2008 to $319,739 for the fiscal year ended March 31, 2009.
The decrease was due to decreases in revenues amount as a result of the disposal
of Best Allied. Gross profit percentage recorded 7.6% and 17.1% for the years
ended March 31, 2009 and 2008, respectively. The decreased gross profit
percentage was mainly due to the change in sales mix, in which more lower margin
products were manufactured and sold for the fiscal year ended March 31, 2009
than for the same period of 2008.





Operating
Expenses





Our total
operating expenses (selling, general & administrative expenses (SG&A))
for the fiscal year ended March 31, 2009 decreased by $1,156,943 or 74%, to
$407,199 from $1,564,142 for the fiscal year ended 2008. These decreases were
primarily contributed by the decrease in operating expenses as a result of the
disposal of Best Allied.





Other
Income





Our other
income, mainly consisting of commission and handling income, for the fiscal
years ended March 31, 2009 and 2008 were $48 and $151,677, respectively. This
decrease was primarily due to the decrease in provision of handling
services.





(Loss)/Income from
Operations





Our
(loss)/income from operations for the fiscal years ended March 31, 2009 and 2008
were $(87,412) and $1,601,283, respectively. These decreases were primarily due
to the decrease in net revenue amount.





Loss on Disposal of Best
Allied





Our loss
on our disposal of Best Allied for the year ended March 31, 2009 of $276,855 was
in relation to the disposal of Best Allied on April 1, 2008.





Depreciation





Depreciation
expense for office units, machinery, furniture equipment and motor vehicles,
increased for the fiscal year period ended March 31, 2009 to $199,724, from
$140,611 for the same period in 2008. The increase in depreciation expense was
mainly due to the fact that purchases of machinery of $390,272 were made for the
year ended March 31, 2009.





Interest
Expense





Interest
expense, net, increased for the fiscal year ended March 31, 2009 to $16,023 from
$100,859 for the fiscal year ended March 31, 2008. This decrease was due to the
decrease in average bank borrowing balances.





Net(Loss)/Income





We had
net loss of $380,290 for the fiscal year ended March 31, 2009 as compared to net
income of $1,500,424  for the fiscal year ended March 31, 2008 The
decreased result of operations was due to a decrease in revenue and income from
operations.





Accounts
Receivable





Accounts
receivable, increased from $2,464,437 as of March 31, 2008 to $1,538,779 as of
March 31, 2009. This decrease was primarily due to a decrease in
revenues.





25


Inventories





At March
31, 2009, we had $137,260 in inventories, compared to$938,661 at March 31, 2008.
Our inventories consist of raw materials, products which are work-in-progress,
and finished goods. The decrease was due to a decrease in all three categories.
Our raw materials decreased from $102,439 at March 31, 2008 to $53,100 at March
31, 2009 primarily due to the decrease in purchases during the year ended March
31, 2009, as compared to the corresponding period ended March 31, 2008. Our
Work-in-Progress inventory significantly decreased from $456,216 at March 31,
2008 to $0 at March 31, 2009 primarily due to the implementation of more
efficient production schedules, which led to a shorter manufacturing lead time.
Our Finished Goods decreased from $380,006 to $84,160 primarily due to more
goods delivered to the customers near year ended March 31, 2009, as compared to
the year ended March 31, 2008. No inventories were written off for the year
ended March 31, 2009.





Current
Liabilities





Total
current liabilities, consisting of accounts payable, bank and other borrowings
and accrued expenses and other liabilities, decreased from $2,168,914 as of
March 31, 2008 to $587,750 as of March 31, 2009. This increase was primarily
contributed by the decrease in accounts payable and bank
borrowings.





Accounts
Payable





Accounts
payable, which typically operates on a two to three-week cycle, decreased from
$607,235 as of March 31, 2008 to $43,178 as of March 31, 2009. The decrease was
mainly due to the decrease in inventory level as of March 31, 2009.





Bank and Other
Borrowings





Bank and
other borrowing, which consist of bank overdrafts, short-term loans, other
borrowings, long-term bank loans, decreased from $1,279,745 as of March 31, 2008
to $340,066 as of March 31, 2009. This decrease was primarily due to a decrease
in borrowings from banks.





Banking
Facilities:







As of
March 31, 2009, the banking facilities were secured by the charge over
properties owned by the directors of the Company, and personal guarantee
executed by the directors of the Company.




Bank
loans were charged at rate 0.5% per annum below the bank’s Prime to 1% per
annum above the Prime. The interest rates of other credit facilities were
at the bank’s Hong Kong Dollar Best Lending Rate or prevailing funding cost,
whichever was higher, plus 0.5% to 2% per annum.




Accrued Expenses and Other
Liabilities





Accrued
expenses decreased from $281,934 as of March 31, 2008 to $204,506 as of March
31, 2009. Accrued expenses consist of legal and professional fees, accrued staff
related costs and other accruals and liabilities. Legal and professional fees
increased from $88,944 as of March 31, 2008 to $163,077 as of March 31, 2009.
Accrued and staff related costs decreased from $94,322 as of March 31, 2008 to
$25,208 as of March 31, 2009. Other accruals and liabilities decreased from
$98,668 as of March 31, 2008 to $16,221 as of March 31, 2009. Other accruals and
liabilities consist of payables on general administrative and selling expenses
and the decrease from fiscal 2008 to 2009 was primarily due to the decrease in
operating costs as a result of the disposal of Best Allied on April 1,
2008.








Comparison of Results of
Operations for the Fiscal Years Ended March 31, 2008 and
2007





Revenues





Our
revenues increased by $2,811,731, or 18.95%, from $14,840,870 in the fiscal year
ended March 31, 2007 to $17,652,601 in the fiscal year ended March 31,
2008. The increase was mainly attributable to the growth in sales volume, which
resulted from an increase in our customer base and an increase in our product
types in the fiscal year ended March 31, 2008 when compared to
2007.


26


Cost of
Revenues





For the
fiscal year ended March 31, 2008, our total cost of revenues increased by
$2,620,974, or 21.81%, to $14,638,853 from $12,017,879 for the fiscal year ended
March 31, 2007. This increase was primarily due to more revenue amount
recorded.





Gross
Profit





Our gross
profit amount increased by $190,757, or 6.76%, from $2,822,991 for the fiscal
year ended March 31, 2007 to $3,013,748 for the fiscal year ended March 31,
2008. The increase was due to increases in revenues amount. Gross profit
percentage recorded 17.07% and 19.02% for the years ended March 31, 2008 and
2007, respectively. The decreased gross profit percentage was mainly due to the
change in sales mix, in which more lower margin products were manufactured and
sold for the fiscal year ended March 31, 2008 than for the same period of
2007.




Operating
Expenses





Our total
operating expenses (selling, general & administrative expenses (SG&A))
for the fiscal year ended March 31, 2008 increased by $95,675 or 6.52%, to
$1,564,142 from $1,468,467 for the fiscal year ended 2007. These increases were
primarily contributed by the increase in staff related costs, freight and
delivery charges, and other selling and general administrative
expenses.





Other
Income





Our other
income, mainly consisting of commission and handling income, for the fiscal
years ended March 31, 2008 and 2007 were $151,677 and $282,013, respectively.
This decrease was primarily due to the decrease in provision of handling
services.





Income from
Operations





Our
income from operations for the fiscal years ended March 31, 2008 and 2007 were
$1,601,283 and $1,636,537, respectively. These decreases were primarily due to
the decrease in other income and higher operating expenses.





Other non-operating
income





Other
non-operating income of $50,569 for the year ended March 31, 2007 represented
gain on disposal of property and equipment. There was no other non-operating
income for the year ended March 31, 2008.





Depreciation





Depreciation
expense for office units, machinery, furniture equipment and motor vehicles,
decreased for the fiscal year period ended March 31, 2008 to $140,611, from
$142,209 for the same period in 2007. This decrease in depreciation expense was
mainly due to the fact that more fixed assets had been fully depreciated for the
fiscal year ended March 31, 2008 when compared to that for 2007.





Interest
Expense





Interest
expense, net, increased for the fiscal year ended March 31, 2008 to $100,859
from $86,120 for the fiscal year ended March 31, 2007. This increase was due to
the increase in average bank borrowing balances.





27


Net
Income





We had
net income of $1,500,424 for the fiscal year ended March 31, 2008 as compared to
net income of $1,579,341 for the fiscal year ended March 31, 2007. The decrease
was due to a decrease in income from operations and other non-operating
income.





Accounts
Receivable





Accounts
receivable which typically operates at one to two-month cycle, increased from
674,580 as of March 31, 2007 to 2,464,437 as of March 31, 2008. This increase
was primarily due to an increase in revenues.





Current
Liabilities





Total
current liabilities, consisting of accounts payable, bank and other borrowings,
amounts due to related parties and accrued expenses and other liabilities,
increased from $1,240,235 as of March 31, 2007 to $2,168,914 as of March 31,
2008. This increase was primarily contributed by the increase in accounts
payable and bank borrowings.





Accounts
Payable





Accounts
payable, which typically operates on a two to three-week cycle, increased from
$277,574 as of March 31, 2007 to $607,235 as of March 31, 2008. The increase was
mainly due to the increase in inventory level as of March 31, 2008.





Bank and Other
Borrowings





Bank and
other borrowing, which consist of bank overdrafts, short-term loans, other
borrowings, long-term bank loans, increased from $583,983 as of March 31, 2007
to $1,279,745 as of March 31, 2008. This increase was primarily due to an
increase in borrowings from banks as a result of the business
expansion.





Banking
Facilities:





At March
31, 2008, our banking facilities consisting of bank loans and other credit
facilities were $3,031,626, of which $1,279,745 has been drawn down and
$1,751,882 remains available. Bank loans were $87,336 at March 31, 2008, of
which the full amount has been drawn down. Other credit facilities were
$2,944,290 at March 31, 2008, of which $1,192,409 has been drawn down and
$1,751,882 remains available. Below is a summary of Best Allied and Asian
Point’s banking facilities.





Overdraft
facility of $192,753 and revolving trading facility of $1,683,372 between Best
Allied and Shanghai Commercial Bank Ltd. This agreement was signed on February
7, 2005. The overdraft facility has an interest rate 1% above prime, while the
trading facility has an interest rate 0.5% above prime. Both credit facilities
are guaranteed by Ms. Lam Siu Kuen. As of March 31, 2008 $617,652 has been drawn
down and $1,258,473 remains available.





Revolving
trading facility of $565,407 between Asian Point and ICBC Asia. This agreement
was signed on November 26, 2007. The trading facility has an interest rate of
prime or prevailing funding cost, whichever is higher, plus 0.5%. The revolving
trading facility is guaranteed by the personal assets of Mr. Roger K. W. Fan and
Ms. Mei Ling Szeto. As of March 31, 2008 $560,305 has been drawn down and $5,102
remains available.





Amounts Due to Related
Parties





Amounts
due to related parties decreased from $68,330 as of March 31, 2007 to $0.00 as
of March 31, 2008. The former balance represented the expenses paid by the chief
executive officer on behalf of the Company, as well as represented a payable for
the management consultancy services rendered by Yin Kee Weaving Factory Limited,
which is owned and operated by Mr. Roger K.W. Fan, our Chief Executive Officer
and Chairman. The balance of the amounts due to related parties was interest
free, had no fixed date of repayment and was successfully paid in full as of
March 31, 2008.




28


Accrued Expenses and Other
Liabilities





Accrued
expenses decreased from $310,348 as of March 31, 2007 to $281,934 as of March
31, 2008. Accrued expenses consist of legal and professional fees, accrued staff
related costs and other accruals and liabilities. Legal and professional fees
increased from $4,477 as of March 31, 2007 to $88,944 as of March 31, 2008.
Accrued and staff related costs decreased from $122,042 as of March 31, 2007 to
$94,322 as of March 31, 2008. Other accruals and liabilities decreased from
$183,829 as of March 31, 2007 to $98,668 as of March 31, 2008. Other accruals
and liabilities consist of payables on general administrative and selling
expenses and the increase from fiscal 2007 to 2008 was primarily due to the
differences on timing for balance payments.








Liquidity
and Capital Resources





Prior to
the merger with SWL on October 25, 2007, Freedom was a reporting shell company
with no operations and nominal operations. For accounting purposes, we treated
our acquisition of SWL as a recapitalization of our company. As a result, we
treat the historical financial information of SWL as our historical financial
information.The sole
founder and stockholder of Freedom funded Freedom’s pre-merger operations from
such stockholder’s personal funds.





Our
primary liquidity and capital resource needs are to finance the costs of our
operations and to make capital expenditures. To date, we have financed our
business operations through our banking facility and loans from officers and
directors. We believe we will have adequate liquidity through the next twelve
months to operate our business and to meet our cash requirements.





Comparison of Liquidity for
the Fiscal Years Ended March 31, 2009 and 2008





Net cash
provided by operating activities totaled $1,051,352 for the year ended March 31,
2009, which was an increase from the net cash used in operating activities,
which totaled $517,578 for the year ended March 31, 2008. This change is
primarily attributable to a decrease in accounts receivable balance and
inventory level, but offset in part by a decrease in accounts
payable.





Net cash
used in investing activities totaled $390,272 for the year ended March 31, 2009,
which was an increase from the net cash used in investing activities of $12,555
for the year ended March 31, 2007. The increase in use of cash from investing
activities was due to more purchases of property and equipment for the year
ended March 31, 2009 as compared to 2008.




Net cash
used in financing activities totaled $941,581 for year ended March 31, 2009, as
compared to $685,382 provided by financing activities for the year ended March
31, 2008. The change from net cash provided by to net cash used in financing
activities for the year ended March 31, 2009 was due to a net repayment of bank
borrowings of $941,581 for the year ended March 31, 2009 whereas there was a net
proceeds from bank borrowings of $677,524 for the year ended March 31,
2008.





Comparison of Liquidity for
the Fiscal Years Ended March 31, 2008 and 2007





Net used
in operating activities totaled $517,578 for the year ended March 31, 2008,
which was a decrease from the net cash provided by operating activities, which
totaled $1,335,719 for the year ended March 31, 2007. This change is primarily
attributable to an increase in accounts receivable balance and inventory level,
but offset in part by an increase in accounts payable.





Net cash
used in investing activities totaled $12,555 for the year ended March 31, 2008,
which was a decrease from the net cash provided by investing activities of
$1,011,147 for the year ended March 31, 2007. The difference is due to no sale
proceeds on disposal of machinery for the year ended March 31, 2008 as compared
to 2007.




Net cash
provided by financing activities totaled $685,382 for year ended March 31, 2008,
as compared to $2,242,005 used in financing activities for the year ended March
31, 2007. The change from net cash used in to net cash provided by financing
activities for the year ended March 31, 2007 was due to a net proceeds from bank
borrowings of $677,524 for the year ended March 31, 2008 whereas there was a net
repayment of bank borrowings of $725,432 for the year ended March 31, 2008. In
addition, no dividend was paid for the year ended March 31, 2008 whereas we paid
dividend of $1,516,573 for the year ended March 31, 2007.





29


Impact
of Inflation and Changing Prices





We were
not impacted by inflation during the past two fiscal years in any material
respect. Interest rate hikes have increased the rental cost of our vault cash.
As the interest rates increase and vault cash costs increase, this will have a
less favorable impact on our income.





Off
Balance Sheet Arrangements





None.





ITEM
8. FINANCIAL STATEMENTS.





The
financial statements and related notes are included as part of this report as
indexed in the appendix beginning on page F-1.





ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.





None.





ITEM
9AT. CONTROLS AND PROCEDURES.





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





Evaluation of disclosure and controls
and procedures. As of the end of the period covered by this Annual
report, we conducted an evaluation, under the supervision and with the
participation of our chief executive officer and chief financial officer, of our
disclosure controls and procedures (as defined in Rules 13a-15(e) of the
Exchange Act). Based on this evaluation, our chief executive officer and
treasurer, the sole officers and directors of the company, concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and
forms.





Changes in internal controls over
financial
reporting. There was no change in our internal controls, which are
included within disclosure controls and procedures, during our most recently
completed fiscal quarter that has materially affected, or is reasonably likely
to materially affect, our internal controls.











ITEM
9B. OTHER INFORMATION.





None.





PART
III





ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.





Directors
and Officers





The
following table sets forth the respective names, ages and positions of our
directors and executive officers as well as the year that each of them commenced
serving as a director with SWL. All of the directors identified below were
elected to the Board of Directors of the Company immediately after the
consummation of the exchange on October 25, 2007, or the Effective Date, and
their terms will run until our annual meeting of stockholders in
2009.


30





Person
      and Position:
                
                Age:
                
                SWL
      Director Since:Roger
      Kwok Wing Fan
                  —
      Chief Executive Officer and Chairman
                
                47
                
                July
      1999Tony
      Ka Kin Chui
                  —
      Chief Financial Officer
                
                53
                
                —Hung
      Man To
                  —
      Operation Director and Director
                
                47
                
                February
      2007Mei
      Ling Szeto
                  —Secretary
                
                45
                
                —





Management
and Director Biographies





Roger K. W.
Fan


Chief
Executive Officer, President and Chairman





Mr. Roger
K. W. Fan has been serving as the Chief Executive Officer and Chairman of Sound
Worldwide Holdings, Inc. since the Effective Date and as President since May 20,
2008. From the Effective Date to November 14, 2007, Mr. Fan also served as the
President of Sound Worldwide Holdings, Inc. Mr. Fan has been serving as the
President and Chairman of SWL since its inception in July 1999. Since 1997, he
was the Chairman of Asian Point. Mr. Fan has over 20 years of experience in
textile industry, starting with his family’s textile manufacturing company, Yin
Kee Weaving Factory. Mr. Fan also serves as a Director of Yin Kee Weaving
Factory, Ltd.




Tony Ka Kin
Chui


Chief
Financial Officer





Mr. Chui
has been serving as the Chief Financial Officer of Sound Worldwide Holdings,
Inc. since the Effective Date and of SWL since its inception in July 1999. From
1984 to 1987, Mr. Chui served as the Accounts Executive of China Dyeing Works
Ltd. From 1987 to 1991, Mr. Chui served as the Factory Manager of Tak Po
Printing Factory Ltd. From 1991 to 1999, Mr. Chui served as the Sales Manager of
Deep Success Industrial Ltd.





Hung Man
To


Operation
Director and Director





Mr. Hung
Man To has been serving as the Operation Director and Director of Sound
Worldwide Holdings, Inc. since the Effective Date and of SWL since 2007. From
1987 to 2001, Mr. To served as the Operation Manager of Fordcan Industries
Ltd.  From 2001 to January, 31, 2007 he served as General Manager of
SWL.





Mei Ling
Szeto


Secretary





Ms. Szeto
has been serving as the Secretary of Sound Worldwide Holdings, Inc. since the
Effective Date and of SWL since its inception in July 2009. Miss Szeto has over
20 years of experience in textile industry during her employment with Po Lung
Garment Manufacturing Ltd., from 1981 to 1983 as Secretary. From 1983 to
199l served as Secretary of Telly Weaving & Dyeing Factory Ltd., From 1992
to 2000 served as Secretary of Yin Kee Weaving Factory Ltd., and from 2000 to
now as Director of Yin Kee Weaving Factory Ltd. From 1997 to now as Director of
Asian Point Investment Ltd.





Family Relationships amongst
Directors and Officers:





Mei Ling
Szeto, the Company’s Secretary, is the spouse of Roger Kwok Wing Fan, the
Company’s Chief Executive Officer and Chairman of the Board.





Compliance with Section 16(a) of the
SecuritiesExchange Act
of 1934





Section 16(a)
of the Exchange Act requires the Company’s directors and officers, and persons
who beneficially own more than 10% of a registered class of the Company’s equity
securities, to file reports of beneficial ownership and changes in beneficial
ownership of the Company’s securities with the SEC of Forms 3, 4 and 5.
Officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.


31








Item 405
of Regulation S-B requires every small business issuer that has a class of
equity securities registered pursuant to Section 12 of the Exchange Act to
identify each person who, at any time during the fiscal year, was a director,
officer or beneficial owner of more than 10 percent of any class of equity
securities registered pursuant to Section 12 of the Exchange Act that failed to
file on a timely basis, as disclosed in the above forms as well as other
information.





The
Company believes that no person who, at any time during such fiscal year, was a
director, officer or beneficial owner of more than 10% of the Company’s common
stock failed to comply with all Section 16(a) filing requirements during such
fiscal year.




Code
of Ethics





We have
adopted a Code of Ethics and Code of Business Conduct that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller, and persons performing similar functions in that our
officers and directors serves in all the above capacities. The Code of Ethics
and Code of Business Conduct are attached to this annual statement as Exhibits
14.1 and 14.2 respectively.





Item
10. Executive Compensation.





The
following table sets forth information regarding the compensation paid to our
“named executive officers” as defined in Rule 402(a)(2) under Regulation S-B.
Compensation accrued during one year and paid in another is recorded under the
year of accrual.




SUMMARY
      COMPENSATION TABLE




Name
      and Position
                                              
                                              Year
                                              
                                              Salary
                                              
                                              TotalRoger
      K.W. Fan
                                              
                                              2009
                                              
                                              $
                                              43,254
                                              
                                              $
                                              43,254President
      Chief Executive Officer
                                              
                                              2008
                                              
                                              $
                                              38,470
                                              
                                              $
                                              38,470Chairman
      of the Board and President
                                              
                                              2007
                                              
                                              $
                                              37,844
                                              
                                              $
                                              87,914Tony
      Ka Kin Chui
                                              
                                              2009
                                              
                                              $
                                              0
                                              
                                              $
                                              0Chief
      Financial Officer
                                              
                                              2008
                                              
                                              $
                                              0
                                              
                                              $
                                              02007
                                              
                                              $
                                              0
                                              
                                              $
                                              0Hung
      Man To
                                              
                                              2009
                                              
                                              $
                                              0
                                              
                                              $
                                              0Operations
      Director
                                              
                                              2008
                                              
                                              $
                                              0
                                              
                                              $
                                              02007
                                              
                                              $
                                              0
                                              
                                              $
                                              0





Included
in the total compensation of $87,914 for the year ended March 31, 2007 for
Mr. Roger K.W. Fan represented a payable of $46,073 for the management
consultancy services rendered by Yin Kee Weaving Factory Limited, which is owned
and operated by Mr. Roger K.W. Fan. The balance of the amounts due to related
parties was interest free and had no fixed date of repayment. There is currently
no consulting agreement between the Company and Yin Kee Weaving Factory
Limited.





Management
Compensation





Except
for as stated in the preceding Summary Compensation Table, we have not paid any
salary, bonus or other compensation to our officers and directors since our
inception. We presently have no compensation arrangements with our officers and
directors.





32


Stock
Option Grants





No stock
options or stock appreciation rights under any stock incentive plans or
otherwise were granted to our executive officers and directors since our
inception. No such grants have otherwise been made pursuant to the 2009 Stock
Incentive Plan.





Director
Compensation





The
Company currently does not pay any cash fees to directors, but we pay directors'
expenses in attending board meetings. During the year ended March 31, 2009, no
director expenses were reimbursed.





Employment
Agreements





On March
31, 2006, Asian Point entered into a Consultant Agreement with Yin Kee Weaving
Factory Limited, or Yin Kee, a company owned and operated by Roger K.W., Fan,
our Chief Executive Officer and Chairman. The term of the consulting agreement
is from April 1, 2006 to March 31, 2007 during which Yin Kee provided management
services, merchandise consultancy services and quality checking and approval
services in consideration for $45,073.





Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our stockholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our Board of Directors and hold
office until removed by the Board.





Significant
Employees





We have
no significant employees other than our executive officers and directors named
in this Annual Report. We conduct our business through agreements with
consultants and arms-length third parties.





Committees
of the Board of Directors





Our audit
committee presently consists of our directors. Our board at this time does not
have compensation, governance, nominating or executive committees or any other
committees.





Limitation
of Director Liability; Indemnification





Indemnity





Section
145 of the Delaware General Corporation Law and our certificate of incorporation
and bylaws contain provisions for indemnification of our officers and directors,
and under certain circumstances, our employees and other persons. The bylaws
require us to indemnify such persons to the fullest extent permitted by Delaware
law. Each such person will be indemnified in any proceeding if such person acted
in good faith and in a manner that such person reasonably believed to be in, or
not opposed to, our best interests. The indemnification would cover expenses,
including attorney's fees, judgments, fines and amounts paid in settlement. Our
bylaws also provide that we may purchase and maintain insurance on behalf of any
of our present or past directors or officers insuring against any liability
asserted against such person incurred in their capacity as a director or officer
or arising out of such status, whether or not we would have the power to
indemnify such person.





We have
no other indemnification provisions in our Certificate of Incorporation, Bylaws
or otherwise specifically providing for indemnification of directors, officers
and controlling persons against liability under the Securities Act.





Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
“Act 1993”), as amended, may be permitted to directors or officers pursuant to
the foregoing provisions, we are informed that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy, as
expressed in the Act 1933 and is, therefore, unenforceable.





ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 31, 2009 by the following
persons:





·           eachperson who is
known to be the beneficial owner of more than five percent (5%) of our issued
and outstanding shares of common stock;





33


·           eachof our
directors and executive officers; and





·           all
of our
directors and executive officers as a group.








Name
      and Address
                                    Number
      of Shares
                                      Beneficially
      Owned
                                    Percentage(1)Roger
      K.W. Fan, President, CEO
                                    11,261,250
                                    78.55%Tony
      Ka Kin Chui, CFO
                                    1,750
                                    *Hung
      Man To, Operations Dir.
                                    43,050
                                    *Mei
      Ling Szeto, Secretary
                                    0
                                    -All
      Directors, Officers as a Group
                                    11,306,050
                                    78.86%





*
Represents less than 1%





(1)
            Applicable
      percentage of ownership is based on 14,336,250 shares of common stock
      issued and outstanding. Pursuant to Rule 13d-3 promulgated under the
      Exchange Act, any securities not outstanding which are subject to
      warrants, rights or conversion privileges exercisable within 60 days are
      deemed to be outstanding for purposes of computing the percentage of
      outstanding securities of the class owned by such person but are not
      deemed to be outstanding for the purposes of computing the percentage of
      any other person.





There are
no arrangements, known to us, including any pledge by any person of our
securities, the operation of which may at a subsequent date result in a change
in control of Sound Worldwide Holdings, Inc. There are no arrangements or
understandings among members of both the former and the new control groups and
their associates with respect to election of directors or other
matters.





ITEM 12. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.





Described
below are transactions, since the beginning of our last fiscal year, or any
currently proposed transaction, in which we were or are to be a participant and
the amount involved exceeds the lesser of $120,000 or one percent of the average
of our total assets for the last three completed fiscal years, and in which any
of our directors, nominee directors, executive officers, security holders who
beneficially own 5% or more of our voting securities, and any member of the
immediate family of any of the foregoing persons, had, or will have, a direct or
indirect material interest. We believe that terms of each transaction below were
comparable to those obtainable from unaffiliated third parties.





· In
2006, SWL paid management consultancy service fees of $113,922 to Yin Kee
Weaving Factory Limited, which is owned and operated by Mr. Roger K.W. Fan, our
Chief Executive Officer and Chairman. The agreement, which was for management
service, merchandising consultancy and quality checking & approval, was made
between Yin Kee Weaving Factory Limited and Asian Point. The agreement dated
March 31, 2005 covered the periods from April 1, 2006 to March 31,
2007.





· In
2007, SWL paid management consultancy service fees of $46,073 to Yin Kee Weaving
Factory Limited, which is owned and operated by Mr. Roger K.W. Fan, our Chief
Executive Officer and Chairman. The agreement, which was for management service,
merchandising consultancy and quality checking & approval, was made between
Yin Kee Weaving Factory Limited and Asian Point. The agreement dated March 31,
2006 covered the periods from April 1, 2006 to March 31, 2007.





· At
March 31, 2006, $739,848 was due to Mr. Roger K.W. Fan, our Chief Executive
Officer. This amount represented expenses paid by Mr. Roger K.W. Fan on SWL
behalf. This amount was treated as an interest free loan with no fixed date of
repayment between Mr. Roger K.W. Fan, the lender, and SWL, the borrower. At
March 31, 2007, the amount due to Mr. Roger K.W. Fan decrease from $739,848 to
$22,257. As of March 31, 2008 and 2009 the loan has been completely repaid, with
$0 due to Mr. Roger K.W. Fan.





Director
Independence





None of
our directors are deemed to be independent.





34


Item
13. Exhibits and Reports on Form 8-K





(a) The
following exhibits required by Item 601 of Regulation S-B are filed with this
Registration Statement.





Exhibit
                                                                                                            DescriptionNumber
                                                                                                            of
      Exhibits3.1
                                                                                                            Certificate
      of Incorporation of Freedom 3, Inc. (1)3.1.1
                                                                                                            Amendment
      to the Certificate of Incorporation of Freedom 3, Inc., dated October 25,
      2007 (2)3.2
                                                                                                            Bylaws
      (1)4.1
                                                                                                            Form
      of Common Stock Certificate (3)10.1
                                                                                                            Share
      Exchange Agreement, dated October 25, 2007, between Freedom 3, Inc. and
      Sound Worldwide Limited (2)10.2
                                                                                                            Banking
      Facilities of Asian Point Investment Limited (3)10.3
                                                                                                            Management
      Agreement, dated March 31, 2005, between Asian Point Investment Limited
      and Yin Kee Weaving Factory Ltd. (3)10.4
                                                                                                            Management
      Agreement, dated March 31, 2006, between Asian Point Investment Limited
      and Yin Kee Weaving Factory Ltd. (3)10.5
                                                                                                            Share
      Purchase and Exchange Agreement, dated May 27, 2008, among Sound Worldwide
      Holdings, Inc., Sound Worldwide Limited, Best Allied Industrial Limited
      and Ms. Ivy S.K. Lam (5)10.6
                                                                                                            Settlement
      Agreement and Release, dated May 27, 2008, by Sound WorldwideHoldings,
      Inc. and Ms. Ivy S.K. Lam (5)14.1
                                                                                                            Code
      of Ethics14.2
                                                                                                            Code
      of Business Conduct16.1
                                                                                                            Letter
      from Conner & Associates, PC, dated October 25, 2007
    (4)23.1
                                                                                                            Consent
      of Dominic K. F. Chan & Co., Certified Public
    Accountants31.1
                                                                                                            Certification
      of the Company’s Principal Executive Officer pursuant to Section 302 of
      Sarbanes Oxley Act of 2002, with respect to the registrant’s Annual Report
      on Form 10-KSB for the year ended March 31, 200831.2
                                                                                                            Certification
      of the Company’s Principal Financial Officer pursuant to Section 302 of
      Sarbanes Oxley Act of 2002, with respect to the registrant’s Annual Report
      on Form 10-KSB for the year ended March 31, 200832.1
                                                                                                            Certification
      of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of
      200232.2
                                                                                                            Certification
      of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of
      2002





(1)
            Filed
      as an exhibit to the Company’s Registration Statement on Form 10SB (SEC
      File No.: 000-52116) filed on July 7, 2006 and incorporated by reference
      herein.





(2)
            Filed
      as an exhibit to the Company’s Registration Statement on Form SB-2 (SEC
      File No.: 333-146986) filed on October 29, 2007 and incorporated by
      reference herein.





(3)
            Filed
      as an exhibit to the Company’s Registration Statement on Form
      SB-2/Amendment No. 1 (SEC File No.: 333-146986) filed on January 22, 2008
      and incorporated by reference
herein.





(4)
            Filed
      as an exhibit to the Company’s Current Report on Form 8-K (SEC File No.:
      000-52116) filed on October 29, 2007 and incorporated by reference
      herein.





(5)
            Filed
      as an exhibit to the Company’s Current Report on Form 8-K (SEC File No.:
      000-52116) filed on May27, 2008 and incorporated by reference
      herein.





(b)
            Reports
      on Form 8-K.  None


35





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.





Dominic
K.F. Chan & Co. (“Dominic”) was our principal auditor.





Audit
Fees





The
aggregate fees billed by Dominic for professional services rendered for the
audit of our annual financial statements and review of financial statements
included in our Form 10-Q or services that are normally provided in connection
with statutory and regulatory filings were $30,000 and $30,000 for fiscal
years ended March 31, 2009 and March 31, 2008, respectively.





Audit-Related
Fees





No
Dominic’s fees were billed for assurance and related services related to the
audit or review of the Company’s financial statements for the fiscal years ended
March 31, 2009 and March 31, 2008, respectively.





Tax
Fees





No
Dominic’s fees were billed for professional services for tax compliance, tax
advice, and tax planning for the fiscal years ended March 31, 2009 and March 31,
2008, respectively.





All
Other Fees





No
Dominic’s fees were billed for other products and services for the fiscal years
ended March 31, 2009 and March 31, 2008, respectively.











SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.





Pursuant
to the requirements of Section 13 or 15(d) 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.








SOUND
WORLDWIDE HOLDINGS, INC.





Date:
March 31, 2009




By: /s/ ROGER KWOK WING FAN


Roger
Kwok Wing Fan


President,
Chief Executive Officer and Chairman


(Principal
Executive Officer)





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





Date:
March 31, 2009




By: /s/
ROGER KWOK WING FAN


Roger
Kwok Wing Fan President,


Chief
Executive Officer and Chairman


(Principal
Executive Officer)





Date:
March 31, 2009




/s/
TONY KA KIN CHUI


Tony Ka
Kin Chui


Chief
Financial Officer


(Principal
Financial Officer)


36








SOUND
WORLDWIDE HOLDINGS, INC.





CONSOLIDATED
FINANCIAL STATEMENTS


FOR
THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


AND
INDEPENDENT AUDITORS’ REPORT




F-1


SOUND
WORLDWIDE HOLDINGS, INC.


CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE
YEARS ENDED MARCH 31 2009, 2008 AND 2007


AND
INDEPENDENT AUDITORS’ REPORT





INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS





PAGESREPORT OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            F-3CONSOLIDATED BALANCE
      SHEETS
            F-4CONSOLIDATED
      STATEMENTS OF OPERATIONS
            F-5CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY AND
      COMPREHENSIVE INCOME
            F-6CONSOLIDATED
      STATEMENTS OF CASH FLOWS
            F-7NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTS
            F-8
      - F-23






F-2








REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the
Board of Directors and Stockholders of


SOUND
WORLDWIDE HOLDINGS, INC.





We have
audited the accompanying consolidated balance sheets of SOUND WORLDWIDE
HOLDINGS, INC. and its subsidiaries (the “Company”) as of March 31, 2009 and
2008 and the related consolidated statements of operations, shareholders’ equity
and other comprehensive income, and cash flows for the years ended
March 31, 2009, 2008 and 2007. These consolidated financial statements are
the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.





In our
opinion, these consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of March 31, 2009 and
2008 and the results of its operations and its cash flows for the years ended
March 31, 2009, 2008 and 2007 in conformity with accounting principles generally
accepted in the United States of America.













Dominic
K.F. Chan & Co


Certified
Public Accountants


Hong
Kong


July14, 2009




F-3


SOUND
WORLDWIDE HOLDINGS, INC.





CONSOLIDATED BALANCE
SHEETS


(Stated
in US Dollars)





At
      March 31,Notes
            
            
            2009
            
            
            2008$
            
            
            
            $ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            
            
            
            
            7,989
            
            
            
            288,356Accounts
      receivable, net of allowancefor doubtful accounts
            
            
            3
            
            
            
            1,538,779
            
            
            
            2,464,437Prepaid
      expenses and other receivables
            
            
            
            
            
            
            422
            
            
            
            116,480Inventories
            
            
            4
            
            
            
            137,260
            
            
            
            938,661Total
      current assets
            
            
            
            
            
            
            1,684,450
            
            
            
            3,807,934Property
      and equipment, net
            
            
            5
            
            
            
            1,891,844
            
            
            
            1,694,374TOTAL
      ASSETS
            
            
            
            
            
            
            3,576,294
            
            
            
            5,502,308LIABILITIES
      AND STOCKHOLDERS’ EQUITYLIABILITIESCurrent
      liabilities:Accounts
      payable
            
            
            
            
            
            
            43,178
            
            
            
            607,235Bank
      and other borrowings
            
            
            6
            
            
            
            340,066
            
            
            
            1,279,745Accrued
      expenses and other liabilities
            
            
            8
            
            
            
            204,506
            
            
            
            281,934Total
      current liabilities
            
            
            
            
            
            
            587,750
            
            
            
            2,168,914Long-term
      debt:Bank
      and other borrowings
            
            
            6
            
            
            
            -
            
            
            
            -TOTAL
      LIABILITIES
            
            
            
            
            
            
            587,750
            
            
            
            2,168,914Commitments
      and contingencies
            
            
            11Stockholder’s
      equity:Common
      stock (USD 0.0001 par value-
      authorized
      20,000,000 shares;issued and
      outstanding 14,336,250 shares in 2007 shares in 2009 and 20,000,000 shares
      in 2008)
            
            
            
            
            
            
            1,434
            
            
            
            2,000Additional
      paid-in capital
            
            
            
            
            
            
            645,726
            
            
            
            627,916Retained
      earnings
            
            
            
            
            
            
            2,321,202
            
            
            
            2,701,492Accumulated
      other comprehensive (loss)/income
            
            
            
            
            
            
            20,182
            
            
            
            1,986Total
      stockholders’ equity
            
            
            
            
            
            
            2,988,544
            
            
            
            3,333,394TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            
            
            
            
            
            3,576,294
            
            
            
            5,502,308








See
accompanying notes to consolidated financial statements


F-4


SOUND
WORLDWIDE HOLDINGS, INC.





CONSOLIDATED
STATEMENTS OF OPERATIONS


(Stated
in US Dollars)





Year
      ended March 31,Notes
            
            
            2009
            
            
            2008
            
            
            2007$
            
            
            $
            
            
            
            $Net
      sales
            
            
            
            
            
            4,227,552
            
            
            
            17,652,601
            
            
            
            14,840,870Cost
      of sales
            
            
            
            
            
            (3,907,813
            )
            
            
            (14,638,853
            )
            
            
            (12,017,879
            )Gross
      profit
            
            
            
            
            
            319,739
            
            
            
            3,013,748
            
            
            
            2,822,991Selling,
      general and administrative expenses, including share based
      compensation
            
            
            
            
            
            (407,199
            )
            
            
            (1,564,142
            )
            
            
            (1,468,467
            )Other
      income
            
            
            
            
            
            48
            
            
            
            151,677
            
            
            
            282,013(Loss)/income
      from operations
            
            
            
            
            
            (87,412
            )
            
            
            1,601,283
            
            
            
            1,636,537Loss
      on disposal of a subsidiary
            
            
            
            
            
            (276,855
            )
            
            
            -
            
            
            
            -Other
      non-operating income
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            50,569Interest
      expenses
            
            
            
            
            
            (16,023
            )
            
            
            (100,859
            )
            
            
            (86,120
            )(Loss)/income
      before income taxes
            
            
            
            
            
            (380,290
            )
            
            
            1,500,424
            
            
            
            1,600,986Income
      tax expenses
            
            
            7
            
            
            
            -
            
            
            
            -
            
            
            
            (21,645
            )Net
      (loss)/income
            
            
            
            
            
            
            (380,290
            )
            
            
            1,500,424
            
            
            
            1,579,341(Loss)/earnings
      per share, basic and diluted
            
            
            10
            
            
            
            (0.03
            )
            
            
            0.08
            
            
            
            0.09Weighted
      average number of common shares outstanding, basic and
    diluted
            
            
            10
            
            
            
            14,053,685
            
            
            
            18,599,727
            
            
            
            17,500,000
















See
accompanying notes to consolidated financial statements


F-5


SOUND
WORLDWIDE HOLDINGS, INC.





CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY


AND
COMPREHENSIVE INCOME


(Stated
in US Dollars)




AccumulatedAdditional
            
            
            
            otherCommon
      stock
            
            
            
            paid-in
            
            
            
            Comprehensive
            
            
            
            RetainedShares
            
            
            
            Amount
            
            
            
            capital
            
            
            
            (loss)/income
            
            
            
            earnings
            
            
            
            Total$
            
            
            
            $
            
            
            
            $
            
            
            
            $
            
            
            
            $Balance,
      March 31, 2006
            
            
            17,500,000
            
            
            
            1,750
            
            
            
            620,308
            
            
            
            6,308
            
            
            
            1,138,300
            
            
            
            1,766,666Net
      income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,579,341
            
            
            
            1,579,341Foreign
      currency translationadjustments
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (8,541
            )
            
            
            -
            
            
            
            (8,541
            )Comprehensive
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (8,541
            )
            
            
            1,579,341
            
            
            
            1,570,800Dividend
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,516,573
            )
            
            
            (1,516,573
            )Balance,
      March 31, 2007
            
            
            17,500,000
            
            
            
            1,750
            
            
            
            620,308
            
            
            
            (2,233
            )
            
            
            1,201,068
            
            
            
            1,820,893Shares
      of stock held byFreedom
      3’s shareholders
            
            
            300,000
            
            
            
            30
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            30Issuance
      of common stock for consultants upon completion of the share exchange
      transaction
            
            
            2,200,000
            
            
            
            220
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            220Recapitalization
      in connection with the share exchange transaction
            
            
            -
            
            
            
            -
            
            
            
            7,608
            
            
            
            -
            
            
            
            -
            
            
            
            7,608Net
      income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,500,424
            
            
            
            1,500,424Foreign
      currency translationAdjustments
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            4,219
            
            
            
            -
            
            
            
            4,219Comprehensive
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            4,219
            
            
            
            1,500,424
            
            
            
            1,504,643Dividend
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance,
      March 31, 2008
            
            
            20,000,000
            
            
            
            2,000
            
            
            
            627,916
            
            
            
            1,986
            
            
            
            2,701,492
            
            
            
            3,333,394Retirement
      of shares
            
            
            (6,063,750
            )
            
            
            (606
            )
            
            
            606
            
            
            
            -
            
            
            
            -
            
            
            
            -Issuance
      of shares
            
            
            400,000
            
            
            
            40
            
            
            
            (10
            )
            
            
            -
            
            
            
            -
            
            
            
            30Share
      based compensation
            
            
            -
            
            
            
            -
            
            
            
            17,214
            
            
            
            -
            
            
            
            -
            
            
            
            17,214Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (380,290
            )
            
            
            (380,290
            )Foreign
      currency translation adjustments
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            18,196
            
            
            
            -
            
            
            
            18,196Comprehensive
      loss
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            18,196
            
            
            
            (380,290
            )
            
            
            (362,094
            )Dividend
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance,
      March 31, 2009
            
            
            14,336,250
            
            
            
            1,434
            
            
            
            645,726
            
            
            
            20,182
            
            
            
            2,321,202
            
            
            
            2,988,544
















See
accompanying notes to consolidated financial statements


F-6


SOUND
WORLDWIDE HOLDINGS, INC.





CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Stated
in US Dollars)





Year
      ended March 31,2009
            
            
            2008
            
            
            2007$
            
            
            $
            
            
            
            $Cash
      flows from operating activities:Net
      (loss) income
            
            
            (380,290
            )
            
            
            1,500,424
            
            
            
            1,579,341Adjustments
      to reconcile net income toNet
      cash (used in)/provided by operating activities:Depreciation
      expense
            
            
            199,724
            
            
            
            140,611
            
            
            
            142,209Loss
      on disposal of property and equipment
            
            
            -
            
            
            
            5,692
            
            
            
            (50,569
            )Shares
      based compensation
            
            
            17,214
            
            
            
            -
            
            
            
            -Changes
      in current assets and liabilitiesAccounts
      receivable
            
            
            932,021
            
            
            
            (1,783,404
            )
            
            
            428,772Prepaid
      expenses and other receivables
            
            
            122,556
            
            
            
            (85,450
            )
            
            
            36,667Inventories
            
            
            802,454
            
            
            
            (525,320
            )
            
            
            394,352Accounts
      payable
            
            
            (564,599
            )
            
            
            327,849
            
            
            
            (399,553
            )Amounts
      due to related parties
            
            
            -
            
            
            
            (68,466
            )
            
            
            (783,185
            )Accrued
      expenses and other liabilities
            
            
            (77,728
            )
            
            
            (29,514
            )
            
            
            (12,315
            )Net
      cash provided by/(used in) operating activities
            
            
            1,051,352
            
            
            
            (517,578
            )
            
            
            1,335,719Cash
      flows from investing activities:Purchases
      of property and equipment
            
            
            (390,272
            )
            
            
            (12,555
            )
            
            
            (46,159
            )Proceeds
      from sale of property and equipment
            
            
            -
            
            
            
            -
            
            
            
            1,057,306Net
      cash used in investing activities
            
            
            (390,272
            )
            
            
            (12,555
            )
            
            
            1,011,147Cash
      flow from financing activities:Issuance
      of new shares
            
            
            -
            
            
            
            7,858
            
            
            
            -Proceeds
      from bank borrowings
            
            
            677,756
            
            
            
            5,455,840
            
            
            
            7,803,696Repayment
      of new bank borrowings
            
            
            (1,619,337
            )
            
            
            (4,778,316
            )
            
            
            (8,529,128
            )Dividend
      paid
            
            
            -
            
            
            
            -
            
            
            
            (1,516,573
            )Net
      cash (used in)/provided by financing activities
            
            
            (941,581
            )
            
            
            685,382
            
            
            
            (2,242,005
            )Effect
      of exchange rate changes on cashand cash
      equivalents
            
            
            134
            
            
            
            (5,547
            )
            
            
            2,538Net
      (decrease) increase in cash and cash equivalents
            
            
            (280,367
            )
            
            
            149,702
            
            
            
            107,399Cash
      and cash equivalents at beginning of the year
            
            
            288,356
            
            
            
            138,654
            
            
            
            31,255Cash
      and cash equivalents at end of the year
            
            
            7,989
            
            
            
            288,356
            
            
            
            138,654Supplementary
      disclosures of cash flow information:Interest
      paid
            
            
            16,023
            
            
            
            100,859
            
            
            
            86,120Income
      taxes paid
            
            
            -
            
            
            
            15,380
            
            
            
            -








See
accompanying notes to consolidated financial statements


F-7


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)






1.
                Organization and nature of
      operations


Sound
Worldwide Holdings, Inc. (the “Company”) and its subsidiaries (together, the
“Group”) are principally engaged in manufacturing and trading of denim fabrics
and garments.  The Group owns production plants in Hong Kong and the
People’s Republic of China (“PRC”) and its customers are mainly in the United
States, Europe and Japan.




On
October 25, 2007, Freedom 3, Inc. a Delaware corporation (“Freedom 3”), sold one
share of its common stock to Sound Worldwide Limited (“Sound Worldwide” or
“SWL”) for $1.00 and redeemed 100,000 shares of its common stock from its prior
sole stockholder constituting 100% of Freedom 3’s issued and outstanding shares
of its common stock prior to the sale, resulting in Sound Worldwide owning 100%
of Freedom 3. After the sale and redemption by Freedom 3, Sound Worldwide and
Freedom 3 entered into a Share Exchange Agreement, dated October 25, 2007, or
Exchange Agreement, pursuant to which each issued and outstanding share of Sound
Worldwide’s common stock and preferred stock was converted into 350 shares of
Freedom 3’s common stock and preferred stock, respectively, and all of the
issued and outstanding shares of Sound Worldwide’s common and preferred stock
were retired and cancelled, resulting in Freedom 3 owning 100% of Sound
Worldwide (the “Exchange”). This resulted in the stockholders of Sound Worldwide
to become stockholders of Freedom 3. The previous stockholder of Freedom was
then issued 300,000 shares of Freedom 3 as agreed previously. The one share of
Freedom’s common stock held by Sound Worldwide was then cancelled and Sound
Worldwide sold one share of its common stock to Freedom 3, which resulted in
Freedom 3 owning 100% of Sound Worldwide. Freedom 3 then changed its name to
Sound Worldwide Holdings, Inc.




For
accounting purposes, the Exchange has been treated as an acquisition of Freedom
3 by Sound Worldwide and as a recapitalization of Sound Worldwide (i.e. a
"reverse acquisition"), in which Sound Worldwide was deemed to be the accounting
acquirer. As a result of the Exchange, the historical consolidated financial
statements of the Company for periods prior to the date of the transaction are
those of Sound Worldwide, as the accounting acquirer, and all references to the
consolidated financial statements of the Company apply to the historical
financial statements of Sound Worldwide prior to the transaction and the
consolidated financial statements of the Company subsequent to the transaction.
The Company’s shares have been restated retroactively to reflect the share
exchange ratio as at the date of the transaction in a manner similar to a stock
split.





On May
27, 2008, the Company and SWL, entered into a Share Purchase and Exchange
Agreement (the “Exchange Agreement”) with Best Allied, a wholly-owned subsidiary
of SWL, and Ms. Ivy S.K. Lam, a director and officer of Best Allied and a
stockholder of an aggregate of 6,063,750 shares of the Company’s Common Stock.
Pursuant to the Exchange Agreement, at a closing held on May 30, 2008, Ms. Lam
purchased from the Company and SWL 10,000 shares of Common Stock of Best Allied
owned by SWL, which constituted 100% of the issued and outstanding shares of
Best Allied, in exchange for 6,063,750 shares of the Company’s Common Stock held
by Ms. Lam, which constituted 100% of the shares of the Company’s Common Stock
held by Ms. Lam (the “Exchange”). The effective date of the Exchange is April 1,
2008.





Pursuant
to the agreement, Ms. Lam had agreed to the return and cancellation of 6,063,750
shares of our common stock held by her.




F-8




SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)





1.
                  Organization and nature of
      operations (continued)


As of
March 31, 2009, the subsidiaries of the Company include the
following:




Name
      of company
            Place and
      date
              of
      incorporation
            Attributable
      equity
              interest
    held
            Principal
              activitiesSound
      Worldwide
            BVI
            100%
            Investment
      holdingLimited
      (“SWL”)
            July, 28th,
      1999Asian
      Point
            BVI
            100%
            Manufacturing
      andInvestment
      Limited
            March 26th,
      1997
            
            trading of denim
      fabrics(“Asian
      Point”)




2.
                    Summary
      of principal accounting policies


Basis of presentation and
consolidation





The
accompanying consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of
America.





The
consolidated financial statements include the accounts of Sound Worldwide
Holdings, Inc. and its subsidiaries. All significant inter-company balances and
transactions have been eliminated in consolidation.





The
results of subsidiaries acquired or disposed of during the years are included in
the consolidated income statement from the effective date of acquisition or up
to the effective date of disposal.





The
Company also evaluates consolidation of entities under Financial Accounting
Standards Board (FASB) Interpretation No.46, “Consolidation of Variable Interest
Entities” (FIN 46). FIN 46 requires management to evaluate whether an entity or
interest is a variable interest entity and whether the Company is the primary
beneficiary. Consolidation is required if both of these criteria are met. The
Company does not have any variable interest entities requiring
consolidation.




Use of
estimates





In
preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year. These accounts and estimates include, but are not limited to,
the valuation of accounts receivable, deferred income taxes and the estimation
on useful lives of plant and equipment. Actual results could differ from those
estimates.





F-9





SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)





2.
                      Summary
      of principal accounting policies (continued)




Cash and cash
equivalents





Cash and
cash equivalents include all cash, deposits in banks and other highly liquid
investments with original maturities of three months or less at the date of
acquisition.  These investments are carried at cost, which
approximates market value.




Trade accounts
receivable





Accounts
receivable are stated at original amount less allowance made for doubtful
receivables, if any, based on a review of all outstanding amounts at the year
end.  An allowance is also made when there is objective evidence that
the Group will not be able to collect all amounts due according to original
terms of receivables.  Bad debts are written off when
identified.  The Group extends unsecured credit to customers in the
normal course of business and believes all accounts receivable in excess of the
allowances for doubtful receivables to be fully collectible.  The
Group does not accrue interest on trade accounts receivable.




Inventory





Inventories,
which primarily consist of yarns, denim fabrics, garments and other textile
materials and products, are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method.  Write down of
potentially obsolete or slow-moving inventory is recorded based on management’s
assumptions about future demand and market conditions.




Propertyand
equipment





Property
and equipment are stated at cost less accumulated depreciation.  Cost
represents the purchase price of the asset and other costs incurred to bring the
asset into its existing use. Maintenance, repairs and betterments,
including replacement of minor items, are charged to expense; major additions to
physical properties are capitalized.





Depreciation
of property and equipment is calculated on a straight-line method over the
estimated useful lives of the assets.  The estimated useful lives are
as follows:-





Office
      unit
            5
      yearsMachinery
              Furniture
      and office equipment
              Motor
      vehicles
            5-10
      years
              5
      years
              5
      years





Upon sale
or disposition, the applicable amounts of asset cost and accumulated
depreciation are removed from the accounts and the net amount less proceeds from
disposal is charged or credited to income.




F-10


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)






2.
                        Summary
      of principal accounting policies (continued)





Impairment of long-lived
assets





In
accordance with SFAS No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets (“SFAS No. 144”), long-lived assets,
such as property and equipment, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Assets to be disposed of are separately presented in
the balance sheet and reported at the lower of the carrying amount or fair value
less costs to sell, and are no longer depreciated. The assets and liabilities of
a disposal group classified as held for sale are presented separately in the
appropriate asset and liability sections of the balance sheet.





No
impairment of long-lived assets was recognized for the year
presented.




Revenue
recognition




The
Company recognized revenue when the following fundamental criteria are met: (i)
persuasive evidence that an arrangement exists, (ii) delivery has occurred,
(iii) our price to the customer is fixed or determinable and (iv) collection of
the resulting accounts receivable is reasonably assured.  These
criteria are usually met at the time of product shipment.  The Company
does not recognize revenue until all customer acceptance requirements have been
met and no significant obligations remain, when applicable.  Customer
purchase orders and/or contracts are generally used to determine the existence
of an arrangement.  Shipping documents are used to verify product
delivery.  The Company assesses whether a price is fixed or
determinable based upon the payment terms associated with the transaction and
whether the sales price is subject to refund or adjustment.  The
Company assesses the collectibility of the accounts receivable based primarily
upon the creditworthiness of the customer as determined by credit checks and
analysis, as well as the customer’s payment history.





Sales of
goods represent the invoiced values of goods, net of sales returns, trade
discounts and allowances.  The Company records reductions to revenue
for estimated product returns and pricing adjustments in the same period that
the related revenue is recorded.  The amount of these reductions is
based on historical sales returns, analysis of credit memo data, and other
factors known at the time.  The amounts of reductions to revenue were
$2,579, $27,865 and $987 for the years ended March 31, 2009, 2008 and 2007,
respectively.





F-11


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)






2.
                        Summary
      of principal accounting policies (continued)


Shipping and handling fees
and costs





Costs
incurred by the Group for shipping and handling, including costs paid to
third-party transportation companies, to transport and deliver products to
customers, are included in “Selling, general and administrative expenses”.
Shipping and handling fees and costs amounted to $Nil, $102,823 and $183,879 for
the years ended March 31, 2009, 2008 and
2007, respectively.




Income
Taxes





Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.





In June
2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of Statement of Financial Accounting Standards No. 109(“FIN
48”).  FIN 48 clarifies the accounting for uncertainty in tax
positions.  This interpretation requires that an entity recognizes in
the consolidated financial statements the impact of a tax position, if that
position is more likely than not of being sustained upon examination, based on
the technical merits of the position.  The adoption of FIN 48 did not
have any impact on the Group’s consolidated financial
statements.




Comprehensive
income





Other
comprehensive income refers to revenues, expenses, gains and losses that under
U.S. GAAP are included in comprehensive income but are excluded from net income
as these amounts are recorded as a component of stockholders’ equity. The
Company’s other comprehensive income represented foreign currency translation
adjustment.




Foreign currency
translation





The
functional currency of the Group is Hong Kong dollars (“HK$”).  The
Group maintains its financial statements in the functional
currency.  Monetary assets and liabilities denominated in currencies
other than the functional currency are translated into the functional currency
at rates of exchange prevailing at the balance sheet
dates.  Transactions denominated in currencies other than the
functional currency are translated into the functional currency at the exchanges
rates prevailing at the dates of the transaction.  Exchange gains or
losses arising from foreign currency transactions are included in the
determination of net income for the respective periods.




F-12


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)




2.
                        Summary
      of principal accounting policies (continued)





Foreign currency
translation(continued)





In
translating the financial statements of the Company from its functional currency
into its reporting currency of United States dollars, balance sheet accounts are
translated using the closing exchange rate in effect at the balance sheet date
and income and expense accounts are translated using an average exchange rate
prevailing during the reporting period. Any translation adjustments resulting
are not included in determining net income but are included in cumulative other
comprehensive income (loss), a component of stockholders’ equity.





2009
            
            
            2008
            
            
            2007Year
      end HK$ : US$ exchange rate
            
            
            7.7530
            
            
            
            7.7820
            
            
            
            7.8137Average
      yearly HK$ : US$ exchange rate
            
            
            7.7768
            
            
            
            7.7982
            
            
            
            7.7807




Share-based
compensation





Effective
January 1, 2006, the Group adopted Statements of Financial Accounting
Standards (“SFAS”) No. 123R, Share-Based Payment (“SFAS
No. 123R”). Under SFAS No. 123R, the Group measures the cost of
employee and consultant services received in exchange for an award of equity
instruments based on the grant-date fair value of the award and recognizes the
costs over the period the employee or consultant is required to provide service
in exchange for the award, which generally is the vesting period.





Share-based
compensation expense of $17,214, $nil and $nil for the years ended
March 31, 2009, 2008 and 2007, respectively. Since share-based compensation
is not tax deductible in Hong Kong, the PRC and the United States, no related
tax benefit has been recognized.




Earnings per
share





Basic
earnings per share is computed by dividing net income attributable to ordinary
shareholders by the weighted average number of ordinary shares outstanding
during the year. Diluted earnings per share gives effect to all dilutive
potential common shares outstanding during the year. The weighted average number
of common shares outstanding is adjusted to include the number of additional
common shares that would have been outstanding if the dilutive potential common
shares had been issued.




Commitments and
contingencies





Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and
other sources are recorded when it is probable that a liability has been
incurred and the amount of the assessment can be reasonable
estimated.





F-13




SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)





2.
                        Summary
      of principal accounting policies (continued)





Recently
Issued Accounting Pronouncements




FASB Statement
No. 141(R) (“SFAS No. 141(R)”) and FASB Statement No. 160 (“SFAS
No. 160”)




In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”and
SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment to ARB No. 51”.SFAS No. 141(R) and SFAS No. 160 require most identifiable
assets, liabilities, noncontrolling interests and goodwill acquired in a
business combination to be recorded at “full fair value” and require
noncontrolling interests (previously referred to as minority interest) to be
reported as a component of equity, which changes the accounting for transactions
with noncontrolling interest holders. Both statements are effective for periods
beginning on or after December 15, 2008, and earlier adoption is
prohibited. SFAS No. 141(R) will be applied to business combinations
occurring after the effective date. SFAS No. 160 will be applied
prospectively to all noncontrolling interests, including any that arose before
the effective date. The Company does not expect the initial adoption of SFAS No.
160 will have a material effect on the Company’s consolidated financial
statements.




FASB Statement
No. 161 (“SFAS No. 161”)


In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”, which requires enhanced disclosures
about an entity’s derivatives and hedging activities. This Statement is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Since SFAS No. 161 only provides for
additional disclosure requirements, management assessed that there will be no
impact on the results of operations and financial position.






F-14


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)




3.
                        Accounts
      receivable, net


Accounts
receivable consist of the following:





At
      March 31,2009
            
            
            2008$
            
            
            $Accounts
      receivable
            
            
            1,538,779
            
            
            
            2,464,437Less:
      allowance for doubtful accounts
            
            
            -
            
            
            
            -1,538,779
            
            
            
            2,464,437





An
analysis of the allowance for doubtful accounts is follows:





At
      March 31,2009
            
            
            2008$
            
            
            $Balance
      at beginning of year
            
            
            -
            
            
            
            -Charges
      to consolidated statement of income
            
            
            -
            
            
            
            -Balance
      at end of year
            
            
            -
            
            
            
            -





The Group
has a credit policy in place and the exposure to credit risk is monitored on an
ongoing basis.  Credit evaluations are performed on all customers
requiring credit over a certain amount.







F-15




SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)







4.
                      Inventories


Inventories
by major categories are summarized as follows:





At
      March 31,2009
            
            
            2008$
            
            
            $Raw
      materials
            
            
            53,100
            
            
            
            102,439Work-in-progress
            
            
            -
            
            
            
            456,216Finished
      goods
            
            
            84,160
            
            
            
            380,006137,260
            
            
            
            938,661





No
      inventories were written off in 2009 and
2008.


5.
                        Property
      and equipment, net






Property
and equipment consists of the following:





At
      March 31,2009
            
            
            2008$
            
            
            $Office
      unit
            
            
            
            
            
            -Machinery
            
            
            2,091,586
            
            
            
            2,272,563Furniture
      and office equipment
            
            
            593
            
            
            
            89,299Leasehold
      improvement
            
            
            -
            
            
            
            27,025Motor
      vehicles
            
            
            46,161
            
            
            
            89,259Total
            
            
            2,138,340
            
            
            
            2,478,146Less:
      accumulated depreciation
            
            
            (246,496
            )
            
            
            (783,772
            )Property
      and equipment, net
            
            
            1,891,844
            
            
            
            1,694,374





Depreciation
expenses for the years ended March 31, 2009 and 2008 were $199,724, $140,611 and
$142,209, of which $199,724, $113,393 and 113,647 was included in cost of sales,
and $Nil, $27,218 and $28,562 was included in selling, general and
administrative expenses in 2009, 2008 and 2007, respectively.






F-16


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)






6.
                    Bank
      and other
borrowings




At
      March 31,2009
            
            
            2008$
            
            
            $Secured:Repayable within one
      yearBank
      overdraft
            
            
            -
            
            
            
            163,585Short-term
      loans
            
            
            340,066
            
            
            
            1,101,708Other
      borrowings
            
            
            -
            
            
            
            14,452340,066
            
            
            
            1,279,745Long-term
      bank loans
            
            
            -
            
            
            
            -340,066
            
            
            
            1,279,745





As
of March 31, 2009, the Company’s banking facilities are composed of the
following:





AmountFacilities
      granted
            
            Granted
            
            
            Utilized
            
            
            Unused$
            
            
            $
            
            
            $Other
      credit facilities
            
            
            567,522
            
            
            
            340,066
            
            
            
            227,456567,522
            
            
            
            340,066
            
            
            
            227,456





As of
March 31, 2009, the above banking borrowings were secured by the
following:





(a)
            charge
      over properties owned by the directors of the Company;
  and





(b)
            personal
      guarantee executed by the directors of the
  Company.





Bank
loans were charged at rate 0.5% per annum below the bank’s Prime to 1% per
annum above the Prime.





The
interest rates of other credit facilities were at the bank’s Hong Kong Dollar
Best Lending Rate or prevailing funding cost, whichever was higher, plus 0.5% to
2% per annum.





F-17


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)





7.
                      Income
      taxes


The
      Company is incorporated in the United States, and is subject to United
      States federal and state income taxes. The Company did not generate
      taxable income in the United States for the years ended March 31, 2007,
      2008 and 2009. Its subsidiaries that are incorporated in the British
      Virgin Islands are not subject to income taxes under those
      jurisdictions.  The Company’s subsidiary is subject to Hong Kong
      income or profit tax at 16.5% in 2009 (2008:
  17.5%).





The
provision for income taxes consists of the following:





Year
      ended March 31,2009
            
            
            2008
            
            
            2007$
            
            
            $
            
            
            $Current
      taxHong
      Kong
            
            
            -
            
            
            
            -
            
            
            
            21,645Deferred
      tax
            
            
            -
            
            
            
            -
            
            
            
            --
            
            
            
            -
            
            
            
            21,645





A
reconciliation between income tax expense and amounts calculated using the Hong
Kong statutory tax rate is as follows:





At
      March 31,2009
            
            
            2008
            
            
            2007$
            
            
            $
            
            
            $(Loss)/income
      before income tax
            
            
            (380,290
            )
            
            
            1,500,424
            
            
            
            1,295,087Hong
      Kong statutory tax rate
            
            
            16.5
            %
            
            
            17.5
            %
            
            
            17.5
            %Computed
      “expected” tax expenses
            
            
            -
            
            
            
            262,574
            
            
            
            226,640Effect
      of tax exemptions granted
            
            
            -
            
            
            
            (262,574
            )
            
            
            (204,995
            )Income
      taxes
            
            
            -
            
            
            
            -
            
            
            
            21,645





No
provision for deferred tax liabilities has been made as the Group has no
material temporary differences between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. The Group has not
recognized deferred tax assets in respect of losses due to the unpredictability
of the future earnings. The tax losses do not expire under current tax
legislation.




Accounting
for uncertainty in income taxes




As of
April1,
2006 and for each of the twelve-month ended March31, 2007,
2008 and 2009, the Group did not have unrecognized tax benefits relating to
uncertain tax positions. Also, the Group does not expect that the amount of
unrecognized tax benefits will change significantly within the next 12 months.
No interest or penalties were accrued at the date of initial adoption of FIN 48
and as of March31, 2008 and
2009.




F-18


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)





8.
                        Accrued
      expenses and other
liabilities
  Accrued
expenses and other liabilities consists of the following:




At
      March 31,2009
            
            
            2008$
            
            
            $Legal
      and professional fees
            
            
            163,077
            
            
            
            88,944Accrued
      staff related costs
            
            
            25,208
            
            
            
            94,322Other
      accruals and liabilities
            
            
            16,221
            
            
            
            98,668204,506
            
            
            
            281,934




9.
                      Share
      based
compensation


On March
9, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan (the
“2009 Incentive Plan”) pursuant to which 6,000,000 shares of the Company’s
common stock are reserved for issuance upon exercise of stock options, and for
the issuance of stock appreciation rights, restricted stock awards and
performance shares. The purpose of the 2009 Incentive Plan is to provide
additional incentive to employees, directors, advisors and consultants. The 2009
Incentive Plan provides for a term of 10 years from the date of its adoption by
the Board of Directors, after which no awards may be made, unless the 2009
Incentive Plan is early terminated by the Board.





A summary
of non-vested equity share units issued under the 2009 Incentive Plan is as
follows:





Shares
            
            
            Weighted
      average grant date fair value$Balance
      as of April 1, 2008 and 2007
            
            
            -
            
            
            
            -Granted
      on January 22, 2009
            
            
            100,000
            
            
            
            0.51Granted
      on February 13, 2009
            
            
            120,000
            
            
            
            0.51Balance
      as of March 31, 2009
            
            
            240,000
            
            
            
            0.51





The stock
awards vest equally over a period of one year from the date of
grant.




F-19




SOUND
WORLDWIDE HOLDINGS, INC.
 
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)


10.
                        (Loss)/earnings
      per
share





Basic
(loss)/earnings per share of common stock was calculated by dividing the net
loss of $380,290
(2008: net income of $1,500,424 and 2007: net income of $1,579,341) by the
weighted average number of 14,053,685 (2008: 18,599,727 and 2007:17,500,000)
common shares.





There is
no dilution effect to the basic (loss)/earnings per share of common stock for
the years presented.





11.
            Commitments
      and contingencies





The
Company has operating lease agreements principally for its office facilities.
The leases have remaining terms of 3 to 24 months. Rental expense was $25,454
and $124,803 for the years ended March 31, 2009 and 2008,
respectively.





Future
minimum lease payments under non-cancellable operating lease agreements as of
March 31, 2009 were as follows:





$Year
      ending March 31,2010
            
            
            5,150Total
            
            
            5,510





Other
than as disclosed above, the Company had no other material contractual
obligations and had no off-balance sheet guarantees or arrangements or
transactions as at March 31, 2009.





F-20




SOUND
WORLDWIDE HOLDINGS, INC.
 
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)


12.
            Related
      party balances and transactions




Related party
transactions





Related party
            
            Description
      of transactions
            
            Year
      ended March 31,2009
            
            
            2008
            
            
            2007$
            
            
            $
            
            
            $Yin
      Kee Weaving Factory
              (“Yin
      Kee”)
            
            Purchase
      of raw
              material
            
            
            1,267
            
            
            
            -
            
            
            
            -





The
amount due to Yin Kee represented payable for the management consultancy
services rendered to the Company.





F-21


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)








13.
            Concentration
      of credit





A
      substantial percentage of the Company's sales are made to the following
      customers.  Details of the customers accounting for 10% or more
      of total net revenue in any of the years ended March 31, 2009, 2008 and
      2007 are as follows:





2009
            
            
            2008
            
            
            2007Company
      A
            
            
            50
            %
            
            
            29
            %
            
            
            11
            %Company
      B
            
            
            25
            %
            
            
            23
            %
            
            
            25
            %Company
      C
            
            
            *
            
            
            
            *
            
            
            
            12
            %Company
      D
            
            
            *
            
            
            
            *
            
            
            
            11
            %*Less than
      10%





Details
of the accounts receivable from the customers with the largest receivable
balances at March 31, 2009, 2008 and 2007are as follows:





Percentage of accounts
      receivable2009
            
            
            2008
            
            
            2007Company
      A
            
            
            82
            %
            
            
            77
            %
            
            
            -Company
      B
            
            
            -
            
            
            
            11
            %
            
            
            -Company
      C
            
            
            -
            
            
            
            -
            
            
            
            17
            %Company
      D
            
            
            -
            
            
            
            -
            
            
            
            13
            %Company
      E
            
            
            -
            
            
            
            -
            
            
            
            11
            %Largest
      receivable balances
            
            
            82
            %
            
            
            88
            %
            
            
            41
            %




14.
              Employee
      benefit plans


The
Company operates a Mandatory Provident Fund Scheme for all qualifying employees
in Hong Kong. The assets of the scheme are held separately from those of the
Company by trustees. The Company contributes 5% of relevant payroll costs to the
scheme, which contribution is matched by employees. The contributions paid by
the Company for the years ended March 31, 2009, 2008 and 2007 were $Nil, $42,579
and $29,328, respectively.




15.
            Fair
      value of financial instruments





The
      fair values of cash and cash equivalents, trade accounts receivable,
      amount due from a related party, short-term loans, trade accounts payable,
      and other payables and accrued liabilities approximated the respective
      carrying amounts because of the short maturity of these
      instruments.






F-22


SOUND
WORLDWIDE HOLDINGS, INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Stated
in US Dollars)








16.
            Interest
      rate risk





The
Company is exposed to interest rate risk arising from short-term variable rate
borrowings from time to time. The Company’s future interest expense will
fluctuate in line with any change in borrowing rates. The Company does not have
any derivative financial instruments as of March 31, 2009 and 2008 and
believes its exposure to interest rate risk is not material.








17.
            Comparative
      amounts





Certain
amounts included in prior years’ consolidated financial statements have been
reclassified to conform to the current year’s presentation.  These
reclassifications had no effect on reported total assets, liabilities,
shareholders’ equity, or net income.


F-23