Summary of POINT.360 - Yahoo! Finance

Results of Operations and Financial Condition, Non-Reliance on Previous Financials, Aud

Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On September 18, 2009, Point.360 issued a press release announcing financial results for the three and twelve month periods ended June 30, 2009. Included in the press release issued by the Company and furnished herewith as Exhibit 99.1 are certain non-GAAP financial measures.

Management of the Company believes such non-GAAP financial measures are useful to investors in assessing the financial condition and results of operations and because they present certain cash flow and balance sheet statistics, and effects of unusual transactions.

A copy of the press release follows as Exhibit 99.1.

Item 4.02. NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW.

(a) On September 17, 2009, the Audit Committee of our Board of Directors, upon the recommendation of management and after discussion with our independent registered public firm, Singer Lewak LLP, concluded that the consolidated balance sheets, consolidated statements of income (loss) and consolidated statements of cash flows for the following periods should no longer be relied upon:

· As of and for the three month period ended September 30, 2008

· As of and for the three and six month periods ended December 31, 2008.

· As of and for the three and nine month periods ended March 31, 2009.

During the preparation of the June 30, 2009 financial statements, management determined that there were cutoff errors related to the application of the proportional performance method of recognizing revenues for certain contracts. As a result of the foregoing, the Company intends to file a Form 10-Q/A for each of the above periods to reflect the correction of the errors in these statements.

The effect of the correction of the error on previously reported revenue is expected to be as follows:

                                                   Increase (Decrease)
          Accounting Period                        in Reported Revenue

          Three months ended September 30, 2008   $             190,000
          Three months ended December 31, 2008                 (277,000 )
          Six months ended December 31, 2008                    (87,000 )
          Three months ended March 31, 2009                     165,000
          Nine months ended March 31, 2009                       78,000