As filed with the Securities and Exchange Commission on January 13, 2000
Registration No. 333- _____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------
FOCUS ENHANCEMENTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11860 04-3186320
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
600 Research Drive
Wilmington, Massachusetts 01887
(978) 988-5888
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Christopher P. Ricci
Senior Vice President and General Counsel
FOCUS Enhancements, Inc.
600 Research Drive
Wilmington, Massachusetts 01887
(978) 988-5888
(Name, address, including zip code, telephone number,
including area code, of agent for service)
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Approximate date of commencement of proposed sale to the public: From time to
time or at one time after the effective date of the Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Amount to Proposed Maximum Amount of
Title of Each Class of Securities to Be Registered Price to Public (2) Offering Price (2) Registration
be Registered Fee(2)
- --------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per 3,163,333 $6.969 $22,045,267 $5,819.95
share(1)
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The common stock being registered consists of (i) 2,833,333 shares issued in privately negotiated transactions with
several institutional investors, (ii) 275,000 shares issuable upon the exercise of common stock purchase warrants
issued to such investors in connection with such transactions, (iii) 30,000 shares issuable upon the exercise of
common stock purchase warrants issued to the principals of a third-party service provider as additional
consideration for investor relations services provided to the company and (iv) 25,000 shares issuable upon the
exercise of common stock purchase warrants issued to an investment banking firm for its assistance in obtaining
equity financing.
(2) The price to public and proposed maximum offering price referenced are included solely for purposes of calculating
the amount of the registration fee. The registration fee is calculated pursuant to Rule 457(c) of the Securities Act
of 1933 by taking the average of the bid and asked prices of the registrant's common stock, $.01 par value per
share, on January 11, 2000 as reported on the Nasdaq SmallCap Market.
</FN>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not a solicitation
of an offer to buy these securities in any state where the offer and sale is not
permitted.
Subject to Completion, Dated January 13, 2000
REOFFER
PROSPECTUS
FOCUS ENHANCEMENTS, INC.
3,163,333 Shares of Common Stock
Four existing shareholders of FOCUS Enhancements, Inc. and three
holders of outstanding warrants to purchase shares of our common stock are
offering to sell up to 3,163,333 shares of our common stock under this
prospectus. Throughout this prospectus, we often refer to this group
collectively as the selling shareholders.
The selling shareholders acquired their shares and/or warrants through
privately negotiated purchases or other transactions directly from the company.
The total number of shares that may be sold under this prospectus by
the selling shareholders will be subject to the discretion of each selling
shareholder. The selling shareholders may offer the shares covered by this
prospectus through public transactions executed through one or more
broker-dealers at prevailing market prices, carried out through the NASDAQ
SmallCap Market or one or more stock exchanges (if the shares are listed on an
exchange at any time in the future), or in private transactions directly with
purchasers at privately negotiated prices.
FOCUS stock is listed on the NASDAQ SmallCap Market with the ticker
symbol: "FCSE." On January 12, 2000, the closing price of one share of FOCUS
common stock on the NASDAQ SmallCap Market was $7.125.
Our principal executive offices are located at 600 Research Drive,
Wilmington, Massachusetts, 01887, and our telephone number is (978) 988-5888.
----------------------
Neither the Securities and Exchange Commission, nor any state
securities commission, has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
----------------------
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" AT PAGES 2 - 4.
----------------------
The date of this prospectus is January __, 2000.
RISK FACTORS
An investment in the shares offered under this prospectus involves a
high degree of risk and should only be purchased by investors who can afford to
lose their entire investment. The following factors should be considered
carefully in evaluating the company and our business.
We Have Been Named As A Defendant In A Law Suit Alleging Violation Of Federal
Securities Laws
The complaint alleges that FOCUS and our chief executive officer
violated federal securities laws in connection with a number of allegedly false
or misleading statements and seeks certification as a class action on behalf of
persons alleged to have purchased our stock from July 17, 1997 to February 19,
1999. We believe that we have consistently complied with the federal securities
laws, and we do not believe at this time that this litigation will result in a
material adverse effect on our financial condition. Nonetheless, the management
time and resources that could be required to respond effectively to this claim
and to defend the company vigorously in this litigation could adversely impact
our management's administrative capabilities.
We Will Need To Raise Additional Capital But Have No Commitments From Anyone To
Provide It
Historically, we have had to meet our short- and long-term cash needs
through debt and the sale of common stock in private placements in that cash
flow from operations has been insufficient. For example, during 1998, we
received $2,827,355 in net proceeds from private offerings of common stock and
$7,003,963 from the exercise of common stock options and warrants. In 1999, we
received $4,482,073 in net proceeds from private offerings of common stock and
$3,033,634 from the exercise of common stock options and warrants. Our future
capital requirements will depend on many factors, including cash flow from
operations, continued progress in our research and development programs,
competing technological and market developments, and our ability to market our
products successfully. If we require additional equity or debt financing in the
future, there can be no assurance that sufficient funds will be raised.
Moreover, any equity financing could result in dilution to our then-existing
stockholders and additional debt financing may result in higher interest
expense. Any financing, if available, may be on terms unfavorable to us. If
adequate funds are not available, we may be required to curtail our activities
significantly.
We Rely On Sales To A Few Major Customers For A Large Part Of Our Revenues
For the nine months ended September 30, 1999, approximately 26% of our
revenues were derived from sales to a major distributor, approximately 14% of
our revenues were derived from sales to two major retailers, and approximately
8% of our revenues were derived from sales to a major consumer electronics
manufacturer. Management expects that sales to these customers will continue to
represent a significant percentage of our future revenues. We do not have
long-term contracts requiring any customer to purchase any minimum amount of
products. There can be no assurance that we will continue to receive orders of
the same magnitude as in the past from existing customers or we will be able to
market our current or proposed products to new customers. Our loss of any major
customer would have a material adverse effect on our business as a whole.
We Have A Long History Of Operating Losses
We have experienced limited profitability since our inception and at
September 30, 1999, had an accumulated deficit of $34,899,894. We incurred net
losses of $12,787,324 and $1,986,079 for the years ended December 31, 1998 and
1997, respectively. We had net income of $299,041 and $1,448,121 for
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the first nine months of 1999 and 1998, respectively. There can be no assurance
that we will be profitable in 1999.
We Rely On A Single Vendor For 90% Of Our Product Components
Approximately 90% of the components for our products are manufactured
by a single vendor on a turnkey basis. This vendor is located overseas. If this
vendor experiences production or shipping problems for any reason, we in turn
could experience delays in the production and shipping of our products.
Our Products May Become Obsolete Very Quickly
The computer peripheral markets are characterized by extensive research
and development and rapid technological change resulting in short product life
cycles. Development by others of new or improved products, processes or
technologies may make our products or proposed products obsolete or less
competitive. We will be required to devote substantial efforts and financial
resources to enhance our existing products and to develop new products. There
can be no assurance that we will succeed with these efforts.
Our Business Is Very Competitive
The computer peripheral markets are extremely competitive. We currently
compete with other developers of video conversion products and with
video-graphic integrated circuit developers. Many of our competitors have
greater market recognition and greater financial, technical, marketing and human
resources than we have. Although we are not currently aware of any announcements
by our competitors that would have a material impact on us or our operations,
there can be no assurance that we will be able to compete successfully against
existing companies or new entrants to the marketplace.
We May Not Make Significant Sales Through Office Super Stores Despite Expensive
Marketing Efforts On Our Part
Sales of our products through office super stores is a sales channel
with which we have had limited success. We have limited our use of this channel
to the best performing stores and are making substantial investments in
marketing and inventory to supply this channel. However, this is an unproven
channel and there can be no assurance that we will be able to compete
successfully in this channel.
We Have Had Component Supply Problems
We purchase all of our parts from outside suppliers and from time to
time experience delays in obtaining some components or peripheral devices. We
attempt to reduce the risk of supply interruption by evaluating and obtaining
alternative sources for various components or peripheral devices. However, there
can be no assurance that supply shortages will not occur in the future which
could significantly increase the cost, or delay shipment of, our products, which
in turn could adversely affect our results of operations.
We May Not Be Able To Protect Our Proprietary Information
Although we have filed eight patent applications with respect to our
PC-to-TV video-graphics products, we currently only have four patents issued. We
treat our technical data as confidential and rely on internal non-disclosure
safeguards, including confidentiality agreements with employees, and on laws
protecting trade secrets to protect our proprietary information. There can be no
assurance that these measures will adequately protect the confidentiality of our
proprietary information or that others will not
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independently develop products or technology that are equivalent or superior to
ours. While it may be necessary or desirable in the future to obtain licenses
relating to one or more of our products or relating to current or future
technologies, there can be no assurance that we will be able to do so on
commercially reasonable terms.
THE COMPANY
Based on an independent survey published in December of 1997 by Frost &
Sullivan, a leading market research firm, we are an industry leader in the
development and marketing of advanced, proprietary multimedia video scan
conversion products for the rapidly converging, multi-billion dollar computer
and television industries. Our products, which are sold globally through
Original Equipment Manufacturers (OEMs) and resellers, merge computer generated
graphics and television displays for presentations, training, education, video
teleconferencing, internet viewing and home gaming markets. In addition, we are
working to develop a family of products that will enable the current installed
base of televisions, VCRs, and camcorders to remain functional in upcoming HDTV
environments. It is our objective to design, develop, and deliver quality video
conversion products to the global marketplace.
USE OF PROCEEDS
All net proceeds from the sale of the shares being offered under this
prospectus will go to the selling shareholders. Accordingly, we will not receive
any proceeds from sales of these shares. We will pay all of the expenses of
registration of the shares being offered under this prospectus.
We will receive the proceeds of any exercises of the warrants that have
been issued to the selling shareholders. The maximum cash amount that we would
receive if the selling shareholders exercise all of these warrants in full is
approximately $699,000. We would use these proceeds for working capital and
general corporate purposes.
SELLING SHAREHOLDERS
The shares being offered under this prospectus are offered by four
existing shareholders and three additional holders of outstanding warrants. The
existing shareholders are BNC Bach International Ltd., Inc., The Raptor Global
Portfolio Ltd., Roseworth Group, Ltd. and The Altar Rock Fund L.P. All of these
shareholders acquired the shares that they are offering under this prospectus
directly from us in privately negotiated purchases. The three additional holders
of outstanding warrants are R. Jerry Falkner and Richard W. West, who are the
principals of R.J. Falkner & Company, Inc., and Union Atlantic, L.C. Messrs.
Falkner and West acquired their warrants directly from us in connection with
services provided to us by their company. Union Atlantic also acquired its
warrant directly from us in connection with services it has provided to us. The
following table sets forth certain information regarding beneficial ownership of
our common stock as of December 31, 1999 and the number of shares of common
stock which may be offered for the account of each of the selling shareholders
from time to time after the date of this prospectus.
Shares Beneficially Shares Beneficially
Selling Shareholders(1) Owned Prior to Offering Shares Offered Owned After Offering
- ----------------------- ----------------------- -------------- --------------------
Number Percent Number Percent
------ ------- ------ -------
BNC Bach International Ltd., Inc. 1,733,333(2) 7.11% 1,733,333(2) 0 *
The Raptor Global Portfolio Ltd. 958,650(3) 3.93 958,650(3) 0 *
Roseworth Group, Ltd. 412,500(4) 1.69 412,500(4) 0 *
4
The Altar Rock Fund L.P. 3,850(5) * 3,850(5) 0 *
Union Atlantic, L.C. 25,000(6) * 25,000 0 *
R. Jerry Falkner 15,000(7) * 15,000(6) 0 *
Richard W. West 15,000(7) * 15,000(6) 0 *
- --------------------
<FN>
* less than one percent
(1) None of the selling shareholders has had any position, office or other material relationship
with us or any of our affiliates within the three years preceding the date of this prospectus,
except that a director of ours, Timothy E. Mahoney, is a principal of Union Atlantic, L.C.,
which has provided investment banking services to us during this period, and Messrs. Falkner
and West are principals of an investor relations firm that has provided services to us within
the past year. To the best of our knowledge, each of the selling shareholders has sole voting
and investing power with respect to all of the shares indicated as beneficially owned by the
selling shareholder, although such voting and investment powers may be deemed to be shared with
various affiliates, which may include entities and natural persons, of the selling shareholders
who may exercise control over, or provide investment advice to, the selling shareholders. With
respect to The Altar Rock Fund L.P. and the Raptor Global Portfolio Ltd., Tudor Investment
Corporation is the sole general partner of The Altar Rock Fund L.P. and provides investment
advisory services to The Raptor Global Portfolio Ltd. and may be deemed to beneficially own the
shares owned directly by these entities. Paul Tudor Jones, II is the controlling shareholder of
Tudor Investment Corporation and may in turn be deemed to beneficially own the shares deemed
beneficially owned by this entity. Both Tudor Investment Corporation and Mr. Jones expressly
disclaim all deemed beneficial ownership pertaining to any of the shares indicated above as
beneficially owned by The Altar Rock Fund, L.P. and The Raptor Global Portfolio Ltd.
(2) Includes 150,000 shares that may be purchased by BNC Bach International Ltd., Inc. upon its
exercise of an outstanding warrant at a purchase price of $1.5375 per share.
(3) Includes 87,150 shares that may be purchased by The Raptor Global Portfolio Ltd. upon its
exercise of an outstanding warrant at a purchase price of $3.1969 per share.
(4) Includes 37,500 shares that may be purchased by Roseworth Group, Ltd. upon its exercise of an
outstanding warrant at a purchase price of $3.1969 per share.
(5) Includes 350 shares that may be purchased by The Altar Rock Fund L.P. upon its exercise of an
outstanding warrant at a purchase price of $3.1969 per share.
(6) These shares may be purchased by Union Atlantic, L.C. upon its exercise of an outstanding
warrant at a purchase price of $1.478125 per share.
(7) These shares may be purchased by Messrs. Falkner and West, respectively, upon their exercise of
outstanding warrants at a purchase price in each case of $1.063 per share.
</FN>
Any of the selling shareholders identified above may choose to donate
or transfer as a gift some or all of the shares that may otherwise be sold
directly by the selling shareholder or any of them may choose to transfer some
or all of the shares at no value to one or more affiliated persons. If any of
the shares are so transferred by any of the selling shareholders, then any
person who receives any of these shares would constitute an additional selling
shareholder under this prospectus.
SECURITIES PURCHASE AND OTHER AGREEMENTS
On September 17, 1999, we entered into a common stock and warrant
purchase agreement with BNC Bach International Ltd., Inc., pursuant to which we
agreed to issue 1,500,000 shares of our
5
common stock to BNC at a purchase price of $1.00 per share and to issue a
warrant to BNC for its purchase of up to 150,000 additional shares at a purchase
price of $1.5375 per share. This warrant expires unless sooner exercised on
September 17, 2002. Under the terms of this agreement, we initially issued to
BNC 750,000 shares and BNC paid to us an initial $750,000, with the issuance of
the remaining 750,000 shares and the payment of the remaining $750,000 to occur
at the time our registration of BNC's resale of the total number of shares
became effective with the Securities and Exchange Commission. On November 17,
1999, we agreed with BNC to amend the agreement, so that BNC paid the remaining
$750,000 immediately to us in exchange for our issuing at that time a total of
833,333 shares to BNC (that is, BNC agreed to waive the registration requirement
as a condition to its payment of the remaining $750,000 in exchange for our
agreeing to increase the second installment of shares issued to BNC by 83,333
from 750,000 to 833,333).
On November 24, 1999, we entered into a common stock and warrant
purchase agreement with The Raptor Global Portfolio Ltd., Roseworth Group Ltd.
and The Altar Rock Fund L.P. pursuant to which we issued to these investors a
total of 1,250,000 shares of our common stock at a purchase price of $1.60 per
share. Under the terms of this agreement, we also issued to these investors
warrants to purchase up to a total of 125,000 additional shares of our common
stock at a purchase price of $3.1969 per share. These warrants expire unless
sooner exercised on December 1, 2002.
In connection with these private sales of our common stock, we entered
into registration rights agreements with each of BNC, Raptor, Roseworth, Altar
Rock and Asia ITN Ltd. In these agreements, we agreed to register with the
Securities and Exchange Commission their resale of all of the shares purchased
in these transactions, including, with respect to BNC, Raptor, Roseworth and
Altar Rock, the shares issuable pursuant to the warrants we have issued to each
of them, and to keep the applicable registration statement effective until all
of the shares are sold or until this registration is no longer necessary as
described further in the agreements.
On December 12, 1998, we entered into an agreement with Union Atlantic,
L.C., a third-party provider of investment banking services, of which one of our
directors, Timothy E. Mahoney, is a principal, pursuant to which Union Atlantic
agreed to provide to us a variety of investment banking services. On May 7,
1999, we amended this agreement to reduce the commissions otherwise payable to
Union Atlantic in connection with certain equity financing transactions. In
return for this fee reduction, we agreed to issue a warrant to Union Atlantic
for the purchase of up to 25,000 shares of our common stock upon the same terms
as any warrants that may be issued to the investors in such equity financing
transactions. Accordingly, the purchase price under this warrant was set at
$1.478125 per share. This warrant expires unless sooner exercised on June 4,
2004. We also agreed to register with the Securities and Exchange Commission the
resale by Union Atlantic of the shares it may acquire upon its exercise of this
warrant.
On December 22, 1998, we entered into an agreement with R.J. Falkner &
Company, Inc., an unaffiliated, third-party provider of investor relations
services, pursuant to which that company agreed to provide to us a variety of
investor relations services. In addition to the cash fees we agreed to pay to
R.J. Falkner & Company for these services, in February 1999 we also agreed to
issue, as additional consideration for these services, warrants to both Messrs.
Falkner and West, the principals of R.J. Falkner & Company, to purchase in the
aggregate up to 30,000 shares (that is, 15,000 shares each) at a purchase price
of $1.063 per share. These warrants expire unless sooner exercised on February
22, 2004. We also agreed to register with the Securities and Exchange Commission
the resale by Messrs. Falkner and West of the shares they may acquire upon their
respective exercises of these warrants.
Our registration of the shares covered by this prospectus does not
necessarily mean that the selling shareholders will sell all or any of these
shares.
6
PLAN OF DISTRIBUTION
The selling shareholders may offer their shares at various times in one
or more of the following transactions:
o on the NASDAQ SmallCap Market
o on any United States securities exchange where our common
stock may be listed in the future
o in the over-the-counter market
o in privately negotiated transactions directly with purchasers
o in a combination of any of the above transactions
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. The selling shareholders may
use broker-dealers to sell their shares. If this happens, broker-dealers will
either receive discounts or commissions from the selling shareholders, or they
will receive commissions from purchasers of shares for whom they acted as
agents.
The selling shareholders may also pledge shares to a broker-dealer or
other financial institution, and, upon a default, such broker-dealer or other
financial institution may effect sales of the pledged shares pursuant to this
prospectus (as supplemented or amended to reflect such transaction). In
addition, any shares that qualify for sale pursuant to Rule 144 of the
Securities and Exchange Commission may be sold under Rule 144 rather than
pursuant to this prospectus.
In effecting sales, brokers, dealers or agents engaged by any selling
shareholder may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from a
selling shareholder in amounts to be negotiated prior to the sale. The selling
shareholders and such brokers or dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933 in connection with such sales, and any such commissions, discounts
or concessions may be deemed to be underwriting discounts or commissions under
the Securities Act of 1933. The selling shareholders may indemnify any
broker-dealer that participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under the Securities
Act of 1933.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We have advised the selling shareholders that the anti-manipulation
rules of Regulation M under the Securities Exchange Act of 1934 may apply to
sales of common stock in the market and to the activities of the selling
shareholders and their affiliates. In addition, we will make copies of this
prospectus available to the selling shareholders and have informed them of the
need for delivery of copies of this prospectus to purchasers at or prior to the
time of any sale of the shares offered under this prospectus.
7
At the time a particular offer of shares is made, if required, a
prospectus supplement will be distributed that will set forth the number of
shares being offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any underwriter, any
discount, commission or other item constituting compensation to any underwriter,
any discount, commission or concession allowed or re-allowed or paid to any
dealer, and the proposed selling price to the public.
RECENT DEVELOPMENTS
On December 31, 1999, we settled a claim that had previously been
brought against us by PAGG Corporation and certain related parties in the
Superior Court for Middlesex County, Commonwealth of Massachusetts. Pursuant to
this action, PAGG had sought money damages against us totaling approximately
$1,800,000 for amounts we allegedly owed to PAGG for inventory manufactured for
us by PAGG and pursuant to an outstanding secured promissory note we had given
to PAGG. The parties entered into a general release effective December 31, 1999,
pursuant to which PAGG and the related plaintiffs have agreed to release us from
all claims that they may have against us, subject to our paying a total of
$1,669,000 in cash, which will be paid in four monthly installments commencing
on January 5, 2000 and ending on April 5, 2000.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Copies of
these materials can be obtained at prescribed rates from the Public Reference
Section of the SEC at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Our SEC filings are also available to the public from
the SEC's Website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
o annual report on Form 10-KSB/A for the fiscal year ended
December 31, 1998
o quarterly report on Form 10-QSB/A for the quarter ended
September 30, 1999
o definitive proxy statement dated June 25, 1999, which was
provided to our stockholders in connection with our annual
meeting of stockholders held on July 26, 1999
o description of our common stock contained in our registration
statement on Form SB-2, SEC File No. 33-60248-B, which we
filed with the SEC on March 29, 1993, as amended
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
FOCUS Enhancements, Inc.
600 Research Drive
Wilmington, Massachusetts 01887
Attention: Christopher P. Ricci
(978) 988-5888
8
This prospectus is part of a registration statement we have filed with
the SEC. You should rely only on the information or representations provided in
this prospectus. We have authorized no one to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
prospectus.
LEGAL MATTERS
The validity of the shares of common stock offered under this
prospectus was passed upon for us by Christopher P. Ricci, Esq., our Senior Vice
President and General Counsel.
EXPERTS
The consolidated financial statements of the company incorporated in
this prospectus by reference to our Annual Report on Form 10-KSB/A for the year
ended December 31, 1998, as amended, have been so incorporated in reliance on
the report of Wolf & Company, P.C., independent accountants, given on the
authority of said firm as experts in auditing and accounting.
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
We do not provide forecasts of our future financial performance.
However, this prospectus may contain "forward looking" information that involves
risks and uncertainties. In particular, statements contained in this prospectus
which are not historical facts (including, for example, statements concerning
our international revenues, anticipated operating expense levels and such
expense levels relative to our total revenues) constitute forward looking
statements and are intended to be made under the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. In addition, any of the words
"believes," "expects," "anticipates" or similar expressions indicate
forward-looking statements of this type. Our actual results of operations and
financial condition have varied and may in the future vary significantly from
those stated in any forward-looking statements. Factors that may cause such
differences include, for example, the following:
o the availability of capital to fund our future cash needs
o our reliance on major customers
o our history of operating losses
o our reliance on a limited number of vendors for the
manufacturing of our products
o technological obsolescence
o competition
o component supply problems
o protection of proprietary information
o accuracy of our internal estimates of revenue and operating
expense levels
9
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
The Delaware General Corporation Law and our certificate of
incorporation and by-laws provide for indemnification of our directors and
officers for liabilities and expenses that they may incur in such capacities.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
company pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
10
You should rely only on the information incorporated by reference or
contained in this prospectus or any supplement. We have not authorized anyone
else to provide you with different or additional information. You should not
assume that the information in this prospectus or any supplement is accurate as
of any date other than the date on the front of this prospectus or any
supplement that may have a later date. The selling shareholders are not making
an offer of our shares in any state where the offer is not permitted.
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TABLE OF CONTENTS
Page
Risk Factors 2
The Company 4
Use of Proceeds 4
Selling Shareholders 4
Securities Purchase and Other Agreements 5
Plan of Distribution 7
Recent Developments 8
Where You Can Find More Information 8
Legal Matters 9
Experts 9
Cautionary Statement Concerning
Forward Looking Statements 9
Disclosure Statement 10
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FOCUS
ENHANCEMENTS, INC.
3,163,333 Shares of
Common Stock
__________________
PROSPECTUS
__________________
JANUARY __, 2000
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated amounts of expenses to be borne
by the Company in connection with the offering described in this Registration
Statement:
Registration Fee Under Securities Act $ 5,819.95
Blue Sky Fees and Expenses 2,000.00
Legal Fees and Expenses 5,000.00
Accounting Fees and Expenses 5,000.00
Printing and Mailing Costs 1,000.00
Miscellaneous Fees and Expenses 2,000.00
----------
Total Expenses $20,819.95
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify, subject to the standards therein prescribed, any
person in connection with any action, suit or proceeding brought or threatened
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation, or was serving as such with respect to another
corporation or other entity at the request of such corporation.
The Delaware General Corporation Law and the Company's certificate of
incorporation and by-laws provide for indemnification of the Company's directors
and officer for liabilities and expenses that they may incur in such capacities.
In general, directors and officers are indemnified with respect to actions taken
in good faith in a manner reasonably believed to be in, or not opposed to, the
best interests of the Company, and with respect to any criminal action or
proceeding, actions that the indemnitee had no reasonable cause to believe were
unlawful. Reference is made to the Company's Second Restated Certificate of
Incorporation, as amended, and Restated By-laws incorporated herein by
reference.
The Company has obtained directors and officers liability insurance for the
benefit of its directors and certain of its officers.
Item 16. Exhibits
The following documents have been previously filed as Exhibits and are
incorporated herein by reference except those exhibits indicated with an
asterisk which are filed herewith:
Exhibit No. Description
----------- -----------
3.1 Second Restated Certificate of Incorporation, as amended,
incorporated by reference to Exhibit No. 3.1 of the Company's
Registration Statement on Form SB-2 [Reg. No. 33-60248-B] and as an
exhibit to the Company's Form 10-QSB dated November 13, 1995.
3.2 Restated By-laws of the Company (1).
4.1 Specimen certificate for Common Stock of the Company (1).
II-1
4.2 Common Stock and Warrant Purchase Agreement, as amended, with BNC
Bach International Ltd., Inc.*
4.3 Form of Stock Purchase Warrant issued to BNC Bach International
Ltd., Inc. (included as Exhibit A to the Common Stock and Warrant
Purchase Agreement).*
4.4 Form of Registration Rights Agreement with BNC Bach International
Ltd., Inc. (included as Exhibit B to the Common Stock and Warrant
Purchase Agreement).*
4.5 Common Stock and Warrant Purchase Agreement with The Raptor Global
Portfolio Ltd., The Altar Rock Fund L.P. and Roseworth Group, Ltd. *
4.6 Form of Stock Purchase Warrant issued to The Raptor Global Portfolio
Ltd. (for 87,150 shares), The Altar Rock Fund L.P. (for 350 shares)
and Roseworth Group, Ltd. (for 37,500 shares) (included as Exhibit A
to the Common Stock and Warrant Purchase Agreement). *
4.7 Form of Registration Rights Agreement with The Raptor Global
Portfolio Ltd., The Altar Rock Fund L.P. and Roseworth Group, Ltd.
(included as Exhibit B to the Common Stock and Warrant Purchase
Agreement). *
4.8 Contract for services to be rendered to FOCUS Enhancements, Inc. by
R.J. Falkner & Company, Inc. *
4.9 Form of Stock Purchase Warrant issued to each of R. Jerry Falkner
and Richard W. West. *
4.10 Agreement between Union Atlantic, L.C. and FOCUS Enhancements, Inc.
confirming agreement to issue warrant in exchange for fee reduction.*
4.11 Stock Purchase Warrant issued to Union Atlantic, L.C. *
5.1 Opinion of Christopher P. Ricci, Esq. *
23.1 Consent of Wolf & Company, P.C., independent public accountants. *
23.2 Consent of Christopher P. Ricci, Esq. (included in Exhibit 5.1).
24. Power of Attorney (contained in signature page to this registration
statement).
(1) Filed as an exhibit to the Company's Registration Statement on Form
SB-2, No. 33-60248-B, and incorporated herein by reference.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered), and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) (Section 230.424(b) of 17 C.F.R.) if, in the
aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
II-2
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in the periodic
reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities and Exchange Act of 1934 that
are incorporated by reference in this registration statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the Securities being registered that remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes, that for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Company's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in such Act and is, therefore,
unenforceable.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the Town of Wilmington, Commonwealth of Massachusetts, on January
13, 2000.
FOCUS ENHANCEMENTS, INC.
By: /s/ Thomas L. Massie
Thomas L. Massie
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Form S-3 relating to Common Stock of the Registrant has been signed by the
following persons in the capacities and on the dates indicated. Each person
whose signature appears below hereby authorizes Thomas L. Massie and Christopher
P. Ricci, and each of them, to file one or more amendments (including additional
post-effective amendments) to this Registration Statement, which amendments may
make such changes as any of such persons deem appropriate, and each person,
individually and in each capacity stated below, hereby appoints each of such
persons as attorney-in-fact to execute in his name and on his behalf any of such
amendments to the Registration Statement.
Signature Title Date
/s/ Thomas L. Massie President, Chief Executive Officer and January 13, 2000
Thomas L. Massie Director (Principal Executive Officer)
/s/ Gary M. Cebula Vice President of Finance and January 13, 2000
Gary M. Cebula Administration (Principal Financial and
Accounting Officer)
/s/ John C. Cavalier Director January 13, 2000
John C. Cavalier
Director January __, 2000
William B. Coldrick
Director January __, 2000
Timothy E. Mahoney
/s/ Robert C. Eimers Director January 13, 2000
Robert C. Eimers
/s/ William A. Dambrackas Director January 13, 2000
William A. Dambrackas