As filed with the Securities and Exchange Commission on April 6, 1998
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 (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification Number)
142 North Road
Sudbury, Massachusetts 01776
(781) 371-2000
(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.
142 North Road
Sudbury, Massachusetts 01776
(781) 371-2000
(Name, address, including zip code, telephone number,
including area code, of agent for service)
Copy to:
John A. Piccione, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 338-2800
---------------------
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
Proposed Amount of
Title of Each Class of Securities to Amount to Maximum Registration
be Registered be Registered Price to Public Offering Price Fee(2)
Common Stock, par value $.01 per 1,441,224 $3.15625 $4,548,863.20 $1,341.91
share(1)
<FN>
(1) The Common Stock being registered consists of: (i) 1,092,150 shares issued to JNC Opportunity Fund Ltd. (the "Investor") in
connection with a private placement in March 1998 (the "March 98 Offering"); (ii) 327,645 shares issuable to the Investor upon
the exercise of a warrant issued to the Investor; and (iii) 21,429 shares issuable upon the exercise of warrants issued to the
placement agent and its designee in connection with the March 98 Offering, all as described in the "SELLING STOCKHOLDERS" and
"PLAN OF DISTRIBUTION" sections of the Prospectus.
(2) 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 March 31, 1998 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.
(ii)
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion
Preliminary Prospectus Dated April 6, 1998
REOFFER
PROSPECTUS
FOCUS ENHANCEMENTS, INC.
1,441,224 Shares of Common Stock
This Prospectus relates to the offer and sale from time to time of up to
1,441,224 shares (the "Shares") of common stock, $.01 par value per share (the
Common Stock") of FOCUS Enhancements, Inc. (the "Company"), by the Selling
Stockholders named herein (the "Selling Stockholders"), or by their respective
pledgees, donnees, transferees or other successors in interest that receive such
Shares as a gift, partnership distribution or other non-sale related transfer.
Of the 1,441,224 Shares being offered hereby: (i) 1,092,150 Shares were issued
to JNC Opportunity Fund Ltd. (the "Investor"); (ii) 327,645 Shares are issuable
upon the exercise of warrants (the "Investor Warrants") issued to the Investor;
and (iii) 21,429 Shares are issuable upon the exercise of warrants issued to the
placement agent and its designee (the "Broker Warrants" and, together with the
Investor Warrants, the "Warrants"). The Shares and Warrants were issued by the
Company to the Selling Stockholders on March 3, 1998 in a private placement (the
"March 98 Offering"). To the extent that the Warrants are exercised, the Company
will receive proceeds equal to the exercise price of the Warrants. The Company
will not receive any proceeds from the sale of the Shares by the Selling
Stockholders. The expenses of registration of the Shares which may be offered
hereby under the Securities Act of 1933, as amended (the "Securities Act") will
be paid by the Company.
The Shares covered under the Registration Statement of which this
Prospectus is a part may be offered for sale from time to time by or for the
account of the Selling Stockholders, or their pledgees, donees, transferees or
other successors in interest, in the open market, on the NASDAQ Small Cap Market
or on one or more exchanges on which the Shares are then listed, in privately
negotiated transactions, in an underwritten offering, in a combination of such
methods, or by any other legally available means, at market prices prevailing at
the time of such sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. The Shares are intended to be sold through
one or more broker-dealers or directly to purchasers. Such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholders, their successors in interest and/or the purchasers of
the Shares for whom such broker-dealers may act as agent or to whom they may
sell as principal, or both (which compensation as to a particular broker-dealer
may be in excess of customary commissions). The Selling Stockholders, their
successors in interest and/or any broker-dealers acting in connection with the
sale of the Shares hereunder may be deemed to be underwriters with the meaning
of Section 2(11) of the Securities Act, and any commissions or other
compensation received by them and any profits realized by them on the resale of
the Shares as principals may be deemed underwriting compensation under the
Securities Act. See "SELLING STOCKHOLDERS" and "PLAN OF DISTRIBUTION."
The Common Stock is traded on the Nasdaq SmallCap Market under the
symbol FCSE. On March 31, 1998, the last sale price of the Company's Common
Stock as reported on the Nasdaq SmallCap Market was $3 1/8.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY
INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
AT PAGES 5 THROUGH 7.
----------------------
The date of this Prospectus is April __, 1998.
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus in connection with the offer contained in this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or the Selling Stockholders. This
Prospectus does not constitute an offer to sell or solicitation of an offer to
buy securities in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that there
has been no change in the affairs of the Company since the date hereof or the
information contained or incorporated by reference herein is correct at any time
subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copies obtained at the public reference facilities maintained by
the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
Chicago Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661- 2511; and New York Regional Office, Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the Commission
at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
materials may also be accessed electronically by means of the Commission's home
page at http://www.sec.gov.
The Company has filed with the Commission a Form S-3 Registration
Statement (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This prospectus, which constitutes part of the Registration
Statement filed by the Company with the Commission under the Securities Act
omits certain information contained in the Registration Statement in accordance
with the rules and regulations of the Commission. Reference is hereby made to
the Registration Statement and the exhibits relating thereto for further
information with respect to the Company and the securities offered hereby. Any
statements contained herein concerning provisions of any documents are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission pursuant
to the Exchange Act, are hereby incorporated in this Prospectus and specifically
made a part hereof by reference: (i) the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997; (ii) the definitive Proxy Statement filed
with the Commission dated June 20, 1997 provided to stockholders in connection
with the Annual Meeting of Stockholders held on July 25, 1997; and (iii) the
description of the Company's Common Stock contained in the Registration
Statement on Form SB-2 File No. 33-60248-B filed with the Commission on March
29, 1993, as amended. All documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to
-2-
the termination of the offering of the securities offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the respective dates of filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in the applicable Prospectus Supplement), or in any
subsequently filed document that also is or is deemed to be incorporated herein
by reference, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in this Prospectus (excluding exhibits unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be made to the Company at its
principal executive offices, 142 North Road, Sudbury, Massachusetts 01776,
Attention: Christopher P. Ricci, telephone (781) 371-2000.
-3-
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus or incorporated
herein by reference and the financial statements which are incorporated herein
by reference.
THE COMPANY....................... FOCUS Enhancements, Inc. (the "Company"
or "FOCUS") internally develops, markets
and sells worldwide a proprietary line
of PC-to-TV video conversion products
for PC's and Macintoshes (R). The
Company's proprietary PC-to-TV video
conversion products include video output
devices marketed and sold under the
Company's registered "TView" trademark.
All of the Company's PC-to-TV conversion
products enable users to transmit at
low-cost, high quality, computer
generated images from any DOS, Windows
or Mac OS based personal computer to any
television of any size with a standard
RCA or S-Video interface. FOCUS'
PC-to-TV technology provides sharp,
flicker-free, computer-generated images
on televisions for multimedia/business
presentations, classroom/training
sessions, game playing, collective
viewing of computer applications and
Internet browsing. The Company markets
and sells its FOCUS branded consumer
products globally through a network of
distributors, volume resellers, mail
order, value added resellers ("VARs")
and original equipment manufacturers
("OEMs").
RISK FACTORS...................... The Offering involves substantial risk.
See "RISK FACTORS".
SECURITIES OFFERED................ 1,441,224 Shares. The Common Stock
offered hereby consists of: (i)
1,092,150 Shares issued to the Investor;
(ii) 327,645 Shares issuable to the
Investor upon the exercise of the
Investor Warrants; and (iii) 21,429
Shares issuable upon exercise of the
Broker Warrants. See "SELLING
STOCKHOLDERS."
OFFERING PRICE.................... All or part of the Shares offered hereby
may be sold from time to time in amounts
and on terms to be determined by the
Selling Stockholders at the time of
sale.
USE OF PROCEEDS................... To the extent that the Warrants are
exercised, the Company intends to use
the net proceeds for general working
capital purposes. The Company will
receive no part of the proceeds from the
sale of the Shares registered pursuant
to this Registration Statement.
NASDAQ TRADING SYMBOL............. FCSE
-4-
RISK FACTORS
An investment in the securities offered hereby involves a high degree
of risk and should only be purchased by investors who can afford to lose their
entire investment. The following factors, in addition to those discussed
elsewhere in the Prospectus, should be considered carefully in evaluating the
Company and its business.
Future Capital Needs. At December 31, 1997, the Company had working
capital of $2,619,300, cash and cash equivalents of $719,851 and was fully drawn
on its line of credit (approximately $720,000 at December 31, 1997) with its
bank and its $1.5 million term note with an unaffiliated lender. Historically,
the Company has been required to meet its 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. During 1997, the Company received
approximately $6,082,000 in net proceeds from the exercise of warrants, stock
options and the sale of Common Stock. In March 1998, the Company received
approximately $2,800,000 in net proceeds from the sale of Common Stock in the
March 98 Offering.
The Company's future capital requirements will depend on many factors,
including cash flow from operations, continued progress in its research and
development programs, competing technological and market developments, and the
Company's ability to market its products successfully. During 1998, the Company
may be required to raise additional funds through equity or debt financing, of
which there can be no assurance. Any equity financing could result in dilution
to the Company's then-existing stockholders. Sources of debt financing may
result in higher interest expense. Any financing, if available, may be on terms
unfavorable to the Company. If adequate funds are not available, the Company may
be required to curtail its activities significantly.
Reliance on Major Customers. For the year ended December 31, 1997,
approximately 16% of the Company's revenues were derived from sales to a major
distributor, approximately 27% of the Company's revenues were derived from sales
to a major manufacturer of personal computers and its contract manufacturer, and
approximately 11% of the Company's revenues were derived from sales to a major
television manufacturer. Management expects that sales to these customers will
continue to represent a significant percentage of the Company's future revenues.
The Company does not have long-term contracts pursuant to which any customer is
required to purchase any minimum amount of products. There can be no assurance
that the Company will continue to receive orders of the same magnitude as in the
past from existing customers or that it will be able to market its current or
proposed products to new customers. The loss of any major customer by the
Company would have a materially adverse effect on the business of the Company as
a whole.
History of Operating Losses. The Company has experienced limited
profitability since its inception and at December 31, 1997, had an accumulated
deficit of $22,411,611. The Company incurred net losses of $10,772,410 and
$1,986,079 for the years ended December 31, 1996 and 1997, respectively.
There can be no assurance that the Company will be profitable in 1998.
Limited Availability of Capital under Credit Arrangements with Lenders.
The Company maintains a line of credit with Silicon Valley Bank which is fully
drawn ($720,000 was owed to the bank at December 31, 1997). At December 31,
1997, the Company was in violation of certain debt covenants relating to the
line of credit. In addition, the line of credit was scheduled to expire on March
8, 1998. The Company has received a waiver of the covenants from the bank, a
revision of the loan covenants and an agreement to extend the line until June 8,
1998. The Company is currently in discussions with another lender to refinance
this line.
-5-
The Company also owes $1.5 million to an unaffiliated lender pursuant
to a term note that currently accrues interest at a revolving rate of prime plus
4%, is payable quarterly in arrears at the end of December, March, June, and
September, and was due February 1, 1996. On June 28, 1996, the Company
negotiated an amendment to the term note with the lender to extend the due date
of the term note to March 31, 1997. Pursuant to the amendment, the Company
granted the lender a second security interest in all the assets of the Company.
The Company is currently negotiating an additional extension with the lender.
In the event that the Company is unsuccessful in refinancing its bank
line of credit or that the unaffiliated lender does not extend the due date of
its term note, the Company would be required to repay the amounts outstanding
from working capital or from equity or debt financing.
Market Acceptance. The Company's sales and marketing strategy is
targeted to sales of its PC-to- TV video-graphics products to the Windows, Mac
OS markets, including computer manufacturers, VGA graphic card developers and
VGA chip developers, as well as to television manufacturers. Although the
Company has to date experienced success in penetrating these markets, there can
be no assurance that the Company's marketing strategy will continue to be
effective and that current customers will continue to buy the Company's
products. Market acceptance of the Company's current and proposed products will
depend upon the ability of the Company to demonstrate the advantages of its
products over other PC-to-TV video- graphics products.
Reliance on Vendors. In the year ended December 31, 1997, approximately
90% of the components for the Company's products were secured and manufactured
on a turnkey basis by two vendors. In the event that either vendor were to cease
supplying the Company, management believes there are alternative vendors for the
components for the Company's products. However, the Company would experience
short-term delays in the shipment of its products.
Dependence on Timely Delivery of the FOCUS Scan 300 Chip. In late 1997,
the Company completed development of an ASIC called the FOCUS Scan 300 Chip
which the Company will incorporate into all of its next generation PC-to-TV
video-graphics products. The Company is relying on an outside vendor to
manufacture its requirements for the Chip. A significant portion of the
Company's anticipated revenues and gross margins for 1998 are dependent on
timely delivery of sufficient quantities of the FOCUS Scan 300 Chip in order to
fill pending and anticipated orders. In the event that the Company does not
receive sufficient quantities of the Chip to fill orders, the Company's revenues
and profitability for 1998 could be adversely effected.
Technological Obsolescence. The Windows and Mac OS markets are
characterized by extensive research and development and rapid technological
change resulting in product life cycles of nine to eighteen months. Development
by others of new or improved products, processes or technologies may make the
Company's products or proposed products obsolete or less competitive. The
Company will be required to devote substantial efforts and financial resources
to enhance its existing products and to develop new products. There can be no
assurance that the Company will succeed with these efforts.
Competition. The Windows and Mac OS markets are extremely competitive.
The Company currently competes with other developers of PC-to-TV conversion
products and with video-graphic integrated circuit developers. Many of the
Company's competitors have greater market recognition and greater financial,
technical, marketing and human resources than the Company. Although the Company
is not currently aware of any announcements by its competitors that would have a
material impact on the Company or its operations, there can be no assurance that
the Company will be able to compete successfully against existing companies or
new entrants to the marketplace.
-6-
Component Supply Problems. The Company purchases all of its parts from
outside suppliers and from time to time experiences delays in obtaining some
components or peripheral devices. The Company attempts 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, the Company's products, which in turn could
adversely affect its results of operations.
Protection of Proprietary Information. Although the Company currently
has three patents pending, all with respect to its PC-to-TV video conversion
chips, and anticipates filing another patent application in the second quarter
of this year, the Company does not currently have any patents. The Company
treats its technical data as confidential and relies on internal nondisclosure
safeguards, including confidentiality agreements with employees, and on laws
protecting trade secrets to protect its proprietary information. There can be no
assurance that these measures will adequately protect the confidentiality of the
Company's proprietary information or that others will not independently develop
products or technology that are equivalent or superior to those of the Company.
While it may be necessary or desirable in the future to obtain licenses relating
to one or more of its products or relating to current or future technologies,
there can be no assurance that the Company will be able to do so on commercially
reasonable terms.
-7-
THE COMPANY
FOCUS Enhancements, Inc. (the "Company" or "FOCUS") internally
develops, markets and sells worldwide a line of proprietary PC-to-TV video
conversion products for PC's and Macintoshes (R). Based on an independent survey
by Frost & Sullivan, the Company is an industry leader in the development and
marketing of PC-to-TV video conversion products that make personal computers
"TV-ready" and televisions "PC- ready."
The Company's proprietary PC-to-TV video conversion products include
video output devices marketed and sold under the Company's registered trademark
"TView." All of the Company's PC-to-TV conversion products enable users to
transmit at low-cost, high-quality, computer generated images from any DOS,
Windows or Mac OS based personal computer to any television of any size with a
standard RCA or S-Video interface. FOCUS' PC-to-TV technology provides sharp,
flicker-free, computer-generated images on televisions for multimedia/business
presentations, classroom/training sessions, game playing, collective viewing of
computer applications, and Internet browsing.
The Company markets and sells its FOCUS branded consumer products
globally through a network of distributors, volume resellers, mail order,
value-added resellers ("VARs") and original equipment manufacturers ("OEMs"). In
North America, the Company markets and sells its products through national
distributors such as Ingram Micro D, D & H, Academic and Nuvo; national volume
resellers such as CompUSA, Computer City, Micro Center, Staples and through
third party mail order companies such as MicroWarehouse, Multiple Zones, Global
Direct, PC Connection and CDW.
In addition, the FOCUS branded PC-to-TV products have been selected by
leading personal computer manufacturers to be marketed with the use of their
select brand of personal computers. Compaq, and Toshiba have included the
Company's PC-to-TV products on their selected market price lists, and promote
the FOCUS PC-to-TV products in their box materials.
The Company also markets and sells its products internationally in over
30 countries by independent distributors in each country. These independent
distributors market and sell the FOCUS branded products to retailers, mail order
companies, and VARs in their respective countries.
In addition to the FOCUS branded products, the Company markets, sells
or licenses its proprietary PC-to-TV technology to television manufacturers such
as Philips Consumer Electronics and Zenith Electronics, and to personal computer
manufacturers such as Apple Computer. The Company is currently in discussions
with several other PC manufacturers, television manufacturers, VGA chip
developers and VGA card developers globally.
The Company was founded in December 1991, as a Massachusetts
corporation and was reincorporated in Delaware in April 1993. In December 1993,
the Company acquired Lapis Technologies Inc. ("Lapis"), a developer of
high-quality, low-cost Macintosh PC to TV video graphics products. Effective
September 30, 1996, the Company consummated the acquisition of TView, Inc., a
developer of PC-to-TV video conversion ASIC technology. This acquisition has
played a major strategic role in allowing FOCUS to gain a major technological
lead over competitors in the video scan conversion category and has positioned
FOCUS as a leader in PC-to-TV video conversion technology. On September 30,
1997, the Company sold its line of computer connectivity products.
The Company's principal executive offices are located at 142 North
Road, Sudbury, Massachusetts 01776. Its research and development center is
located at 9275 SW Nimbus Drive, Beaverton, Oregon 97008. The Company's European
sales and marketing office, FOCUS Enhancements B.V., is located at Schipholweg
-8-
118, Kantorenhuis, 2316 XD Leiden, The Netherlands. The Company's general
telephone number is (978) 371-2000 and its Worldwide Web address is
http://www.focusinfo.com.
USE OF PROCEEDS
The Company will not receive any proceeds from the resale by the
Selling Stockholders of the Shares.
Management intends to use any proceeds from the exercise of the
Warrants for general working capital purposes including expenditures in
connection with the development, sales and marketing of future products for the
Company.
SELLING STOCKHOLDERS
The Shares being offered for resale by the Selling Stockholders were
acquired in connection with the March 98 Offering and include shares of Common
Stock issuable upon exercise of the Warrants. In connection with the March 98
Offering, the Company granted the Selling Stockholders certain registration
rights pursuant to which the Company agreed to keep the Registration Statement,
of which this Prospectus is a part, effective until the date that all of such
Shares have been sold pursuant to the Registration Statement or the Shares are
otherwise eligible for resale pursuant to Rule 144(k) of the Securities Act,
whichever occurs first. The Company has agreed to indemnify the Selling
Stockholders and each of their officers, directors, members, employees,
partners, agents and each person who controls any of the Selling Stockholders
against certain expenses, claims, losses, damages and liabilities (or action,
proceeding or inquiry by any regulator or self-regulatory organization in
respect thereof). The Company has agreed to pay its expenses of registering the
Shares under the Securities Act, including registration and filing fees, blue
sky expenses, printing expenses, accounting fees, administrative expenses and
its own counsel fees.
The following table sets forth the name of each Selling Stockholder,
the number of shares of Common Stock beneficially owned by such Selling
Stockholder as of March 3, 1998 and the number of Shares being offered by each
Selling Stockholder. The Shares being offered hereby are being registered to
permit public secondary trading, and the Selling Stockholders may offer all or
part of the Shares for resale from time to time. However, such Selling
Stockholders are under no obligations to sell all or any portion of such Shares
nor are such Selling Stockholders obligated to sell any Shares immediately under
this Prospectus. All information with respect to share ownership has been
furnished by the Selling Stockholders. Because the Selling Stockholders may sell
all or part of their Shares, no estimates can be given as to the number of
Shares that will be held by any Selling Stockholder upon termination of any
offering made hereby. See "PLAN OF DISTRIBUTION."
Name of Selling Shares Beneficially Shares to be Sold in the Shares Owned After
Stockholder Owned Prior to the Offering the Offering (1)(2)
Offering (1)
JNC Opportunity Fund 1,419,795 1,419,795 - 0 -
Ltd. (3)
Wharton Capital 15,000 15,000 - 0 -
Partners Ltd. (4)
Elizabeth D'Angelis (4) 6,429 6,429 - 0 -
-9-
<FN>
(1) Except as set forth in footnote (5) below, beneficial ownership is determined in accordance with Rule
13d-3 of the Exchange Act. The persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by them.
(2) Assumes all Shares offered hereby are sold in the Offering.
(3) Includes 327,645 Shares issuable upon exercise of the Investor Warrants. The Investor Warrants are
exercisable until March 3, 2005 if at any time prior to August 25, 1999, the average of the closing
bid prices of the Company's Common Stock during any consecutive 20 trading days is equal to or less
than $2.7469.
(4) Represent Shares issuable upon exercise of the Broker Warrants. The Broker Warrants are exercisable
at a price of $4.2118 per share until March 3, 2003.
(5) Pursuant to the terms of the Warrants, the Warrants are exercisable by any holder only to the extent
that the number of shares of Common Stock thereby issuable, together with the number of shares of
Common Stock owned by such holder and its affiliates (but not including shares of Common Stock
underlying unexercised portions of the Warrants) would not exceed 9.99% of the then outstanding
Common Stock as determined in accordance with Section 13(d) of the Exchange Act. Accordingly, the
number of Shares set forth in the table for a Selling Stockholder may exceed the number of Shares
that such Selling Stockholder could own beneficially at any given time through such Selling
Stockholder's ownership of the Warrants. In that regard, beneficial ownership of such Selling
Stockholder set forth in the table is not determined in accordance with Rule 13d-3 under the Exchange
Act.
</FN>
PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by the Selling
Stockholders or by pledgees, donees or transferees of, or successors in interest
to, the Selling Stockholders, directly to one or more purchasers (including
pledgees) or through brokers, dealers or underwriters who may act solely as
agents or may acquire Shares as principals, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices, which may be changed. The distribution of the Shares
may be effected in one or more of the following methods: (i) ordinary brokers
transactions, which may include long or short sales, (ii) transactions involving
cross or block trades or otherwise on the NASDAQ SmallCap Market, (iii)
purchases by brokers, dealers or underwriters as principal and resale by such
purchasers for their own accounts pursuant to this Prospectus, (iv) "at the
market" to or through market makers or into an existing market for the Common
Stock, (v) in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through agents,
(vi) through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or (vii) any combination of the foregoing, or by
any other legally available means. In addition, the Selling Stockholders or
their successors in interest may enter into hedging transactions with
broker-dealers who may engage in short sales of shares of Common Stock in the
course of hedging the positions they assume with the Selling Stockholders. The
Selling Stockholders or their successors in interest may also enter into option
or other transactions with broker-dealers that require the delivery by such
broker-dealers of the Shares, which Shares may be resold thereafter pursuant to
this Prospectus.
Brokers, dealers, underwriters or agents participating in the
distribution of the Shares may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of Shares for whom such broker-dealers may act as agent or to whom they may sell
as principal, or both (which compensation as to a particular broker-dealer may
be in excess of customary commissions).
-10-
The Selling Stockholders and any broker-dealers acting in connection with the
sale of the Shares hereunder may be deemed to be underwriters within the meaning
of Section 2(11) of the Securities Act, and any commissions received by them and
any profit realized by them on the resale of Shares as principals may be deemed
underwiting compensation under the Securities Act. Neither the Company nor any
Selling Stockholder can presently estimate the amount of such compensation. The
Company knows of no existing arrangements between any Selling Stockholder and
any other stockholder, broker, dealer, underwriter or agent relating to the sale
of distribution of the Shares.
Each Selling Stockholder and any other persons participating in a
distribution of securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which may restrict certain activities of, and limit
the timing of purchases and sales of securities by, Selling Stockholders and
other persons participating in a distribution of securities. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions subject to specified exceptions or
exemptions. All of the foregoing may affect the marketability of the securities
offered hereby.
Any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
There can be no assurance that the Selling Stockholders will sell any
or all of the shares of Common Stock offered by them hereunder.
LEGAL MATTERS
The validity of the Shares offered hereby was passed upon for the
Company by Sullivan & Worcester LLP, Boston, Massachusetts 02109. John A.
Piccione, Esq., Secretary of the Company, is also a partner at Sullivan &
Worcester LLP. Mr. Piccione holds warrants to purchase 72,740 shares of Common
Stock.
EXPERTS
The consolidated financial statements of the Company as of and for the
year ended December 31, 1997 appearing in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1997, have been audited by Wolf &
Company, P.C. independent accountants as set forth in their report thereon. Such
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Act 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 Commission such indemnification is against
public policy as expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the Shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.
-11-
No dealer, salesman or other person has been authorized to give any
information or make any representation other than those contained in this
Prospectus. If given or made, such information or representations must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any of the
securities other than the specific securities to which it relates, or an offer
or solicitation to any person in any jurisdiction where such an offer or
solicitation would be unlawful.
TABLE OF CONTENTS
Page
Available Information....................................2
Incorporation of Certain
Documents by Reference.................................2
Prospectus Summary.......................................4
Risk Factors.............................................5
The Company............................................. 8
Use of Proceeds..........................................9
Selling Stockholders.....................................9
Plan of Distribution....................................10
Legal Matters...........................................11
Experts.................................................11
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities ..........................................11
1,441,224 Shares of Common Stock
FOCUS ENHANCEMENTS, INC.
______________
PROSPECTUS
______________
April |X|, 1998
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses in connection with the issuance and distribution of the
Common Stock to be registered are estimated (except for the Securities and
Exchange Commission filing fee) below. All such expenses will be paid by the
Registrant.
Registration Fee Under Securities Act $ 1,341.91
Blue Sky Fees and Expenses 5,000.00
Legal Fees and Expenses 15,000.00
Accounting Fees and Expenses 8,000.00
Printing and Mailing Costs 1,000.00
Miscellaneous Fees and Expenses 2,000.00
-------------
Total Expenses $ 32,341.91
=============
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, the Company's charter 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 Underwriting Agreement executed in connection with the Company's
initial public offering provides that the underwriters are obligated, under
certain circumstances, to indemnify directors, officers and controlling persons
of the Company against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Act"). Reference is made to the form of
Underwriting Agreement previously filed as Exhibit 1.1 to the Company's
Registration Statement on Form SB-2, No. 33-60248-B.
The Company has obtained directors and officers liability insurance for
the benefit of its directors and certain of its officers.
Reference is made to the Underwriting Agreement described above,
pursuant to which the Registrant agreed to indemnify each underwriter and each
person, if any, who controls any underwriter within the meaning of the Act, or
the Securities Exchange Act of 1934, as amended, against certain types of civil
liabilities arising in connection with the aforementioned Registration Statement
or the prospectus contained therein.
II-1
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
2 Agreement and Plan of Merger dated as of September 30, 1996,
by and among FOCUS Enhancements, Inc., a Delaware corporation,
FOCUS Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of FOCUS, and TView, Inc., a Delaware
Corporation(1).
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(2).
4.1 Specimen certificate for Common Stock of the Company(2).
4.2* Securities Purchase Agreement between the Company and JNC
Opportunity Fund Ltd. (the "Investor") dated February 27,
1998.
4.3* Registration Rights Agreement dated February 27, 1998.
4.4* Common Stock Purchase Warrant dated March 3, 1998 issued to
the Investor.
4.5* Form of Warrant dated March 3, 1998 issued to designees of the
Placement Agent(3).
5.1* Opinion of Sullivan & Worcester LLP
23.1* Consent of Wolf & Company, P.C., independent public
accountants
(1) Filed as an exhibit to the Company's Current Report on Form 8-K
dated November 4, 1996, and incorporated herein by reference.
(2) 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,
II-2
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
(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 Shares being registered which remain
unsold at the termination of the offering.
(b) 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.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared
effective; and
(2) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
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 Sudbury, Commonwealth of Massachusetts, on April
2, 1998.
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 Shares 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 April 2, 1998
Thomas L. Massie Officer and Director
(Principal Executive Officer)
April 2, 1998
/s/ Gary Cebula Vice President of Finance and
Gary Cebula Administration (Principal
Financia land Accounting Officer)
/s/ John C. Cavalier Director April 2, 1998
John C. Cavalier
/s/ William B. Coldrick Director April 2, 1998
William B. Coldrick
/s/ Timothy E. Mahoney Director April 2, 1998
Timothy E. Mahoney
II-5