REOFFER
PROSPECTUS
FOCUS ENHANCEMENTS, INC.
350,000 Shares of Common Stock
This Prospectus relates to the offer and sale from time to time of up
to 350,000 shares (the "Shares") of common stock, $.01 par value per share (the
"Common Stock") of FOCUS Enhancements, Inc. (the "Company"), by Digital Vision,
Inc., (the "Selling Stockholder"), or by its pledgees, donees, transferees or
other successors in interest that receive such Shares as a gift, distribution or
other non-sale related transfer. The Shares were issued by the Company to the
Selling Stockholder on March 31, 1998 as partial payment for certain assets sold
by the Selling Stockholder to the Company (the "Sale of Assets"). The Company
will not receive any proceeds from the sale of the Shares by the Selling
Stockholder. 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 Stockholder, or its 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 Stockholder, its 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 Stockholder, its 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 STOCKHOLDER" and "PLAN OF DISTRIBUTION."
The Common Stock is traded on the Nasdaq SmallCap Market under the
symbol FCSE. On June 25, 1998, the last sale price of the Company's Common Stock
as reported on the Nasdaq SmallCap Market was $2.50.
----------------------
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 July 6, 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 Stockholder. 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 Company's Quarterly
Report on Form 10-QSB for the quarter ended March 31, 1998; (iii) the definitive
Proxy Statement filed with the Commission dated April 30, 1998 provided to
stockholders in connection with the Annual Meeting of Stockholders to be held on
July 31, 1998; and (iv) 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 the termination of the
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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 (978) 371-2000.
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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
Windows(TM) and Mac(TM)OS based personal
computers. The Company's proprietary PC-to-TV
video conversion products include video
output devices marketed and sold under the
Company's registered brand name, 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 or even collective viewing of
spreadsheets or 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........... 350,000 Shares. See "SELLING STOCKHOLDER."
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
Stockholder at the time of sale.
USE OF PROCEEDS.............. 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
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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 March 31, 1998, the Company had working
capital of $5,825,071, cash and cash equivalents of $1,164,624 and was fully
drawn on its line of credit (approximately $690,000 at March 31, 1998) 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 $6,081,939 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 a
Private Placement, and in May 1998, the Company received approximately
$6,000,000 in proceeds from the exercise of Common Stock Purchase Warrants
issued in connection with the Company's initial public 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 three months ended March 31, 1998,
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 March 31, 1998, had an accumulated
deficit of $22,046,863. The Company incurred net losses of $10,772,410 and
$1,986,079 for the years ended December 31, 1996 and 1997, respectively. The
Company had net income of $364,748 and $16,476 for the first three months of
1997 and 1998, 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 ($690,000 was owed to the bank at March 31, 1998). 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. In March 1998, the Company 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 Silicon Valley Bank
to extend the line for an additional term. The Company is currently in
discussions with another lender to refinance this line.
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The Company also currently owes $1.5 million to an unaffiliated lender
pursuant to a term note that 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 the principal 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 anticipates paying this lender with capital raised from
recent warrant exercises.
In the event that the Company is unsuccessful in refinancing its bank
line of credit or the Company is unable to pay the unaffiliated lender 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 Two 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 is incorporating into all of its next generation PC-to-TV
video-graphics products. The Company is relying on an outside vendor to
manufacture 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.
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
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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 has filed
five patent applications and expects to file two additional patent applications
in 1998 with respect to its PC-to-TV video-graphics products, 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.
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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 Mac's(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, Zenith Electronics, Port, 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. In March
1998, the Company acquired Digital Vision, Inc., a developer of PC-to-TV Video
Scan converters and TV-to-PC video frame capture products for the personal
computer marketplace.
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
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.
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USE OF PROCEEDS
The Company will not receive any proceeds from the resale by the
Selling Stockholder of the Shares.
SELLING STOCKHOLDER
The Shares being offered for resale by the Selling Stockholder were
acquired in connection with the Sale of Assets. In connection with the Sale of
Assets, the Company granted the Selling Stockholder 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
Stockholder and its officers, directors, members, employees, partners, agents
and each person who controls the Selling Stockholder 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 the Selling Stockholder, the
number of shares of Common Stock beneficially owned by the Selling Stockholder
as of June 26, 1998 and the number of Shares being offered by the Selling
Stockholder. The Shares being offered hereby are being registered to permit
public secondary trading, and the Selling Stockholder may offer all or part of
the Shares for resale from time to time. However, the Selling Stockholder is
under no obligation to sell all or any portion of the Shares nor is the Selling
Stockholder obligated to sell any Shares immediately under this Prospectus. All
information with respect to share ownership has been furnished by the Selling
Stockholder. Because the Selling Stockholder may sell all or part of its Shares,
no estimates can be given as to the number of Shares that will be held by the
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)
Digital Vision, Inc. 350,000 350,000 - 0 -
<FN>
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. The entity named in
the table above has sole voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by it.
(2) Assumes all Shares offered hereby are sold in the Offering.
</FN>
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PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by the Selling
Stockholder or by pledgees, donees or transferees of, or successors in interest
to, the Selling Stockholder, 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 Stockholder or its
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 Stockholder. The Selling Stockholder
or its 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 Stockholder 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). The Selling Stockholder 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 underwriting compensation under the
Securities Act. Neither the Company nor the Selling Stockholder can presently
estimate the amount of such compensation. The Company knows of no existing
arrangements between the Selling Stockholder and any other stockholder, broker,
dealer, underwriter or agent relating to the sale of distribution of the Shares.
The 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 purchasers and sales of securities by the Selling Stockholder 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 Stockholder will sell any or
all of the shares of Common Stock offered hereunder.
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LEGAL MATTERS
The validity of the shares of Common Stock offered hereby was passed
upon for the Company by Sullivan & Worcester LLP, Boston, Massachusetts 02109.
John A. Piccione, Esq., is a partner at Sullivan & Worcester LLP. Mr. Piccione
holds options to purchase 45,000 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.
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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 Stockholder............................... 9
Plan of Distribution.............................. 9
Legal Matters..................................... 11
Experts........................................... 11
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities ..................................... 11
350,000 Shares of Common Stock
FOCUS ENHANCEMENTS, INC.
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PROSPECTUS
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July 6, 1998