SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A #1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported): MAY 14, 1996
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FOCUS ENHANCEMENTS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11860 04-3186320
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
800 WEST CUMMINGS PARK, SUITE 4500, WOBURN, MASSACHUSETTS 01801
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: (617) 938-8088
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Total number of pages: 4
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not Applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Not Applicable
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not Applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Effective May 14, 1996, Coopers & Lybrand L.L.P. resigned as the
independent accountants of FOCUS Enhancements, Inc. (the "Registrant").
The report of Coopers & Lybrand L.L.P. on the Registrant's financial
statements for the years ended December 31, 1994 and 1995 included an
explanatory paragraph regarding the Registrant's ability to continue as a going
concern. The foregoing notwithstanding, the report of Coopers & Lybrand L.L.P.
did not contain any other adverse opinion, a disclaimer of opinion or
qualification as to uncertainty, audit scope or accounting principles.
Except as set forth in the letter dated June 4, 1996 from Coopers &
Lybrand L.L.P. to the Securities and Exchange Commission, (a copy of which is
filed herewith as an exhibit) in connection with the audits of the Registrant's
financial statements for the years ended December 31, 1994 and 1995, and during
the subsequent interim period through May 14, 1996, there were no disagreements
between the Registrant and Coopers & Lybrand L.L.P. relative to accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to the satisfaction of Coopers & Lybrand
L.L.P., would have caused Coopers & Lybrand L.L.P. to make reference to the
matter in its report. None of the reportable events listed in Item 304
(a)(l)(iv)(B) of Regulation S-B occurred with respect to the Registrant during
the years ended December 31, 1994 and 1995 and the subsequent interim period
preceding the resignation of Coopers & Lybrand L.L.P.
The Registrant has not to date engaged an independent accounting firm
to perform the audit for the year ending December 31, 1996, although it is
currently in discussions with other accounting firms and expects to engage a new
firm by June 30, 1996.
ITEM 5. OTHER EVENTS
Not Applicable
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
Not Applicable
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of business acquired -- none.
(b) Pro forma financial information -- none.
(c) Exhibits
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The following exhibits are filed herewith:
Exhibit No.
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*16a. Letter from Coopers & Lybrand L.L.P. to Registrant
16b. Letter from Coopers & Lybrand L.L.P. to the Commission
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*Previously filed.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FOCUS ENHANCEMENTS, INC.
By: /s/ Jeremiah J. Cole, Jr.
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Jeremiah J. Cole, Jr.
Vice President of Finance
Date: June 5, 1996
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COOPERS COOPERS & LYBRAND L.L.P. One Post Office Square
& LYBRAND a professional services firm Boston, MA 02109
One International Place
Boston, MA 02110
telephone (617)478-5000
facsimile (617)478-5900
June 4, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We have read the statements made by FOCUS Enhancements, Inc. as part of the
Company's Form 8-K report for the month of May 1996, which we understand was
filed with the Commission, pursuant to Item 4 of Form 8-K. We do not agree with
the statements concerning our Firm in the third paragraph of Item 4 contained in
such Form 8-K. Disagreements with the Company relating to matters that would
have led to reference thereto in our report if such matters had not been
resolved to our satisfaction are described below.
During the course of our audit of the Company's consolidated financial
statements for the fiscal year ended December 31, 1995, there were
"disagreements," as described in Item (a)(l)(iv) of Regulation S-B, between the
Company and us on matters of accounting principles and practices. As a result of
the Company's subsequent recording of adjustments totaling approximately
&847,000, which reduced net income to approximately $329,000, these matters were
resolved to our satisfaction prior to the issuance of the Company's December 31,
1995 financial statements included in its Form 10-KSB.
The disagreements consisted of the following matters:
o The matter with respect to accounts receivable involved the level of
reserves recorded for potential bad debts and product returns subsequent to
year-end. The Company recorded adjustments to increase its allowance for
doubtful accounts and to reserve sales related to credits issued or
estimated subsequent to year-end for product returns, sales promotions and
other items related to 1995 activities.
o The matter with respect to inventory involved the method used by the
Company to apply overhead to inventory and the level of reserves and
adjustments recorded for potential excess or obsolete and other
unrecoverable inventory items. The Company recorded adjustments to reduce
inventory and to increase inventory valuation reserves.
o The matter with respect to intangible assets involved the Company's
assessment of the net realizable value of goodwill related to its
acquisition of Inline Software, Inc. in May 1994. The Company recorded an
adjustment to write-off such goodwill and reduced from five years to two
years the remaining amortization period of other intangible assets related
to the acquisition.
Securities and Exchange Commission
Page 2.
o The matter with respect to warrants involved the value initially ascribed
and recorded by the Company related to various warrants issued in
connection with debt financings and services. As part of the resolution of
the disagreement, the Company engaged an investment banking firm to perform
a valuation of such warrant issuances. Based on that analysis, the Company
recorded values for these warrants as interest expense and compensation for
services.
These matters were discussed by us with the Audit Committee of the Company's
Board of Directors. The Company has authorized Coopers & Lybrand L.L.P. to
respond fully to the inquiries of the successor accountant concerning the
subject matter of each of the disagreements described above.
Very truly yours,
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
