As filed with the Securities and Exchange Commission on November 17, 1997
Registration No. 33-80033
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
POST - EFFECTIVE AMENDMENT NO. 1 ON FORM S-3
TO FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------
FOCUS ENHANCEMENTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11860 04-3186320
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
142 North Road
Sudbury, Massachusetts 01776
(508) 371-2000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Harry G. Mitchell
Chief Financial Officer
FOCUS Enhancements, Inc.
142 North Road
Sudbury, Massachusetts 01776
(508) 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 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|
Pursuant to Rule 429, this Registration Statement also amends
Registration Statement No. 33-60248- B on From SB-2 which was declared effective
on May 24, 1993.
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.
<PAGE>
Subject to Completion
Preliminary Prospectus Dated November 17, 1997
PROSPECTUS
FOCUS ENHANCEMENTS, INC.
3,498,855 Shares of Common Stock
150,000 Redeemable Common Stock Purchase Warrants
This Prospectus relates to 3,498,855 shares of Common Stock, $.01 par
value per share (the "Common Stock"), and 150,000 Redeemable Common Stock
Purchase Warrants (the "Unit Warrants") of FOCUS Enhancements, Inc., a Delaware
corporation (the "Company"). The Common Stock offered hereby consists of (a) up
to 2,896,507 shares issuable by the Company upon exercise of 1,632,755
Redeemable Common Stock Purchase Warrants issued to the public (the "Public
Warrants") in May 1993 in connection with the Company's initial public offering
(the "IPO"); (b) up to 160,000 shares issuable by the Company upon exercise of
warrants (the "Private Warrants") issued in private transactions to certain
persons by the Company; (c) up to 416,100 shares issuable by the Company upon
exercise of a warrant (the "Underwriter's Warrant"), including the Unit Warrants
contained therein, sold to Thomas James & Associates, Inc. (now known as H.J.
Meyers & Co., Inc.) in connection with the IPO; and (d) 26,248 shares currently
issued and outstanding offered by certain persons, who together with the holders
of the Private Warrants shall be hereinafter referred to as the"Selling
Stockholders." The Public Warrants are currently exercisable at a price of $6.75
per Warrant; the Private Warrants are exercisable at prices ranging from $1.25
to $2.07 per Warrant; the Underwriter's Warrant is exercisable to purchase
150,000 Units at a price of $5.74 per Unit, each Unit consisting of one share of
Common Stock and one Unit Warrant; and the Unit Warrants are exercisable at a
price of $9.11 per Warrant. Hereinafter, the Unit Warrants, the Public Warrants,
the Private Warrants and the Underwriter's Warrant shall be collectively
referred to as the "Warrants." To the extent that the Warrants are exercised,
the Company will receive proceeds equal to the exercise price of the Warrants.
The Common Stock held by the Selling Stockholders and the Common Stock issuable
to the Selling Stockholders upon the exercise of the Private Warrants is
registered hereunder for resale purposes only. The Company will not receive any
proceeds from the sale of Common Stock offered by the Selling Stockholders. See
"SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION."
The Common Stock offered by the Selling Stockholders may be offered and
sold from time to time by the Selling Stockholders, or by pledgees, donees or
transferees or other successors-in-interest, in privately negotiated
transactions directly or through brokers, or in the over-counter market and
otherwise at prices and on terms then prevailing. In connection with any sales,
the Selling Stockholders and any broker participating in such sales may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended.
The Common Stock and Public Warrants are traded on the Nasdaq Small-Cap
Market under the symbols FCSE and FCSEW, respectively. On November 14, 1997, the
last sale price of the Company's Common Stock as reported on the Nasdaq
Small-Cap Market was $5.00. See "PRICE RANGE OF COMMON STOCK."
----------------------
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 November __, 1997.
<PAGE>
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 Post-Effective Amendment on
Form S-3 to its Registration Statement on Form SB-2 (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 a 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/A-1 for the year ended December 31, 1996; (ii) the Company's Current
Report on Form 8K/A-1 filed on January 6, 1997 relating to the Company's
acquisition of TView , Inc.; (iii) the Company's Current Report on Form 8-K
filed on January 16, 1997 relating to the sale of securities pursuant to
Regulation S; (iv) the definitive Proxy Statement dated February 18, 1997
provided to stockholders in connection with a Special Meeting of Stockholders
held March 18, 1997; (v) the Company's Current Report on Form 8-K filed on March
3, 1997 relating to the sale of securities pursuant to Regulation S; (vi) the
definitive Proxy Statement filed with the Commission dated June 20, 1997
provided to
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<PAGE>
stockholders in connection with the Annual Meeting of Stockholders held on July
25, 1997; (vii) the Company's Quarterly Report on Form 10-QSB/A-1 for the period
ended March 31, 1997; (viii) the Company's Quarterly Report on Form 10-QSB/A-1
for the period ended June 30, 1997; (x) the Company's Quarterly Report on Form
10-QSB for the period ended September 30, 1997; and (x) 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 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: Harry G. Mitchell, telephone (508) 371-2000.
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<PAGE>
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's 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.............. 3,498,855 shares of Common Stock and
150,000 Redeemable Common Stock Purchase
Warrants (the "Unit Warrants"). The
Common Stock offered hereby consists of
(a) up to 2,896,507 shares issuable by
the Company upon exercise of 1,632,755
Public Warrants; (b) up to 160,000
shares issuable by the Company upon
exercise of the Private Warrants; (c) up
to 416,100 shares issuable upon exercise
of the Underwriter's Warrant; and (d)
26,248 shares currently issued and
outstanding offered by Selling
Stockholders. See "DESCRIPTION OF
SECURITIES."
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
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<PAGE>
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 September 30, 1997, the Company had working
capital of $5,160,342, cash and cash equivalents of $2,492,705 and was fully
drawn on its line of credit (approximately $750,000 at September 30, 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 1996, the Company
received approximately $6,116,000 in net proceeds from the exercise of warrants,
stock options and the sale of Common Stock. During the nine month period ended
September 30, 1997, the Company received approximately $5,783,174 in net
proceeds from the exercise of warrants, stock options and the sale of Common
Stock.
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 1997, 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 nine months ended September 30,
1997, approximately 22% of the Company's revenues were derived from sales to
Ingram Micro D ("Ingram"), a national distributor, approximately 19% of the
Company's revenues were derived from sales to SCI Systems, Inc. ("SCI"),
approximately 12% of the Company's revenues were derived from sales to Apple
Computer, Inc. ("Apple"), and approximately 11% of the Company's revenues were
derived from sales to Zenith Electronics, Inc. ("Zenith"). Management expects
that sales to Ingram, SCI and Zenith will continue to represent a significant
percentage of the Company's future revenues. In October 1996, the Company
entered into a two-year exclusive agreement with Zenith, under which Zenith must
purchase at least $12,000,000 of PC-to-TV conversion products in 1997 and at
least $30,000,000 of these products in 1998 in order to maintain exclusivity.
For the nine months ended September 30, 1997, the Company shipped approximately
$1,987,000 of PC-to-TV products to Zenith and projects that total shipments
through December 31, 1997 will be less than the $12 million contract minimum. As
a result, under the terms of the Agreement, Zenith has ceased to be an exclusive
OEM for the Company's PC to TV products in the television market.
History of Operating Losses. The Company has experienced limited
profitability since its inception and at September 30, 1997, had an accumulated
deficit of $19,763,443. Although the Company reported net income of $662,089 for
the nine-month period ended September 30, 1997, there can be no assurance that
the Company will remain profitable during the remainder of 1997.
The Company's independent auditors have included an explanatory
paragraph in their report on the Company's financial statements for the year
ended December 31, 1996 to the effect that the Company's ability to continue as
a going concern is contingent upon its ability to secure financing and attain
profitable operations. In addition, the Company's ability to continue as a going
concern must be considered in light of
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<PAGE>
the problems, expenses and complications frequently encountered by its entrance
into established markets and the competitive environment in which the Company
operates.
Limited Availability of Capital under Credit Arrangements with Lenders.
The Company maintains a line of credit with Silicon Valley Bank which was fully
drawn as of September 30, 1997. At December 31, 1996, the Company was in
violation of certain debt covenants relating to the line of credit. In March
1997, 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 March 1998. As
of September 30, 1997, approximately $750,000 is owed to the bank under the line
of credit.
In October 1994, the Company borrowed $2,500,000 from an unaffiliated
lender to help finance its inventory and accounts receivable under its Master
Purchase Agreement with Apple. The Company issued to this unaffiliated lender
its term note in the aggregate principal amount of $2,500,000. The term note
accrues interest at the revolving rate of prime plus 2%, is payable quarterly in
arrears at the end of December, March, June, and September, and was due February
1, 1996. In January 1996, the Company repaid approximately $1 million of the
amount owed under the term note. 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, however, there
can be no assurances that the term note will be extended on terms favorable to
the Company.
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 Single Vendor. In the nine months ended September 30, 1997,
approximately 68% of the components for the Company's products were secured and
manufactured on a turnkey basis by a single vendor, Pagg Corporation. In the
event that the vendor was 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 the third
quarter of 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 that it intends to ship in the fourth
quarter of 1997. A significant portion of the Company's anticipated revenues and
gross margins for 1997 are dependent on timely delivery of sufficient quantities
of the FOCUS Scan 300 Chip in order to fill pending 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 1997 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
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<PAGE>
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 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
three patents and expects to file two additional patents in the fourth quarter
of 1997 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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<PAGE>
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.
Based on an independent survey by PC Data Corp., the Company is an industry
leader in the development and marketing of PC-to-TV 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 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's 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"). 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 Egg Head;
and through third party mail order companies such as MicroWarehouse, Multiple
Zones, Global, PC Connection and Tiger Direct.
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, Toshiba and Apple 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 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 multimedia graphics products. Effective
September 30, 1996, the Company consummated the acquisition of TView, Inc., a
developer of PC-to-TV video conversion 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.
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 (508) 371-2000 and its worldwide web address is
http://www.focusinfo.com.
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<PAGE>
USE OF PROCEEDS
The gross proceeds to be received by the Company from exercise of all
of the Warrants (assuming that all of the Warrants are exercised) are
$13,522,496, and management intends to use such proceeds for general working
capital purposes including expenditures in connection with the development,
sales and marketing of future products for the Company.
The Company will not receive any proceeds from the resale by the
Selling Stockholders of the Shares.
SELLING STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of Shares of Common Stock by the Selling Stockholders as of the date
of this Prospectus and the number of such shares included for sale in this
Prospectus assuming the exercise of Warrants held by the Selling Stockholders
and the sale of all Shares being offered by this Prospectus. To the best of the
Company's knowledge, none of the Selling Stockholders have held any office or
maintained any material relationship with the Company or its predecessors or
affiliates over the past three years, except as set forth below. The Selling
Stockholders reserve the right to reduce the number of Shares offered for sale
or to otherwise decline to sell any or all of the Shares registered hereunder.
The calculation of the number of Shares owned after the Offering assumes that
all of the Shares offered hereby are sold.
<TABLE>
<CAPTION>
Shares to be Sold in Offering
-----------------------------
Shares Owned
Prior to Shares Shares Owned
Name of Selling Stockholder Offering Offered After Offering
--------------------------- ------------ ------- --------------
<S> <C> <C> <C>
Mark Allen (1) 6,935 6,935 0
Karl Brenza (1) 4,161 4,161 0
Marshall Cox (2) 10,000 10,000 0
Culverwell & Co., Inc. 50,000 50,000 0
Highlands Group (3) 10,000 10,000 0
David Hughes (1) 4,161 4,161 0
Fred Kassner (4) 50,000 50,000 0
Jodi Ogden (1) 1,387 1,387 0
Judith M. Ott Family Limited Partnership, III (5) 16,248 16,248 0
John A. Piccione (1)(6) 72,740 72,740 0
George Salloum (1) 4,161 4,161 0
James A. Villa (1) 367,555 367,555 0
Venture Investment Management Co., L.L.C. (7) 5,000 5,000 0
(footnotes on next page)
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<PAGE>
<FN>
(1) Represents shares issuable upon exercise of the Underwriter's Warrants originally issued to Thomas James Associates, Inc.
(now known as H.J. Meyers & Co., Inc.) in connection with the Company's initial public offering.
(2) This stockholder was a director of the Company from September 1992 until January 1996.
(3) Highlands Group is wholly-owned by Timothy Mahoney, a director of the Company.
(4) Mr. Kassner has provided a line of credit to the Company in the original principal amount of $2.5
million (currently $1.5 million).
(5) Ms. Ott, the General Partner of the Judith M. Ott Family Limited Partnership III, was the Secretary of the Company from
inception to August 1995 and a director of the Company from inception until 1993. Ms. Ott is also a partner in the law firm
that previously served as general counsel to the Company.
(6) Mr. Piccione is the Secretary of the Company and a partner at Sullivan & Worcester, LLP, the Company's general counsel.
(7) A predecessor firm of Venture Management Co., L.L.C. was formerly a principal stockholder of the Company.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
Of the 3,498,855 Shares being registered herein for sale by the Selling
Stockholders, (a) up to 2,896,507 shares are issuable by the Company upon
exercise of 1,632,755 Public Warrants; (b) up to 160,000 shares are issuable by
the Company upon exercise of the Private Warrants; (c) up to 416,100 shares are
issuable upon exercise of the Underwriter's Warrant; and (d) 26,248 shares are
currently issued and outstanding offered by Selling Stockholders. All Shares to
be registered hereby are to be offered by certain security holders of the
Company, and, other than the exercise price of the Warrants, the Company will
receive no proceeds from the sale of Shares offered hereby.
The Selling Stockholders may sell the Common Stock registered in
connection with this Offering on the NASDAQ market system or otherwise. There
will be no charges or commissions paid to the Company by the Selling
Stockholders in connection with the issuance of the Shares. It is anticipated
that usual and customary brokerage fees will be paid by the Selling Stockholders
upon sale of the Common Stock offered hereby. The Company will pay the other
expenses of this Offering. The Shares may be sold from time to time by the
Selling Stockholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market, or otherwise at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The Shares may be sold by one or more of the following: (a) a
block trade in which the broker so engaged will attempt to sell the Shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
an exchange distribution in accordance with the rules of NASDAQ; and (d)
ordinary brokerage transactions. In effecting sales, brokers or dealers engaged
by the Selling Stockholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from
Selling Stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Act in connection with such sales. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 of the Act may be sold under Rule 144 rather than pursuant
to this Prospectus.
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<PAGE>
The Company has agreed to indemnify certain of the Selling Stockholders
against certain liabilities, including certain liabilities under the Act, or to
contribute to payments which a Selling Stockholder may be required to make in
respect thereof.
LEGAL MATTERS
The validity of certain of shares of Common Stock offered hereby was
passed upon for the Company by Epstein, Becker & Green, P.C., Boston,
Massachusetts 02109. At the time that the opinion was issued, John A. Piccione,
Esq., currently Secretary of the Company, was an attorney at Epstein, Becker &
Green, P.C. Mr. Piccione holds options to purchase 45,000 shares of Common Stock
and warrants to purchase 27,735 shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company as of and for the
year ended December 31, 1996 appearing in the Company's Annual Report on Form
10-KSB/A-1 for the year ended December 31, 1996, have been audited by Wolf &
Company, P.C. independent accountants as set forth in their report thereon,
which report includes an explanatory paragraph regarding the Company's ability
to continue as a going concern, included therein and incorporated herein by
reference. 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.
The consolidated financial statements of FOCUS Enhancements, Inc. as of
and for the year ended December 31, 1995, included in the Annual Report on Form
10-KSB/A-1 of the Company for the fiscal year ended December 31, 1996 referred
to above have been audited by Coopers & Lybrand L.L.P., independent accountants,
as set forth in their report dated April 11, 1996, which included an explanatory
paragraph related to the Company's ability to continue as a going concern,
accompanying such financial statements, and are incorporated herein by reference
in reliance upon the report of such firm, which report is given upon their
authority 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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<PAGE>
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 as 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
3,498,855 Shares of Common Stock
150,000 Redeemable Common Stock
Purchase Warrants
FOCUS ENHANCEMENTS, INC.
______________
PROSPECTUS
______________
November__, 1997
<PAGE>
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 $ *
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 $31,000.00
==========
- ---------
* Previously paid
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
<PAGE>
Item 16. Exhibits
The following documents have been previously filed as Exhibits and are
incorporated herein by reference except those exhibits indicated with an
asterisk which are filed herewith:
Exhibit No. Description
3.1 Second Restated Certificate of Incorporation, as amended,
incorporated by reference to Exhibit No. 3.1 of the Company's
Registration Statement on Form SB-2 [Reg. No. 33-60248-B] and
as an exhibit to the Company's Form 10-QSB dated November 13,
1995.
3.2 Restated By-laws of the Company(1).
4.1 Specimen certificate for Common Stock of the Company(1).
4.2 Specimen certificate for Redeemable Common Stock Purchase
Warrant(1)
4.3 Form of Warrant Agreement between the Company, Mellon
Securities Trust Company and Thomas James Associates Inc. (1)
4.4 Form of Warrant issued to Thomas James Associates, Inc.(1)
5.1 Opinion of Testa, Hurwitz & Thibeault.(1)
5.2 Opinion of Epstein, Becker & Green, P.C. regarding legality of
shares registered hereunder, incorporated by reference to
Exhibit 5 of the Company's Registration Statement on Form SB-2
[Reg. No. 33-80033].
23.1* Consent of Wolf & Company, P.C., independent public
accountants
23.2* Consent of Coopers & Lybrand L.L.P.
23.3* Consent of KPMG Peat Marwick LLP
(1) Filed as an exhibit to the Company's Registration Statement on Form
SB-2, No. 33-60248-B, and incorporated herein by reference.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) (Section 230.424(b) of 17 C.F.R.) if, in the
aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
II-2
<PAGE>
(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
<PAGE>
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
November 17, 1997.
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 Harry G. Mitchell, 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas L. Massie President, Chief Executive Officer November 17, 1997
Thomas L. Massie and Director (Principal Executive
Officer)
Sr. Vice President, Chief Financial November 17, 1997
/s/ Harry G. Mitchell Officer and Treasurer (Principal
Harry G. Mitchell Financial and Accounting Officer)
/s/ John C. Cavalier Director November 17, 1997
John C. Cavalier
/s/ William B. Coldrick Director November 17, 1997
William B. Coldrick
/s/ U. Haskell Crocker II Director November 17, 1997
U. Haskell Crocker, II
/s/ Timothy E. Mahoney Director November 17, 1997
Timothy E. Mahoney
</TABLE>
II-4
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
FOCUS Enhancements, Inc. on Form S-3 of our report, which included an
explanatory paragraph about the Company's ability to continue as a going
concern, dated March 14, 1997, except for Notes 8 and 16 as to which the date is
March 31, 1997, and Note 2 as to which the date is October 20, 1997, on the
consolidated financial statements of FOCUS Enhancements, Inc. as of and for the
year ended December 31, 1996, appearing in the Annual Report on Form 10-KSB/A-1
of FOCUS Enhancements, Inc. for the year ended December 31, 1996. We also
consent to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
WOLF & COMPANY, P.C.
Boston, Massachusetts
November 17, 1997
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
FOCUS Enhancements, Inc. on Form S-3 of our report, which included an
explanatory paragraph about the company's ability to continue as a going
concern, dated April 11, 1996, on our audit of the consolidated financial
statements of FOCUS Enhancements, Inc. as of December 31, 1995 and for the year
then ended, which report is included in the Annual Report on Form 10-KSB/A-1 of
FOCUS Enhancements, Inc. for the year ended December 31, 1996. We also consent
to the reference to our firm under the caption "Experts".
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 17, 1997
Exhibit 23.3
Consent of Independent Certified Public Accountants
The Board of Directors
T.View, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-3 to be filed by FOCUS Enhancements, Inc.of our report dated September
13, 1996, with respect to the balance sheets of T. View, Inc. as of December 31,
1995 and 1994, and the related statements of operations, stockholders' equity,
and cash flows for the years ended December 31, 1995 and 1994, which report
appears in the Form 8-K/A-1 of FOCUS Enhancements, Inc., dated January 6, 1997.
KPMG Peat Marwick LLP
Portland, Oregon
November 14, 1997
