FORM 10-QSB


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
              OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended: June 30, 1997

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from _______ to _______

                         Commission File Number 1-11860


                            FOCUS Enhancements, Inc.
        (Exact name of small business issuer as specified in its charter)


             Delaware                            04-3186320 
  (State or other jurisdiction of              (IRS Employer
   incorporation or organization)           identification No.)


                                 142 North Road
                               Sudbury, MA 01776
                    (Address of principal executive offices)

                                (508) 371 - 2000
                          (Issuer's telephone number)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes __X__ No_____

As of June 30, 1997, there were outstanding  12,719,019  shares of Common Stock,
$.01 par value per share.



<PAGE>



                            FOCUS ENHANCEMENTS, INC.
                                  FORM 10-QSB

                                QUARTERLY REPORT
                                 June 30, 1997

                               TABLE OF CONTENTS


                                                                       Page

Facing Page
                                                                         1


Table of Contents
                                                                         2

PART I.  FINANCIAL INFORMATION

         Item 1. Consolidated Financial Statements:

              Consolidated Balance Sheets at June 30, 1997 
              and December 31, 1996                                      3

              Consolidated Statements of Operations
              for the Three Months Ended June 30, 1997 and 1996          4

              Consolidated Statement of Operations
              for the Six Months Ended June 30, 1997 and 1996            5

              Consolidated Statements of Cash Flows
              for the Six Months Ended June 30, 1997 and 1996            6

              Notes to Consolidated Financial Statements                7-9

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                  10-19

PART II.  OTHER INFORMATION


         Item 1.   Legal Proceedings                                     20
         Item 2.   Changes in Securities                                 20
         Item 3.   Defaults Upon Senior Securities                       20
         Item 4.   Submission of Matters to a Vote of Security Holders  20-21
         Item 5.   Other Information                                     21
         Item 6.   Exhibits and Reports on Form 8-K                      21


SIGNATURES                                                               22


                                       2



<PAGE>


<TABLE>
<CAPTION>


                            FOCUS ENHANCEMENTS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)


                                     ASSETS

                                                                                     June 30,       December 31,
                                                                                      1997              1996
                                                                                  -------------    -------------
<S>                                                                              <C>             <C>
Current Assets:
     Cash and cash equivalents                                                     $  1,262,546    $    413,894
     Accounts receivable, net of allowance of $321,733 and $488,605                   6,282,769       3,613,565
     Inventories                                                                      2,303,744       1,975,381
     Prepaid expenses and other current assets                                          221,429         243,829
                                                                                   ------------    ------------
         Total current assets                                                        10,070,488       6,246,669

Property and equipment, net                                                             797,360         483,591
Other assets, net                                                                     1,307,472       1,273,980
Goodwill, net                                                                         1,358,428       1,467,106
                                                                                   ------------    ------------
         Total assets                                                              $ 13,533,748    $  9,471,346
                                                                                   ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Notes payable                                                                 $  2,497,458    $  2,517,458
     Obligations under capital leases                                                   118,744         124,132
     Accounts payable                                                                 5,497,697       3,584,284
     Accrued liabilities                                                                556,941         628,304
                                                                                   ------------    ------------
         Total current liabilities                                                    8,670,840       6,854,178

Obligations under capital leases                                                         40,586          80,666
                                                                                   ------------    ------------

         Total liabilities                                                            8,711,426       6,934,844
                                                                                   ------------    ------------

Commitments
Stockholders' equity
     Preferred stock, $.01 par value;  3,000,000 shares authorized,  none issued
     Common stock, $.01 par value; 20,000,000 shares authorized,
         12,719,019 and 11,301,845 shares issues and outstanding at
         June 30, 1997 and December 31, 1996, respectively                              127,190         113,018
     Additional paid-in capital                                                      23,308,503      21,285,037
     Accumulated deficit                                                            (18,613,371)    (18,861,553)
                                                                                   ------------    ------------
         Total stockholders' equity                                                   4,822,322       2,536,502
                                                                                   ------------    ------------
         Total liabilities and stockholders' equity                                $ 13,533,748    $  9,471,346
                                                                                   ============    ============

</TABLE>
                  The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       3

<PAGE>


                            FOCUS ENHANCEMENTS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                             Three Months Ended
                                          June 30,        June 30,
                                           1997             1996
                                       ------------    ------------    

Net sales                              $  6,124,867    $  4,369,255

Cost of goods sold                        4,057,809       2,588,476
                                       ------------    ------------

      Gross profit                        2,067,058       1,780,779
                                       ------------    ------------
Operating expenses:

      Sales, marketing and support        1,012,253         829,656

      General and administrative            474,476         463,972

      Research and development              252,436         334,689
                                       ------------    ------------

            Total operating expenses      1,739,165       1,628,317
                                       ------------    ------------

Income from operations                      327,893         152,462

Interest expense, net                       (67,703)        (65,729)
Other income (expense)                      (26,883)         (2,481)
                                       ------------    ------------

Income before income taxes                  233,307          84,252

Income tax expense                            1,600           2,500
                                       ------------    ------------

Net income                             $    231,707    $     81,752
                                       ============    ============

Net income per common share
            Primary                    $       0.02    $       0.01
                                       ============    ============
            Fully Diluted              $       0.02    $       0.01
                                       ============    ============

Weighted average common and common
      equivalent shares outstanding
            Primary                      13,337,853       8,561,504
                                       ============    ============
            Fully Diluted                13,319,486       9,102,537
                                       ============    ============

                  The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       4
<PAGE>


                            FOCUS ENHANCEMENTS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                              Six Months Ended
                                          June 30,        June 30,
                                           1997             1996
                                       ------------    ------------    

Net sales                              $ 10,926,417    $  8,171,134

Cost of goods sold                        7,325,650       7,714,286
                                       ------------    ------------

      Gross profit                        3,600,767         456,848
                                       ------------    ------------
Operating expenses:

      Sales, marketing and support        1,965,217       1,976,785

      General and administrative            859,568       1,232,325

      Research and development              431,838         617,941
                                       ------------    ------------

            Total operating expenses      3,256,623       3,827,051
                                       ------------    ------------

Income from operations                      344,144      (3,370,203)

Interest expense, net                      (134,943)       (170,103)
Other income (expense)                       42,132         (12,792)
                                       ------------    ------------

Income (loss) before income taxes           251,333      (3,553,098)

Income tax expense                            3,150          10,000
                                       ------------    ------------

Net income (loss)                      $    248,183    $ (3,563,098)
                                       ============    ============


Net income (loss) per common share
            Primary                    $       0.02    $      (0.45)
                                       ============    ============
            Fully Diluted              $       0.02    $      (0.45)
                                       ============    ============

Weighted average common and common
      equivalent shares outstanding
            Primary                      12,538,386       7,974,362
                                       ============    ============
            Fully Diluted                12,692,614       7,974,362
                                       ============    ============


                  The accompanying notes are an integral part
                    of the consolidated financial statements.


                                       5
<PAGE>
<TABLE>
<CAPTION>

                            FOCUS ENHANCEMENTS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                                                        Six Months Ended
                                                                                    June 30,        June 30,
                                                                                      1997           1996
                                                                                  ------------   ------------
<S>                                                                              <C>            <C>
Cash flows from operating activities:
      Net income (loss)                                                           $   248,183    $(3,563,098)
      Adjustments to reconcile net income (loss) to net cash provided (used in)
         operating activities:
          Depreciation and amortization                                               191,681        390,715
          Gain on forgiveness of accounts payable                                     (70,202)          --
          Changes in operating assets and liabilities:
               (Increase) decrease in accounts receivable                          (2,669,204)    (2,736,188)
               (Increase) decrease in notes receivable                                   --          (37,957)
               Decrease (increase) in inventories                                    (328,363)       (31,989)
               Decrease (increase) in prepaid expenses and other assets               (11,092)       177,528
               Increase (decrease) in accounts payable                              1,983,615        850,503
               Increase (decrease) in accrued liabilities                             (71,364)       609,088
                                                                                  -----------    -----------

          Net cash provided (used in) operating activities                           (726,746)    (4,341,398)
                                                                                  -----------    -----------

Cash flows from investing activities:
      Purchase of property and equipment                                             (396,772)       (78,207)
                                                                                  -----------    -----------

          Net cash used in investing activities                                      (396,772)       (78,207)
                                                                                  -----------    -----------

Cash flows from financing activities:
      Payments on notes payable                                                       (20,000)    (1,040,000)
      Payments under capital lease obligations                                        (45,468)       (80,652)
      Net proceeds from private offerings of common stock                           1,996,813      3,015,528
      Net proceeds from exercise of common stock options and warrants                  40,825        994,766
                                                                                  -----------    -----------

          Net cash provided by financing activities                                 1,972,170      2,889,642
                                                                                  -----------    -----------

Net increase (decrease) in cash and cash equivalents                                  848,652     (1,529,963)

Cash and cash equivalents at beginning of period                                      413,894      2,140,043
                                                                                  -----------    -----------

Cash and cash equivalents at end of period                                        $ 1,262,546    $   610,080
                                                                                  ===========    ===========
</TABLE>

                  The accompanying notes are an integral part
                    of the consolidated financial statements.



                                       6


<PAGE>



                            FOCUS Enhancements, Inc.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION

         The consolidated financial statements of FOCUS Enhancements, Inc. ("the
Company") as of June 30, 1997 and for the three and six month periods ended June
30,  1997 and 1996 are  unaudited  and  should be read in  conjunction  with the
consolidated  financial statements and notes thereto for the year ended December
31, 1996  included in the  Company's  Annual  Report on Form 10-KSB for the year
ended  December 31, 1996.  The  consolidated  financial  statements  include the
accounts of the Company and its wholly owned  subsidiaries  Lapis  Technologies,
Inc., TView, Inc. and FOCUS Enhancements b.v. and FOCUS Networking,  Inc. In the
opinion  of  management,  the  consolidated  financial  statements  include  all
adjustments  (consisting only of normal recurring  adjustments)  necessary for a
fair  presentation  of the  results  of the  interim  periods.  The  results  of
operations  for the three  and six month  periods  ended  June 30,  1997 are not
necessarily  indicative  of the  results  that may be  expected  for any  future
period.

2.       NET INCOME (LOSS) PER SHARE

         Per share amounts are calculated  using the weighted  average number of
common shares and common share  equivalents  outstanding  during  periods of net
income.  Common share  equivalents are attributable to unexercised stock options
and warrants and are computed using the treasury stock method. Per share amounts
are  calculated  using  only  the  weighted  average  number  of  common  shares
outstanding during periods of net loss.

          In February  1997,  the Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting  Standards No. 128 - Earnings Per Share. This
Statement  is effective  for  financial  statements  for both interim and annual
periods  ending after December 15, 1997.  Earlier  application is not permitted.
However,  an entity is permitted to disclose pro forma  earnings per share (EPS)
amounts  computed using this Statement in the notes to the financial  statements
in periods  prior to required  adoption.  After the  effective  date,  all prior
period EPS data  presented  shall be restated to conform with the  provisions of
this Statement.

         The  Company has  elected to  disclose  pro forma EPS amounts  computed
using this Statement, as follows:


                                       Three Months Ended June 30,
                            -----------------------------------------------
                                     1997                     1996
                                     ----                     ----
                              Shares      Per Share     Shares    Per Share
                                            Amount                  Amount

Basic EPS                   12,716,005     $0.02      8,561,504     $.01
                            ==========     =====      =========     ====
Diluted EPS                 13,337,853     $0.02      9,102,537     $.01
                            ==========     =====      =========     ====


                                       Six Months Ended June 30,
                            -----------------------------------------------
                                     1997                     1996
                                     ----                     ----
                              Shares      Per Share     Shares    Per Share
                                            Amount                  Amount

Basic EPS                   12,123,306     $0.02      7,974,362     $.(45)
                            ==========     =====      =========     ======
Diluted EPS                 12,538,386     $0.02      7,974,362     $.(45)
                            ==========     =====      =========     ======


                                       7



<PAGE>

3.                INVENTORIES

         Inventories consist of the following:


                                       June 30,       December 31,
                                     ----------       ------------
                                         1997            1996
                                         ----            ----
Finished goods                       $1,683,632       $ 1,555,812
Raw materials                           620,112           419,569
                                     ----------       -----------
                                     $2,303,744       $ 1,975,381
                                     ==========       ===========


4.       NOTES PAYABLE

         Lines of Credit,  Banks.  The Company  maintains  a  revolving  line of
credit with a bank which is fully drawn as of June 30,  1997.  Borrowings  under
the line are payable upon demand and are  collateralized by all of the assets of
the Company, except as noted below. Borrowings, aggregating $800,000 at June 30,
1997, bear interest at the bank's prime rate plus 1% (9.5% at June 30, 1997) and
are personally  guaranteed by an investor. In March 1997, the line of credit was
extended to March 8, 1998.

         The Company  has an  additional  revolving  line of credit with a bank,
which is fully drawn as of June 30, 1997.  Borrowings under the line are payable
upon  demand and are  collateralized  by certain  inventory  of the  Company and
marketable securities of certain affiliates. Interest is payable monthly at 1.5%
above  the  prime  rate,  as  defined  (10.00%  at June  30,  1997).  Borrowings
outstanding  under  the line of credit as of June 30,  1997 were  $197,458.  The
Company has not renewed the line.

         Term Line of Credit.  At June 30, 1997, the Company owed  $1,500,000 to
an unrelated  individual under a term line of credit  originated in October 1994
in the principal amount of $2,500,000.  Borrowings under the line of credit were
made  pursuant to a  promissory  note that was due on March 31, 1997 and was not
paid.  The Company is in the process of  renegotiating  the terms and expiration
date of this loan with the  lender.  In the event that the  unaffiliated  lender
does not extend the due date,  the Company  would be required to pay the amounts
outstanding from working capital or from an equity or debt financing.

                                       8
<PAGE>

5.       COMMON STOCK TRANSACTIONS

         In January 1997,  the Company sold  approximately  75,000 shares of its
common stock,  valued at  approximately  $138,750,  in connection with a private
offering  to  foreign  investors.  This  stock is  unregistered  and  subject to
restrictions  on  trading in the United  States for a period of forty  days.  In
connection  with the  offering,  the Company paid  approximately  $26,250 to the
underwriter. Net proceeds of the private offering were approximately $112,500.

         On February 12, 1997, the Company sold approximately  218,181 shares of
common stock for gross proceeds of  approximately  $338,181 in connection with a
private offering to foreign investors. This stock is unregistered and subject to
restrictions  on  trading in the United  States for a period of forty  days.  In
connection with the offering,  the Company  incurred fees of $38,181,  receiving
net proceeds of $300,000.

         On March 27, 1997, the Company  completed a financing of  approximately
$1,650,000 in gross proceeds for the sale of  approximately  1,100,000 shares of
Common Stock in a private placement to unaffiliated  accredited  investors.  The
shares issued as part of this transaction were registered  through Form S-3 with
the  Securities  and  Exchange  Commission  on May 12,  1997.  Fees and expenses
associated  with this  offering  amounted to $76,000  yielding  net  proceeds of
$1,574,000.  In  connection  with  this  transaction,  the  Board  of  Directors
authorized  the grant of warrants  to the  Placement  Agent to purchase  110,000
shares of the  Company's  common  stock at a price per share equal to the common
stock price on the date of the closing  ($1.6875  per share)  exercisable  for a
period of five years.


6.       REDEEMABLE COMMON STOCK PURCHASE WARRANTS


         In  accordance  with  the  anti-dilution  provisions  of the  Company's
Redeemable Common Stock Purchase Warrants (the "Warrants")  issued in connection
with the  Company's  initial  public  offering  in May  1993,  the  terms of the
Warrants  have been amended so that upon  exercise,  a holder will receive 1.774
shares of Common Stock for each Warrant exercised.  The Warrants are exercisable
at a price of $6.75 per Warrant until May 23, 1998.

                                       9
<PAGE>



ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

         The  following  information  should  be read in  conjunction  with  the
consolidated  financial  statements  and notes thereto in Part I, Item 1 of this
Quarterly  Report and with  Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations  contained in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1996.

         The  Company  does  not  provide  forecasts  of  the  future  financial
performance of the Company.  However, from time to time, information provided by
the Company or statements  made by its employees may contain  "forward  looking"
information  that involves risks and  uncertainties.  In particular,  statements
contained in this Form 10-QSB which are not historical facts constitute  forward
looking  statements and are made under the safe harbor provisions of the Private
Securities  Litigation Reform Act of 1995. Each forward looking statement should
be read in  conjunction  with the  consolidated  financial  statements and notes
thereto in Part I, Item 1, of this  Quarterly  Report  and with the  information
contained in Item 2, including,  but not limited to,  "Certain  Factors That May
Affect  Future  Results"  contained  herein,   together  with  the  Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
contained  in the  Company's  Annual  Report on Form  10-KSB  for the year ended
December 31, 1996,  including,  but not limited to, the section therein entitled
"Certain Factors That May Affect Future Results."

RESULTS OF OPERATIONS

               Three-Month Period Ended June 30, 1997 As Compared
                With The Three-Month Period Ended June 30, 1996

Net Sales

         Net sales for the three-month period ended June 30, 1997 ("Q2 97") were
$6,124,867 as compared with $4,369,255 for the three-month period ended June 30,
1996 ("Q2 96"),  an increase of  $1,755,612  or 40%.  The growth in net sales is
attributed  to orders from new customers  and  increased  product  awareness and
acceptance of the Company's PC to TV products.  Specifically, net sales in Q2 97
to the Company's US resellers  increased 32% to $3,540,000 from $2,687,000 in Q2
96. In Q2 96, sales to US resellers  included  $1,568,000  of sales of inventory
related to Apple's  Powerbook 190 and 5300 laptop  computers which products have
been  discontinued.  Net sales to  international  resellers rose 16% to $648,000
from  $558,000  for the same  quarter  in 1996.  Net  sales  from  OEM/Licensing
customers  increased  72% to $1,937,000  in Q2 97 from  $1,124,000  for the same
quarter in 1996.  This increase  reflects  primarily OEM sales to Apple Computer
("Apple").  In Q2 97,  sales to  Apple  represented  29% of  total  sales in the
quarter as compared to 1% of total sales in Q2 96.

         As of  June  30,  1997,  the  Company  had a  sales  order  backlog  of
approximately $2.1 million.

                                       10
<PAGE>

Cost of Goods Sold

         Cost  of  goods  sold  were  $4,057,809  or 66% of net  sales,  for the
three-month  period ended June 30, 1997, as compared  with  $2,588,476 or 59% of
net sales,  for the  three-month  period  ended June 30,  1996,  an  increase of
$1,469,333 or 57%. The Company's  gross profit  margins for Q2 97 and Q2 96 were
34% and  41%,  respectively.  The  increase  in cost of goods  sold in  absolute
dollars  is due  principally  to the  increased  sales  volume of the  Company's
PC-to-TV products.  As a percentage of sales, cost of goods sold was lower in Q2
96 due to the sale in Q2 96 of  previously  written-down  inventory  related  to
Apple's Powerbook 190 and 5300 laptop computers.

Sales, Marketing and Support Expenses

         Sales,  marketing and support  expenses were $1,012,253 or 16.5% of net
sales,  for the  three-month  period  ended  June 30,  1997,  as  compared  with
$829,656,  or 19% of net sales, for the three-month  period ended June 30, 1996,
an increase of 182,597 or 22%. The increase in  absolutedollars is due primarily
to increased  sales  commissions  as a result of increased  sales from period to
period and, an increase in advertising and trade show events.

General and Administrative Expenses

         General and  administrative  expenses for the three-month  period ended
June 30, 1997 were $474,476 or 7.7% of net sales, as compared with $463,972,  or
10.6% of net sales for the  three-month  period ended June 30, 1996, an increase
of $10,504 or 2.3%.  The  increase  in  absolute  dollars  is due  primarily  to
increased payroll and benefits.

Research and Development Expenses

         Research and development expenses for the three-month period ended June
30, 1997 were $252,436,  or 4% of net sales, as compared to $334,689, or 7.7% of
net sales,  for three-month  period ended June 30, 1996, a decrease of $(82,253)
or (24.6)%. The decrease is due principally to reductions in consulting expenses
of $25,000,  in employee recruiting costs of $16,000, in R&D supplies of $15,000
and in travel of  $13,000.  During Q2 97, the Company  capitalized  $64,000 as a
fixed asset in connection  with the  manufacture of the FOCUS Scan300 ASIC masks
which amounts are to be amortized over the expected life of the ASIC technology.

Interest Expense, Net

         Net interest expense for the three-month period ended June 30, 1997 was
$(67,703), or 1.1% of net sales, as compared to $(65,729), or 1.5% of net sales,
for the three-month period ended June 30, 1996, an increase of $1,974, or 3%.

Other Income (Expense)

         Other Income  (Expense) for the three-month  period ended June 30, 1997
was $(26,883),  as compared to $(2,481),  for the three-month  period ended June
30, 1996, an increase of $24,402.

                                       11
<PAGE>


Net Income

         For the quarter ended June 30, 1997, the Company reported net income of
$231,707,  or $0.02 per share,  as compared to a net income of $81,752,  or $.01
per share, for the quarter ended June 30, 1996.


                Six-Month Period Ended June 30, 1997 As Compared
                 With The Six-Month Period Ended June 30, 1996

Net Sales


         Net  sales  for the  six-month  period  ended  June 30,  1997  (the "97
Period") were  $10,926,417 as compared with $8,171,134 for the six-month  period
ended June 30, 1996 (the "96  Period"),  an increase of  $2,755,283  or 34%. The
growth in net sales is  attributable  primarily to increased  orders from global
reseller  customers as a result of increased product awareness and acceptance of
the Company's PC-to-TV products. Specifically, in the 97 Period net sales to the
Company's US resellers  increased  42% to $6,439,000  from  $4,530,000 in the 96
Period.  Net  sales to  international  resellers  in the 97  Period  rose 34% to
$1,418,000  from  $1,054,000  for the  same  period  in  1996.  Net  sales  from
OEM/Licensing  customers  increased  19% to  $3,069,000  in the 97  Period  from
$2,587,000 for the same period in 1996. The increase in  OEM/Licensing  reflects
primarily  the increase in OEM sales to Apple  Computer  during Q2 97. In the 97
Period, net sales to Apple represented 16% of the Company's revenues as compared
to 12% of revenues during the comparable period in 1996.

         During the 96 Period (principally during Q1 96), the Company recognized
OEM  royalty  revenues  from Apple of  approximately  $317,000,  with 100% gross
margins.  If the Company had  recognized  Apple  revenue on a product sale basis
rather  than a royalty  basis,  net sales for the 96 Period on a proforma  basis
would have been approximately $9,296,000.

Cost of Goods Sold

         Cost  of  goods  sold  were  $7,325,650  or 67% of net  sales,  for the
six-month  period ended June 30, 1997, as compared with $7,714,286 or 94% of net
sales,  for the six-month  period ended June 30, 1996, a decrease of $388,636 or
50%. The Company's gross profit margins for the 97 period and the 96 Period were
33% and 6% of net sales, respectively. The gross profit margin for the 97 Period
represents  the  approximate  margins  achievable  for  the  Company's  PC-to-TV
products with the present mix of sales to global resellers and OEM accounts.

                                       12
<PAGE>

         In the 96 Period,  the Company  experienced a significant  reduction in
orders for the Company's L-TV product and graphics/connectivity products for the
Powerbook 190 and 5300 laptop  computers.  During the first five months of 1996,
management  became  aware of various  product  quality and  sell-through  issues
relating to Apple's Powerbook 190 and 5300 products, including a recall by Apple
of these products in May 1996.  Because of the uncertainty with respect to these
Apple   products   and  the   likelihood   that   demand   for   the   Company's
graphic/connectivity  products would be  significantly  below the Company's then
existing  inventory  levels,   management  decided  to  minimize  the  Company's
inventory exposure and recorded a charge of $2.2 million in the first quarter of
1996, thus negatively  impacting cost of goods sold for the 96 Period.  However,
cost of goods sold for the 96 Period was  favorably  impacted by the sale during
Q2 96 of previously  written-off  inventory related to Apple's Powerbook 190 and
5300 laptop computers.

Sales, Marketing and Support Expenses

         Sales,  marketing and support  expenses  were  $1,965,217 or 18% of net
sales,  for the six  -month  period  ended  June  30,  1997,  as  compared  with
$1,976,785 or 24.2% of net sales,  for the six-month period ended June 30, 1996,
a  decrease  of  $11,568  or 1%.  The  decrease  in  absolute  dollars  and as a
percentage of net sales is due primarily to the  combination of decreased  costs
in direct display advertising,  mail order promotional  expenditures,  and trade
show events, offset by increased payroll expenses for domestic sales,  marketing
and customer service  departments and increased sales  commission  expenses as a
result of increased sales from period to period.

General and Administrative Expenses

         General and administrative expenses for the six-month period ended June
30, 1997 were  $859,568 or 7.9% of net sales,  as compared  with  $1,232,326  or
15.1% of net sales for the  six-month  period ended June 30, 1996, a decrease of
$372,758  or 30.2%.  The  decrease  is due  primarily  to a decrease in goodwill
amortization costs of $199,000, and a reduction in legal, audit and other public
company fees of approximately $200,000. The reduction in goodwill from period to
period is due the write-down in 1996 of certain  intangible costs related to the
Lapis acquisition.

Research and Development Expenses

         Research and development  expenses for the six-month  period ended June
30, 1997 were $431,838,  or 4% of net sales, as compared to $617,941, or 7.6% of
net sales,  for the six-month period ended June 30, 1996, a decrease of $186,103
or 30.1%. The decrease is due principally to a reduction in consulting  expenses
of  $44,000,  R & D facility  expenses of  $21,000,  travel  expense of $22,000,
recruiting costs of $21,000 and other net reductions in company wide engineering
costs.  During the 6 months  ended June 1997,  FOCUS  completed  the majority of
development efforts for an ASIC relating to the Company's PC-to-TV products. The
engineering  in-process  costs to manufacture the ASIC masks during this period,
amounting to approximately  $220,000, have been capitalized as a fixed asset and
will be amortized over the expected life of the ASIC technology,  with licensing
and product  revenues  expected to commence in the quarter  ended  September  30
1997.

                                       13
<PAGE>


Interest Expense, Net

         Net interest  expense for the six-month  period ended June 30, 1997 was
$134,943,  or 1.2% of net sales,  as  compared to $170,103 or 2.1% of net sales,
for the six-month  period ended June 30, 1996, a decrease of $35,160,  or 20.7%.
Interest  expense  decreased  in absolute  dollars due to the  reduction  in the
principal  amount  outstanding  of a note payable to an unrelated  investor from
$2.5  million  to $1.5  million  during Q1 96, and due to the  reduction  of the
Company's  line of credit from  $900,000 at June 30, 1996 to $800,000 as of June
30, 1997.

Other Income (Expense)

         For the six month  period  ended June 30,  1997,  the Company  realized
other income of $42,132,  primarily the net result of favorable  settlements  of
certain  accounts payable  obligations.  For the six month period ended June 30,
1996, the Company incurred other expenses of $(12,792).

Net Income (Loss)

         For the six months ended June 30, 1997, the Company reported net income
of $248,183,  or $0.02 per share, as compared to a net loss of $(3,563,099),  or
$(.45) per share, for the same period in 1996.

LIQUIDITY AND CAPITAL RESOURCES

         Net cash used in operating  activities  for the six-month  period ended
June 30, 1997 and 1996 was ($726,746) and ($4,341,398),  respectively. In the 97
Period, net cash used in operating activities consisted primarily of an increase
in accounts  receivable and inventory of $2,669,204 and $328,363,  respectively.
This was offset by an increase in accounts  payable of $1,983,615,  depreciation
and amortization  (non-cash charge) of $191,681,  and net income of $248,183. As
of June 30, 1997, Ingram Micro D, a distributor, represented approximately 31.5%
of the Company's accounts receivable. For the same period in 1996, net cash used
in operations was ($4,341,398)  consisting primarily of a net loss of $3,563,098
and an  increase  in  accounts  receivable  of  $2,736,188.  The 1996  uses were
partially offset by increased accounts payable and accrued liabilities  totaling
$1,459,591 as well as depreciation and amortization of $390,715.

         Net cash used in investing  activities  for the six month periods ended
June 30, 1997 and 1996 was  ($396,772) and  ($78,207),  respectively  due to the
purchase of property and equipment.

         Net cash from financing  activities for the six month period ended June
30, 1997 and 1996 was $1,972,170 and $2,889,642, respectively. In the 97 Period,
the Company received $1,996,813 in net proceeds from private offerings of Common
Stock and $40,825 from the exercise of common stock  options and  warrants.  The
Company's  financing  proceeds  were  offset by  payments  on notes  payable and
capital  lease  obligations.  In the same period in 1996,  the Company  received
$3,015,528 in net proceeds  from private  offerings of Common Stock and $994,766
from the  exercise of common  stock  options and  warrants.  The Q2 96 financing
proceeds  were offset by  $1,120,652  in  payments on notes  payable and capital
lease obligations.

                                       14
<PAGE>


         As of June 30, 1997, the Company had working capital of $1,399,648,  as
compared to a working capital  deficiency of $(607,509) at December 31, 1996, an
increase of $2,006,157.  The Company's cash position  increased to $1,262,546 at
June 30, 1997,  an increase of $848,652,  or 205%,  over amounts at December 31,
1996.

          On January 15, 1997, the Company sold  approximately  75,000 shares of
its Common Stock for gross  proceeds of  approximately  $138,750,  in connection
with a private  offering to foreign  investors.  This stock is unregistered  and
subject to  restrictions  on trading in the United  States for a period of forty
days.

         In connection with the offering, the Company paid approximately $26,250
to the  underwriter.  Net proceeds of the private  offering  were  approximately
$112,500.

         On February 12, 1997, the Company sold approximately  218,181 shares of
common stock for gross proceeds of  approximately  $338,181 in connection with a
private offering to foreign investors. This stock is unregistered and subject to
restrictions  on  trading in the United  States for a period of forty  days.  In
connection with the offering, the Company incurred fees of $38,181 receiving net
proceeds of $300,000.

         On March 27, 1997, the Company  completed a financing of  approximately
$1,650,000 in gross proceeds for the sale of  approximately  1,100,000 shares of
Common Stock in a private placement to unaffiliated  accredited  investors.  The
shares issued as part of this transaction were registered  through Form S-3 with
the  Securities  and  Exchange  Commission  on May 12,  1997.  Fees and expenses
associated  with this  offering  amounted to $76,000  yielding  net  proceeds of
$1,574,000.  In  connection  with  this  transaction,  the  Board  of  Directors
authorized  the grant of warrants  to the  Placement  Agent to purchase  110,000
shares of the  Company's  common  stock at a price per share equal to the common
stock price on the date of the closing  ($1.6875  per share)  exercisable  for a
period of five years.

         Although  the  Company  has  been  successful  in the  past in  raising
sufficient  capital to fund its  operations,  there can be no assurance that the
Company will achieve sustained  profitability or obtain sufficient  financing in
the  future to provide  the  liquidity  necessary  for the  Company to  continue
operations.

         As of  June  30,  1997,  the  Company  has an  accumulated  deficit  of
approximately  $18.6 million.  The report of the independent  accountants on the
Company's  financial  statements as of and for the year ended  December 31, 1996
included an  explanatory  paragraph to the effect that the Company's  ability to
continue as a going concern is dependent  upon the Company's  ability to achieve
its  fiscal  1997  operating  plan,   including  the  achievement  of  sustained
profitability,  and obtaining additional sources of financing. In 1995 and 1996,
the  Company   redefined  its  operating  model  to  achieve   profitability  by
discontinuing sales of lower-margin,  non-proprietary  products, by focusing its
marketing efforts on its higher-margin  proprietary products,  emphasizing sales
to OEMs and expanding its distribution and reseller channels, limiting inventory
levels and reducing operating costs. In 1997, the Company expects to continue to
use  this  business   model.   The  Company's   ability  to  achieve   continued
profitability in 1997 is dependent upon its securing  additional  contracts from
OEM partners such as Apple and Zenith,  increasing revenues through its domestic
and  international  distributors  and reducing  expenses as a percentage  of net
sales.  The  Company  does not  have any  significant  commitments  for  capital
expenditures.  Management anticipates that expected funds to be generated during
1997  through its  present  business  model,  and  additional  funds that may be
received from debt or equity financing will be sufficient to fund operations for
at least 12 months.

                                       15
<PAGE>

         At December  31,  1996,  the Company was in  violation  of certain debt
covenants  relating to the line of credit  with its  commercial  bank.  In March
1997, the Company received a waiver of the covenants from the commercial bank, a
revision of the loan  covenants  and an agreement to extend the line until March
1998. In addition,  the Company is currently  negotiating  with its unaffiliated
lender to extend the March 1997 due date for the $1.5 million note payable which
was in default as of the date of this report. In the event that the unaffiliated
lender does not extend the due date,  the  Company  would be required to pay the
amounts outstanding from working capital or from an equity or debt financing.

Effects of Inflation and Seasonality

         The Company believes that inflation has not had a significant impact on
the  Company's  sales or operating  results.  The  Company's  business  does not
experience  substantial  variations  in revenues or operating  income during the
year due to seasonality.

Environmental Liability

         The Company has no known environmental violations or assessments.


CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

         The following  discussion of the Company's  risk factors should be read
in conjunction  with the financial  statements  and related notes  thereto.  The
following factors, among others, could cause actual results to differ materially
from those contained in forward looking statements  contained or incorporated by
reference in this report and  presented by  management  from time to time.  Such
factors,  among others,  may have a material  adverse  effect upon the Company's
business, results of operations and financial condition.

         Future Capital Needs. At June 30, 1997, the Company had working capital
of  $1,399,648,  cash and cash  equivalents of $1,262,546 and was fully drawn on
its line of credit  (approximately  $800,000 at June 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 six month period ended June 30,
1997,  the Company  received  approximately  $1,997,000 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

                                       16
<PAGE>

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 six months  ended June 30, 1997,
approximately  26% of the  Company's  revenues were derived from sales to Ingram
Micro D, a national distributor, and approximately 5% were derived from sales to
Zenith Electronics,  Inc.  ("Zenith").  Management expects those sales to Zenith
and Ingram 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 June 30,
1997, the Company shipped approximately  $733,000 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,  the  Company  and Zenith are
reviewing an amendment to the original  Agreement that would  establish  revised
minimum purchases for Zenith and the removal of the exclusivity sales provision.
There can be no  assurances,  however,  that Zenith  will agree to the  proposed
amendment  to the original  Agreement or that Zenith will  purchase the minimums
per the original  Agreement.  Further,  if the contract were to be terminated by
Zenith,  there  would  be a  material  adverse  effect  to the  Company  and its
business.

         For the six  months  ended  June  30,  1997,  approximately  16% of the
Company's  net sales were  derived from sales of the  Company's  L-TV product to
Apple Computer,  Inc.  ("Apple").  The sales were pursuant to volume orders from
Apple for shipment in the first,  second and third quarters of 1997. The Company
believes that in 1997,  Apple will be a major customer.  Although the orders are
irrevocable and non-cancelable,  no assurances can be given that Apple will take
delivery on the products or continue to order products from the Company.

         History of  Operating  Losses.  The  Company  has  experienced  limited
profitability  since its  inception  and at June 30,  1997,  had an  accumulated
deficit of $18,613,371. Although the Company reported net income of $248,183 for
the six month  period ended June 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 the problems,  expenses and complications
frequently  encountered  by  its  entrance  into  established  markets  and  the
competitive environment in which the Company operates.

                                       17
<PAGE>


         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 June 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 June 30,
1997, approximately $800,000 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 and connectivity products.

         Reliance  on Single  Vendor.  In the six months  ended  June 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.  The Company
is currently  completing  development  of an ASIC called the FOCUS Scan 300 Chip
which  the  Company  expects  to  incorporate  into all of its  next  generation
PC-to-TV  video-graphics  products.  A  significant  portion  of  the  Company's
anticipated  revenues  and gross  margins for 1997 are  dependent  on the timely
completion  and delivery of the FOCUS Scan 300 Chip.  In the event that the Chip
is not  available  before the end of the third  calendar  quarter  of 1997,  the
Company's revenues and profitability for 1997 could be adversely effected.

                                       18
<PAGE>


         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  expects to compete in the future  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 third 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.


                                       19

<PAGE>


PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

         The Company is not party to any pending legal  proceedings,  other than
routine  litigation  that is  incidental  to the  business,  which  would have a
material  adverse  effect on the  Company's  financial  position  or  results of
operations for the six month period ended June 30, 1997.


ITEM 2. CHANGES IN SECURITIES

         At the  Annual  Meeting  of  Stockholders  held on July 25,  1997,  the
stockholders  approved an amendment to the Certificate of  Incorporation  of the
Company to increase the  authorized  Common Stock from  20,000,000 to 25,000,000
shares.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         In October 1994, the Company  borrowed  $2,500,000 from an unaffiliated
lender under a term note due February 1, 1996. The term note accrues interest at
the prime rate plus 2%, payable quarterly in arrears, and is collateralized by a
second security interest in all the assets of the Company. At June 30, 1997, the
Company owed  $1,500,000 to the lender under the term note. This note was due on
March 31, 1997 and was not paid. The Company is in the process of  renegotiating
the terms and expiration date of this loan with the lender.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE

         On June 20, 1997,  the Board of Directors  caused to be  distributed to
stockholders  of  record as of May 30,  1997,  a Notice  of  Annual  Meeting  of
Stockholders,  Proxy and Proxy Statement for the Annual Meeting held on July 25,
1997.  As of the record date,  12,721,633  of Common Stock  (excluding  treasury
shares) were entitled to vote.

         At the meeting,  the stockholders  acted upon the following  proposals:
(i) election of two Class III  directors;  (ii)  approval of an amendment to the
Company's  Certificate  of  Incorporation  to increase the number of  authorized
shares  of  Common  Stock  from  20,000,000  to  25,000,000   shares  and  (iii)
ratification of the firm of Wolf & Company, P.C. as independent auditors. All of
the above matters were approved by the stockholders.

         Votes  "For"   represent   affirmative   votes  and  do  not  represent
abstentions  or broker  non-votes.  In cases where a signed proxy was  submitted
without  direction,  the shares  represented  by the proxy were voted "For" each
proposal in the manner  disclosed in the Proxy  Statement and Proxy.  The voting
results were as follows:

I.  Election Of Directors

                             FOR            AGAINST           WITHHOLD
                             ---            -------           --------
U. Haskell Crocker        10,659,834           0               41,912
Daniel Shaver             10,659,759           0               41,987

II.  Amendment to Certificate of Incorporation

                             FOR            AGAINST            ABSTAIN
                             ---            -------           --------
                          10,289,773        368,514            43,459



                                       20

<PAGE>



III.  Ratification of Independent Auditors

                             FOR            AGAINST            ABSTAIN
                             ---            -------           --------
                          10,622,680         29,957            49,109


ITEM 5. OTHER INFORMATION

Appointment of New President

Effective April 21, 1997, the Board of Directors appointed Mr. Brett A. Moyer as
President and Chief Operating Officer of the Company. For the past 10 years, Mr.
Moyer served in various  capacities with Zenith  Electronics  Corporation.  Most
recently,  Mr.  Moyer  was the Vice  President  and  General  Manager  of Zenith
Commercial Products Division,  where he directed sales and marketing  activities
of television and projection  systems  products for the education,  hospitality,
healthcare,  and  professional  markets.  He  also  previously  served  as  Vice
President of Sales  Planning and  Operations at Zenith where he was  responsible
for  forecasting,  customer  service,  distribution,  MIS  and  regional  credit
operations.

Amendment to Terms of Warrants

In accordance  with the  anti-dilution  provisions  of the Company's  Redeemable
Common Stock Purchase  Warrants (the  "Warrants")  issued in connection with the
Company's  initial  public  offering in May 1993, the terms of the Warrants have
been amended so that upon exercise, a holder will receive 1.774 shares of Common
Stock for each Warrant  exercised.  The Warrants are  exercisable  at a price of
$6.75 per Warrant until May 23, 1998.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

a.       The following exhibits are filed herewith:

3.1      Certificate of Amendment to Certificate of Incorporation dated July 25,
         1997.

4.1      Certificate of Warrant Adjustment dated August 13, 1997.

10.1     Loan Document Modification Agreement No. 6 dated as of March 7, 1997.

10.2     Amended and Restated Promissory Note dated as of March 7, 1997 in favor
         of Silicon Valley Bank.

11       Statement Re: Computation of Per Share Earnings

99.1     Press Release dated May 5, 1997 Regarding Appointment of Brett A. Moyer
         as President and Chief Operating Officer.


b. Reports on Form 8-K


         The  Company  did not file any  reports on Form 8-K during the  quarter
ended June 30, 1997.



                                       21


<PAGE>



SIGNATURES

In accordance with the  requirements of the Exchange Act, the Registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


FOCUS Enhancements, Inc.




August 14, 1997                  By:   \s\  Thomas L. Massie
                                        Thomas L. Massie               
                                        Chief Executive Officer and
                                        Chairman of the Board
                                        (Principal Executive Officer)
   


August 14, 1997                  By:   \s\  Harry G. Mitchell 
                                        Harry G. Mitchell
                                        Senior Vice President,
                                        Chief Financial Officer and Treasurer
                                        (Principal Accounting Officer)




                                       22