SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this Agreement) is dated as of February 20, 2007, among Focus Enhancements, Inc., a Delaware corporation (the Company), and each Purchaser identified on the signature pages hereto (each a Purchaser and collectively the Purchasers); the Company and each Purchaser are individually referred to herein as a party and collectively as the parties.

WHEREAS, the Company has filed with the Commission a Registration Statement (as defined below) relating to the offer and sale from time to time of the Companys securities, including shares of its Common Stock and Warrants;

WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to issue and sell to the Purchasers pursuant to the Registration Statement, and the Purchasers, severally and not jointly, desire to purchase from the Company in the aggregate, up to 4,500,000 shares of Common Stock and Warrants to purchase 450,000 shares of Common Stock on the Closing Date, each as set forth in the respective amounts on the signature pages attached hereto.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agrees as follows:

ARTICLE I.
DEFINITIONS

1.1 Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:

Action shall have the meaning ascribed to such term in Section 3.1(j).

Affiliate means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144.  With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.

Business Day means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

Closing means the closing of the purchase and sale of the Common Stock and the Warrants pursuant to Section 2.1.

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Closing Date means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to the Purchasers obligations to pay the Subscription Amount have been satisfied or waived.

Commission means the Securities and Exchange Commission.

Common Stock means the common stock of the Company, $0.01 par value per share, and any securities into which such common stock may hereafter be reclassified.

Common Stock Equivalents means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

Company Counsel means Manatt, Phelps & Phillips, LLP with offices located at 1001 Page Mill Road, Bldg. 2, Palo Alto, California  94304-1006.

Disclosure Schedules means the Disclosure Schedules attached hereto.

 Environmental Laws shall have the meaning ascribed to such term in Section 3.1(bb).

Evaluation Date shall have the meaning ascribed to such term in Section 3.1(dd).

Exchange Act means the Securities Exchange Act of 1934, as amended.

GAAP shall have the meaning ascribed to such term in Section 3.1(h).

Intellectual Property Rights shall have the meaning ascribed to such term in Section 3.1(o).

Liens means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

Material Adverse Effect shall have the meaning ascribed to such term in Section 3.1(b).

Material Permits shall have the meaning ascribed to such term in Section 3.1(m).

Per Share Purchase Price shall be $1.26, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement but prior to the Closing.

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Person means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

Registration Statement means the registration statement on Form S-3 (File No. 333-139224), including a prospectus, relating to the offer and sale of certain of the Companys Common Stock, which was declared effective by the Commission on December 20, 2006.  References herein to the term Registration Statement as of any date shall mean such effective registration statement, as amended or supplemented to such date, including all information and documents incorporated by reference therein.

Required Approvals shall have the meaning ascribed to such term in Section 3.1(e).

Rule 144 means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

SEC Reports shall have the meaning ascribed to such term in Section 3.1(h).

Securities means the Shares, the Warrants and the Warrant Shares.

Securities Act means the Securities Act of 1933, as amended.

Shares means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

Subscription Amount means, as to each Purchaser, the amounts set forth below such Purchasers signature block on the signature page hereto, in United States dollars and in immediately available funds.

Subsidiary shall mean the subsidiaries of the Company, if any, set forth on Schedule 3.1(a) or any business entity in which the Company now or in the future owns or has the power to vote or control, at the time such is determined, twenty percent (20%) or more of the equitable, beneficial,  legal or other ownership interests thereof.

Trading Day means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded on the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

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Trading Market means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market or the Nasdaq Capital Market.

Transaction Documents means this Agreement and the Warrants and any other documents or agreements executed in connection with the transactions contemplated hereunder.

Warrants means the Common Stock Purchase Warrants, in the form of Exhibit A, issuable to the Purchasers at the Closing, which warrants shall have an exercise price equal to $2.00 per share and shall be exercisable for a period of 5 years.

Warrant Shares means the shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE II.
PURCHASE AND SALE

2.1 Purchase of Common Stock.

(a) At the Closing, each Purchaser shall purchase from the Company, severally and not jointly, and the Company shall issue and sell to each Purchaser, (a) a number of Shares equal to such Purchasers Subscription Amount divided by the Per Share Purchase Price and (b) the Warrants, registered in the name of each Purchaser, pursuant to which such Purchaser shall have the right to acquire up to the number of shares of Common Stock equal to 10% of the Shares to be issued to such Purchaser at the Closing.  The aggregate number of Shares sold hereunder (when aggregated with the aggregate number of Warrant Shares) shall, in no event, exceed 5 million (5,000,000) shares.  The offering and sale of the Shares (the Offering) are being made pursuant to (1) an effective Registration Statement on Form S-3 (including the Prospectus contained therein (the Base Prospectus) and (2) a Prospectus Supplement (the Prospectus Supplement and together with the Base Prospectus, the Prospectus) containing certain supplemental information regarding the Shares and terms of the Offering that will be filed with the Commission and delivered to the Purchaser (or made available to the Purchaser by the filing by the Company of an electronic version thereof with the Commission).

(b) Upon satisfaction of the conditions set forth in Section 2.2, (i) each Purchaser shall deliver to the Company such Purchasers Subscription Amount by wire transfer of immediately available funds to an account designated by the Company as set forth on Schedule I hereto, which funds will be delivered to the Company in consideration of the Shares and the Warrants issued at the Closing and (ii) the Company shall deliver to each Purchaser duly executed certificates evidencing the Shares and the Warrants provided however that the Company may deliver  the Shares through the Depository Trust Company Deposit/Withdrawal at Custodian (DWAC) system to the account that the Purchaser has specified in writing to the Company. 

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