Well I dont think it was any secret that the company was in financial peril, it doesnt happen overnight. Thats why I find it somewhat comforting that the CEO, knowing full well that the company was on the brink of Bankruptcy, bought just over $14000.00 worth of stock in the open market. The following tells me however that they are attempting to enter new markets with new products to diversify themselves:
Focus Enhancements Enters Agreement to Purchase Wireless Audio IP
- Creates Unique Portfolio of Wireless Audio/Video Technology -
- Management to Hold Conference Call Today at 1:30 p.m. ET/10:30 a.m. PT -
Campbell, Calif. – July 2, 2008 - Focus Enhancements, Inc. (NASDAQ: FCSE) a worldwide leader in Ultra Wideband (UWB) wireless technology, video conversion and digital media products, has entered into an agreement on June 25, 2008 to purchase certain intellectual property rights for a prototype wireless audio product chipset developed by AudioMojo, Inc. and owned by Hallo Development Co. The digital wireless audio (DWA) technology provides highly sought-after features including two milliseconds (ms) latency, which reduces lip-syncing concerns, and scalability up to 16 channels.
“Blending superior DWA technology with our video expertise strengthens our UWB strategy and creates a unique capability for Focus Enhancements to deliver wireless media throughout the home,” said Brett Moyer, president and CEO of Focus Enhancements. “DWA is an exciting, growing market in its own right. RH Associates projects the total available market for DWA to reach approximately $53 million by 2009 growing to approximately $136 million in 2011. Since we have developed significant long-standing relationships with large consumer electronics companies with our video conversion technology, we intend to leverage these for distribution. In addition to this impressive technology, the rapid time-to-revenue and relatively low cash requirements were important factors in our acquisition decision. With an additional engineering investment of approximately $1.5 million, we expect to sample DWA chips in the first quarter of 2009 and begin production volume mid-2009 in time for the holiday season. Our ultimate goal is to deliver high quality audio and video via UWB using a single radio, thereby lowering the system cost for the large consumer electronics manufacturers.”
Also from their conference call in August the CEO talks about ways of cutting cost and increasing revenues:
In the current third quarter, we expect revenue to increase significantly as we begin shipments of ProxSys and FS-5 under OEM agreements with three different partners.
Also, to improve our strategic and financial position we are implementing a three prong stratify investing in quick time to market technologies, rationalizing our UWB investments as we wait for the ultra wideband market to materialize, and reducing non-core engineering expenses.
As we have discussed, the deal with UWB industry adoption has been slower than anticipated. First investing in related technology to quick time to market revenue potential, required our digital wireless audio technology at the beginning of July.
Our present DWA technology has a rapid time to revenue with relatively low cash requirements. It delivers fast speed providing 2 millisecond latency to avoid noticeable lip sync errors which occur above 10 milliseconds, scalability enabling up to 16 channels, high quality delivering independent 24 bit 48 kilo-Hz audio to each channel and unique simplicity in the industry offering speaker finder, which identifies within centimeters where each speaker is relative to the rest of the room, and my zone, which identifies and adjusts each set speaker to where the listener is for the center of the surround sound regardless of listener's position.
The asset purchased includes two patent applications originally filed by Audio Mojo and the rights to intellectual property which allowed Focus Enhancements to file four more provisional patents.
With a low engineering investment of approximately $1.5 million, we expect to tape out in September, receive back 100 chips in October, bring up and demonstrate technology in November and sample with customers in November and December. All this is driving towards our goal of securing customer design commitments and announce to them at the consumer electronics show in early January '09.
Since we have developed significant long standing relationships with large consumer electronics companies with our video conversion technology, we intend to leverage these for distribution. Already we have demonstrated or discussed our DWA approach with over 25 potential customers, including some of the largest consumer electronics companies in the world.
We have received a very strong response to this technology and the timeline of this introduction. We are very excited about DWA market opportunity as well as the prospects of positioning our existing UWB chip for audio/video applications in conjunction with our new DWA technology.
Our ultimate goal is to deliver high quality audio/video via UWB using a single radio, thereby lowering the system cost through large consumer electronics manufacturers. According to Consumer Electronics Association's CEA market data, there are approximately five million home theater systems sold per year.
We believe if we sold 350,000 DWA chip stats to consumer manufacturers, our semiconductor business revenues would increase from the running rate of approximately $4 million to approximately $18 million with UWB revenue in addition to that revenue string.
Also, our H and A associates projects the total available market for DWA to reach approximately $53 million in 2009 and growing to approximately $136 million in 2011, excluding two potentially enormous growth markets for DWA, digital TV's and set top boxes. We believe our DWA and UWB technologies combined with our existing customer base that this is achievable first step in building up the business. In addition, in April we formed a technology alliance with Sony Electronics, we are partnering to customize our new ProxSys PX100 Media Asset Management Solution with Sony XDCAM EX.
The second prong of our strategy is that we are rationalizing our UWB investments to time with a delay in the market. We have deferred semiconductor research and development for the next generation UWB and we have re-deployed resources on positioning our existing UWB chip with available AB applications in conjunction with our new DWA technology.
The third prong, we are reducing costs further. In addition to the expense cutting action taken in February, in July we began deferring certain non-critical engineering expenses.
Since the beginning of the year, excluding the hiring of six employees to work on our DWA technology, we have reduced our headcount by 35 and cut our annual payroll by approximately $2.2 million a year or $550,000 a quarter. We believe the combination of these actions will strengthen the company and we will present this to the NASDAQ panel on September 4th.
Regarding our semiconductor business, we've demonstrated low-cost UWB chips, extremely high-def video of Computex type A in June, our FS-453 TV out encoder chip will power Tachyon's Mad Dog home media center with on TV navigation for iPod devices. While we have discussed earlier the home theater system as a primary market for DWA, products like this media center are prime opportunities for wireless AB solutions and incorporating streaming video using UWB and wireless audio.
We strengthen our team hiring Michael Hudson as CTO of semiconductor group. This is a new position that will lead our vision of investing in quick time to market technologies and implementing our objective to deliver high quality audio and video via UWB using a single radio. Michael brings almost three decades of engineering, design creativity and result serving management including his work on Intel's first motherboard and industry's first MP3 player at Diamond Multimedia.
Now regarding our system business NAB 2008 was a success. We demonstrated new products including our MM-1 Universal Media Manager for Digital Signage and our FS-100 250 GB FireStore product. And we unveiled our FS-5, which is the fifth generation of our award winning line of direct edit recorders. During the show, we highlighted our system business focus, which is to expand file format and multi-platform support across our product families to establish a continuous work flow and seamless interoperable platform with popular non-linear editing systems and video camcorders.
We also announced our partnership with Sony Electronics to customize the media asset management solution for the XDCAM EX to support Sony's powerful new PMW-EX camcorder.
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