Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “ Agreement ”) is dated as of September 24, 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 Company’s 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 3,863,637 shares of Common Stock and Warrants to purchase 965,910 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).

“ Montauk Placement Agent Fee” shall mean eight percent (8%) of the gross proceeds from the sale of up to and including 3,863,637 Shares to the Purchasers.

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“ Per Share Purchase Price ” shall be $0.88, 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.

“ 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.

“ Placement Agent” means First Montauk Securities Corp. and any other placement agents used as selling agents in connection with the sale of the Securities.

“ Placement Agent Fee ” shall mean the Montauk Cash Placement Agent Fee and any other fees paid to the placement agents in connection with services provided to the Company as selling agent in connection with the sale of the Securities.

“ 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 Company’s 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 Purchaser’s 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.

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“ 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.

“ 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 $1.05 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 Purchaser’s 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 25% 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 four million eight-hundred twenty-nine thousand five hundred and forty-seven (4,829,547) 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

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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 Purchaser’s 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 Purchase r 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.  Delivery of the Shares may be by electronic book-entry at The Depository Trust Company (“DTC”), registered in the Purchaser’s name and address as set forth on Schedule I , and released by the Company’s transfer agent to the Purchaser at the Closing.  The Closing shall occur at the offices of Manatt Phelps & Phillips, LLP, or such other location as the parties shall mutually agree.

(c) It is the Purchaser’s responsibility to (A) make the necessary wire transfer or confirm the proper account balance in a timely manner and (B) if the Shares are to be delivered through the DWAC system, arrange for settlement by way of DWAC in a timely manner.  If the Purchaser does not deliver the aggregate Subscription Amount for the Shares or does not make proper arrangements for settlement in a timely manner, as applicable, the Shares may not be delivered at Closing to the Purchaser or the Purchaser may be excluded from the Closing altogether.

2.2 Closing Conditions; Deliveries .

(a) Conditions to the Purchasers’ Obligations . The obligation of each Purchaser to purchase the Shares and Warrants at the Closing is subject to the fulfillment to the Purchasers’ reasonable satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived in writing by the Purchasers:

(i)            The representations and warranties made by the Company in Section 3.1 hereof shall be true and correct except where the failure to be so true and correct does not have a Material Adverse Effect.  The Company shall have performed in all material respects all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date.

(ii)           The Company shall have obtained in a timely fashion any and all material consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Shares and Warrants, all of which shall be and remain so long as necessary in full force and effect.

(iii)          No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, or self-regulatory organization enjoining or

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preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

(iv)          The Company shall have delivered a Certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in subsections (i), (ii), (iii) and(vii) of this Section 2.2(a).

(v)           The Company shall have delivered a Certificate, executed on behalf of the Company by its Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Shares and Warrants, certifying the current versions of the Certificate of Incorporation and Bylaws of the Company and certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company.

(vi)          The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Securities Act within the applicable time period prescribed for such filing; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no stop order or suspension of trading shall have been imposed by any Person with respect to public trading in the Common Stock; and the Purchaser shall have received the Prospectus in accordance with the federal securities laws.

(vii)         The Company’s Common Stock (including the Shares and the Warrant Shares) shall be eligible for inclusion on the Nasdaq Capital Market and listed and admitted and authorized for trading on the Nasdaq Capital Market.

(b) Conditions to Obligations of the Company . The Company’s obligation to sell and issue the Shares and Warrants at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

(i)            The representations and warranties made by each of the Purchasers in Section 3.2 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date.  The Purchasers shall have performed in all material respects all obligations and conditions herein required to be performed or observed by them on or prior to the Closing Date.

(ii)           Each of the Purchasers shall have delivered such Purchaser’s Subscription Amount by wire transfer to the account set forth on Schedule I attached hereto.

(iii)          No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, or self-regulatory organization enjoining or

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preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

(c) Termination of Obligations to Effect Closing; Effects .

(i)            The obligations of the Company, on the one hand, and the Purchasers, on the other hand, to effect the Closing shall terminate as follows:

(A)          Upon the mutual written consent of the Company and the Purchasers;

 (B)          By the Company if any of the conditions set forth in Section 2.2(b) shall have become incapable of fulfillment, and shall not have been waived by the Company;

 (C)          By a Purchaser (with respect to itself only) if any of the conditions set forth in Section 2.2(a) shall have become incapable of fulfillment, and shall not have been waived by such Purchaser; or

 (D)         By either the Company or any Purchaser (with respect to itself only) if the Closing has not occurred on or prior to September 28, 2007;

provided, however, that, except in the case of clause (A) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.

(ii)           Nothing in this Section 2.2(c) shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.

(iii)          In the event of termination by a Purchaser of its obligations to effect the Closing pursuant to this Section 2.2(c), written notice thereof shall forthwith be given by the Company to the other Purchasers and the other Purchasers shall have the right to terminate their obligations to effect the Closing upon written notice to the Company.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company.   Except as set forth under the corresponding section of the Disclosure Schedules delivered concurrently herewith, the Company hereby makes the following representations and warranties as of the date hereof and as of the Closing Date to each Purchaser:

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(a) Subsidiaries .  Except as set forth on Schedule 3.1(a) , the Company has no direct or indirect subsidiaries.  Except as set forth on Schedule 3.1(a) , the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.  If the Company has no subsidiaries, then references in the Transaction Documents to the Subsidiaries will be disregarded.

(b) Organization and Qualification .  Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “ Material Adverse Effect ”).

(c) Authorization; Enforcement .  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith other than in connection with the Required Approvals.  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(d) No Conflicts .  The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an

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event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected, or (iv) conflict with or violate the terms of any agreement by which the Company or any Subsidiary is bound or to which any property or asset of the Company or any Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(e) Filings, Consents and Approvals .  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) filings required pursuant to Section 4.1 of this Agreement, (ii) application(s) to each applicable Trading Market for the listing of additional shares with respect to the Shares and Warrant Shares for trading thereon in the time and manner required thereby, and (iii) such filings as are required to be made under applicable state securities laws, with each of the items listed in clauses (i)-(iii) inclusive being deemed a “ Required Approval ”).

(f)  Issuance of the Securities .  The Shares and Warrants are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Warrant Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants.

(g) Capitalization .  The authorized capital stock of the Company consists of  150,000,000 shares of Common Stock and 3,000,000 shares of Preferred Stock.  The Company has not issued any capital stock since such filing other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plan and pursuant to the conversion or exercise of outstanding Common Stock Equivalents.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, script rights to subscribe to, calls or

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commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock, other than as set forth in the SEC Reports, the Registration Statement or the Prospectus or in connection with the Company’s stock option plans.  The issue and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Securities.  Except as disclosed in the SEC Reports, the Registration Statement or the Prospectus, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

(h) SEC Reports; Financial Statements .  The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Reports and the Registration Statement and the Prospectus comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

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