Decision in Legal Appeal.

Business Editors

CAMPBELL, Calif.--(BUSINESS WIRE)--Jan. 8, 2002

FOCUS Enhancements, Inc. (NASDAQ: FCSE) announced today that in its appeal of the judgment awarded to CRA Systems, Inc., of Waco, Texas, the U.S. Court of Appeals for the Fifth Circuit has affirmed the judgment virtually in its entirety. A jury trial in May 2000 in the U.S. District Court for the Western District of Texas, Waco, Texas (Civil No. W-99-CA-031) had ended in a verdict in favor of CRA that formed the basis for the judgment. On October 27, 2000, Focus filed with the court a supersedeas bond in the approximate amount of $2.3 million (being the approximate amount of the judgment plus 10% to cover interest and costs of CRA). During the third quarter of 2000, the Company recorded a charge to operations to establish a legal reserve for such amount.

As a result of the legal reserve and the posting of the bond, this judgment will have little or no effect on the Company's working capital or operating results on a go forward basis.

Statements about future results made in the above referenced (press release/presentation/conference call) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and the current economic environment. The Company cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Such projections are based upon many estimates and are inherently subject to significant economic and competitive uncertainties and contingencies, many of which are beyond the control of management of FOCUS. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company's Form 10-KSB for the year ended December 31, 2000 and other filings with the SEC by both FOCUS and Videonics.