As filed with the Securities and Exchange Commission on January 31, 1997
Registration No. 333-______
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
FOTOBALL USA, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0614889
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3738 Ruffin Road
San Diego, California 92123
(619) 467-9900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
______________
MICHAEL FAVISH
President and
Chief Executive Officer
Fotoball USA, Inc.
3738 Ruffin Road
San Diego, California 92123
(619) 467-9900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
___________
Copies to:
CHARLES I. WEISSMAN, ESQ.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue, 20th Floor
New York, New York 10022
(212) 758-9500
Telecopier No.: (212) 758-9526
___________<PAGE>
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. o
If any of the securities being registered on this form are being offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. X
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. o
If this Form is a post-effective supplement filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. o
CALCULATION OF REGISTRATION FEE
Proposed Proposed Amount
Title of each Amount maximum maximum of
class of securities to be offering price aggregate registration
to be registered registered per share(1) offering price fee
- -------------------- ----------- -------------- -------------- ------------
Common Stock,
par value
$.01 per share 220,000 shares $5.75 $1,265,000 $ 436.21
--------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) promulgated under the Securities Act of 1933, as
amended. Based on the average of the high and low sale prices of the Common
Stock as reported by the Nasdaq National Market on January 30, 1997.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall become effective in accordance with Section
8(a) of the Securities Act of 1933 or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
____________________________________________________ __________________
No dealer, sales representative or other person
has been authorized to give any information or
to make any representations in connection with
this Offering other than those contained in this
Prospectus and, if given or made, such information 220,000
or representations must not be relied upon as Shares of
having been authorized by the Company. This Common Stock
Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, any securities
other than the registered securities to which it
relates or an offer to, or a solicitation of,
any person in any jurisdiction in which such offer
or solicitation is not authorized or would be
unlawful. The delivery of this Prospectus and/or
any sale made hereunder shall not, under any
circumstances, create any implication that the FOTOBALL USA, INC.
information contained herein is correct as of
any time subsequent to the date of this Prospectus.
________________
TABLE OF CONTENTS
Page
Additional Information. . . . . . . . 2
Incorporation of Certain Documents ________________
by Reference .................. 2
The Company . . . . . . . . . . . . . 4 PROSPECTUS
The Offering. . . . . . . . . . . . . 6
Risk Factors. . . . . . . . . . . . . 7 ________________
Use of Proceeds . . . . . . . . . . .12
Dividend Policy . . . . . . . . . . .12
Selling Stockholder.. . . . . . . . .13
Plan of Distribution. . . . . . . . .13 January__, 1997
Legal Matters . . . . . . . . . . . .14
Experts . . . . . . . . . . . . . . .14
__________________________________________________ ________________
<PAGE>
PROSPECTUS Subject to completion, dated January 31, 1997
220,000 Shares of Common Stock
FOTOBALL USA, INC.
The securities offered hereby (the "Offering") are being sold for the
account of the Selling Stockholder named herein and consist of 220,000
shares of common stock, par value $.01 per share ("Common Stock"), of Fotoball
USA, Inc., a Delaware corporation (the "Company"), issuable upon exercise
of a 110,000 unit purchase option (the "Purchase Option") issued to the
Selling Stockholder in connection with its services as the representative
of the underwriters in the Company's 1994 initial public offering (the
"Initial Public Offering"). Each unit in the Purchase Option consists of
one share of Common Stock of the Company and one redeemable common stock
purchase warrant ("Warrant"), each Warrant to purchase one share of Common
Stock for $7.93, subject to adjustment in certain circumstances, during
the four-year period commencing August 11, 1995. The Purchase Option is
exercisable at $9.90 per unit. See "Selling Stockholder" and "Plan of
Distribution."
The Common Stock and Warrants are quoted on the Nasdaq National Market
under the symbols "FUSA" and "FUSAW", respectively. On January 30, 1997,
the closing bid price was $ 5.75 per share of Common Stock and $ 1.63 per
Warrant.
All costs, expenses and fees in connection with the registration of the
Common Stock will be borne by the Company, except that the Selling
Stockholder will pay any commissions and fees applicable to shares sold
by the Selling Stockholder and fees of others employed by the Selling
Stockholder, including attorneys' fees. See "Plan of Distribution."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" LOCATED ON PAGES 7-12 OF THIS PROSPECTUS.
________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
________________
The date of this Prospectus is January __, 1997.
This Prospectus is subject to completion or amendment. A registration
statement relating to these securities has been filed with the Securities
and Exchange Commission. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitations or sale would
be unlawful prior to registration or qualification under the securities
laws of any such State.
1<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company may be inspected
without charge at the Public Reference Room maintained by the Commission
at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. In addition,
upon request such reports, proxy statements and other information will be
made available for inspection and copying at the Commission's public reference
facilities at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and at Seven World Trade Center, 13th Floor, New York, New York 10048. Copies
of such material can be obtained at prescribed rates upon request from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site(http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding issuers who file electronically with the Commission. This
Registration Statement has been filed electronically through the Commission's
Electronic Data Gathering, Analysis and Retrieval (EDGAR) system and may be
accessed through the Commission's Web site.
The Company's Common Stock is listed on the Nasdaq National Market.
Reports, proxy statements and other information can be inspected at the
offices of the Nasdaq Stock Market at 1735 "K" Street, N.W., Washington, D.C.
20006. The Company has filed with the Commission a Registration Statement
on Form S-3 under the Securities Act with respect to the securities offered
by this Prospectus. This Prospectus does not contain all of the information
set forth in the Registration Statement and in the exhibits thereto, certain
parts of which are omitted in accordance with the rules and regulations of
the Commission. For further information with respect to the Company,
reference is made to the Registration Statement, including the exhibits
filed therewith, copies of which may be obtained at prescribed rates
from the Commission at the public reference facilities maintained by the
Commission. Descriptions contained in this Prospectus as to the contents of
any contract or other documents filed as an exhibit to the Registration
Statement are not necessarily complete and each such description is
qualified by reference to such contract or documents.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
a. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995 (the "Annual Report"), filed with the Commission
on March 30, 1996;
b. The Company's Quarterly Report on Form 10-QSB for the fiscal quarter
ended March 31, 1996, filed with the Commission on May 13, 1996; and
c. The Company's Quarterly Report on Form 10-QSB/A for the fiscal
quarter ended March 31, 1996, filed with the Commission on June 26,
1996;
2<PAGE>
d. The Company's Quarterly Report on Form 10-QSB for the fiscal quarter
ended June 30, 1996, filed with the Commission on August 14, 1996;
e. The Company's Quarterly Report on Form 10-QSB for the fiscal quarter
ended September 30, 1996, filed with the Commission on November 14,
1996.
f. The Company's proxy statement for its annual meeting of stockholders
held on May 2, 1996;
g. The description of the Company's Common Stock, contained in the
Company's Registration Statement on Form 8-A, filed with the
Commission on August 1, 1994; and
h. The description of the Company's Preferred Stock Purchase Rights
contained in the Company's Registration Statement on Form 8-A,
filed with the Commission on August 30, 1996
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus
and to be a part of this Prospectus from the date of filing thereof. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or verbal request of any
such person, a copy of any or all of the documents which have been incorporated
herein by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference to such documents).
Requests for such documents should be directed to Fotoball USA, Inc., 3738
Ruffin Road, San Diego, California, Attention: Secretary, Telephone: (619)
467-9900.
3<PAGE>
THE COMPANY
Fotoball USA, Inc., a Delaware corporation (the "Company"), designs,
develops, manufactures and markets custom sports and non-sports related
products for promotional programs. Additionally, the Company designs and
manufactures custom sports products which are sold in the licensed product
retail market through independent manufacturers' representatives and directly
to the customer. The Company currently holds licenses with Major League
Baseball, the Major League Baseball Players Association, and the National
Association of Professional Baseball Leagues, Inc. (representing professional
minor league baseball; collectively, "Professional Baseball"); the National
Football League Properties, Inc. and the NFL Players Inc. (collectively,
"NFL"); NHL Enterprises, L.P., NHL Enterprises Canada, L.P. and the
National Hockey League Players' Association (collectively,"NHL"); and over
sixty (60) colleges and universities ("Colleges"). Pursuant to these
licenses, the Company has the right to use, for commercial purposes, the
names and logos of sports leagues, teams, colleges and universities and the
likenesses of certain sports figures.
The Company's products include: (i) baseballs: synthetic leather,
official size and weight baseballs licensed by Colleges and Professional
Baseball, featuring players' images, statistics and/or school, team and
league logos; (ii) footballs: synthetic leather, miniature footballs
licensed by the NFL and Colleges, featuring helmet logos and shields of NFL
teams, NFL Quarterback Club players' images, statistics and/or NFL team and
league logos, and College logos and/or mascots; (iii) basketballs: synthetic
leather, miniature basketballs licensed by Colleges, featuring College logos
and/or mascots; (iv) hockey pucks: all rubber hockey pucks licensed by the
NHL, featuring team logos and player images; and (v) custom-designed products,
including toy cars based upon characters featured in Chevron's national
advertising campaign.
The Company's business is segregated into two distinct market segments:
the promotional product business, in which the Company sells custom products
directly to customers, and the licensed product retail market, in which the
Company sells directly to mass merchants and through independent
representatives to the retail marketplace.
The Company's promotions customers, which are large corporations such as
Chevron, Shell, Coca-Cola, Burger King and McDonalds, purchase the Company's
products for use in promotional campaigns and in connection with their
sponsorship of professional sports teams. In 1995, 40% of the Company's sales
was derived from sales to promotions customers (with 26% of the Company's
sales derived from contracts for the sale of promotional products to Burger
King Corporation) as compared to 74% in 1994 (with 34% of the Company's sales
derived from contracts for the sale of promotional products to Chevron). The
Company provides its promotions customers with a wide range of design,
product development and manufacturing services. These services include
assisting customers in the negotiation of corporate sponsorships with
professional sports teams and their associations, in designing and developing
promotions and in procuring product licenses and authorizations. The Company
is responsible for all phases of production, including creative design,
manufacturing, quality control, packaging and shipping.
4<PAGE>
At the retail level, the Company's account base has increased to over
2,000 retailers, including selected department stores and mass merchants
(such as Kmart, Wal-Mart, J.C. Penney, Sears, Pro Image and Sports Authority),
theme parks (including Disney World , Disneyland , Sea World , Hershey Park
and Six Flags ), airport and hotel concessionaires (including Paradise,
Duty Free Shops, Host Marriot and the Del-Star Group), various licensed
sports specialty and sporting goods chains, various consumer catalogs and
Professional Baseball stadiums (including all 28 Major League Baseball
stadiums and 95 professional minor league baseball stadiums).
Fotoball USA, Inc., a California corporation and the predecessor to the
Company ("Fotoball California"), was incorporated under the laws of the
State of California on December 13, 1988. The Company was incorporated under
the laws of the State of Delaware on April 27, 1994, for the purpose of
merging and continuing the business of Fotoball California. On July 29, 1994,
Fotoball California merged with and into the Company, with the Company being
the surviving corporation. The Company's office is located at 3738 Ruffin
Road, San Diego, California 92123 and its telephone number is (619) 467-9900.
5<PAGE>
THE OFFERING
Securities Offered
by the Company None
Securities Offered
by the Selling
Stockholder 220,000 shares of Common Stock issuable upon
exercise of the 110,000 unit Purchase Option.
Each unit in the Purchase Option consists of one
share of Common Stock and one Warrant to purchase
one share of Common Stock for $7.93, subject to
adjustment in certain circumstances, during the
four-year period commencing August 11, 1995. The
Company may redeem the Warrants at a price of $.01
per Warrant at any time upon not less than 30 days'
prior written notice to the warrantholders, if the
last sale price of the Common Stock has been at
least $9.75 per share for the 20 consecutive
trading days ending on the third day prior to the
date on which the notice of redemption is given.
See "Description of Securities."
Common Stock
Outstanding as of
December 31, 1996(1) 2,676,742 shares
Nasdaq Symbols Common Stock: FUSA
Warrants: FUSAW
(1) Does not include (i) 258,000 shares of Common Stock reserved for
issuance upon exercise of outstanding stock options granted under the
Company's 1994 Stock Option Plan (the "Option Plan"), (ii) 117,000 shares
of Common Stock reserved for issuance upon exercise of stock options which
may be granted under the Option Plan, and (iii) 95,000 shares of Common Stock
reserved for issuance upon exercise of outstanding stock options granted
outside of the Option Plan, (iv) 1,411,673 shares of Common Stock issuable
upon exercise of outstanding Warrants and (v) 220,000 shares of Common Stock
reserved for issuance upon exercise of the Purchase Option and the Warrants
contained therein. See "Management -- Option Plan" and "Description of
Securities."
Estimated Net Proceeds; Use of Proceeds
If the Selling Stockholder named herein elects to exercise the Purchase
Option and the Warrants contained herein, the estimated net proceeds to the
Company, would be approximately $1,951,300 (including expenses of the
Offering estimated to be approximately $10,000). The Company intends to
apply the net proceeds received by the Company from such exercise for
working capital and general corporate purposes. See "Use of Proceeds" and
"Share Eligible for Future Sale."
Risk Factors
The purchase of the securities offered hereby is speculative and involves a
high degree of risk. See "Risk Factors."
6<PAGE>
RISK FACTORS
The purchase of the shares of Common Stock offered hereby is speculative
and involves a high degree of risk, including the risk factors described
below. Each prospective investor should carefully consider the following
risk factors inherent in and affecting the business of the Company before
making a decision to purchase the securities being offered hereby.
Dependence Upon Licensing Arrangements. The Company's business is based
primarily upon its use of the insignia, logos, names, colors, likenesses and
other identifying marks and images on many of its products pursuant to
license arrangements with Professional Baseball, the NFL and, to a lesser
extent, Colleges. The Company's licensing arrangements expire at various
times through December 31, 1998. The Company may acquire other licenses for
new product lines; however, there can be no assurance that the Company will
be successful in obtaining new licenses. The non-renewal or termination of
one or more of the Company's material licenses, particularly with Professional
Baseball or the NFL, could have a material adverse effect on the Company's
business.
Dependence on Promotions Business. The Company's promotions business
depends primarily upon a series of one-time projects with its customers.
Although the Company has had repeat business from certain promotions
customers, there can be no assurance that the Company will be able to
continue its relationships with its promotions customers or attract new
promotions customers to generate enough revenues to operate profitably.
During the year ended December 31, 1995, 40% of the Company's sales was
derived from sales of the Company's products to 189 customers, of which
Burger King accounted for aggregate sales of $2,015,000 or 26% of sales.
During the year ended December 31, 1994, 74% of the Company's sales were
derived from promotions, of which Chevron accounted for aggregate sales
of $2,495,000 or 34% of total sales, and two other customers accounted
for aggregate sales of $622,000 or 8% of sales and $639,000 or 9% of sales,
respectively. Chevron and Burger King will account for a significant
percentage of sales in 1996.
Dependence Upon Key Personnel. The success of the Company is largely
dependent on the personal efforts of Michael Favish, its President and
Chief Executive Officer, and Fred Ostern, its Vice President of Marketing.
Mr. Favish has entered into a five-year employment agreement with the
Company, commencing on August 11, 1994, which, among other things, precludes
Mr. Favish from competing with the Company for a period of two years
following termination of his employment with the Company. The loss of the
services of Mr. Favish would have a material adverse effect on the Company's
business and prospects. The Company maintains "key man" life insurance on the
life of Michael Favish in the amount of $1,000,000. Mr. Ostern has entered
into a three-year employment agreement with the Company, commencing on
January 1, 1996, which, among other things, precludes Mr. Ostern from
competing with the Company for a period of one year following termination of
his employment with the Company. The loss of the services of Mr. Ostern
would have a material adverse effect on the Company's business and prospects.
7<PAGE>
Seasonality; Concentration of Business; Major League Baseball Strike.
During the year ended December 31, 1995, 75% of the Company's sales was
derived from baseball-related products and 72% of the Company's sales was
recorded during the third (46%) and fourth (26%) quarters. During the year
ended December 31, 1994, 85% of the Company's sales was derived from
baseball-related products and 86% of the Company's sales was recorded
during the first (19%) and second (67%) quarters. Sales during the third
and fourth quarters of 1994 were adversely impacted due to the Major League
Baseball ("MLB") strike, as discussed below.
The Company is susceptible to circumstances affecting professional sports
leagues or teams, such as player strikes and owner lockouts. On August 12,
1994, the Major League Baseball Players Association (the "MLBPA") went on
strike citing differences with team owners regarding compensation. On April
2, 1995, the MLBPA ended their strike and agreed to return to MLB teams
without having signed a collective bargaining agreement ("CBA") with team
owners. The beginning of the 1995 MLB season was delayed from April 2, 1995
until April 25, 1995. As a result of the strike and the uncertainty as to the
continuation in full of the 1995 MLB season, the Company's baseball-related
business was materially adversely impacted during the last half of 1994 and
the first half of 1995. However, the Company experienced an upsurge in its
baseball and football-related business during the last half of 1995. On
November 26, 1996 MLB team owners and the MLBPA agreed to a CBA that extends
for up to a five year period, ending after the baseball season in 2000.
Irrespective of the signing of a CBA, the Company believes that the continuing
decrease in the Company's dependence upon baseball-related sales during the
past several years will continue in the future, with the introduction of new
product lines and non-baseball-related promotions.
Consumer Trends. The Company's business is vulnerable to a number of
factors beyond its control, including changes in consumer tastes and
enthusiasm for spectator sports. Although the Company has benefited from
the interest of consumers in collecting souvenirs, especially souvenirs
relating to professional sports, there can be no assurance that such
interest will continue, especially given the occurrence of player strikes
and owner lockouts in MLB and the NHL in recent years. Although the Company
continuously evaluates its product lines to tailor them to consumer trends,
there can be no assurance that it will be successful in doing so.
Competition and Technological Change. The promotions and sports-related
business is highly competitive, diverse and constantly changing. The
Company experiences substantial competition in most of its product categories
from a number of companies, some of which have greater financial resources
and marketing and manufacturing capabilities than the Company. Many of the
Company's products are sold under non-exclusive license agreements, and
licensors may license more than one vendor in a particular product line.
Although the Company has been successful in obtaining and renewing such
licenses, and in being the sole vendor of certain licensed product lines,
there can be no assurance that other competitors will not obtain competing
licenses to sell the same or similar products in the future. The technology
8<PAGE>
currently being used by the Company has also contributed to restricting
direct competition of its product lines. The future success of the Company
will be dependent, in large part, upon its proprietary printing process
and ability to keep pace with advancing printing and photographic technology.
There can be no assurance that new printing or photographic technology will
not be developed that renders the Company's current printing process and
products obsolete or inferior or that other competitors will not develop
the technology currently used by the Company.
Foreign Manufacturing and Suppliers. A significant portion of the raw
materials used in the production of the Company's products are the blank
baseballs, footballs and basketballs. In 1995, the Company purchased
approximately 74% of its raw materials from four companies located in China,
with one manufacturer accounting for 61% of total raw materials purchased.
The Company is increasingly shifting the imprinting of its products,
including certain four-color retail product, to companies located in China
to capitalize on significantly lower manufacturing costs. Foreign
manufacturing is subject to a number of risks, including transportation
delays and interruptions, political and economic disruptions, the imposition
of tariffs, quotas and other import or export controls, and changes in
government policies. China currently enjoys most favored nation ("MFN")
trading status with the United States, although there can be no assurance
that China will continue to enjoy MFN trading status in the future or that
conditions on China's MFN status will not be imposed. Any conditions imposed
by the President of the United States and any legislation in the United
States revoking or placing further conditions on China's MFN trading status
could have a material adverse effect on the cost of the Company's baseballs,
footballs and basketballs because products originating from China could be
subjected to substantially higher rates of duty.
Although alternative suppliers may be available in other countries at
competitive prices, and the Company continues to evaluate their ability to
compete in terms of cost, quality, production capacity and other
considerations, there can be no assurance that the Company would be able to
find alternative suppliers in a timely manner or that such suppliers would
meet the Company's cost, quality or production capability standards. The
inability of a supplier to ship orders of the Company's products in a timely
manner could adversely affect the Company's ability to deliver products to
its customers on schedule or could otherwise adversely affect the Company.
Lack of Patent Protection. The Company is able to successfully reproduce
an image, with all its half tones, on its products with detail and accuracy,
using the Company's proprietary printing process. This process was developed
by the Company by combining several pre-existing techniques that are used in
other similar industries. To the Company's knowledge, no other company
currently has the ability to perform the complete process. The Company does
not rely upon any material patents or licensed technology in the operation
of its business. The Company does not believe that it is possible to be
issued a patent on its proprietary process and, accordingly, there can be no
assurance that the Company's techniques, processes and formulations will not
otherwise become known to, or independently developed by, competitors of the
Company.
9<PAGE>
Future Capital Requirements. The Company's future capital requirements
will depend on many factors, including cash flow from operations, continued
progress in the development of its products, the successful implementation
of new product lines, the successful expansion of the Company's current
product lines, competing technological and market developments, and the
Company's ability to market its products successfully. To the extent that
the funds generated by the Company's initial public offering, together with
cash flow from operations, are insufficient to fund the Company's activities,
it will be necessary to raise additional funds, through equity or debt
financings. Any equity financings could result in dilution to the Company's
then existing stockholders, and any financing, if available at all, may be
on terms unfavorable to the Company. If adequate funds are not available,
the Company may be required to curtail its activities significantly and its
business would be adversely affected.
Dividends. The Company has not paid any dividends on its Common Stock
to date and does not intend to pay dividends in the foreseeable future. It is
the present intention of the Board of Directors to retain all earnings,if any,
for use in the Company's business operations and, accordingly, the Board
does not anticipate declaring any dividends in the foreseeable future. See
"Dividend Policy."
Limitation on Net Operating Loss Carryforwards. As of December 31, 1995,
the Company had net operating loss carryforwards for income tax purposes of
$2,878,123. These carryforwards are subject to limitations on the amount that
can be utilized by the Company in a fiscal year due to change of ownership
rules as defined by applicable tax statutes. An ownership change occurred
upon completion of the Company's initial public offering which resulted
in the limitation on the use of carryforward losses incurred prior to the
ownership change. Consequently, the Company will not have a portion of its
net operating loss carryforwards available in the current period to offset
taxable income, if any, thereby reducing the Company's net income.
No Assurance of Public Market. Although the Common Stock is listed on
the Nasdaq National Market, there can be no assurance that the Company will,
in the future, be able to meet all requirements for continued listing thereon.
In the absence of an active trading market or if such securities cannot be
traded on the Nasdaq National Market, the securities could instead be
traded on the Electronic Bulletin Board or in the "Pink Sheets." In such
event, the liquidity and stock price of such securities in the secondary
market may be adversely affected. In addition, in the event such securities
are delisted, broker-dealers have certain regulatory burdens imposed upon
them which may discourage broker-dealers from effecting transactions in
such securities, further limiting the liquidity of such securities.
Shares Eligible for Future Sale. As of December 31, 1996, the Company
has 2,676,742 shares of Common Stock outstanding. Of such shares, at least
1,457,923 are freely tradeable under the Securities Act of 1933, as amended
(the "Securities Act"). The up to 1,218,819 remaining shares are "Restricted
Securities," as that term is defined under Rule 144 promulgated under the
Securities Act.
10<PAGE>
Effect of Outstanding Options. As of December 31, 1996, there were
outstanding stock options under the Option Plan to purchase an aggregate of
258,000 shares of Common Stock at per share exercise prices ranging from
$5.25 to $8.80 and outstanding stock options outside of the Option Plan to
purchase an aggregate of 95,000 shares at per share exercise prices ranging
from $.01 to $5.25. In addition, all of the Warrants and the Purchase Option
are exercisable. The exercise of such outstanding stock options, the Warrants
and the Purchase Option (and the Warrants included therein) will dilute the
percentage ownership of the Company's stockholders, and any sales in the
public market of Common Stock underlying such stock options, Warrants and
the Purchase Option (and the Warrants included therein) may adversely affect
prevailing market prices for the Common Stock. Moreover, the terms upon which
the Company will be able to obtain additional equity capital may be adversely
affected since the holders of such outstanding securities can be expected
to exercise them at a time when the Company would, in all likelihood, be able
to obtain any needed capital on terms more favorable to the Company than
those provided in such stock options, Warrants and the Purchase Option.
In addition, the Company has granted certain demand and piggy-back
registration rights with respect to the securities issuable upon exercise
of the Purchase Option.
Certain Anti-takeover Provisions; Authorization of Preferred Stock;
Shareholder Rights Plan; Indemnification. Certain provisions of the Company's
Amended and Restated Certificate of Incorporation (the "Certificate") and
Amended and Restated By-Laws ("By-Laws") may be deemed to have the effect
of discouraging a third party from pursuing a non-negotiated takeover of
the Company and preventing certain changes in control. In particular, the
Company has adopted a shareholder rights plan and the Certificate authorizes
the issuance of preferred stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or
other rights of the holders of the Common Stock. In the event of issuance,
the preferred stock could be utilized, under certain circumstances, as a
method of discouraging, delaying or preventing a change in control of the
Company. Although the Company has no present intention to issue any shares
of its preferred stock, there can be no assurance that the Company will not
do so in the future.
The Certificate contains provisions to limit the personal liability of
its directors for monetary damages for breach of their fiduciary duties,
except for liability that cannot be eliminated under the Delaware General
Corporation Law ("DGCL"), including (i) for any breach of the duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for any unlawful payment of a dividend or unlawful stock
purchase or redemption, as provided in Section 174 of the DGCL, or (iv) for
any transaction from which a director derived an improper personal benefit.
The Certificate also provides that the Company shall indemnify its directors
and officers to the fullest extent permitted by Section 145 of the DGCL,
11<PAGE>
including circumstances in which indemnification is otherwise discretionary.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Company, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.
USE OF PROCEEDS
If the Selling Stockholder named herein elects to exercise the Purchase
Option and Warrants contained therein, the estimated net proceeds to the
Company would be approximately $1,951,300 (including expenses of the Offering
estimated to be approximately $10,000). The Company intends to apply the net
proceeds received by the Company from such exercise for working capital and
general corporate purposes. The Company will not receive any proceeds from
the sale of Common Stock offered hereby. See "Use of Proceeds."
DIVIDEND POLICY
To date, the Company has not paid any dividends on its Common Stock. The
payment of dividends, if any, in the future is within the discretion of the
Board of Directors and will depend on the Company's earnings, its capital
requirements and financial condition and other relevant factors. The Company
does not expect to declare or pay any dividends in the foreseeable future.
12<PAGE>
SELLING STOCKHOLDER
The following table sets forth certain information with respect to the
Selling Stockholder as of December 31, 1996. If the Selling Stockholder
elects to exercise the Purchase Option and the Warrants contained therein,
the estimated net proceeds to the Company would be approximately $1,951,300.
Beneficial
Ownership of
Shares of
Beneficial Common Stock
Ownership of Shares of After Giving
Name of Shares of Common Stock Effect to
Selling Stockholder Common Stock Offered for Sale Proposed Sale
- --------------------- ------------- ----------------- --------------
Gaines, Berland Inc.(1) 220,000 220,000 0
------------- ----------------- --------------
Total 220,000 220,000 0
------------- ----------------- --------------
(1) In connection with the Initial Public Offering, the Company agreed to
sell the Purchase Option to the Selling Stockholder for an aggregate of
$55. The Unit Purchase Option is exercisable initially at $9.90 per
unit for a period of four years commencing August 11, 1995. Each unit
in the Purchase Option consists of one share of Common Stock and one
Warrant to purchase one share of Common Stock for $7.93, subject to
adjustment in certain circumstances during the four-year period
commencing August 11, 1995.
PLAN OF DISTRIBUTION
The Selling Stockholder may sell its shares of Common Stock from time to
time.
The 220,000 shares of Common Stock being sold hereby may be offered to
purchasers directly by the Selling Stockholder or through underwriters,
brokers, dealers or agents from time to time in one or more transactions
(i) in the over-the-counter market, (ii) in transactions other than in the
over-the-counter market or (iii) through the writing of options (whether
such options are listed on an options exchange or otherwise) on, or in
settlement of, short sales of shares. Any such transactions may be at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at varying prices determined at the time of sale or at
negotiated or fixed prices, in each case as determined by the Selling
Stockholder or by agreement between the Selling Stockholder and such
underwriters, brokers, dealers or agents or purchasers if the Selling
Stockholder effects such transactions by selling shares to or through
underwriters, brokers, dealers or agents, such underwriters, brokers,dealers,
or agents receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholder and/or the purchasers of securities
for whom they may act as agent (which discounts, concessions or commission
13<PAGE>
as to particular underwriters, brokers, dealers or agents may be in excess
of those customary in the types of transactions involved). The Selling
Stockholder and any dealers or agents that participate in the distribution
of securities offered hereby may be deemed to be underwriters, and any
profit on the sale of such securities by them and any discounts, commissions,
or concessions received by any such dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act.
The securities offered hereby may be sold pursuant to this Prospectus or
pursuant to an available exemption from the registration requirements of the
Securities Act, such as the provisions of Rule 144 promulgated under the
Securities Act, to the extent applicable. Under the securities laws of
certain states, the securities offered hereby may be sold in such states
only through registered or licensed brokers or dealers. In addition, in
certain states the securities may not be sold unless the securities have
been registered or qualified for sale in such state or an exemption from
registration of qualification is available and is complied with. The Company
will pay substantially all of the expenses incident to this offering, other
than commissions and fees and fees of others employed by the Selling
Stockholder, including attorneys fees. The Company will not receive any of
the proceeds from the sale of any of the shares of Common Stock by the
Selling Stockholder. See "Use of Proceeds."
The Selling Stockholder will be subject to applicable provisions of
the Exchange Act and rules and regulations thereunder, including,
without limitation, Rules 10b-2, 10b-6 and 10b-7 which provisions may limit
the timing of purchases and sales of any of the securities by the Selling
Stockholder. All of the foregoing may affect the marketability of the
securities.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
the Company by Shereff, Friedman, Hoffman & Goodman, LLP, New York, New York.
EXPERTS
The financial statements of the Company at December 31, 1994 and 1995
appearing in the Company's Annual Report on Form 10-KSB for the year ended
December 31,1995 have been audited by Hollander, Gilbert & Co., independent
auditors, as set forth in their reports thereon appearing therein, and are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
14<PAGE>
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the Offering are:
SEC filing fees $ 436.21
Accounting fees and expenses* 2,000.00
Legal fees and expenses* 5,000.00
Miscellaneous* 2,563.79
------------
Total $ 10,000.00
============
________________
* Estimated.
Item 15. Indemnification of Directors and Officers.
The indemnification of officers and directors of the Company is governed
by Section 145 of the DGCL and the Certificate and By-Laws of the Company.
Among other things, the DGCL permits indemnification of a director, officer,
employee or agent in civil, criminal, administrative or investigative actions,
suits or proceedings (other than an action by or in the right of the
corporation) to which such person is a party or is threatened to be made a
party by reason of the fact of such relationship with the corporation or the
fact that such person is or was serving in a similar capacity with another
entity at the request of the corporation against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him if such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
if he had no reasonable cause to believe his conduct was unlawful. No
indemnification may be made in any such suit to any person adjudged to be
liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or the court in which the action was brought determines
that, despite the adjudication of liability, such person is under all
circumstances, fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper. Under the DGCL, to the extent that a
director, officer, employee or agent is successful, on the merits or
otherwise, in the defense of any action, suit or proceeding or any claim,
issue or matter therein (whether or not the suit is brought by or in the
right of the corporation), he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him. In all
cases in which indemnification is permitted (unless ordered by a court), it
may be made by the corporation only as authorized in the specific case upon
a determination that the applicable standard of conduct has been met by the
party to be indemnified. The determination must be made by a majority vote of
a quorum consisting of the directors who were not parties to the action or,
if such a quorum is not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or by the stockholders. The statute authorizes the corporation to
pay expenses incurred by an officer or director in advance of a final
disposition of a proceeding upon receipt of an undertaking by or on behalf
of the person to whom the advance will be made, to repay the advances if it
shall ultimately be determined that he was not entitled to indemnification.
The DGCL provides that indemnification and advances of expenses permitted
thereunder are not to be exclusive of any rights to which those seeking
indemnification or advancement of expenses may be entitled under any by-law,
II-1<PAGE>
agreement, vote of stockholders or disinterested directors, or otherwise.
The DGCL also authorizes the corporation to purchase and maintain liability
insurance on behalf of its directors, officers, employees and agents
regardless of whether the corporation would have the statutory power
to indemnify such persons against the liabilities insured.
The Certificate provides that no director of the Company shall be
personally liable to the Company or its stockholders for monetary damages
for breach of fiduciary duty as a director except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for paying a dividend or
approving a stock repurchase in violation of Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper
personal benefit.
The By-Laws provide that directors, officers and others shall be
indemnified to the fullest extent authorized by the DGCL, as in effect
(or, to the extent indemnification is broadened, as it may be amended),
against any and all judgments, fines and amounts paid in settling or
otherwise disposing of threatened, pending or completed actions, suits or
proceedings, whether civil, criminal, administrative or investigative and
expenses incurred by such person in connection therewith. The By-Laws further
provide that, to the extent permitted by law, expenses so incurred by any
such person in defending a civil or criminal action or proceeding shall, at
his request, be paid by the Company in advance of the final disposition of
such action or proceeding.
The By-Laws provide that the right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final
disposition shall not be exclusive of any other right which any person may
have or acquire under any statute, provision of the Certificate or By-Laws
or otherwise.
The Company maintains directors and officers liability and company
reimbursement insurance which, among other things, (i) provides for
payment on behalf of its officers and directors against loss as defined
in the policy stemming from acts committed by directors and officers in
their capacity such and (ii) provides for payment on behalf of the Company
against such loss but only when the Company shall be required or permitted
to indemnify directors or officers for such loss pursuant to statutory or
common law or pursuant to duly effective Certificate or By-Law provisions.
II-2<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
1.1 Form of Underwriting Agreement.(1)
4.1 Form of Representative's Unit Purchase Option.(2)
4.2 Form of Warrant Agreement.(2)
4.3 Specimen Warrant Certificate.(3)
4.4 Specimen Stock Certificate.(3)
4.5 Specimen Rights Certificate(4)
4.6 Rights Agreement dated as of August 19, 1996, by and between the
Registrant and Continental Stock Transfer & Trust Company (4)
5.1 Opinion of Shereff, Friedman, Hoffman & Goodman, LLP.(5)
23.1 Consent of Hollander, Gilbert & Co.(5)
23.2 Consent of Shereff, Friedman, Hoffman & Goodman, LLP (contained
in Exhibit 5.1).(5)
24.1 Power of Attorney (included in Part II of this Registration
Statement)(5)
27.1 Financial Data Schedule(5)
_______________________
(1) Exhibits to the Company's Registration Statement on Form SB-2 filed
with the Commission on August 11, 1994 incorporated herein by
reference.
(2) Exhibits to the Company's Registration Statement on Form SB-2 filed
with the Commission on August 1, 1994 incorporated herein by reference.
(3) Exhibits to the Company's Registration Statement on Form SB-2 filed
with the Commission on August 9, 1994 incorporated herein by reference.
(4) Exhibits to the Company's Registration Statement on Form 8-A filed with
the Commission on August 23, 1996 incorporated herein by reference.
(5) Filed herewith.
(b) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related instructions
or are inapplicable and, therefore, have been omitted.
II-3<PAGE>
Item 17. Undertakings.
(a) Indemnification
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
(b) The undersigned small business issuer hereby undertakes that it will:
(1) file, during any period in which it offers or sell securities, a
post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information set forth in the registration statement; and
(iii) include any additional or changed material information on the
plan of distribution;
(2) for determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of such securities at that
time to be the initial bona fide offering.
(3) file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(4) for purposes of determining any liability under the Securities Act,
treat the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the small business issuer
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
as part of this registration statement as of the time the Commission
declared it effective; and
(5) for the purpose of determining any liability under the Securities
Act, treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities
offered in the registration statement, and that offering of such
securities at that time as the initial bona fide offering of those
securities.
II-4<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of San Diego, State of California,
on January 29, 1997.
FOTOBALL USA, INC.
/s/Michael Favish
-----------------
Michael Favish
President, Chief Executive
Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned whose
signatures appears below constitutes and appoints Michael Favish and
David G. Forster, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agents, with full power of
substitution and resubstitution for him and on his behalf, and in his name,
place and stead, in any and all capacities to execute and sign any and all
amendments or post-effective amendments to this Registration Statement, and
to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be
done in and about premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof and the
Registrant hereby confers like authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Titles Date
- --------- -------- ----------------
/s/ Michael Favish President, January 29, 1997
- ------------------ Chief Executive
Michael Favish Officer and Director
(Principal Executive Officer)
/s/ David G. Forster Vice President, Finance, January 29, 1997
- --------------------- Treasurer, and Chief
David G. Forster Financial Officer
(Principal Financial &
Accounting Officer)
/s/ William R. Hasvold Director January 29, 1997
- ----------------------
William R. Hasvold
II-5<PAGE>
/s/ Joel K. Rubenstein Director January 29, 1997
- ----------------------
Joel K. Rubenstein
/s/ Sabin C. Streeter Director January 29, 1997
- ---------------------
Sabin C. Streeter
/s/ Robert N. Weingarten Director January 29, 1997
- ------------------------
Robert N. Weingarten
II-6<PAGE>
Exhibit Index
Exhibit No. Exhibits
- ---------- --------
5.1 Opinion of Shereff, Friedman, Hoffman and Goodman, LLP.
23.1 Consent of Hollander, Gilbert & Co.
27.1 Financial Data Schedule.
II-7<PAGE>
January 29, 1997
Fotoball USA, Inc.
3738 Ruffin Road
San Diego, California 92123
Dear Sirs:
Fotoball USA, Inc., a Delaware corporation (the "Company"), intends to
transmit for filing with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933, as amended, on Form S-3 (the
"Registration Statement") which relates to 220,000 shares of the Company's
common stock, par value $.01 per share (the "Shares"), and the related
preferred stock purchase rights ("Rights") to be issued in connection with
the issuance of the Shares pursuant to the Rights Agreement, dated as of
August 19, 1996, by and between the Company and Continental Stock Transfer
& Trust Company (the "Rights Agreement"), which are being offered for sale
by the selling stockholder named in the Registration Statement
(the "Selling Stockholder"). This opinion is an exhibit to the Registration
Statement.
We have acted as counsel to the Company in connection with the
proposed offer and sale of the Shares as contemplated by the Registration
Statement. However, we are not general counsel to the Company and would not
ordinarily be familiar with or aware of matters relating to the Company unless
they are brought to our attention by representatives of the Company. We have
examined copies (in each case signed, certified or otherwise proved to our
satisfaction) of the Company's Certificate of Incorporation and By-Laws as
presently in effect, minutes and other instruments evidencing actions taken by
the Company's directors, the Rights Agreement and such other documents and
instruments relating to the Company and the proposed offering as we have
deemed necessary under the circumstances. In our examination of all such
agreements, documents, certificates and instruments, we have assumed
the genuineness of all signatures and the authenticity of all agreements,
documents, certificates and instruments submitted to us as originals and the
conformity with the originals of all agreements, instruments, documents and
certificates submitted to us as copies. Insofar as this opinion relates to
securities to be issued in the future, we have assumed that all applicable
laws, rules and regulations in effect at the time of such issuance are the
same as such laws, rules and regulations in effect as of the date hereof.
We note that we are members of the Bar of the State of New York and
do not hold ourselves out as experts in the laws of any jurisdiction
other than the State of New York and the federal laws of the United States.
Insofar as the opinions set forth below relate to the laws of the State of
Delaware, we have relied solely upon our reading of standard compilations of
the Delaware General Corporation Law, as presently in effect.
Based on the foregoing, and subject to and in reliance on the
accuracy and completeness of the information relevant thereto provided to us,
it is our opinion that:
1. The Company has been duly incorporated under the laws of the
State of Delaware and has an authorized capital stock consisting
of 15,000,000 shares of common stock, par value $.01 per share,
and 1,000,000 shares of preferred stock, par value $.01 per
share.
2. The Shares to be issued to the Selling Stockholder, and the
Rights to be issued in connection with the issuance of the
Shares pursuant to the Rights Agreement, have been duly
authorized and (subject to the effectiveness of the Registration
Statement and compliance with applicable state securities
laws), when issued and paid for in accordance
with the terms of the stock options relating thereto, will be
legally and validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and as an exhibit to any filing made by the
Company under the securities or "Blue Sky" laws of any state.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purposes, except as expressly provided in the
preceding paragraph.
Very truly yours,
/s/ SHEREFF, FRIEDMAN HOFFMAN & GOODMAN, LLP
-----------------------------------------
SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated February 16, 1996,
relating to the financial statements of Fotoball USA, Inc. which are
incorporated by reference in such Prospectus. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ HOLLANDER, GILBERT & CO.
____________________________
HOLLANDER, GILBERT & CO.
Los Angeles, California
January 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMA-
TION EXTRACTED FROM THE FINANCIAL STATEMENTS
CONTAINED IN THE FOTOBALL USA, INC. FORM 10-QSB
FOR THE PERIOD ENDED SEPTEMBER 30, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,943,388
<SECURITIES> 0
<RECEIVABLES> 2,315,023
<ALLOWANCES> 0
<INVENTORY> 1,803,457
<CURRENT-ASSETS> 8,448,600
<PP&E> 1,422,052
<DEPRECIATION> 612,170
<TOTAL-ASSETS> 9,271,505
<CURRENT-LIABILITIES> 1,120,827
<BONDS> 0
0
0
<COMMON> 26,767
<OTHER-SE> 8,013,873
<TOTAL-LIABILITY-AND-EQUITY> 9,271,505
<SALES> 18,179,613
<TOTAL-REVENUES> 18,179,613
<CGS> 12,221,116
<TOTAL-COSTS> 3,950,423
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,397
<INCOME-PRETAX> 2,111,327
<INCOME-TAX> 847,500
<INCOME-CONTINUING> 1,263,827
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,263,827
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
