As filed with the Securities and Exchange Commission on August 18, 1997
Registration No. 33-80508
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4
ON FORM S-3 TO FORM SB-2
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 of (I.R.S. Employer
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
_____________<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: [ ]
If any of the securities being registered on this Form are to be 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. [ ]
If this Form is a post-effective amendment 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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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>
Subject to Completion, Dated August 18, 1997
PROSPECTUS
1,411,673 Shares of Common Stock
FOTOBALL USA, INC.
The securities offered hereby (the "Offering") are being sold by Fotoball
USA, Inc., a Delaware corporation (the "Company"), and consist of 1,411,673
shares of common stock, par value $.01 per share ("Common Stock"), issuable
upon exercise of outstanding Redeemable Common Stock Purchase Warrants (the
"Warrants") of the Company issued in connection with the Company's 1994
initial public offering (the "Initial Public Offering"). Each Warrant
entitles the holder to purchase one share of Common Stock for $6.50, subject
to adjustment in certain circumstances, during the four-year period
commencing August 11, 1995. The Company may call the Warrants for redemption,
at a price of $.01 per Warrant, at any time after they become exercisable on
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.
The Common Stock and Warrants are quoted on the Nasdaq National Market
under the symbols "FUSA" and "FUSAW," respectively. On August 1, 1997, the
closing bid price was $3.06 per share of Common Stock and $.44 per Warrant.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" LOCATED ON PAGES 6-12 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.
_________________
This Prospectus also covers 1,250 Warrants and 600 shares of Common Stock
which are being offered hereby for the respective accounts of the selling
stockholder named herein (the "Selling Stockholder"). The Company will not
receive any proceeds from the sale of these securities. See "Selling
Stockholder."
The date of this Prospectus is August __, 1997<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 will file 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 facilities 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 Northwestern Atrium Center, 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. The Registration Statement of which this
Prospectus forms a part has been filed electronically through the Commission's
Electronic Data Gathering Analysis and Retrieval (EDGAR) system and may be
obtained 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 of 1933, as amended (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 thereto, 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 previously filed with the Commission are hereby
incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996, filed with the Commission on April 15, 1997;
2. The Company's Quarterly Reports on Form 10-QSB for the fiscal quarters
ended March 31, 1997 and June 30, 1997, filed with the Commission on
May 15, 1997 and August 14, 1997, respectively;
3. The Company's proxy statement for its annual meeting of stockholders
to be held on July 31, 1997;
2<PAGE>
4. 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
5. 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 Sections 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 or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been 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 documents 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 92123, Attention: Secretary,
Telephone (619) 467-9900.
Cautionary Statement Pursuant To Safe Harbor Provisions Of The Private
Securities Litigation Reform Act Of 1995:
This Prospectus, including any documents that are incorporated by reference
as set forth in "Incorporation of Certain Documents by Reference," contains
"forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These forward-looking
statements include, among others, statements concerning the Company's outlook
for 1997, overall sales trends, gross margin trends, cost and inventory
reduction strategies and their results, the ability to obtain or retain
significant licensing rights, the Company's expectations as to funding its
capital expenditures and operations during 1997, and other statements of
expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts. The forward-looking statements in this Prospectus, including any
documents that are incorporated by reference, are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in or implied by the statements. Certain of these risks are
described under "Risk Factors" on pages 6-12 of this Prospectus.
3<PAGE>
THE COMPANY
The Company designs, develops, manufactures and markets high quality
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 a nationwide network of over
2,000 retailers, including Walmart, J.C. Penney, Kmart, Target, Pro Image and
The Sports Authority. The Company currently holds licenses with Major League
Baseball Properties, the Major League Baseball Players Association, the
National Association of Professional Baseball Leagues, Inc. (representing
professional minor league baseball; collectively, "Professional Baseball");
the National Football League Properties, Inc. and NFL Players Inc.
(collectively, "NFL"); National Hockey League Enterprises and NHL Players'
Association (collectively, "NHL"); Major League Soccer ("MLS"); and over 200
colleges and universities ("Colleges"). The Company has also signed license
agreements with thirteen NASCAR drivers, four motor speedways and Goodyear
Tire & Rubber Co., the California Sesquicentennial Foundation and a retail
license with WB Sport, Warner Bros. new sport merchandise brand. 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. A major component of the Company's
operations is the design, development and manufacture of promotions for major
corporations using imprinted sports-related products and non sports-related
products.
The Company's 1997 product lines include: (i) baseballs: synthetic leather,
both mini and 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, College logos and/or mascots, and brand licensed full-size
footballs; (iii) basketballs: synthetic leather, miniature basketballs
licensed by Colleges, featuring College logos and/or mascots, and brand
licensed full-size basketballs; (iv) hockey pucks: official size and weight
hockey pucks featuring unique logo designs displayed in a replica hockey net
and licensed by the NHL; (v) Fototires: miniature synthetic rubber tires,
scaled proportionally for size and weight, which replicate the exact
appearance of a NASCAR or INDY tire, featuring drivers' images and/or cars;
(vi) lapel pins: high-quality lapel pins featuring corporate logos and
designs for promotions and special events; (vii) soccer balls: miniature and
regulation-size synthetic leather soccer balls licensed by MLS, featuring
players' images, and/or MLS team and league logos; (viii) brand licensed and
performance ball products: regulation-size synthetic leather or vulcanized
rubber sports balls, featuring imprinted corporate logos, designs and animated
characters, including products for Disney Attractions, Official All-Star Cafe
and WB Sport; and (ix) custom-designed products, including, for example,
plush teddy bears licensed by the California Sesquicentennial Foundation.
The Company's business is segregated into two distinct market segments:
the promotions business, in which the Company sells custom-designed 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.
4<PAGE>
The Company's promotions customers, which include large corporations such
as Chevron, General Mills, 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 1996, 76% of the Company's
sales was derived from sales to promotions customers (with 54% of the Company's
sales derived from contracts for the sale of toy cars to a major oil company),
as compared to 40% in 1995 (with 26% of the Company's sales derived from
contracts for the sale of promotional products to a national quick serve
restaurant chain). 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.
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 Walmart, J.C. Penney, Kmart, Target, Pro Image and The Sports
Authority), theme parks (including Sea World, Disneyland, Disney World,
Hershey Park and Six Flags), airport and hotel concessionaires (including
Paradies, Duty Free Shops, Host Marriott 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.
THE OFFERING
Securities Offered by the Company 1,411,673 shares of Common Stock
issuable upon exercise of
outstanding Warrants. Each
Warrant is exercisable to purchase
one share of Common Stock for $6.50
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 after they become exercisable
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.
5<PAGE>
Securities Offered by the Selling 1,250 Warrants and 600 shares of
Stockholder Common Stock. See "Selling
Stockholder."
Common Stock Outstanding as of 2,676,742 shares
June 30, 1997(1)
Common Stock Issuable upon 1,411,673 shares
Exercise of Warrants(2)
Nasdaq Symbols Common Stock: FUSA
Warrants: FUSAW
(1) Does not include (i) 260,000 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) 115,000
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 reserved for issuance upon exercise of outstanding stock
options granted outside of the Option Plan.
(2) Does not include 110,000 shares of Common Stock reserved for issuance
upon exercise of the Warrants included in the option granted to the
representative of the underwriters (the "Representative") in the Initial
Public Offering (the "Purchase Option").
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, 1999. 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, 1996, 76% of the Company's sales was
6<PAGE>
derived from promotions, of which one customer accounted for aggregate sales
of $14,122,000, or 54% of sales, and another customer accounted for aggregate
sales of $4,400,000, or 17% of sales. 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 one customer accounted for aggregate sales of
$2,015,000 or 26% of sales. In expanding its sports product retail business,
devoting greater resources to its sales staff, and seeking diversification of
its promotions business by expanding its customer base and product offerings,
the company's goal is to reduce the potential variability of its quarterly
results in future years. The effect, however, of increasing its sales staff
to leverage its sales opportunity may be to increase operating costs in the
short term. The Company's promotional sales are significantly lower in 1997
than promotions sales in 1996, resulting to a large extent, from the reliance
upon a few significant customers. The Company expects to realize operating
losses for the fiscal year ending December 31, 1997, since current retail
sales growth along with current promotional business in hand is not expected
to exceed the Company's cost of operations in 1997.
Variability of Gross Margins. Historically, the Company has realized gross
margins as a percentage of total sales of between 45-50% on an annual basis.
This represented an aggregation of somewhat lower margin promotions sales
offset by higher margin retail sales. Generally, the Company's promotions
sales realize lower margins than its retail sales. In 1996, the Company
realized gross margins of 29% as a result of $14,000,000 of low margin toy
car promotion sales. As the company does not anticipate any material toy car
sales during 1997, the Company expects that its higher margin sports-related
promotions and retail business should contribute to higher margins in 1997
comparable with gross margins realized during the six months ended June 30,
1997. The Company's gross margins fluctuate, particularly between quarters,
based in part on the concentration of promotions and retail sales during the
reporting period. The type of product sold, the size of the promotion and
extent of competition also create variability in realized gross margins.
Variability of Operating Results; Seasonality; Dependence Upon Baseball
Related Sales. The Company has experienced, and expects to continue to
experience, significant quarter-to-quarter variability in its sales and net
income. This is due in part to the seasonality of its licensed sports
product business combined with a significant concentration of its business
from baseball. Historically, the Company has derived a significant amount of
sales from baseball-related products, representing 74% and 35% of the
Company's sales during the years ended December 31, 1995 and 1996,
respectively. As such, its sales tend to be concentrated during the second
and third quarters which coincides with the baseball season. Baseball-related
sales as a percentage of total sales decreased significantly in 1996 due to
the $14,000,000 of toy car sales realized in 1996. Despite the absence in the
future of any material toy car sales, the Company believes that the decrease
in the 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. The second factor which significantly
contributes to the variability of the Company's operations is its dependence
on promotions business as more fully explained above.
7<PAGE>
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. In March 1997, Mr. Ostern brought an
action against the Company alleging that the Company breached the employment
agreement between the Company and Mr. Ostern. More information on this
lawsuit is contained in the Company's Annual Report on Form 10-KSB and
Quarterly Reports on Form 10-QSB.
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. 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. Beginning in
1997, the Company began competing directly with Rawlings Sporting Goods
Company, Inc. ("Rawlings") in the team logo baseball business after Rawlings
received licensing rights from MLB Properties, Inc. for this product category.
The transfer pad printing technology 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.
8<PAGE>
Foreign Manufacturing and Suppliers. A significant portion of the raw
materials used in the production of the Company's products are produced from
unaffiliated manufacturers in the Far East. Additionally, the majority of
the Company's promotions products are manufactured according to Company and
customer specifications by these same unaffiliated manufacturers. In
1996, the Company purchased approximately 89% of its raw material, consisting
primarily of synthetic baseballs, footballs and basketballs, and finished
promotions goods from four companies located in China, with one manufacturer
accounting for 57% of total raw materials purchased. The Company is
increasingly shifting the imprinting of its products, including screen
printing of 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 all of the Company's
products 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.
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.
Future Capital Requirements and Resources. 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 and reduce its
inventory balances. The Company's inventories have increased significantly
during the six months ended June 30, 1997, increasing to $3,408,000 from
$2,081,000 at December 31, 1996. The Company's increasing retail sales and
expanding product lines have required it to carry a higher level of inventory.
These higher inventory levels combined with future anticipated operating
losses will result in average cash balances in 1997 being significantly lower
9<PAGE>
than in 1996. Average cash balances were $2,800,000 for the six month period
ended June 30, 1997, a 33% decrease as compared to $4,200,000 for the prior
year period. Average monthly cash balances for the remaining six months of
1997 are expected to decrease moderately from the ending cash balance of
$1,798,000 at June 30, 1997, reflecting continued constraint on the Company's
cash resources. To the extent that the funds generated by the 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, 1996, the
Company had net operating loss carryforwards for Federal income tax purposes
of $1,032,587. 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 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 and Warrants are
quoted 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
quotation 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 June 30, 1997, the Company has
2,676,742 shares of Common Stock outstanding. Of such shares, at least
1,457,923 have been registered under the Registration Statement of which this
Prospectus forms a part and therefore are freely tradable 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 June 30, 1997, there were outstanding
stock options to purchase an aggregate of 355,000 shares of Common Stock at
per share exercise prices ranging from $0.01 to $8.00. 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. On January 31, 1997 the
Company elected to register the shares of Common Stock underlying the
Purchase Option by filing a registration statement on Form S-3, which was
subsequently declared effective by the Commission on February 7, 1997.
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 (the "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,
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.
11<PAGE>
Potential Adverse Effect of Redemption of Warrants. The Company may call the
Warrants for redemption, at a price of $.01 per Warrant, at any time after
they become exercisable on 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. The
warrantholders may exercise their Warrants until the close of business on the
date fixed for redemption. Redemption of the Warrants could force the holders
to exercise the Warrants and pay the exercise price at a time when it may be
disadvantageous for the holders to do so, to sell the Warrants at the then
current market price when they might otherwise wish to hold the Warrants,
or to accept the redemption price, which is likely to be substantially less
than the market value of the Warrants at the time of redemption.
Current Prospectus and State Blue Sky Registration Required in Connection
with Exercise of Warrants. The Company will be able to issue shares of
Common Stock upon exercise of Warrants only if there is then a current
prospectus relating to the Common Stock issuable upon exercise of the
Warrants under an effective registration statement filed with the Commission,
and only if such Common Stock is qualified for sale or exempt from
qualification under applicable state securities laws of the jurisdictions
in which the various holders of Warrants reside. Although the Company has
undertaken to file and keep current a prospectus relating thereto until
the expiration of the Warrants, subject to the terms of the Warrant Agreement
by and between the Company and Continental Stock Transfer & Trust Company,
there can be no assurance that it will be able to do so. The Warrants may be
deprived of any value and the market for the Warrants may be limited if a
then current prospectus covering the Common Stock issuable upon exercise of
the Warrants is not effective or if such Common Stock is not qualified or
exempt from qualification in the jurisdictions in which the holders of the
Warrants reside.
USE OF PROCEEDS
If all of the holders of outstanding Warrants, including Warrants held for
the account of the Selling Stockholder named herein, elect to exercise their
Warrants after they become exercisable, the estimated net proceeds to the
Company would be approximately $8,758,840 (including expenses of the Offering
estimated to be approximately $50,000 and assuming payment to the
Representative of a 4% commission in connection with the solicitation of the
exercise of the Warrants). The Company intends to apply the net proceeds
received by the Company from the Offering for working capital and general
corporate purposes.
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 tables set forth certain information with respect to the
Selling Stockholder as of June 30, 1997. The Warrants and shares of Common
Stock set forth therein are being included in the Registration Statement of
which this Prospectus forms a part pursuant to registration commitments
afforded to the Selling Stockholder by contractual obligations. There are no
relationships between the Company and the Selling Stockholder. The Company
will not receive any proceeds from the sale of any securities by the Selling
Stockholder.
Beneficial Ownership
of Warrants/Shares
Name of Ownership Of Warrants/Shares of Common Stock After
Selling Warrants/Shares Common Stock Giving Effect to
Stockholder of Common Stock Offered for Sale Proposed Sale
- ---------------- --------------- ------------------ --------------------
W. Donald DeWitt 1,250/600 1,250/600 0/0
--------- --------- ---
Total 1,250/600 1,250/600 0/0
========= ========= ===
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholder that there are no
underwriting arrangements with respect to the sale of the above securities
(collectively, the "Selling Stockholder Securities"). Any or all of the
Selling Stockholder Securities may be sold from time to time to purchasers
directly by the Selling Stockholder. Alternatively, the Selling Stockholder
may from time to time offer the Selling Stockholder Securities through
underwriters, dealers or agents who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling
Stockholder and/or the purchasers of the Selling Stockholder Securities for
whom they may act as agents. The Selling Stockholder and any such underwriters,
dealers or agents that participate in the distribution of the Selling
Stockholder Securities may be deemed to be underwriters under the Securities
Act, and any profit on the sale of the Selling Stockholder Securities by them
and any discounts, commissions or concessions received by them may be deemed
to be underwriting discounts and commissions under the Securities Act. The
Selling Stockholder Securities may be sold from time to time in one or more
transactions at a fixed offering price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. The
distribution of the Selling Stockholder Securities by the Selling Stockholder
may be effected in one or more transactions that may take place on Nasdaq
National Market, including ordinary brokers' transactions,
privately-negotiated transactions or through sales to one or more
broker-dealers for resale of such shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees, discounts and commissions may be paid by the
Selling Stockholder in connection with such sales of securities.
13<PAGE>
The Company will not receive any of the proceeds from the sale by the Selling
Stockholder of the Selling Stockholder Securities offered hereby. All of the
filing fees and other expenses of this Registration Statement will be borne
in full by the Company, other than any underwriting fees, discounts and
commissions relating to this Offering.
In order to comply with certain states securities laws, if applicable, the
Selling Stockholder Securities will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In certain states the
Selling Stockholder Securities may not be sold unless the Selling Stockholder
Securities have been registered or qualified for sale in such state, or
unless an exemption from registration or qualification is available and is
obtained.
In addition to sales pursuant to the Registration Statement of which this
Prospectus forms a part, the Selling Stockholder Securities may be sold in
accordance with Rule 144 promulgated under the Securities Act.
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, 1995 and 1996
appearing in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996 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>
========================================== ============================
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
or representations must not be relied
upon as having been authorized by the
Company. This Prospectus does not
constitute an offer to sell, or a
solicitation of an offer to buy, any 1,411,673
securities other than the registered Shares of
securities to which it relates or an Common Stock
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 information contained herein is
correct as of any time subsequent to the
date of this Prospectus.
_______________
FOTOBALL USA, INC.
TABLE OF CONTENTS
Page
----
Additional Information 2
Incorporation of Certain Documents
by Reference 2 ________________
The Company 4
The Offering 5
Risk Factors 6 PROSPECTUS
Use of Proceeds 12
Dividend Policy 12 ________________
Selling Stockholder 13
Plan of Distribution 13
Legal Matters 14 August __, 1997
Experts 14
========================================== ============================
<PAGE>
PART II
Item 14. Expenses of Issuance and Distribution.
The expenses in connection with the Offering are:
Accounting fees and expenses* $ 10,000.00
Legal fees and expenses* 30,000.00
Printing costs* 5,000.00
Miscellaneous* 5,000.00
------------
Total $ 50,000.00
============
*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
II-1<PAGE>
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,
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.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
1.1(P) Form of Underwriting Agreement (1)
3.1(2)(P) Amended and Restated Certificate of Incorporation (2)
3.2(2)(P) Amended and Restated By-laws (2)
4.1(P) Form of Representative's Unit Purchase Option (2)
4.2(P) Form of Warrant Agreement (2)
4.3(P) Specimen Warrant Certificate (3)
II-2<PAGE>
4.4(P) Specimen Stock Certificate (3)
4.5(1) Specimen Form of Rights Certificate (4)
4.5(2) Form of Rights Agreement, dated as of August 19, 1996,
between the Company and Continental Stock Transfer & Trust
Company (4)
4.5(3) Form of Certificate of Designation, Preferences and Rights of
Series A Preferred Stock (4)
4.5(4) Summary of Rights Plan (4)
5.1(P) Opinion of Shereff, Friedman, Hoffman & Goodman, LLP (3)
10.1(3)(P) License Agreement with Major League Baseball Properties, Inc (2)
10.1(4)(P) License Agreement with Major League Baseball Players
Association (5)
10.1(5)(P) License Agreement with National Football League Properties,
Inc (6)
10.1(6)(P) Trademark License Agreement with Goodyear Tire & Rubber
Company (7)
10.1(8)(P) Agreement with Chevron USA, Inc. dated as of October 10, 1995 (7)
10.1(9) Agreement with Chevron USA, Inc. dated June 17, 1996 (8)
10.3*(P) 1994 Stock Option Plan of the Company, as amended (9)
10.3(1)*(P) Form of Stock Option Agreement (6)
10.3(2)*(P) Form of Directors' Stock Option Agreement (6)
10.3(3)*(P) Stock Option Agreement dated as of November 9, 1994 with David
G. Forster (6)
10.3(4)*(P) Form of Stock Option Agreement dated June 1, 1994 with Sabin C.
Streeter (6)
10.4(1)*(P) Form of Employment Agreement with Michael Favish (3)
10.4(2)* Employment Agreement with Fred S. Ostern dated January 1, 1996 (8)
10.4(3)*(P) Amended and Restated Consulting Agreement with Robert
Weingarten effective January 1, 1996 (7)
10.4(6)(P) Consulting Agreement with Universal Marketing Services Ltd.
("UMS") dated January 1, 1996 (7)
10.4(7)(P) Stock Option Agreement dated May 9, 1995 with UMS (7)
10.4(8)(P) Consulting Agreement with ADR Management Group Ltd. dated
August 1, 1995 (7)
10.5(P) Lease, dated February 4, 1994, by and between the Company and
George and Marcel Jach, with respect to 3738 Ruffin Road,
San Diego, California (5)
10.9(1) Merrill Lynch International Bank Limited line of credit dated
December 20, 1995 (8)
10.9(2) Merrill Lynch International Bank Limited irrevocable stand-by
letter of credit dated December 1, 1995 (8)
10.10 Revolving Credit Agreement dated November 13, 1996 between the
Company and Scripps Bank (8)
21 Subsidiaries of the Company (3)
23.1 Consent of Hollander, Gilbert & Co. (10)
23.2 Consent of Shereff, Friedman, Hoffman & Goodman, LLP (contained
in Exhibit 5.1) (3)
27 Financial data schedule (10)
_______________________
II-3<PAGE>
* Indicates exhibits relating to executive compensation.
(P) Indicates that the document was originally filed with the Commission
in paper form and that there have been no changes or amendments to
the document which would require filing of the document electronically
at this time.
(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 30, 1996.
(5) Exhibits to the Company's Registration Statement on Form SB-2 filed
with the Commission on June 20, 1994 incorporated herein by reference.
(6) Exhibits to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1994.
(7) Exhibits to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995.
(8) Exhibits to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996.
(9) Exhibits to Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form SB-2 filed with the Commission on
June 18, 1996.
(10) 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.
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.
II-4<PAGE>
(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
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.
(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-5<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 authorized 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 August 18, 1997.
FOTOBALL USA, INC.
By:/s/Michael Favish
-----------------
Michael Favish
President, Chief Executive
Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned whose
signatures appear 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 attorneys-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 attorneys-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 the 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 hereof 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, Chief Executive August 18, 1997
- ----------------- Officer and Director
Michael Favish (Principal Executive Officer)
/s/David G. Forster Vice President, Finance, August 18, 1997
- ------------------- Treasurer, Chief Financial
David G. Forster Officer (Principal Financial
& Accounting Officer)
/s/Joel K. Rubenstein Director August 18, 1997
- ---------------------
Joel K. Rubenstein
/s/Sabin C. Streeter Director August 18, 1997
- --------------------
Sabin C. Streeter<PAGE>
/s/Robert N. Weingarten Direcor August 18, 1997
- -----------------------
Robert N. Weingarten
/s/Salvatore T. DiMascio Director August 18, 1997
- ------------------------
Salvatore T. DiMascio<PAGE>
Exhibit Index
Exhibit No. Exhibits
----------- --------
23.1 Consent of Hollander, Gilbert & Co.
27.1 Financial data schedule.
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 21, 1997,
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
August 15, 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 JUNE 30, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,798,178
<SECURITIES> 0
<RECEIVABLES> 1,930,280
<ALLOWANCES> 0
<INVENTORY> 3,408,030
<CURRENT-ASSETS> 7,419,857
<PP&E> 1,987,222
<DEPRECIATION> 795,963
<TOTAL-ASSETS> 9,135,243
<CURRENT-LIABILITIES> 854,647
<BONDS> 0
0
0
<COMMON> 26,767
<OTHER-SE> 8,066,516
<TOTAL-LIABILITY-AND-EQUITY> 9,135,243
<SALES> 6,804,835
<TOTAL-REVENUES> 6,804,835
<CGS> 4,311,923
<TOTAL-COSTS> 2,514,242
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,354
<INCOME-PRETAX> 13,278
<INCOME-TAX> 5,300
<INCOME-CONTINUING> 7,978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,978
<EPS-PRIMARY> .003
<EPS-DILUTED> .003
</TABLE>
