<PAGE>
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q


   X     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-------  EXCHANGE ACT OF 1934

         For the quarterly period ended March 31, 2002


         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-------- EXCHANGE ACT OF 1934

         For the transition period from                 to
                                        ----------------  --------------------

                        Commission file number 0 - 24608
                                              ----------

                               FOTOBALL USA, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                Delaware                               33 - 0614889
-------------------------------------------------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


                   6740 Cobra Way, San Diego, California 92121
                   -------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                (858) 909 - 9900
                            -------------------------
                           (Issuer's telephone number)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X  No
                                                                      ---   ---
         As of April 30, 2002, the Company had 3,592,333 shares of its common
stock issued and outstanding.



<PAGE>


                               FOTOBALL USA, INC.

                                      INDEX

<TABLE>
<CAPTION>
                                                                                             Page No.
                                                                                             --------
<S>                                                                                          <C>
PART I.       FINANCIAL INFORMATION

     Item 1.  Financial Statements

              Balance Sheets as of March 31, 2002 (Unaudited) and December 31, 2001               3

              Statements of Operations for the three months ended
                  March 31, 2002 and 2001 (Unaudited)                                             4

              Statements of Cash Flows for the three months ended
                  March 31, 2002 and 2001 (Unaudited)                                             5

              Notes to Financial Statements (Unaudited)                                       6 - 8

     Item 2.  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                       9 -12

     Item 3.  Quantitative and Qualitative disclosure about Market Risk                          12

PART II. OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K                                                   13

SIGNATURES                                                                                       14
</TABLE>


<PAGE>

                          PART I FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

                               FOTOBALL USA, INC.
                                 BALANCE SHEETS
                      MARCH 31, 2002 AND DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                        March 31, 2002      December 31, 2001
                                                                          (Unaudited)
                                                                       ------------------   ------------------
<S>                                                                      <C>                  <C>
                                     ASSETS
Current assets
     Cash and equivalents                                                $     4,868,046      $     5,779,203
     Accounts receivable less uncollectible allowances of $208,533 in
         2002 and $198,441 in 2001                                             4,149,272            3,705,873
     Income tax receivable                                                       359,400              359,400
     Inventories                                                               2,554,537            2,655,702
     Prepaid expenses and other                                                1,668,111            1,165,209
     Deferred income taxes                                                       951,000              951,000
                                                                       ------------------   ------------------
         Total current assets                                                 14,550,366           14,616,387

Property and equipment, net                                                    2,233,515            2,225,106
Deposits and other assets                                                        158,995              158,995
                                                                       ------------------   ------------------
                                                                          $   16,942,876       $   17,000,488
                                                                       ==================   ==================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
     Accounts payable and accrued expenses                               $     3,130,759      $     1,861,842
     Customer deposits                                                           557,750            1,978,779
     Income taxes payable                                                        119,670                   --
     Current portion of long term debt                                           774,760              741,368
     Current portion of capital leases                                            81,637               92,773
                                                                       ------------------   ------------------
         Total current liabilities                                             4,664,576            4,674,762
                                                                       ------------------   ------------------

Long term liabilities
     Long term debt, net of current portion                                      707,875              927,145
     Capital leases, net of current portion                                      166,751              183,775
     Deferred rent                                                               259,069              248,105
     Deferred income taxes                                                       121,000              121,000
     Long term reserve for discontinued operations                                15,938               24,290
                                                                       ------------------   ------------------
         Total long term liabilities                                           1,270,633            1,504,315
                                                                       ------------------   ------------------
         Total liabilities                                                     5,935,209            6,179,077
                                                                       ------------------   ------------------

Stockholders' equity
     Preferred stock, $.01 par value;
         Authorized - 1,000,000 shares; issued and outstanding-none                   --                   --
     Common stock, $.01 par value; authorized - 15,000,000 shares;
         Issued and outstanding - 3,584,032 shares in 2002; 3,579,032
         in 2001                                                                  35,840               35,800
     Additional paid-in capital                                               11,687,049           11,680,337
     Retained earnings/(accumulated deficit)                                    (715,222)            (894,726)
                                                                       ------------------   ------------------
         Total stockholders' equity                                           11,007,667           10,821,411
                                                                       ------------------   ------------------
                                                                          $   16,942,876       $   17,000,488
                                                                       ==================   ==================
</TABLE>

                 See accompanying Notes to Financial Statements

                                  Page 3 of 14

<PAGE>


                               FOTOBALL USA, INC.
                            STATEMENTS OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                               2002                2001
                                                                          ---------------     ---------------
<S>                                                                          <C>                <C>
    Net sales                                                                $10,704,270        $   5,580,566
    Cost of sales                                                               6,838,914           3,774,507
                                                                          ---------------     ---------------
         Gross profit                                                           3,865,356           1,806,059
                                                                          ---------------     ---------------
    Operating expenses
         Royalties                                                                811,753             439,415
         Marketing                                                              1,306,507             892,857
         General and administrative                                             1,326,365           1,105,732
         Depreciation and amortization                                            130,417             123,625
                                                                          ---------------     ---------------
             Total operating expense                                            3,575,042           2,561,629
                                                                          ---------------     ---------------
             Income (loss) from operations                                        290,314            (755,570)
                                                                          ---------------     ---------------
    Other income (expense)
         Interest expense                                                         (14,918)            (26,269)
         Interest income                                                           23,778              39,251
                                                                          ---------------     ---------------
             Total other income (expense)                                           8,860              12,982
                                                                          ---------------     ---------------
    Income (loss) from continuing operations before income tax                    299,174            (742,588)
         Income tax expense (benefit)                                             119,670            (297,035)
                                                                          ---------------     ---------------
    Income (loss) from continuing operations                                      179,504            (445,553)
    Discontinued operations
         Loss on discontinued operations net of tax benefit ($82,471)                  --            (123,707)
                                                                          ---------------     ---------------
    Net income (loss)                                                      $      179,504        $   (569,260)
                                                                          ===============     ===============

    Weighted average number of common shares outstanding:
         Basic                                                                  3,581,677           3,579,032
                                                                          ===============     ===============
         Diluted                                                                3,863,073           3,579,032
                                                                          ===============     ===============
    Income (loss) from continuing operations per share
                                                                          ===============     ===============
         Basic                                                            $           .05     $          (.12)
                                                                          ===============     ===============
         Diluted                                                          $           .05     $          (.12)
                                                                          ===============     ===============
    Loss from discontinued operations per common share:
         Basic                                                                         --     $          (.04)
                                                                          ===============     ===============
         Diluted                                                                       --     $          (.04)
                                                                          ===============     ===============
    Net income (loss) per common share:
         Basic                                                            $           .05                (.16)
                                                                          ===============     ===============
         Diluted                                                          $           .05     $          (.16)
                                                                          ===============     ===============
</TABLE>


                 See accompanying Notes to Financial Statements

                                  Page 4 of 14

<PAGE>


                               FOTOBALL USA, INC.
                            STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                      2002                 2001
                                                                                  -----------------    -----------------
<S>                                                                               <C>                  <C>
Cash flows from operating activities
     Net income (loss)                                                            $     179,504        $    (569,260)
     Adjustments to reconcile net income (loss) to net cash used in operating
         activities:
         Depreciation and amortization of property and equipment                        138,115              153,255
         Amortization of stock compensation expense                                          -                 3,780
         Provision for doubtful accounts                                                 22,500               55,000
     Changes in operating assets and liabilities:
         Accounts receivable                                                           (465,899)             (12,347)
         Income tax receivable                                                                -             (386,606)
         Inventories                                                                    101,165             (211,964)
         Prepaid expenses and other                                                    (502,902)             (25,491)
         Accounts payable and accrued expenses                                        1,268,917             (123,701)
         Customer deposits                                                           (1,421,029)
         Income taxes payable                                                           119,670                   --
         Deferred rent                                                                   10,964               (2,165)
         Long term reserve for discontinued operations                                   (8,352)                  --
                                                                                -----------------    -----------------
Net cash used in operating activities                                                  (557,347)          (1,119,499)
                                                                                -----------------    -----------------
Cash flows from investing activities.
     Purchase of property and equipment                                                (146,525)            (145,909)
     Decrease (increase) in long-term deposits                                               --               14,274
                                                                                -----------------    -----------------
Net cash used in investing activities                                                  (146,525)            (131,635)
                                                                                -----------------    -----------------

Cash flows from financing activities
     Proceeds from term loans                                                           410,006            1,500,000
     Payments of capitalized leases                                                     (28,160)             (27,786)
     Payments of term loans                                                            (595,883)             (43,008)
     Proceeds from exercise of stock options                                              6,752                   --
                                                                                -----------------    -----------------
Net cash provided by (used in) financing activities                                    (207,285)           1,429,206
                                                                                -----------------    -----------------

Net increase (decrease) in cash and equivalents                                        (911,157)             178,072
Cash and equivalents, beginning of period                                             5,779,203            2,921,358
                                                                                -----------------    -----------------
Cash and equivalents, end of period                                              $    4,868,046       $    3,099,430
                                                                                =================    =================

Supplemental disclosure of cash flow information:
     Interest paid                                                               $       33,676       $        8,887
     Incomes taxes paid                                                          $           --                   --
Supplemental schedule of noncash investing and financing activities:
     Equipment acquired under capital leases                                     $           --       $       15,418

</TABLE>


                 See accompanying Notes to Financial Statements

                                  Page 5 of 14

<PAGE>

                               FOTOBALL USA, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001

1.       BASIS OF PRESENTATION

The balance sheet as of March 31, 2002, the statements of operations for the
three months ended March 31, 2002 and 2001, and the statements of cash flows for
the three months ended March 31, 2002 and 2001 have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows for all periods presented have
been made.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been omitted, pursuant to the rules and
regulations of the Securities and Exchange Commission. It is suggested that
these condensed financial statements are read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2001.

The results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the results of operations to be expected for any other
interim period or for the year ending December 31, 2002.

RECLASSIFICATION - Certain amounts in the 2001 financial statements have been
reclassified to conform to the 2002 presentation.

2.       NEW ACCOUNTING PRONOUCEMENTS

EITF 00-14 "Accounting for Certain Sales Incentives" and EITF 00-25 "Vendor
Income Statement Characterization of Consideration Paid to a Reseller of the
Vendor's Products" issued by the Emerging Issues Task Force require certain
sales incentives, slotting fees and cooperative advertising expenses to be
classified as reductions to revenue rather than as expenses. The provisions of
EITF 00-14 and EITF 00-25 are effective for financial statements issued for
fiscal years beginning after December 15, 2001. The Company adopted EITF 00-14
and EITF 00-25 beginning January 1, 2002. For comparison purposes, the first
quarter 2001 sales and operating expenses were reduced by $33,767 from
previously reported results to comply with the provisions of EITF 00-14 and EITF
00-25. There was no impact to the Company's net income/(loss) as a result of the
adoption of EITF 00-14 or EITF 00-25.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, Accounting for Obligations Associated
with the Retirement of Long-Lived Assets (SFAS 143). SFAS 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. It also applies to certain legal obligations associated with the
retirement of long-lived assets. SFAS 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. This Statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company plans to
adopt the provisions of SFAS 143 beginning January 1, 2003 and does not expect
it will have a material impact on the results of operations or financial
position.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS 144). SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This

                                  Page 6 of 14


<PAGE>

                               FOTOBALL USA, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001

Statement supersedes FASB Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and the
accounting and reporting provisions of APB Opinion No. 30, Reporting the Results
of Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business (as previously defined in that Opinion).
Under SFAS 144, discontinued operations are no longer measured on a net
realizable value basis, and future operating losses are no longer recognized
before they occur. The provisions of this Statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001. The
Company adopted SFAS 144 beginning January 1, 2002.

3.       INVENTORIES

Inventories are valued at the lower of cost or market. Cost is determined on the
first-in first-out (FIFO) method. Inventories consisted of the following at
March 31, 2002 and December 31, 2001:

<TABLE>
<CAPTION>
                                                                 March 31,            December 31,
                                                                    2002                  2001
                                                             -------------------  ------------------
         <S>                                                      <C>                  <C>
         Finished goods                                           $ 1,887,150          $ 2,018,335
         Raw material                                               1,271,772            1,205,933
         Less allowance for discontinued inventory                   (604,385)            (568,566)
                                                             -------------------  ------------------

            Total                                                 $ 2,554,537          $ 2,655,702
                                                             ===================  ==================
</TABLE>

4.       ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at March 31,
2002 and December 31, 2001:

<TABLE>
<CAPTION>
                                                                     March 31,          December 31,
                                                                       2002                 2001
                                                                 ------------------  -------------------
          <S>                                                          <C>                <C>
          Accounts payable                                             $ 1,946,662        $    972,059
          Accrued payroll and related                                      194,815             192,691
          Accrued commissions and bonuses                                  402,212             294,583
          Royalties payable                                                278,710              20,051
          Current reserve for discontinued operations                       91,790             147,472
          Accrued joint advertising costs                                  210,652             199,892
          Accrued other taxes                                                5,918              35,094
                                                                 ------------------  -------------------
                                                                       $ 3,130,759         $ 1,861,842
                                                                 ==================  ===================
</TABLE>

5.      LINE OF CREDIT

In February 2002, the Company extended its credit line with U.S. Bank National
Association ("US Bank") to May 15, 2002. The credit line extension includes a
decrease in the credit line from $2.5 million to $2.0 million and an increase in
the interest rate from the US Bank prime rate to the US Bank prime rate plus 1%.
The accounts receivable of the Company collateralize this credit line and actual
borrowings are limited to available collateral, as defined in the agreement. The
loan agreement contains financial covenants applicable to the credit line and
outstanding term loans requiring the Company to maintain a minimum net worth of
$9.75 million, minimum working capital of $7 million, a minimum current ratio of
2 to 1 and a maximum debt to equity ratio of .75 to 1. The Company is in
compliance with the covenants as of March 31, 2002. There were no outstanding
borrowings under the credit line at March 31, 2002 or

                                  Page 7 of 14

<PAGE>

                               FOTOBALL USA, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001

March 31, 2001. The Company has a $150,000 Automatic Clearing House ("ACH") hold
on its credit line relating to funding its payroll on a semi-monthly basis. The
ACH hold reduces the Company's ability to borrow against its credit line. US
Bank has notified the Company that it will not renew or extend the credit line.
The Company is currently negotiating a new credit line with another bank and
there can be no assurances that the terms and conditions of the new credit line
will be as favorable as the US Bank credit line. The Company anticipates that it
will have a new line of credit in place by May 31, 2002.

6.      COMMITMENTS AND CONTINGENCIES

DEBT - In February 2002, the Company combined two outstanding term loans with US
Bank into a single term loan. The term loans combined were a 48-month note with
a 9.5% interest rate dated June 13, 2000 for $250,000 and 36-month note dated
August 9, 2000 with a 9.5% interest rate for $400,000. The term loans were
combined into a single term loan with a variable interest rate of US Bank prime
rate plus 1% to be fully amortized over 24 months and due October 1, 2003.

7.       EARNING PER SHARE

Basic earnings per share ("EPS") excludes dilution and is computed by dividing
net income or loss attributable to common stockholders by the weighed-average of
common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if common stock options using the treasury stock
method were exercised or converted into common stock. Potential common shares in
the diluted EPS are excluded in loss periods, as their effect would be
anti-dilutive.

Basic and Diluted EPS was computed as follows:

<TABLE>
<CAPTION>
                                                                 March 31,         March 31, 2001
                                                                    2002
                                                             -------------------  -----------------

         <S>                                                      <C>                 <C>
         Net income (loss)                                        $   179,504         $   (569,260)
                                                             ===================  =================

         Weighted average shares for basic EPS                      3,581,677            3,579,032
                                                             ===================  =================

         Basic EPS                                                $       .05         $       (.16)
                                                             ==================   =================


         Weighted average shares for basic EPS                      3,581,677            3,579,032

         Plus Stock Options                                           281,396                   --
                                                             -------------------  -----------------

         Weighted average shares for diluted EPS                    3,863,073            3,579,032
                                                             ===================  =================

         Diluted EPS                                              $       .05         $       (.16)
                                                             ===================  =================
</TABLE>

For the three months ended March 31, 2002 and 2001, shares related to stock
options of 173,200 and 612,589 respectively, were excluded from the calculation
of diluted EPS, as the effect of their inclusion would be anti-dilutive.


                                  Page 8 of 14

<PAGE>


ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS


CAUTIONARY STATEMENTS PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995:

This report contains forward-looking statements within the meaning of the
federal securities laws. These forward-looking statements involve risks,
uncertainties and assumptions that, if they never materialize or prove
incorrect, could cause the results of the Company to differ materially from
those expressed or implied by such forward-looking statements. All statements,
other than statements of historical fact, are forward-looking statements,
including statements regarding adding new license properties, overall sales
trends, gross margin trends and operating cost trends 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 risks, uncertainties and assumptions referred to above include the
Company's inability to obtain new licenses and the risk factors listed from time
to time in the Company's filings with the Securities and Exchange Commission
including but not limited to, the Annual Report on Form 10-K for the year ended
December 31, 2001.

RESULTS OF OPERATIONS:

         The following table sets forth certain operating data (in dollars and
as a percentage of the Company's sales) for the periods presented:

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED MARCH 31,
                                                        2002                      2001
                                              ----------------------------------------------------
         <S>                                     <C>            <C>      <C>              <C>
         Sales                                   $ 10,704,270   100%     $  5,580,566     100%
         Gross profit                               3,865,356    36         1,806,059      32
         Operating expenses                         3,575,042    33         2,561,629      46
         Operating income (loss)                      290,314     3          (755,570)    (14)
         Interest expense                             (14,918)   --           (26,269)     --
         Interest income                               23,778    --            39,251       1
         Inc. (loss) before inc. tax                  299,174     3          (742,588)    (13)
         Income tax exp. (benefit)                    119,670     1          (297,035)     (5)
         Income (loss) from cont. ops                 179,504     2          (445,553)     (8)
         Loss from disc operations                         --    --          (123,707)     (2)
         Net income                              $    179,504     2%     $   (569,260)    (10)%
</TABLE>

FOR THE THREE MONTHS ENDED MARCH 30, 2002 AND 2001:

SALES:

         DISTRIBUTION CHANNEL                    March 31,
                                           2002             2001
                                         % Sales           % Sales
                                       -------------    --------------
         Retail                            24%               40%
         Entertainment                     22%               33%
         Team                              10%               19%
         Promotion                         44%               8%

         Sales increased $5.1 million, or 92%, for the first quarter


                                  Page 9 of 14

<PAGE>


2002 from sales for the first quarter 2001. The increase in sales was due to an
increase in promotion sales (up 1,169%), entertainment sales (up 29%) and retail
sales (up 16%), and an increase in team sales (up 7%). Promotion sales were up
due to several bobblehead doll promotions, including a national 21 million piece
mini-bobblehead doll promotion for Kraft's Post cereal division that is split
between the first quarter 2002 and the second quarter 2002. The other promotions
were regional promotions for quick serve restaurants tied to the Sacramento
Kings basketball team and Colorado Avalanche hockey club. With the conclusion of
the Kraft promotion and other promotions currently in process, the Company
expects another significant increase in promotion sales in the second quarter
2002 versus the second quarter 2001. Entertainment sales were up due to sales to
Disney increasing as the result of being the primary vendor in the first quarter
2002 for the Disney Store's year-round pin product line. The Company does not
expect to continue as the sole vendor for the year-round pin product line, but
does expect to continue to do select pins for the Disney Store. The company
anticipates producing another third quarter 2002 promotion as the Company has
done the past three years. Retail sales were up due to increased sales to Target
and The Sports Authority which more than offset decreases in sales to Toys "R"
Us and Wal-Mart. The Company anticipates Wal-Mart sales to increase in the
second quarter 2002, with sales of Scooby Doo and Spiderman merchandise to
support end-cap promotions within the stores. Team sales were up in large part
from increased sales to Major League Baseball teams and concessionaires. The
Company expects moderate growth in this area coming from sales of its new
souvenir batting helmets in the third quarter 2002 and from sales of NFL
merchandise in the third and fourth quarter 2002.

         PRODUCT LINE SALES                       March 31
                                           2002             2001
                                         % Sales          % Sales
                                       -------------    --------------
         Football                          14%               27%
         Baseball                          13%               17%
         Basketball                         6%               10%
         Bobbleheads                       25%               --
         Lapel pins                        12%               11%
         Playground balls                  13%               19%
         Soccer/volleyball                  1%               8%
         Other                             16%               8%
                                       -------------    --------------
         Total                             100%             100%
                                       =============    ==============

         During the first quarter 2002, the Company realized product sales
increases in pins (up 109%), bobbleheads (up 100%), baseball (up 39%),
playground balls (up 32%), basketball (up 13%), and footballs (up 1%), with an
offsetting decline in soccer balls (down 76%) compared to the first quarter
2001.

GROSS PROFIT:

         Gross profit increased $2.1 million, or 114%, for the first quarter
2002 from gross profit for the first quarter 2001. Gross profit as a percentage
of sales increased to 36% for the first quarter 2002 from 32% for the first
quarter 2001. The increase in gross margin was due to higher margins on all of
the Company's main product lines, including a nine percentage point increase in
playground ball margins. Increases in gross margin were reduced by the lower
than average gross margin on the Post mini-bobblehead doll promotion. Promotions
of the size of the Post promotion typically carry lower gross margins than the
Company's other areas of business. The Post promotion will conclude in the
second quarter 2002. Due to the structure of the Post promotion, the gross
margin on the project in the second quarter 2002 will be two percentage points
lower than in the first quarter 2002. Depending on the volume

                                  Page 10 of 14

<PAGE>


and margin rates of the Company's other types of sales, its overall gross
margin, for the second quarter 2002 only, may be a few percentage points lower
than the first quarter 2002 gross margin.

OPERATING EXPENSES:

         Total operating expenses increased $1.0 million, or 40%, for the first
quarter 2002 from total operating expenses for the first quarter 2001. Total
operating expenses as a percentage of sales decreased to 33% for the first
quarter 2002 from 46% for the first quarter 2001. The increase in total
operating expenses is primarily due to an increase in royalties, commissions,
and personnel and salary related items. Non-revenue and non-salary related
operating expenses decreased by 4% for the first quarter 2002 compared to the
first quarter 2001.

         Royalty expenses increased $.4 million, or 85%, for the first quarter
2002 from royalty expenses for the first quarter 2001. Royalty expenses as a
percentage of sales remained constant at 8% for both the first quarter 2002 and
2001. The increase in royalty expense was the result of higher sales.

         Marketing expenses increased $.4 million, or 46%, for the first quarter
2002 from marketing expenses for the first quarter 2001. Marketing expenses as a
percentage of sales decreased to 12% for the first quarter 2002 from 16% for the
first quarter 2001. The increase in marketing expenses is attributable to sample
expense, salary related items and commission expenses.

         General and administrative expenses increased $.2 million, or 20%, for
the first quarter 2002 from general and administrative expenses for the first
quarter 2001. The increase is primarily attributable to salary-related items.
General and administrative expenses as a percentage of sales decreased to 12%
for the first quarter 2002 from 20% for the first quarter 2001. The decrease was
primarily due to higher sales in the first quarter 2002 compared to the first
quarter 2001.

OTHER INCOME (EXPENSE):

         Interest expense decreased by 43% for the first quarter 2002 from
interest expense for the first quarter 2001. This decrease reflects a decrease
in the amount outstanding on Fotoball's debt and capital lease obligations as
further discussed under "Liquidity and Capital Resources". There were no
outstanding borrowings under the line of credit for the periods ending March 31,
2002 and March 31, 2001.

         Interest income decreased by 39% for the first quarter 2002, from
interest income for the first quarter 2001. Excess cash is deposited into an
interest-bearing depository account. The decrease was due to lower interest
rates during the first quarter 2002 compared to the first quarter 2001.

INCOME TAX EXPENSE (BENEFIT):

         The Company recorded income tax expense of $.1 million for the first
quarter 2002 calculated at an effective tax rate of 40% compared to an income
tax benefit of $.3 million for the prior year period, calculated at an effective
tax rate of 40%.

LIQUIDITY AND CAPITAL RESOURCES:

         The Company's net working capital remained at $9.9 million at December
31, 2001 and March 31, 2002.

                                 Page 11 of 14

<PAGE>

         Cash and equivalents aggregated $4.9 million at March 31, 2002, a
decrease of $.9 million from cash and equivalents of $5.8 million at December
31, 2001. This decrease in cash was the result of $.6 million used in
operations, primarily consisting of a $.2 million net income, a $.5 million
increase in accounts receivables, and a $1.3 million increase in accounts
payable and accrued expenses, a $1.4 million decrease in customer deposits, $.1
million used in purchasing property and equipment and $.2 million used in the
payment of capital leases and term loans.

         At March 31, 2002, the Company has commitments for minimum guaranteed
royalties under licensing agreements totaling $1.2 million in the aggregate
through 2005, of which $.6 million is due at various times during 2002. Based
upon anticipated increases in sales, management expects these guaranteed
royalties to be funded from operating cash flows.

         In February 2002, the Company extended its credit line with U.S. Bank
National Association ("US Bank") to May 15, 2002. The credit line extension
includes a decrease in the credit line from $2.5 million to $2.0 million and an
increase in the interest rate from the US Bank prime rate to the US Bank prime
rate plus 1%. The accounts receivable of the Company collateralize this credit
line and actual borrowings are limited to available collateral, as defined in
the agreement. The loan agreement contains financial covenants applicable to the
credit line and outstanding term loans requiring the Company to maintain a
minimum net worth of $9.75 million, minimum working capital of $7 million, a
minimum current ratio of 2 to 1 and a maximum debt to equity ratio of .75 to 1.
The Company is in compliance with the covenants as of March 31, 2002. There were
no outstanding borrowings under the credit line at March 31, 2002 or March 31,
2001. The Company has a $150,000 Automatic Clearing House ("ACH") hold on its
credit line relating to funding its payroll on a semi-monthly basis. The ACH
hold reduces the Company's ability to borrow against its credit line. US Bank
has notified the Company that it will not renew or extend credit line. The
Company is currently negotiating a new credit line with another bank and there
can be no assurances that the terms and conditions of the new credit line will
be as favorable as the US Bank credit line. The Company anticipates that it will
have a new line of credit in place by May 31, 2002.

         Management believes the Company's existing cash position and credit
facilities, combined with internally generated cash flows, will be adequate to
support the Company's liquidity and capital needs at least through the end of
March 31, 2003.



ITEM 3.       QUANTATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The Company's exposure to market risk relates to interest rate risk
with its variable rate term loans and credit line. The Company does not use
derivative financial instruments to manage or reduce market risk. As of March
31, 2002, the Company's only variable rate debt outstanding was the $1.5 million
remaining balance on its term loans. There were no outstanding borrowings under
the credit line as of March 31, 2002. A 10% change in future interest rates on
the variable rate term loans would not lead to a material decrease in future
earnings assuming all other factors remained constant.




                                 Page 12 of 14

<PAGE>


                           PART II. OTHER INFORMATION

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

              None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

              (a) Exhibits
                  None


              (b) Reports on Form 8-K for the three months ended March 31, 2002
                           Change in Auditor; Filed March 12, 2002


                                 Page 13 of 14

<PAGE>




In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                  FOTOBALL USA, INC
                         -----------------------------------
                                   (Registrant)


Dated: May 13, 2002     BY:   /s/ Michael Favish
                              ------------------
                              Michael Favish
                              Chairman and Chief Executive Officer
                              (Principal Executive Officer)


Dated: May 13, 2002     BY:   /s/ Thomas R. Hillebrandt
                              -------------------------
                              Thomas R. Hillebrandt
                              Senior Vice President and Chief Financial Officer
                              (Principal Financial and Accounting Officer)


                                 Page 14 of 14