NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2020
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
United States Basketball League, Inc. (“USBL”)
was incorporated in Delaware on May 29, 1984 as a wholly owned subsidiary of Meisenheimer Capital, Inc. (“MCI”)
for the purpose of developing and managing a professional basketball league, the United States Basketball League (the “League”).
Since the inception of the League, USBL has primarily engaged in selling franchises and managing the League. From 1985 and up to the present
time, USBL has sold a total of approximately forty active franchises (teams), a vast majority of which were terminated for non-payment
of their respective franchise obligations. Seasons from 2008 through 2018, inclusive, have been cancelled. At the present time, USBL does
not have any definitive plans as to the scheduling of a new season. USBL is currently in the process of exploring certain strategic alternatives,
including the possible sale of the League.
On October 30, 2014, USBL dissolved its wholly-owned
subsidiary, Meisenheimer Capital Real Estate Holdings, Inc. (“MCREH”). MCREH owned a commercial building in Milford,
Connecticut until June 19, 2014.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements
and notes thereto contained in the Company's latest Annual Report on Form 10-K filed with the SEC. In the opinion of management,
all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim
periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of operations
for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial
statements for the most recent fiscal year, as reported in the Form 10-K for the fiscal year ended February 29, 2020, have been
omitted.
Use of Estimates
The preparation of the unaudited financial statements
in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the reported amounts of liabilities, and the disclosure of contingent liabilities at the date of the financial statements,
and the reported amounts of expenses during the reporting periods. Management makes these estimates using the best information available
at the time; however, actual results could differ materially from those estimates.
Reclassifications
Certain reclassifications have been made to the prior period financial
information to conform to the presentation used in the financial statements for the three and nine months ended November 30, 2020.
Recently issued accounting pronouncements
In
November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivative and Hedging (Topic
815, and Leases (Topic 841). This new guidance will be effective for annual reporting periods beginning after December 15,
2019, including interim periods within those annual reporting periods. The adoption of ASU 2019-10 does not have a material effect
on its financial statements.
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise
disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have
a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
The
accompanying unaudited financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying
financial statements, the Company has an accumulated deficit of $5,108,704 liabilities of $2,424,942and no source of revenue. Due
to these conditions, it raises substantial doubt about the Company’s ability to continue as a going concern. The
financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the
amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of:
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November 30, 2020
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February 29,
2020
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Legal and accounting services’ vendors
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$
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82,164
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$
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76,163
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Transfer agent and EDGAR agent
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16,956
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|
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8,660
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Rent due Genvest, LLC (an entity controlled by the
two officers of USBL)
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144,000
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144,000
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Accrued interest on MCREH note payable to
president of USBL
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|
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13,562
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|
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13,562
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Security deposit due CADCOM (an entity controlled by
the two officers of USBL)
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|
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2,725
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|
|
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2,725
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Other
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777
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|
|
|
777
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Total
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$
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260,184
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|
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$
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245,887
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NOTE 5 – DUE TO RELATED PARTIES
Due to related parties consist of:
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November 30, 2020
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February 29, 2020
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USBL loans payable to Spectrum Associates, Inc. (“Spectrum”),
a corporation controlled by the two officers of USBL,
interest at 6%, due on demand
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$
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1,324,689
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$
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1,324,689
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USBL loans payable to the two officers of USBL,
interest at 6%, due on demand
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|
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569,317
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|
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569,317
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USBL loans payable to Daniel T. Meisenheimer, Jr. Trust, a trust
controlled by the two officers of USBL, non-interest bearing,
due on demand
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48,850
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|
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48,850
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MCREH note payable to president of USBL, interest at 7%, due
on demand
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|
|
48,000
|
|
|
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48,000
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MCREH loan payable to Spectrum, non-interest bearing, due
on demand
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|
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4,500
|
|
|
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4,500
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MCREH loan payable to president of USBL, non-interest
bearing, due on demand
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|
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5,000
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|
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4,000
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MCREH loan payable to Meisenheimer Capital, Inc.,
non-interest bearing, due on demand
|
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159,275
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|
|
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159,275
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Total
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$
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2,159,631
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$
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2,158,631
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NOTE 6 – RELATED PARTY TRANSACTIONS
For
the three and nine months ended November 30, 2020 and 2019, USBL included in operating expenses rent incurred to Genvest,
LLC (an entity controlled by the two officers of USBL) totaling $0 and $3,000, and $0 and $9,000 respectively.
NOTE 7 – PREFERRED STOCK
Each share of preferred stock has five votes,
is entitled to a 2% cumulative annual dividend, and is convertible at any time into one share of common stock. As
of November 30, 2020, the Company has not declared any dividends on its preferred stock.
NOTE 8 – SUBSEQUENT EVENTS
On April 7,
2021, through a series of Stock Purchase Agreements (the “Purchase Agreements”), the majority owners of the Company, Richard
C. Meisenheimer, Daniel T. Meisenheimer, III, James Meisenheimer, Meisenheimer Capital, Inc. and Spectrum Associates, Inc.
(the “Sellers”) sold a total of 2,807,181 existing common shares of USBL’s common stock at a per share price of $.065,
issued 2,400,000 shares of USBL’s common stock at a per share price of $.10 and sold 1,105,644 of USBL’s existing preferred
stock at a per share price of $.053 for a total purchase price of $481,066. There were two purchasers of over 5% of the issued and outstanding
shares of USBL’s capital stock following these sales, Equity Markets Advisory which owns 8.29% of the issued and outstanding shares
of USBL’s common stock and EROP Enterprises LLC which owns 29.24% of the issued and outstanding shares of USBL’s common stock
and 100% of the issued and outstanding shares of preferred stock.
As a result
of the sale of common and preferred stock by the Sellers, the Company experienced a change in control.
World Equity
Markets acted in the capacity of a broker/dealer for the Purchase Agreements and was issued 125,000 shares of common stock for its services.
Effective
April 7, 2021, the Board of Directors accepted the resignation of Daniel T. Meisenheimer, III as Chairman of the Board of Directors
and President of the Company. Effective April 7, 2021 Saeb Jannoun was appointed to fill the vacancy following the resignation of
Daniel T. Meisenheimer, III as Chairman of the Board of Directors and President of the Company. Mr. Michael Pruitt also joined
the Board.
Item
2. Management’s Discussion and Analysis OF FINANCIAL CONDITION AND RESULTS of Operation.
Forward-looking Statements
There are “forward-looking statements”
contained in this quarterly report. All statements that express expectations, estimates, forecasts or projections are forward-looking
statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf.
Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,”
“estimate,” “project,” “forecast,” “may,” “should,” and variations of such
words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation
to update or revise any of the forward-looking statements after the date of this quarterly report to conform forward-looking statements
to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited
to, uncertainties associated with the following:
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Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;
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Our failure to earn revenues or profits;
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Inadequate capital to continue business;
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Volatility or decline of our stock price;
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Potential fluctuation in quarterly results;
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Rapid and significant changes in markets;
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Litigation with or legal claims and allegations by outside parties; and
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Insufficient revenues to cover operating costs.
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The following discussion should be read in conjunction
with the financial statements and the notes thereto which are included in this quarterly report. This discussion contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any
forward-looking statements included in this discussion as a result of various factors.
OVERVIEW
The Company anticipates continued reliance on
financial assistance from affiliates. Given the current lack of capital, the Company has not been able to develop any new programs to
revitalize the League, nor has it been able to hire sales and promotional personnel or schedule a season. As a result, the Company is
currently dependent on the efforts of its officers for all marketing efforts. Their efforts have not resulted in any franchises.
Results of Operations
The three months ended November 30, 2020 compared to
the three months ended November 30, 2019
Revenue
The
Company recognized no revenue for the three months ended November 30, 2020 and 2019.
Operating Expenses
For
the three months ended November 30, 2020, the company incurred $4,843 of operating expense compared to $8,242 for the three
months ended November 30, 2019. For the three months ended November 30, 2020, we had $2,750 of professional fees and $2,093
of general and administrative expense (“G&A”), compared to $4,988 of professional fees, $3,000 of rent expense and $254
of other G&A expense for the three months ended November 30, 2019. In the prior period we incurred expense for rent and professional
fees that we did not have in the current period. Expenses in the current period consist mostly of audit, accounting, Edgar and transfer
agent fees.
The nine months ended November 30, 2020 compared to the
nine months ended November 30, 2019
Revenue
The
Company recognized no revenue for the nine months ended November 30, 2020 and 2019.
Operating Expenses
For
the nine months ended November 30, 2020, the company incurred $14,297 of operating expense compared to $26,317 for the nine
months ended November 30, 2019. For the nine months ended November 30, 2020, we had $6,750 of professional fees and $8,627 of
G&A expense, compared to $15,890 of professional fees, $9,000 of rent expense and $1,427 of G&A expense for the nine months ended
November 30, 2019. In the prior period we incurred expense for rent and professional fees that we did not have in the current period.
Expenses in the current period consist mostly of audit, accounting, Edgar and transfer agent fees.
Liquidity and Capital Resources
For
the nine months ended November 30, 2020, the company used $1,080 in operating activities compared to $21,157 for the nine
months ended November 30, 2019.
The Company expects it will continue to have to
rely on affiliates for loans to assist it in meeting its current obligations. With respect to long term needs, the Company recognizes
that in order for the USBL and the League to be successful, USBL has to develop a meaningful sales and promotional program. This will
require an investment of additional capital. Given the Company’s current financial condition, the Company’s ability to raise
additional capital other than from affiliates is questionable.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes
the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited
to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies
are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.
Recent Accounting Pronouncements
We have reviewed other recently issued accounting
pronouncements and plan to adopt those that are applicable to us. We do not expect the adoption of any other pronouncements to have an
impact on our results of operations or financial position.