UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended May 31, 2012

 

¨

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

 

For the transition period from __________ to _________

 

Commission File Number 1-15913

 

UNITED STATES BASKETBALL LEAGUE, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware	06-1120072
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification Number)

 

183 Plains Road, Suite 2, Milford, Connecticut 06461

(Address of Principal Executive Offices)

 

(203) 877-9508

(Registrant’s Telephone Number, Including Area Code)

 

___________________________

(Former Name, Former Address and Former Fiscal Year, if Changed

Since Last Report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x     No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  ¨	Accelerated filer                    ¨
Non-accelerated filer    ¨ (Do not check if a smaller reporting company)	Smaller reporting company   x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨    No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date. As of July 13, 2012, there were 3,512,527 shares of Common Stock, $.01 par value per share, outstanding.

 

 

UNITED STATES BASKETBALL LEAGUE, INC.

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION	3
Item 1.	Unaudited Financial Statements.	3
	Consolidated Balance Sheets – May 31, 2012 and February 29, 2012	3
	Consolidated Statements of Operations for the three months Ended May 31, 2012 and 2011	4
	Consolidated Statement of Stockholders’ Deficiency for the three months ended May 31, 2012	5
	Consolidated Statements of Cash Flows for the three months ended May 31, 2012 and 2011	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
PART II.	OTHER INFORMATION	15
Item 6.	Exhibits	15

 

 

PART I

FINANCIAL INFORMATION

 

Item 1.

Consolidated Financial Statements

 

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

 

CONSOLIDATED BALANCE SHEETS

 

		May 31, 2012				February 29, 2012
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	87,335			$	4,834
Marketable equity securities			34,211				186,768
Inventory			5,000				5,000
Due from related parties			26,822				24,927
Total current assets			153,368				221,529
PROPERTY, NET of accumulated depreciation of $46,680 and $45,382, respectively			230,320				231,618
Total assets		$	383,688			$	453,147
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and accrued expenses		$	174,313			$	172,100
Credit card obligations			47,389				86,742
Due to related parties			2,146,243				2,068,839
Total current liabilities			2,367,945				2,327,681
Due to related parties, net of current portion			-				-
Total Liabilities			2,367,945				2,327,681
STOCKHOLDERS’ DEFICIENCY
Common stock, $0.01 par value; 30,000,000 shares authorized; issued 3,552,502 and 3,552,502 shares, respectively			35,525				35,525
Preferred stock, $0.01 par value; 2,000,000 shares authorized; 1,105,679 shares issued and outstanding			11,057				11,057
Additional paid-in-capital			2,679,855				2,679,855
Deficit			(4,668,240	)			(4,558,517	)
Treasury stock, at cost; 39,975 shares			(42,454	)			(42,454	)
Total stockholders’ deficiency			(1,984,257	)			(1,874,534	)
Total liabilities and stockholders’ deficiency		$	383,688			$	453,147

 

See notes to consolidated financial statements.

 

 

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

		Three Months Ended
		May 31, 2012				May 31, 2011
REVENUES:
Rental income		$	9,000			$	-
			9,000				-
OPERATING EXPENSES:
Salaries			14,715				14,380
Travel and promotion			2,486				7,031
Depreciation			1,298				1,298
Other			27,831				29,791
			46,330				52,500
Income (loss) from operations			(37,330	)			(52,500	)
OTHER INCOME (EXPENSES):
Net gain (loss) from marketable equity securities			(64,820	)			101,738
Interest expense			(7,573	)			(8,059	)
			(72,393	)			93,679
NET INCOME (LOSS)		$	(109,723	)		$	41,179
Earnings (loss) per common share:
Basic		$	(0.03	)		$	0.01
Diluted		$	(0.03	)		$	0.01
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic			3,512,527				3,512,527
Diluted			4,618,206				4,618,206

 

See notes to consolidated financial statements.

 

 

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders’ Deficiency

(Unaudited)

 

		Common Stock								Preferred Stock								Additional																Total
		Shares								Shares								Paid-in								Treasury Stock								Stockholders’
		Outstanding				Amount				Outstanding				Amount				Capital				Deficit				Shares				Amount				Deficiency
Balance, February 29, 2012			3,552,502			$	35,525				1,105,679			$	11,057			$	2,679,855			$	(4,558,517	)			39,975			$	(42,454	)		$	(1,874,534	)
Net loss			-				-				-				-				-				(109,723	)			-				-				(109,723	)
Balance, May 31, 2012			3,552,502			$	35,525				1,105,679			$	11,057			$	2,679,855			$	(4,668,240	)			39,975			$	(42,454	)		$	(1,984,257	)

 

See notes to consolidated financial statements.

 

 

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Three Months Ended
		May 31, 2012				May 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	(109,723	)		$	41,179
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation			1,298				1,298
Non-cash compensation			-				-
Change in operating assets and liabilities:
Marketable equity securities			152,557				(105,381	)
Accounts payable and accrued expenses			2,213				10,804
Credit card obligations			(39,353	)			(111	)
Net cash provided by (used in) operating activities			6,992				(52,211	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due from related parties			(1,895	)			(5,441	)
Increase in due to related parties			77,404				55,590
Net cash provided by financing activities			75,509				50,149
NET INCREASE ( DECREASE) IN CASH AND CASH EQUIVALENTS			82,501				(2,062	)
CASH AND CASH EQUIVALENTS, beginning of period			4,834				2,465
CASH AND CASH EQUIVALENTS, end of period		$	87,335			$	403
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid		$	3,018			$	4,155
Income tax paid		$	-			$	-

 

See notes to consolidated financial statements.

 

 

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED MAY 31, 2012

(Unaudited)

 

1.

Description of Business and Basis of Presentation

 

United States Basketball League, Inc. (“USBL”), incorporated in Delaware on May 29, 1984, has operated a professional summer basketball league through franchises located in the United States. Its wholly owned subsidiary Meisenheimer Capital Real Estate Holdings, Inc. (“MCREH”) owns a commercial building in Milford, Connecticut. USBL cancelled its 2008, 2009, 2010, 2011 and 2012 seasons.

 

At May 31, 2012, USBL and MCREH (collectively, the “Company”) had negative working capital of $2,214,577, a stockholders’ deficiency of $1,984,257, and accumulated losses of $4,668,240. These factors, as well as the Company’s reliance on related parties (see Notes 7 and 9), raise substantial doubt as to the Company’s ability to continue as a going concern.

 

The Company is making efforts to raise equity capital, revitalize the league and market new franchises. However, there can be no assurance that the Company will be successful in accomplishing its objectives. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they may not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation. Operating results for the three-month period ended May 31, 2012 may not necessarily be indicative of the results that may be expected for the year ending February 28, 2013. The notes to the consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s Form 10-K for the year ended February 29, 2012.

 

2.

Summary of Significant Accounting Policies

 

Principles of consolidation - The accompanying consolidated financial statements include the accounts of USBL and MCREH. All significant intercompany accounts and transactions have been eliminated.

 

Fair value disclosures – The carrying amounts of the Company’s financial instruments, which consist of cash and cash equivalents, marketable equity securities, due from related parties, accounts payable and accrued expenses, credit card obligations, and due to related parties, approximate their fair value due to their short term nature or based upon values of comparable instruments.

 

Cash and cash equivalents - The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

 

 

Marketable equity securities – Marketable equity securities are recorded at fair value with unrealized gains and losses included in income. The Company has classified its investment in marketable equity securities as trading securities. The change in net unrealized holding gain (loss) included in earnings for the three months ended May 31, 2012 and 2011 was $10,377 and $103,032, respectively.

 

Inventory - Inventory consists of USBL trading cards, basketball uniforms, sporting equipment and printed promotional material and is stated at the lower of cost or market. Certain inventory was obtained through barter transactions whereby the USBL granted suppliers various advertising space (print) and airtime (television) in return for the supplier’s products. These transactions were accounted for based upon the fair values of the assets and services involved in the transactions.

 

Depreciation expense - Depreciation is computed using the straight-line method over the building’s estimated useful life (30 years).

 

Revenue recognition - The Company generally uses the accrual method of accounting in these financial statements. However, due to the uncertainty of collecting royalty and franchise fees from the franchisees, the USBL records these revenues upon receipt of cash consideration paid or the performance of related services by the franchisee. Franchise fees earned in nonmonetary transactions are recorded at the fair value of the franchise granted or the service received, based on which value is more readily determinable. Upon the granting of the franchise, the Company has performed essentially all material conditions related to the sale

 

The Company generated advertising revenue from fees for arena signage, tickets, and program and yearbook advertising space. Advertising revenue is recognized over the period that the advertising space is made available to the user.

 

Fees charged to teams to allow them to relocate are recognized as revenue upon collection of the fee. Souvenir sales, which were generated on the Company’s web site, are recorded upon shipment of the order. Essentially all orders were paid by credit card.

 

Income taxes - Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance has been fully provided for the deferred tax asset (approximately $875,000 attributable to the USBL net operating loss carryforward).

 

As of February 29, 2012, USBL had a net operating loss carryforward of approximately $2,500,000 available to offset future taxable income. The carryforward expires in varying amounts from 2019 to 2032. Current United States income tax laws limit the amount of loss available to offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

 

Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Advertising costs - Advertising costs are expensed as incurred.

 

 

Stock-based compensation – Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) 718, “Compensation – Stock Compensation.” No stock options were granted during 2012 and 2011 and none are outstanding at May 31, 2012.

 

Earnings (loss) per share – ASC 260, “Earnings Per Share”, establishes standards for computing and presenting earnings (loss) per share (EPS). ASC 260 requires dual presentation of basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock options or convertible securities were exercised or converted into common stock. The Company did not include the 1,105,679 shares of convertible preferred stock in its calculation of diluted loss per share for the three months ended May 31, 2012 as the result would have been antidilutive.

 

Comprehensive income – Other comprehensive income (loss) refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity. Comprehensive income (loss) was equivalent to net income (loss) for all periods presented.

 

3.

Marketable Equity Securities

 

At May 31, 2012 (unaudited), marketable equity securities consisted of:

 

										Fair
										Value and
										Carrying
Security		Shares				Cost				Value
Seafarer Exploration Corp. (SFRX)			6,002,064			$	80,815			$	28,210
Other							53,850				6,001
Total						$	134,665			$	34,211

 

At February 29, 2012, marketable equity securities consisted of:

 

										Fair
										Value and
										Carrying
Security		Shares				Cost				Value
Seafarer Exploration Corp. (SFRX)			7,252,064			$	97,642			$	58,017
Pacific Rim Mining Corp. (PMV)			350,000				83,458				47,950
Caledonia Mining Corp. (CALVF)			410,000				34,099				47,150
Other							82,399				33,651
Total						$	297,598			$	186,768

 

 

As discussed in Note 2, the Company has classified its investment in marketable equity securities as trading securities. All fair value measurements are based on Level 1 inputs (i.e., closing trading prices of respective marketable equity securities).

 

Gain (loss) on marketable equity securities consisted of:

 

		Three Months Ended May 31,
		(Unaudited)
		2012				2011
Realized net gain (loss)		$	(75,197	)		$	(1,294	)
Unrealized net gain (loss)			10,377				103,032
Net gain (loss)		$	(64,820	)		$	101,738

 

Commencing March 2012, the Company began the process of selling its marketable equity securities pursuant to a plan to liquidate substantially all of such securities as market conditions allow.

 

4.

Due from related parties

 

Due from related parties consist of:

 

		May 31,				February 29,
		2012				2012
		(Unaudited)
USBL receivable from Meisenheimer Capital, Inc.
(“MCI”) controlling stockholder of USBL, non-interest bearing, due on demand		$	26,822			$	24,927
Total		$	26,822			$	24,927

 

5.

Property, Net

 

Property, net, consists of:

 

		May 31,				February 29,
		2012				2012
		(Unaudited)
Land		$	121,253			$	121,253
Building			155,747				155,747
Total			277,000				277,000
Less accumulated depreciation			(46,680	)			(45,382	)
Property, net		$	230,320			$	231,618

 

 

The property is a commercial building owned by MCREH located in Milford, Connecticut. From June 2008 to December 2010, MCREH had no tenants at the property.

 

In 2011, Spectrum Associates, Inc. (“Spectrum”), a corporation controlled by the two officers of USBL, entered into an informal agreement to rent available space from MCREH for the purpose of storing surplus material. Under this agreement, Spectrum paid MCREH a total of $12,000 rent for the year ended February 29, 2012.

 

On February 1, 2012, MCREH executed a Lease Agreement with an unrelated entity (“the Tenant”) to rent the property (on a Net Lease basis) for a term of 11 months from February 1, 2012 to December 31, 2012 at a monthly rent of $3,000. The Tenant has an option to renew the lease for two additional periods of one year each at monthly rents of $3,150 (for the year ended December 31, 2013), and $3,300 (for the year ended December 31, 2014).

 

6.

Credit Card Obligations

 

USBL uses credit cards of related parties to pay for certain travel and promotion expenses. USBL has agreed to pay the credit card balances, including related interest. The credit card obligations bear interest at rates ranging up to 30% and are due in monthly installments of principal and interest.

 

7.

Due to Related Parties

 

Due to related parties consists of:

 

		May 31, 2012				February 29, 2012
		(Unaudited)
USBL loans payable to Spectrum Associates, Inc. (“Spectrum”), a corporation controlled by the two officers of USBL, interest at 6%, due on demand		$	1,224,789			$	1,224,789
USBL loans payable to the two officers of USBL, interest at 6%, due on demand			588,854				511,450
USBL loan payable to Genvest, LLC (“Genvest”), an entity controlled by the two officers of USBL			20,000				20,000
USBL loans to Daniel T. Meisenheimer, Jr. Trust, a trust controlled by the two officers of USBL, non-interest bearing, due on demand			44,100				44,100
MCREH note payable to trusts for the benefit of the two officers of USBL, interest at 6%, due December 31, 2011			50,000				50,000
MCREH note payable to Spectrum, interest at 7%, due on demand, secured by MCREH property			25,000				25,000
MCREH note payable to president of USBL, interest at 7%, due on demand, secured by MCREH property			45,000				45,000
MCREH note payable to the two officers of USBL, interest at 7%, due on demand, secured by MCREH property			70,000				70,000
MCREH note payable to a trust for the benefit of the two officers of USBL, interest at 4%, due October 22, 2009, secured by MCREH property			70,000				70,000
MCREH loan payable to president of Spectrum, non-interest bearing, due on demand			4,500				4,500
MCREH loan payable to president of USBL, non-interest bearing, due on demand			4,000				4,000
Total			2,146,243				2,068,839
Less current portion			(2,146,243	)			(2,068,839	)
Non current portion		$	-			$	-

 

 

For the three months ended May 31, 2012 and 2011, interest due under the USBL loans was waived by the respective lenders.

 

At May 31, 2012 and February 29, 2012, accounts payable and accrued expenses included accrued interest payable on MCREH notes payable to related parties totaling $65,887 and $61,987, respectively.

 

8.	Stockholders’ Equity
	Each share of common stock has one vote. Each share of preferred stock has five votes, is entitled to a 2% non-cumulative annual dividend, and is convertible at any time into one share of common stock.

 

9.	Related Party Transactions
	In the three months ended May 31, 2012 and 2011, USBL included in other operating expenses, rent to Genvest, LLC of $3,000 and $3,000, respectively.
10.	Commitments and Contingencies
	Occupancy Agreement   In September 2007, the Company moved its office from the MCREH building to a building owned by Genvest LLC, an organization controlled by the two officers of USBL. Improvements to the Company’s space there were completed in February 2008. Pursuant to a verbal agreement, the Company is to pay Genvest monthly rentals of $1,000 commencing March 2008. At May 31, 2012 and February 29, 2012, accounts payable and accrued expenses included accrued rent payable to Genvest totaling $51,000 and $48,000, respectively.   Cancellation of 2008, 2009, 2010, 2011, and 2012 Seasons   USBL cancelled its 2008, 2009, 2010, 2011 and 2012 seasons. These cancellations may result in claims and legal actions from franchisees.
	Litigation   On June 30, 2008, a legal action was commenced by Albany Patroons, Inc., a franchisee of USBL, against the Company in the United States District Court for the Northern District of New York. The complaint alleges breach of contract by USBL due to the suspension of the 2008 season and seeks total damages of $285,000. On September 5, 2008, the Company answered the complaint and asserted a counter-claim against plaintiff for breach of franchise agreement and/or memorandum of agreement. This action was discontinued and the parties agreed to proceed with binding arbitration. The Company believes that it has a meritorious defense to the action and does not expect the ultimate resolution of this matter to have a material adverse effect on its consolidated financial condition or results of operations.

  

 

Item 2.

Management’s Discussion and Analysis of financial condition and results of operations.

 

OVERVIEW

 

It is anticipated that the Company will continue to rely on financial assistance from affiliates. The Meisenheimer family is fully committed to making the Company a profitable operation and also making the League a viable one. 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 additional sales and promotional personnel. As a result, the Company is currently dependent on the efforts of Daniel T. Meisenheimer, III and two other employees for all marketing efforts. Their efforts have not resulted in any substantial increase in the number of franchises. Also, Mr. Meisenheimer recently suffered a stroke and has been unable to devote any material amount of time to the affairs of the Company. The NBA has established a developmental basketball league known as the National Basketball Developmental League (“NBDL”). The Company believes that the establishment of this league, consisting of eight teams, will have no effect on the Company’s season, since the NBDL season as presently constituted runs from November through March. Further, nothing prohibits a NBDL player from playing in the USBL. Accordingly, and as of the present time, the Company does not perceive the NBDL as a competitor. However, with the establishment of the NBDL, it is unlikely that, at least for the present time, the Company can develop any meaningful relationship with the NBA.

 

THREE MONTHS ENDED MAY 31, 2012 AS COMPARED TO MAY 31, 2011

 

For the three months ended May 31, 2012 and 2011, the Company had no franchise fees or advertising revenues as a result of the cancellation of the 2008, 2009, 2010, 2011, and 2012 seasons. Other revenues increased $9,000 from $0 in 2011 to $9,000 in 2012 as a result of rental income received from an unrelated party commencing in February 2012.

 

Operating expenses decreased $6,170 from $52,500 for the three months ended May 31, 2011 to $46,330 for the three months ended May 31, 2012. The decrease in operating expenses was primarily due to the reduction of travel and promotion expenses from $7,031 in 2011 to $2,486 in 2012.

 

Net gain (loss) from marketable equity securities decreased $166,558 from $101,738 in 2011 to $(64,820) in 2012. The decrease was due to the sale by the Company of most of its marketable equity securities during the three months ended May 31, 2012 and lower trading prices of the remaining marketable equity securities of the Company.

 

Interest expense decreased to $7,573 in 2012, as compared to $8,059 in 2011.

 

Net loss for the three months ended May 31, 2012 was $109,723 as compared to net income of $41,179 for the three months ended May 31, 2011. The deterioration is due mainly to the $166,558 change in net gain (loss) from marketable equity securities (from $101,738 in 2011 to $(64,820) in 2012).

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

The Company had cash and cash equivalents of $87,335 and a working capital deficit of $2,214,577 at May 31, 2012. The Company's statement of cash flows reflects cash provided by operating activities of $6,992, which results primarily from the decrease in marketable equity securities of $152,557 offset by $109,723 in net loss and a $39,353 decrease in credit card obligations. Net cash provided by financing activities was $75,509 in 2012 compared to $50,149 in 2011.

 

The Company's ability to generate cash flow from franchise royalty fees is dependent on scheduling of a 2013 season and the financial stability of the individual franchises constituting the League. Each franchise is confronted with meeting its own fixed costs and expenses, which are primarily paid from revenues generated from attendance. Experience has shown that USBL is generally the last creditor to be paid by the franchise. If attendance has been poor, USBL has from time to time only received partial payment and, in some cases, no payments at all. The Company estimates that it requires approximately $300,000 of working capital to sustain operations over a 12-month period. Accordingly, if the Company is unable to generate additional sales of franchises and schedule a 2013 season within the next 12 months it will again have to rely on affiliates for loans and revenues to assist it in meeting its current obligations. With respect to long term needs, the Company recognizes that in order for the League and USBL 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 ability of the Company to raise additional capital other than from affiliates is questionable. At the current time the Company has no definitive plan as to how to raise additional capital and schedule a 2013 season.

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

 

Item 4.

Controls and Procedures.

 

Under the supervision and with the participation of our management, including our principal executive and financial officers, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2012 and, based on such evaluation, our principal executive and financial officers have concluded that these controls and procedures are effective. There were no changes in our internal control over financial reporting that occurred during the quarter ended May 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosures.

 

 

PART II

OTHER INFORMATION

 

Item 6.

Exhibits.

 

Exhibit No.:		Description:
31.1		Certxification of principal executive officer
31.2		Certification of principal financial officer
32		Certification pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on the 13^th day of July, 2012. 

 

	UNITED STATES BASKETBALL LEAGUE,
	INC.
	By:	/s/ Daniel T. Meisenheimer III
		Daniel T. Meisenheimer III
		Chairman and President
	By:	/s/ Richard C. Meisenheimer
		Richard C. Meisenheimer
		Chief Financial Officer and
		Director

 

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name		Capacity		Date
/s/ Daniel T. Meisenheimer III
Daniel T. Meisenheimer III		Director and President (principal executive officer)		July 13, 2012
/s/ Richard C. Meisenheimer
Richard C. Meisenheimer		Director and Chief Financial Officer (principal financial and accounting officer)		July 13, 2012

 

 

EXHIBIT INDEX

 

Exhibit No.:		Description:
31.1		Certification of principal executive officer
31.2		Certification of principal financial officer
32		Certification pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002