REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
United States Basketball League, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of United States Basketball
League, Inc. (the “Company”) as of February 28, 2021 and February 29, 2020 and the related statements of operations, stockholders’
equity (deficiency), and cash flows for the year ended February 28, 2021 February 29, 2020, and the related notes (collectively referred
to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of United States Basketball League Inc. as of February 28, 2021 and February 29, 2020 and the results of its operations
and cash flows for the year ended February 28, 2021 and February 29, 2020 conformity with accounting principles generally accepted in
the United States.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the Company’s financial statements based on my audit. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. The Company is not required to have, nor are we engaged to perform, an audit
of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control
over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Going Concern Uncertainty
The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s present
financial situation raises substantial doubt about its ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Critical Audit Matters
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgements. We determined that there were no critical audit matters.
/s/ Fei Qi CPA
Elmhurst, New York
July 6, 2021
We have served as the Company’s auditor since 2020.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28, 2021, AND FEBRUARY
29, 2020
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 Company’s financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of 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. Significant estimates include the estimated useful lives of property and equipment.
Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts,
the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently
have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Cash equivalents
The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the year ended February
28, 2021 or February 29, 2020.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of
the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of
the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States
of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair
value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority
to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The
three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active markets for identical
assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted
prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and
not corroborated by market data.
The carrying amount of the Company’s financial assets and liabilities,
such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The
Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest
rates that would be available to the Company for similar financial arrangements on February 28, 2021 and February 29, 2020.
Income taxes
The Company follows Section 740-10-30 of the FASB
Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are
based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for
the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income
in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under
Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater
than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition,
classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company
had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
Net income (loss) per common share
Net income (loss) per common share is computed
pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed
by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net
income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially
outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
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.
While the Company is continuing to assess the potential impacts of ASU 2019-10, it does not expect ASU 2019-10 to 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 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 $5,119,824, liabilities of $2,435,916 and no source of revenue. For the year ended February 28, 2021 the
Company had a net loss of $26,497, with $1,226 of cash used in operating activities. 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:
|
|
February 28, 2021
|
|
February 29, 2020
|
|
|
|
|
|
Legal and accounting services’ vendors
|
|
$
|
89,163
|
|
|
$
|
76,163
|
|
Transfer agent and EDGAR agent
|
|
|
20,931
|
|
|
|
8,660
|
|
Rent due Genvest, LLC (an entity controlled by the
two officers of USBL)
|
|
|
144,000
|
|
|
|
144,000
|
|
Accrued interest on MCREH note payable to
president of USBL
|
|
|
13,562
|
|
|
|
13,562
|
|
Security deposit due CADCOM (an entity controlled by
the two officers of USBL)
|
|
|
2,725
|
|
|
|
2,725
|
|
Other
|
|
|
777
|
|
|
|
777
|
|
Total
|
|
$
|
271,158
|
|
|
$
|
245,887
|
|
NOTE 5 – DUE TO RELATED PARTIES
Due to related parties consist of:
|
|
February 28,
2021
|
|
|
February 29, 2020
|
|
|
|
|
|
|
|
|
USBL loans payable to Spectrum Associates, Inc. (“Spectrum”),
a corporation controlled by the two officers of USBL,
interest at 6%, due on demand
|
|
$
|
1,324,689
|
|
|
$
|
1,324,689
|
|
USBL loans payable to the two officers of USBL,
interest at 6%, due on demand
|
|
|
569,317
|
|
|
|
569,317
|
|
USBL loans payable to Daniel T. Meisenheimer, Jr. Trust, a trust
controlled by the two officers of USBL, non-interest bearing,
due on demand
|
|
|
48,850
|
|
|
|
48,850
|
|
MCREH note payable to president of USBL, interest at 7%, due
on demand
|
|
|
48,000
|
|
|
|
48,000
|
|
MCREH loan payable to Spectrum, non-interest bearing, due
on demand
|
|
|
4,500
|
|
|
|
4,500
|
|
MCREH loan payable to president of USBL, non-interest
bearing, due on demand
|
|
|
5,000
|
|
|
|
4,000
|
|
MCREH loan payable to Meisenheimer Capital, Inc.,
non-interest bearing, due on demand
|
|
|
159,275
|
|
|
|
159,275
|
|
Total
|
|
$
|
2,159,631
|
|
|
$
|
2,158,631
|
|
NOTE 6 – RELATED PARTY TRANSACTIONS
For the years ended February 28, 2021, and February
29, 2020, USBL included in operating expenses rent incurred to Genvest, LLC (an entity controlled by the two officers of USBL) totaling
$0 and $12,000, 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 February 28, 2021, 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 2,744,007 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 $.057 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
and Verde Capital was issued 150,000 shares for Consulting 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.