SHOREPOWER TECHNOLOGIES INC. - Quarter Report: 2008 November (Form 10-Q)

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 November 30, 2008

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE 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 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 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 December 29, 2008, there were 3,482,527 shares of Common Stock, $.01 par value per share, outstanding.

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 ¨	Smaller reporting company x
(Do not check if a smaller reporting company)

UNITED STATES BASKETBALL LEAGUE, INC.

INDEX

		PAGE

PART I.	FINANCIAL INFORMATION	3

Item 1.	UNAUDITED FINANCIAL STATEMENTS.

	Consolidated Balance Sheets – November 30, 2008 and February 29, 2008	3

	Consolidated Statements of Operations for the three and nine months ended November 30, 2008 and 2007	4

	Consolidated Statement of Stockholders’ Deficiency	5

	Consolidated Statements of Cash Flows for the nine months ended November 30, 2008 and 2007	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14

Item 4T.	Controls and Procedures	14

PART II.	OTHER INFORMATION	15

Item 1.	Legal Proceedings	15

Item 5.	Other Information	15

Item 6.	Exhibits	16

PART I

FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

	November 30, 2008			February 29, 2008
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	4,698		$	17,975
Marketable equity securities		17,078			3,642
Inventory		5,000			5,000
Due from related parties		36,836			28,895
Total current assets		63,612			55,512

PROPERTY, NET		248,492			252,386
Total assets	$	312,104		$	307,898

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	147,196		$	73,375
Deferred Revenue		25,000			-
Credit card obligations		115,647			96,688
Due to related parties		1,179,256			994,604
Current portion of mortgage payable		-			74,245

Total current liabilities		1,467,099			1,238,912
Due to related parties, net of current portion		50,000			50,000
Total Liabilities		1,517,099			1,288,912
STOCKHOLDERS’ DEFICIENCY
Common stock, $0.01 par value; 30,000,000 shares authorized; issued and outstanding 3,522,502 and 3,522,502, shares respectively		35,225			35,225
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		2,668,155			2,668,155
Deficit		(3,876,978	)		(3,652,997	)
Treasury stock, at cost; 39,975 shares		(42,454	)		(42,454	)
Total stockholders’ deficiency		(1,204,995	)		(981,014	)

Total liabilities and stockholders’ deficiency	$	312,104		$	307,898

See notes to consolidated financial statements.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended
	November 30, 2008			November 30, 2007			November 30, 2008			November 30, 2007

REVENUES:
Initial franchise fees	$	-		$	-		$	-		$	-
Continuing franchise fees		-			-			20,000			85,000
Sponsorship/advertising		-			-			-			45,000
Other		-			16,575			22,000			49,698
		-			16,575			42,000			179,698

OPERATING EXPENSES:
Consulting		5,600			1,000			10,100			79,500
Referee fees		-			-			-			20,200
Salaries		13,585			14,950			42,985			44,850
Travel and promotion		16,458			15,635			37,680			19,013
Depreciation		1,298			1,298			3,894			3,894
Other		24,866			15,105			101,081			63,463
		61,807			47,988			195,740			230,920

Income (loss) from operations		(61,807	)		(31,413	)		(153,740	)		(51,222	)

OTHER INCOME (EXPENSES):
Net gain (loss) from marketable equity securities		(56,255	)		307			(42,964	)		(714	)
Interest expense		(9,551	)		(9,882	)		(27,382	)		(22,817	)
Interest and dividend income		33			2			105			16

		(65,773	)		(9,573	)		(70,241	)		(23,515	)
NET INCOME (LOSS)	$	(127,580	)	$	(40,986	)	$	(223,981	)	$	(74,737	)

Earnings (loss) per common share:
Basic	$	(.04	)	$	(.01	)	$	(.06	)	$	(.02	)
Diluted	$	(.04	)	$	(.01	)	$	(.06	)	$	(.02	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic		3,482,527			3,482,527			3,482,527			3,482,527
Diluted		4,588,206			4,588,206			4,588,206			4,588,206

See notes to consolidated financial statements.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

(Unaudited)

	Common Stock				Preferred Stock				Additional								Total
	Shares				Shares				Paid-in					Treasury			Stockholders’
	Outstanding		Amount		Outstanding		Amount		Capital		Deficit			Stock			Deficiency

Balance February 29, 2008		3,522,502	$	35,225		1,105,679	$	11,057	$	2,668,155	$	(3,652,997	)	$	(42,454	)	$	(981,014	)
Net Income (loss)		-		-		-		-		-		(223,981	)		-			(223,981	)

Balance November 30, 2008		3,522,502	$	35,225		1,105,679	$	11,057	$	2,668,155	$	(3,876,978	)	$	(42,454	)	$	(1,204,995	)

See notes to consolidated financial statements.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	November 30, 2008			November 30, 2007

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(223,981	)	$	(74,737	)
Adjustments to reconcile net income(loss) to net cash provided by (used in) operating activities:
Depreciation		3,894			3,894
Judgment Reserve		-			(150,000	)
Change in operating assets and liabilities:
Increase in deferred revenue		25,000
Marketable equity securities		(13,436	)		(2,493	)
Accounts payable and accrued expenses		73,821			(16,517	)
Credit card obligations		18,959			10,529

Net cash used in operating activities		(115,743	)		(229,324	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from (repayments to) related parties		176,711			233,652
Decrease in mortgage payable		(74,245	)		(7,888	)

Net cash provided by financing activities		102,466			225,764

NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS		(13,277	)		(3,560	)

CASH AND CASH EQUIVALENTS, beginning of period		17,975			4,061

CASH AND CASH EQUIVALENTS, end of period	$	4,698		$	501

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Interest paid	$	19,733		$	20,179
Income tax paid	$	-		$	-

See notes to consolidated financial statements.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED NOVEMBER 30, 2008

(Unaudited)

1.	Description of Business and Basis of Presentation:

United States Basketball League, Inc. (“USBL”), incorporated in Delaware on May 29, 1984, operates 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.

At November 30, 2008, USBL and MCREH (collectively, the “Company”) had negative working capital of $1,403,487, a stockholders’ deficiency of $1,204,995 and accumulated losses of $3,876,978. Further USBL suspended its 2008 season and may suspend its 2009 season. These factors, as well as the Company’s reliance on related parties (see Notes 6 and 8), create 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 nine-month period ended November 30, 2008 may not necessarily be indicative of the results that may be expected for the year ending February 28, 2009. 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-KSB for the year ended February 29, 2008.

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, accounts payable and accrued expenses, credit card obligations, due to related parties and mortgage payable, 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 and nine months ended November 30, 2008 and 2007 was $ (56,255), $307, $(42,964), and $(10,621), 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 (approximately 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 offering price of a new franchise at November 30, 2008 was $100,000.

The Company generates advertising revenue from fees for arena signage, tickets, and program and year book 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 are generated on the Company’s web site, are recorded upon shipment of the order. Essentially all orders are 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 (approximating $680,000) resulting from the net operating loss carryforward.

As of November 30, 2008, the Company had a net operating loss carryforward of approximately $1,700,000 available to offset future taxable income. The carryforward expires in varying amounts through year ended February 29, 2029.

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 compensation is accounted for at fair value in accordance with SFAS No. 123 and 123(R), “Accounting for Stock-Based Compensation.” No stock options were granted during 2008 and 2007 and none are outstanding at November 30, 2008.

Earnings (loss) per share - SFAS No. 128, “Earnings Per Share”, establishes standards for computing and presenting earnings (loss) per share (EPS). SFAS No. 128 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 and nine months ended November 30, 2008 and 2007 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.

Referee fees – The Company’s principal obligation under the franchise agreements is to provide referees for the league.

3.	Due From Related Parties

Due from related parties consist of:

	November 30,		February 29,
	2008		2008
	(unaudited)

Due from Meisenheimer Capital, Inc. (“MCI”) controlling stockholder of USBL, non-interest bearing, due on demand	$	34,836	$	26,895

Due from Synercom (“Synercom”), a corporation controlled by the two officers of USBL, non-interest bearing, due on demand		2,000		2,000

Total	$	36,836	$	28,895

4.	Property, Net

Property, net consists of:

	November 30,			February 29,
	2008			2008
	(unaudited)

Land	$	121,253		$	121,253
Building		155,747			155,747
Total		277,000			277,000

Accumulated depreciation		(28,508	)		(24,614	)

Property, net	$	248,492		$	252,386

Through June 2008, MCREH leased parts of the property to Cadcom, Inc., a corporation controlled by the two officers of USBL, on a month-to-month basis. Rental income from Cadcom (which is included in other revenues in the consolidated statements of operations) for the three months ended November 30, 2008 and 2007 and for the nine months ended November 30, 2008 and 2007 was $0, $16,500, $22,000, and $49,500, respectively.

Since June 2008, MCREH has had no tenants at the property.

5.	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.

6.	Due to Related Parties

Due to related parties consists of:

	November 30, 2008			February 29, 2008
	(Unaudited)
USBL loans payable to Spectrum Associates, Inc. (“Spectrum”), a corporation controlled by the two officers of USBL, interest at 6%, due on demand	$	659,286		$	553,919
USBL loans payable to the two officers of USBL, interest at 6%, due on demand		309,970			300,685
MCREH note payable to 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 the two officers of USBL, interest at 4%, due October 22, 2009, secured by MCREH property		70,000			-

Total		1,229,256			1,044,604
Less current portion		(1,179,256	)		(994,604	)
Noncurrent portion	$	50,000		$	50,000

For the nine months ended November 30, 2008 and 2007, interest due under the USBL loans was waived by the respective lenders.

At November 30, 2008 and February 29, 2008, accounts payable and accrued expenses included accrued interest payable to related parties totaling $12,737 and $5,088, respectively.

7.	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.

8.	Related Party Transactions

In the three months ended November 30, 2008 and 2007 and the nine months ended November 30, 2008 and 2007, USBL included in continuing franchise fees revenues from MCI of $0, $0, $0, and $75,000 respectively, and revenues from Spectrum of $0, $0, $20,000 and $0, respectively.

In the three months ended November 30, 2008 and 2007 and the nine months ended November 30, 2008 and 2007, USBL received advertising revenues from Spectrum totaling $0, $0, $0, and $45,000, respectively.

In the three months ended November 30, 2008 and 2007 and the nine months ended November 30, 2008 and 2007, MCREH received rental income from Cadcom, Inc., a corporation controlled by the two officers of USBL, totaling $0, $16,500, $22,000, and $49,500, respectively.

In the three months ended November 30, 2008 and 2007 and the nine months ended November 30, 2008 and 2007, USBL included in consulting fees expenses to MCI of $0, $0, $0, and $75,000, respectively.

9.	Commitments and Contingencies

Occupancy Agreement

In September 2007, the Company moved its offices 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 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 November 30, 2008, accounts payable and accrued expenses included accrued rent payable to Genvest totaling $9,000.

Financial Advisory Agreement

On November 28, 2007, USBL executed an agreement with Colebrooke Capital, Inc. (“Colebrooke”). The agreement provided for Colebrooke to provide financial advisory services to USBL. As compensation, USBL was to pay Colebrooke monthly fees of $3,000 commencing December 15, 2007. In the event that a financing is consummated with a participant introduced to USBL by Colebrooke or with which Colebrooke was in discussions with on behalf of USBL, Colebrooke is to receive consideration equal to 7.5% of the total capital raised. For non-financing capital transactions Colebrooke is to earn a cash fee equal to 5% of the Transaction Value; alternatively and at Colebrooke’s option, Colebrooke may receive 6% of the Transaction Value in an equivalent form to that received or issued by USBL. The term of the agreement is four months and renews automatically unless either party has provided written notice of cancellation. Colebrooke’s engagement may be terminated by USBL or Colebrooke at any time upon 30 days written notice from one party to the other.

No monthly fees to Colebrooke were paid or accrued in the nine months ended November 30, 2008. The Company has obtained a verbal waiver of such fees from Colebrooke.

Suspension of 2008 Season

In December 2007, USBL announced the suspension of its 2008 season. This suspension has resulted in one legal action and may result in additional claims and legal actions from franchisees.

USBL may also suspend its 2009 season.

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. 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.

South Korean Venture

In August 2008, the Company received $170,667 from a third party to investigate business opportunities with the South Korea Basketball League, and with prospective South Korean sponsors. Under a verbal agreement with the third party, the $170,667 is to be used to pay certain expenditures approved by the third party in connection with such investigation. From August 2008 to November 2008, the Company paid a total of $100,000 to a consulting firm approved by the third party. Since the third party effectively controls the funds, the Company recorded the $170,667 as a liability (not as revenue) and recorded the $100,000 expenditures as a reduction of the liability (not as an expense). At November 30, 2008, the Company has included the $70,667 unexpended portion of the money in accounts payable and accrued expenses.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

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. 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 NOVEMBER 30, 2008 AS COMPARED TO NOVEMBER 30, 2007

Revenues decreased $16,575 from $16,575 in 2007 to $0 in 2008. In 2007, the Company had $16,500 in rental revenues from the MCREH property.

Operating expenses increased $13,819 from $47,988 in 2007 to $61,807 in 2008 primarily due to an increase in professional fees.

Net loss increased $86,594 from $40,986 in 2007 to $127,580 in 2008, primarily due to $16,575 lower revenues, $13,819 higher operating expenses, and a $56,255 loss from marketable equity securities in 2008.

NINE MONTHS ENDED NOVEMBER 30, 2008 AS COMPARED TO NOVEMBER 30, 2007

Aggregate franchise fees decreased to $20,000 for the first nine months of 2008 from $85,000 for the first nine months of 2007. This decrease was due to the suspension of the 2008 season. Sponsorship and advertising revenues totaled $0 during the first nine months of 2008 as compared to $45,000 in the first nine months of 2007, all from the Company’s affiliate Spectrum Associates. $42,000 and $169,500 of the 2008 and 2007 revenues, respectively, were derived from various related parties.

Operating expenses decreased from $230,920 for the nine months ended November 30, 2007 to $195,740 for the nine months ended November 30, 2008. This decrease was due to the $69,400 decrease in consulting fees and $20,200 decrease in referee fees as a result of the suspension of the 2008 season. Operating expenses for the nine months ended November 30, 2008 and 2007 included consulting fees of $0 and $75,000 respectively, to MCI for management services, including the services provided to the Company by Daniel T. Meisenheimer, III and Richard Meisenheimer.

Net loss increased $149,244 from $74,737 in 2007 to $223,981 in 2008. The decrease was due mainly to the $137,698 decrease in revenues and the $42,964 loss from marketable securities, offset partially by the $35,180 decrease in operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash of $4,698 and a working capital deficit of $1,403,487 at November 30, 2008. The Company's statement of cash flows reflects cash used in operations of $115,743 in 2008, which results primarily from the $223,981 net loss, offset partially by a $73,821 increase in accounts payable and accrued expenses. Net cash provided by financing activities was $102,466 in 2008, primarily due to loans from related parties.

The Company’s ability to generate cash flow from franchise royalty fees is dependent on scheduling of a 2009 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 at least $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 2009 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 from 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.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4T.

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 November 30, 2008 and, based on such evaluation, our principal executive and financial officers have concluded that these controls and procedures are effective. There were no significant changes in our internal control over financial reporting that occurred during the quarter ended November 30, 2008 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 1.

LEGAL PROCEEDINGS.

ITEM 5.

OTHER INFORMATION.

In August 2008, the Company received $170,667 from a third party to investigate business opportunities with the South Korea Basketball League, and with prospective South Korean sponsors. Under a verbal agreement with the third party, the $170,667 is to be used to pay certain expenditures approved by the third party in connection with such investigation. From August 2008 to November 2008, the Company paid a total of $100,000 to a consulting firm approved by the third party. Since the third party effectively controls the funds, the Company recorded the $170,667 as a liability (not as revenue) and recorded the $100,000 in expenditures as a reduction of the liability (not as an expense). At November 30, 2008, the Company has included the $70,667 unexpended portion of the money in accounts payable and accrued expenses.

The Company does not have in place procedures by which security holders may recommend nominees to the Company’s board of directors.

ITEM 6.

EXHIBITS.

Exhibit No.:		Description:
*3(i)		Certificate of Incorporation (May 29, 1984)
*3(i)a		Amended Certificate of Incorporation (Sept. 4, 1984)
*3(i)b		Amended Certificate of Incorporation (March 5, 1986)
*3(i)c		Amended Certificate of Incorporation (Feb. 19, 1987)
*3(i)d		Amended Certificate of Incorporation (June 30, 1995)
*3(i)e		Amended Certificate of Incorporation (January 12, 1996)
*3(i)f		Certificate of Renewal (June 23, 1995)
*3(i)g		Certificate of Renewal (May 22, 2000)
*3(ii)a		By-Laws of USBL
*3(ii)b		Amended By-Laws
+10.2		Standard Franchise Agreement of USBL
31.1		Certification of President (principal executive officer)
31.2		Certification of Chief Financial Officer (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

___________________

*Incorporated by reference to the Company’s Registration Statement on Form 10-SB, and amendments thereto, filed with the SEC on May 30, 2000.

+Incorporated by reference to the Company’s Annual Report on Form 10-KSB for the fiscal year ended February 28, 2001.

SIGNATURES

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.

	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

Date: January 12, 2009

EXHIBIT INDEX

Exhibit No.:		Description:
*3(i)		Certificate of Incorporation (May 29, 1984)
*3(i)a		Amended Certificate of Incorporation (Sept. 4, 1984)
*3(i)b		Amended Certificate of Incorporation (March 5, 1986)
*3(i)c		Amended Certificate of Incorporation (Feb. 19, 1987)
*3(i)d		Amended Certificate of Incorporation (June 30, 1995)
*3(i)e		Amended Certificate of Incorporation (January 12, 1996)
*3(i)f		Certificate of Renewal (June 23, 1995)
*3(i)g		Certificate of Renewal (May 22, 2000)
*3(ii)a		By-Laws of USBL
*3(ii)b		Amended By-Laws
+10.2		Standard Franchise Agreement of USBL
31.1		Certification of President (principal executive officer)
31.2		Certification of Chief Financial Officer (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

___________________

*Incorporated by reference to the Company’s Registration Statement on Form 10-SB, and amendments thereto, filed with the SEC on May 30, 2000

+Incorporated by reference to the Company’s Annual Report on Form 10-KSB for the fiscal year ended February 28, 2001.