SHOREPOWER TECHNOLOGIES INC. - Annual Report: 2015 (Form 10-K)

SECURITIES AND EXCHANGE COMMISSION

450 FIFTH STREET, N.W.

WASHINGTON, D.C. 20549

FORM 10-K

x Annual Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934

For the fiscal year ended February 28, 2015

or

¨ Transitional Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934

For the transition period from _________ to _________

Commission File Number 001-15913

UNITED STATES BASKETBALL LEAGUE, INC.

(Name of small business issuer in its charter)

Issuer's telephone number (203) 877-9508

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Stock - $.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes  ¨    No   x

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 website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  x   No  ¨

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Approximately $85,619 as of August 31, 2014.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 3,512,527 shares of common stock as of May 29, 2015.

Documents Incorporated By Reference: None.

Forward Looking Statements

When used in this report, the words “may”, “will”, “expect”, “anticipate”, “estimate” and “intend” and similar expressions are intended to identify forward looking statement within the meaning of Section 21E of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect our future plan of operations, business strategy, operating results and financial position. Prospective investors are forewarned and cautioned that any forward looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within any such forward looking statements.

United States Basketball League (“USBL”, “we” or the “Company”) was incorporated in Delaware in May, 1984 as a wholly-owned subsidiary of Meisenheimer Capital, Inc. (“MCI”). MCI is a publicly owned company having made a registered public offering of its common stock in 1984. Since 1984, MCI has been under the control of the Meisenheimer family. Members of the Meisenheimer family also have a controlling interest in Spectrum Associates, Inc. (“Spectrum”), a company engaged in the manufacture of helicopter parts. From time to time, Spectrum has loaned money to us and has engaged in other revenue generating transactions with us.

We were incorporated by MCI for the purpose of developing and managing a professional basketball league, the United States Basketball League (the “League”). The League was originally conceived to provide a vehicle for college graduates interested in going professional with an opportunity to improve their skills and to showcase their skills in a professional environment. This approach afforded the players an opportunity to perhaps be selected by one of the teams comprising the National Basketball Association (“NBA”) and to attend summer camp sponsored by that team. USBL’s season (April through June of each year) was specifically designed to afford our League players the chance to participate in the various summer camps run by the teams in the NBA, which summer camps normally start in August each year. Since 1984 and up to the present time there have been approximately 150 players from our League who also have been selected to play for teams in the NBA. A sizable number of our players were eventually selected to play in NBA all star games. Additionally, a total of approximately 75 players were previously selected to play in the Continental Basketball Association (“CBA”) and the National Basketball Development League (the “NBDL”), the official developmental league of the NBA.

Since the inception of our League, we have been primarily engaged in selling franchises and managing the League. From 1985 and up to the present time, we have sold a total of approximately 40 active franchises (teams), a vast majority of which were terminated for non- payment of their respective franchise obligations. All seasons since 2008 have been canceled. At the present time we do not have any definitive plans as to the scheduling of a new season.

We are currently in the process of exploring certain strategic alternatives, including the possible sale of the League.

We currently have one part-time employee. This employee is currently engaged primarily to respond to inquiries for information from potential strategic parties.

Prospective investors as well as shareholders should be aware that an investment in USBL involves a high degree of risk. Accordingly, you are urged to carefully consider the following Risk Factors as well as all of the other information contained in this Annual Report and the information contained in the Financial Statements and the notes thereto.

Our Operating History Does Not Reflect Profitable Operations

Our operating history does not reflect a history of profitable operations. Since our inception we have been attempting to develop the League. Our operations have not been profitable and unless and until we can increase the sale of franchises, schedule a season, and at the same time attract franchisees who are able or willing to incur start-up costs to develop their respective franchises, we may continue to operate at a loss. There can be no assurance that we will be successful.

We May Not Be Able to Continue as a Going Concern

Because of our historically poor revenues and earnings, our auditors have for at least the last five years included in their unqualified opinions an emphasis paragraph regarding the uncertainty of our ability to continue to operate as a going concern. Shareholders and prospective shareholders should weigh this factor carefully in considering the merits of our company as an investment vehicle.

We Have Not Been Able to Realize the Full Sales Value of a Franchise

Generally speaking, we have not been able to collect what we perceive to be true value for a franchise because of the League's overall weak performance. As such we have sold franchises for less than we believe the true value to be and additionally have extended terms for payment as an additional inducement to the franchisees to purchase the franchise. As a result, our revenues have been affected and will continue to be affected until such time as we are able to realize the full value for franchises.

We Lack Sufficient Capital to Promote the League

In order for the League to become successful, we have to promote the League and a schedule a season. Historically and up to the present time, we have lacked sufficient capital to develop a national promotion for the League and have been forced to cancel our last six seasons. Promotion will achieve two objectives: (i) create more fan interest, and (ii) franchise interest. Until such time that we can properly promote the League we do not anticipate any significant change in the overall fan interest, and consequently no significant change in sales of franchises or our ability to schedule a season. Attendance has been rather small and is not enough to support a team's operations. Without real promotional efforts, we do not anticipate any significant increase in franchises. We do occasional advertising in Barron’s.

The Meisenheimer Family Exercises Significant Control over Us

The Meisenheimer family, consisting of Daniel T. Meisenheimer III and Richard C. Meisenheimer and entities own approximately 80% of our outstanding common stock and as such control the daily affairs of the business as well as significant corporate actions. Additionally, the Meisenheimer family controls the Board of Directors and as such shareholders have little or no influence over the affairs of the Company.

Dependence upon Key Individual

Our success is dependent upon the activities of Daniel T. Meisenheimer III. The loss of Mr. Meisenheimer through death, disability or resignation would have a material and adverse effect on our business. Mr. Meisenheimer suffered a stroke a few years ago and has been unable to devote any material amount of time to the affairs of the Company.

We Have a Limited Public Market for Our Stock

There are approximately 700,000 shares held by approximately 300 public shareholders and as such there is a limited public market for our stock. As such, holders of our stock may have difficulty in selling their shares.

Penny Stock Regulation

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ System). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information regarding penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers, who sell such securities to persons other than established customers and accredited investors, must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of activity, if any, in the market for our common stock.

Meisenheimer Capital Real Estate Holdings Inc. (“MCRE”), our wholly owned subsidiary, owned the property at 46 Quirk Road, Milford, Connecticut, the former location of our corporate offices. Such property consisted of three-quarters of an acre of real property and an office building of approximately 6,000 square feet.

In 2011, MCRE rented the property to Spectrum Associates, Inc., a corporation controlled by the two officers of USBL, under an informal agreement.

On February 1, 2012, MCRE 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 lease also provided the Tenant an option to renew the lease for two additional periods of one year each at monthly rates of $3,150 (for the year ended December 31, 2013), and $3,300 (for the year ended December 31, 2014).

On June 19, 2014, the property was sold to two individuals affiliated with the Tenant for $420,000 cash. The gain on sale of the property was $192,931.

The Company currently leases general office space located at 183 Plains Road, Suite 2, Milford, Connecticut from Genvest, LLC (related party).

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 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.

Not applicable.

Part II

Item 5.            Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a)         Our Common Stock trades on the Over-the-Counter Bulletin Board under the symbol “USBL”. The following is the range of high and low closing prices for the Common Stock for each quarter for the Company’s fiscal years ended February 28, 2014 and February 28, 2015.

The foregoing range of high-low closing prices represents quotations between dealers without adjustments for retail markups, markdowns or commissions and may not represent actual transactions. The information has been provided by qualified inter-dealer quotation medium.

Approximately 700,000 shares of our Common Stock are held by nonaffiliates as of May 29, 2015. The shares held by members of the public were issued by us in connection with a private placement over ten years ago and also in connection with an offering in 1995 under Rule 504 of Regulation D of the Securities Act of 1933. The existing holders of shares issued pursuant to the private placement would have available to them the exemption provided by Rule 144 and thus would be able to sell all of their shares if they so elected.

We have not paid any dividends and do not anticipate paying dividends in the future.

Our Preferred Stock is held by our officers and directors and affiliates. No member of the public holds any Preferred Stock.

Overview

It is anticipated that the Company will operate at a loss for the next twelve months. 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 Daniel Meisenheimer, III and one other employee for all marketing efforts. Their efforts have not resulted in any franchises.

CRITICAL ACCOUNTING POLICIES

Revenue Recognition

The Company generally uses the accrual method of accounting. 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.

Fiscal Year 2015 Compared To Fiscal Year 2014

For the years ended February 28, 2015 ("Fiscal 2015") and February 28, 2014 (“Fiscal 2014”), the Company had no franchise fees or advertising revenues as a result of the cancellation of its seasons. Rental income decreased $33,843 from $47,784 in Fiscal 2014 to $13,941 in Fiscal 2015 as a result of the June 19, 2014 sale of the property located on Quirk Road in Milford, Connecticut owned by our subsidiary Meisenheimer Capital Real Estate Holdings, Inc. (“MCREH”).

Operating expenses decreased $30,930 from $128,485 in Fiscal 2014 to $97,555 in Fiscal 2015. The decrease in operating expenses was primarily due to lower salaries ($18,200) as a result of the termination of our last employee during Fiscal 2014, and lower depreciation expense ($3,624) and other operating expenses relating to the MCREH property sold June 19, 2014.

Other income (expenses), net, improved $205,490 from ($18,244) in Fiscal 2014 to $187,246 in Fiscal 2015 primarily as a result of the $192,931 gain on sale of the MCREH property on June 19, 2014.

Net income (loss) improved $202,577 from ($98,945) in Fiscal 2014 to $103,632 in Fiscal 2015, due to improved other income (expenses), net ($205,490) and lower operating expenses ($30,930), offset partially by lower rental income ($33,843).

Liquidity and Capital Resources

The Company had a working capital deficit of $2,109,950 at February 28, 2015. The Company's statement of cash flows reflects net cash used in operating activities of $130,995, which is due primarily to the $83,614 loss from operations and the $42,379 decrease in accounts payable and accrued expenses. Net cash used in financing activities was $291,966, which is due to the net decrease in amounts due to related parties.

The Company expects it will again 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 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 2016 season.

As indicated in the report of the independent registered public accounting firm, the consolidated financial statements referred to above have been prepared for the Company assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 1. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts or classification of liabilities that might be necessary in the event the Company cannot continue in existence.

See our index to financial statements in Item 15 and the financial statements and notes that are filed as part of this annual report following the signature page.

None.

Based on their evaluation as of February 28, 2015, our management, with the participation of our President and Chief Financial Officer, being our principal executive and principal financial officer, respectively, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, the President and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of February 28, 2015.

There were no changes in our internal controls over financial reporting that occurred during the quarter ended February 28, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company in accordance with and as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s assessment of the effectiveness of the small business issuer’s internal control over financial reporting is as of February 28, 2015. We believe that internal control over financial reporting is effective. We have not identified any current material weaknesses considering the nature and extent of our current operations or any risks or errors in financial reporting under current operations.

None.

PART III

The following persons served as our directors and executive officers for the fiscal year ended February 28, 2015. Each director holds office until the next annual meeting of the stockholders or until his successor has been duly elected and qualified. Each executive officer serves at the discretion of the Board of Directors of the Company.

Background of Executive Officers and Directors

Daniel T. Meisenheimer III (“Mr. Meisenheimer III”) has been Chairman of the Board and President of the Company since its inception in 1984. Mr. Meisenheimer III has also been the Chairman of the Board and President of MCI, USBL’s parent, since 1983, and Meisenheimer Capital Real Estate Holdings, Inc. (“MCREH”) a former subsidiary of USBL. Mr. Meisenheimer III is also a shareholder and director of Synercom, Inc. (“Synercom”), a Meisenheimer family-owned holding company which owns Spectrum Associates, Inc., a shareholder of USBL and which company has loaned funds to USBL and MCREH.

Richard C. Meisenheimer (“R. Meisenheimer”), brother of Mr. Meisenheimer III, has acted as Chief Financial Officer and a Director of USBL since the inception of the business in 1983. R. Meisenheimer has also been associated with Spectrum Associates, Inc. since 1976 and is now the President of that Company. Spectrum owns 34.1% of USBL Preferred Stock and 6.5% of USBL Common Stock.

The Company does not have a separate audit committee. The Board of Directors functions as the audit committee. Richard Meisenheimer qualifies as an audit committee financial expert.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers, directors and persons who own more than ten percent of a registered class of its equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. These persons are required by SEC regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file with the SEC. Based solely upon our review of the copies of the forms the Company has received, we believe that all such persons complied on a timely basis with all filing requirements applicable to them with respect to transactions during fiscal 2015.

Code of Ethics

The Company has not adopted a Code of Ethics applicable to its principal executive officer, and principal financial officer. As a small public company with limited funds and other resources, the Company elected not to incur the time and expense of adopting such a code.

The following table sets forth information with respect to all compensation paid by us to our Chief Executive Officer and our Chief Financial Officer (only two officers) for the last two fiscal years ended February 28, 2015 and 2014:

For many years our only two officers, D. Meisenheimer III and R. Meisenheimer, have not received or taken any salaries from USBL. There are no formal employment agreements with either D. Meisenheimer III and R. Meisenheimer and they have not been paid any salary for the last five years.

We have 30,000,000 shares of authorized Common Stock, of which 3,552,502 shares are currently issued and 3,512,527 shares are currently outstanding. We also have 2,000,000 authorized shares of Convertible Preferred Stock, of which 1,105,679 shares are currently issued and outstanding.

The following table sets forth certain information as of May 29, 2015 with respect to the beneficial ownership of both our outstanding Convertible Preferred Stock (the "Preferred Stock") and Common Stock by (i) any holder of more than five (5%) percent thereof; (ii) each of our officers and directors and (iii) directors and officers of the Company as a group.

_________________________

* less than 1%

(1) Includes 20,000 shares of Preferred Stock and 100,000 shares of Common Stock held by Mr. Meisenheimer III for the benefit of his two children. Includes 91,362 shares of Preferred Stock and 4,500 shares of Common Stock in the name of Daniel T. Meisenheimer, Jr. who died in September, 1999, bequeathed his stock to his wife, Mary Ellen Meisenheimer, who died in August, 2008, who bequeathed her stock to her two children Daniel T. Meisenheimer, III and Richard C. Meisenheimer.

(2) Includes 91,362 shares of Preferred Stock and 4,500 shares of Common Stock in the name of Daniel T. Meisenheimer, Jr. who died in September, 1999, bequeathed his stock to his wife, Mary Ellen Meisenheimer, who died in August, 2008, who bequeathed her stock to her two children Daniel T. Meisenheimer, III and Richard C. Meisenheimer. Richard Meisenheimer, an officer and director of USBL, is also the President of Spectrum Associates, Inc., which owns both Preferred and Common Stock as set forth herein.

(3) Between the various members of the Meisenheimer family and their affiliates, Spectrum Associates, Inc. and MCI, the Meisenheimers effectively control 89% of the outstanding Preferred Stock and 80% of the outstanding Common Stock of USBL. No public shareholders own any Preferred Stock of USBL.

For many years, the principals of MCI consisting of Daniel Meisenheimer III, Richard Meisenheimer and their affiliated entities have made loans to us. As of February 28, 2015, USBL and MCREH were indebted to the principals or their affiliated entities in the sum of $1,969,350. Of the foregoing amount, Spectrum is owed the sum of $1,188,789 and the principals (D. Meisenheimer III and R. Meisenheimer) are owed $574,111.

Over the years we have received a material amount of revenues from affiliated persons or entities.

Audit Fees

We were billed $22,500 and $20,250 by Michael T. Studer CPA P.C. (“Mike Studer”) for the years ended February 28, 2015 and February 28, 2014, respectively, for professional services rendered for the audits of our annual financial statements and reviews of our financial statements included in our Forms 10-Q and 10-K.

Tax Fees

We have not incurred expenses or been billed by Mike Studer for the year ended February 28, 2015 or February 28, 2014 for fees for tax compliance, tax advice or tax planning services.

All Other Fees

There were no other fees billed to us by Mike Studer for the years ended February 28, 2015 or February 28, 2014.

Pre-Approval Policies

Our Board of Directors has not adopted any blanket pre-approval policies. Instead, the Board will specifically pre-approve the provision for all audit or non-audit services.

Our Board of Directors approved all of the services provided by Mike Studer described in the preceding paragraphs.

PART VI

a)          The following consolidated financial statements of United States Basketball League, Inc. and its subsidiary are included in this report immediately following the signature page:

Schedules are omitted because they are either not required or the required information is provided in the consolidated financial statements or notes thereof.

The exhibits filed herewith or incorporated by reference are set forth on the Exhibit Index below and attached hereto.

___________________

*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

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 11^th day of June, 2015.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

United States Basketball League, Inc.

I have audited the accompanying consolidated balance sheets of United States Basketball League, Inc. and subsidiary (the “Company”) as of February 28, 2015 and February 28, 2014, and the related consolidated statements of operations, stockholders’ deficiency, and cash flows for the years ended February 28, 2015 and February 28, 2014. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 28, 2015 and February 28, 2014, and the results of its operations and cash flows for the years ended February 28, 2015 and February 28, 2014 in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Freeport, New York

June 8, 2015

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

Consolidated Balance Sheets

February 28, 2015 and February 28, 2014

See notes to consolidated financial statements.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

Consolidated Statements of Operations

See notes to consolidated financial statements.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders’ Deficiency

Years Ended February 28, 2015 and February 28, 2014

See notes to consolidated financial statements

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

See notes to consolidated financial statements.

UNITED STATES BASKETBALL LEAGUE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED FEBRUARY 28, 2015 AND FEBRUARY 28, 2014

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. The 2008, 2009, 2010, 2011, 2012, 2013, 2014 and 2015 seasons 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 (see Note 3).

At February 28, 2015, USBL had negative working capital of $2,109,950 and accumulated losses of $4,793,933. These factors, as well as the Company’s reliance on related parties (see notes 4 and 6), raise substantial doubt as to 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 recorded assets or the amounts or classification of liabilities that might be necessary in the event the Company cannot continue in existence.

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 USBL be unable to continue as a going concern.

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

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.

Fair value disclosures – The carrying amounts of the Company’s financial instruments, which consist of cash and cash equivalents, 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.

Marketable equity securities – Marketable equity securities are recorded at fair value with unrealized gains and losses included in income. The Company classified its investment in marketable equity securities as trading securities. The change in net unrealized holding gain (loss) included in earnings for the years ended February 28, 2015 and February 28, 2014 was $0 and ($2,059), respectively.

Depreciation expense – Until the sale of the property on June 19, 2014, depreciation was 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, USBL recorded these revenues upon receipt of cash consideration paid or the performance of related services by the franchisee. Franchise fees earned in nonmonetary transactions were recorded at the fair value of the franchise granted or the service received, based on which value was more readily determinable. Upon the granting of the franchise, the Company had performed essentially all material conditions related to the sale.

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 $945,000 at February 28, 2015) attributable to the USBL net operating loss carryforward.

As of February 28, 2015, USBL had a net operating loss carryforward of approximately $2,700,000 available to offset future taxable income. The carryforward expires in varying amounts from 2019 to 2034. Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

USBL and MCREH file consolidated Federal and combined separate Connecticut income tax returns. The last returns filed were for the year ended December 31, 2013.

Estimates – The preparation of 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 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.

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 the years ended February 28, 2015 and February 28, 2014 and none are outstanding at February 28, 2015.

Earnings (loss) per common 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 year ended February 28, 2014 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 loss was equivalent to net loss for all periods presented.

At February 28, 2014, property, net, consisted of:

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

On February 1, 2012, MCREH executed a Lease Agreement with an unrelated entity (the “Tenant”) to rent the MCREH 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 lease also provided the Tenant 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).

On June 19, 2014, the property was sold to two individuals affiliated with the Tenant for $420,000 cash. The gain on sale of property was $192,931, as follows:

Due to related parties consist of:

On June 27, 2014, USBL repaid the $20,000 loan payable to Genvest and repaid $61,000 of the $1,239,289 loans payable to Spectrum at May 31, 2014.

On June 27, 2014, MCREH repaid the $50,000 notes payable to trusts for the benefit of the two officers of USBL (and $18,000 accrued interest thereon), repaid the $25,000 note payable to Spectrum, repaid the $70,000 note payable to the two officers of USBL (and $14,998 accrued interest thereon), and repaid the $70,000 note payable to a trust for the benefit of the two officers of USBL (and $32,694 accrued interest thereon).

On June 30, 2014, MCREH paid legal fees on behalf of MCI of $10,000, which was charged against the loan payable to MCI.

For the years ended February 28, 2015 and February 28, 2014, interest due under the USBL loans were waived by the respective lenders.

At February 28, 2015 and February 28, 2014, accounts payable and accrued expenses included accrued interest payable to related parties on MCREH notes payable totaling $13,562 and $77,887, respectively.

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.

For the years ended February 28, 2015 and February 28, 2014, USBL included in operating expenses rent incurred to Genvest, LLC (an entity controlled by the two officers of USBL) totaling $12,000 and $12,000, respectively.

Occupancy Agreement

In September 2007, the Company moved its office from the MCREH building to a building owned by Genvest, LLC, an entity 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 February 28, 2015 and February 28, 2014, accounts payable and accrued expenses included accrued rent payable to Genvest totaling $84,000 and $72,000, respectively.

Cancellation of 2008, 2009, 2010, 2011, 2012, 2013, 2014 and 2015 Seasons

USBL cancelled its seasons from 2008 to 2015. 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.

EXHIBIT INDEX

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*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.