Aeternum Health, Inc 10-K, filed Jun 15, 2022
Aeternum Health, Inc. (AETN)
About this 10-K
Aeternum Health, Inc filed this 10-K on June 15, 2022, covering the fiscal year ended February 28, 2022.
Headline figures
Fiscal year ended February 28, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $2.07M
- compared with a net loss of $26.5K a year earlier
- Diluted EPS
- -$0.36
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the fiscal year ended
or
For the transition period from _________ to _________
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
(Address of Principal Executive Offices with Zip Code)
Registrant’s telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ◻
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 ◻
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 ☒
Indicate by check mark whether the registrant has submitted electronically 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 ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻ | Accelerated filer ◻ |
Smaller reporting company | |
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fi rm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
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. $
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:
UNITED STATES BASKETBALL LEAGUE, INC.
TABLE OF CONTENTS
2
PART I
Item 1. Business.
Forward-Looking Statements
Unless the context indicates otherwise, as used in this Annual Report, the terms “USBL,” “we,” “us,” “our,” “our company” and “our business” refer, to United States Basketball League, Inc. Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Overview
United States Basketball League, Inc. (OTC: USBL) is an emerging diversified investment vehicle focused on participating in and acquiring interests that are leading edge in their respective market niches, and that have expectations of enhancing shareholder values. Based in Tampa, Florida, the Management, Advisors, and the Board of the Company are currently engaged in evaluating and assessing new business opportunities.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item; however, due to the current circumstance we have chosen to include the following risk factor.
Item 1B. Unresolved Staff Comments
None
Item 2.Properties
We do not own any property
Item 3.Legal Proceedings.
There are no material claims, actions, suits, proceedings, or investigations that are currently pending or, to the Company’s knowledge, threatened by or against the Company or respecting its operations or assets, or by or against any of the Company’s officers, directors, or affiliates.
Item 4.Mine Safety Disclosures.
Not applicable.
3
PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our Common Stock is quoted on the OTC Markets under the symbol “USBL”.
Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule. The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares. Broker-dealers who sell penny stocks to persons other than established customers and accredited investors must make a special suitability determination for the purchase of the security. Accredited investors, in general, include individuals with assets in excess of $1,000,000 (not including their personal residence) or annual income exceeding $200,000 or $300,000 together with their spouse, and certain institutional investors. The rules require the broker-dealer to receive the purchaser’s written consent to the transaction prior to the purchase and require the broker-dealer to deliver a risk disclosure document relating to the penny stock prior to the first transaction. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent to customers disclosing recent price information for the penny stocks.
Holders
At May 25, 2022 there were approximately 726 holders of record of our common stock, although we believe that there are other persons who are beneficial owners of our common stock held in street name. The transfer agent and registrar for our common stock is Olde Monmouth Stock Transfer, 200 Memorial Pkwy, Atlantic Highlands, NJ 07716. Their telephone number is (732) 872-2727.
Dividends
We have not paid cash or stock dividends and have no present plan to pay any dividends, intending instead to reinvest our earnings, if any. For the foreseeable future, we expect to retain any earnings to finance the operation and expansion of our business and the payment of any cash dividends on our common stock is unlikely.
Recent Sales of Unregistered Securities
None
Issuer Purchase of Securities
The Company did not repurchase any of its securities during the fiscal year ended February 28, 2022.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
Results of Operations
Year Ended February 28, 2022, Compared to the Year Ended February 29, 2021
Revenue
The Company recognized consulting revenue of $5,000 for the year ended February 28, 2022, compared to $0 for the year ended February 28, 2021.
4
Professional Fees
For the year ended February 28, 2022, the company incurred $31,551 of professional fees compared to $13,750 for the year ended February 28, 2021, an increase of $17,801 or 129,.5%. Professional fees generally consist of audit, legal, accounting and transfer agent fees. The increase in the current year is due to an increase of legal, audit and transfer agent fees.
General and Administrative Expense
For the year ended February 28, 2022, the company incurred $229,484 of general and administrative expenses compared to $12,747 for the year ended February 28, 2021, an increase of $216,737. The increase in the current period is primarily the result of stock compensation of $183,042 and other fees related to our SEC filings.
Director Compensation
For the year ended February 28, 2022, the company incurred $48,000 of director compensation expense compared to $0 for the year ended February 28, 2021. During the current period we issued common stock to two of our directors for total non-cash stock compensation of $48,000.
Other Income/Expense
During the year ended February 28, 2022, we recognized a gain of forgiveness of debt of $55,270 (Note 5), related party loss on conversion of debt of $127,480 (Note 6), an expense of $1,699,145 related to the conversion of preferred stock and $2,000 of other income. There was no other income or expense in the prior period.
Net Loss
For the year ended February 28, 2022, we had a note loss of $2,073,390 compared to $26,497 for the year ended February 28, 2021. Our increase in net loss is largely attributed to non-cash stock compensation expense and the expense incurred with the conversion of preferred stock.
Liquidity and Capital Resources
Operating Activities
For the year ended February 28, 2022, the company used $117,989 in operating activities compared to $1,226 for the year ended February 28, 2021.
Financing Activities
During the year ended February 28, 2022, we received $240,000 from the sale of common stock. We received a cash advances from our CEO of $3,000, $28,870 from another related party and $29,800 from members of the prior management. We also received $3,581 from another party to assist with general operating expenses.
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 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.
As indicated in the report of the independent registered public accounting firm, the 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 3 to the 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 3. 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.
5
Critical Accounting Policies
Refer to Note 2 of our financial statements contained elsewhere in this Form 10-K for a summary of our critical accounting policies and recently adopting and issued accounting standards.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
6
Item 8. Financial Statements and Supplementary Data
UNITED STATES BASKETBALL LEAGUE, INC.
TABLE OF CONTENTS
F-1
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, 2022 and February 28, 2021 and the related statements of operations, stockholders’ equity (deficiency), and cash flows for the year ended February 28, 2022 and February 28, 2021, 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, 2022 and February 28, 2021 and the results of its operations and cash flows for the year ended February 28, 2022 and February 28, 2021 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/
June 15 , 2022
We have served as the Company’s auditor since 2020.
F-2
UNITED STATES BASKETBALL LEAGUE, INC.
BALANCE SHEETS
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| February 28, |
| February 28, | ||
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| 2022 |
| 2021 | ||
ASSETS |
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Current Assets: |
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Cash | | $ | | | $ | |
Prepaid stock for services | | | | | | — |
Total Assets | | $ | | | $ | |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
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Current Liabilities: | |
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Accounts payable and accrued expenses | | $ | | | $ | |
Credit card obligations | |
| — | |
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Due to related parties | |
| — | |
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Total Current Liabilities | |
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Total Liabilities | |
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Stockholders’ Equity (Deficit): | |
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Preferred stock, $ | |
| — | |
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Common stock, $ | |
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Additional paid-in capital | |
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Accumulated deficit | |
| ( | |
| ( |
Treasury stock, at cost; | |
| ( | |
| ( |
Total Stockholders’ Equity (Deficit) | |
| | |
| ( |
Total Liabilities and Stockholders’ Deficit | | $ | | | $ | |
The accompanying notes are an integral part of these financial statements.
F-3
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENTS OF OPERATIONS
| | For the Years Ended | ||||
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| February 28, | ||||
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| 2022 |
| 2021 | ||
Revenue – related party | | $ | | | $ | — |
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Operating Expenses: |
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Professional fees |
| $ | |
| $ | |
General and administrative |
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Director compensation |
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| | — |
Total operating expenses | | | | | | |
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Loss from Operations | | | ( |
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Other Income (Expense): |
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Gain on forgiveness of debt |
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| | — |
Other income | | | | | | — |
Interest expense | | | ( | | | — |
Loss on conversion of debt – related party | | | ( | | | — |
Total other expense | | | ( | | | — |
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Net loss | | $ | ( | | $ | ( |
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Loss per Common Share: | | | | | | |
Basic and Diluted | | ( | | ( | ||
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Weighted Average Number of Common Shares Outstanding: | | | | | | |
Basic and Diluted | |
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The accompanying notes are an integral part of these financial statements.
F-4
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED FEBRUARY 28, 2022 and 2021
| | Common Stock | | Preferred Stock | | Additional | | Accumulated | | Treasury Stock | | Total Stockholders’ | ||||||||||||
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| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Shares |
| Amount |
| Equity (Deficit) | ||||||
Balance, February 28, 2020 |
| | | $ | |
| | | $ | | | $ | | | $ | ( |
| | | $ | ( | | $ | ( |
Net Loss | | — | | | — | | — | | | — | | | — | | | ( | | — | | | — | | | ( |
Balance, February 28, 2021 |
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| ( |
Common stock issued for director services | | | | | | | — | | | — | | | | | | — | | — | | | — | | | |
Forgiveness of related party debt |
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| — |
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| — | |
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Common stock issued for services | | | | | | | — | | | — | | | | | | — | | — | | | — | | | |
Common stock sold for cash |
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| — | |
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Common stock issued for loans payable – related party | | | | | | | — | | | — | | | | | | — | | — | | | — | | | |
Common stock issued for conversion of preferred |
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| ( | | | ( | | | | | | — |
| — | | | — | | | |
Net Loss | | — | | | — | | — | | | — | | | — | | | ( | | — | | | — | | | ( |
Balance, February 28, 2022 | | | | $ | | | — | | $ | — | | $ | | | $ | ( | | | | $ | ( | | $ | |
The accompanying notes are an integral part of these financial statements.
F-5
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENTS OF CASH FLOWS
| | For the Years Ended | ||||
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| February 28, | ||||
| | 2022 |
| 2021 | ||
Cash Flows from Operating Activities: |
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Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | |
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Gain on forgiveness of debt | | | ( | | | — |
Loss on conversion of debt – related party | | | | | | — |
Interest stock expense | | | | | | — |
Common stock issued for director fees | | | | | | — |
Common stock issued for services | | | | | | — |
Changes in operating assets and liabilities: | |
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Accounts payable and accrued expenses | |
| ( | |
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Net cash used in operating activities | |
| ( | |
| ( |
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Cash Flows from Investing Activities | |
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Cash Flows from Financing Activities: | |
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Increase in due to related parties | |
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Loans payable | | | | | | — |
Repayment of loan payable | | | ( | | | — |
Cash proceeds from sale of common stock | | | | | | — |
Net cash provided by financing activities | |
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Net change in cash | |
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Cash, beginning of year | |
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Cash, end of year | | $ | | | $ | |
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Supplemental disclosures of cash flow information: | |
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Interest paid | | $ | | | $ | |
Income tax paid | | $ | — | | $ | — |
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Supplemental disclosure of non-cash financing activity: | | | | | | |
Related party loans converted to common stock | | $ | | | $ | |
The accompanying notes are an integral part of these financial statements.
F-6
UNITED STATES BASKETBALL LEAGUE, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2022
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
United States Basketball League, Inc. (“USBL”) is a holding company currently evaluating and assessing new business opportunities. The Company was incorporated in Delaware on
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
World Equity Markets acted in the capacity of a broker/dealer for the Purchase Agreements and was issued
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 U.S. GAAP 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. The Company’s accounting estimates include the collectability of receivables, useful lives of long-lived assets and recoverability of those assets, impairment in fair value of goodwill, valuation allowances for income taxes, stock-based compensation.
Concentration 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.
Stock-based Compensation
In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We adopted this ASU on January 1, 2019.
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 years ended February 28, 2022 or 2021.
F-7
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, 2022 and 2021.
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.
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the 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 income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of February 28, 2022, and 2021, no liability for unrecognized tax benefits was required to be reported.
Revenue Recognition
In 2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or
F-8
agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company has chosen the early adoption of ASU 2020-06. The adoption of ASU 2020-06, had a material effect on the Company’s financial statements. If the standard was not early adopted the Company would have recognize s full OID on its convertible notes.
The Company has implemented all new applicable 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 $
NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of:
| | | | | | |
|
| February 28, |
| February 28, | ||
| | 2022 | | 2021 | ||
| | | | | | |
Legal and accounting services’ vendors | | $ | — | | $ | |
Transfer agent and EDGAR agent | |
| — | |
| |
Rent due Genvest, LLC (an entity controlled by the | |
| — | |
| |
Accrued interest on MCREH note payable to president of USBL | |
| — | |
| |
Security deposit due CADCOM (an entity controlled by the | |
| — | |
| |
Other | |
| — | |
| |
Total | | $ | — | | $ | |
F-9
NOTE 5 – DUE TO PRIOR RELATED PARTIES
Due to related parties consist of:
|
| February 28, |
| February 28, | ||
| | 2022 | | 2021 | ||
| | | | | | |
USBL loans payable to Spectrum Associates, Inc. (“Spectrum”), a corporation controlled by the | | $ | — | | $ | |
USBL loans payable to the | |
| — | |
| |
USBL loans payable to Daniel T. Meisenheimer, Jr. Trust, a trust controlled by the | |
| — | |
| |
MCREH note payable to president of USBL, interest at | |
| — | |
| |
MCREH loan payable to Spectrum, non-interest bearing, due on demand | |
| — | |
| |
MCREH loan payable to president of USBL, non-interest bearing, due on demand | |
| — | |
| |
MCREH loan payable to Meisenheimer Capital, Inc., non-interest bearing, due on demand | |
| — | |
| |
Total | | $ | — | | $ | |
On April 7, 2021, as part of the purchase and sale agreement, the principals of MCI consisting of Daniel Meisenheimer III, Richard Meisenheimer and their affiliated entities have agreed to cancel previously issued and outstanding loans made to the Company.
Spectrum Associates agreed to cancel indebtedness in the amount of $
As a result of the debt cancellation the Company recognized a gain on the forgiveness of debt of $
NOTE 6 – RELATED PARTY TRANSACTIONS
During the year ended February 28, 2022, Saeb Jannoun, CEO advanced the Company $
During the year ended February 28, 2022, EROP Enterprises LLC (“EROP”), a significant shareholder, advanced the Company $
On April 7, 2021, the Company issued
During the year ended February 28, 2022, EROP purchased
During the year ended February 28, 2022, the Company was engaged by a relative of a shareholder to provide consulting services. As of February 28, 2022, the Company has recorded $
During the year ended February 28, 2022, an individual of EROP, advanced the Company $
F-10
NOTE 7 – PREFERRED STOCK
On May 18, 2021, the Company increased its authorized shares of Preferred Stock from
Each share of preferred stock has
NOTE 8 – COMMON STOCK TRANSACTIONS
On April 29, 2021, the Company issued
On April 6, 2021, the Company issued
During the year ended February 28, 2022, the Company sold
On May 18, 2021, the Company increased its authorized shares of Common Stock to
Refer to Note 6 for common stock issued to related parties.
NOTE 9 – INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of
Net deferred tax assets consist of the following components as of February:
|
| 2022 |
| 2021 | ||
Deferred tax assets: |
| |
|
| |
|
NOL Carryover | | $ | ( | | $ | ( |
Related Party Accruals | |
| — | |
| |
Less: valuation allowance | |
| ( | |
| ( |
Net deferred tax asset | | $ | — | | $ | — |
F-11
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended February 28, due to the following:
|
| 2022 |
| 2021 | ||
Deferred Tax Assets: |
| |
|
| |
|
Book Loss | | $ | ( | | $ | ( |
Related Party Accruals | |
| ( | |
| |
Other nondeductible expenses | |
| | |
|
|
Less valuation allowance | |
| | |
| |
| | $ | — | | $ | — |
At February 28, 2022, the Company had net operating loss carry forwards of approximately $
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2016.
F-12
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Management’s Report Disclosure Controls and Procedures
Based on their evaluation as of February 28, 2022, 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 not effective as of February 28, 2022.
There were no changes in our internal controls over financial reporting that occurred during the quarter ended February 28, 2022, 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, 2022. We believe that internal control over financial reporting is not effective.
Item 9B. Other Information
None.
7
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following persons served as our directors and executive officers for the fiscal year ended February 28, 2022. 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.
Name |
| Age |
| Position |
Saeb Jannoun | | 65 | | Chairman of the Board and President |
Michael D. Pruitt | | 61 | | Board Member |
Background of Executive Officers and Directors
Saeb Jannoun, CEO. Saeb is a serial entrepreneur, and investor since 1994. Mr. Jannoun has a Bachelor’s in business administration and a CFP degree. He has been the CEO and a Board Member of several public companies and is currently the CEO of United States Basketball League Inc. Mr. Jannoun is the founder of Tess Holdings LLC, Living 360 LLC and Thirty 05 LLC., which concentrate on investments ranging from health care to real estate. One of the main goals attributed to Mr. Jannoun’s leadership is finding the best partners for companies he is involved in and building shareholder value.
Michael D. Pruitt joined our Board of Directors in April 2021. He founded Avenel Financial Group, a boutique financial services firm concentrating on emerging technology company investments in 1999. In 2001, he formed Avenel Ventures, a technology investment and private venture capital firm. In February 2005, Mr. Pruitt formed Chanticleer Holdings, Inc., then a public holding company (now known as Sonnet BioTherapeutics Holdings, Inc.), and he served as Chairman of the Board of Directors and Chief Executive Officer until April 1, 2020, at which time the restaurant operations of Chanticleer Holdings were spun out into a new public entity, Amergent Hospitality Group, Inc., where Mr. Pruitt has served as its Chairman and Chief Executive Officer to date. Mr. Pruitt also served as a director on the board of Hooters of America, LLC from 2011 to 2019. Mr. Pruitt received a B.A. degree from Costal Carolina University. He currently sits on the Board of Visitors of the E. Craig Wall Sr. College of Business Administration, the Coastal Education Foundation Board, and the Athletic Committee of the Board of Trustees. Mr. Pruitt’s over 15 years of day-to-day operational leadership and service as a board member at public companies Chanticleer Holdings, IMAC Holdings and Amergent Hospitality Group make him well qualified as a member of the Board. He also brings transactional expertise in mergers and acquisitions and capital markets.
The Company does not have a separate audit committee. The Board of Directors functions as the audit committee.
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 2022.
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.
8
Item 11. Executive Compensation
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, 2022 and February 29, 2021:
|
| |
| |
| |
| All other |
| |
Name and Principal Position | | Fiscal Year | | Salary | | Fees | | Compensation | | Total |
Saeb Jannoun |
| 2022 |
| — |
| — |
| — |
| — |
CEO and President |
| 2021 |
| — |
| — |
| — |
| — |
| | | | | | | | | | |
Daniel T. Meisenhimer, III |
| 2022 |
| — |
| — |
| — |
| — |
Former CEO and President |
| 2021 |
| — |
| — |
| — |
| — |
| | | | | | | | | | |
Richard C. Meisenheimer |
| 2022 |
| — |
| — |
| — |
| — |
Former CFO and Vice President |
| 2021 |
| — |
| — |
| — |
| — |
Employment Agreements
We have had no formal employment agreements with any of our officers, and none have taken any salary.
Outstanding Equity Awards at Fiscal Year-End
None.
Director Compensation
Our directors do not receive compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information as of May 25, 2022, with respect to the beneficial ownership of our outstanding 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.
The address of each holder listed below, except as otherwise indicated, is c/o United States Basketball League, Inc., 8270 Woodland Center, Tampa, FL 33614.
| | | | Percent of |
|
| | Shares | | Common Stock |
|
| | Beneficially owned of | | Beneficially |
|
Name and Address of Beneficial Owner |
| Common Stock |
| Owned |
|
EROP Enterprises LLC |
| 2,323,700 |
| 32.52 | % |
Equity Markets Advisory LLC |
| 550,000 |
| 7.70 | % |
Thirty-05, LLC |
| 505,000 |
| 7.07 | % |
All Beneficial Owners (3 persons) |
| 3,378,700 |
| 47.29 | % |
Saeb Jannoun, CEO, is the control person for Thirty-05, LLC. Vince Sbarra is the owner of EROP Capital, Steve Apolant is Manager of Equity Markets Advisory LLC.
9
Item 13. Certain Relationships and Related Transactions, and Director Independence
During the year ended February 28, 2022, Saeb Jannoun, CEO advanced the Company $3,000 for general operating expense. The advance was non-interest bearing and due on demand. On July 26, 2021, Mr. Jannoun converted the $3,000 into 30,000 shares of common stock. The shares were valued at $0.50, the closing stock price on the date of conversion, for a loss on conversion of debt of $12,000.
During the year ended February 28, 2022, EROP Enterprises LLC (“EROP”), a significant shareholder, advanced the Company $28,870 for general operating expense. The advance was non-interest bearing and due on demand. On July 26, 2021, EROP converted the $28,870 into 288,700 shares of common stock. The shares were valued at $0.50, the closing stock price on the date of conversion, for a loss on conversion of debt of $115,480.
On April 7, 2021, the Company issued 200,000 restricted shares of common stock each to two of its directors for services. The shares were valued at $0.12, the closing stock price on the date of grant, for total non-cash expense of $48,000.
During the year ended February 28, 2022, EROP purchased 1,475,000 shares of common stock for $147,500. In addition, the Company granted 200,000 shares of common stock to EROP for services per the terms of a consulting agreement. The shares were valued at $0.52, the closing stock price on the date of grant, for total non-cash expense of $104,000. The expense is being amortized over the one-year term of the service agreement with EROP. As of February 28, 2022, the Company recognized $73,667 of the expense.
During the year ended February 28, 2022, the Company was engaged by a relative of a shareholder to provide consulting services. As of February 28, 2022, the Company has recorded $5,000 of consulting revenue for services provided.
Item 14. Principal Accountant Fees and Services
Audit Fees
We were billed $10,000 and $11,750 by Fei Qi CPA, our independent public accounting firm, for the years ended February 28, 2022 and February 29, 2021, 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 Fei Qi CPA for the years ended February 28, 2022 or 2021 for fees for tax compliance, tax advice or tax planning services.
All Other Fees
There were no other fees billed to us by Fei Qi CPA for the years ended February 28, 2022 or 2021.
Pre-Approval Policies
All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.
10
PART VI
Item 15. Exhibits
The following exhibits are filed as part of this Annual Report.
Exhibit Number |
| Description |
31.1 |
| |
32.1 |
| |
101.INS* |
| Inline XBRL Instance Document. |
101.SCH* |
| Inline XBRL Taxonomy Extension Schema Document. |
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
104* |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
Item 16. FORM OF 10-K SUMMARY
None.
Item 16. Form 10-K Summary
None.
11
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.
UNITED STATES BASKETBALL LEAGUE, INC.
/s/ Saeb Jannoun | |
Saeb Jannoun | |
Chairman and President | |
June 15, 2022 | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
12
Exhibit 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Saeb Jannoun, certify that:
1. | I have reviewed this Annual Report on Form 10-K of The United States Basketball League, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: June 15, 2022 | |
| |
| |
/s/ Saeb Jannoun | |
Saeb Jannoun | |
Chief Executive Officer and Chief Financial Officer | |
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Saeb Jannoun, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | the Annual Report on Form 10-K of The United States Basketball League, Inc. for the year ended February 28, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of The United States Basketball League, Inc. |
Dated: June 15, 2022
| /s/ Saeb Jannoun |
| Saeb Jannoun |
| President, Chief Executive Officer, Chief Financial |
| Officer, and Director |
| (Principal Executive Officer, Principal Financial |
| Officer and Principal Accounting Officer) |