UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
UNITED STATES BASKETBALL LEAGUE, INC.
(Name of Small Business Issuer in its charter)
Delaware 06-1120072
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
46 Quirk Road, Milford, Connecticut 06460
(Address of principal executive offices) (Zip Code)
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Issuer's telephone number: (203) 877-9508
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which to be so registered each class is to be registered ______________________________ ____________________________ |
Securities to be registered under Section 12(g) of the Act:
Common Stock $.01 par value per share
(Title of class)
RISK FACTORS
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 Registration Statement and the information contained in the Financial Statements and the notes thereto. Forward Looking Statements
When used in this Registration Statement, the words "may", "will", "expect", "anticipate", "estimate" and "intend" and similar expressions are intended to identify forward looking statement within the meaning of Section 21 E 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.
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 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 four years qualified their opinions and expressed their concern as to 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 poor 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 Have Not Established Adequate Guidelines in Connection with the Sale of
Franchises
Historically in our dealings with prospective franchisees and in our desire to sell franchises, we did not establish adequate guidelines to insure that prospective franchisees have sufficient capital to properly finance a franchise and to be able to absorb losses until such time as the franchise would become profitable. Starting with the 1999 season, we have established rigorous standards to ensure the viability of the franchise over the long term; however, there is still no assurance that in view of our historical dealings we will be able to attract qualified franchisees.
We Have Been Dependent on Loans and Revenues from Affiliates to Sustain Our Operations
Because our revenues from third parties have been insufficient to sustain our operations, we have been historically dependent on revenues, loans and advances from the Meisenheimer family to assist in financing. If members of the Meisenheimer family elected not to continue to advance loans to us, our operations could be drastically impaired.
We Are Dependent on Corporate Sponsorships Which Have Been Negligible
The financial success of the individual franchises is dependent to a large degree on corporate sponsorship to help defray costs. To date, corporate sponsorship in some cities has been negligible and as a result, some of the franchises have had to absorb expenses which would otherwise have been supported by corporate sponsorship. As a result, profits of some of the franchises have been affected and in many instances some of the franchises have been operating at a small loss. Until such time as the League can attract meaningful sponsorship, earnings, if any, of the individual franchises will be impacted.
Our Basketball Season Competes with Other Professional Sporting Events
Our season from May to early July is designed to afford players with the opportunity to showcase their professional ability to the teams comprising the National Basketball Association ("NBA") and to be possibly selected to participate in NBA teams' summer camps in the latter part of July and August. As such, our schedule competes with outdoor sporting events such as baseball, golf and tennis and our season comes at a time when spectators might normally prefer to be outdoors rather than indoors in an arena. These factors have had some impact on the League's overall attendance, although attendnace has continued to improve.
We Lack Sufficient Capital to Promote the League
In order for the League to become successful, we have to promote the League. Historically and up to the present time, we have lacked sufficient capital to develop a national promoiton for the League. 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. While attendance has recently improved, it is still only 1300 per game. Additionally, interest in franchises has increased, but without real promotional efforts, we do not anticipate any significant increase in franchises.
The Meisenheimer Family Exercises Significant Control over Us
The Meisenheimer family, consisting of Daniel T. Meisenheimer III, Richard C. Meisenheimer and Mary Ellen Meisenheimer, and companies they control own approximately 85% of our outstanding 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, Chief Executive Officer. The loss of Mr. Meisenheimer through death, disability or resignation would have a material and adverse effect on our business.
We Have a Limited Public Market for Our Stock
There are approximately 450,000 shares held by approximately 140 public shareholders and as such there is a limited public market for our stock. As such, sellers of our stock may have difficulty in selling their stock. In addition, and until such time as we can list our Common Stock on the NASDAQ Electronic Bulletin Board, our stock will continue to trade in the over-the- counter market and this will make it even more difficult for individuals to sell their stock.
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, the broker-dealer 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 the Common Stock.
ITEM I DESCRIPTION OF BUSINESS
The 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 was and 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 consisting of Daniel T. Meisenheimer III, his brother, Richard Meisenheimer, and their father and mother, Daniel Meisenheimer, Jr. and Mary Ellen Meisenheimer. Daniel Meisenheimer, Jr. died in September, 1999.
(a) Operations
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 primarily 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 and perhaps be selected by one of the teams comprising the National Basketball Association ("NBA") to attend summer camp sponsored by that team. Today, players also consist of free agents seeking to join an NBA team. USBL's season (May through July of each year) was specifically designed to afford League players with the chance to participate in the various summer camps run by the teams in the NBA. Since 1984 and up to the present time there have been 125 players from the League who also have been selected to play for teams in the NBA. Approximately forty-five players each year are selected to play in the Continental Basketball Association ("CBA"), the official developmental league of the NBA.
Since the inception of the League, USBL has been engaged in selling franchises and managing the League. From 1985 and up to the present time, USBL has sold a total of thirty-five active franchises (teams), a vast majority of which were terminated for non-payment of franchise obligations. For the 1999 season (ending in August, 1999) we had thirteen active franchises and two inactive franchises. After the 1999 season, two franchises were canceled for their failure to meet franchise obligations. For our 2000 season, which begins in May, 2000, we will have eleven active franchises.
As the League is presently constituted, each team within the League maintains an active roster of twelve players during the season and each team plays thirty games per season. We have playoffs at the conclusion of the regular season. Under the terms of our Franchise Agreements, each franchise is limited to a $47,500 salary cap for all players for each season. No player receives more than $1,000 a week as salary.
Since the inception of the League to the present time, the number of active franchises has fluctuated from seven to a high for the 1999 season of thirteen franchises. The current active franchises, divided into the Southern, Mid-Atlantic and Northern Divisions, are located in Sarasota, Florida (the Gulf Coast SunDogs); Dodge City, Kansas (the Dodge City Legend); Enid, Oklahoma (the Oklahoma Storm); Fort Myers, Florida (the Florida Sea Dragons);Salina, Kansas (the Kansas Cagerz); Washington, DC (the Washington DC Congressionals); Atlantic City, New Jersey (the Atlantic City Seagulls);Oyster Bay, New York (the Long Island Surf); Lehigh, Pennsylvania (the Pennsylvania ValleyDawgs); Ocean, New Jersey (the New Jersey Shorecats); and Brooklyn, New York (the Brooklyn Kings). In addition, MCI owns two inactive franchises which pay annual royalty fees.
Since 1984 and up to the present time our franchises have been sold at various prices ranging from a low of $25,000 to a high of $300,000. The price varies depending on the location of the franchise and the prior history of the franchise if the particular franchise had previously been active. Because historically our franchises have not operated profitably, we decided to accept less than our asking price for new franchises at the time of sale. It is our intention to terminate this practice in the future. However, each franchisee is required to pay the full sales price over time and in the event full payment is not made, we reserve the right to cancel the franchise and have done so. At least twenty-two of the thirty-five total franchises previously sold have been terminated for non-payment of annual franchises fees and/or the full sales price. The termination of the franchises has been primarily due to the fact that most of the franchises have not operated profitably and as a result could not meet their contractual commitments. At the present time only two active franchises are marginally profitable.
During the fiscal year ended February 29, 1996 (fiscal 1996), we sold five franchises in a barter transaction, receiving in exchange 2,000,000 units of negotiable television advertising due bills. During the first quarter of fiscal 1997, we also entered into an agreement with the same party to receive an additional 2,000,000 units of negotiable television advertising due bills in exchange for five additional franchises. The 4,000,000 units of advertising time are with American Independent Network ("AIN") which employs satellite transmissions to certain affiliated television stations in approximately 90 cities throughout the United States. Management had originally valued the advertising due bills received in fiscal 1996 and the first quarter of fiscal 1997 at $500,000. For Fiscal 1998 the due bills were valued at $684,062. During Fiscal 1999, we acquired 2,000,000 additional units from AIN in exchange for five more franchises. We subsequently concluded that a more conservative estimate of the cumulative value of the total of all units as of the end of Fiscal 1999 is approximately $484,000. See "Financial Information." We have already used approximately 300,000 units to broadcast certain selective League games. During fiscal 1999, USBL did not use any of the units. USBL may use the remainder of the available time to broadcast our games or, in the alternative, sell off the available television time assuming that USBL can locate buyers. The barter transaction requires that the 15 franchise teams must be established within ten years from the date of the transactions. We have no assurance that any of the franchises will ever be established. In addition, we retain
the right to approve or disapprove the ultimate franchisee. None of the prospective franchisees are currently obligated to pay us any fees.
Under our standard franchise agreements, the term of the franchise is for ten
(10) years with a right to renew for a similar period. In addition to the
initial purchase price of the franchises, franchisees are required to pay an
annual royalty fee of $20,000 per year. Currently three of our active franchises
are in arrears in their annual royalty fees: one owes two years of royalties and
the other two are in arrears for one year. We have the right to terminate these
franchises for failure to pay the annual royalty fee, but in an effort to assist
the teams have elected not to do so. In addition and because of our desire to
have the League expand, historically, we have from time to time adjusted annual
royalty fees in certain situations where the individual franchise has not been
operating profitably.
The franchise agreement employed by us also entitles us to receive television revenues on a sharing basis with the teams in connection with the broadcasting of regional or national games. While we have broadcasted on a regional basis, we have not received any significant revenues. We are also entitled to receive a percentage from the sale of team and league merchandise which is directly sold by us, primarily over the Internet. Revenues earned by us have been negligible. Revenues from the sale by a team of its own merchandise is retained by the selling team. These sales have contributed to the individual team's revenues.
The franchises agreements state that we will use our best efforts to obtain sponsorships for each team and the League. Such sponsorships are generally from local or national corporations. The sponsorships which for the last few years have been negligible generally take the form of free basketballs, uniforms, airline tickets and discount accommodations for teams when they travel. The sponsorships generated by us are shared by all of the teams in the League. The individual teams comprising the league are also free to seek sponsorship for their own individual franchise. Some of the teams have been successful in attracting sponsorships in the form of merchandise and cash and it is these sponsorships that have helped support the ongoing operations of the individual teams. Other teams have not been successful. The success of obtaining sponsorship is generally a function of good attendance and good media exposure. In some instances particular franchises cannot generate any meaningful attendance because of a lack of media exposure.
The Franchise Agreement requires us to provide scheduling of all games and officiating for all games. We also print a full roster book as well as a weekly newsletter which provides information regarding the League as well as individual players and their personal statistics.
As previously stated, very few of our franchises have operated profitably. This is primarily due to the fact that attendance and sponsorship has not been sufficient to sustain a team's expenses. We estimate that at the current time annual expenses for each team average about $220,000. At the present time only two franchises are operating profitably. The general lack of marketing by the League and the teams is primarily due to insufficient capital to properly
promote and market the League, which has resulted in our inability and the individual team's inability to attract any meaningful sponsorships. As a result, the sale of additional franchises either to maintain a constant number of franchises or to expand the League has historically proven difficult for USBL.
From the inception of the League, USBL has generally operated at a loss. This has been due to the poor sale of franchises and the inability of most of the franchises to generate sufficient revenues to pay their respective annual royalty fees. Because of the poor historical record, USBL has been dependent on loans from the principals and affiliated companies to defray the cost of operations. See "Related Transactions." Additionally and because of our poor performance for at least the last four years, our auditors have rendered qualified opinions based on their concerns as to the ability to continue as a going concern.
We believe that the current mix of franchises are beginning to realize some increase in sponsorship and attendance. There has been approximately a 50% increase in attendance for the first half of the 2000 season (late April and the month of May) as compared to the first half of the 1999 season. This may eventually result in more teams realizing increased gate attendance and corresponding revenues. This would increase the value of the individual franchises and also the League. As a consequence we believe this would enable us to sell additional franchises where new teams might be successful.
(c) Employees
We currently have a staff in excess of 50 people. USBL has four full-time employees consisting of the chairman and League commissioner, Daniel Meisenheimer III, a director of administration, a director of public relations and a director of operations. The balance, 46 in number, are employed as referees and statisticians who are paid on a per game basis. From time to time we have also used independent contractors for consulting work.
(d) Future Plans of USBL
We have, as an ultimate goal, the establishment of at least forty (40) franchises throughout the United States, consisting of ten (10) teams in four regional divisions. This would result in regional play-off games and then a final championship series. We are also attempting to develop a formal association with the NBA. During fiscal 1998, the NBA selected us to handle a pre-draft camp for the Korean Basketball League for which we received a nominal fee. At present time, the Continental Basketball Association (the "CBA"), a league consisting of nine teams, is regarded as the semi-official minor league of the NBA, and as such, receives financial support from the NBA. We believe that a formal association with the NBA would enhance the value of the franchises and attract more significant gate attendance, but to date we have not been able to promote a formal relationship with the NBA. Likewise, we intend to use some of the television time available to us to broadcast more games, which we believe might create additional fan interest and possibly serve to attract additional franchisees. However, given the difficulties
encountered by us to date in the sale of additional franchises, it is doubtful that we will achieve our long-range goals unless we can raise additional capital to properly promote the League. While gate attendance has been poor historically, there has been some growth over the past four seasons. For fiscal 1999, there was an increase in attendance of 16% over fiscal 1998, and fiscal 1998 reflected a 14% increase over fiscal 1997. More significantly, gate attendance for the first half of the 2000 season is approximately 50% higher than the corresponding period in the 1999 season. However, there can be no assurance that the increase in attendance will continue. If gate attendance continues to increase, this may make it easier to interest third parties to invest in new franchises, but there can be no assurance that we will be successful.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998
Results of Operations
Revenues for the fiscal year ended February 28, 1999 ("Fiscal 99") were $806,552 as compared to revenues of $638,676 for the fiscal year ended February 28, 1998 ("Fiscal 98"). Revenues from initial franchise fees increased $33,754 or 8 percent, primarily from the sale of a franchise. Continuing franchise fees increased $20,389 or 24 percent as a result of the increased success of some of the USBL franchisees. Advertising income amounted to $112,500. There was no advertising income in Fiscal 98. The advertising income was received from a related party.
Operating expenses for Fiscal 99 increased by approximately $397,000 to $965,000 compared to $568,000 in Fiscal 1998. Management recorded an allowance of $450,000 for the impairment of its investment in the advertising due bills that have been received in recent years in exchange for franchises. This allowance represents the Company's best estimate of the continuing value of the advertising due bills. The Company continues to explore the best way to utilize these credits and has entered into negotiations with the television network in an effort to liquidate their investment. The slight decrease in the remaining operating expenses of approximately $53,000 represents management's continued pressure to reduce its operating overhead. Consulting expenses decreased $90,000, professional fees decreased $33,000 and travel expenses decreased $30,000. These decreased expenses were offset, in part, by increases in team expenses of $22,000, advertising expenses of $13,000 and other expenses of $65,000.
The net loss for Fiscal 99 amounted to $160,965, as compared to net income of $57,516 for Fiscal 98. The increase in the loss is primarily attributable to the allowance for the impairment in the value of the advertising credits amounting to $450,000 partially offset by increased revenue of $167,876, decreased operating expenses of $53,462 and decreased interest expense of $6,797.
FISCAL YEAR 1998 COMPARED TO FISCAL YEAR 1997
Results of Operations
Revenues for the fiscal year ended February 28, 1998 ("Fiscal 98") were $638,676 as compared to revenues of $700,569 for the fiscal year ended February 28, 1997 ("Fiscal 97"). Revenues from initial franchise fees decreased $104,500 or 21 percent, primarily from the lack of sales of franchises. Continuing franchise fees decreased $9,210 or 10 percent. Other income amounted to $148,886, an increase of $51,817 over Fiscal 97. This increase was primarily related to the exchange of airline tickets used for team travel for advertising in the amount of $30,000. Other revenues consist of sales of marketing rights, souvenir sales and miscellaneous fees charged to owners.
Operating expenses for Fiscal 98 decreased by approximately $154,000 to $569,000 compared to $723,000 in Fiscal 1997. The decrease in the operating expenses relates primarily to the decreases in consulting expenses of approximately $81,000, team expenses of $14,000, advertising expenses of $13,000, salaries of $45,000 and other expenses decreased $32,000. These decreased expenses were offset, in part, by increases in travel expenses of $21,000 and professional fees of $10,000.
The net income for Fiscal 98 amounted to $57,516, as compared to a net loss of $35,290 for Fiscal 97. This change is the result of the decrease in revenue coupled with a greater decrease in operating expenses. Liquidity and Capital Resources
The United States Basketball League's working capital deficiency decreased by approximately $58,000 to $306,000 at February 28, 1999, as compared to $364,000 at February 28, 1998. This decrease was caused primarily by the increase in cash of approximately $20,000, the decrease in other current assets of $5,000, the reduction in accounts payable and accrued expenses of $26,000 and an increase in loans from stockholders of approximately $13,000.
The Company continues to make efforts to resolve its working capital deficiency by seeking additional equity capital, It is anticipated that there is potential for growth in the USBL. Management is endeavoring to capitalize on its investment in the advertising credits to expand the recognition of the USBL and generate advertising income in the future.
The Company's statement of cash flows for Fiscal 99 reflects cash provided by
operations of approximately $55,000, reflecting the net loss of $161,000
increased by non-cash income sources such as advertising credits of $250,000,
offset by a reduction for the impairment in the value of the due bills amounting
to $450,000. Cash amounting to $13,839 was raised from loans from stockholders.
The Company also repaid debt to affiliates in the amount of $ 30,493 and
purchased treasury stock for $18,355.
ITEM 3 DESCRIPTION OF PROPERTY
We rent approximately 1,500 square feet under a lease with Meisenheimer Capital Real Estate Holdings, Inc. ("MCR"), an affiliated company and another subsidiary of MCI. Our space is in a building which also houses Cadcom, Inc., another MCI subsidiary engaged in manufacturing helicopter parts. Our space consists of four offices, a common area and a conference room. We pay a monthly rental of $1,500. The lease expires December 31, 2000. The property is located at 46 Quirk Road, Milford, Connecticut 06460.
ITEM 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
We have 30,000,000 shares of authorized Common Stock, of which 3,478,502 shares are currently issued and 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 April 30, 2000 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 ; (ii) each of our officers and directors and (iii) directors and officers of the Company as a group.
Amount and Nature of Approximate
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
Daniel T. Meisenheimer III (1) 143,998 Preferred 13.2%
c/o The United States Basketball League Stock(1)
46 Quirk Road 437,400 Common Stock 12.5%
Milford, CT 06460
Estate of Daniel T. Meisenheimer, Jr.(2) 182,723 Preferred Stock 16.5%
c/o Spectrum Associates 12,000 Common Stock -0-
440 New Haven Avenue
Milford, CT 06460
Richard C. Meisenheimer(3) 142,285 Preferred Stock 12.9%
884 Robert Treat Ext. 5,000 Common Stock -0-
Orange, CT 06477
Meisenheimer Capital Corp. 140,000 Preferred Stock 14.8%
46 Quirk Road 2,095,000 Common 60.2%
Milford, CT 06460 Stock
Spectrum Associates, Inc. (4) 376,673 Preferred Stock 34.1%
440 New Haven Avenue 231,857 Common Stock 6.7%
Milford, CT 06460
All Officers and Directors as a Group 286,283 Preferred Stock 25.9%
437,400 Common Stock 15.7%
_________________________
(1) Includes 20,000 shares of Preferred Stock held by Mr. Meisenheimer III for the benefit of
his two minor children.
(2) Mr. Meisenheimer Jr., who died in September, 1999, bequeathed his stock to his wife,
Mary Ellen Meisenheimer.
(3) 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.
(4) Between the various members of the Meisenheimer family and an affiliated company,
Spectrum Associates, Inc., the Meisenheimers effectively control 85% of the outstanding
Preferred Stock and 21% of the outstanding Common Stock. Including the ownership of
MCI by the Meisenheimer family, they effectively control 87% of the outstanding
Common Stock of USBL. No public shareholders own any Preferred Stock of USBL (see
"Description of Securities").
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ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The following persons served as our directors and executive officers for the fiscal year ending February 28, 1999:
Name Age Position
Daniel T. Meisenheimer III 49 Chairman of the Board and President
Richard C. Meisenheimer 46 Chief Financial Officer and Director
Daniel T. Meisenheimer, Jr. 71 Director (deceased)
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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 occupies the same positions in Cadcom and MCR, the other subsidiaries of MCI. 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.
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. ("Spectrum") since 1976 and is now the President of that Company. Spectrum owns 37.7% of the Preferred Stock and 6.7 % of our Common Stock. Spectrum is the main customer of Cadcom, MCI's other subsidiary.
Daniel T. Meisenheimer, Jr. ("D. Meisenheimer, Jr.") was the father of Mr. Meisenheimer III and R. Meisenheimer and the husband of Mary Ellen Meisenheimer. D. Meisenheimer, Jr. served as a director of USBL from its inception to September, 1999, when he died. We have not replaced D. Meisenheimer Jr. with another director.
ITEM 6 EXECUTIVE COMPENSATION
Historically, our only two officers, D. Meisenheimer III and Richard
Meisenheimer, have not received or taken any salaries from USBL. However, in
September, 1995, our Board of Directors adopted an option program reserving for
each officer 200,000 options exercisable at a price equal to the closing bid
price on the date of grant. In August, 1996, the directors with the consent of
the two officers elected to rescind the option program. No options were awarded
under the Plan.
On January 1, 1996, we entered into two-year employment agreements with Daniel Meisenheimer III. The employment agreement for Daniel Meisenheimer III provided for a monthly salary of $2,000 during the first year and $5,000 a month for the second year. The agreement provided that if, in the opinion of the USBL board of directors, the payment of salary would have an adverse impact on cash flow, then USBL was authorized to withhold the salary payments. Under the terms of the agreement, for every month of salary omitted, Daniel Meisenheimer III was to receive 10,000 options. Each option entitled D. Meisenheimer III to purchase one share of USBL common stock at $1.00 a share. All options were to be issued at the end of each 12-month period. During the calendar year ended December 31, 1996, D. Meisenheimer III received a total cash salary of $4,000 and received 100,000 options in lieu of salary, which D Meisenheimer III elected not to take. D. Meisenheimer III did not receive any salary for the months of January and February 1997 and as such was entitled to receive 20,000 options, which he also elected not to take.
R. Meisenheimer's employment agreement with us was similar to that of D. Meisenheimer III, except that R. Meisenheimer was to receive a salary of $800 a month during calendar year 1996 and $1,600 a month for 1997. For each month's salary omitted, R. Meisenheimer was to receive 4,000 options. Each option entitled R. Meisenheimer to purchase one share of USBL common stock at $1.00 a share. All options were to be awarded at the end of each year. During the calendar year ended December 31, 1996 (fiscal 1997), R. Meisenheimer received a total of $1,600 of salary and was entitled to receive 40,000 options in lieu of salary. R. Meisenheimer elected not to accept the options. R. Meisenheimer did not receive any salary for the months of January and February 1997 and was therefore entitled to receive 8,000 options, which he also elected not to accept. On March 1, 1997, both D. Meisenheimer III and R. Meisenheimer agreed to terminate the compensation provisions of their employment agreements in view of USBL's financial condition.
The following table reflects the salaries received by D. Meisenheimer III and R. Meisenheimer for the fiscal years ended February 28, 1999, 1998 and 1997:
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Re-
Other stricted Securities
Annual Stock Underlying LTIP All Other
Compen- Awarded Options/ Payouts Compen-
Name and Principal Position Year Salary($) Bonus($) sation ($) ($) SARs (#) ($) sation ($)
Daniel T. Meisenheimer III 1999 -0- -0- -0- -0- -0- -0- -0-
President & Chief Executive
Officer
1998 -0- -0- -0- -0- -0- -0- -0-
1997 $4,000 -0- -0- -0- -0- -0- -0-
Richard C. Meisenheimer 1999 -0- -0- -0- -0- -0- -0- -0-
Chief Financial Officer & Vice
President
1998 -0- -0- -0- -0- -0- -0- -0-
1997 $1,600 -0- -0- -0- -0- -0- -0-
There were no option/SAR grants or exercises in last fiscal year.
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ITEM 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Loans
For at least the last ten years, the principals of MCI consisting of Daniel Meisenheimer III, Richard Meisenheimer and Daniel Meisenheimer, Jr. and their affiliated companies have made loans to us. As of February 28, 1999 (Fiscal 1999), USBL was indebted to the principals or their affiliated companies in the principal sum of $298,045 together with accrued interest at six percent (6%) per annum of $121,299. All of the outstanding debt is payable upon demand. Of the foregoing amount, Spectrum is owed the principal sum of $123,752 plus accrued interest of $68,615. The principals (D. Meisenheimer III, R. Meisenheimer and the Estate of Daniel T. Meisenheimer, Jr.) are owed $128,293 plus accrued interest of $52,684. The remainder of $46,000 is due from USBL to MCR, another subsidiary of MCI. See "Financial Information."
Ownership of Franchise
In 1988, our chief financial officer and director, Richard Meisenheimer, and several other individuals purchased, through a corporation, the active Connecticut Skyhawks franchise from us. The purchase price was $50,000, and annual royalty payments have been made to USBL for each year to date. On August 31, 1996, Spectrum, a company owned and controlled by the Meisenheimer Family, also purchased a franchise from USBL for $100,000. The franchise is not currently active but pays the annual royalty fee of $20,000.
ITEM 8 LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against USBL.
ITEM 9 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Common Stock has traded for the last two years on the NASDAQ SmallCap Market under the symbol "USBL." On May 3, 2000, USBL was delisted from the SmallCap Market because of the failure to have a registration statement on file with the Securities and Exchange Commission. This Registration Statement on Form 10SB is being filed to cure the deficiency. Our stock now trades on the over-the-counter market and is quoted in the National Quotation Bureau Pink Sheets. The following is the range of high and low bid information for each quarter for the fiscal years ended February 28, 1998 and February 28, 1999:
Fiscal 1998
Closing Bid
High Low
First Quarter Ended 5/30/97 $2.25 $1.25
Second Quarter Ended 8/29/97 $2.25 $1.4375
Third Quarter Ended 11/28/97 $1.625 $2.215
Fourth Quarter Ended 2/27/98 $2.56 $1.75
Fiscal 1999
Closing Bid
High Low
First Quarter Ended 5/29/98 $2.937 $1.875
Second Quarter Ended 8/31/98 $2.50 $1.50
Third Quarter Ended 11/30/98 $1.625 $1.031
Fourth Quarter Ended 2/26/99 $1.50 $1.031
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The foregoing range of high-low closing bid 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 the National Association of Securities Dealers Composite Feed or other qualified inter-dealer quotation medium.
Approximately 450,000 of our Common Stock shares are held by 140 shareholders. The shares held by members of the public were issued by us in connection with a private placement at least ten years ago and also in connection with an offering in 1995 under Rule 504 of Regulation D of the Securities Act of 1933.
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.
ITEM 10 RECENT SALES OF UNREGISTERED SECURITIES
FOR FISCAL YEAR ENDED FEBRUARY 28, 1999
On September 18, 1998, we issued 15,000 shares of our Common Stock, 5,000 shares each, to its Director of Operations, Director of Administration and Director of Publicity. The shares were issued as an additional bonus for loyal and faithful service to the Company. In addition, on June 15, 1998, we issued 12,500 shares of its Common Stock to an independent consultant who was advising the Company on raising additional capital. The Company relied upon the private placement exemption for the issuance of all of the shares pursuant to Section 4(2) of the Securities Act.
FOR FISCAL YEAR ENDED FEBRUARY 28, 1998
On September 1, 1997, the Company issued 20,000 shares of its Common Stock to an independent consultant who was assisting the Company in the development and promotion of additional franchises. The Company relied upon the Private Placement Exemption pursuant to Section 4(2) of the Securities Act.
FOR FISCAL YEAR ENDED FEBRUARY 28, 1997
In December, 1996, the Company issued 60,000 shares of its Common Stock in connection with the exercise of warrants by two holders (40,000 warrants for 40,000 shares and 20,000 warrants for 20,000 shares). The warrants had been issued to two individuals who had assisted the Company in a private offering pursuant to Regulation D promulgated under the Securities Act of 1933. The Company relied upon the Private Placement Exemption pursuant to
Section 4(2) of the Securities Act in connection with the issuance of the shares upon exercise of the warrants.
ITEM 11 DESCRIPTION OF SECURITIES
(a) Common Stock.
We are authorized to issue 30,000,000 shares of Common Stock, $.01 par value per share. There are currently 3,478,502 shares of Common Stock outstanding. Each share of the Common Stock entitles the holder thereof to one vote on each matter submitted to the stockholders of the Company for a vote thereon. The holders of Common Stock (i) have equal ratable rights to dividends from funds legally available therefor when and as if declared by the Board of Directors; (ii) are entitled to share ratably in all of the assets of the Company available for distribution to holders of Common Stock upon liquidation, dissolution or winding up of the affairs of the Company; (iii) do not have preemptive subscription or conversion rights, or redemption or sinking fund provisions applicable thereto; and (iv) as noted above, are entitled to one non-cumulative vote on all matters submitted stockholders for a vote at any meeting of stockholders. We have not paid any dividend on our Common Stock to date. The Company anticipates that, for the foreseeable future, it will retain earnings, if any, to finance continuing operations.
(b) Preferred Stock
The certificate of incorporation authorizes the issuance of up to 2,000,000 shares of Convertible Preferred Stock ("Preferred Stock") $.01 par value per share. Each share of Preferred Stock is convertible at any time at the discretion of the holder thereof upon written notice to the Corporation into one share of Common Stock. Each share of Preferred Stock entitles the holder thereof to five (5) votes per share on all matters submitted to shareholders for vote. The Preferred Stock bear a two percent (2%) non-cumulative annual dividend. No dividends have ever been paid on the Preferred Stock. At the present time there are 1,105,679 shares of Preferred Stock outstanding. None of the shares are held by members of the public. The company's Certificate of Amendment filed with the State of Delaware on June 30, 1995 authorizing the establishment of the Preferred stock did not create any other preferences for the Preferred Stock and consequently the Preferred Stock shares equally with the Common Stock in connection with a liquidation of the Corporation's assets.
(c) Transfer.
Continental Stock Transfer & Trust Co. is the Company's Registrar and Transfer Agent for the Common Stock.
ITEM 12 INDEMNIFICATION OF OFFICERS AND DIRECTORS
Pursuant to USBL's Certificate of Incorporation, all directors of USBL will be indemnified by USBL against expenses actually and necessarily incurred with the defense of any action, suit or proceedings to which they are made a party by reason of their being or having been elected to serve as directors of USBL and against claims, losses, damages and judgments against
them by reason of any act performed by them in their capacity as directors, except for any act in which they are adjudged liable for misconduct in the performance of their duties as directors. The effect is to eliminate liability of a director for monetary damages except for any act where the directors have been adjudged liable for misconduct in the performance of their duties as a director. Stockholder actions can only be maintained against a director upon a showing of a breach of the individual directo's loyalty to the Company, a failure to act in good faith, intentional misconduct, a knowing violation of the law, improper personal benefit or an illegal dividend or stock purchase, and not for a director's negligence or gross negligence in satisfying his duty of care.
ITEM 13 FINANCIAL STATEMENTS
The Financial Statements appear after Signature Page.
ITEM 14 CHANGES IN AND DISAGREEMENTS IN ACCOUNTING AND FINANCIAL
DISCLOSURE
There were no changes in and disagreements in accounting and Financial Disclosure.
ITEM 15 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(1) Independent Auditor's Report.
(2) Balance Sheets for USBL as of February 28, 1999 and February 28, 1998.
(3) Statement of Operations for USBL for Years Ended February 28, 1999 and February 28, 1998.
(4) Statement of Stockholders' Equity for years Ended February 28, 1999 and February 28, 1998.
(5) Statements of Cash Flows for Years Ended February 28, 1999 and February 28, 1998.
(6) Notes to Financial Statements for Years Ended February 28, 1999 and 1998.
(b) Exhibits
*3.1 Certificate of Incorporation (May 29, 1984)
*3.1.1 Amended Certificate of Incorporation (Sept. 4, 1984)
*3.1.2 Amended Certificate of Incorporation (March 5, 1986)
*3.1.3 Amended Certificate of Incorporation (Feb. 19, 1987)
*3.1.4 Amended Certificate of Incorporation (June 30, 1995)
*3.1.5 Amended Certificate of Incorporation (January 12, 1996)
*3.1.6 Certificate of Renewal (June 23, 1995)
*3.1.7 Certificate of Renewal (May 22, 2000)
*3.2 By-Laws of USBL
*3.2.1 Amended By-Laws
10.1 Employment Agreement of Daniel T. Meisenheimer III with USBL(1)
10.2 Employment Agreement of Richard Meisenheimer with USBL(2)
10.3 Lease between Meisenheimer Capital Real Estate Holdings, Inc..
and USBL(3)
10.4 Standard Franchise Agreement of USBL(4)
10.5 Agreement between USBL and Topaz Selections Ltd.for Barter
Transactions for Acquisition of Advertising Due Bills in Exchange for
Franchises (5)
*27 Financial Data Schedule
________________________________
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*Filed herewith.
(1) Filed with the Commission on February 19, 1997 as Exhibit 10.3 to Form 10-SB/A of Meisenheimer Capital, Inc. and incorporated by reference hereto.
(2) Filed with the Commission on February 19, 1997 as Exhibit 10.4 to Form 10-SB/A of Meisenheimer Capital, Inc. and incorporated by reference hereto.
(3) Filed with the Commission on February 19, 1997 as Exhibit 10.7 to Form 10-SB/A of Meisenheimer Capital, Inc. and incorporated by reference hereto.
(4) Filed with the Commission on February 19, 1997 as Exhibit 10.10 to Form 10-SB/A of Meisenheimer Capital, Inc. and incorporated by reference hereto.
(5) Filed with the Commission on February 19, 1997 as Exhibit 10.11 to Form 10-SB/A of Meisenheimer Capital, Inc. and incorporated by reference hereto.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
/S/ UNITED STATES BASKETBALL LEAGUE, INC.
Registrant
By: /S/ Daniel T. Meisenheimer, III
Daniel T. Meisenheimer, III, Chief Executive Officer
Date: May 23, 2000
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UNITED STATES BASKETBALL LEAGUE, INC.
REPORT ON AUDITS OF FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28, 1999 AND 1998
INDEX TO FINANCIAL STATEMENTS
(1) Independent Auditor's Report F-1
(2) Balance Sheets as of February 28, 1999 and 1998 F-2
(3) Statements of Operations for Years Ended February 28, 1999
and 1998 F-3
(4) Statement of Stockholder Equity for Years Ended February 28,
1999 and 1998 F-4
(5) Statements of Cash Flows for Years Ended February 28,
1999 and 1998 F-5
(6) Notes to Financial Statements F-6--F10
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F-1
Independent Auditors' Report
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Board of Directors
United States Basketball League, Inc.
Milford, Connecticut
We have audited the balance sheets of United States Basketball League, Inc. as of February 28, 1999 and 1998, and the related statements of operations, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those stan dards require that we plan and perform the audits 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. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of United States Basketball League, Inc. as of February 28, 1999 and 1998 and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company's recurring cash flow deficiencies from operations, its inability to collect annual franchise fees and its reliance on related party revenue transactions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Holtz Rubenstein & Co., LLP
Melville, New York
May 27, 1999
F-2
UNITED STATES BASKETBALL LEAGUE, INC.
BALANCE SHEETS
February 28,
ASSETS 1999 1998
CURRENT ASSETS:
Cash $ 43,178 $ 23,423
Franchise fee receivable 15,000 15,000
Due from affiliates 131,730 63,476
Inventory 18,500 18,500
Investments in securities 20,420 20,420
Other current assets 600 5,087
Total current assets 263,428 145,906
EQUIPMENT, net (Note 3) 4,957 9,530
PREPAID ADVERTISING CREDITS (Note 5) 484,062 684,062
$ 752,447 $ 839,498
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 150,063 $ 175,894
Due to affiliates 238,367 166,606
Loans payable - stockholders (Note 4) 180,977 167,138
Total current liabilities 569,407 509,638
STOCKHOLDERS' EQUITY (Notes 4, 5 and 6):
Common stock, $0.01 par value, 30,000,000 shares
authorized; 3,478,502 and 3,451,001 shares issued
and outstanding 34,785 34,510
Preferred stock, $0.01 par value, 2,000,000 shares
authorized; 1,105,679 shares issued and outstanding 11,057 11,057
Additional paid-in capital 2,516,112 2,483,887
Deficit (2,358,816) (2,197,851)
Treasury stock, at cost; 14,425 and 975 shares, respectively (20,098) (1,743)
Total stockholders' equity 183,040 329,860
$ 752,447 $ 839,498
See notes to financial statements
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F-3
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENTS OF OPERATIONS
Years Ended
February 28,
1999 1998
REVENUES:
Initial franchise fees (Note 4) $438,754 $ 405,000
Continuing franchise fees 105,179 84,790
Advertising 112,500 -
Other (Note 9) 150,119 148,886
806,552 638,676
OPERATING EXPENSES (Notes 4 and 6):
Consulting 26,924 116,804
Team expenses 114,570 96,374
Advertising 86,836 73,110
Salaries 74,300 72,361
Travel 31,400 61,145
Depreciation 4,573 4,573
Professional fees 15,606 48,402
Asset impairment (Note 5) 450,000 -
Other 161,079 95,981
965,288 568,750
(Loss) income from operations (158,736) 69,926
OTHER INCOME (EXPENSES):
Interest expense (3,801) (10,598)
Interest income 227 1,375
Other 1,345 (3,187)
(2,229) (12,410)
NET (LOSS) INCOME $ (160,965) $ 57,516
NET (LOSS) INCOME PER SHARE $ (.03) $ .02
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 3,453,330 3,436,973
See notes to financial statements
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F-4
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
(Notes 4, 5 and 6)
Common Stock Preferred Stock Additional Total
Shares Shares Paid-in Treasury Stockholders'
Outstanding Amount Outstanding Amount Capital Deficit Stock Equity
Balance, March 1, 1997 3,431,001 $34,310 1,105,679 $11,057 $2,460,524 $(2,255,367) $(7,757) $242,767
Common stock issued for services 20,000 200 - - 23,363 - - 23,563
Acquisition of treasury stock - - - - - - (16,277) (16,277)
Issuance of treasury stock
as compensation - - - - - - 22,291 22,291)
Balance, February 28, 1998 3,451,001 34,510 1,105,679 11,057 2,483,887 (2,197,851) (1,743) 329,860
Common stock issued for services 27,501 275 - - 32,225 - - 32,500
Acquisition of treasury stock - - - - - - (18,355) (18,355)
Net loss - - - - - (160,965) - (160,965)
Balance, February 28, 1999 3,478,502 $34,785 1,105,679 $11,057 $2,516,112 $(2,358,816) $(20,098) $183,040
See notes to financial statements
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F-5
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENTS OF CASH FLOWS
Years Ended
February 28,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(160,965) $57,516
Adjustments to reconcile net (loss) income to
net cash provided by (used in) operating activities:
Prepaid barter units - 50,000
Prepaid advertising credits (250,000) (250,000)
Depreciation 4,573 4,573
Asset impairment 450,000 -
Non-cash revenue - (30,000)
Non-cash compensation 32,500 45,854
(Increase) decrease in assets:
Franchise fee receivable - 15,000
Inventory - (1,500)
Other assets 4,487 463
Decrease in liabilities:
Accounts payable and accrued expenses (25,831) (51,984)
215,729 (113,626)
Net cash provided by (used in) operating activities 54,764 (56,110)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities - (920)
Net cash used in investing activities - (920)
CASH FLOWS FROM FINANCING ACTIVITIES:
Due from (to) affiliates 30,493) 19,388
Increase in stockholders' loans 13,839 72,280
Purchase of treasury stock 18,355) (16,277)
Net cash provided by financing activities 35,009) 75,391
NET INCREASE IN CASH 19,755 18,361
CASH AND CASH EQUIVALENTS, beginning of year 23,423 5,062
CASH AND CASH EQUIVALENTS, end of year $43,178 $23,423
See notes to financial statements
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UNITED STATES BASKETBALL LEAGUE, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28, 1999 AND 1998
1. Description of Business and Basis of Presentation:
The United States Basketball League, Inc. (the "USBL" or the "Company") operates a professional summer basketball league through franchises located in the eastern part of the United States.
The Company has incurred an accumulated deficit of approximately $2,359,000. In addition, the USBL's reliance on both substantial non-cash transactions and related parties (see Notes 4 and 5) create an uncertainty as to the USBL's ability to continue as a going concern.
The Company is making efforts to raise equity capital, revitalize the league and market new franchises, however, there can be no assurance that the USBL will be successful in accomplishing its objectives. Because of the uncertainties surrounding the ability of the Company to continue its operations, there is substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the USBL be unable to continue as a going concern.
2. Summary of Significant Accounting Policies:
a. Cash and cash equivalents
For purposes of the cash flow statement, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash and/or cash equivalents.
b. Inventory
Inventory consists of USBL trading cards, basketball uniforms, sporting equipment and printed promotional material. Most of the inventory was obtained through barter transactions whereby the USBL granted suppliers various advertising space (print) and air time (television) in return for the supplier's products. These transactions were accounted for based upon the fair values of the assets and services involved in the transactions. Advertising revenues are recognized by the USBL for broadcasting rights and print space made available to suppliers in these transactions.
c. Depreciation and amortization expense
Depreciation is computed using the straight-line method over an asset's estimated useful life (5 to 7 years).
d. Revenue recognition
The Company generally uses the accrual method of accounting in these financial statements. However, due to the uncertainty of collecting royalty and franchise fees from the franchisees, the USBL records revenue when collected.
2. Summary of Significant Accounting Policies: (Cont'd)
e. 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 $561,000) resulting from the net operating loss carryforward.
As of February 28, 1999, a net operating loss carryforward of approximately $1,403,000 is available through February 28, 2016 to offset future taxable income.
f. Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
g. Advertising costs
Advertising costs are expensed as incurred and were approximately $87,000 and $73,000 for the years ended February 28, 1999 and 1998, respectively. h. Stock-based compensation
The Company applies APB Opinion No. 25 and related interpretations in accounting for stock-based compensation to employees. Stock compensation to non-employees is accounted for at fair value in accordance with FASB Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). i.(Loss) earnings per share
Statement of Financial Accounting Standards No. 128, "Earnings Per Shares" (SFAS No. 128) establishes standards for computing and presenting earnings (loss) per share (EPS). SFAS No. 128 requires dual presentation of basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock options or convertible securities were exercised or converted into common stock.
Basic and diluted (loss) earnings per share amounts were equivalent for the years ended February 28, 1999 and 1998.
3. Equipment:
Equipment, at cost, consists of the following:
February 28,
1999 1998
Equipment $ 8,606 $ 8,606
Transportation equipment 52,090 52,090
60,696 60,696
Less accumulated depreciation 55,739 51,166
(Loss) earnings per share $ 4,957 $ 9,530
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4. Related Party Transactions:
The Company has entered into the following transactions with related parties:
a. The USBL's president, personally, through family members and other entities controlled by the family (the "Meisenheimer Group"), controls approximately 81% of the USBL's common stock and 100% of the Company's preferred stock. The Company is a majority-owned subsidiary.
The Company is a majority-owned subsidiary (60.71%) of Meisenheimer Capital, Inc. Meisenheimer Capital, Inc. is an entity in the Meisenheimer Group.
b. As of February 28, 1999, loans payable to stockholders, including interest, approximated $181,000. As of February 29, 1998, loans payable to stockholders approximated $167,000. Interest rates on these obligations are 6% per annum.
c. Included in revenues are amounts received from various related parties affiliated with the Meisenheimer Group approximating $230,000 in 1999 and $150,250 in 1998.
d. The Company leases its office space from Meisenheimer Capital Real Estate Holdings, Inc., a wholly-owned subsidiary of Meisenheimer Capital Inc. Rent expense on this operating lease totalled $12,000 for each of the years ended February 28, 1999 and 1998, respectively.
5. Non-Cash Transactions:
The USBL entered into the following non-cash transactions during the fiscal year ended February 28, 1999:
The Company received $66,000 of advertising and promotional services in lieu of cash, as consideration for franchise fees.
The sale of an additional five franchises for 2,000,000 negotiable advertising due bills from an independent cable television network.
The USBL entered into the following non-cash transactions during the fiscal year ended February 28, 1998:
The sale of an additional five franchises for 2,000,000 negotiable advertising due bills from an independent cable television network. The USBL has valued these due bills at $250,000.
The Company issued 20,000 shares of its stock to a consultant in exchange for his services during fiscal 1998. The value of the shares were charged to earnings based upon their fair market value on September 1, 1997 of $23,563.
The Company recognized advertising income in exchange for airline tickets and merchandise valued at $30,000 during fiscal year ended February 28, 1998.
Non-Cash Transactions: (Cont'd)
The deferred charge on the balance sheet at February 28, 1999 of $484,062 represents the unused amount of the deferred advertising due expense relating to the advertising due bills earned through fiscal 1999. These advertising due bills can be traded for various goods and services and they can assigned sold or transferred. However, they are not recognized as currency in the United States although they can be traded as such. The credit will be amortized at the time the advertising is utilized. The total of $8,000,000 advertising due bills were recorded at a substantial discount from their face value. However, if the Company is unable to realize the recorded value of this asset, a significant reduction in overall equity may result.
During the year ended February 29, 1999, the Company adjusted the carrying value of the due bills to their estimated fair value, resulting in a noncash impairment loss of $200,000.
6. Stockholders' Equity:
a. Capitalization
The Company's authorized capital consists of 30,000,000 shares of common stock and 2,000,000 shares of preferred stock. All stock has a $.01 par value. Each share of common stock has one vote, and each share of preferred stock has five votes and is entitled to a 2% non- cumulative annual dividend. b. Treasury stock
As of February 28, 1999, the Company has acquired 14,425 shares of its own stock, valued at approximately $20,100, in order to facilitate compensatory stock grants to employees. These shares are considered treasury and have been valued at cost. c. Stock/warrant issuances
During the years ended February 28, 1999 and 1998, the Company granted 27,500 shares (valued at $32,500) and 20,000 shares (valued at $23,563) of common stock, respectively, to employees and consultants for services. The value of these shares was charged to operations in the year of issuance. d. Stock/warrants
In connection with a 1995 private placement, the underwriter received, as compensation, warrants for the purchase of 100,000 shares of common stock at $1.00. 60,000 warrants were exercised in 1996, and the remaining 40,000 warrants expire in May 2000. The Company provided each of its two officers options to purchase 20,000 shares annually. These options were granted on the first of each year and have an exercise price equal to the fair market value on the date of grant. These options expire January 2006 or nine months after the retirement of the officer. There are 40,000 such options outstanding as of February 28, 1999. This Plan was terminated during the fiscal year ended February 28, 1998.
(continued)
7. Supplementary Cash Flow Information:
Cash paid for interest for the years ended February 28, 1999 and 1998 was $501 and $2,976, respectively.
8. Fair Value of Financial Instruments:
The methods and assumptions used to estimate the fair value of the following classes of financial instruments were:
Current Assets and Current Liabilities. The carrying amount of cash, current receivables and payables and certain other short-term financial instruments approximate their fair value.
9. Other Revenues:
Other revenues consist of advertising fees, sales of marketing rights, souvenir sales and miscellaneous fees charged to team owners.
EXHIBITS
EXHIBIT 3.1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF "THE UNITED STATES BASKETBALL LEAGUE, INC.", FILED IN THIS OFFICE ON THE TWENTY-NINTH DAY OF MAY, A.D. 1984, AT 9 O'CLOCK A.M.
/S/ Edward J. Freel
Edward J. Freel, Secretary of State
2036407 8100
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001253249
Authentication 0446456
Date: 05-18-00
701500007
FILED
MAY 29 1984
CERTIFICATE OF INCORPORATION
OF
THE UNITED STATES BASKETBALL LEAGUE, INC.
I, the undersigned, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the General Corporation Law of the State of Delaware, do hereby certify as follows:
FIRST: The name of the corporation is:
THE UNITED STATES BASKETBALL LEAGUE, INC.
SECOND: The registered office of the corporation is to be located at c/o United Corporate Services Inc., 410 South State Street, in the City of Dover, County of Kent, State of Delaware 19901. The name of its registered agent at that address is United Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware.
FOURTH: The corporation shall be authorized to issue the following shares:
Number of
Common Shares Par Value
COMMON 1,000 $01
FIFTH: The name and address of the incorporator are as follows:
Name Address
Ray A. Barr 9 East 40th Street
New York, New York 10016
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SIXTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the corporation, and for further definition, limitation and regulation of the powers of the corporation and of its directors and stockholders:
(1) The number of directors of the corporation shall be such as from time to time shall be fixed by, or In the manner provided in the by-laws. Election of directors need not be by ballot unless the by-laws so provide. (2) The Board of Directors shall have power without the assent or vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the By-Laws of the
corporation: to fix and vary the amount to be reserved for any proper purpose:
to authorize and cause to be executed mortgages and liens upon all or any part
of the property of the corporation; to determine the use and disposition of any
surplus or net profits: and to fix the times for the declaration and payment of
dividends.
(b) To determine from time to time whether, and to what times and places, and under what conditions the accounts and books of the corporation (other than the stockledger) or any of them, shall be open to the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the corporation, whether or not the contract or act would otherwise be open to legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the corporation: subject, nevertheless to the provisions of the statutes of Delaware, of this certificate, and to any by-laws from time to time made by the stockholders; provided, however, that no by-laws so made shall invalidate any prior act of the directors which would have been valid if such by-law had not been made.
SEVENTH: The corporation shall, to the full extent permitted by Section 145 of the Delaware General Corporation Law, as amended, from time to time, indemnify all persons whom it may indemnify pursuant thereto.
EIGHTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of then and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware, may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title S of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 Title 8 of the Delaware Code order a meeting of the creditors
or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may we, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths (3/4) in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.
NINTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the statements made herein are true under the of perjury, this twenty-third day of May, 1984.
/S/ Ray A. Barr Ray A. Barr, Incorporator |
EXHIBIT 3.1.1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "THE UNITED STATES BASKETBALL LEAGUE, INC.", FILED IN THIS OFFICE ON THE FOURTH DAY OF SEPTEMBER, 1984, AT 9 O'CLOCK A.M.
/S/ Edward J. Freel Edward J. Freel, Secretary of State |
THE UNITED STATES BASKETBALL LEAGUE, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the written consent of the necessary number of shares required by
statute of the stockholders of THE UNITED STATES BASKETBALL LEAGUE, INC. was
given ir accordance with Section 228 of the General Corporation Law of Delaware
setting forth an amendment to the Certificate of incorporation of said
corporation. The Amendment to the Certificate of Incorporation is as follows:
Article FOURTH of the Certificate of Incorporation of this corporation is hereby
amended to read as follows:
"FOURTH: the total number of shares which the corporation is authorized to issue is Fifteen Million (15,000,000) shares of voting Common Stock, each of which shall have a par value of $.00l.
SECOND: Prompt notice of the taking of the corporate action amending the Certificate of Incorporation in the manner set forth above is being given to all stockholders who had not consented in writing, as provided by Section 228 of the General Corporation Law of the State of Delaware.
THIRD: The 400 outstanding shares of Common Stock were split on a ten-thousand-for-one basis, so that, after the ten thousand-for-one split and the change of par value from $.0l to $.001 per share, the corporation has issued and outstanding 4,000,000 shares of Common Stock, $.001 par value per share.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be signed by
Daniel T. Meisenheimer III, its President, and attested by Richard
C..Meisenheimer, its Secretary, this 24th day of August, 1984.
THE UNITED STATES BASKETBALL LEAGUE, INC.
By: /s/ Daniel T. Meisenheimer III, Pres.
Daniel T. Meisenheimer III, President
ATTEST:
/S/ Richard C. Meisenheimer, Sec.
Richard C. Meisenheimer, Secretary
|
EXHIBIT 3.1.2
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF AMENDMENT OF "THE UNITED STATES BASKETBALL LEAGUE,
INC.", FILED IN THIS OFFICE ON THE FIFTH DAY OF MARCH 1986, AT 9 O'CLOCK
A.M.
/S/ Edward J. Freel Edward J. Freel, Secretary of State |
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
(Pursuant to Section 242)
THE UNITED STATES BASKETBALL LEAGUE INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the written consent of the necessary number of shares required by statue of the stockholders of the UNITED STATES BASKETBALL LEAGUE, INC., was given in accordance with section 228 of the General Corporation Law of Delaware. setting forth an amendment to the Certificate of Incorporation of said corporation. The amendment to the Certificate of Incorporation is as follows:
Article FOURTH of the Certificate of Incorporation of this corporation is hereby amended to read as follows:
"FOURTH: the total number of shares which the corporation is authorized to issue is Thirty Million (30,000,000) shares of voting Common Stock, each of which shall have a par value of $.001".
SECOND: Prompt notice of the taking of the corporate action amending the Certificate of Incorporation in the manner set forth above is being given to all stockholders who had not consented in writing, as provided by Section 228 of the General Corporation Law of the State of Delaware.
THIRD: The 6,250,000 outstanding shares of Common Stock were split on a two-for-one basis, so that, after the two-for-one split, the corporation has issued and outstanding 12.500.000 shares of Common Stock, $.001 par value per share.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be signed by Daniel T. Meisenheimer III, its President, and attested by Richard C. Meisenheimer, its Secretary, this 28th day of February, 1986.
THE UNITED STATES BASKETBALL LEAGUE, INC.
By: /S/ Daniel T. Meisenheimer III, Pres.
Daniel T. Meisenheimer III, President
ATTESTED
/S/ Richard C. Meisenheimer
Richard C. Meisenheimer, Secretary
|
EXHIBIT 3.i.c
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "THE UNITED STATES BASKETBALL LEAGUE, INC.", FILED IN THIS OFFICE ON THE NINETEENTH DAY OF FEBRUARY, A.D. 1987, AT 3 O'CLOCK P.M.
/S/ Edward J. Freel
Edward J. Freel, Secretary of State
2036407 8100
|
001253249
Authentication 0446456
Date: 05-18-00
877050064
Feb. 19, 1987
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
(Pursuant to Section 242)
THE UNITED STATES BASKETBALL LEAGUE, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the written consent of the necessary number of shares required by statute of the stockholders of THE UNITED STATES BASKETBALL LEAGUE, INC., was given in accordance with Section 228 of the General Corporation Law of Delaware, setting forth an amendment to the Certificate of Incorporation of said corporation. The amendment to the Certificate of Incorporation is as follows:
Article FOURTH of the Certificate of Incorporation of this corporation is hereby amended to read as follows:
"FOURTH: (a) The total number of shares of Common, Stock which the corporation is authorized to issue is Thirty Million (30,000,000) shares of voting Common Stock, each of which shall have a par value of $.00l; and (b) The total number of shares of Preferred Stock which the corporation is authorized to issue is One Million (1,000,000) shares of non-voting Preferred Stock, each of which is convertible into Common Stock at $.50 per share, and callable by the corporation at any time after March 1, 1988 at $1.20 per share. The Preferred Stock shall bear a 6% non-cumulative annual dividend."
SECOND: Prompt notice of the taking of the corporate action amending the Certificate of Incorporation in the manner set forth above is being given to all stockholders who have not consented in writing, as provided by Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be signed by Daniel T. Meisenheimer III, its President, and attested by Richard C. Meisenheimer, its Secretary, this 13th day of February, 1987.
THE UNITED STATES BASKETBALL LEAGUE, INC.
By: /S/ Daniel T. Meisenheimer III,
Daniel T. Meisenheimer III, President
ATTEST:
By: /S/ Richard C. Meisenheimer
Richard C. Meisenheimer, Secretary
|
EXHIBIT 3.(i)d
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE. DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "THE UNITED STATES BASKETBALL LEAGUE. INC.", FILED IN THIS OFFICE ON THE THIRTIETH DAY OF JUNE, A.D. 1995. AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY RECORDER OF DEEDS FOR RECORDING.
/S/ EDWARD J. FREEL
Edward I. Freel, Secretary of State
AUTHENTICATION:
DATE: 7/03/95
|
CERTIFICATE OF AMENDMENT
OF
THE UNITED STATES BASKETBALL LEAGUE, INC.
(Pursuant to Section 242 of the
Delaware General Corporation Law)
The undersigned, being the Secretary of the Corporation, hereby certifies as follows:
FIRST: The name of the Corporation is: THE UNITED STATES BASKETBALL LEAGUE, INC.
SECOND: Article 4(a) relating to the authorized class of Common Shares and
Article 4(b) relating to the authorized class of Preferred Shares are hereby
stricken in their entireties and in their place Article FOURTH (a) and FOURTH
(b) are hereby amended to read as follows:
FOURTH: (a) The total number of shares of Common Stock which the Corporation is authorized to issue is Thirty Million (30,000,000) shares of voting Common Stock, each of which shall have a par value of 1.01; and
(b) The total number of shares of Preferred Stock which the Corporation is authorized to issue is One Million (1,000,000) shares of Preferred Stock, .01 par value per share, of which each share is convertible at any rime at the discretion of the holders thereof upon written notice to the Corporation into one share of Common Stock. Each share of Preferred Stock entitles the holder thereof to five (5) votes per share on all matters submitted for vote to the shareholders. The Common Stock shall have one vote per share. The Preferred Stock shall bear a two percent (2%) non-cumulative annual dividend.
THIRD: Upon the filing of this Amendment, the 12,320,000 issued and outstanding shares of Common Stock par value $.001 shall be changed on the basis of four shares, par value $.001 for one share par value $.01 into 3,080,000 issued and outstanding shares of Common Stock par value $.01 per share.
FOURTH: This Certificate of Amendment was authorized in accordance with Sections 228 and 242 of the General Corporation Law of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be created this 29th day of June, 1995.
THE UNITED STATES BASKETBALL LEAGUE, INC.
By: /S/ Richard C. Meisenheimer Richard C. Meisenheimer, Secretary |
EXHIBIT 3.1.5
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "THE UNITED STATES BASKETBALL LEAGUE, INC.", FILED IN THIS OFFICE ON THE TWELFTH DAY OF JANUARY, A.D. 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY RECORDER OF DEEDS FOR RECORDING.
/S/ EDWARD J. FREEL Edward I. Freel, Secretary of State |
CERTIFICATE OF AMENDMENT
OF
THE UNITED STATES BASKETBALL LEAGUE, INC.
(Pursuant to Section 242 of the
Delaware General Corporation Law)
The undersigned, being the Secretary of the Corporation, hereby certifies as follows:
FIRST: The name of die Corporation is: THE UNITED STATES BASKETBALL LEAGUE, INC.
SECOND: Article 4(6) relating to the authorized class of Preferred Shares is amended to increase the authorized Shares from one million (1,000,000) Shares of Preferred Stock to two million (2,000,000) Shares of Preferred Stock and Article 4(b) is hereby amended to read as follows:
"and Article FOURTH(b) is hereby amended to read as follows:
"FOURTH: (b) The total number of shares of Preferred Stock which the Corporation is authorized to issue is Two Million (2,000,000) shares of Preferred Stock $.01 par value per share; of which each share is convertible at any time at the discretion of the holders thereof upon written notice of the Corporation one Share of Common Stock. Each share of Preferred Stock entitles the holder thereof to five (5) votes per share on all matters submitted to vote to the Shareholders. The Common Stock shall have one (1) vote per share. The Preferred Stock shall bear a two percent (2%) non-cumulative annual dividend."
THIRD: The Amendment effected herein was authorized by the consent in writing by the Holders of at least the majority of the outstanding shares entitled to vote thereon and due notice so taken has been given to these Shareholders who have not consented in writing pursuant to Section 222 and 242 of the General Corporation Law in the State of Delaware.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that the statements made herein are true under penalties of perjury this 15th day of December, 1995.
THE UNITED STATES BASKETBALL LEAGUE, INC.
ATTEST
By: /S/ Daniel T. Meisenheimer, III
Daniel T. Meisenheimer, President
/S/ Richard Meisenheimer
Richard Meisenheimer, Secretary
|
EXHIBIT 3.i.f
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF RENEWAL OF "THE UNITED STATES BASKETBALL LEAGUE, INC.", FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY OF JUNE, A.D. 1995, AT 9 O'CLOCK A.M.
/S/ Edward J. Freel
Edward J. Freel, Secretary of State
2036407 8100
001253249
Authentication: 0446455
Date: 05-18-00
|
Certificate for Renewal and Revival of Charter
The United States Basketball League, Inc. a corporation organized under the laws of Delaware, the charter of which was voided for non-payment of taxes, now desires to procure a restoration, renewal and revival of its charter, and hereby certifies as follows:
1 The name of the corporation is The United States Basketball League, Inc.
2. Its registered office in the State of Delaware is located at 15 East North Street, City of Dover, Zip Code 19901, County of Kent. The name and address of its registered agent is United Corporate Services, Inc., 15 East North Street, Dover, DE 19901.
3. The date of filing of the original Certificate of Incorporation in Delaware was May 29, 1984.
4. The date when restoration, renewal, and revival of the charter of this company is to commence is the 29th day of February, 1988, same being prior to the date of the expiration of the charter. This renewal and revival of the charter of this corporation is to be perpetual.
5. This corporation was duly organized and carried on the business authorized by its charter until the First day of March A.D. 1988, at which time its charter became inoperative and void for nonpayment of taxes and this certificate for renewal and revival is filed by authority of the duly elected directors of the corporation in accordance with the Laws of the State of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312 of the General Corporation Law of the State of Delaware, as amended, providing for the renewal, extension and restoration of charters. Daniel T. Meisenheimer, III, the last and acting President, and Richard C. Meisenheimer, the last and acting Secretary of The United States Basketball League, Inc., have hereunto set their hands to this certificate this 20th day of June, 1995.
/S/ Daniel T. Meisenheimer, III
Last and Acting President
ATTEST:
/S/ Richard C. Meisenheimer
Last and Acting Secretary
|
EXHIBIT 3.1.7
CERTIFICATE FOR
RENEWAL AND REVIVAL OF CHARTER
OF
UNITED STATES BASKETBALL LEAGUE, INC.
UNITED STATES BASKETBALL LEAGUE, INC., a corporation organized under the laws of Delaware, the certificate of incorporation of which was filed in the office of the Secretary of State on the 29th day of May, 1984 and recorded in the office of the Recorder of Deeds for Kent county, the charter of which was voided for non-payment of taxes, now desires to procure a restoration, renewal and revival of its charter, and hereby certified as follows:
1. The name of the corporation is:
UNITED STATES BASKETBALL LEAGUE, INC.
2. Its registered office in the State of Delaware is located at United Corporate Services, Inc., 15 East North Street, in the City of Dover, County of Kent, State of Delaware 19901. The name of its registered agent at that address is United Corporate Services, Inc.
3. The date when the restoration, renewal, and revival of the charter of this company is to commence is the 28th day of February, 1997, same being prior to the date of the expiration of the charter. This renewal and revival of the charter of this corporation is to be perpetual.
4. This corporation was duly organized and carried in the business authorized by its charter until the 1st day of March, 1997, at which time its charter became inoperative and void for non-payment of taxes and this certificate for renewal and revival is filed by authority of the duly elected directors of the corporation in accordance with the laws of the State of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312 of the General Corporation Law of the State of Delaware, as amended, providing for the renewal, extension and restoration of charters, Daniel T. Meisenheimer, III, the last authorized officer of UNITED STATES BASKETBALL LEAGUE, INC., has hereunto set his hand to this certificate this 22nd day of May, 2000.
By /S/ Daniel T. Meisenheimer III
Daniel T. Meisenheimer, III
Chief Executive Officer
|
EXHIBIT 3.ii
UNITED STATES BASKETBALL LEAGUE, INC.
BY-LAWS
U. S. B. L.
By-Laws
Article
I. Name and Principal Office
II. Purposes and Objects
III. Meetings of Shareholders
IV. Directors
V. Officers
VI. Commissioners Powers
VII. Certificates of Stock
VIII. Dividends
IX. Amendments
ARTICLE I
NAME AND PRINCIPAL OFFICE
Section 1. This corporation's name is the United States Basketball League, Inc. ("USBL").
Section 2. The principal office of the USBL is located at 117 North Broad Street, Milford, Connecticut 06460.
ARTICLE II
PURPOSES AND OBJECTS
Section 1. The purposes and objects of the USBL are:
(a) To operate a league of professional basketball clubs.
(b) To do everything and anything lawful and necessary, proper, suitable or convenient for the purpose(s) stated above.
Section 2. The USBL is operated for profit.
ARTICLE III
MEETINGS OF SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of shareholders shall be held on the 10th day of January of each year. If the day so designated falls upon a Sunday or a legal holiday, then the meeting shall be held upon the first business day thereafter.
Section 2. QUORUM. The presence, in person or by proxy, of the holders of a majority (HZ) percent of the outstanding stock entitled to vote on the subject matter shall be necessary to constitute a quorum for the transaction of business, but a lesser number may adjourn to some future rime not less than Fourteen (14) nor more than twenty-one (21) days later, and the Secretary shall thereupon give at least five (5) days notice by mail to each shareholder entitled to vote who was absent from such meeting.
Section 3. SPECIAL MEETINGS. Special meetings of shareholders may be called at any time by the President. The President shall call a special meeting of shareholder. whenever so requested in writing by a majority of Directors or by shareholders representing not less than twenty-five (25%) percent of the total number of shares of the issued and outstanding capital stock entitled to vote at said meeting. No business other than that specified in the call for the meeting shall be transacted at any such special meeting of the shareholders.
Section 4. VOTING. At all meetings of the shareholders all questions, the manner of deciding which is not specifically regulated by Delaware statutes, shall be determined by a majority vote of the shareholders present in person of by proxy.
Each shareholder present in person or by proxy, shall be entitled to cast one vote for each share of stock owned or represented by him.
Section 5. NOTICE. Written notice of the time and place and general purposes of all annual and special meetings shall be mailed or otherwise given as provided by law by the Secretary to each shareholder not less than thirty (30) days prior to the date thereof. Annual and special meetings of shareholders may be held at such time and place within the State of Connecticut as the Directors shall determine.
ARTICLE IV
DIRECTORS
Section 1. NUMBER. The affairs and business of this Corporation shall be managed by a Board of Directors elected by the Shareholders at their annual meeting. The number of directorships at any time shall be fixed by resolution, first, of the incorporator, and thereafter of the shareholders.
Section 2. TERM OF OFFICE. The term of office of each of the Directors shall be one year, and thereafter until his successor has been elected.
Section 3. DUTIES OF DIRECTORS. The Board of Directors shall have the control and general management of the affairs and business of the corporation.
Section 4. DIRECTORS' MEETINGS. Regular meetings of the Hoard of Directors shall be held immediately following the annual meeting of the shareholders, and at such other times as the Board of Directors may determine. Special meetings of the Board of Directors may be called by the President at any time, and shall be called by the President upon the written request of three (3) Directors. Any and all meetings may be held within or without of the State of Connecticut as the Directors shall determine.
Section 5. QUORUM. At any meeting of the Board of Directors, a majority of the Board shall constitute a quorum for the transaction of business; but in the event of a quorum not being present, a lesser number may adjourn the meeting to some future time, not more than fourteen (14) days later. The act of a majority of the Directors present at a meeting at which there is a quorum shall be the act of the Board of Directors.
Section 6. VOTING. At all meetings of the Board of Directors, each director is to have one vote, irrespective of the number of shares of stock that he or she may hold.
Section 7. VACANCIES. Vacancies in the Board occurring between annual meetings shall be filled for the unexpired portion of the term by the concurring vote of a majority of the remaining Directors.
Section 8. REMOVAL OF DIRECTORS. Any one or more of the Directors may be removed, either with or without cause, at any time by a vote of the shareholders holding sixty (602) percent of the stock, at any special meeting called for the purpose.
Section 9. NOTICE. Written notice of all regular and special meetings shall be mailed to each director by the Secretary not less than seven (7) days prior to the date fixed for such meeting.
Section 10. UNANIMOUS CONSENT. In lieu of any regular or special meeting and vote of the Directors the unanimous written consent of all Directors may be filed ~with the Secretary with respect to any action taken or to be taken by the Directors, and said consents shall, when filed, have the same force and effect as a unanimous vote of the Directors.
Section 11. All Directors of the USBL will be indemnified by the USBL against expenses actually and necessarily incurred by them in connection with defense of any action, suit or proceedings to which they are made a party, by reason of their being or having been elected to serve as directors of the USBL and against claims, losses, damages and judgments against them by reason of any act performed by them in their capacity as directors, except for any act in which they are adjudged liable for misconduct in the performance of their duties as a director.
Section 12. A. The Board of Directors shall appoint a Commissioner of the basketball league. The Commissioner's contract, if any, must be approved by two thirds of the members of the Board of Directors at a duly constituted meeting called for that purpose.
B. The Commissioner shall have a fixed term established by the Board of Directors, at an annual salary to be determined by the Board of Directors.
C. If the Commissioner dies or is incapacitated during his term (as determined by a majority of the Board of Directors), the Board of Directors shall appoint a new Commissioner within ninety (90) days after the previous Commissioner's death or determination of incapacity.
D. The Commissioner shall be vested with full authority to carry out the duties
delegated to him in these by-laws. When there is no Commissioner, the Board of
Directors may appoint an Acting Commissioner. The person designated as Acting
Commissioner by the Board of Directors shall have all of the Commissioner's
powers and duties.
ARTICLE V
OFFICERS
Section 1. NUMBER. The officers of this corporation shall be a President, a Vice President. a Secretary and a Treasurer, and such other officers as are designated by the Board of Directors.
Section 2. ELECTION. The Board of Directors, at its annual meeting held immediately after the annual meeting of shareholders, shall elect from among their number a President, a Vice president, a Secretary and a Treasurer and such other officers as the Board of Directors may determine, all of whom shall serve for the term of one
year and until their successors are duly elected and qualified. No more than two offices may be held by the same person.
Section 3. DUTIES OF OFFICERS. The duties and powers of the officers of the
corporation shall be as follows:
PRESIDENT
The President shall preside at all meetings of the Board of Directors and shareholders.
He shall present at each annual meeting of the shareholders and Directors a report of the condition of the business of the corporation.
He shall cause to be called regular and special meetings of the shareholders and Directors in accordance with these By-laws.
He shall appoint and remove, employ and discharge, and fix the compensation of all servants, agents, employees and clerks of the corporation, subject to the approval of the Board of Directors.
He shall sign and make all contracts and agreements in the name of the corporation.
He shall see that the books, reports, statements and certificates required by the statutes are properly kept, made and filed according to law.
He shall sign all certificates of stock.
He shall have general direction and management of the affairs of the corporation.
He shall enforce these By-laws and perform all the duties incident to the office
of President.
VICE PRESIDENT
The Vice President shall have the responsibility of assisting the President in carrying out his duties.
He shalt preside at all meetings of the Board of Directors and shareholders in the absence of the President.
He shall perform all the duties of the President in the event of the incapacity of the President.
He shall have specific responsibility, at the direction of the President, in the following areas: personnel, accounting, finances, insurance, shareholder relations, investments,
franchising, player relationships, player contracts, media, promotional arrangements, relationship with arena owners and insurance.
He shall issue reports at the request of the President or Board of Directors in each area of his responsibility at Least one time per year.
SECRETARY
The Secretary shalt keep the minutes of the meetings of the Board of Directors and of the shareholders in appropriate books.
He shall give and serve all notices of the corporation.
He shall be custodian of the records and of the seal, and affix the latter when authorized and required.
He shall keep the stock and transfer books in the manner prescribed by law.
He shall sign all certificates of stock.
He shall present to the Hoard of Directors at their stated meetings all communications addressed to him officially by the President or any officer or shareholder of the corporation.
He shall attend to all correspondence and perform all the duties incident to the officer of Secretary.
TREASURER
The Treasurer shall have the care and custody of and be responsible for the funds and securities of the corporation, and deposit all such funds in the name of the corporation in such bank or banks, trust company or trust companies or safe deposit vaults as the Board of Directors may designate.
In the absence of a resolution of the Directors to the contrary, he shall sign, make and endorse in the name of the corporation, all checks, drafts, notes and other evidences of debt.
He shall exhibit at all reasonable times his books and account. to any director or stockholder of the corporation upon application at the office of the corporation during business hours.
He shall render a statement of the condition of the finances of the corporation at each regular meeting of the Board of Directors, and at such other times as shall be required of him.
Re shall present a full financial report at the annual meeting at the shareholders.
He shall keep, at the office of the corporation, correct books of account of all its business and transactions and such other books of account as the Board of Directors may require.
He shall perform all duties incident to the office of Treasurer.
Section 4. VACANCIES, HOW FILLED. All vacancies in any office shall be filled by the Board of Directors without undue delay, at its regular meeting, or at a meeting specially called for that purpose.
Section 5. COMPENSATION OF OFFICERS. The officers shall receive such salary or compensation as may be determined by the Board of Directors.
Section 6. REMOVAL OF OFFICERS. The Board of Directors may remove any officer, by a two thirds vote, at any time, with or without cause.
ARTICLE VI
COMMISSIONER'S POWERS
Section 1. The Commissioner shall be the Chief Executive Officer of the operation of the Corporation's basketball league. The Commissioner may perform any act consistent with his obligation as Chief Executive Officer of such league, so long as such act is not inconsistent with any agreement entered into by the USBL, these By-laws and the rules and regulations of the league.
Section 2. The Commissioner is authorized to appoint committees.
Section 3. The Commissioner may recommend to the Board of Directors legal action and other steps against any person or ocher organization, including a USBL club, to protect the best interests of the USBL.
Section 4. The Commissioner shall have the power to hire such administrative and support personnel for the USBL as the Commissioner deems necessary to assist the Commissioner in the operation of the USBL, subject to the approval of the Board of Directors.
Section 5. The Commissioner is authorized to adopt and promulgate rules and regulations, subject to the approval of the Board of Directors, for the basketball league, which may include, without limitation:
(a) rules and regulations governing the contractual relationship of clubs and players, including the adoption of model player contracts.
(b) rules and regulations governing behavior, and the firing and suspension of players, coaches and any persons associated with any USBL club;
(c) rules and regulations governing the scheduling of basketball contests;
(d) rules and regulations governing the drafting of players by the various USBL basketball clubs;
(e) rules and regulations governing the playing and officiating of USBL basketball contests.
(f) rules and regulations governing the USBL All-Star Game and USBL playoff games and the manner of determining participation in such basketball contests;
(g) rules and regulations governing the keeping of records and statistical information of the USBL;
(h) rules and regulations governing USBL training camps;
(i) rules and regulations governing the assignment of player contracts and the manner in which a player's contract can be transferred from one club to another club;
(j) rules and regulations governing players' eligibility to participate for individual USBL basketball clubs in the league;
(k) rules and regulation governing the take-over of USBL clubs who have failed to adhere to their franchise agreements, these by-laws or the rules of the basketball League;
(l) rules and regulations governing the ownership by any party of a USBL franchise or interest in a USBL franchise;
(m) rules and regulations governing coaches, trainers and employees of all USBL franchises;
(n) rules and regulations governing situations in which a USBL club ceases operation, including a dispersal draft;
(o) rules and regulations governing adherence with league-wide contracts negotiated by the Corporation;
(p) rules and regulations governing local promotional agreements;
(q) rules and regulations governing any other aspect of the USBL operation necessary for the proper functioning of the basketball league.
ARTICLE VII
CERTIFICATES OF STOCK
Section 1. DESCRIPTION OF STOCK CERTIFICATES. The certificates of stock shall be numbered and registered in the order in which they are issued. They shall be
signed by the President and by the Secretary and sealed with the seal of the corporation.
Section 2. TRANSFER OF STOCK. The stock of the corporation shall be assignable and transferable on the books of the corporation only by the person in whose name it appears on said books, or his legal representatives. In case of transfer by attorney, the power of attorney, duly executed and acknowledged, shall be deposited with the Secretary. In all cases of transfer, the former certificate must be surrendered up and cancelled before a new certificate can be issued. No transfer shall be made upon the books of the corporation within ten days next preceding the annual meeting of the shareholders.
ARTICLE VIII
DIVIDENDS
Section 1. WHEN DECLARED. The Board of Directors shall by vote declare dividends from the unsecured and unrestricted surplus of the corporation whenever, in their Opinion, the condition of the corporation's affairs will render it expedient for such dividends to be declared, pursuant to law. No dividend shall be paid that will impair the capital of the corporation.
ARTICLE IX
AMENDMENTS
Section 1. HOW AMENDED. These By-laws may be amended by an affirmative vote of the shareholders representing sixty (601) percent of the capital stock entitled to vote, at an annual meeting or at a special meeting called for that purpose, provided that written notice shall have been sent to each shareholder entitled to receive such notice, which notice shalt state the amendments which are proposed to be made in such By-laws. Only such changes as have been specified in the notice shall be made, If, however, all the shareholders shall be present at any regular or special meeting, these By-laws may be amended by a unanimous vote, without any previous notice; and furthermore, these By-laws may be amended by unanimous consent action of the shareholders as provided in these By-Laws.
EXHIBIT 3.2.1
AMENDED
BY-LAWS
OF
THE UNITED STATES BASKETBALL LEAGUE, INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at c/o United Corporate Services. Inc., 410 South State Street, Dover, Delaware 19901 and United Corporate Services, Inc. shall be the registered agent of this corporation in charge thereof.
SECTION 2. OTHER OFFICES. The corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of meeting. In the event the Board of Directors fails to so determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the corporation in Delaware.
If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other than the election of directors may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting.
SECTION 3. VOTING. Each stockholder entitled to Vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting, shall be by ballot. All elections for directors shall be decided by
plurality vote; all other questions shall be decided by majority Vote except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the- time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
SECTION 4. QUORUM. Except as otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be, present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting frog time to time without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, or by resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than ten nor more than fifty days before the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat.
SECTION 7. ACTION WITHOUT MEETING. Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such-action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. The number of directors shall be at least three and no more than five. The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his Successor shall be elected and shall qualify. Directors need not be stockholders.
SECTION 2. RESIGNATIONS. Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the tine specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any director, member of a committee or other officer becomes vacant, the remaining directors in office, though less than a quorum by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen.
SECTION 4. REMOVAL. Any director or directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote.
SECTION 5. INCREASE OF NUMBER. The number of directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the directors, though less than a quorum, or, by the- affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify.
SECTION 6. POWERS. The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation or by these By-Laws conferred upon or reserved to the stockholders.
SECTION 7. COMMITTEES. The Board of Directors may, by resolution or resolutions passed by a majority of-the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member or such committee or committees, the member or members thereof present at any such meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-Laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power of authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the By-Laws, of the corporation; and unless the resolution, these By- Laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.
SECTION 8. MEETINGS. The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent, in writing, of all the directors.
Regular meetings of the directors may be held without notice at such place and times as shall be determined from time to time by resolution of the directors.
Special meetings of the board may be called by the President or by the Secretary on the written request of any two directors on at least two days' notice to each director and shall be held at such place or places as may be determined by the directors, or as shall be-stated in the call of the meeting.
SECTION 9. QUORUM. A majority of the, directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned.
SECTION 10. COMPENSATION. Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 11. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman, one or more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors.
SECTION 4. PRESIDENT. The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE PRESIDENT. Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books be- longing to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositaries as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of' all-his transactions as-Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the board shall prescribe.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by the law or by these By- Laws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, or by the directors, or stockholders, upon whose requisition the- meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation and of the directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant Treasurers
and Assistant Secretaries, if any, shall be elected and shall have such powers
and shall perform such duties as shall be assigned to them, respectively, by the
directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. A certificate of stock, signed by the Chairman or Vice-Chairman of the Board of Directors, if they be elected, President or Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. When such certificates are countersigned (1) by a transfer agent other than the corporation or its employee, or, (2) by a registrar other than the corporation or its employee, the signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificate shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as. the directors may designate, by whom they shall be. cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action, a determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that-the Board of Directors may fix a new record date for the adjournment meeting.
SECTION 5. DIVIDENDS. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion
deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words CORPORATE SEAL, Delaware, 1984. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be determined by resolution of the Board of Directors.
SECTION 8. CHECKS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, -and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage, prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute.
Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal of By-Law or By-Laws to be made be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat, or by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal of By-Law or By-Laws to be made, be contained in the notice of such special meeting.
| ARTICLE 5 |
| This schedule contains summary financial information extracted from the financial statements and is qualified in its entirety by reference to such financial statements. |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | FEB 28 1999 |
| PERIOD START | MAR 01 1998 |
| PERIOD END | FEB 28 1999 |
| CASH | 43,178 |
| SECURITIES | 20,420 |
| RECEIVABLES | 15,000 |
| ALLOWANCES | 0 |
| INVENTORY | 18,500 |
| CURRENT ASSETS | 263,428 |
| PP&E | 60,696 |
| DEPRECIATION | 55,739 |
| TOTAL ASSETS | 752,447 |
| CURRENT LIABILITIES | 569,407 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 11,057 |
| COMMON | 34,785 |
| OTHER SE | 137,198 |
| TOTAL LIABILITY AND EQUITY | 752,447 |
| SALES | 0 |
| TOTAL REVENUES | 806,552 |
| CGS | 0 |
| TOTAL COSTS | 114,570 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 3,801 |
| INCOME PRETAX | (160,965) |
| INCOME TAX | 0 |
| INCOME CONTINUING | (160,965) |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | (160,965) |
| EPS BASIC | (0.03) |
| EPS DILUTED | (0.03) |