ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

OVERVIEW

It is anticipated that the Company will continue to rely on financial assistance from affiliates. The Meisenheimer family is fully committed to making the Company a profitable operation and also making the League a viable one. Given the current lack of capital, the Company has not been able to develop any new programs to revitalize the League, nor has it been able to hire additional sales and promotional personnel. As a result, the Company is currently dependent on the efforts of Daniel T. Meisenheimer, III and two other employees for all marketing efforts. Their efforts have not resulted in any substantial increase in the number of franchises. The NBA has established a developmental basketball league known as the National Basketball Developmental League ("NBDL"). The Company believes that the establishment of this league, consisting of eight teams, will have no effect on the Company's season, since the NBDL season as presently constituted runs from November through March. Further, nothing prohibits a NBDL player from playing in the USBL. Accordingly, and as of the present time, the Company does not perceive the NBDL as a competitor. However, with the establishment of the NBDL, it is unlikely that, at least for the present time, the Company can develop any meaningful relationship with the NBA.

THREE MONTHS ENDED MAY 31, 2009 AS COMPARED TO MAY 31, 2008

Revenues decreased to $4,000 for the first quarter of 2009 from $21,000 in the first quarter of 2008. $0 and $21,000 of the 2009 and 2008 first quarter revenues, respectively, were derived from related parties.

Operating expenses decreased from $57,705 for the three months ended May 31, 2008 to $40,178 for the three months ended May 31, 2009. The decrease in operating expenses was primarily due to lower travel and promotion and other expenses, primarily as a result of the cancellation of the 2008 and 2009 seasons.

Interest expense decreased to $8,686 in 2009, as compared to $9,304 in 2008.

Net income for the three months ended May 31, 2009 was $1,895 as compared to a net loss of $46,007 for the three months ended May 31, 2008. This $47,902 improvement is due mainly to the $46,753 net gain from marketable equity securities in 2009.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash of $331 and a working capital deficit of $1,432,479 at May 31, 2009. The Company's statement of cash flows reflects cash used in operating activities of $81,283, which results primarily from the $46,752 increase in marketable equity securities and the $20,000 decrease in the amount due in connection with the South Korea venture. Net cash provided by financing activities was $74,381 in 2009 compared to cash provided of $35,273 in 2008.

---

The Company's ability to generate cash flow from franchise royalty fees is dependent on scheduling of a 2010 season and the financial stability of the individual franchises constituting the League. Each franchise is confronted with meeting its own fixed costs and expenses, which are primarily paid from revenues generated from attendance. Experience has shown that USBL is generally the last creditor to be paid by the franchise. If attendance has been poor, USBL has from time to time only received partial payment and, in some cases, no payments at all. The Company estimates that it requires approximately $300,000 of working capital to sustain operations over a 12-month period. Accordingly, if the Company is unable to generate additional sales of franchises and schedule a 2010 season within the next 12 months it will again have to rely on affiliates for loans and revenues to assist it in meeting its current obligations. With respect to long term needs, the Company recognizes that in order for the League and USBL to be successful, USBL has to develop a meaningful sales and promotional program. This will require an investment of additional capital. Given the Company's current financial condition, the ability of the Company to raise additional capital other than from affiliates is questionable. At the current time the Company has no definitive plan as to how to raise additional capital.