U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2000          Commission File No. 0-29627

                                    PSA, INC.
                 (Name of small business issuer in its charter)


             Nevada                                              88-0212662
 (State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                       9800 Sepulveda Boulevard, Suite 810
                          Los Angeles, California 90045
                    (Address of principal executive offices)
                     Issuer's telephone number: 310/258-0500


Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $.001
                                                                 par value
                                                              (Title of Class)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ ]  No [X]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best or registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

Issuer's revenues for its most recent fiscal year:               $ 12,808,924.00

At December 31, 2000 there were 9,141,200 outstanding shares of registrant's
common stock held by non-affiliates, with a market value of $9,141,200 based on
a closing bid quotation on the OTC Bulletin Board on that date of $1.00 per
share.

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 and 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ] Not applicable [X].

At December 31, 2000, a total of 35,985,423 shares of registrant's common stock
were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:  None

Transitional Small Business Disclosure Format (check one):  Yes [ ]  No [X]

<PAGE>

                                   PSA, INC.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

CAUTIONARY STATEMENTS

         YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND THE OTHER
INFORMATION CONTAINED IN THIS REPORT BEFORE INVESTING IN OUR COMMON STOCK. IF WE
DO NOT SUCCESSFULLY ADDRESS THE RISKS DESCRIBED BELOW, OUR BUSINESS, PROSPECTS,
FINANCIAL CONDITION, RESULTS OF OPERATIONS OR CASH FLOW COULD BE MATERIALLY
ADVERSELY AFFECTED. THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE BECAUSE
OF ANY OF THESE OR OTHER RISKS, AND YOU COULD LOSE ALL OR PART OF YOUR
INVESTMENT. WE URGE YOU TO REFER TO THE OTHER INFORMATION INCLUDED IN THIS
REPORT, INCLUDING THE FINANCIAL STATEMENTS AND RELATED NOTES.

         The following cautionary statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 in order for the PSA to avail itself on
the "safe harbor" provisions of that Act. The discussions and information in
this Report may contain both historical and forward-looking statements. To the
extent that the Report contains forward-looking statements regarding the
financial condition, operating results, business prospects, or any other aspect
of the PSA, please be advised that the PSA's actual financial condition,
operating results, and business performance may differ materially from that
projected or estimated by the PSA in forward-looking statements. The PSA has
attempted to identify, in context, certain of the factors it currently believes
may cause actual future experience and results to differ from the PSA's current
expectations. The differences may be caused by a variety of factors, including
but not limited to adverse economic conditions, intense competition, including
entry of new competitors, adverse international, federal, state, and local
government regulation, inadequate capital, unexpected costs, lower revenues and
net income than forecast, operating deficits, no profitability, loss of
customers, dilution caused by other issuances of Common Stock, warrants and
other securities by the PSA, price increases for advertising, labor, and
supplies, failure of Web site software, failure to obtain customers, the risk of
litigation and administrative proceedings involving the PSA and its employees,
the possible acquisition of new businesses that do not perform as anticipated,
intense competition, adverse government regulation, the possible fluctuation and
volatility of the PSA's operating results and financial condition, adverse
publicity and news coverage, inability to carry out marketing and sales plans,
changes in interest rates, inflationary factors, and other specific risks that
may be alluded to in this Report or in other reports issued by the PSA. The risk
factors listed in this Report could adversely affect the value of our Common
Stock. Any forward-looking statements contained in this Report should not be
relied upon as predictions of future events.

PSA, INC.

         PSA is a holding company for entities that are developing interactive
television services network ("T-Commerce") designed to unite global
interactivity via the familiar television format with the emerging digital
broadcast and interactive technologies, and digital video production and post
production services, as well as international tour, travel and entertainment
products and services.

         PSA EUROPE AG ("PSA AG"). This PSA subsidiary, based in Zurich,
Switzerland, was formed to conduct our European business affairs. In the areas
of capital formation, mergers and acquisitions and strategic alliances, PSA AG
will play an integral role.

         PSAZZ TV, INC. ("PSAZZ TV"), incorporated in the State of Delaware on
March 14, 2000, is a majority owned subsidiary of PSA created to develop and
operate our television related assets and acquisitions. In August 2000, PSA
executed a Purchase Agreement with New York Network, LLC to acquire WBVT, Inc.,
a UPN affiliate with 10 licenses in the Northeast United States as part of our
plan to consolidate stations in small high-opportunity markets into a new
national network to distribute its global entertainment content on a multi-media

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basis. As a low power TV broadcaster, WBVT is ideal positioned for last mile
broadband wireless Internet connection. Through PSAZZ TV, INC., PSA intends to
build a comprehensive T-Commerce affinity programming. The system is designed to
provide a full range of financial and local news, travel and entertainment
shows, as well as related information, products and services to be purchased
interactively. In our efforts to enhance interactive TV capabilities, we intend
to utilize currently available broad-band distribution software. PSA has not
completed the acquisition of WBVT, Inc. to date and there is no assurance as to
if or when the closing will occur.

         PSAZZ TRAVEL, INC. ("PSAZZ Travel"), incorporated in the State of
Delaware on July 27, 2000, is a majority owned subsidiary of PSA created to
develop and operate PSA's travel related assets and acquisitions. Through PSAZZ
Travel, PSA currently provides tour and travel packages for domestic and
international customers. With the launch of our travel website, PSAZZ Travel
will broaden its base of products and services to include the Traveltainment
concept of entertainment and travel shows and related information by using
existing e-commerce products and services available for purchase.

         Both PSAZZ TV and PSAZZ Travel will operate under the guidance and
management of the PSAZZ Network, which has been created to integrate the
convergent technologies of e-commerce and T-Commerce.

         PSAZZ NETWORK, INC. ("PSAZZ Network"), was incorporated in the State of
Nevada on April 5, 1999, as a majority-owned subsidiary of PSA to develop and
operate PSA's exclusive Internet brand.

         ROYAL INTERNATIONAL TOURS, INC. ("RIT"), a California corporation
incorporated in 1980, was acquired as a wholly owned subsidiary of PSA as of
March 14, 2000. RIT was a travel tour operator with an office in El-Segundo,
California, specializing in tours for European visitors to the United States.

         TRAVEL TREASURES, INC. ("TVL"), a California corporation incorporated
in 1982, was acquired as a wholly owned subsidiary of PSA as of March 15, 2000.
TVL is a full service travel agency based in El-Segundo, specializing in
affinity tours and cruise ship packages for both foreign and domestic travelers.

         JET VACATIONS, INC. ("JET"), a Florida corporation incorporated in
1996, was acquired as a wholly owned subsidiary of the Company as of November
30, 2000. JET is a travel tour operator with an office in El Segundo,
California, specializing in tours to Europe for the United States domestic
travel market.

         PSAZZ AIR, INC. ("PSAZZ Air"), incorporated in the State of California
on May 27, 1994, is a 80%-owned subsidiary of PSA. PSA has no immediate plans to
activate PSAZZ Air. Neither PSA nor PSAZZ Air has any affiliation with the
former Pacific Southwest Airlines, PSA Airlines or USAirways, which acquired PSA
Airlines in 1998.

HISTORICAL MATERIAL EVENTS

         PSA is a publicly held company that was incorporated in the State of
Nevada in 1985. PSA's Common Stock, $.001 par value per share, is listed on the
NASDAQ OTC BB trading under the symbol PSAX. Formerly known as American
Telecommunications Standard International, Inc., PSA completed its merger with
PSA, Inc., a California corporation, in April of 1998. Although PSA was the
surviving entity, the management of the terminated entity replaced all of its
management. In connection with the merger, PSA changed its name to the our
present name, as well as its trading symbol from ASAT to PSAZ. On September 22,
1998, the Company changed its trading symbol to PSAX.

         On February 18, 2000, PSA acquired all the outstanding shares of Common
Stock of Canticle Corporation ("Canticle"), a Delaware corporation, from the
prior Canticle shareholder in exchange for an aggregate of 56,000 shares of
Common Stock of PSA (the "Acquisition"). As a result, Canticle became a wholly
owned subsidiary of PSA. The Acquisition was intended to qualify as a
re-organization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended. Upon effectiveness of the Acquisition,
pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities

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<PAGE>

and Exchange Commission ("SEC"), PSA became the successor issuer to Canticle for
reporting purposes under the Securities Exchange Act of 1934. The Acquisition
occurred after December 31, 1999, and as of December 31, 1999 Canticle
Corporation was the reporting company. A copy of the Agreement and Plan of
Reorganization was filed as an exhibit to the Current Report on Form 8-KSB filed
with the Securities and Exchange Commission on May 14, 2000.

         On March 14, 2000, the Company completed the acquisition of 100% of the
issued and outstanding stock of Royal International Tours, Inc. ("Royal"), a Los
Angeles based travel tour operator, specializing in tours for European visitors
to the United States. Pursuant to the terms of the Acquisition Agreement, the
former shareholders of Royal received shares of restricted common stock of the
Company and cash. The previous sole owner of Royal, Mr. Richard Sondheim, was
retained as CEO of Royal International Tours pursuant to a one (1) year
engagement agreement. Subsequently, he was terminated for cause on February 12,
2001 and the Company filed a lawsuit for rescission and other claims in March
2001 (see "Legal Proceedings")

         On March 15, 2000, the Company completed the acquisition of 100% of the
issued and outstanding stock of Travel Treasures, Inc. ("Travel"), a retail
travel agency. Travel is a California corporation specializing in cruise ship
packages and individual travel arrangements. Pursuant to the terms of the
Acquisition Agreement, the former shareholders of Travel received $30,000.

         In May 4, 2000, the Company entered into an agreement with SMA Real
Time, Inc. ("SMA") to acquire a 50% equity interest in SMA in exchange for cash
and stock, valued at $12 million. In October 2000, the Company reduced its
holdings in SMA to 34%, thereby reflecting its investment in SMA as a
significant $9.9 million asset.

         On August 30, 2000, PSA entered into an agreement with New York
Network, LLC ("NYN") to acquire 100% ownership WBVT Television, Inc., a UPN
affiliate with 10 licenses in the Northeast United States. On January 18, 2000,
the application to transfer control of the licenses to PSAZZ TV, Inc. was filed
with the Federal Communications Commission (FCC). Under the terms and conditions
of the acquisition agreement by PSA and NYN, the completion of the transaction
is subject to FCC approval and transfer of the licenses. Concurrently, NYN
applied to the FCC for transfer of the licenses to its affiliate, WBVT
Television, Inc., and PSA assigned its rights to the licenses to its subsidiary,
PSAZZ TV, Inc. These subsidiary companies are the applicants in the FCC filing.
On March 23, 2001, the FCC consented to the transfer of the licenses. The
Company anticipates that the FCC will issue its formal grant order on or about
May 1, 2001 and the acquisition can proceed to consummation.

         On September 14, 2000, PSA entered into an agreement with Execute
Direct, Inc. ("EDC") to acquire an 80% interest in EDC in exchange for cash and
stock. As a result of adverse market and economic conditions in the 4th Quarter
2000, PSA reduced its holdings in EDC to a $105,000 investment as of December
28, 2000. EDC provides on-line securities trading and training.

         On September 15, 2000, PSA entered into an agreement to acquire 100% of
the issued and outstanding stock of Jet Vacations International, Inc. ("Jet").
Jet, a Florida corporation, is a wholesaler of travel products specializing
inWestern European destinations. Pursuant to the terms of the acquisition
agreement, the former shareholders of Jet were to receive 242,593 shares of
restricted common stock of the Company. On November 30, 2000, the Company
completed the acquisition

         On October 26, 2000, PSA entered into an Investment Agreement (the
"Equity Line") with GMF Holdings, Inc., ("GMF"). Pursuant to the terms of the
Investment Agreement, PSA may issue and sell to GMF, by delivery of a put
notice, up to $50,000,000 of PSA's Common Stock during the period beginning on
the effective date of a registration statement covering PSA's Common Stock and
ending 30 months later or 36 months from October 26, 2000, whichever occurs
soonest, or upon termination of the Investment Agreement. GMF has agreed to
purchase shares of Common Stock within 10 business days after receipt of the put

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<PAGE>

notice (the "Purchase Period"). PSA may deliver put notices no more frequently
than once every 11 consecutive business days. The purchase price per share is
91% of the average of the three lowest bid prices of PSA's Common Stock during
the Purchase Period.

         The minimum amount of Common Stock that GMF is required to purchase
during the applicable Purchase Period is the lesser of the put notice amount
(unless otherwise reduced in accordance with the terms of the Investment
Agreement) or 150% of the average daily trading volume during the 40 Business
Days prior to the put notice date. In no event will GMF be required to purchase
an amount of PSA Common Stock that would result in GMF beneficially owning more
than 9.9% of PSA's outstanding shares of Common Stock on the put notice date.
Conversely, PSA will not be required to issue shares to GMF totaling more than
19.99% of PSA Common Stock outstanding as of October 26, 2000, as may be
adjusted, if such issuances could cause a delisting of the Company's Common
Stock, without first obtaining the approval of PSA's shareholders.

         The issuance and sale of our Common Stock to GMF is conditional upon:
(i) the effectiveness of a registration statement with respect to such Common
Stock at all times during the Purchase Period; (ii) the listing of our Common
Stock on at least the OTC electronic board, during the period commencing on the
date the put notice is delivered by PSA and ending on and including the related
closing date of such purchase, and our Common Stock has not been suspended from
trading or been notified of any pending or threatened action to delist or
suspend our Common Stock; (iii) no major transaction has occurred or been
announced during the period commencing on October 26, 2000, and ending on and
including the applicable closing date of any stock purchases; and (iv) PSA has
complied with its obligations and is not in breach of the Investment Agreement,
the Amended and Restated Registration Rights Agreement and any other related
agreement. A major transaction is defined in the Investment Agreement as: (i)
the consolidation, merger or other business combination of PSA into another
person (other than certain mergers effected solely for the purposes of changing
the jurisdiction of incorporation of PSA); (ii) the sale or transfer of all or
substantially all of PSA's assets; or (iii) the consummation of a purchase,
tender or exchange offer made to and accepted by the holders of more than 30% of
the economic interest in, or the combined voting power of all classes of voting
stock of PSA.

         The Investment Agreement will automatically terminate upon the earliest
to occur of the purchase by GMF of $50,000,000 in PSA's Common Stock, 36 months
after October 26, 2000 or 30 months from the date that the initial registration
statement is declared effective, whichever is earlier, or the bankruptcy or
insolvency of PSA. Additionally, GMF has the option to terminate the Investment
Agreement upon the occurrence of certain events, including without limitation:
(x) subject to certain exceptions, the issuance or sale by PSA of any equity
securities or securities convertible into equity securities without the prior
written consent of GMF if the primary purpose of such issuance or sale is the
raising of capital, (y) the suspension of trading of PSA's Common Stock for a
period of five consecutive business days, and (z) if PSA has not filed a
registration statement for the shares of Common Stock issuable to GMF pursuant
to the Investment Agreement on or before May 1, 2001, or such registration
statement has not been declared effective within 120 days after the initial
filing date of the registration.

CURRENT OPERATIONS

         PSA's current operations consist of business activities of its three
(3) wholly owned travel subsidiaries: JET, TVL and, RIT and the launch of its
Internet portal at HTTP://WWW.PSAZZ.COM. For the 12 months ending December 31,
2000, these entities had revenues of $12,808,924 with an operating loss of
$8,053,703.

BUSINESS PLAN

         PSA intends to build a fully integrated content, distribution and
multi-media production infrastructure for its PSAZZ Network subsidiary through a
series acquisitions and alliances of related on-and-offline entities, including:

      TELEVISION BROADCASTING. PSA intends to own and operate broadcast
television channels dedicated to high quality affinity programming, which
represents one of the most popular emerging television formats. The Company is
in the process of acquiring WBVT Television, Inc. to operate and distribute
programming through its low power transmission and through other distributors,

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syndicators and licensing agreements. PSA's principal objectives are to grow
revenues and profitability from the convergence of TV and the Internet by
becoming the viewer's path destination in the search for high quality, branded
and affinity programming and for the advertisers targeting these viewers. The
key elements of our business strategy to achieve these objectives are:
capitalize on our unique brands by marketing to other television distributors,
viewers and advertisers; expand distribution of our formats through leading
distributors in markets worldwide; increase advertising revenues by targeting
leading local advertisers in our DMAs by expanding our sales staff; continue to
refine and enhance the attractiveness of our network to viewers and advertisers;
capitalize on the digital broadband content and distribution to create
additional revenue streams for our business; and facilitate the implementation
of these strategies through advanced digital globalization of convergence and
interactivity.

         THE TRAVELTAINMENT LAUNCH. Under the umbrella of the "PSAZZ Network,"
PSA's initial focus will be on the travel market. PSAZZ Network is planning to
offer its targeted, professional affinity groups one-stop-access to an
end-to-end spectrum of tailored in-depth travel programs and services, including
"Traveltainment" packages driven by high profile sports, entertainment and
cultural events. The launch of this service is projected for July 2001.

         TOUR INDUSTRY CONSOLIDATION. PSA will pursue a virtual consolidation
strategy of the highly fragmented offline tour industry. The PSAZZ Network will
seek to achieve market advantage by using its proprietary travel and tour
technologies to deliver the range of choice, ease of access and use. PSA plans
to aggregate small to midsize tour companies and corporate travel departments
into an industry wide partnership with a set of travel services sites under the
umbrella of the PSAZZ Network brand, as well as providing access to PSA's
library of proprietary and repackaged, multi-media content that includes
streaming videos and virtual tours of resorts, cruise lines and destinations
worldwide. This concept anticipates driving additional traffic to the PSAZZ
website, dramatically increasing brand awareness and creating a new revenue
stream.

         PUBLISHING COMPANIES. PSA is currently negotiating the purchase of
several special interest publications, which will be cross-marketed within the
PSAZZ Network.

         ONLINE MUSIC. PSA is currently negotiating with an online music site
that has developed a 35,000 plus digital music database along with the
infrastructure and expertise to deliver ("stream") high quality audio programs
to segmented audiences.

         MUSIC PRODUCTION. PSA is currently negotiating to acquire a record
company and a recording studio in the Los Angeles area.

         No assurance can be given that PSA will be able to implement any
aspects of its business plan or to maintain the operations that it has currently
established. PSA will need additional capital either through financing or
through operations to meet its business goals. There is no assurance that PSA
can reverse its operating losses or that it can raise additional capital to
allow it to expand its planned Internet operations.

MARKETING

         PSA intends to pursue a segmentation strategy that gives priority to
providing its products and services to those communities and their affinity
groups via converging T-Commerce, the Internet and travel services. PSA expects
to take advantage of the shared demographics of affinity groups by creating
travel packages, goods and services customized to their interests. Positioned as
"Traveltainment," these packages will be driven by sports and commercial events
or international business or trade conferences.

EMPLOYEES

         The Company and its subsidiaries currently employ approximately 47
employees, none of which are subject to collective bargaining agreements.
Approximately 25 individuals are retained to perform management functions for
the Company under engagement agreements or consultant contracts.

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TRADEMARKS AND LICENSES

         Three trademark applications have been approved and notices of
allowance have been issued. PSA intends to file applications for additional
marks in connection with a variety of goods and services to be offered by the
Company and its affiliates.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company leases approximately 6,000 square feet of office space at
its business address at a monthly rental rate of $6,505, subject to annual
adjustment. The lease term expired in February, 2001, and PSA currently occupies
the space, on a month to month basis, subject to negotiation of a new lease. RIT
leases approximately 3,200 square feet of office space for $3,367 per month. Its
lease expires on April 15, 2002. TVL leases approximately 1,800 square feet on a
month to month basis. JET leases approximately 5,100 square feet of office space
for $11,830 per month. Its lease expires in January 2004. In January 2001, the
Company consolidated its three travel subsidiaries in the El Segundo facilities
of JET. The Company is currently renegotiating its leases at the 9800 S.
Sepulveda Blvd., Los Angeles location.

         The Company expects to lease approximately 7,500 to 10,000 square feet
of operating facilities for PSAZZ.COM in the future on terms to be determined.

ITEM 3.  LEGAL PROCEEDINGS

         PSA and its subsidiaries are currently involved in the following legal
proceedings:

         HAWKINS V. PSA, INC. ET AL., Superior Court of Los Angeles County,
California, Case No. YC033477. On October 16, 1998, Frankie and Harry Hawkins
filed a complaint against the Company and others, alleging breach of contract
and fraud, and rescission of the Company's agreement to purchase Frankie
Hawkins' controlling share of Pacific States Airlines Services, Inc. ("PSAS"),
PSAS filed for bankruptcy protection in or around May 2000. The complaint
against the Company was previously dismissed by the court, but reinstated in
February 2001. The Court is considering the Company's motion to file a
cross-complaint against Frankie Hawkins for misrepresentations and resultant
damages in connection with the acquisition of PSAS and, the court granted the
Hawkins' request to reopen the case. Trial is set for October 10, 2001.

         MEYER GROUP LTD., ET AL., V. DOUGLAS T. BEAVER, ET AL., Superior Court
of Orange County, California, Case No. 775680. Defendant Robert E. Thompson
filed a cross-complaint against the Company and others, including American
Telecommunications Standards International, Inc. ("ASAT"), with whom the Company
entered into a stock exchange agreement and plan of reorganization on March 13,
1998. Mr. Thompson alleges that he was fraudulently induced by ASAT and others
to invest money in various ventures, both related and unrelated to the Company.
The Company believes this claim is without merit, and is vigorously defending
the cross-complaint. On November 7, 2000, Mr. Thompson filed a separate, but
related action, against the Company in the Orange County Superior Court,
alleging substantially identical causes of action as those found in the
cross-complaint in the Meyer v. Beaver case. Since the claims therein are
redundant, the Company expects that case to be dismissed in the near future.

         FNG & ASSOCIATES, INC. V. PSA, INC., Superior Court of Los Angeles
County, California, Case No. BC224041. On FNG & Associates, Inc. ("FNG") filed a
complaint against the Company, alleging breach of contract and fraud claiming
that the Company failed to compensate FNG for its financial public relations
services. FNG seeks damages of not less than $1,272,000, plus an award of
punitive damages and attorneys' fees. The Company is vigorously defending this
claim on the grounds that the services FNG agreed to perform were never
provided. Trial is set to begin on April 11, 2001.

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         OKOTURO, ET AL. V. PSA, INC., ET AL., Superior Court of Los Angeles
County, California. In August 2000, a suit was filed against the Company by
Richard Okoturo, an individual, and Richard Okoturo, doing business as Sammoric
Financial Co., alleging breach of contract for accounting services allegedly
provided and claiming $27,100, plus 100,000 shares of the Company's stock for
services rendered. The Company believes this action has no merit and is
defending the claim. Trial is set for October 22, 2001.

         STOCK V. PSA, INC., District Court of Clark County, Nevada, A424877. In
September 2000, James Stock d/b/a Stock Enterprises filed a complaint against
the Company, claiming unspecified damages exceeding $40,000. The Company is
negotiating a resolution of Mr. Stock's claim.

         ZURLO V. PSA, INC., AT AL., Superior Court of Los Angeles County,
California, Case No. SC064886. In January 2001, a suit was filed by Carmen Zurlo
and Brad Holcomb, alleging breach of contract and fraud. Plaintiffs are seeking
$75,000 in compensatory damages, plus loss of earnings. The Company believes
this action to have no merit and is defending against the claim. Discovery has
not yet commenced and no trial date has been set.

         PSA, INC. V. SONDHEIM, Superior Court of Los Angeles County,
California, Case No. BC246795. On March 14, 2001, the Company filed a complaint
against Richard Sondheim, the former president and former sole shareholder of
Royal International Tours, Inc. The Company purchased one hundred percent of the
outstanding shares of RIT in March 2000. The Company believes that Mr. Sondheim
misrepresented the liabilities of RIT in connection with the purchase by PSA of
RIT. The Company therefore is seeking rescission of the purchase agreement and a
return of the purchase price and all damages caused by Mr. Sondheim's wrongful
conduct. The Company is waiting Mr. Sondheim's answer to the complaint and will
then commence discovery in May 2001.

         ROBERT ROSEN ETC. V. PSA, INC., ET AL., Superior Court of Los Angeles
County, California, Case No. BC246441. A complaint was filed in March 2001
against PSA for unpaid legal fees allegedly incurred in defending the Company in
several pieces of litigation. The Company is defending this action and will be
negotiating a resolution of this case in the near future.

         BONNER V. PSA, INC. District of Harris County, Texas, Case No. 99-39761
filed August, 1999. Plaintiff alleges a breach of contract seeking approximately
$20,000 plus 75,000 shares of PSA, Inc. The Company believes that this claim has
no merit because of a breach of contract and failure to perform by the
plaintiff. In October 2000, a confidential settlement was reached in this action
and a dismissal was entered with the court on November 2, 2000.

         FORMER MANAGEMENT OF ASAT. PSA of California entered into a stock
exchange agreement and plan of reorganization on March 13, 1998 with American
Telecommunications Standards International, Inc., ("ASAT") which has
subsequently changed its name to PSA, Inc. The transaction was entered into by
the Walsh Family Trust based on representations by former management that ASAT
had no litigation, no material contracts, no liabilities and a positive
stockholders equity. On August 2, 1999, the Securities and Exchange Commission
filed a complaint in Federal District Court against fifteen individuals and
entities, among which were former management of ASAT, for their roles in a
fraudulent offering and market manipulation of the stock of the Company. Neither
the Company, its subsidiaries or any of their current management were named in
the complaint.

         DUPONT V. PACIFIC SOUTHWEST AIRLINES, INC., Superior Court of
California, San Diego County Case No. 719562. This case was filed in May, 1997
against PSA, Inc. and several officers and directors of the Company, alleging
fraud in the issuance of securities of PSAZZ Air, Inc. Plaintiff Thomas Halder
has been dismissed as plaintiff per his request and replaced by substitute
plaintiff Michael DuPont. Plaintiff DuPont sought to have the case certified as
an investor class action, but the Court denied his request. Despite the notice
of the action from Mr. Dupont's counsel to the other shareholders, none has so
far joined this action. Thus, the case is at this time limited to Mr. DuPont's
individual claim pertaining his $75,000 investment. In November, 1999, the Court
abated the action and required Mr. DuPont to pursue his claim in arbitration. It
is the view of the Company's counsel that he will not proceed with the
arbitration.

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         A suit was filed by the Trustee for Air 21 Bankruptcy Estate against
PSAZZ AIR, INC. in the U.S. Bankruptcy Court, Eastern District of California,
Case No. 97-10084-B-7. During September 1999, this case was reduced to a
judgment of approximately $46,000. The Company is attempting to negotiate a
lesser amount and/or payment terms.

         NEW ARCHETYPE V. PSAZZ AIR, INC., ET AL., Superior Court of Los Angeles
County, California, Case No. BC231773. A suit was filed in late June 2000
against PSAZZ by New Archetype Publishing Corp., d/b/a Vox Mundi, alleging
breach of contract. Vox Mundi is seeking approximately $74,000 in compensatory
damages as well as punitive damages. The Company believes this action is without
merit and is defending the case. Trial is set for September 24, 2001.

         The Company and its subsidiaries are also involved in a number of
smaller litigations and claims. The Company has interposed answers in all cases,
except where an answer is not yet due. The Company has established provisions
for most of the liabilities represented by these smaller claims, and where
provisions have not been established, management believes it will prevail on the
merits and intends to vigorously contest the claims. Based on its past
experience dealing with such claims, the Company anticipates it will be able to
settle most of these smaller litigations with provisions to pay over periods of
time, which are manageable for the Company.

         There are no substantial or material pending or threatened legal
proceedings to which the Company is a party, except for the above-described
proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         During 2000, there were no actions brought before the security holders
of the Company.


                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

         (a) GENERAL. As of December 31, 2001, PSA has an authorized
capitalization of 75,000,000 shares of common stock, $.001 par value per share,
of which 35,985,423 shares have been issued and outstanding as of December 31,
2000. No preferred stock has been authorized.

         (b) MARKET INFORMATION. The common stock of PSA is traded in the
over-the-counter ("OTC") market and quoted through the NASD OTC Bulletin Board
under the symbol "PSAX." The market for OTC common stock is often characterized
by low volume and broad price and volume volatility. PSA cannot give any
assurance that a stable trading market will develop for its stock or that an
active trading market will be sustained. Moreover, the trading price of PSA's
common stock could be subject to wide fluctuations due to such factors as
quarterly variations in operating results, competition, announcements of new
products by PSA or its competitors, product enhancements by PSA or its
competitors, regulatory changes, differences in actual results from those
expected by investors and analysts, changes in financial estimates by securities
analysts, and other events or factors.

         Prior to February 2000, the Company had been a non-reporting publicly
traded company with certain of its securities exempt from registration under the
Securities Act of 1933 pursuant to Rule 504 and Rule 506 of Regulation D of the
General Rules and Regulations of the Securities and Exchange Commission. The
NASD Stock Market implemented a change in its rules requiring all companies
trading securities on the NASD OTC Bulletin Board to become reporting companies
under the Securities Exchange Act of 1934. At that time PSA acquired all the
outstanding shares of Canticle Corporation to become successor issuer to it in
order to comply with the Eligibility Rule for the OTC Bulletin Board. (See Form
10-KSB for fiscal year ending December 31, 1999)

                                       9
<PAGE>

       The following table sets forth the range of high and low bid quotation
per share for the Common Stock as reported by the OTC Bulletin Board for the
quarterly periods of the calendar years indicated. The bid price reflects
inter-dealer prices and does not include retail mark-up, markdown, or
commission. The Company enacted a 1 for 50 reverse stock split effective
September 22, 1998 and a two share dividend effective May 14, 1999.

                                                           High          Low
                                                           ----          ---
1999
  First Quarter                                            2 1/6         5/8
  Second Quarter                                           4 7/8         11/4
  Second Quarter (after stock dividend)                    3 3/8         11/2
  Third Quarter                                            4 3/4         1 3/16
  Fourth Quarter                                           15.0          12 7/16

2000
  First Quarter                                            20 1/8        7 7/16
  Second Quarter                                           14 5/8        3 3/8
  Third Quarter                                            6 1/4         13/4
  Fourth Quarter                                           5 3/16        1 3/16
                                                           5 3/16        1 3/16
2001
  First Quarter                                            2 3/8         3/8


SHAREHOLDERS

         As of December 31, 2000, PSA had 35,985,423 shares of common stock
outstanding held by approximately 677 shareholders of record.

DIVIDENDS

         PSA has never declared or paid cash dividends on its Common Stock and
anticipates that future earnings, if any, will be retained for development of
its business.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

GENERAL

         This management's discussion and analysis of financial condition and
results of operations contain, in addition to historical information,
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially. Factors that could cause or contribute to such
differences include, without limitation, our liquidity and capital resources,
changes in consumer preferences and relationships, new product introductions,
timing of our technological advances, and the other factors discussed in this
Report and other reports published by the Company.

         The following is a discussion of our financial condition, results of
our operations and liquidity. This discussion should be read together with our
financial statements and notes included in this 10-KSB.

         On November 30, 2000, we completed our previously announced merger into
Jet Vacations International, Inc. ("Jet") by exchanging 242,593 shares of our
common stock for 100% of Jet. We have accounted for the merger as a
pooling-of-interests and, accordingly, all prior period consolidated financial
statements have been restated to include the results of operations, financial
position and cash flows of Jet. The effects of conforming Jet's accounting
policies to those of ours were not material. All references to the "Company"
reflect the pooling-of-interest.

                                       10
<PAGE>

RESULTS OF OPERATIONS

         Comparison of the Year Ended December 31, 2000 vs. the Year Ended
December 31, 1999:

         We reported revenue of $12,808,924 and $5,758,788 for the years ended
December 31, 2000 and 1999, respectively. The increase was attributed to the
acquisition of Royal International Tours, Inc. ("Royal") on March 14, 2000. We
reported operating expenses for the years ended December 31, 2000 and 1999 of
$11,575,971 and $4,860,630, respectively, with the increase in 2000 resulting
from the acquisitions in 2000.

         Selling, general and administrative expenses increased from $3,412,482
for the year ended December 31, 1999 to $7,710,346 for the year ended December
31, 2000. The increase was attributable to expenses incurred for consulting,
public relations and advisory fees, aggregating $3,618,230, other corporate
overhead and selling, general and administrative expenses of our acquired
businesses.

         During the year ended December 31, 1999, the Company incurred non-cash
compensation aggregating $940,526. This was the result of stock issued to David
E. Walsh as compensation for his management services to the Company.

         For the years ended December 31, 1999 and 2000, we incurred operating
losses of $3,454,850 and $8,053,703, respectively. The losses are principally
due to expenses incurred in the development of software, public relations,
advisory fees, general and administrative expenses, and the lack of revenues.

         For the years ended December 31, 1999 and 2000, other expense was
$3,975,000 and $2,993,127, respectively. For the year ended December 31, 1999,
as consideration for executing a settlement and mutual release agreement, the
Board of Directors approved the issuance of 15,900,000 shares of common stock
(adjusted for the effect of the share dividend), valued at $3,975,000, to the
Walsh Family Trust. During the year ended December 31, 2000, we charged $700,000
to operations in connection with our purchase of the Canticle Corporation (Note
5). For the year ended December 31, 2000, the Company realized a gain
aggregating $310 from the sale of marketable securities and net interest income
of $144,895. During the year ended December 31, 2000, we recorded an equity loss
of unconsolidated affiliate - SMA aggregating $2,438,232.

         We expect revenues to increase during 2001 as we recognize revenues
from our acquisitions. However, such revenues may not be sufficient to eliminate
our operating loss during 2001.

LIQUIDITY AND CAPITAL RESOURCES

         We funded our operations during 1999 and 2000 through sales of our
common stock resulting in net proceeds to us of $2,901,025 in 1999 and
$11,232,668 in 2000. Sales of our common stock in 1999 and 2000 were sold in
private transactions in reliance on various exemptions from the registration
requirements of the Securities Act.

         During the year ended December 31, 2000, we expended $612,000 to fund
business acquisitions, $517,500 for the initial payment on the acquisition of a
software license, $5,194,721 for working capital needs and $825,013 for
discontinued operations. In addition, we invested $5,050,000 in our equity
investment in SMA.

         Our cash and cash equivalents and marketable securities approximated
$1,008,225 and $30,600, respectively, as of December 31, 2000. We will require
additional funding in order to accomplish our growth objectives and marketing of
our products and services. There is no assurance that we will be able to secure
any or all funding necessary for our future growth and expansion. There is also
no assurance that even if we manage to obtain adequate funding to complete any
contemplated acquisition, such acquisition will succeed in enhancing our
business and will not ultimately have an adverse effect on our business and will
not ultimately have an adverse effect on our business and operations. We are
exploring other financing alternatives, including private placements and public
offerings.

                                       11
<PAGE>

         In this regard, on October 26, 2000, we entered into an Investment
Agreement (the "Equity Line") with GMF Holdings, Inc., ("GMF"). Pursuant to the
terms of the Investment Agreement, we may issue and sell to GMF, by delivery of
a put notice, up to $50,000,000 of our Common Stock, during the period beginning
on the effective date of a registration statement covering our Common Stock and
ending on the earlier of: (I) the date which is 30 months from the effective
date of such registration statement; (ii) 36 months from October 26, 2000; and
(iii) the termination of the Investment Agreement. GMF has agreed to purchase
shares of Common Stock within 10 Business Days (as such term is defined in the
Investment Agreement) after receipt of the put notice from us. GMF is required
to purchase a certain number of shares of our common stock pursuant to each put
notice, based on the average daily trading volume of our stock and other
conditions. The purchase price is a discount from the prevailing bid price of
our common stock during the 15 business days preceding the put notice. (See
"Item 1. Business - Historical Material Events")

         On May 4, 2000, we entered into an agreement to transfer to S.M.A. Real
Time Inc. ("SMA") $10 million in cash and 1,958,824 shares of common stock,
valued at approximately $10 million, in exchange for 55% of SMA's Class A voting
common stock and 43.75% of SMA's Class B non-voting common stock, together
representing a 50% equity interest in SMA. The following consideration was due
to SMA as follows:

            $1,250,000 in cash on May 4, 2000
            $3,750,000 in cash on May 16, 2000
            $5,000,000 obligation due October 4, 2000
            1,958,824 shares of our common stock

         In October of 2000 as a result of market and economic conditions for
the Company and business conditions for SMA, our obligation to SMA of $5,000,000
was not paid. As a result, our combined interest in SMA's common shares was
reduced to 34%, and the $5,000,000 obligation to SMA was cancelled and the
shares of PSA common stock provided to SMA was reduced from 1,958,824 to
1,035,473. Our investment in SMA has been accounted for under the equity method
of accounting commencing with May 4, 2000. Included in the carrying amount of
the SMA investment is goodwill of $6,535,612 at December 31, 2000, which is
being amortized over 10 years.

         On August 25, 2000, we entered into a purchase agreement to acquire
100% of the membership units of New York Network, LLC ("NYN"). Pursuant to the
terms of the purchase agreement, the former members of NYN will receive common
stock equal to $5,000,000. The number of shares of common stock to be issued in
consideration to the members will be based on the five-day average stock closing
price of our common stock preceding commencement of the acquisition. We are also
required to provide a loan to NYN to be used for operational expenses up to a
maximum of $388,000. As of December 31, 2000, we advanced NYN $212,000 and that
amount is reflected in other assets on the accompanying balance sheet.
Consummation of the acquisition is subject to, among other things, the approval
of the Federal Communications Commission ("FCC") to this transaction, the
transfer to us of all FCC licenses currently owned by NYN and the completion of
a due diligence review. As of December 31, 2000, the agreement has not been
consummated. The acquisition will be accounted for as a purchase under which the
purchase price will be allocated to the acquired assets and assumed liabilities
based upon the fair values at the date of the acquisition.

                                       12
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

         The financial statements for the years ended December 31, 1999 and 2000
are included herein.




                           PSA, INC. AND SUBSIDIARIES
                           --------------------------

                                FINANCIAL REPORT
                                ----------------

                               FOR THE YEARS ENDED
                           DECEMBER 31, 1999 AND 2000
                           --------------------------

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                     INDEX TO CONSOLIDATED FINANCIAL REPORT


                                                                      Page Nos.
                                                                      ---------

INDEPENDENT AUDITORS' REPORT                                              1


CONSOLIDATED BALANCE SHEET                                                2
     At December 31, 2000


CONSOLIDATED STATEMENTS OF OPERATIONS                                     3
     For the Years Ended December 31, 1999 and 2000


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIENCY) EQUITY              4
     For the Years Ended December 31, 1999 and 2000


CONSOLIDATED STATEMENTS OF CASH FLOWS                                     5
     For the Years Ended December 31, 1999 and 2000


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                             6 - 32

<PAGE>


To the Shareholders
PSA, Inc. and Subsidiaries


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

We have audited the accompanying consolidated balance sheet of PSA, Inc. and
Subsidiaries and its subsidiaries (the "Company") as of December 31, 2000, and
the related consolidated statements of operations, stockholders'(deficiency)
equity and cash flows for the year 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 audit. The related
statements of operations, stockholders'(deficiency) equity and cash flows for
the year ended December 31, 1999 were audited by Tabb, Conigliaro & McGann,
P.C., who merged with Grassi & Co., CPAs, P.C. as of January 1, 2001, and whose
report dated April 13, 2000 expressed an unqualified opinion on those
statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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 PSA, Inc. and Subsidiaries as
of December 31, 2000, and the results of its operations and its cash flows for
the year then ended, in conformity with accounting principles generally accepted
in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred net losses of approximately $8,151,000 and $11,068,000
during the years ended December 31, 1999 and 2000, respectively. Further, as of
December 31, 2000, the Company had a working capital deficiency of approximately
$5,515,000 and is in arrears on accounts with certain vendor creditors which,
among other things, causes the balances to become due on demand. Those
conditions raise substantial doubt about the Company's 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.

As more fully described in Note 12, the Company is a defendant in various
lawsuits alleging breach of contract and other matters. It is not possible to
predict at this time whether the ultimate awards or settlement will exceed the
amount currently provided for by the Company.


                                          GRASSI & CO., CPAs, P.C.

New York, NY
March 14, 2001

                                      F-1
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                               AT DECEMBER 31, 2000



                                     ASSETS
                                      ------


CURRENT ASSETS
  Cash and cash equivalents                                        $    907,983
  Cash - restricted                                                     100,242
  Marketable securities                                                 306,000
  Other current assets                                                   26,022
                                                                   -------------
      TOTAL CURRENT ASSETS                                            1,340,247

EQUIPMENT - at cost, net of accumulated depreciation of
  $232,233                                                              150,393
INVESTMENT IN UNCONSOLIDATED AFFILIATE - SMA                          7,789,033
CAPITALIZED SOFTWARE COSTS                                            1,725,000
OTHER ASSETS                                                            398,181
                                                                   -------------
      TOTAL ASSETS                                                 $ 11,402,854
                                                                   =============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES
  Accounts payable and accrued liabilities                         $  5,458,951
  Accrued capitalized software costs                                  1,207,500
  Loans payable                                                         188,686
                                                                   -------------
      TOTAL CURRENT LIABILITIES                                       6,855,137
                                                                   -------------
COMMITMENTS AND CONTINGENCIES (Notes 1, 5, 6, 12, 13 and 15)

STOCKHOLDERS' EQUITY:
  Common stock, par value $.001 per share; authorized
    75,000,000 shares; issued and outstanding 35,985,423
    shares                                                               35,985
  Additional paid-in capital                                         33,508,987
  Unearned compensation                                              (1,050,937)
  Accumulated deficit                                               (27,800,352)
  Accumulated other comprehensive loss                                 (145,966)
                                                                   -------------
      TOTAL STOCKHOLDERS' EQUITY                                      4,547,717
                                                                   -------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 11,402,854
                                                                   =============

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-2
<PAGE>
<TABLE>

                            PSA, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>

                                                           For the Years Ended
                                                               December 31,
                                                     --------------------------------
                                                         1999               2000
                                                     -------------      -------------
<S>                                                  <C>                <C>
REVENUES - NET                                       $  5,758,788       $ 12,808,924
                                                     -------------      -------------
OPERATING EXPENSES:
  Cost of revenues                                      4,860,630         11,575,971
  Selling, general and administrative                   3,412,482          7,710,346
  Software development                                          -            275,179
  Compensatory element of stock issuances
    pursuant to consulting and other agreements           940,526            366,500
  Asset impairment                                              -            934,631
                                                     -------------      -------------
      TOTAL OPERATING EXPENSES                          9,213,638         20,862,627
                                                     -------------      -------------
LOSS FROM OPERATIONS                                   (3,454,850)        (8,053,703)
                                                     -------------      -------------
OTHER (EXPENSE) INCOME:
 Issuance of common shares in settlement of
    dispute with principal shareholder                 (3,975,000)                 -
 Costs of acquisition of Canticle Corporation                   -           (700,000)
 Net realized gain on sale of securities                        -                310
 Interest income - net of interest expense of
   $-0- and $6,360 for 1999 and 2000,
   respectively                                                 -            144,895
 Equity loss of unconsolidated affiliate - SMA                  -         (2,438,332)
                                                     -------------      -------------
      TOTAL OTHER (EXPENSE) INCOME                     (3,975,000)        (2,993,127)
                                                     -------------      -------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME
  TAXES                                                (7,429,850)       (11,046,830)

PROVISION FOR INCOME TAXES                                      -                  -
                                                     -------------      -------------
LOSS FROM CONTINUING OPERATIONS                        (7,429,850)       (11,046,830)

LOSS FROM DISCONTINUED OPERATIONS, Net of
  income taxes of $-0- and $-0-, respectively            (721,315)           (21,200)
                                                     -------------      -------------
NET LOSS                                             $ (8,151,165)      $(11,068,030)
                                                     =============      =============
BASIC AND DILUTED NET LOSS PER SHARE:
  From continuing operations                         $       (.36)      $       (.32)
  From discontinued operations                               (.04)                 -
                                                     -------------      -------------
    NET LOSS PER SHARE                               $       (.40)      $       (.32)
                                                     =============      =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING - BASIC AND DILUTED                      20,543,760         34,674,603
                                                     =============      =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-3
<PAGE>
<TABLE>

                                         PSA, INC. AND SUBSIDIARIES

                         CONSOLIDATED STATEMENT OF STOCKHOLDERS'(DEFICIENCY) EQUITY

                                    FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>

                                                                        Common Stock               Paid-in
                                                     Per Share  ----------------------------       Capital
                                                      Amount      Shares(1)        Amount         Par Value
                                                    ----------  -----------     ------------     ------------
<S>                                                     <C>     <C>             <C>              <C>
Balance - December 31, 1998                                      2,739,923      $     2,740      $ 6,066,465

Net loss                                                                 -                -                -
Other comprehensive income:
  Unrealized gain on marketable
    securities                                                           -                -                -
     Total Comprehensive Income                                          -                -                -
Shares issued for settlement - WF
  Trust                                                  .250   15,900,000           15,900        3,959,100
Issuance of common stock                                 .333       15,000               15            4,985
Issuance of common stock for services
  rendered                                               .211    4,710,000            4,710          990,290
Shares issued under employment
  contract                                               .250    5,700,000            5,700        1,419,300
Shares issued for services rendered                      .250       55,000               55           13,695
Shares issued for services rendered                     1.047      475,295              475          497,134
Issuance of common stock under Reg. S                   2.294    1,462,294            1,462        2,894,563
Amortization of unearned compensation                                    -                -                -
                                                               ------------     ------------     ------------
Balance - December 31, 1999                                     31,057,512      $    31,057      $15,845,532
                                                               ============     ============     ============
</TABLE>
<TABLE>
<CAPTION>
                                                                                  Accumulated
                                                                                     Other
                                              Unearned          Accumulated      Compensation
                                            Compensation          Deficit            Income            Total
                                            ------------      -------------       ------------     -------------
<S>                                         <C>               <C>                 <C>              <C>
Balance - December 31, 1998                 $         -       $ (8,581,157)       $         -      $ (2,511,952)
                                                                                                   -------------
Net loss                                                        (8,151,165)                          (8,151,165)
Other comprehensive income:
  Unrealized gain on marketable
    securities                                                                        279,250           279,250
                                            ------------      -------------       ------------     -------------
     Total Comprehensive Income                       -                  -                  -        (7,871,915)
                                            ------------      -------------       ------------     -------------
Shares issued for settlement - WF
  Trust                                               -                  -                  -         3,975,000
Issuance of common stock                              -                  -                  -             5,000
Issuance of common stock for services
  rendered                                            -                  -                  -           995,000
Shares issued under employment
  contract                                   (1,425,000)                 -                  -                 -
Shares issued for services rendered                   -                  -                  -            13,750
Shares issued for services rendered                   -                  -                  -           497,609
Issuance of common stock under Reg. S                 -                  -                  -         2,896,025
Amortization of unearned compensation            89,063                  -                  -            89,063
                                            ------------      -------------       ------------     -------------
Balance - December 31, 1999                 $(1,335,937)      $(16,732,322)       $   279,250      $ (1,912,420)
                                            ============      =============       ============     =============
</TABLE>

(1)  Share amounts have been restated to reflect the one-for-fifty reverse stock
     split effective on September 16, 1998 and the 200% stock dividend effective
     on May 14, 1999.

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-4
<PAGE>
<TABLE>

                                         PSA, INC. AND SUBSIDIARIES

                         CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIENCY) EQUITY

                                    FOR THE YEAR ENDED DECEMBER 31, 2000
<CAPTION>

                                                                       Common Stock                Paid-in
                                                     Per Share  ---------------------------        Capital
                                                      Amount      Shares(1)        Amount         Par Value
                                                    ----------  -----------     -----------      ------------
<S>                                                     <C>     <C>             <C>              <C>
Balance - December 31, 1999                                     31,057,512      $   31,057       $15,845,532

Comprehensive loss:
  Net loss                                                               -               -                 -
  Other comprehensive income (loss):
    Unrealized loss on marketable
      securities - net of reclassific-
        ation adjustments                                                -               -                 -

     Total Comprehensive Income (Loss)                                   -               -                 -

Shares issued for services rendered                                195,000             195           366,305
Shares issued for equity investment in
  SMA                                                   $5.00    1,035,473           1,036         5,176,329
Shares issued for acquisition of
  Canticle Corp.                                         8.93       56,000              56           499,944
Shares issued for acquisition of Royal
  International Tours, Inc.                              2.00       78,370              78           391,772
Issuance of common stock under Reg. S                    3.15    3,563,068           3,563        11,229,105
Amortization of unearned compensation                                    -               -                 -
                                                                -----------     -----------      ------------
Balance - December 31, 2000                                     35,985,423      $   35,985       $33,508,987
                                                                ===========     ===========      ============
</TABLE>
<TABLE>
<CAPTION>
                                                                                  Accumulated
                                                                                     Other
                                              Unearned          Accumulated      Compensation
                                            Compensation          Deficit            Income            Total
                                            ------------      -------------       ------------     ------------
<S>                                         <C>               <C>                 <C>              <C>
Balance - December 31, 1999                 $ (1,335,937)     $(16,732,322)       $   279,250      $(1,912,420)
                                                                                                   ------------
Comprehensive loss:
  Net loss                                             -       (11,068,030)                 -      (11,068,030)
  Other comprehensive income (loss):
    Unrealized loss on marketable
      securities - net of reclassific-
      ation adjustments                                -                  -          (425,216)        (425,216)
                                            -------------     --------------      ------------     ------------
     Total Comprehensive Loss                                                                      (11,493,246)
                                            -------------     --------------      ------------     ------------
Shares issued for services rendered                    -                  -                 -          366,500
Shares issued for equity investment in
  SMA                                                  -                  -                 -        5,177,365
Shares issued for acquisition of
  Canticle Corp.                                       -                  -                 -          500,000
Shares issued for acquisition of Royal
  International Tours, Inc.                            -                  -                 -          391,850
Issuance of common stock under Reg. S                  -                  -                 -       11,232,668
Amortization of unearned compensation            285,000                  -                 -          285,000
                                            -------------     --------------      ------------     ------------
Balance - December 31, 2000                 $ (1,050,937)     $ (27,800,352)      $  (145,966)     $ 4,547,717
                                            =============     ==============      ============     ============
</TABLE>

(1)  Share amounts have been restated to reflect the one-for-fifty reverse stock
     split effective on September 16, 1998 and the 200% stock dividend effective
     on May 14, 1999.

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-5
<PAGE>
<TABLE>

                                    PSA, INC. AND SUBSIDIARIES

                                CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                  For the Years Ended
                                                                      December 31,
                                                           --------------------------------
                                                               1999                2000
                                                           -------------      -------------
<S>                                                        <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                 $ (8,151,165)      $(11,068,030)
  Adjustments to reconcile net loss to net cash
    used in operating activities from continuing
    operations:
      Equity loss of unconsolidated affiliate - SMA                   -          2,438,332
      Loss from discontinued operations                         721,315             21,200
      Compensatory element of stock issuances                   940,526            366,500
      Common stock issued in settlement of claims by
        Walsh Family Trust                                    3,975,000                  -
      Costs of acquisition of Canticle Corporation                    -            700,000
      Depreciation and amortization                                   -             42,901
      Amortization of unearned compensation                      64,458            285,000
      Amortization of excess of cost price over net
        assets of business acquired                                   -              4,500
      Asset impairment loss                                      89,063            934,631
      Gain on sale of marketable securities                           -               (310)

  (Increase) decrease in assets and liabilities, net
    of effects from acquisitions:
      Other current assets                                        5,598             36,706
      Accounts payable and accrued liabilities                1,490,843          1,069,040
      Due to/from officers                                      141,291            (25,191)
                                                           -------------      -------------
        NET CASH USED IN OPERATING ACTIVITIES                  (723,071)        (5,194,721)
                                                           -------------      -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                                  -            (60,773)
  Equity investment in unconsolidated affiliate - SMA                 -         (5,050,000)
  Expenditures for acquisitions                                       -           (612,000)
  Payments for capitalized software costs                             -           (517,500)
  Purchase of marketable securities                          (1,406,128)        (1,459,856)
  Proceeds from sale of marketable securities                         -          2,413,738
  Increase in other assets                                            -           (270,973)
                                                           -------------      -------------
        NET CASH USED IN INVESTING ACTIVITIES                (1,406,128)        (5,557,364)
                                                           -------------      -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                      2,901,025         11,232,668
  Proceeds from loans payable                                    55,968             51,128
                                                           -------------      -------------
        NET CASH PROVIDED BY FINANCING ACTIVITIES             2,956,993         11,283,796
                                                           -------------      -------------
CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS              328,744           (825,013)
                                                           -------------      -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS          1,156,538           (293,302)

CASH AND CASH EQUIVALENTS - BEGINNING                           145,019          1,301,557
                                                           -------------      -------------
CASH AND CASH EQUIVALENTS - ENDING                         $  1,301,557       $  1,008,225
                                                           =============      =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                                F-6
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1 - BUSINESS AND CONTINUED OPERATIONS

PSA, Inc. and Subsidiaries (the "Company") was incorporated in the state of
Nevada in 1985. Formerly known as American Telecommunications Standard
International, Inc. ("ASAT"), the Company completed its merger with PSA, Inc.
and Subsidiaries, a California corporation ("PSA of California"), in April 1998.
In connection with the merger, ASAT changed its name to the Company's present
name.

The Company is a holding company for entities comprising its proposed
broad-based global travel and transportation services network that will include
global electronic commerce ("E-Commerce"), international tour services, video
production and post production services, air transportation, ground services and
Internet television broadcast. The Company intends to search and acquire
Internet and non-Internet companies that fit its acquisition portfolio criteria
to complement its own products and services and extend its content offering.

In conjunction with its business plan, the Company acquired 100% of the
outstanding stock of three travel tour operators for cash and shares of its
common stock during the year ended December 31, 2000 (Note 5), and acquired a
34% equity interest of SMA Real Time Inc. during May 2000 (Note 4). SMA is a
provider of wide range of production and post-production services to companies
that produce commercials, television programs, music videos and feature films.
As discussed further in Note 8, on March 14, 2000, the Company completed the
sale of 100% of the issued and outstanding stock of Pacific States Airline
Services, Inc. ("PSAS") to a member of the Board of Directors of the Company.
PSAS is an airport/airline service company providing skycap services at various
airports in the United States. The sale will enable the Company to concentrate
on its proposed on-line travel services business. Accordingly, the Company has
accounted for the operations of PSAS as a discontinued operations.

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, for the years ended December 31, 1999 and
2000, the Company incurred net losses of approximately $8,151,000 and
$11,068,000, respectively, and as of December 31, 2000, had a working capital
deficiency of approximately $5,515,000. The Company is in arrears with
substantially all of its payables and accrued liabilities. The Company has
limited finances and requires additional funding in order to accomplish its
growth objectives and marketing of its products and services. There is no
assurance that the Company can reverse its operating losses or that it can raise
additional capital to allow it to expand its planned Internet operations. There
is also no assurance that even if the Company manages to obtain adequate funding
to complete any contemplated acquisition, such acquisition will succeed in
enhancing the Company's business and will not ultimately have an adverse effect
on the Company's business and operations. These factors raise substantial doubt
about the Company's ability to continue as a going concern.

                                      F-7
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BUSINESS AND CONTINUED OPERATIONS (Continued)

The Company funded its operations during 1999 and 2000 through sales of its
common stock resulting in net proceeds to the Company of $2,901,025 in 1999 and
$11,232,668 in 2000. Sales of common stock in 1999 and 2000 were sold in private
transactions in reliance on various exemptions from the registration
requirements of the Securities Act. The Company is exploring other financing
alternatives, including private placements and public offerings. The Company has
an Investment Agreement for an Equity Line of potential capital investment from
an unaffiliated investor, as described in greater detail in Note 13. The Company
is currently in the process of registering the shares underlying the Equity Line
on a Form S-1 registration statement.

The Company's ability to continue as a going concern is dependent upon obtaining
additional financing and restructuring its existing liabilities. These financial
statements do not include any adjustments relating to the recoverability of
recorded asset amounts that might be necessary as a result of the above
uncertainty.

NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of PSA, Inc. and
Subsidiaries and its majority and wholly-owned subsidiaries (collectively the
"Company"). All material intercompany accounts and transactions have been
eliminated in consolidation. Investments in 20% to 50% owned entities are
accounted for under the equity method and investments in less than 20% owned
entities are accounted for on the cost method.

Use of Estimates
----------------

The preparation of the consolidated financial statements, in conformity with
accounting principles generally accepted in the United States of America,
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 consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Cash and Cash Equivalents
-------------------------

The Company considers all short-term highly liquid investments with a maturity
of three months or less when purchased to be cash or cash equivalents.

                                      F-8
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investment in Marketable Securities
-----------------------------------

The Company accounts for its investments using Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in debt and Equity
Securities" ("SFAS No. 115"). This standard requires that certain debt and
equity securities be adjusted to market value at the end of each accounting
period. Unrealized market value gains and losses are charged to earnings if the
securities are traded for short-term profit. Otherwise, such unrealized gains
and losses are charged or credited to comprehensive income.

Management determines the proper classifications of investments in obligations
with fixed maturities and marketable equity securities at the time of purchase
and reevaluates such designations as of each balance sheet date. At December 31,
2000, all securities covered by SFAS No. 115 were designated as available for
sale. Accordingly, these securities are stated at fair value, with unrealized
gains and losses reported in comprehensive income. Realized gains and losses on
sales of investments, as determined on a specific identification basis, are
included in the Consolidated Statement of Operations.

Property and Equipment
----------------------

Property and equipment are recorded at cost. Depreciation and amortization is
computed using the straight line method over the estimated useful lives of five
years.

Capitalized Software Costs
--------------------------

The Company capitalizes costs of computer software developed or obtained for
internal use. Capitalized costs primarily include the cost of a software license
purchased from a third party (Note 6). The costs will be amortized on a
straight- line basis over five years, commencing when the computer software is
ready for its intended use. As of December 31, 2000, the use of the computer
software had not commenced.

                                      F-9
<PAGE>

                          PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Long-Lived Assets
-----------------

The Company periodically assesses the recoverability of long-lived assets,
including property and equipment, capitalized software costs, intangibles and
excess of cost over net assets of businesses acquired, when there are
indications of potential impairment, based on estimates of undiscounted future
cash flows. The amount of impairment is calculated by comparing anticipated
discounted future cash flows with the carrying value of the related asset. In
performing this analysis, management considers such factors as current results,
trends, and future prospects, in addition to other economic factors.

Revenue Recognition
-------------------

Income and direct expenses related to travel sales are recognized as revenue and
expenses during the month of travel.

Advertising Expenses
--------------------

Advertising expenses are charged to operations when incurred. Advertising
expense for the year ended December 31, 1999 and 2000 approximated $37,274 and
$587,187, respectively.

Income Taxes
------------

The provision for income taxes is based on the elements of income and expenses
as reported in the accompanying statements of operations.

Deferred tax liabilities and assets are determined based on the difference
between the financial statement carrying amount and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.

Stock-Based Compensation
------------------------

As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation", the
Company accounts for its stock-based compensation arrangements pursuant to APB
Opinion No. 25, "Accounting for Stock Issued to Employees". In accordance with
the provisions of SFAS No. 123, the Company discloses the proforma effects of
accounting for these arrangements using the minimum value method to determine
fair value.

                                      F-10
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Split and Stock Dividend
------------------------------

On September 8, 1998, the Board of Directors authorized, and a majority vote of
the shareholders approved, a one-for-fifty reverse split of its issued and
outstanding common stock as of September 1, 1998 to be effective upon the filing
date, September 16, 1998.

On March 12, 1999, the Board of Directors declared, and a majority vote of the
shareholders approved, a stock dividend for issuance to each of the shareholders
of the common stock who was a shareholder of record on May 14, 1999, as a stock
dividend, two shares of restricted common stock for each outstanding share of
the common stock owned by each shareholder.

The accompanying consolidated financial statements, notes and other references
to share and per share data have been retroactively restated to reflect the
reverse stock split and stock dividend for all periods presented.

Loss Per Share
--------------

Basic net loss per common share has been computed based on the weighted average
number of shares of common stock outstanding during the periods presented, which
were retroactively adjusted to give recognition to the reverse stock split on
September 16, 1998 and the stock dividend on May 14, 1999.

Fair Value of Financial Instruments
-----------------------------------

The financial statements include various estimated fair value information, as
required by Statement of Financial Accounting Standards 107, "Disclosures about
Fair Value of Financial Instruments". Such information, which pertains to the
Company's financial instruments, is based on the requirements set forth in that
Statement and does not purport to represent the aggregate net fair value to the
Company.

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

Cash and cash equivalents: The carrying amount approximates fair value because
of the short-term maturity of those instruments.

                                      F-11
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments (Continued)
-----------------------------------

Investment in marketable securities: The fair value of investments in marketable
securities is based on quoted prices.

Receivables and payables: The carrying amounts approximates fair value because
of the short maturity of those instruments.

All of the Company's financial instruments are held for purposes other than
trading.

Impact of Recently Issued Accounting Standards
----------------------------------------------

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". The Company
is required to adopt SFAS No. 133 for the year ending December 31, 2001. SFAS
No. 133 establishes methods of accounting for derivative financial instruments
and hedging activities related to those instruments as well as other hedging
activities. Because the Company currently holds no derivative financial
instruments and does not currently engage in hedging activities, adoption of
SFAS No. 133 is expected to have no material impact on the financial condition
or results of operations.

On December 3, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"). SAB 101 summarizes certain areas of the
Staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements. The Company believes that its current
revenue recognition principles comply with SAB 101.

NOTE  3 - MARKETABLE SECURITIES

Marketable securities consist of the following:

                                                  At December 31, 2000
                                         ---------------------------------------
                                                       Unrealized       Fair
                                                        Holdings        Market
                                            Cost          Loss          Value
                                         -----------  -----------    -----------
Equity securities                        $   451,966  $ (145,966)    $  306,000
                                         ===========  ===========    ===========

No deferred taxes have been provided for unrealized holding loss.

                                      F-12
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  4 - INVESTMENT IN UNCONSOLIDATED AFFILIATE - SMA

On May 4, 2000, the Company entered into an agreement to transfer to S.M.A. Real
Time Inc. ("SMA") $10 million in cash and 1,958,824 shares of common stock,
valued at approximately $10 million, in exchange for 55% of SMA's Class A voting
common stock and 43.75% of SMA's Class B non-voting common stock, together
representing a 50% equity interest in SMA. The following consideration was due
to SMA as follows:

            $1,250,000 in cash on May 4, 2000
            $3,750,000 in cash on May 16, 2000
            $5,000,000 obligation due October 4, 2000
            1,958,824 shares of the Company's common stock

In October of 2000, the Company's obligation to SMA of $5,000,000 was not paid.
As a result, the Company's combined interest in SMA's common share was reduced
to 34% and the $5,000,000 obligation to SMA was cancelled and the shares of PSA
common stock provided to SMA was reduced from 1,958,824 to 1,035,473. The
Company's investment in SMA has been accounted for under the equity method of
accounting commencing with May 4, 2000. Included in the carrying amount of the
SMA investment is goodwill of $6,535,612 at December 31, 2000, which is being
amortized over 10 years.

SMA provides a wide range of production and post-production services to
companies that produce commercials, television programs, music videos and
feature films. SMA's principal activities include studio videotape recording,
film to videotape transfer, computer generated visual effects and the coloring,
creation of customized virtual studio sets, editing and dubbing of various form
of emerging media, including film and video. Most of SMA's services are
performed at its headquarters in lower Manhattan, New York.

NOTE  5 - ACQUISITIONS

a)  Purchase Transactions:

Canticle Corporation
--------------------

Pursuant to an Agreement and Plan of Reorganization, effective February 18,
2000, the Company acquired all the outstanding shares of common stock of
Canticle Corporation ("Canticle"), a Delaware corporation, from the shareholders
thereof, in an exchange for $200,000 in cash and 56,000 shares of common stock
of the Company valued at $500,000. As a result of this transaction, Canticle has
become a wholly-owned subsidiary of PSA effective on February 18, 2000. The
acquisition is intended to qualify as a reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.

                                      F-13
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  5 - ACQUISITIONS (Continued)

a) Purchase Transactions: (Continued)

Canticle Corporation (Continued)
--------------------

Canticle had no operating history nor any revenues or earnings from operations.
Canticle had no significant assets and no financial resources. In evaluating
Canticle as a candidate for the proposed acquisition, the Company placed a
primary emphasis on Canticle's status as a reporting company under Section 12(g)
of the Securities Exchange Act of 1934, as amended, and Canticle's facilitation
of the Company becoming a reporting company under the Act. Accordingly, the cost
of the acquisition, $700,000, has been charged to operations during the year
ended December 31, 2000.

Royal International Tours, Inc.
-------------------------------

On March 6, 2000, the Company completed the acquisition of 100% of the issued
and outstanding stock of Royal International Tours, Inc. ("Royal"), a travel
tour operator, specializing in tours for European visitors to the United States.
Royal's office is located in Los Angeles, California. Pursuant to the terms of
the Acquisition Agreement, the former shareholders of Royal received 78,370
shares of restricted common stock of the Company valued at $391,850 and cash of
$382,000.

The acquisition was accounted for as a purchase, under which the purchase price
was allocated to the acquired assets and assumed liabilities based upon fair
values at the date of the acquisition. The excess of the purchase price over the
fair value of the net assets acquired amounted to $934,631. The accompanying
consolidated financial statements include the operations of Royal from the date
of acquisition, March 6, 2000. During the fourth quarter of 2000, Royal
experienced a significant decline in its revenue base. Consequently, the Company
determined that the goodwill associated with the acquired business was impaired.
As a result, the Company recorded a charge to operations aggregating $934,631.

On March 14, 2001, the Company filed a complaint against the former president
and shareholder of Royal (see Note 15).

Travel Treasures, Inc.
----------------------

On March 15, 2000, the Company completed the acquisition of 100% of the issued
and outstanding stock of Travel Treasures, Inc. ("Travel"), a travel tour
operator. Travel is a California corporation currently located in Los Angeles,
California. Pursuant to the terms of the Acquisition Agreement, the former
shareholders of Travel received $30,000.

                                      F-14
<PAGE>

                            PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  5 - ACQUISITIONS (Continued)

a) Purchase Transactions: (Continued)

The acquisition was accounted for as a purchase, under which the purchase price
was allocated to the acquired assets and assumed liabilities based upon fair
values at the date of the acquisition. The excess of the purchase price over the
fair value of the net assets acquired amounted to $30,000 and is being amortized
on a straight-line basis over 5 years. The accompanying consolidated financial
statements include the operations of Travel from the date of acquisition, March
15, 2000.

The Company's consolidated financial statements for the year ended December 31,
1999 do not include the results of operations of Royal and Travel and the
consolidated financial statements for the year ended December 31, 2000 do not
include the results of operations of Royal for the period from January 1, 2000
through March 6, 2000 and Travel for the period January 1, 2000 through March
15, 2000. The following summarizes the proforma results of operations for the
year ended December 31, 1999 and 2000, assuming the foregoing acquisitions had
occurred on January 1, 1999 and 2000:

                                                      1999              2000
                                                  -------------    -------------
          Revenues - Net                          $ 11,844,963     $ 13,313,145
                                                  =============    =============
          Loss from Operations                    $ (3,513,456)    $ (8,199,337)
                                                  =============    =============
          Loss Before Taxes                       $ (7,488,456)    $(11,192,464)
                                                  =============    =============
          Basic and Diluted Net Loss Per Share    $       (.40)    $       (.32)
                                                  =============    =============

New York Network, LLC - Pending Acquisition
-------------------------------------------

On August 25, 2000, the Company entered into a purchase agreement to acquire
100% of the membership units of New York Network, LLC ("NYN"). Pursuant to the
terms of the purchase agreement, the former members of NYN will receive common
stock equal to $5,000,000. The number of shares of common stock to be issued in
consideration to the members will be based on the five-day average stock closing
price of the Company's common stock preceding commencement of the acquisition.
The Company is also required to provide a loan to NYN to be used for operational
expenses up to a maximum of $388,000. As of December 31, 2000, the Company
advanced NYN $212,000 and is reflected in other assets on the accompanying
balance sheet. Consummation of the acquisition is subject to, among other
things, the approval of the Federal Communications Commission ("FCC") to this
transaction, the transfer to the Company of all FCC licenses currently owned by
NYN and the completion of a due diligence review. As of December 31, 2000, the
agreement has not been consummated.

                                      F-15
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  5 - ACQUISITIONS (Continued)

a) Purchase Transactions: (Continued)

New York Network, LLC - Pending Acquisition (Continued)
-------------------------------------------

NYN is a cellular network of ten low-power television licenses and construction
permits that are linked by a high capacity fiber optic cable. The network
currently serves as a dynamic regional market that spans Vermont, New York, New
Hampshire and Montreal, Canada. Operating under the call sign WBVT-TV, NYN is an
affiliate of the United Paramount Network.

The acquisition will be accounted for as a purchase under which the purchase
price will be allocated to the acquired assets and assumed liabilities based
upon the fair values at the date of the acquisition.

b) Pooling-of-Interests Transactions

Jet Vacations International Inc.
--------------------------------

On November 30, 2000, the Company completed the acquisition of 100% of the
issued and outstanding stock of Jet Vacations International, Inc. ("Jet"). Jet,
a Florida corporation, is a wholesaler of travel products specializing in
Western European destinations. Pursuant to the terms of the acquisition
agreement, the former shareholders of Jet received 242,593 shares of restricted
common stock of the Company.

The merger with Jet constituted tax-free reorganizations and has been accounted
for as pooling-of-interests transaction. Accordingly, all prior period
consolidated financial statements presented have been restated to include the
combined results of operations, financial position and cash flows of Jet as
though they had always been a part of Jet.

                                      F-16
<PAGE>

                            PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  5 - ACQUISITIONS (Continued)

b) Pooling-of-Interests Transactions (Continued)

Jet Vacations International Inc. (Continued)
--------------------------------

There were no transactions between the Company and Jet prior to the
combinations. Certain reclassifications were made to Jet's financial statements
to conform presentation. The results of operations for the separate companies
and the combined amounts included in the consolidated financial statements
follow:

<TABLE>
<CAPTION>
                                             PSA, Inc. and
                                              Subsidiaries           Jet             Combined
                                             -------------      -------------      -------------
Year Ended December 31, 2000 (Unaudited):
----------------------------------------
<S>                                          <C>                <C>                <C>
Revenue                                      $  6,621,214       $  6,187,710       $ 12,808,924
Loss from continuing operations              $(10,604,292)      $   (442,538)      $(11,046,830)
Net loss                                     $(10,625,492)      $   (442,538)      $(11,068,030)

Year Ended December 31, 1999:
-----------------------------

Revenue                                      $          -       $  5,758,788       $  5,758,788
Loss from continuing operations              $ (6,889,911)      $   (539,939)      $ (7,429,850)
Net loss                                     $ (7,611,226)      $   (539,939)      $ (8,151,165)
</TABLE>

NOTE  6 - CAPITALIZED SOFTWARE COSTS

On March 30, 2000, the Company entered into a software license and services
agreement with Datalex Limited, a company located in Dublin, Ireland. The
agreement calls for the Company to license certain computer software pertaining
to tour travel system for a five-year period. The Company took delivery of the
server software in September 2000 and requires a permanent facility and final
site design to place the software into operations. As of December 31, 2000, the
software was not placed in operation. The Company capitalized software costs of
$1,725,000, including a deposit of $517,500 in March 2000 and accrued costs of
$1,207,500 as of December 31, 2000. The agreement also calls for annual software
maintenance costing $245,250 per year, payable in advance. The Company expenses
these costs in the year incurred.

                                      F-17
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  7 - OTHER ASSETS

Other assets as of December 31, 2000 consisted of the following:


a) Investment in Execute Direct.com, Inc. ("EDC")                   $  105,000
b) Advances to NYN                                                     212,000
   Excess of the cost of Travel Treasures, Inc.
     over the net assets acquired - net of
     accumulated amortization of $4,500                                 25,500
   Other                                                                55,681
                                                                    -----------
        Total                                                       $  398,181
                                                                    ===========

a) On September 14, 2000, the Company entered into a stock sale and purchase
agreement to transfer to EDC 1,555,555 shares of common stock in exchange for
80% of the issued and outstanding shares of EDC. EDC, a Nevada corporation, is
an on- line direct access level I and level II trading firm with a number of
operating divisions, including an investment in a broker/dealer, a direct access
trading floor, and a trading academy to instruct level II direct access trading.

During the fourth quarter of 2000, the agreement was cancelled. The Company
converted advances made of $105,000 to 52,500 shares of common stock of EDC. The
investment is being accounted under the cost method of accounting.

b) In connection with the acquisition discussed in Note 4, the Company advanced
NYN $212,000 as of December 31, 2000.

NOTE  8 - DISCONTINUED OPERATIONS

On March 14, 2000, the Company completed the sale of 100% of the issued and
outstanding stock of PSAS, a wholly-owned subsidiary of the Company. PSAS is an
airport/airline services company providing skycap services at various airports
in the United States. The purchaser of PSAS was a member of the Board of
Directors of the Company.

Pursuant to the terms of the agreement, the Company is entitled to receive
$425,000 to be paid in 17 equal quarterly installments of $25,000, commencing
with and contingent on net profits of PSAS for each subsequent quarter exceeding
$25,000. There is no assurance that the Company will receive any of these
payments, since they are contingent on PSAS becoming profitable. PSAS has
incurred operating losses, since the Company acquired it in 1998. In addition,
the Company shall provide funding to PSAS in an amount sufficient to meet PSAS'
obligations through April 30, 2000. Such funds advanced by the Company shall be
reimbursed to the Company as supplemental payments subsequent to the payment of
the $425,000 and based on the same contingent payment formula.

During April 2000, PSAS filed for Bankruptcy. Due to the uncertainty related to
the payment of the purchase price, the Company has not recognized any receivable
from the purchaser and any gain related to this sale.

                                      F-18
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  8 - DISCONTINUED OPERATIONS (Continued)

The results of operations for PSAS for the respective periods presented are
reported as a component of discontinued operations in the consolidated
statements of operations.

Summarized results of operations of PSAS are as follows:

                                                                For the Period
                                                                   Beginning
                                                  For the       January 1, 2000
                                                Year Ended         and Ending
                                              December 31,1999   March 14, 2000
                                              ----------------  ----------------
                    REVENUE                     $ 1,550,980       $   397,733
                                                ============      ============

                    OPERATING EXPENSES          $(2,272,295)      $  (418,933)
                                                ============      ============

                    LOSS FROM DISCONTINUED
                       OPERATIONS               $  (721,315)      $   (21,200)
                                                ============      ============

NOTE  9 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at December 31, 2000 consist of the
following:

                    Accrued claims and litigation settlements       $  625,000
                    Accrued professional fees                        1,024,816
                    Customer deposits and accrued tour costs         2,135,640
                    Retained liabilities of discontinued
                       operations                                      723,832
                    Other                                              949,663
                                                                    ----------
                                                                    $5,458,951
                                                                    ==========

                                      F-19
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - LOANS PAYABLE

Loans payable at December 31, 2000 consisted of the following:


        a) Loan payable - bank                                    $   65,000
        b) Loan payable - bank                                        23,686
        c) Loan payable - shareholder                                100,000
                                                                  -----------
              Total                                               $  188,686
                                                                  ===========

a) On December 19, 2000, the Company entered into a line of credit for up to
$90,000. Indebtedness under the agreement bears interest at 8% per annum and is
due on December 19, 2001. The indebtedness is collateralized by a cash deposit
aggregating $100,242. The deposit is reflected on the accompanying balance sheet
as restricted cash.

b) The Company entered into a $50,000 credit line. Indebtedness under the
agreement bears interest at 13.0% per annum and is payable on demand.

c) In conjunction with the Jet acquisition, the Company assumed liabilities of
$100,000 payable to the former shareholder of Jet. The loans are payable on
demand and bear interest at the prime rate.

NOTE 11 - INCOME TAXES

The Company was not required to provide for a provision for income taxes for the
years ended December 31, 1999 and 2000 as a result of net operating losses
incurred during those years.

The components of deferred tax assets and liabilities at December 31, 2000 are
as follows:

                    Deferred Tax Assets:
                      Net operating loss carryforwards           $5,599,000
                      Compensatory element of stock
                        issuances                                   717,000
                                                                 -----------
                         Total Gross Deferred Tax Assets          6,316,000

                      Less: Valuation allowance                   6,316,000
                                                                 -----------
                         Net Deferred Tax Assets                 $        -
                                                                 ===========

The net change during the year in the valuation allowance for deferred tax
assets was an increase of approximately $2,378,000.

                                      F-20
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - INCOME TAXES (Continued)

As of December 31, 2000, the Company had available approximately $14,993,000 of
net operating losses ("NOL") for income tax purposes that may be carried forward
to offset future taxable income, if any. The NOL carryforwards from December 31,
1997 expire during the year 2010 through 2013, and the December 31, 1998, 1999
and 2000 NOL expire in the years 2018, 2019 and 2020, respectively. Pursuant to
Section 382 of the Internal Revenue Code, substantial restrictions are imposed
on the utilization of net operating loss carryforwards in the event of an
ownership change.

A reconciliation between the statutory federal income tax rate (34%) and the
Company's effective rate is as follows:

                                                           1999          2000
                                                         --------      --------
Federal statutory rate                                    (34.0)%       (34.0)%
Non-deductible expenses and
  losses                                                   16.0          12.5
Increase in valuation allowance                            18.0          21.5
                                                          -----         -----
    Effective rate                                            -             -
                                                          =====         =====

NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY)

The transactions discussed below have been retroactively restated to reflect the
one-for-fifty reverse stock split effected on September 16, 1998 and the 200%
stock dividend effective on May 14, 1999.

Common Stock Issuances
----------------------

On March 13, 1998, ASAT entered into a stock exchange agreement and plan of
reorganization, whereby ASAT acquired PSA, Inc. and Subsidiaries, a California
corporation, which it subsequently merged into ASAT. Control of the corporation
shifted to the Walsh Family Trust, David E. Walsh, Trustee, and ASAT changed its
name to the Company's current name. David E. Walsh and other individuals
replaced the existing officers and directors. This transaction resulted in the
issuance to the Walsh Family Trust of 1,424,319 shares of the Company's common
stock, which, after issuance, was to have equaled 81.58% of the outstanding
common stock at the time of the reorganization. The Walsh Family Trust owned 97%
of the common stock of the acquired California entity prior to the acquisition
by the Company. This transaction has been accounted for as a reverse acquisition
under the purchase method of accounting, with an effective date of March 13,
1998. At the time of acquisition, ASAT had no tangible assets and no operations,
and no goodwill resulted from this transaction.

                                      F-21
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY) (Continued)

Common Stock Issuances (Continued)
----------------------

On March 20, 1998, the Board of Directors authorized an amendment to the
Articles of Incorporation of the Company to increase the authorized number of
shares of common stock from 30,000,000 shares to 75,000,000 shares with a $0.001
par value per share.

On May 20, 1998, the Board of Directors approved the issuance of 163,800 shares
of unrestricted common stock to David E. Walsh in consideration for his
management services to the Company during 1997. On June 15, 1998, the Board of
Directors approved 240,000 shares of restricted common stock to be issued to Mr.
Walsh for past services from May 1994 through May 1998, excluding calendar year
1997.

On March 10, 1999, as consideration for executing a settlement and mutual
release agreement, the Board of Directors approved the issuance of 15,900,000
shares of common stock to the Walsh Family Trust to correct inequities created
by undisclosed liabilities and undisclosed stock transactions implemented by
former management and/or their agents before the March 13, 1998 acquisition. The
stock was also issued in consideration for subsequent unauthorized stock
transactions by this former management, which were not disclosed to current
management, and in consideration for the Walsh Family Trust not rescinding the
business combination between the California corporation and the Company.

On March 15, 1999, the Board of Directors approved the issuance of 4,635,000
shares of unrestricted common stock valued at $970,000 to David E. Walsh, as
consideration for compensation of his management services to the Company for
past services from June 1998 through May 1999.

On September 15, 1999, the Board of Directors approved the issuance of 5,700,000
shares of restricted common stock valued at $1,425,000 to David E. Walsh,
pursuant to a five-year employment agreement.

Regulation S Offering
---------------------

On October 1, 1999, pursuant to Rule 902 of Regulation S of the Securities Act
of 1933, the Company offered to sell a maximum value of $10,000,000 of shares of
common stock of the Company at the purchase price per share of 90% of the
closing bid as quoted on the NASD OTC Bulletin Board on the date of purchase or
$2.00 per share, whichever was greater, to selected institutional and individual
investors. On May 22, 2000, the offering was amended to sell a maximum of
$25,000,000 at a purchase price not less than $5.00 per share. The minimum
purchase value was $25,000, subject to the Company's right to accept less.
Through December 31, 1999, 1,462,294 shares were sold, yielding $2,896,025 in
proceeds, net of commissions. During the year ended December 31, 2000, 3,563,068
shares have been sold yielding $11,232,668 in proceeds, net of commissions. Per
share prices varied from $2.00 to $9.66. There is no assurance that the Company
will be able to sell any additional shares of its common stock in the course of
this offering.

                                      F-22
<PAGE>

                          PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY) (Continued)

Regulation S Offering (Continued)
---------------------

In connection with this offering, the Company entered into an exclusive
agreement with a placement agent to solicit offers from individuals to purchase
shares. As consideration, the Company is obligated to pay the placement agent a
commission equal to 7% of the gross proceeds of the offering.

NOTE 13 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

Litigation and Claims
---------------------

As of December 31, 2000, the Company was subject to the following litigation
claims:

PSA, Inc. and Subsidiaries:
--------------------------

During May 1997, a suit was filed by Thomas Halder against the Company and
several officers and directors of the Company in the Superior Court of
California, San Diego County Case No. 719562, alleging fraud in the issuance of
securities of PSAZZ, a subsidiary of the Company. Plaintiff Thomas Halder, has
been dismissed as plaintiff per his request and replaced by substitute plaintiff
Michael Dupont. Plaintiff Dupont sought to have the case certified as an
investor class action, but the Court denied his request. Despite the notice,
none has so far joined this action. Thus, the case is, at this time, limited to
Mr. Dupont's individual claim pertaining to his $75,000 investment. In November
1999, the Court abated the action and required Mr. Dupont to pursue his claim in
arbitration, pursuant to his subscription agreement. Mr. Dupont failed to file
for arbitration and this action was dismissed by the court on August 18, 2000.

During October 1998, a suit was filed by F. Hawkins and H. Hawkins against the
Company in the Superior Court of California, Los Angeles County, Case No.
YC033477. Plaintiff F. Hawkins seeks approximately $1 million in additional
consideration from the Company, Pacific States Airline Services, Inc. ("PSAS"),
a former subsidiary of the Company, and certain individual officers and
directors for the Company's purchase of her interest in PSAS in June 1998.
Plaintiff H. Hawkins seeks damages for breach of an employment contract. As a
result of PSAS filing for Chapter 11 Bankruptcy in April 2000, this case was
removed from the Superior Court to the U.S. Bankruptcy Court Central District of
California, Los Angeles Division, Case No. LA00-22748KM. In September 2000, the
action was remanded back to the Superior Court. Trial is set for October 10,
2001. The Company intends to negotiate a settlement or vigorously defend against
the claims, but there is no assurance as to whether a settlement agreement will
be reached.

                                      F-23
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)

Litigation and Claims (Continued)
---------------------

PSA, Inc. and Subsidiaries: (Continued)
--------------------------

Meyer Group Ltd., et al., v. Douglas T. Beaver, et al. Superior Court of
California, Orange County, Case No. 775680, Third Amended Cross-Complaint filed
June 23, 1998 by defendant Robert E. Thompson. The complaint in this action does
not name the Company as a defendant. However, individual defendant Robert E.
Thompson filed a cross-complaint against over thirty cross-defendants, one of
which is American Telecommunications Standards International, Inc. ("ASAT"),
with whom the Company entered into a stock exchange agreement and plan of
reorganization on March 13, 1998. Later, Mr. Thompson also added the Company as
a Roe cross-defendant. Briefly, Mr. Thompson alleges that he was fraudulently
induced by ASAT and others to invest money in that venture and in other ventures
not related to the Company. Mr. Thompson seeks approximately $900,000 from all
the cross-defendants. Negotiations to settle all claims with Mr. Thompson are
currently ongoing. The Company believes that this action will be settled and
will include a "good faith" dismissal for past and future claims by all
claimants. There is no assurance as to whether a settlement agreement will be
reached.

During August 1999, a suit was filed by Jan Bonner against the Company in the
District Court of Harris County, Texas, Case No. 99-39761. Bonner alleges a
breach of contract, seeking approximately $20,000, plus 75,000 shares in the
Company. The Company believes that this claim has no merit because of a breach
of contract and failure to perform by the plaintiff. In October 2000, a
confidential settlement was reached in this action and a dismissal was entered
with the court during November 1, 2000.

PSA of California entered into a stock exchange agreement and plan of
reorganization on March 13, 1998 with American Telecommunications Standards
International, Inc. ("ASAT"), which has subsequently changed its name to PSA,
Inc. and Subsidiaries The transaction was entered into by the Walsh Family Trust
based on representations by former management that ASAT had no litigation, no
material contracts, no liabilities and positive stockholders' equity. On August
2, 1999, the Securities and Exchange Commission filed a complaint in Federal
District Court against fifteen individuals and entities, among which were former
management of ASAT, for their roles in a fraudulent offering and market
manipulation of the stock of the Company. Neither the Company, its subsidiaries
or any of their current management were named in the complaint.

During 1999, a suit was filed by FNG & Associates, Inc. against the Company in
the Superior Court of California, County of Los Angeles, Case No. BC224041 for
compensatory damages of not less than $1,272,000 subject to proof at the time of
trial, plus punitive damages, according to proof and attorneys' fees. The
Company is vigorously defending this claim. Trial is set to begin on April 11,
2001.

                                      F-24
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)

Litigation and Claims (Continued)
---------------------

PSA, Inc. and Subsidiaries: (Continued)
--------------------------

In September 2000, the Company was served with a suit filed in August by Richard
Okoturo and Sammoric Financial Co. alleging breach of contract and claiming
$27,100, plus 100,000 shares of the Company's stock for services rendered. The
Company believes this action to be merit less and will vigorously defend the
claim. Trial is set for October 22, 2001.

In September 2000, a suit was filed against the Company in the District Court of
Clark County, Nevada, Case No. A424877 by James Stock d/b/a Stock Enterprises
claiming unspecified damages exceeding $40,000. The Company is investigating
this claim and will, if appropriate, either negotiate a settlement or defend the
claim.

Pacific States Airline Services, Inc. ("PSAS"):
-------------------------------------

During April 2000, PSAS filed for bankruptcy.  As a result of the bankruptcy
filing the following cases were removed from the Superior Court to the U.S.
Bankruptcy Court Central District of California, Los Angeles Division, Case No.
LA 00-22748 KM:

During 1999, a suit was filed by James Winford against PSAS in the Superior
Court of California, San Francisco County, Case No. 30201. Mr. Winford alleges
that he was wrongfully terminated from PSAS and seeks damages of $25,000, plus a
daily penalty, alleged to be $87,000 at the time of the complaint. The case is
in preliminary stages. The Company is vigorously defending this claim.

During June 1995, a suit was filed by Phyllis Emerson against PSAS in the
Superior Court of California, County of Oakland, Case No. 753384-4. This case
has been reduced to judgement, on which plaintiff claims approximately $128,000
remains unpaid. The Company, nevertheless, contends that the judgement was
improperly perfected, is attempting to negotiate a lesser payment and/or payment
terms and, if unsuccessful in that attempt, will challenge the enforceability of
the judgement.

During May 1999, a suit was filed by Douglas Lloyd and Joseph Alibo against PSAS
in the Superior Court of California, Fresno County, Case No. 611044-9. There is
an unpaid judgement in this employment discrimination case of approximately
$21,900. The Company is attempting to negotiate a lesser payment.

                                      F-25
<PAGE>

                            PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)

Litigation and Claims (Continued)
---------------------

PSAZZ Air, Inc. ("PSAZZ"):
---------------

A suit was filed by the Trustee for Air 21 Bankruptcy Estate against PSAZZ in
the U.S. Bankruptcy Court, Eastern District of California, Case No.
97-10084-B-7. During September 1999, this case has been reduced to judgement of
approximately $46,000. The Company is attempting to negotiate a lesser amount
and/or payment terms.

A suit was filed in late June 2000 against PSAZZ by New Archetype Publishing
Corp. doing business as Vox Mundi in the Superior Court of Los Angeles County,
California, Case No. BC231773 alleging breach of contract. Vox Mundi is seeking
approximately $74,000 in compensatory damages, as well as punitive damages. The
Company believes this action is without merit and is defending the case. Trial
is set for September 24, 2001.

Other
-----

The Company and its subsidiaries are also involved in a number of smaller
litigations and claims. The Company has interposed answers in all cases, except
where an answer is not yet due. The Company has established provisions for most
of the liabilities represented by these smaller claims, and where provisions
have not been established, management believes it will prevail on the merits and
intends to vigorously contest the claims. Based on its past experience dealing
with such claims, the Company anticipates it will be able to settle most of
these smaller litigations with provisions to pay over periods of time, which are
manageable for the Company.

Concentrations of Credit Risk
-----------------------------

Financial instruments, which potentially subject the Company to concentrations
of credit risk, are primarily cash and cash equivalents. As of December 31,
2000, cash and cash equivalents include $696,000 in money market funds.

                                      F-26
<PAGE>

                          PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)

Leases
------

The Company currently leases office space at a monthly rental rate of $11,385,
subject to annual adjustments.

Minimum annual rents under the lease agreement are as follows:

                    Year:
                    ----

                    2001                       $135,987
                    2002                        153,683
                    2003                        156,972
                    2004                         13,081
                                               --------
                                               $459,723
                                               ========

Rent expense relating to the operating leases included in selling, general and
administrative expenses amounted to approximately $144,000 and $185,000 for the
years ended December 31, 1999 and 2000, respectively.

Employment Agreements
---------------------

David E. Walsh, Chairman, Chief Executive Officer and President, receives a
salary of $350,000 per annum. Mr. Walsh is eligible for incentive compensation
payable in cash and stock options as determined by the Board of Directors,
pursuant to a five-year employment agreement, effective on September 30, 1999.
During the year ended December 31, 2000, Mr. Walsh received incentive
compensation approximating $300,000.

Pursuant to the employment agreement, Mr. Walsh received 5,700,000 shares of
common stock as additional consideration valued at $1,425,000 in 1999. The value
is being amortized over the five-year period of the agreement, of which $285,000
was charged to operations for the year ended December 31, 2000.

Related Party Transactions
--------------------------

During the year ended December 31, 2000, the Company reimbursed David E. Walsh,
Chairman, Chief Executive Officer and President, $1,018,000 for various business
expenses of the Company, including investment advisory fees, Website development
fees and public relations fees that were paid by David Walsh through the
transfer of his common stock of the Company to various vendors.

                                      F-27
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)

Financial Advisory Agreement
----------------------------

Effective October 26, 2000, the Company entered into an Investment Agreement
(the "Equity Line") with GMF Holdings, Inc., ("GMF"). Pursuant to the terms of
the Investment Agreement, the Company may issue and sell to GMF, by delivery of
a put notice, up to $50,000,000 of the Company's Common Stock, during the period
beginning on the effective date of a registration statement covering the
Company's Common Stock and ending on the earlier of: (i) the date which is 30
months from the effective date of such registration statement; (ii) 36 months
from October 26, 2000; and (iii) the termination of the Investment Agreement.
GMF has agreed to purchase shares of Common Stock within 10 Business Days (as
such term is defined in the Investment Agreement) after receipt of the put
notice from the Company. GMF is required to purchase a certain number of shares
of the Company's Common Stock pursuant to each put notice, based on the average
daily trading volume of the Company's stock and other conditions. The purchase
price is a discount from the prevailing bid price of the Company's Common Stock
during the 15 business days preceding the put notice. In no event will GMF be
required to purchase an amount of Common Stock of the Company that, when added
to the sum of (i) the number of shares of the Company's Common Stock
beneficially owned by GMF, and (ii) all other shares of the Company's Common
Stock to be acquired by GMF pursuant to the Investment Agreement, would exceed
9.9% of the number of shares of the Company's Common Stock outstanding on the
put notice d\Date for the applicable purchase pPeriod.

The issuance and sale of the Company's Common Stock is conditional upon (i) the
effectiveness of a registration statement with respect to such Common Stock at
all times during the purchase period; (ii) the continued listing of the Common
Stock on at least the OTC electronic board; and (iii) no major transaction
involving the Company (i.e. change of control, merger, sales of substantially
all of the assets, etc.) has occurred or been announced; and (iv) the Company
has complied with its obligations and is not in breach of the Investment
Agreement and any other related agreement.

The Investment Agreement will automatically terminate if the Company has not
filed a registration statement for the shares of Common Stock issuable to GMF
pursuant to the Investment Agreement on or before May 1, 2001, or such
registration statement has not been declared effective within 120 days after the
initial filing date of the registration.

May Davis, the placement agent for the Equity Line, is entitled to a fee equal
to 4.5% of the purchase price of the shares sold to GMF pursuant to the
Investment Agreement. In addition, May Davis has been issued warrants to
purchase 2,500,000 shares of Common Stock exercisable at a purchase price equal
to 110% of the closing bid price of the Common Stock on October 26, 2000,
whether or not any securities are purchased by GMF pursuant to the Investment
Agreement. The warrants are exercisable in part or in whole at any time by May
Davis for a period of 60 months from April 15, 2001. May Davis is entitled to
certain "piggyback" registration rights with respect to the shares of Common
Stock issuable upon the exercise of the warrants.

The Company paid $20,000 to May Davis for certain legal fees and expenses upon
the execution of the Investment Agreement and has agreed to pay Silverman,
Collura & Chernis, P.C. an additional $3,000 on each closing date of stock
purchases made pursuant to the Investment Agreement for additional legal,
administrative and escrow fees.

                                      F-28
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION

During the year ended December 31, 1999 and 2000, with respect to its continuing
operations, the Company paid $-0- for interest and income taxes.

Non-Cash Transactions
---------------------

During the year ended December 31, 2000, the Company completed the acquisitions
of Royal, Travel and Canticle. The transactions had the following non-cash
impact on the balance sheet and income statement as of December 31, 2000:

               Property and equipment                             $   15,000
               Intangibles                                           964,631
               Accounts payable and accrued liabilities             (175,781)
               Equity                                               (891,850)
               Costs of acquiring Canticle charged to
                 operations                                          700,000
                                                                  -----------
                   Net Cash Used for Acquisitions                 $  612,000
                                                                  ===========

During the year ended December 31, 2000:

a) Common stock issued for services rendered aggregating $366,500.

During the year ended December 31, 1999:

a) Common stock issued in settlement of claims by Walsh Family Trust aggregating
$3,975,000.

b) Common stock issued in settlement of 1999 and prior year's compensation
aggregating $404,167 and $565,833, respectively.

c)  Common stock issued for services rendered aggregating $536,359.

NOTE 15 - SUBSEQUENT EVENT

Litigation
----------

In January 2001, a suit was filed by Carmen Zurio and Brad Holcomb against the
Company in the Superior Court of Los Angeles County, California, Case No.
SC064886, alleging breach of contract and fraud. Plaintiffs are seeking $75,000
in compensatory damages, plus loss of earnings. The Company believes this action
to have no merit and is defending against the claim. Discovery has not yet
commenced and no trial date has been set.

                                      F-29
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - SUBSEQUENT EVENT (Continued)

Litigation (Continued)
----------

On March 14, 2001, the Company filed a complaint against Richard Sondheim, the
former president and former sole shareholder of Royal International Tours, Inc.
("RIT") in the Superior Court of Los Angeles Country, California, Case No.
BC246795. The Company purchased 100% of the outstanding shares of RIT in March
2000. The Company believes that Mr. Sondheim misrepresented the liabilities of
RIT in connection with the purchase by PSA of RIT. The Company, therefore, is
seeking recision of the purchase agreement and a return of the purchase price
and all damages caused by Mr. Sondheim's wrongful conduct. The Company is
waiting for Mr. Sondheim to answer the complaint and will then commence
discovery in May 2001.

A complaint was filed in March 2001 by Robert Rosen against the Company in the
Superior Court of Los Angeles County, California, Case No. BC246441 for unpaid
legal fees allegedly incurred in defending the Company in several pieces of
litigation. The Company is defending this action and will be negotiating a
resolution of this case in the near future.

                                      F-30

<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.


                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         As of December 31, 2000, there were no agreements or understandings for
the officer or director to resign at the request of another person.

         As of February 18, 2000, the sole officer and director of Canticle
resigned effective upon completion of the Acquisition.

         As of March 15, 2000 in connection with the divestiture of the PSA
subsidiary, Pacific States Airline Services, Inc. ("PSAS"), Mr. Walsh and Mr.
Root resigned from the PSAS Board of Directors and Mr. Root resigned as CEO of
PSAS. Concurrently, Mr. Root resigned as Executive VP, Secretary and Director of
the Company and Mr. Williams resigned as a Director of the Company.

         As of June 30, 2000, Mr. Williams was reappointed to the Board of
Directors.

         As of October 30, 2000, Michael Morrissey resigned as a Director of the
Company.

         As of February 12, 2001, Mr. Sondheim was terminated as CEO of Royal
International Tours, Inc. and, in March 2001, the Company filed a complaint
against Mr. Sondheim (see "Legal Proceedings").

         As of February 12, 2001, Mr. Ravi Rao was appointed as CEO of PSAZZ
Travel, Inc. and Ms. Sanya Vuletic was appointed as VicePresident of Marketing
of PSAZZ Travel, Inc.

         As of April 2, 2001, Ms. Cynthia Clark was laid off for economic
reasons as Controller, Ms. Kimberly Clark resigned as Corporate Secretary and
Mr. Root was reappointed to the position of Executive Vice President and Ms.
Manju Seeram was appointed as Controller and Assistant Secretary.

         As of April 15, 2001, the officers and directors of the Company were:

NAME:                   AGE     POSITION

David E. Walsh          51      Chairman of the Board of Directors, CEO,
                                President and Chief Financial Officer
Robert E. Root          61      Executive Vice President
Manju Seeram            26      Controller and Assistant Secretary
Ravi R. Rao             47      C.E.O. of PSAZZ Travel, Inc.
Sanya Vuletic           32      V.P. of Marketing of PSAZZ Travel, Inc.
John D. Williams        76      Director, Chairman of the Executive Committee
John J. Fitzpatrick     53      Director, Chairman of the Audit Committee
Eric Carlson            49      Director, Chairman of the Compensation Committee

DAVID E. WALSH. Mr. Walsh's experience in the investing banking industry extends
over a twenty year period. After serving an apprenticeship with a subsidiary of
the Continental Illinois Bank of Chicago, Mr. Walsh became Vice President and
later Executive Vice President of Hospital Mortgage Corporation, a publicly held
corporation specializing in health care finance. In 1975, Mr. Walsh became
President of Great Northern Financial that which arranged and funded Government
credit enhanced financing for major projects including GNMA backed securities
and tax-exempt bond issues. From 1983 to 1992, Mr. Walsh operated Walsh Holding
Company, a diversified real estate development, construction and financing
organization. In 1993, he was affiliated with Merrill Lynch in their
Institutional Client Services Group. Since 1994, Mr. Walsh had devoted his time
and efforts to the formation of the Company and its subsidiaries. Mr. Walsh is
an active Commissioned Officer in the United States Naval Reserve. He received a
Ph.B. degree from Northwestern University, Evanston, Illinois.

                                       13
<PAGE>

ROBERT E. ROOT. Executive Vice President of the Company from 2001 to present.
>From 1997 to 2000, Mr. Root has served as a Director, Corporate Secretary and
Executive Vice President of the Company. From 1995 to 1997, Mr. Root was
employed as Director of Planning and Investor Relations with PSAZZ. Prior to
joining the Company, he was an aviation and business consultant. Between 1979
and 1982, Mr. Root served as a Vice President of Contract Services with Pacific
States Airline Services. From 1968 to 1979, he held positions of Director of
Operations and Director of Properties and Facilities for the original PSA, Inc.
He served on active duty with the U.S. Air Force and attended Sacramento State
University.

MANJU SEERAM. From April to the present, Ms. Seeram has served as Controller and
Assistant Secretary of the Company. From 1997 through the present, Ms. Seeram
has been employed by the Company as Executive Assistant to the President. Prior
to joining the Company, Ms. Seeram was a student at West Los Angeles College
from which she graduated in 1997.

RAVI R. RAO. From 1996 to present, Mr. Rao has served as President and C.E.O. of
Jet Vacations, Inc., which he acquired from Air France. Ravi Rao has a total of
26 years in the travel and transportation industry. Rao's vast airline and
industry experience includes positions with Swissair, British Airways, UTA
French Airlines and Air France in retail and wholesale travel, corporate and
leisure travel, as well as in airfreight and logistics management functions.
Also, Rao has keen travel technology insight and experience from having presided
over a company that designed and implemented the most advanced leisure travel
enterprise management system called Contour. Mr. Rao received undergraduate
degrees in Geography, Business Administration and a Masters Degree in
International Business Administration.

SANYA VULETIC. Ms. Vuletic has worked with Royal International Tours since 1994
where she currently holds the position of Director of Sales and Marketing. Ms.
Vuletic attended the University for Economic Studies in Dubrovnik, Croatia for
two (2) years. From 1985 to 1989, Ms. Vuletic resided in Paris, France where she
studied the French language at the Sorbonne University. for one (1) year. In
1989 Ms. Vuletic graduated from Hortensia, a private College for the Applied
Arts. Ms. Vuletic has a strong background in the travel industry with experience
in operation, product development and marketing.

JOHN D. WILLIAMS. Mr. Williams is a licensed architect, a member of the American
Institute of Architects, and a graduate of the University of Southern
California. He has been a practicing architect for over thirty-five years. Mr.
Williams was a joint venture partner in the redesign of the Los Angeles
International Airport Tom Bradley Terminal, and in the remodeling of the MGM
Grand facility at the Imperial Terminal.

JOHN J. FITZPATRICK. Mr. Fitzpatrick has been employed as Vice President of
Business Development and Government Sales by Dupont Flooring Systems, a division
of Dupont, Inc. and its predecessor companies since 1992. From 1982 to 1992 he
was employed by Karastan Bigelow, a division of Fieldcrest Cannon, Inc. as
manager of government sales and national accounts. Mr. Fitzpatrick is a retired
Captain in the United States Naval Reserve, his last duty assignment was to
serve as Deputy Reserve Intelligence Area Commander for Manpower Management in
Washington, D.C. He serves as Chairman of the Company's Executive Committee Mr.
Fitzpatrick received a B.S. from the University of Dayton and an M.B.A. from St.
Johns University.

ERIC CARLSON. Mr. Carlson has served as both a Board Member and Corporate
Officer for a number of corporations over the last 16 years. He has an extensive
background in business operations and management. Mr. Carlson's background
includes serving in the United States Navy. He received a Bachelors degree in
finance, with an emphasis in accounting, management and economics. In addition,
Mr. Carlson currently holds a number of professional licenses in the area of
investment and finance.

DIRECTOR COMMITTEES

Executive Committee:      John D. Williams and John J. Fitzpatrick
Audit Committee:          John J. Fitzpatrick, John D. Williams and Eric Carlson
Compensation Committee:   Eric Carlson and John J. Fitzpatrick

                                       14
<PAGE>

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act") requires PSA's officers and directors, and persons who own more
than ten percent (10%) of its Common Stock to file reports of ownership and
changes of ownership with the Securities and Exchange Commission. Such persons
are also required to furnish PSA with copies of all Section 16(a) forms they
file.

         Based solely on PSA's review of the copies of those forms received by
PSA, or written representations from such persons that no forms were required to
be filed, it appears that all reports due were timely filed, except for the Form
5 filings, which are yet to be made, and the Form 4 filing, which Mr. Walsh made
on April 24, 2001.

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth certain compensation paid or accrued by
PSA during the years ended December 31, 1998, December 31, 1999 and December 31,
2000 to its Chief Executive Officer and Chief Financial Officer (the "Named
Executive Officers").

                                                                       OTHER
NAME                 POSITION         YEAR     SALARY      BONUS    COMPENSATION
David E. Walsh (1)   CEO, CFO         1998
                                      1999
                                      2000     $350,000   300,000
Kimberly Clark (2)   Secretary        2000     $ 50,000     3,600

(1)      David E. Walsh, Chairman, Chief Executive Officer, and President,
         receives a salary of $350,000 per annum. Mr. Walsh is eligible for
         incentive compensation payable in cash and stock options as determined
         by the Board of Directors, pursuant to an employment agreement
         effective on September 30, 1999.

(2)      Mr. Walsh received compensatory stock issuance as compensation for
         services valued at $540,860 for 1998 and 1999 respectively.

(3)      Kimberly Clark, Corporate Secretary from March 2000 to April 2001,
         received a salary of $50,000 per annum.

BOARD OF DIRECTORS AND COMMITTEES

         PSA's Board of Directors presently consists of four members: David E.
Walsh, Chairman and a Director, and outside Directors, John Williams, John
FitzPatrick and Eric Carlson. The Bylaws of PSA generally provide for majority
approval of directors in order to adopt resolutions. The Board of Directors may
be expanded in the future. All employee and consultant compensation, including
payroll expenditures, salaries, stock options, stock incentives, and bonuses,
must be approved by the unanimous consent of the members of the Compensation
Committee of PSA's Board of Directors. The members of the Compensation Committee
are Eric Carlson and John FitzPatrick. The Compensation Committee was formed on
August 8, 2000.

         The Board of Directors has appointed an Audit Committee. The members of
the Audit Committee are John FitzPatrick, John Williams and Eric Carlson. The
Audit Committee is authorized by the Board of Directors to review, with PSA's
independent accountants, the annual financial statements of PSA prior to
publication, and to review the work of, and approve non-audit services preformed
by, such independent accountants. The Audit Committee will make annual
recommendations to the Board for the appointment of independent public
accountants for the ensuing year. The Audit Committee will also review the
effectiveness of the financial and accounting functions and the organization,
operations and management of PSA. The Audit Committee was authorized August 8,
2000.

                  The Board of Directors has appointed an Executive Committee.
The members of the Executive Committee are John Williams and John FitzPatrick.
The Executive Committee was formed on June 8, 2000, for the purpose of assisting
PSA's management with strategic decisions and acting as a liaison between PSA's
executive officers and the full Board of Directors.

                                       15
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The following table contains information regarding the shareholdings,
as of December 32, 2000, of PSA's current directors and executive officers and
those persons or entities who beneficially own more than 5% of its common stock
(giving effect to the exercise of any warrants held by each such person or
entity which are currently exercisable or may be exercised within 60 days of the
date of this Annual Report):

<TABLE>
<CAPTION>
Name and Title                              Number of Shares of         Percent of
--------------                              Common Stock                Common Stock
                                            Beneficially Owned          Beneficially Owned (1)
                                            -------------------         ----------------------
<S>                                         <C>                         <C>
Walsh Family Trust (2)
Principle Shareholder                       17,324,319                  48.1%
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045

David E. Walsh
Chairman, CEO, CFO, Director                 9,519,904                  26.5%
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045

Robert E. Root                                     -0-                    -0-
Executive Vice President
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045

Manju Seeram                                       -0-                    -0-
Controller and Assistant Secretary
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045

Ravi R. Rao                                        -0-                    -0-
CEO, Psazz Travel, Inc.
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045

Sanya Vuletic                                    1,000                    -*-
VP of Marketing, Psazz Travel, Inc.
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045

John D. Williams                                   -0-                    -0-
Director
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045

John J. Fitzpatrick                                -0-                    -0-
Director
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045


                                       16
<PAGE>

Eric Carlson                                       -0-                    -0-
Director
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045

All Officers and Directors                  26,844,223                  74.6%
as a Group (8 persons)

May Davis Group (3)
Warrant holders                              2,500,000
New York, New York
</TABLE>

*Less than 1% of the outstanding shares.

(1)      Percentages based upon 35,985,423 shares of the Company common stock
         outstanding as of December 31, 2000.

(2)      Mr. Walsh, as Trustee, may be deemed to be the beneficial owner of
         stock owned by the Walsh Family Trust.

(3)      May Davis Group, as partial consideration as the placement agent for
         the GMF Investment Agreement (see "Historical Material Events"), has
         been issued warrants to purchase 2,500,000 shares of Common Stock
         exercisable at a purchase price equal to 110% of the closing bid price
         of the Common Stock on October 26, 2000. The warrants are exercisable
         in part or in whole at any time by May Davis for a period of 60 months
         from April 15, 2001. May Davis is entitled to certain "piggyback"
         registration rights with respect to the Shares of Common Stock issuable
         upon the exercise of the warrants. The warrants, otherwise issuable to
         May Davis, were issued in the names of certain individuals, who are
         principals of May Davis.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF PSA

         On March 13, 1998, PSA entered into a stock exchange agreement and plan
of reorganization, whereby the Company acquired PSA, Inc. a California
corporation, which it subsequently merged into the Company. Control of the
corporation shifted to the Walsh Family Trust, David E. Walsh, Trustee, and the
Company changed its name to the Company's current name. David E. Walsh and other
individuals replaced the existing officers and directors. This transaction
resulted in the issuance to the Walsh Family Trust of 23,738,657 shares of PSA's
common stock which, after issuance, was to have equaled 81.58% of the
outstanding common stock at the time of the reorganization. The Walsh Family
Trust owned 97% of the common stock of the acquired California entity prior to
the acquisition by the Company.

         On March 20, 1998 the Board of Directors (with Mr. Walsh abstaining)
authorized an amendment to the Articles of Incorporation of PSA to increase the
authorized number of shares of common stock from 30,000,000 shares to 75,000,000
shares with a $0.001 par value per share.

         On May 20, 1998, the Board of Directors approved the issuance of
2,730,000 shares of unrestricted common stock to David E. Walsh in consideration
for his management services to PSA during 1997. On June 15, 1998, the Board of
Directors approved 4,000,000 shares of restricted common stock to be issued to
Mr. Walsh for past services from May, 1994 through May, 1998, excluding calendar
year 1997.

         On June 29, 1998, the Board of Directors approved the final acquisition
of PSAS and the issuance of 500,000 shares of restricted common stock to Frankie
Hawkins and 250,000 shares of restricted common stock to Amy Saxton in exchange
for 100% of the issued and outstanding common stock of PSAS.

                                       17
<PAGE>

         On September 8, 1998, the Board of Directors authorized and a vote of
the majority shareholders approved a one for fifty (1:50) reverse split of the
43,082,984 shares of issued and outstanding common stock as of September 1, 1998
to be effective upon the filing date, September 16, 1998, which resulted in
issued and outstanding common stock totaling of 861,660 shares.

         On March 10, 1999, as consideration for executing a settlement and
mutual release agreement, the Board of Directors (with Mr. Walsh abstaining)
approved the issuance of 5,300,000 shares of common stock (pre-dividend) to the
Walsh Family Trust to correct inequities created by undisclosed liabilities and
undisclosed stock transactions implemented by former management and/or their
agents before the March 13, 1998 acquisition. The stock was also issued in
consideration for subsequent unauthorized stock transactions by this former
management, which were not disclosed to current management, and in consideration
for the Walsh Family Trust not rescinding the business combination between the
California entity and the Company.

         On March 12, 1999, the Board of Directors (with Mr. Walsh abstaining)
and a vote of the majority shareholders approved declared a stock dividend and
approved for issuance to each of the shareholders of the common stock who was a
shareholder of record on May 14, 1999, as a stock dividend, two shares of
restricted common stock for each outstanding share of the common stock owned by
each shareholder.

         On March 15, 1999, the Board of Directors (with Mr. Walsh abstaining)
approved the issuance of 1,545,000 shares of unrestricted common stock to David
E. Walsh as consideration for compensation for his management services to the
Company for past services from June 1998 through May 1999.

         On September 15, 1999, the Board of Directors (with Mr. Walsh
abstaining) approved the issuance of 5,733,130 shares of restricted common stock
of which 5,700,000 shares were to be issued to David Walsh pursuant to a
five-year employment agreement.

         On March 14, 2000, the Board of Directors (with Mr. Williams, then a
member of the PSA board of directors, abstaining) approved the sale of all the
shares of PSAS to John D. Williams, then a director of the Company. Mr. Williams
subsequently resigned as a director of PSA.

         On March 14, 2000, the Board of Directors approved the issuance of
78,370 shares of restricted common stock and payment of $382,000 to Richard
Sondheim in exchange for all the shares of Royal International Tours, Inc. Mr.
Sondheim was retained as CEO of Royal International Tours pursuant to a one (1)
year engagement agreement. Subsequently, he was terminated on February 12, 2001
and the Company sued for rescission in March 2001 (see "Legal Proceedings").

         On November 30, 2000, the Board of Directors approved the issuance of
242,593 shares of restricted common stock to the former shareholders in exchange
for all the shares of Jet Vacations International, Inc.

REGULATION S OFFERING

On October 1, 1999, pursuant to Rule 902 of Regulation S of the Securities Act
of 1933, as amended, PSA offered to sell a maximum value of $10,000,000 of
shares of its common stock at the purchase price per share of 90% of the closing
bid as quoted on the NASD OTC Bulletin Board on the date of purchase or $2.00
per share, whichever was greater, to selected institutional and individual
investors. The minimum purchase was $25,000, subject to PSA's right to accept
less. On May 22, 2000, the offering was amended to sell a maximum of $25,000,000
at a purchase price not less than $5.00 per share. The minimum purchase value
was $25,000, subject to the Company's right to accept less. Through December 31,
1999, 1,462,294 shares were sold, yielding $2,896,025 in proceeds, net of
commissions. During the year ended December 31, 2000, 3,563,068 shares have been
sold yielding $11,232,668 in proceeds, net of commissions. Per share prices
varied from $2.00 to $9.66. This offering, as amended, continued until December
15, 2000. PSA used the net proceeds of this private placement to fund some of
its acquisitions and for working capital.

                                       18
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(1)      Exhibits

         10.1     Investment Agreement, dated October 26, 2000, between GMF
                  Holdings, Inc. and PSA, Inc., as amended by the Letter
                  Agreements dated March 1, 2001 and April 23, 2001.*

         10.2     Amended and Restated Registration Rights Agreement, dated
                  October 26, 2000, between PSA, Inc. and GMF Holdings, Inc.*

         10.3     Amended and Restated Placement Agent Agreement, dated October
                  26, 2000, between PSA, Inc. and May Davis Group, Inc.*

         10.4     Placement Agent's Registration Rights Agreement, dated October
                  26, 2000, between PSA and May Davis Group, Inc.*

         10.5     Escrow Agreement, dated October 26, 2000, by and among PSA,
                  Inc., GMF Holding, Inc., May Davis Group, Inc. and Silverman,
                  Collura & Chernis, P.C.*

         10.6     Form of Amended and Restated Warrant*
---------------
*    To be filed by amendment


(2)      The following Form 10QSB or Form 8-KSB were filed by the Company during
         the fiscal quarter ending December 31, 2000:

         (a)      Report on Form 10QSB relating to fiscal 3rd quarter financial
                  statement filed November 14, 2000 (file# 000-29627)

         (b)      Report on form 8KSB relating to the Acquisition of Jet
                  Vacations International, Inc., filed December 15, 2000 (file#
                  000-29627).

                                       19
<PAGE>

                                   SIGNATURES

          In accordance with Section 13 of 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.


                                    PSA, INC.


                                    By /S/ David E. Walsh
                                      ------------------------------------------
                                      David E. Walsh
                                      President, CEO and Chief Financial Officer


Name                                Title                     Date
----                                -----                     ----


/S/ David E. Walsh                  Director                  April 24, 2001
------------------------
David E. Walsh


/S/ John J. Fitzpatrick             Director                  April 24, 2001
------------------------
John J. Fitzpatrick


/S/ Eric Carlson                    Director                  April 24, 2001
------------------------
Eric Carlson


/S/ John D. Williams                Director                  April 24, 2001
------------------------
John D. Williams