<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
 (Mark One)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

[  ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

       For the transition period from ________________ to _______________

                                                              0-29627
                                                     (Commission file number)

                                    PSA, INC.
        (Exact name of small business issuer as specified in its charter)

                    NEVADA                                88-0212662
         (State or other jurisdiction                    (IRS Employer
       of incorporation or organization)              Identification No.)

           880 APOLLO STREET, SUITE 329, EL SEGUNDO, CALIFORNIA 90245
                    (Address of principal executive offices)

                                 (310) 640-3044
                           (Issuer's telephone number)


                 (Former name, former address and former fiscal
                      year, if changed since last report)

Check whether the issuer (1) 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 [X] No [  ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity. As of August 17, 2001 1,799,271 shares of Common Stock

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


<PAGE>


                                    PSA, INC.
                                      INDEX

                                                                          Page
                                                                         Number
                                                                         ------

PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

           Consolidated Balance Sheet as of June 30, 2001                  2

           Consolidated Statements of Operations for
           the three months ended June 30, 2001 and 2000                   3

           Consolidated Statements of Operations for
           the six months ended June 30, 2001 and 2000                     4

           Consolidated Statements of Cash Flows for
           the six months ended June 30, 2001 and 2000                     5

           Notes to Consolidated Financial Statements                     6-7

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                     8-10

Part II.   OTHER INFORMATION

Item 1.    Legal Proceedings                                              11

Item 2.    Change in Securities and Use of Proceeds                       11

Item 3.    Defaults Upon Senior Securities                                11

Item 4.    Submission of Matters to a Vote of Security Holders            11

Item 5.    Other Information                                              11

Item 6.    Exhibits and Reports on Form 8-K                               11

SIGNATURES                                                                12

Part III.  EXHIBITS


<PAGE>


PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

                           PSA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2001


                                     ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                       $    170,350
   Prepaid and other current assets                                     341,024
                                                                   -------------

     Total current assets                                               511,374

EQUIPMENT, net                                                          140,436
INVESTMENT IN UNCONSOLIDATED AFFILIATE - SMA                          6,908,418
CAPITALIZED SOFTWARE COSTS                                            1,725,000
OTHER ASSETS                                                            546,418
                                                                   -------------

     TOTAL ASSETS                                                  $  9,831,646
                                                                   =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES
   Accounts payable and accrued liabilities                        $  6,777,898
   Accrued capitalized software cost                                  1,207,500
   Due to officer                                                       196,418
   Loans payable                                                        147,771
                                                                   -------------

     Total current liabilities                                        8,329,587
                                                                   -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common Stock, $.001 par value, 75,000,000 shares
    authorized, 1,799,271 shares issued and outstanding                   1,799
   Additional paid-in capital                                        33,543,173
   Unearned compensation                                               (908,437)
   Accumulated deficit                                              (31,129,514)
   Less:  Treasury stock 452 shares                                      (4,962)
                                                                   -------------
     Total stockholders' equity                                       1,502,059
                                                                   -------------

TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                                            $  9,831,646
                                                                   =============

       See the accompanying notes to the consolidated financial statements
                                        2


<PAGE>


                           PSA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000

                                                         2001           2000
                                                     ------------   ------------


REVENUE - NET                                        $ 1,945,991    $ 5,347,679

OPERATING EXPENSES:
   Cost of revenues                                    1,653,289      4,640,474
   Selling, general and administrative                 1,365,448      2,716,337
   Software development                                        -          6,134
                                                     ------------   ------------

TOTAL OPERATING EXPENSES                               3,018,737      7,362,945
                                                     ------------   ------------

LOSS FROM OPERATIONS                                  (1,072,746)    (2,015,266)

OTHER INCOME (EXPENSE):
   Amortization of excess of cost price over net
     assets of business acquired                          (1,500)       (59,166)
   Interest income                                        (5,272)        64,272
   Other income                                            9,916         10,618
   Equity in income (loss) of
     unconsolidated affiliate - SMA                     (181,001)        30,085
                                                     ------------   ------------

TOTAL OTHER INCOME (EXPENSE)                            (177,857)        45,809
                                                     ------------   ------------

LOSS FROM OPERATIONS BEFORE
   INCOME TAXES                                       (1,250,603)    (1,969,457)

PROVISION FOR INCOME TAXES                                     -              -
                                                     ------------   ------------

NET LOSS                                             $(1,250,603)   $(1,969,457)
                                                     ============   ============

BASIC AND DILUTED LOSS PER SHARE                     $     (0.70)   $     (1.16)
                                                     ============   ============

WEIGHTED AVERAGE SHARES
     OUTSTANDING - BASIC AND DILUTED                   1,799,271      1,692,966
                                                     ============   ============

       See the accompanying notes to the consolidated financial statements
                                        3

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000

                                                         2001           2000
                                                     ------------   ------------


REVENUE - NET                                        $ 3,063,784    $ 6,195,148

OPERATING EXPENSES:
   Cost of revenues                                    2,630,283      5,388,527
   Selling, general and administrative                 2,728,858      4,293,725
   Software development                                        -         89,920
                                                     ------------   ------------

TOTAL OPERATING EXPENSES                               5,359,141      9,772,172
                                                     ------------   ------------

LOSS FROM OPERATIONS                                  (2,295,357)    (3,577,024)

OTHER INCOME (EXPENSE):
   Amortization of excess of cost price over net
     assets of business acquired                          (3,000)      (70,815)
   Cost of acquisition of Canticle Corporation                 -      (700,000)
   Net realized gain (loss) on sale of securities       (162,961)      277,368
   Interest income, net of $5,273
        of interest expense in 2001                         (145)      114,612
   Other income                                           12,916        47,443
   Equity in income (loss) of unconsolidated
      affiliate - SMA                                   (880,615)       30,085
                                                     ------------   ------------

TOTAL OTHER INCOME (EXPENSE)                          (1,033,805)      (301,307)
                                                     ------------   ------------

INCOME (LOSS) FROM CONTINUING
   OPERATIONS BEFORE INCOME TAXES                     (3,329,162)    (3,878,331)

PROVISION FOR INCOME TAXES                                     -              -
                                                     ------------   ------------

LOSS FROM CONTINUING OPERATIONS                       (3,329,162)    (3,878,331)

LOSS FROM DISCONTINUED OPERATIONS                              -        (21,200)
                                                     ------------   ------------

NET LOSS                                             $(3,329,162)   $(3,899,531)
                                                     ============   ============

BASIC AND DILUTED LOSS PER SHARE
   From continuing operations                        $     (1.85)   $     (2.34)
   From discontinued operations                                -          (0.01)
                                                     ------------   ------------
                                                     $     (1.85)   $     (2.51)
                                                     ============   ============

WEIGHTED AVERAGE SHARES
     OUTSTANDING - BASIC AND DILUTED                   1,799,294      1,658,576
                                                     ============   ============

       See the accompanying notes to the consolidated financial statements
                                        4

<PAGE>

<TABLE>
                                PSA, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                      FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
<CAPTION>

                                                                  2001           2000
                                                              ------------   ------------
<S>                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                   $(3,329,162)   $(3,899,531)
   Adjustments to reconcile net loss
   to net cash used in operating activities
   from continuing operations:
     Equity (income) loss in unconsolidated affiliate - SMA       880,615        (30,085)
     Loss from discontinued operations                                  -         21,200
     Cost of acquisition of Canticle Corporation                        -        700,000
     Depreciation and amortization                                 28,751         17,200
     Amortization of unearned compensation                        142,500        142,500
     Amortization of excess of cost price over net
       assets of business acquired                                  3,000         70,815
     (Gain) loss on sale of marketable securities                 162,961       (277,368)
   (Increase) decrease in:
     Accounts receivable                                                -         53,029
     Prepaid and other current assets                            (315,002)       (76,207)
     Other non-current assets                                    (154,237)             -
   Increase (decrease) in:
     Accounts payable and accrued liabilities                   1,318,947      1,273,329
     Due to/from officers                                         196,418        (74,516)
                                                              ------------   ------------
Net cash used in operating activities                          (1,065,209)    (2,079,634)
                                                              ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of equipment                                          (15,794)       (28,014)
   Equity investment in SMA                                             -     (5,000,000)
   Expenditures for acquisition                                         -       (559,500)
   Payments for capitalized software costs                              -       (517,500)
   Purchase of marketable securities                                    -     (1,397,305)
   Proceeds from sale of marketable securities                    289,005      2,112,447
   Other assets                                                         -       (126,439)
                                                              ------------   ------------
Net cash provided by (used in) investing activities               273,211     (5,516,311)
                                                              ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of common stock                               -      9,558,071
   (Payments of) proceeds from loans payable, net                 (40,915)       (32,086)
   Purchase of treasury stock                                      (4,962)             -
                                                              ------------   ------------
Net cash provided by financing activities                         (45,877)     9,525,985
                                                              ------------   ------------

CASH USED IN DISCONTINUED OPERATIONS                                    -       (825,013)
                                                              ------------   ------------
NET (DECREASE) INCREASE IN CASH
   AND CASH EQUIVALENTS                                          (837,875)     1,105,027
CASH AND CASH EQUIVALENTS -
   BEGINNING OF PERIOD                                          1,008,225      1,301,557
                                                              ------------   ------------
   END OF PERIOD                                              $   170,350    $ 2,406,584
                                                              ============   ============
</TABLE>
            See the accompanying notes to the consolidated financial statements
                                             5
<PAGE>


                           PSA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The unaudited consolidated financial statements have been prepared by PSA, Inc.
and subsidiaries (the "Company"), pursuant to the rules and regulations of the
Securities and Exchange Commission. The information furnished herein reflects
all adjustments (consisting of normal recurring accruals and adjustments) which
are, in the opinion of management, necessary to fairly present the operating
results for the respective periods. Certain information and footnote disclosures
normally present in annual consolidated financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. The results of the six months ended June
30, 2001 are not necessarily indicative of the results to be expected for the
full year ending December 31, 2001. These consolidated financial statements
should be read in conjunction with the Company's consolidated audited financial
statements and related footnotes for the year ended December 31, 2000 included
in the Company's annual report on Form 10-KSB.

The Company was incorporated in the state of Nevada in 1985. Formerly known as
American Telecommunications Standard International, Inc. ("ATSI"), the Company
completed its merger with PSA, Inc., a California corporation ("PSA of
California"), in April 1998. In connection with the merger, ATSI 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 ("T-Commerce"). The Company intends to acquire
Internet and non- Internet companies that fit its acquisition portfolio criteria
that 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 companies for cash and shares of its common
stock during the year ended December 31, 2000, and acquired a 34% equity
interest of SMA Real Time Inc. during May 2000. SMA is a provider of a wide
range of production and post-production services to companies that produce
commercials, television programs, music videos and feature films. 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 former 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 operation.

                                        6

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 1 - BASIS OF PRESENTATION, CONTINUED

Going Concern
-------------
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 six months ended June 30 2001, the
Company incurred net loss of $3,329,162 and as of June 30, 2001, had an
accumulated deficit of $31,129,514 and a working capital deficiency of
$7,818,213. The Company is in arrears on a majority 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.

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. Additionally, the Company has generated revenue of
$3,063,784 from its operating subsidiaries during the six months ended June 30,
2001. The common stock was 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. On June 28, 2001 the Company extended a Rights Offering to its
existing investors who had previously purchased shares of Common Stock from the
Company pursuant to exemptions under provisions of the Securities Act of 1933,
as amended. The Rights Offering provides for the subscription of up to 31
million Units at $0.50 per Unit, each Unit consisting of one share of the
Company's common stock and one warrant to purchase one share of the Company's
common stock. The Rights Offering will conclude on September 28, 2001.

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.

Restatement of prior quarters
-----------------------------
As discussed on Note 4 on November 30, 2000, the Company purchased Jet Vacations
International, Inc. ("Jet") using the pooling-of -interest method of accounting.
Therefore, the Company has restated prior operating results as if the
acquisition of Jet had occurred at the beginning of the periods being reported
upon.

Also, as discussed in Note 5, on May 4, 2000, the Company acquired an interest
in S.M.A. Real Time Inc. ("SMA"). Originally, the Company purchased a 50%
interest in SMA, which was subsequently reduced to 34%. For the six months ended
June 30, 2000, the Company consolidated the financial statements of SMA. Since
the Company currently accounts for SMA on the equity method, the financial
statements for the six months ended June 30, 2000 have been restated to account
for SMA using the equity method.

                                        7

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 1 - BASIS OF PRESENTATION, CONTINUED

Restatement of prior quarters, continued
----------------------------------------
Below is a table showing the results for the six months ended June 30, 2000 as
previously reported and the adjustment made to arrive at the amounts reported in
the Form 10-QSB



                         As previously
                            Reported        Jet           SMA         Adjusted
                         -------------  ------------  ------------  ------------

  Revenue                $  4,726,260   $ 2,906,292   $(1,437,404)  $ 6,195,148
  Operating expenses        8,367,189     3,103,018    (1,698,035)    9,772,172
  Loss from operations     (3,640,929)     (196,726)      260,631    (3,577,024)
  Minority interest           (30,085)            -        30,085             -
  Equity in SMA                     -             -        30,085        30,085
  Net income (loss)        (4,021,594)     (150,619)      272,682    (3,899,531)



NOTE 2 - STOCK SPLITS 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.

On June 28, 2001, the Board of Directors authorized, and a majority vote of the
shareholders approved, a one-for-twenty reverse split of its issued and
outstanding common stock to be effective August 1, 2001.

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.

                                        8

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


NOTE 3 - EARNINGS PER SHARE

In 1997, the Financial Accounting Standard Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share is very similar
to the previously reported fully diluted earnings per share. Basic earnings per
share is computed using the weighted-average number of common shares outstanding
during the period. Common equivalent shares are excluded from the computation if
their effect is anti-dilutive. As of June 30, 2001, the Company had no
potentially dilutive securities outstanding.

NOTE 4 - ACQUISITIONS

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 2,800 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.

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 three
months ended March 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 currently located in El Segundo, California. Pursuant to the
terms of the Acquisition Agreement, the former sole shareholder of Royal
received 3,919 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.

                                        9

<PAGE>

                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 4 - ACQUISITIONS, CONTINUED

Royal International Tours, Inc., continued
------------------------------------------
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 sole shareholder of Royal (see Note 10).

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 El Segundo,
California. Pursuant to the terms of the Acquisition Agreement, the former
shareholders of Travel received $30,000.

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 $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

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 consummation of the acquisition.
Subject to certain conditions of the acquisition agreement, the Company shall
provide working capital to NYN to be used for operational expenses up to a
maximum of $388,000. As of June 30, 2001, the Company advanced NYN $362,000 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 which was granted on June
23, 2001, the transfer to the Company of all FCC licenses currently owned by
NYN, completion of an audit of NYN's financial statements and the completion of
a due diligence review. As of June 30, 2001, the agreement has not been
consummated.

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.

When complete 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 the date of the acquisition is
consummated.

                                       10

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 4 - ACQUISITIONS, CONTINUED

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 12,130 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. There were no transactions between
the Company and Jet prior to the combinations. Certain reclassifications were
made to Jet's financial statements to conform to the Company's presentation.

NOTE 5 - INVESTMENT IN UNCONSOLIDATED AFFILIATE - SMA

Pursuant to an agreement on May 4, 2000, the Company acquired a 34% interest in
S.M.A. Real Time Inc. ("SMA") for $5 million in cash and 51,774 shares of its
common stock, valued at approximately $5 million. 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,
net of accumulated amortization, totaling $6,208,832 at June 30, 2001, 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.

Summarized balance sheet as of June 30, 2001 is as follows:

                  Total assets                              $     7,476,863
                  Total liabilities                         $     4,500,341
                  Total stockholders' equity                $     2,976,522

Summarized results of operation for the six months ended June 30, 2001 are as
follows:

                  Revenue                                   $     4,635,837
                  Loss from operations                      $    (1,587,291)
                  Net loss                                  $    (1,628,925)


                                       11

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


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 its tour and travel operations for Internet reservations for a five-year
period. As of June 30, 2001, the software had not been 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 June 30, 2001. The
agreement also calls for annual software maintenance costing $245,250 per year,
commencing on the date placed in service. On July 30, 2001, the Company sent a
breach of contract notice to Datalex (see Note 10).

NOTE 7 - OTHER ASSETS

Other assets as of June 30, 2001 consisted of the following:


         Investment in Execute Direct.com, Inc. ("EDC")(i)       $      120,009
         Advances to NYN (ii)                                           362,000
         Excess of the cost of Travel Treasures, Inc.
           over the net assets acquired - net of
           accumulated amortization of $7,500                            22,500
         Deposits                                                        41,909
                                                                 ---------------
              Total                                              $      546,418
                                                                 ===============

(i) On September 14, 2000, the Company entered into a stock sale and purchase
agreement to transfer to EDC 77,778 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.

The agreement was cancelled and the Company converted advances made of $120,009
to 52,500 shares of common stock of EDC. The investment is being accounted under
the cost method of accounting.

(ii) In connection with the acquisition discussed in Note 4, the Company
advanced NYN $362,000 as of June 30, 2001.

                                       12

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at June 30, 2001 consist of the
following:


         Accounts payable                                        $    2,995,806
         Accrued claims and litigation settlements                      625,000
         Customer deposits and accrued tour costs                     1,828,877
         Retained liabilities of discontinued operations                665,613
         Other                                                          662,602
                                                                 ---------------
                                                                 $    6,777,898
                                                                 ===============

NOTE 9 - LOANS PAYABLE

Loans payable at June 30, 2001 consisted of the following:


         Loan payable - bank (i)                                 $       41,771
         Loan payable - shareholders (ii)                                85,000
         Other                                                           21,000
                                                                 ---------------
                                                                 $      147,771
                                                                 ===============

(i) 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.

(ii) In conjunction with the Jet acquisition, the Company assumed liabilities of
$100,000 payable to the former shareholders of Jet. The loans are payable on
demand and bear interest at the prime rate. As of August 2, 2001, an additional
$10,000 in loan payments has been paid.

                                       13

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 10 - COMMITMENTS AND CONTINGENCIES

As of June 30, 2001, the Company was involved in the following legal disputes.

PSA, Inc.
---------

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 recision of the Company's agreement to purchase Frankie Hawkins' controlling
share of Pacific States Airlines Services, Inc. ("PSAS"). PSAS filed for
bankruptcy protection in April 2000. The complaint against the Company was
previously dismissed by the court, but reinstated in February 2001. The Court
has similarly allowed the Company's cross-complaint against Frankie Hawkins for
misrepresentations and resultant damages in connection with the acquisition of
PSAS. Discovery is proceeding. A motion for summary judgment will be filed on
behalf of the Company within the next week. 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 multiple individuals and entities, including American
Telecommunications Standards International, Inc. ("ATSI"), 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 ATSI and others
to invest money in various ventures, both related and unrelated to ATSI. In July
1998, Mr. Thompson amended his cross-complaint to include the Company as
successor to ATSI. The Company believes this clam 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.
Discovery is currently proceeding. Trail is set for November 11, 2001.

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 sought damages of in excess of $1,272,000, plus an award of
punitive damages and attorneys' fees. A jury trial was conducted from April
11-20, 2001. The Court dismissed the majority of the case in the Company's favor
and entered a judgment against PSA for $19,188 to compensate FNG for services
rendered to PSA in 1999.

OKOTURO, ET AL. V. PSA, INC., ET AL., Superior Court of Los Angeles County,
California, Case No. BC 233822. 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.

                                       14

<PAGE>


                           PSA, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 10 - COMMITMENTS AND CONTINGENCIES, CONTINUED

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. 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 and seeking $75,000 in
compensatory damages, plus loss of earnings. The Company filed a motion to
dismiss the case for lack of jurisdiction since the contract sued upon had an
arbitration provision. The Court granted the motion. Plaintiff has not filed a
petition to arbitrate its claim. The Company has no way of knowing whether the
Plaintiff will ever pursue its claim in arbitration.

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. ("RIT"). 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 currently discussing settlement with
Mr. Sondheim whereby he would transfer stock back to the Company and make a cash
payment, but no resolution has been made yet.

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. That action has been transferred to mediation and binding
arbitration before Judicial Arbitration and Mediation Services (JAMS), which is
set for August 28, 2001. The Company intends to assert a counterclaim against
the claimant.

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 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. doing business as Vox Mundi, alleging breach
of contract. Vox Mundi sought approximately $74,000 in compensatory damages as
well as punitive damages. The Company believed this action was without merit and
settled it for a nominal, nuisance value amount. The actual terms of the
settlement are confidential, as ordered by the Court.

                                       15

<PAGE>


PSAZZ.COM, INC. V. DATALEX, The Company, through legal counsel, made a written
demand against Datalex that it breached a written agreement whereby Datalex was
to provide several "booking engines" for PSAZZ.com's reservation systems. The
Company has demanded that Datalex return, at a minimum, $517,500 paid for the
first installment under the contract since the booking engines did not work and
have not functioned for the purposes Datalex marketed them to the Company.
Datalex has not responded to PSA's demand. Subsequently, the Company learned
that Datalex has filed an action in the United States District Court for the
Central District of California against the Company for breach of contract
claiming that the Company owes the balance of the contract price (of
approximately $1.3 million). As of August 10, 2001, the Company had not been
served with the complaint.

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.


                                       16


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations

GENERAL

The following discussion and analysis should be read in conjunction with the our
consolidated financial statements and related footnotes for the year ended
December 31, 2000 included in this Annual Report on Form 10-KSB. The discussion
of results, causes and trends should not be construed to imply any conclusion
that such results or trends will necessarily continue in the future.

BACKGROUND AND OVERVIEW

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.

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 Form 10-QSB.

On November 30, 2000, we completed our previously announced merger into Jet
Vacations International, Inc. ("Jet") by exchanging 12,130 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.

PLAN OF OPERATION

We are a holding company for entities comprising our 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. We intend to acquire Internet and non-Internet companies that fit our
acquisition portfolio criteria to complement our own products and services.

According to our business model, we will focus on our portal-for-travelers
concept, with an intention of positioning the Company as a resource and
distributor for business travel products and services on the Internet, as well
as a traditional retail and wholesale distributor. Management believes that in
the presently contracting travel services market and declining economy, a
specialized approach to marketing and promoting our products and services will
have major advantages for several reasons including (i) specialization should
translate into brand recognition, (ii) comprehensive travel services should
provide convenience for busy professionals and business travelers, (iii) focused
demographics should give online advertisers efficient targeting, and (iv) the
one-stop shopping advantage of our planned portal should generate enhanced user
traffic.

                                       17

<PAGE>

We intend to establish a technological development program in customer
interactive promotions, reservations, program planning and tracking. We are
planning to expand this concept internally on a continuous basis, as well as
externally through strategic acquisitions and alliances.

In conjunction with our business plan, we acquired 100% of the outstanding stock
of three travel companies for cash and shares of common stock during the year
ended December 31, 2000. During the six months ended June 30, 2001, we focused
on consolidating and restructuring our travel operations to achieve cost
reductions during the economic downturn. Also in 2000 we acquired a 34% equity
interest of SMA Real Time Inc. ("SMA"). SMA is a provider of a wide range
production and post-production services to companies that produce commercials,
television programs, music videos and feature films. With its digital production
capabilities SMA is well suited to produce our Internet and TV product services.


RESULTS OF OPERATIONS

Three months ended June 30, 2001 vs. June 30, 2000
--------------------------------------------------

Revenue for the three months ended June 30, 2001 decreased by $3,401,668 or
63.6% from $5,347,679 for the three months ended June 30, 2000 to $1,945,991 for
the same period in 2001. The decrease is principally due to the significant
decrease in revenue of our Royal International subsidiary.

Cost of revenue for the three months ended June 30, 2001 decreased by $2,987,185
or 64.4% from $4,640,474 for the three months ended June 30, 2000 to $1,653,289
for the same period in 2001. The decrease is cost of revenue is directly
attributed to the reduction in revenue. Cost of revenue as a percentage of
revenue was 86.8% for the three months ended June 30, 2000 compared to 85.0% for
the same period in 2001.

Selling, general and administrative expenses for the three months ended June 30,
2001 decreased by $1,410,055 or 50.8% from $2,775,503 for the three months ended
June 30, 2000 to $1,365,448 for the same period in 2001. The significant
decrease is due to the reduction of staffing and administrative costs of our
Royal International subsidiary resulting from the lost revenue and other cost
efficiencies resulting from the restructuring and consolidation of our travel
operations.

Interest income, net for the three months ended June 30, 2001 decreased by
$69,544 or 108.2% from interest income of $64,272 for the three months ended
June 30, 2000 to interest expense of $5,272 for the same period in 2000. During
the three months ended June 30, 2000, we were able to invest our cash balances
to generate interest income. During the three months ended June 30, 2001, our
cash balances were significantly less than the balance in the prior year.

Equity of unconsolidated affiliate - SMA for the three months ended June 30,
2001 decreased by $211,086 going from income of $30,085 for the three months
ended June 30, 2000 to a loss of $181,001 for the same period in 2001. The
difference is due to the significant downturn of SMA business over the past
year. We believe this downturn is only temporary and reflective of declines
experienced in their industry.

Six months ended June 30, 2001 vs. June 30, 2000
------------------------------------------------

Revenue for the six months ended June 30, 2001 decreased by $3,131,364 or 50.5%
from $6,195,148 for the six months ended June 30, 2000 to $3,063,784 for the
same period in 2001. The decrease is principally due to the significant decrease
in revenue of our Royal International subsidiary. Substantially all our revenue
for the six months ended June 30, 2001 was from our Jet Vacations subsidiary.

                                       18

<PAGE>

Cost of revenue for the six months ended June 30, 2001 decreased by $2,758,244
or 51.2% from $5,388,527 for the six months ended June 30, 2000 to $2,630,283
for the same period in 2001. The decrease is cost of revenue is directly
attributed to the reduction in revenue. Cost of revenue as a percentage of
revenue was 87.0% for the six months ended June 30, 2000 compared to 85.9% for
the same period in 2001.

Selling, general and administrative expenses for the six months ended June 30,
2001 decreased by $1,908,364 or 41.2% from $4,637,222 for the six months ended
June 30, 2000 to $2,728,858 for the same period in 2001. The significant
decrease is due to the reduction of staffing and administrative costs of our
Royal International subsidiary resulting from the lost revenue and other cost
efficiencies resulting from the restructuring and consolidation of our travel
operations.

During the six months ended June 30, 2000 we wrote off the acquisition costs of
Canticle Corporation. There was no such write off during the six months ended
June 30, 2001.

Interest income, net for the six months ended June 30, 2001 decreased by
$114,757 or 100.1% from interest income of $114,612 for the six months ended
June 30, 2000 to interest expense of $145 for the same period in 2000. During
the six months ended June 30, 2000, we were able to invest our cash balances to
generate interest income. During the six months ended June 30, 2001, our cash
balances were significantly less than the balance in the prior year.

Equity of unconsolidated affiliate - SMA for the six months ended June 30, 2001
decreased by $850,530 going from income of $30,085 for the six months ended June
30, 2000 to a loss of $880,615 for the same period in 2001. The difference is
due to the significant downturn of SMA business over the past year. We believe
this down turn is only temporary as SMA losses were significantly less for the
three months ended June 30, 2001 compared to the three months ended March 31,
2001.

LIQUIDITY AND CAPITAL RESOURCES

During the six months ended June 30, 2001, we expended $1,065,209 for working
capital needs. We funded our operations principally by slowing payments to
vendors and by advances from our CEO.

In order for us to continue in existence, we plan to raise additional capital
from the sale of equity through the Rights Offering and anticipate generating
profits from our subsidiary travel operations.

FORWARD LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of us develop our technology and execute our business
plan. Although we believe the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the forward-looking
statements contained in the report will prove to be accurate.

                                       19

<PAGE>


Part II.   OTHER INFORMATION

Item 1.    Legal Proceedings

As of June 30, 2001, the Company was involved in the following legal disputes.

PSA, Inc.
---------

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 recision of the Company's agreement to purchase Frankie Hawkins' controlling
share of Pacific States Airlines Services, Inc. ("PSAS"). PSAS filed for
bankruptcy protection in April 2000. The complaint against the Company was
previously dismissed by the court, but reinstated in February 2001. The Court
has similarly allowed the Company's cross-complaint against Frankie Hawkins for
misrepresentations and resultant damages in connection with the acquisition of
PSAS. Discovery is proceeding. A motion for summary judgment will be filed on
behalf of the Company within the next week. 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 multiple individuals and entities, including American
Telecommunications Standards International, Inc. ("ATSI"), 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 ATSI and others
to invest money in various ventures, both related and unrelated to ATSI. In July
1998, Mr. Thompson amended his cross-complaint to include the Company as
successor to ATSI. The Company believes this clam 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.
Discovery is currently proceeding. Trail is set for November 11, 2001.

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 sought damages of in excess of $1,272,000, plus an award of
punitive damages and attorneys' fees. A jury trial was conducted from April
11-20, 2001. The Court dismissed the majority of the case in the Company's favor
and entered a judgment against PSA for $19,188 to compensate FNG for services
rendered to PSA in 1999.

OKOTURO, ET AL. V. PSA, INC., ET AL., Superior Court of Los Angeles County,
California, Case No. BC 233822. 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.

                                       20

<PAGE>


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. 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 and seeking $75,000 in
compensatory damages, plus loss of earnings. The Company filed a motion to
dismiss the case for lack of jurisdiction since the contract sued upon had an
arbitration provision. The Court granted the motion. Plaintiff has not filed a
petition to arbitrate its claim. The Company has no way of knowing whether the
Plaintiff will ever pursue its claim in arbitration.

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. ("RIT"). 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 currently discussing settlement with
Mr. Sondheim whereby he would transfer stock back to the Company and make a cash
payment, but no resolution has been made yet.

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. That action has been transferred to mediation and binding
arbitration before Judicial Arbitration and Mediation Services (JAMS), which is
set for August 28, 2001. The Company intends to assert a counterclaim against
the claimant.

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 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. doing business as Vox Mundi, alleging breach
of contract. Vox Mundi sought approximately $74,000 in compensatory damages as
well as punitive damages. The Company believed this action was without merit and
settled it for a nominal, nuisance value amount. The actual terms of the
settlement are confidential, as ordered by the Court.

                                       21

<PAGE>


PSAZZ.COM, INC. V. DATALEX, The Company, through legal counsel, made a written
demand against Datalex that it breached a written agreement whereby Datalex was
to provide several "booking engines" for PSAZZ.com's reservation systems. The
Company has demanded that Datalex return, at a minimum, $517,500 paid for the
first installment under the contract since the booking engines did not work and
have not functioned for the purposes Datalex marketed them to the Company.
Datalex has not responded to PSA's demand. Subsequently, the Company learned
that Datalex has filed an action in the United States District Court for the
Central District of California against the Company for breach of contract
claiming that the Company owes the balance of the contract price (of
approximately $1.3 million). As of August 10, 2001, the Company had not been
served with the complaint.

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.


Item 2.    Change in Securities and Use of Proceeds

None

Item 3.    Defaults Upon Senior Securities

None


Item 4.    Submission of Matters to a Vote of Security Holders

Not applicable


Item 5.    Other Information

Not applicable

Item 6.    Exhibits and Reports on Form 8-K

(a) Exhibits

None

(b) Reports on Form 8-K

None

                                       22

<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                           PSA, INC.



                                           By: /s/ David E. Walsh
                                           -------------------------------------
                                           David E. Walsh
                                           President and Chief Executive Officer


Date:  August 20, 2001


                                       23