<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB
                                   -----------

(Mark One)

( X )  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2001

(   )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934.

For the transition period from                                             to
                               -------------------------------------------

----------------------------------------------------------------------------- .

Commission File Number 0-29627

--------------------------------------------------------------------------------

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

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

                                880 Apollo Street
                                   Suite 329
                          El Segundo, California 90245
                    (Address of principal executive offices)

                                 (310) 640-3044
               (Registrant's telephone number including area code)

--------------------------------------------------------------------------------
               (Former name, former address and former fiscal year
                          if changed since last report)
                           9800 South Sepulveda Blvd.
                                    Suite 810
                              Los Angeles, CA 90045

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

             Yes   ( X )                              No   (   )

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 35,976,375 shares of Common
Stock, $.001 par value, were outstanding as of May 15, 2001.

Transitional Small Business Disclosure Forms (check one):

             Yes   (   )                              No   ( X )

<PAGE>
<TABLE>

ITEM I - FINANCIAL STATEMENTS.

                                  PSA, INC.

                              INDEX TO FORM 10-QSB

                                 MARCH 31, 2001
<CAPTION>



                                                                             PAGE NOS.
                                                                             ---------
<S>                                                                            <C>
PART I - FINANCIAL INFORMATION:

  CONSOLIDATED BALANCE SHEETS
    At December 31, 2000 and March 31, 2001                                      1

  CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31,
    2000 For the Three Months Ended March 31, 2001                               2

  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Three Months Ended
    March 31, 2000 For the Three Months Ended March 31, 2001                    3-4

  CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31,
    2000 For the Three Months Ended March 31, 2001                               5

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                    6-28


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                       29
           CONDITION AND RESULTS OF OPERATIONS

PART II - OTHER INFORMATION                                                      33
</TABLE>

<PAGE>
<TABLE>

                                              PSA, INC.

                                     CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                               ASSETS
                                               ------
                                                                At December 31,    At March 31,
                                                                     2000              2001
                                                                -------------      -------------
                                                                                    (Unaudited)
<S>                                                             <C>                <C>
CURRENT ASSETS:
  Cash and cash equivalents                                     $    907,983       $    259,401
  Cash - restricted                                                  100,242            251,955
  Marketable securities                                              306,000                  -
  Prepaid and other current assets                                    26,022            213,613
                                                                -------------      -------------
    TOTAL CURRENT ASSETS                                           1,340,247            724,969

EQUIPMENT - At cost, net of accumulated
  depreciation of $232,233 and $253,760 at
  December 31, 2000 and March 31, 2001,
  respectively                                                       150,393            166,087
INVESTMENT IN UNCONSOLIDATED AFFILIATE - SMA                       7,789,033          7,092,419
CAPITALIZED SOFTWARE COSTS                                         1,725,000          1,725,000
OTHER ASSETS                                                         398,181            547,200
                                                                -------------      -------------
    TOTAL ASSETS                                                $ 11,402,854       $ 10,255,675
                                                                =============      =============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES
  Accounts payable and accrued liabilities                      $  5,458,951       $  6,027,778
  Accrued capitalized software costs                               1,207,500          1,207,500
  Loans payable                                                      188,686            338,985
                                                                -------------      -------------
      TOTAL CURRENT LIABILITIES                                    6,855,137          7,574,263
                                                                -------------      -------------
COMMITMENTS AND CONTINGENCIES (Notes 2, 6, 7, 11,
13 and 14)

STOCKHOLDERS' EQUITY:
  Common stock, par value $.001 per share;
    authorized 75,000,000 shares; 35,985,423 shares
    issued and 35,985,423 and 35,976,375 shares
    outstanding at December 31, 2000 and March 31, 2001
    respectively                                                      35,985             35,985
  Additional paid-in capital                                      33,508,987         33,508,987
  Unearned compensation                                           (1,050,937)          (979,687)
  Accumulated deficit                                            (27,800,352)       (29,878,911)
  Accumulated other comprehensive loss                              (145,966)                 -
  Less: Treasury stock, 9,048 shares                                       -             (4,962)
                                                                -------------      -------------
      TOTAL STOCKHOLDERS' EQUITY                                   4,547,717          2,681,412
                                                                -------------      -------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 11,402,854       $ 10,255,675
                                                                =============      =============
</TABLE>

See notes to consolidated financial statements.

                                       1
<PAGE>
<TABLE>

                                  PSA, INC.

                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<CAPTION>

                                                       For the Three Months Ended
                                                                March 31,
                                                     --------------------------------
                                                         2000                2001
                                                     -------------      -------------
<S>                                                  <C>                <C>
REVENUES - NET                                       $    847,469       $  1,117,793
                                                     -------------      -------------
OPERATING EXPENSES:
  Cost of revenues                                        748,053            976,994
  Selling, general and administrative                   1,861,719          1,363,410
  Software development                                     83,786                  -
                                                     -------------      -------------
      TOTAL OPERATING EXPENSES                          2,693,558          2,340,404
                                                     -------------      -------------
LOSS FROM OPERATIONS                                   (1,846,089)        (1,222,611)
                                                     -------------      -------------
OTHER (EXPENSE) INCOME:
  Amortization of excess of cost price over net
    assets of business acquired                                 -             (1,500)
  Costs of acquisition of Canticle Corporation           (700,000)                 -
  Net realized gain (loss) on sale of
    securities                                            277,368           (162,961)
  Interest income                                          50,340              5,127
  Other income                                             36,825                  -
  Equity loss of unconsolidated affiliate - SMA                 -           (699,614)
                                                     -------------      -------------
      TOTAL OTHER (EXPENSE) INCOME                       (335,467)          (855,948)
                                                     -------------      -------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME
  TAXES                                                (2,181,556)        (2,078,559)

PROVISION FOR INCOME TAXES                                      -                  -
                                                     -------------      -------------
LOSS FROM CONTINUING OPERATIONS                        (2,181,556)        (2,078,559)

LOSS FROM DISCONTINUED OPERATIONS, Net of
  income taxes of $-0-                                    (21,200)                 -
                                                     -------------      -------------
NET LOSS                                             $ (2,202,756)      $ (2,078,559)
                                                     =============      =============

BASIC AND DILUTED NET LOSS PER SHARE:
  From continuing operations                         $      (0.07)      $      (0.06)
  From discontinued operations                                  -                  -
                                                     -------------      -------------
    NET LOSS PER SHARE                               $      (0.07)      $      (0.06)
                                                     =============      =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING - BASIC AND DILUTED                      32,703,894         35,986,328
                                                     =============      =============
</TABLE>

See notes to consolidated financial statements.

                                                         2

<PAGE>
<TABLE>

                                                   PSA, INC.

                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                                  (UNAUDITED)

                                    FOR THE THREE MONTHS ENDED MARCH 31, 2000
<CAPTION>

                                                                                   Common Stock                    Paid-in
                                                     Per Share            ------------------------------            Capital
                                                      Amount                Shares              Amount             Par Value
                                                    ----------            ----------          ----------          -----------
                                                                                (1)
<S>                                               <C>                  <C>                    <C>                  <C>
Balance - December 31, 1999                                               31,057,512          $    31,057          $15,845,532
                                                                                                                   -----------
Comprehensive income:
  Net loss                                                                         -                    -                    -
  Other comprehensive income:
    Unrealized loss on marketable
      securities - net of
      reclassification adjustments                                                 -                    -                    -
                                                                                                                   -----------
     Total Comprehensive Income                                                                                              -
                                                                                                                   -----------
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                     3.13             2,808,678                2,809            8,790,312
Amortization of unearned compensation                                              -                    -                    -
                                                                          ----------          -----------          -----------
Balance - March 31, 2000                                                  34,000,560          $    34,000          $25,527,560
                                                                          ==========          ===========          ===========

                                                                                             Accumulated
                                                                                                Other
                                                    Unearned            Accumulated         Comprehensive
                                                  Compensation            Deficit               Income                Total
                                                  ------------           -----------         -------------          -----------
Balance - December 31, 1999                       $(1,335,937)         $(16,732,322)          $    279,250         $(1,912,420)
                                                                                                                    -----------
Comprehensive income:
  Net loss                                                   -           (2,202,756)                     -          (2,202,756)
  Other comprehensive income:
    Unrealized loss on marketable
      securities - net of
      reclassification adjustments                           -                     -             (214,970)            (214,970)
                                                                                                                     ----------
     Total Comprehensive Income                                                                                     (2,417,726)
                                                                                                                     ----------
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                        -                     -                     -            8,793,121
Amortization of unearned compensation                   71,250                     -                     -               71,250
                                                   -----------          ------------          ------------           ----------
Balance - March 31, 2000                          $(1,264,687)         $(18,935,078)          $     64,280           $5,426,075
                                                   ===========          ============          ============           ==========
</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.

See notes to consolidated financial statements.

                                                         3

<PAGE>
<TABLE>

                                                   PSA, INC.

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                  (UNAUDITED)

                                    FOR THE THREE MONTHS ENDED MARCH 31, 2001

<CAPTION>

                                                    Common Stock (1)                                       Paid-in
                                             -----------------------------                                 Capital
                                                 Shares             Amount        Treasury Stock          Par Value
                                             ----------         ----------        --------------        -----------
<S>                                        <C>               <C>                    <C>                 <C>
Balance - December 31, 2000                  35,985,423         $   35,985           $         -        $33,508,987

Net loss                                              -                  -                     -                  -
Other Comprehensive Income:
  Reclassified adjustment                             -                  -                     -                  -
                                             ----------         ----------            ----------        -----------
      Total Comprehensive Income                      -                  -                     -                  -

Amortization of unearned compensation                 -                  -                     -                  -
Purchase of 9,048 shares of treasury stock            -                  -               (4,962)                  -
                                             ----------         ----------            ----------        -----------
Balance - March 31, 2001                     35,985,423         $   35,985           $   (4,962)        $33,508,987
                                             ==========         ==========            ==========        ===========



                                                                                    Accumulated
                                                                                       Other
                                              Unearned         Accumulated         Comprehensive
                                           Compensation          Deficit           Income (Loss)           Total
                                           ------------        -----------         -------------        -----------
Balance - December 31, 2000                $(1,050,937)      $(27,800,352)          $  (145,966)        $ 4,547,717
                                                                                                        -----------
Net loss                                              -        (2,078,559)                     -        (2,078,559)
Other Comprehensive Income:
  Reclassified adjustment                             -                  -               145,966            145,966
                                            -----------       ------------           -----------        -----------
      Total Comprehensive Income                      -                  -                     -        (1,932,593)

Amortization of unearned compensation            71,250                  -                     -             71,250
Purchase of 9,048 shares of treasury stock            -                  -                     -            (4,962)
                                            -----------       ------------           -----------        -----------
Balance - March 31, 2001                   $  (979,687)      $(29,878,911)                 $   -        $ 2,681,412
                                            ===========       ============           ===========        ===========
</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.

See notes to consolidated financial statements.

                                                         4

<PAGE>
<TABLE>

                                    PSA, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<CAPTION>

                                                               For the Three Months Ended
                                                                        March 31,
                                                            -------------------------------
                                                                2000                2001
                                                             ------------      ------------
<S>                                                          <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                   $(2,202,756)      $(2,078,559)
  Adjustments to reconcile net loss to net
    cash used in operating activities from
    continuing operations:
      Equity loss of unconsolidated affiliate - SMA                    -           699,614
      Loss from discontinued operations                           21,200                 -
      Costs of acquisition of Canticle Corporation               700,000                 -
      Depreciation and amortization                               20,954            21,527
      Amortization of unearned compensation                       71,250            71,250
      Amortization of excess of cost price over
        net assets of business acquired                                -             1,500
      (Gain) loss on sale of marketable securities              (277,368)          162,961

  (Increase) decrease in assets and liabilities,
    net of effects from acquisitions:
      Accounts receivable                                        (16,924)                -
      Prepaid and other current assets                          (222,382)         (187,591)
      Other noncurrent assets                                      8,011          (150,519)
      Accounts payable and accrued liabilities                   826,695           572,232
      Due to/from officers                                       (16,158)           (3,405)
                                                             ------------      ------------
    NET CASH USED IN OPERATING ACTIVITIES                     (1,087,478)         (893,990)
                                                             ------------      ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                                   -           (37,221)
  Expenditures for acquisitions                                 (612,000)                -
  Payments for capitalized software costs                       (517,500)                -
  Purchase of marketable securities                           (1,397,305)                -
  Proceeds from sale of marketable securities                  2,112,456           289,005
                                                             ------------      ------------
    NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES         (414,349)          251,784
                                                             ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                       8,793,121                 -
  (Payments of) proceeds from loans payable, net                 (14,659)          150,299
  Purchase of treasury stock                                           -            (4,962)
                                                             ------------      ------------
    NET CASH PROVIDED BY FINANCING ACTIVITIES                  8,778,462           145,337
                                                             ------------      ------------
CASH USED IN DISCONTINUED OPERATIONS                            (825,013)                -
                                                             ------------      ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           6,451,622          (496,869)

CASH AND CASH EQUIVALENTS - BEGINNING                          1,301,557         1,008,225
                                                             ------------      ------------
CASH AND CASH EQUIVALENTS - ENDING                           $ 7,753,179       $   511,356
                                                             ============      ============
</TABLE>

See notes to consolidated financial statements.

                                        5

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  1 -  BASIS OF PRESENTATION

The accompanying consolidated financial statements are unaudited. These
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission ( the "SEC"). Certain information and
footnote disclosures normally included in the consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion of
management, the consolidated financial statements reflect all adjustments (which
include only normal recurring adjustments) necessary to state fairly the
financial position and results of operations as of and for the periods
indicated. These consolidated financial statements should be read in conjunction
with the Company's consolidated financial statements and notes thereto for the
year ended December 31, 2000, included in the Company's Form 10-KSB as filed
with the Securities and Exchange Commission.

NOTE  2 - 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 6), and acquired a
34% equity interest of SMA Real Time Inc. during May 2000 (Note 5). 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.

                                        6
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  2 - BUSINESS AND CONTINUED OPERATIONS (Continued)

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 three months ended March 31, 2000
and 2001, the Company incurred net losses of approximately $2,203,000 and
$1,915,000, respectively, and as of March 31, 2001, had a working capital
deficiency of approximately $6,849,000. 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.

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. 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. 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 14.

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.

                                        7
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  3 - 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.

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.

                                        8
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 March 31, 2001, the use of the computer
software had not commenced.

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 three months ended March 31, 2000 and 2001 approximated $53,000
and $46,000, respectively.

                                        9
<PAGE>

                          PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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.

Treasury Stock Repurchase Program
---------------------------------

On March 21, 2001, the Company announced that its Board of Directors authorized
management to purchase up to 500,000 shares of its common stock. Purchases will
be made from time to time in the open market, and it is expected that funding of
the program will come from operating cash flow and existing bank facilities. As
of March 31, 2001, the Company had repurchased 9,048 shares under this new
program for an aggregate cost of $4,962.

                                       10

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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.

                                       11
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impact of Recently Issued Accounting Standards (Continued)
----------------------------------------------

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  4 - MARKETABLE SECURITIES

Marketable securities consist of the following:


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

At December 31, 2000, no deferred taxes were provided for unrealized holding
loss. As of March 31, 2001, the Company had no marketable securities.

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 1,035,473 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, totalling
$6,372,222 at March 31, 2001, which is being amortized over 10 years.


                                       12

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  5 - INVESTMENT IN UNCONSOLIDATED AFFILIATE - SMA (Continued)

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 sheets are as follows:


                                                   December 31,        March 31,
                                                       2000              2001
                                                   ------------       ----------
Total assets                                         $8,325,492       $7,933,770
                                                     ==========       ==========
Total liabilities                                    $3,838,962       $4,859,111
                                                     ==========       ==========
Total stockholders' equity                           $4,486,530       $3,074,659
                                                     ==========       ==========

Summarized results of operations are as follows:


                                               Three Months Ended March 31,
                                               ----------------------------
                                                 2000                   2001
                                             ------------           ------------
Revenue                                      $ 3,461,609            $ 2,384,167
                                             ============           ============
Loss from operations                         $  (166,681)           $(1,624,773)
                                             ============           ============
Net loss                                     $  (951,380)           $(1,568,305)
                                             ============           ============

                                       13
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  6 - 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.

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 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 14).

                                       14
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  6 - ACQUISITIONS (Continued)

a) Purchase Transactions: (Continued)

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.

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.

                                       15
<PAGE>

                            PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  6 - ACQUISITIONS (Continued)

a) Purchase Transactions: (Continued)

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 March 31, 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, the
transfer to the Company of all FCC licenses currently owned by NYN and the
completion of a due diligence review. As of March 31, 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.

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.

                                       16

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  6 - 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
                                                                    -------------         ----------         ------------
Three Months Ended March 31, 2001 (Unaudited):
---------------------------------------------
<S>                                                                 <C>                 <C>                 <C>
Revenue                                                             $    168,246        $   949,547         $  1,117,793
Loss from continuing operations                                     $ (1,464,988)       $  (613,571)        $ (2,078,559)
Net loss                                                            $ (1,464,988)       $  (613,571)        $ (2,078,559)

Three Months Ended March 31, 2000 (Unaudited):
---------------------------------------------

Revenue                                                             $    126,242        $   721,227         $    847,469
Loss from continuing operations                                     $ (1,949,688)       $  (231,868)        $ (2,181,556)
Net loss                                                            $ (1,970,888)       $  (231,868)        $ (2,202,756)

</TABLE>

NOTE  7 - 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. As of March 31, 2001, 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 March 31, 2001. The agreement also calls for annual software
maintenance costing $245,250 per year, commencing on the date placed in service.

                                       17

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  8 - OTHER ASSETS

Other assets as of March 31, 2001 consisted of the following:


a) Investment in Execute Direct.com, Inc. ("EDC")           $105,009
b) Advances to NYN                                           362,000
   Excess of the cost of Travel Treasures, Inc.
     over the net assets acquired - net of
     accumulated amortization of $6,000                       24,000
   Other                                                      56,191
                                                            ---------
        Total                                               $547,200
                                                            =========

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 6, the Company advanced
NYN $362,000 as of March 31, 2001.

NOTE  9 - 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.

                                       18

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE  9 - 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 for the period beginning January 1,
2000 and ending March 14, 2000 are as follows:


REVENUE                                                            $  397,733
                                                                   ==========

OPERATING EXPENSES                                                 $(418,933)
                                                                   ==========

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

NOTE 10 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at March 31, 2001 consist of the
following:


Accrued claims and litigation settlements                          $  625,000
Accrued professional fees                                           1,103,959
Customer deposits and accrued tour costs                            2,544,250
Retained liabilities of discontinued
   operations                                                         665,613
Other                                                               1,088,956
                                                                   ----------
                                                                   $6,027,778
                                                                   ==========

                                       19
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 11 - LOANS PAYABLE

Loans payable at March 31, 2001 consisted of the following:


a) Loan payable - bank                                         $  224,600
b) Loan payable - bank                                             21,385
c) Loan payable - shareholder                                      93,000
                                                               ----------
      Total                                                    $  338,985
                                                               ==========

a) At March 31, 2001, the Company had 2 lines of credit for up to $225,000, with
interest at 8% per annum, of which $89,600 is due on December 19, 2001 and
$135,000 is due on January 24, 2002. The lines of credit are collateralized by
cash deposits aggregating $251,955. The deposits are 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 12 -         INCOME TAXES

The Company was not required to provide for a provision for income taxes for the
periods ended March 31, 2000 and 2001 as a result of net operating losses
incurred during those years.

                                       20
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 12 -         INCOME TAXES (Continued)

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.

NOTE 13 - STOCKHOLDERS' EQUITY

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.

                                       21

<PAGE>

                          PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 13 - 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 14 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

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

As of March 31, 2001, 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. The Company has filed a
cross-complaint against F. Hawkins for misrepresentations and resultant damages
in connection with the acquisition of PSAS. 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.

                                       22

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 14 - 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. The trial was conducted in April
2001 and post trial motions will be heard by the court in June 2001 before it
renders a final judgement.

                                       23
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 14 - 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 has no merit 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.

                                       24

<PAGE>

                            PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 14 - 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.

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.

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.

                                       25

<PAGE>

                          PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 14 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)

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 March 31, 2001,
cash and cash equivalents include $251,955 in certificate of deposits.

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:
----

2002                                 $136,620
2003                                  136,620
2004                                  108,158
                                     --------
                                     $381,398
                                     ========

Rent expense relating to the operating leases included in selling, general and
administrative expenses amounted to approximately $67,000 and $46,000 for the
three months ended March 31, 2000 and 2001, respectively.

                                       26

<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 14 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)

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.

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 $71,250
was charged to operations for the three months ended March 31, 2001.

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.

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.

                                       27
<PAGE>

                           PSA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 14 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)

Financial Advisory Agreement (Continued)
----------------------------

The issuance and sale of the Company's 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 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, sale 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.

NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION

During the three months ended March 31, 2000 and 2001, with respect to its
continuing operations, the Company paid $-0- for interest and income taxes.

                                       28


<PAGE>

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


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 "Risk Factors",
elsewhere herein.

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-QSB.

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.

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 search and acquire Internet and non-Internet companies
that fit its acquisition portfolio criteria to complement our own products and
services and extend its content offering.

According to our business model, it will focus on our portal-for-travelers
concept, with an intention of positioning itself as a resource and distributor
for business travel products and services on the Internet. Management believes
that the specialized approach to marketing and promoting its services will have
major advantages for us for several reasons including that (i) specialization
may translate into brand recognition, (ii) in-depth travel services may mean
convenience for busy professionals and small business executives, (iii) focused
demographics may give online advertisers efficient targeting, and (iv) the
one-stop shopping advantage of the portal may generate user traffic.

We intend to establish a technological development program in customer
interactive promotions, reservations, program planning and tracking. We intend
to expand this program internally on a continuous basis, as well as externally
through strategic acquisitions and alliances. We intend to search and acquire
Internet and non-Internet entities that fit our acquisition portfolio criteria
to complement our own proprietary products and services and extend our content
offerings.



                                       29
<PAGE>

In conjunction with its business plan, we 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 and acquired a 34% equity interest of SMA Real
Time Inc. ("SMA") during May 2000. 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 9, on March 14, 2000, we completed the sale of 100%
of the issued and outstanding stock of PSAS to a member of our Board of
Directors. PSAS is an airport/airline service company providing skycap services
at various airports in the United States. The sale will enable us to concentrate
on our proposed on-line travel services business. Accordingly, we have accounted
for the operations of PSAS as a discontinued operations.


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

RESULTS OF OPERATIONS

Comparison of the Three Months Ended March 31, 2001 vs. the Three Months
Ended March 31, 2000:
---------------------------------------------------------------------------

We reported revenue of $1,117,793 and $847,469 for the three months ended March
31, 2001 and 2000, respectively. The increase was attributed to the acquisition
of Royal International Tours, Inc. ("Royal") on March 6, 2000. We reported cost
of revenues for the three months ended March 31, 2001 and 2000 of $976,994 and
$748,053, respectively. The increase was the result of the acquisition mentioned
above.

Selling, general and administrative expenses decreased for the three months
ended March 31, 2000 from $1,861,719 to $1,363,410 for the three months ended
March 31, 2001. The decrease was attributable to a reduction in expenses for
public relations and advisory fees, aggregating $1,018,425, offset by increase
of other corporate overhead and selling, general and administrative expenses.

For the three months ended March 31, 2001 and 2000, we incurred operating losses
of $1,222,611 and $1,846,089, respectively. The losses are principally due to
expenses incurred in the development of software, public relations, advisory
fees, general and administrative expenses.

For the three months ended March 31, 2001 and 2000, other expense was $855,948
and $335,467, respectively. During the three months ended March 31, 2000, we
charged $700,000 to operations in connection with our purchase of the Canticle
Corporation (Note 6). For the three months ended March 31, 2000, the Company
realized a gain aggregating $277,368 from the sale of marketable securities, and
realized a loss aggregating $162,961 for the three months ended March 31, 2001.
Interest income was $50,340 and $5,127 for the three months ended March 31, 2000
and 2001, respectively. During the three months ended March 31, 2001, we
recorded an equity loss of unconsolidated affiliate - SMA aggregating $699,614.

                                       30
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

During the three months ended March 31, 2001, we expended $893,990 for working
capital needs. We partially funded our operations during the three months ended
March 31, 2001 through proceeds from available credit facilities, resulting in
net proceeds to us of $150,299.

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 March 31, 2001, we 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, the transfer to us of all FCC licenses
currently owned by NYN and the completion of a due diligence review. As of March
31, 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.

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.

Effective 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.

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 continued listing of the common
stock on at least the OTC electronic board and (iii) no major transaction
involving us (i.e. change of control, merger, sale of substantially all of the
assets, etc.) has occurred or been announced; and (iv) we have 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 we
have 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.


                                       31
<PAGE>


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.

We paid $20,000 to May Davis for certain legal fees and expenses upon the
execution of the Investment Agreement and have 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.



                                       32
<PAGE>


                          PART II -- OTHER INFORMATION.


Item 1.  Legal Proceedings.

There have been no material developments in our legal proceedings during the
quarter ended March 31, 2001.


Item 2.  Changes in Securities.

(a)  Not applicable.

(b)  Not applicable.

(c)  Not applicable.

Item 3.  Defaults Upon Senior Securities.

Not applicable.

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

Not applicable.

Item 5.  Other Information.

None.

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

(a)  Not applicable.

(b)  Not applicable.


                                       33
<PAGE>



         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.




Dated: May 30, 2001


                                            PSA, INC.
                                            (Registrant)




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

-----------------------------
(2) Filed herewith