SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
February 18, 2000
Date of Report
(Date of Earliest Event Reported)
PSA, INC.
(Exact Name of Registrant as
Specified in its Charter)
9800 Sepulveda Boulevard, Suite 810
Los Angeles, California 90045
(Address of principal executive offices)
310/258-0500
310/258-0509(fax)
(Registrant's telephone number)
CANTICLE CORPORATION
1504 R Street, N.W.
Washington, D.C. 20009
(Former name and former address)
Nevada 0-29627 33-0630397
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Reorganization
(the "Acquisition Agreement"), PSA, Inc. ("PSA" or the "Company"), a
Nevada corporation, has acquired all the outstanding shares of
common stock of Canticle Corporation ("Canticle"), a Delaware
corporation, from the shareholders thereof in an exchange for an
aggregate of 56,000 shares of common stock of PSA (the
"Acquisition"). As a result, Canticle has become a wholly-owned
subsidiary of PSA.
The Acquisition was approved by the unanimous consent of the
Board of Directors of PSA on February 11, 2000. The Acquisition was
effective 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.
PSA had 31,500,235 shares of common stock issued and
outstanding prior to the Acquisition and 31,556,235 shares issued
and outstanding following the Acquisition.
Upon effectiveness of the Acquisition, pursuant to Rule
12g-3(a) of the General Rules and Regulations of the Securities and
Exchange Commission, PSA elected to become the successor issuer to
Canticle for reporting purposes under the Securities Exchange Act of
1934 and elects to report under the Act effective February 18, 2000.
A copy of the Acquisition Agreement is filed as an exhibit
to this Current Report and is incorporated in its entirety herein. The
foregoing description is modified by such reference.
(b) The following table contains information regarding the
shareholdings of PSA's current directors and executive officers and
those persons or entities who beneficially own more than 5% of its
common stock (giving effect to the exercise of any warrants held by
each such person or entity which are currently exercisable or may be
exercised within 60 days of the date of this Current Report):
Number of Shares
of Common Stock Percent of
Beneficially Common Stock
Name Owned (1) Beneficially Owned (2)
Walsh Family Trust 17,324,319 (2) 54.9%
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045
David E. Walsh 9,678,204 (2) 30.7%
Chairman, Chief Executive Officer,
Director
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045
Robert E. Root * *
Executive Vice President,
Secretary, Director
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045
Michael Handelman * *
Chief Financial Officer
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045
John J. Fitzpatrick * *
Director
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045
Eric Carlson * *
Director
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045
John D. Williams * *
Director
9800 S. Sepulveda Blvd. #810
Los Angeles, California 90045
All Officers and Directors 27,002,523 85.6%
As a Group (6 persons)
* Less than 1% of the outstanding shares.
(1) Percentages based upon 31,556,235 shares of the Company
common stock outstanding following the Acquisition.
(2) Mr. Walsh may also be deemed to be the beneficial owner of
stock owned by the Walsh Family Trust.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Acquisition
Agreement was negotiated between Canticle and PSA. In evaluating PSA
as a candidate for the proposed Acquisition, Canticle used criteria
such as the value of the assets of PSA, PSA's ability to compete in
the information technology market, the increased use of the Internet
as a sales and marketing means, PSA's current and anticipated
business operations, PSA's business reputation in the Internet
venture capital community, and PSA's management's experience and
business plan. In evaluating Canticle as a candidate for the
proposed Acquisition, PSA 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
PSA's becoming a reporting company under the Act.
(b) The Company intends to establish its position as an
Internet portal catering to the needs of travelers throughout the
world by developing its Web site and related technologies and by
placing primary emphasis on capturing a share of the online travel
business.
BUSINESS
COMPANY
PSA, Inc. ("PSA" or the "Company") is a publicly-held
company that 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., a California corporation, in April, 1998. In connection
with the merger, ASAT changed its name to the Company's present
name, as well as its trading symbol from ASAT to PSAZ. On September
22, 1998, the Company changed its trading symbol to PSAX. The
Company's shares of common stock are currently traded on NASD OTC
Bulletin Board.
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, air transportation, ground services and
Internet television broadcast via "Spectrum Broadband Access."
The Company owns and operates two majority-owned and one
wholly-owned subsidiaries which are PSA Internet, Inc., Pacific
Airline Services, Inc., and PSAZZ Air, Inc., respectively. In
addition, PSA Internet, Inc. owns 80% of PSAZZ.COM.
The Company has no affiliation with the former Pacific
Southwest Airlines, PSA Airlines or USAirways, which acquired PSA
Airlines in 1988.
Through PSA Internet, Inc., one of its majority-owned
subsidiaries, the Company intends to build a comprehensive Internet
portal located at http://www.psazz.com. This site is intended to
provide a full range of traveling services and is designed to
capture a share of the online travel business. In its efforts to
enhance its Web site capabilities, the Company intends to utilize
currently available Internet broad-based distribution travel
software. Webmaster Zone One, which has developed several large Web
sites, is in final stages of this site's development and another Web
designer company, DATALUX, is currently constructing the site's
booking engine. The site will also feature broadband convergence to
create a comprehensive database enabling prospective travelers to
search for travel intelligence, travel specials, news, music,
sporting and industry related events. The Company has entered into a
business alliance with an Internet company, Intervu, Inc., whereby
the Company is entitled to the use of Intervu, Inc.'s patented
streaming media technology in exchange for an initial cash fee and
variable additional fees based on size and volume of programming
hosting.
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
will be able to secure any or all funding necessary for its future
growth and expansion. 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.
SUBSIDIARIES
PSA INTERNET, INC., ("PSA Internet") incorporated in the
state of Nevada on October 1, 1999, is a majority-owned subsidiary
of the Company created to develop, own and operate the Company's
exclusive Internet brand, PSAZZ.COM, and to acquire and develop
Internet related entities. The Company owns 80% and David Walsh, the
Chairman and Chief Executive Officer of the Company, owns 20% of the
outstanding common stock of this subsidiary. PSA Internet is a
development stage company.
PSAZZ.COM, INC., ("PSAZZ.COM"), was incorporated in the
State of Nevada on April 5, 1999, as a majority-owned subsidiary of
PSA Internet to develop and operate the Company exclusive Internet
brand. PSA Internet owns 80% and David Walsh, the Chairman and
Chief Executive Officer of the Company, owns 20% of the outstanding
common stock of this subsidiary. PSAZZ.COM is a development stage
company.
PACIFIC STATES AIRLINE SERVICES, INC. ("PSAS"),
incorporated in the state of California on July 19, 1968, is a
wholly-owned subsidiary of the Company through a 33% capital stock
acquisition in August, 1997 and a 67% capital stock acquisition in
June, 1998. PSAS is an airport/airline services company providing
Skycap services at Los Angeles International, San Francisco
International, Sacramento International, Monterey Municipal and the
Columbus, Ohio airports to clients including American Airlines,
Alaska Airlines, Delta Airlines, American West, Horizon, Northwest,
United Airlines, US Airways and the City of San Francisco
Airports Commission. It currently has over 185 employees and
generated approximately $1.5 million in annual gross revenues in
1999. The Company is currently implementing an expansion program for
PSAS, including the revival of its security and maintenance services
components. Historically PSAS has operated at a loss and there is
no assurance that it will ever become profitable.
PSAZZ AIR, INC. ("PSAZZ"), incorporated in the State of
California on May 27, 1994, is a 95%-owned subsidiary
of the Company. PSAZZ completed a private placement of
873,649 shares of its common stock to approximately 92
shareholders for aggregate gross proceeds of $2,820,223
on June 21, 1996. At about the same time, PSAZZ
obtained a Federal Aviation Administration Part 121 Air
Carrier Certificate for Supplemental Cargo Operations.
PSAZZ conducted only limited cargo operations during
that summer and, because of continued inactivity,
surrendered its Air Carrier Certificate to the FAA two
years later. Currently inactive, PSAZZ plans to
commence scheduled passenger service if it is able to
obtain the substantial financing and regulatory
approval that this will require. The Company has no
immediate plans to activate PSAZZ.
CURRENT OPERATIONS
The Company's current operations consist of business
activities of its wholly-owned subsidiary, PSAS, and
the launch and development of its Internet portal at
http://www.psazz.com. In 1998, PSAS generated revenues of
$2,809,000 with estimated losses of $2,743,000 and in 1999 estimated
revenues of $1,500,000 with estimated losses of $800,000.
BUSINESS PLAN
According to the Company's business model, the Company will
focus on its 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 the Company 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.
The Company will establish a technological development
program in customer interactive promotions, reservations, program
planning and tracking. The Company intends to expand this program
internally on a continuous basis, as well as externally through
strategic acquisitions and alliances. PSA intends to search and
acquire Internet and non-Internet entities that fit the Company's
acquisition portfolio criteria to complement its own proprietary
products and services and extend its content offerings.
No assurance can be given that the Company will be able to
effect any aspects of its business plan or to maintain the
operations that it has currently established. The Company will need
additional capital either through financing or through
operations to meet its business goals. 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.
MARKETING
The Company intends to pursue a segmentation strategy that
gives priority to providing its products and services to those
communities and their affinity groups that are the heaviest users of
the Internet and travel services. The Company expects to take
advantage of the shared demographics of affinity groups by creating
travel packages customized to their interests. Positioned as
"Traveltainment," these packages will be driven by sports and
commercial events or international business or trade conferences.
The Company's revenues are expected to be derived from
travel purchases by customers on the PSAZZ.COM Web site, other
E-Commerce transactions, advertising with the Company's out-sourced
product and service providers, subscription services, sponsorships,
licensing, referral fees and from the Company's operating subsidiaries.
EMPLOYEES
The Company and its subsidiaries currently employ
approximately 200 employees, none of which are subject to collective
bargaining agreements. The majority of these individuals are
employed as hourly workers to perform contract services for PSAS.
Approximately 25 individuals are retained to perform management
functions for the Company under engagement agreements or consultant
contracts.
TRADEMARKS AND LICENSES
Three trademark applications have been approved and notices
of allowance have been issued. The Company intends to file
applications for additional marks in connection with a variety of
goods and services to be offered by the Company and its affiliates.
PROPERTY
The Company currently leases approximately 6,000 square feet
of office space at its business address at a monthly rental rate of
$5,000, subject to annual adjustment. Its lease term expires in
February, 2004. Additionally, PSAS rents a 721 square foot storage
and maintenance facility for its service equipment and 93 square
foot office at its Sacramento location. The combined rental expense
for these facilities is $6,022.00 per month.
The Company expects to lease approximately 7,500 to 10,000
square feet of operating facilities for PSAZZ.COM in the future on
terms to be determined.
LEGAL PROCEEDINGS
The Company and its subsidiaries are currently involved in the
following legal proceedings:
DuPont v. Pacific Southwest Airlines, Inc., Superior Court
of California, San Diego County Case No. 719562. Ths case was filed
in May, 1997 against PSA, Inc. and several officers and directors of
the Company, alleging fraud in the issuance of securities of PSAZZ
Air, Inc. Plaintiff Thomas Halder has been dismissed as plaintiff
per his request and replaced by substitute plaintiff Michael DuPont.
Plaintiff DuPont sought to have the case certified as an investor
class action, but the Court denied his request. Despite the notice
of the action from Mr. Dupont's counsel to the other shareholders,
none has so far joined this action. Thus, the case is at this time
limited to Mr. DuPont's individual claim pertaining his $75,000
investment. In November, 1999,the Court abated the action and
required Mr. DuPont to pursue his claim in arbitration. It is the
view of the Company's counsel that he will not proceed with the
arbitration.
Hawkins v. PSA, Inc. Superior Court of California, Los
Angeles County Case No. YC033477, filed October, 1998. Frankie
Hawkins, a former majority owner of PSAS, alleges breach of
contract. Plaintiff seeks approximately $1 million in additional
consideration from PSA, PSAS and certain individual officers and
directors of the Company for the Company's purchase of her interest
in PSAS in June, 1998. She also seeks damages for breach of an
employment contract. The Company and Ms. Hawkins are currently in
settlement negotiations relating to this matter, but there is no
assurance as to whether a settlement agreement will be reached.
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
Thompson. The complaint does not name the Company as a defendant.
However, Robert Thompson filed a cross-complaint against over thirty
cross-defendants, one of which was American Telecommunications
Standards International, Inc. ("ASAT"), with which 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
cross-defendant. 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. He seeks approximately
$900,000 from all cross-defendants. The Company is currently
negotiating all claims by Mr. Thompson for an amount of
approximately $25,000. 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.
Bonner v. PSA, Inc. District of Harris County, Texas, Case
No. 99-39761 filed August, 1999. Plaintiff alleges a breach of
contract seeking approximately $20,000 plus 75,000 shares of PSA,
Inc. The Company believes that this claim has no merit because of a
breach of contract and failure to perform by the plaintiff. This
case is in preliminary stages.
Winford v. PSAS, Inc., Superior Court of California, San
Francisco County, Case No. 30201. Mr. Winford alleges that he was
wrongfully terminated by PSAS by former management and seeks damages
of $25,000 plus a daily statutory penalty alleged to be $87,000 at
the time of the complaint. The Company believes that this claim has
no merit because management believes that the employee breached FAA
safety and security standards. This case is in the preliminary stages.
PSA entered into a stock exchange agreement and plan of
reorganization on March 13, 1998 with American Telecommunications
Standards International, Inc., ("ASAT") which has subsequently
changed its name to PSA, Inc. The transaction was entered into by
the Walsh Family Trust based on representations by former management
that ASAT had no litigation, no material contracts, no liabilities
and a positive stockholders equity. On August 2, 1999, the
Securities and Exchange Commission filed a complaint in Federal
District Court against fifteen individuals and entities, among which
were former management of ASAT, for their roles in a fraudulent
offering and market manipulation of the stock of the Company. Neither
the Company, its subsidiaries or any of their current management
were named in the complaint.
There are no substantial or material pending or
threatened legal proceedings to which the Company is a party, except
for the above-described proceedings.
DESCRIPTION OF SECURITIES
The Company has an authorized capitalization of 75,000,000
shares of common stock, $.001 par value per share, of which
31,556,235 shares have been issued and outstanding. No preferred
stock has been authorized.
MARKET FOR THE COMPANY'S SECURITIES
The common stock of PSA is traded in the over-the-counter
("OTC") market and quoted through the NASD OTC Bulletin Board under the
symbol "PSAX." The market for OTC common stock is often
characterized by low volume and broad price and volume volatility.
PSA cannot give any assurance that a stable trading market will
develop for its stock or that an active trading market will be
sustained. Moreover, the trading price of PSA's common stock could
be subject to wide fluctuations due to such factors as quarterly
variations in operating results, competition, announcements of new
products by PSA or its competitors, product enhancements by PSA or
its competitors, regulatory changes, differences in actual results
from those expected by investors and analysts, changes in financial
estimates by securities analysts, and other events or factors.
The Company has been a non-reporting publicly traded company
with certain of its securities exempt from registration under the
Securities Act of 1933 pursuant to Rule 504 of Regulation D of the
General Rules and Regulations of the Securities and Exchange
Commission. The NASD Stock Market has implemented a change in its
rules requiring all companies trading securities on the NASD OTC
Bulletin Board to become reporting companies under the Securities
Exchange Act of 1934.
PSA acquired all the outstanding shares of Canticle to
become successor issuer to it in order to comply with the
Eligibility Rule for the OTC Bulletin Board.
The market price of the Company's common stock over the
last 52 weeks has ranged from 5/8 to 16 3/4. On February 17, 2000,
the high was 14.375 and the low 13.250 with a volume of 30,100 shares.
STOCK TRANSFER AGENT
The Company's transfer agent is U.S. Stock Transfer
Corporation, 1745 Gardena Avenue, Glendale, California, 91204.
MANAGEMENT
The current executive officers and directors of the Company
are as follows:
Name Age Position
David E. Walsh 50 Chairman, Chief Executive
Officer, President, Director
Robert E. Root 60 Executive Vice President,
Secretary, Director
Michael Handelman 40 Chief Financial Officer
John J. Fitzpatrick 53 Director
Eric Carlson 49 Director
John D. Williams 76 Director
DAVID E. WALSH. Chairman, Chief Executive Officer,
President and Director of the Company. From 1994 to present, Mr.
Walsh has devoted his efforts to the formation of the Company and
its subsidiaries. From 1992 to 1993, Mr. Walsh was affiliated with
Merrill Lynch in their Institutional Client Services Group. From
1983 to 1992, Mr. Walsh operated Walsh Holding Company, a
diversified real estate development, construction and financing
organization. Mr. Walsh is a commissioned officer in the United
States Naval Reserve. Mr. Walsh received a Bachelor of Philosophy
degree from Northwestern University, Evanston, Illinois.
ROBERT E. ROOT. Executive Vice President, Secretary and
Director of the Company. From 1997 to present, Mr. Root has served
as Corporate Secretary and Executive Vice President of the Company.
From 1995 to 1997, Mr. Root has been employed as Director of
Planning and Investor Relations with PSAZZ. Prior to joining the
Company, he was an aviation and business consultant. Between 1979
and 1982, Mr. Root served as a Vice President in Contract Services
with Pacific States Airline Services. From 1968 to 1979, he held
positions of Director of Operations and Director of Properties and
Facilities for the original PSA, Inc. He served on active duty with
the U.S. Air Force and attended Sacramento State University.
MICHAEL HANDELMAN. Chief Financial Officer of the
Company. Mr. Handelman has been the Chief Financial Officer of the
Company since January, 2000. From July, 1996 to July, 1999, Mr.
Handelman was the Vice President and Chief Financial Officer of Jane
International Inc., a publicly held manufacturer of functional
children's products. From October, 1993 to June, 1996, Mr.
Handelman was Vice President and Chief Financial Officer of LAK
Acquisition Corporation which owned the Los Angeles Kings hockey
franchise. Prior to that Mr. Handelman spent twelve years in various
positions in public accounting. Mr. Handelman graduated from
Brooklyn College with a Bachelors degree in Accounting.
JOHN J. FITZPATRICK. Director of the Company. Since 1992,
Mr. Fitzpatrick has been employed as Vice President of Business
Development and Government Sales by Dupont Flooring Systems, a
division of Dupont, Inc. and its predecessor companies. From 1982
to 1992, he has been employed by Karastan Bigelow, a division of
Fieldcrest Cannon, Inc. as manager of government sales and national
accounts. Mr. Fitzpatrick is a retired Captain in the United States
Naval Reserve where his last active duty assignment was to serve as
Deputy Reserve Intelligence Area Commander for Manpower Management
in Washington, D.C. He serves as Chairman of the Company's Executive
Committee. Mr. Fitzpatrick received a Bachelor in Science degree
from the University of Dayton and a Masters in Business
Administration degree from St. Johns University.
ERIC CARLSON. Director of the Company. Mr. Carlson has
been a Director of the Company since February, 1999. Mr. Carlson
has served as both a Director and Corporate Officer for a number of
corporations over the last 16 years. Mr. Carlson has served in the
United States Navy. He received a Bachelor of Arts degree in
Finance, with an emphasis in accounting, management and economics.
In addition, Mr. Carlson currently holds a number of professional
licenses in the area of investment and finance.
JOHN D. WILLIAMS. Director of the Company. Mr. Williams
has been a Director of the Company since March, 1998. Mr. Williams
is a licensed architect, a member of the American Institute of
Architects, and a graduate of the University of Southern California.
He has been a practicing architect for over thirty-five years. Mr.
Williams was a joint venture partner in the redesign of the Los
Angeles International Airport Tom Bradley Terminal, and in the
remodeling of the MGM Grand facility at the Imperial Terminal.
EXECUTIVE COMPENSATION
David E. Walsh, Chairman, Chief Executive Officer, and
President, receives a salary of $350,000 per annum. Mr. Walsh is
eligible for incentive compensation payable in cash and stock
options as determined by the Board of Directors, pursuant to an
employment agreement effective on September 30, 1999.
Robert E. Root, Executive Vice President and Secretary,
receives a salary of $150,000 per annum.
Michael Handelman, Chief Financial Officer, receives a
salary of $120,000 per annum.
CERTAIN TRANSACTIONS
On March 13, 1998, the Company entered into a stock
exchange agreement and plan of reorganization, whereby the Company
acquired PSA, Inc. a California corporation, which it subsequently
merged into the Company. Control of the corporation shifted to the
Walsh Family Trust, David E. Walsh, Trustee, and the Company changed
its name to the Company's current name. David E. Walsh and other
individuals replaced the existing officers and directors. This
transaction resulted in the issuance to the Walsh Family Trust of
23,738,657 shares of the Company's common stock which, after
issuance, was to have equaled 81.58% of the outstanding common stock
at the time of the reorganization. The Walsh Family Trust owned 97%
of the common stock of the acquired California entity prior to the
acquisition by the Company.
On March 20, 1998 the Board of Directors (with Mr.
Walsh abstaining) authorized an amendment to the Articles of
Incorporation of the Company to increase the authorized number of
shares of common stock from 30,000,000 shares to 75,000,000 shares
with a $0.001 par value per share.
On May 20, 1998, the Board of Directors approved the
issuance of 2,730,000 shares of unrestricted common stock to David
E. Walsh in consideration for his management services to the Company
during 1997. On June 15, 1998, the Board of Directors approved
4,000,000 shares of restricted common stock to be issued to Mr.
Walsh for past services from May, 1994 through May, 1998, excluding
calendar year 1997.
On June 29, 1998, the Board of Directors approved the
final acquisition of PSAS and the issuance of 500,000 shares of
restricted common stock to Frankie Hawkins and 250,000 shares of
restricted common stock to Amy Saxton in exchange for 100% of the
issued and outstanding common stock of PSAS.
On September 8, 1998, the Board of Directors
authorized a one for fifty (1:50) reverse split of the 43,082,984
shares of issued and outstanding common stock as of September 1,
1998 to be effective upon the filing date, September 16, 1998, which
resulted in issued and outstanding common stock totaling of 861,660
shares.
On March 10, 1999, as consideration for executing a
settlement and mutual release agreement, the Board of Directors
(with Mr. Walsh abstaining) approved the issuance of 5,300,000
shares of common stock (pre-dividend) to the Walsh Family Trust to
correct inequities created by undisclosed liabilities and
undisclosed stock transactions implemented by former management
and/or their agents before the March 13, 1998 acquisition. The stock
was also issued in consideration for subsequent unauthorized stock
transactions by this former management, which were not disclosed to
current management, and in consideration for the Walsh Family Trust
not rescinding the business combination between the California
entity and the Company.
On March 12, 1999, the Board of Directors (with Mr.
Walsh abstaining) declared a stock dividend and approved for
issuance to each of the shareholders of the common stock who was a
shareholder of record on May 14, 1999, as a stock dividend, two
shares of restricted common stock for each outstanding share of the
common stock owned by each shareholder.
On March 15, 1999, the Board of Directors (with Mr.
Walsh abstaining) approved the issuance of 1,545,000 shares of
unrestricted common stock (pre-dividend) to David E. Walsh as
consideration for compensation for his management services to the
Company for past services from June, 1998 through May, 1999.
On September 15, 1999, the Board of Directors (with Mr.
Walsh abstaining) approved the issuance of 5,733,130 shares of
restricted common stock of which 5,700,000 shares were to be issued
to David Walsh pursuant to a five-year employment agreement.
REGULATION S OFFERING
On October 1, 1999, pursuant to Rule 902 of Regulation S
of the Securities Act of 1933, as amended, the Company offered to
sell a maximum of $20,000,000 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. The minimum purchase was $25,000, subject
to the Company's right to accept less. 2,629,772 shares have been
purchased yielding $6,633,225 in sale proceeds. Per share price
varied from $2.00 to $10.50. This offering is continuing. The
Company intends to use the net proceeds of this private placement of
its common stock to fund some of its acquisitions and for working
capital. 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.
RISK FACTORS
HISTORY OF LOSSES. The Company and its subsidiaries have
only a limited history of operations with periods of net operating
losses since inception. Two of the Company's three subsidiaries are
development stage companies with no revenues to date. In 1998, PSAS
generated $2,809,000 revenues and $2,743,000 estimated loss, and for
1999 the estimated revenue figures are $1,500,000 with net loss
estimated to be $800,000. The Company's operations are subject to
the risks and competition inherent in the establishment of a
relatively new business enterprise in a competitive field of
Internet start-up companies. There can be no assurance that future
operations will be profitable. Revenues and profits, if any, will
depend upon various factors, including market acceptance of its
concepts, market awareness, its ability to expand its network of
participating Internet companies, reliability and acceptance of
Internet commerce, dependability of its advertising and recruiting
network, and general economic conditions. There is no assurance that
the Company will achieve its expansion goals and the failure to
achieve such goals would have an adverse impact on it.
LIMITED HISTORY OF OPERATIONS. PSA's Internet line of
operations has only a limited history. Its Internet operations are
subject to the risks and competition inherent in the establishment
of a relatively new business enterprise in a highly competitive
field. There can be no assurance that future operations will be
profitable. Revenues and profits, if any, will depend upon various
factors. There is no assurance that the Company will achieve its
expansion goals and the failure to achieve such goals would have an
adverse impact on it.
ADVERSE ECONOMIC CONDITIONS OR A CHANGE IN GENERAL MARKET
PATTERNS. A weak economic environment could adversely affect the
Company sales and promotional efforts. General economic conditions
impact Internet-based and related commerce and demand and interest
for the Company's Internet services may decline at any time,
especially during recessionary periods. Many factors beyond the
Company's control may decrease overall demand for Internet portal
services including, among other things, decrease in the entry costs
by other similarly situated companies, increase in the overall
unemployment rate, and additional government regulation. There can
be no assurance that the general market demand for Internet portal
services and related fields will remain the same or will not
decrease in the future.
RELIANCE ON FUTURE ACQUISITIONS STRATEGY. The Company
expects to continue to rely on acquisitions as an important
component of its growth strategy. The Company regularly engages in
evaluations of potential target candidates, including evaluations
relating to acquisitions that may be material in size and/or scope.
There is no assurance that the Company will continue to be able to
identify potentially successful companies that provide suitable
acquisition opportunities or that the Company will be able to
acquire any such companies on favorable terms. Also, acquisitions
involve a number of special risks including the diversion of
management's attention, assimilation of the personnel and operations
of the acquired companies, and possible loss of key employees. There
is no assurance that any acquired companies will be able to
successfully integrate into the Company's existing infrastructure or
to operate profitably. There is also no assurance as to the
Company's ability to obtain adequate funding to complete any
contemplated acquisition or that 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.
THE COMPANY MAY NEED ADDITIONAL FINANCING. The Company may
seek additional sources of capital, including an additional offering
of its equity securities, an offering of debt securities or
obtaining financing through a bank or other entity in case of future
events, including the problems, delays, expenses and difficulties
frequently encountered by development-stage companies. The Company
has not established a limit as to the amount of debt it may incur
nor has it adopted a ratio of its equity to a debt allowance. If the
Company needs to obtain additional financing, there is no assurance
that financing will be available from any source, or that it will be
available on terms acceptable to the Company, or that any future
offering of securities will be successful. The Company could suffer
adverse consequences if it is unable to obtain additional capital
when needed.
PSAZZ.COM AND PSA INTERNET HAVE NO OPERATING HISTORY.
PSAZZ.COM and PSA Internet were recently formed and have no
operating history. There can be no assurance at this time that these
entities will operate profitably or that they will have adequate
working capital to meet their obligations as they become due. Their
success will depend on several factors including their ability to
offer attractive and competitively priced travel packages through
their Web site, to attract clients and provide them with high
quality service, to instill consumer confidence in their service
brand, and to achieve sufficient name recognition. There is no
assurance that either one or both will achieve
any of these objectives.
LACK OF CONTINUED DEVELOPMENT OF E-COMMERCE MARKET. The
use of the Internet and the World Wide Web for commercial purposes
is expanding dramatically. However, as increased commerce takes
place on the Internet unforeseen overloads, lack of sufficient
hardware, telephone availability or other problems may develop. In
addition, consumer use of the Internet for purchases, banking, and
other commercial uses may decline for any number of reasons such as
security problems, shopping trends, or slow Internet access. These
difficulties may undermine Company's expansion and promotional
efforts. There is no assurance that the Company will be able to
successfully overcome these difficulties and maintain competitive
pricing and services.
CONTINUED CONTROL BY PRINCIPAL SHAREHOLDER. The Walsh
Family Trust, for which David E. Walsh, the Chairman of the Board,
Chief Executive Officer and President of the Company, serves as
Trustee and whose children are sole beneficiaries, currently owns a
substantial majority of the Company's outstanding common stock.
Accordingly, the principal shareholder is in a position to control
the management and affairs of the Company.
LOSS OF THE COMPANY KEY EMPLOYEES MAY ADVERSELY AFFECT
GROWTH OBJECTIVES. The Company success in achieving its growth
objectives depends upon the efforts of David E. Walsh, Chairman and
Chief Executive Officer of the Company since its inception, as well
as other key management personnel. The loss of the services of these
individuals could have a material adverse effect on the Company
business, financial condition and results of operations. There is no
assurance that the Company will be able to maintain and achieve its
growth objectives should it lose any of its key management members'
services.
THIRD-PARTY MARKET PRICE MANIPULATIONS. The shares of the
Company's common stock are traded on the NASD OTC Bulletin Board.
Share price quotations for the Company's stock may reflect
inter-dealer prices, without retail mark-up, mark-down or
commissions, and may not represent actual transactions. In addition,
from time to time, persons not affiliated with the Company may seek
to manipulate the market price of the Company's common stock in a
manner unknown to the Company, which may cause a drastic change in
the price of the Company's common stock unrelated to any activity by
the Company. Any rapid change in the Company's stock price should be
viewed with caution.
THE COMPANY HAS NOT BEEN AUDITED BY INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS. Although the Company is required to file audited
financial statements no later than 60 days from the date that this
Current Report is required to be filed, no such audited financial
statements have been prepared or are available for inspection as of
the date hereof. Consequently, there can be no assurance that any
representations as to the financial condition or assets of the
Company are as stated herein.
COMPETITION FROM LARGER AND MORE ESTABLISHED COMPANIES MAY
HAMPER MARKETABILITY. The competition in the Internet and electronic
commerce industry is intense. Large and highly fragmented, this
industry hosts a number of well-established competitors, including
national, regional and local companies possessing greater financial,
marketing, personnel and other resources than the Company. There is
no assurance that the Company will be able to market or sell its
services if faced with direct product and services competition from
these larger and more established Internet portal services providers.
PENDING LITIGATION. The Company and some of its
subsidiaries are parties to certain pending litigation. In those
instances where the Company or its subsidiaries are defendants, the
Company is disputing the allegations. There can be no assurance that
the Company or its subsidiaries will prevail in these actions.
Consequently, there can be no assurance that the final resolution of
these actions will not have a materially adverse effect on the Company.
INTERNET COMMERCE RISKS. Concerns over the security
of transactions conducted on the Internet and other on-line services
as well as users' desires for privacy may also inhibit the growth of
travel services on the Internet. The activities of PSAZZ.COM are
expected to involve the storage and transmission of proprietary
information, such as credit card numbers and other confidential
information. Any security breaches could damage PSAZZ.COM's
reputation and expose PSAZZ.COM to a risk of loss, litigation, and
possible liability. There can be no assurance that PSAZZ.COM's
security measures will prevent security breaches or that failure to
prevent such security breaches will not have a material adverse
effect on PSAZZ.COM's business, financial condition and results of
operations. PSAZZ.COM will be dependent on others for its software
and the hosting of its Web site. Businesses on the Internet are
subject to the risk of credit card fraud and other types of theft
and fraud perpetrated by hackers and on-line thieves. Credit card
companies may hold merchants fully responsible for any fraudulent
purchases made when the signature cannot be verified. Although
credit card companies and others are in the process of developing
anti-theft and anti-fraud protections, and while PSAZZ.COM itself
will continually monitor this problem, at the present time the risk
from such activities could have a material adverse effect on
PSAZZ.COM. A party who is able to circumvent PSAZZ.COM's security
measures could misappropriate confidential information or cause
interruptions in PSAZZ.COM's operations. PSAZZ.COM may be required
to expend significant capital and other resources to protect against
such security breaches or to alleviate problems caused by such
breaches. If a compromise of PSAZZ.COM's security were to occur, or
if its software or Web site hosting fails, there could be a material
adverse effect to PSAZZ.COM's business, financial condition, and
results of operations.
FAILURE TO ATTRACT QUALIFIED PERSONNEL. A change in labor
market conditions that either reduces the availability of employees
or increases significantly the cost of labor could have a material
adverse effect on the Company's business, financial condition and
results of operations. The Company's business is dependent upon its
ability to attract and retain highly trained and qualified technical
personnel and corporate management. There is no assurance that the
Company will be able to employ a sufficient number of qualified
personnel in order to achieve its growth objectives.
TRADEMARK PROTECTION AND PROPRIETARY MARKS. There is no
assurance that the Company will be able to prevent competitors from
using its trade marks or trade names or similar names, marks,
concepts or appearances or that it will have the financial resources
necessary to protect its marks against infringing use.
ISSUANCE OF FUTURE SHARES MAY DILUTE INVESTOR SHARE VALUE.
The Company is authorized to issue 75,000,000 shares of common
stock. The future issuance of all or part of the remaining
authorized common stock may result in substantial dilution in the
percentage of the Company's common stock held by the its then
existing shareholders. Moreover, any common stock issued in the
future may be valued on an arbitrary basis by the Company. There is
no assurance that such issuance will not result in dilution.
PENNY STOCK REGULATION. Penny stocks generally are equity
securities with a price of less than $5.00 per share other than
securities registered on certain national securities exchanges or
quoted on the NASD Stock Market, provided that current price and
volume information with respect to transactions in such securities
is provided by the exchange or system. The Company's securities may
be subject to "penny stock rules" that impose additional sales
practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 together with their spouse).
For transactions covered by these rules, the broker-dealer must make
a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock
rules" require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission relating to the
penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information
on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell the
Company's securities. The foregoing required penny stock
restrictions will not apply to the Company's securities if such
securities maintain a market price of $5.00 or greater. There can be
no assurance that the price of the Company's securities will
maintain such a level.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000. Many existing
computer programs use only two digits
to identify a year in such program's date field. These programs
were designed and developed without consideration of the impact of
the change in the century for which four digits will be required to
accurately report the date. If not corrected, many computer
applications could fail or create erroneous results in or following
the year 2000 ("Year 2000 problem"). Many of the computer programs
containing such date language problems have been corrected by the
companies or governments operating such programs. The Company's
operations are dependent upon the properly functioning computer
equipment which may fail because of such Year 2000 problems. The
Company does not know what steps, if any, have been taken by any of
its business partners in regard to the Year 2000 problems. The
Company's operations will be severally curtailed if one or more of
its business partners were to suffer Year 2000 problems.
Furthermore, it is impossible to predict if the basic utilities
serving the Company will continue uninterrupted.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, the Company
elected to become the successor issuer to Canticle for reporting
purposes under the Securities Exchange Act of 1934 and elects to
report under the Act effective February 18, 2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The sole officer and director of Canticle resigned
effective upon completion of the Acquisition.
ITEM 7. FINANCIAL STATEMENTS
No financials are filed herewith. The Registrant is
required to file financial statements by amendment hereto no later
than 60 days after the date that this Current Report
must be filed.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
EXHIBITS
2.1. Agreement and Plan of Reorganization between PSA, Inc. and
Canticle Corporation.
*27.1. Financial Data schedule.
_______
*To be filed by amendment
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this
Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
PSA, Inc.
By /s/ David E. Walsh
President, Chief
Executive Officer
Date: February 18, 2000
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION among PSA, INC., a
Nevada corporation ("PSA"), CANTICLE CORPORATION, a Delaware
corporation ("Canticle") and the persons listed in Exhibit A hereof
(collectively the "Shareholders"), being the owners of record of all
the issued and outstanding stock of Canticle.
Whereas, PSA wishes to acquire and the Shareholders wish
to transfer all of the issued and outstanding securities of Canticle
in a transaction intended to qualify as a reorganization within the
meaning of Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended (the "Exchange").
Now, therefore, PSA, Canticle, and the Shareholders
adopt this plan of reorganization and agree as follows:
1. EXCHANGE OF STOCK
1.1. NUMBER OF SHARES. The Shareholders agree to
transfer to PSA at the Closing (defined below) the number of shares
of common stock of Canticle, $0.0001 par value per share, shown
opposite their names in Exhibit A, in exchange for an aggregate of
56,000 shares of voting common stock of PSA, $.001 par value per share.
1.2. EXCHANGE OF CERTIFICATES. Each holder of an
outstanding certificate or certificates theretofore representing
shares of Canticle common stock shall surrender such certificate(s)
for cancellation to PSA, and shall receive in exchange a certificate
or certificates representing the number of full shares of PSA common
stock into which the shares of Canticle common stock represented by
the certificate or certificates so surrendered shall have been
converted. The transfer of Canticle shares by the Shareholders
shall be effected by the delivery to PSA at the Closing of
certificates representing the transferred shares endorsed in blank
or accompanied by stock powers executed in blank.
1.3. FURTHER ASSURANCES. At the Closing and from
time to time thereafter, the Shareholders shall execute such
additional instruments and take such other action as PSA may request
in order more effectively to sell, transfer, and assign the
transferred stock to PSA and to confirm PSA's title thereto.
2. CLOSING
2.1. DATE AND PLACE. The Closing contemplated
herein shall be held at the offices of the Exchange Agent provided
for herein without requiring the meeting of the parties hereof. All
proceedings to be taken and all documents to be executed at the
Closing shall be deemed to have been taken, delivered and executed
simultaneously, and no proceeding shall be deemed taken nor
documents deemed executed or delivered until all have been taken,
delivered and executed. The date of Closing may be accelerated or
extended by agreement of the parties.
2.2. EXECUTION OF DOCUMENTS. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or
transmission required by this agreement or any signature required
Agreement and Plan of ReorganizationPage number
thereon may be used in lieu of an original writing or transmission
or signature for any and all purposes for which the original could
be used, provided that such copy, facsimile telecommunication or
other reproduction shall be a complete reproduction of the entire
original writing or transmission or original signature.
3. UNEXCHANGED CERTIFICATES. Until surrendered, each
outstanding certificate that prior to the Closing represented
Canticle common stock shall be deemed for all purposes, other than
the payment of dividends or other distributions, to evidence
ownership of the number of shares of PSA common stock into which it
was converted. No dividend or other distribution shall be paid to
the holders of certificates of Canticle common stock until presented
for exchange at which time any outstanding dividends or other
distributions shall be paid.
4. REPRESENTATIONS AND WARRANTIES OF CANTICLE
Canticle represents and warrants as follows:
4.1. CORPORATE ORGANIZATION AND GOOD STANDING. Canticle
is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and is qualified
to do business as a foreign corporation in each jurisdiction, if
any, in which its property or business requires such qualification.
4.2. REPORTING COMPANY STATUS. Canticle has filed with
the Securities and Exchange Commission a registration statement on
Form 10-SB which became effective pursuant to the Securities
Exchange Act of 1934 and is a reporting company pursuant to Section
12(g) thereunder.
4.3. REPORTING COMPANY FILINGS. Canticle has timely filed
and is current on all reports required to be filed by it pursuant to
Section 13 of the Securities Exchange Act of 1934.
4.4. CAPITALIZATION. Canticle's authorized capital stock
consists of 100,000,000 shares of common stock, $.0001 par value, of
which 5,000,000 shares are issued and outstanding, and 20,000,000
shares of non-designated preferred stock of which no shares are
designated or issued.
4.5. ISSUED STOCK. All the outstanding shares of its
common stock are duly authorized and validly issued, fully paid and
non-assessable.
4.6. STOCK RIGHTS. There are no stock grants, options,
rights, warrants or other rights to purchase or obtain Canticle
Common or Preferred Stock issued or committed to be issued.
4.7. CORPORATE AUTHORITY. Canticle has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as it is now being conducted
and to execute, deliver, perform and conclude the transactions
contemplated by this agreement and all other agreements and
instruments related to this agreement.
4.8. AUTHORIZATION. Execution of this agreement has been
duly authorized and approved by Canticle's board of directors.
4.9. SUBSIDIARIES. Canticle has no subsidiaries.
4.10. FINANCIAL STATEMENTS. Canticle's financial
statements dated June 7, 1999, copies of which will have been
delivered by Canticle to PSA prior to the Closing (the "Canticle
Financial Statements"), fairly present the financial condition of
Canticle as of the date therein and the results of its operations
for the periods then ended in conformity with generally accepted
accounting principles consistently applied.
4.11. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the
extent reflected or reserved against in the Canticle Financial
Statements, Canticle did not have at that date any liabilities or
obligations (secured, unsecured, contingent, or otherwise) of a
nature customarily reflected in a corporate balance sheet prepared
in accordance with generally accepted accounting principles.
4.12. NO MATERIAL CHANGES. There has been no material
adverse change in the business, properties, or financial condition
of Canticle since the date of the Canticle Financial Statements.
4.13. LITIGATION. There is not, to the knowledge of
Canticle, any pending, threatened, or existing litigation,
bankruptcy, criminal, civil, or regulatory proceeding or
investigation, threatened or contemplated against Canticle or
against any of its officers.
4.14. CONTRACTS. Canticle is not a party to any material
contract not in the ordinary course of business that is to be
performed in whole or in part at or after the date of this agreement.
4.15. TITLE. Canticle has good and marketable title to all
the real property and good and valid title to all other property
included in the Canticle Financial Statements. Except as set out in
the balance sheet thereof, the properties of Canticle are not
subject to any mortgage, encumbrance, or lien of any kind except
minor encumbrances that do not materially interfere with the use of
the property in the conduct of the business of Canticle.
4.16. TAX RETURNS. All required tax returns for federal,
state, county, municipal, local, foreign and other taxes and
assessments have been properly prepared and filed by Canticle for
all years for which such returns are due unless an extension for
filing any such return has been filed. Any and all federal, state,
county, municipal, local, foreign and other taxes and assessments,
including any and all interest, penalties and additions imposed with
respect to such amounts have been paid or provided for. The
provisions for federal and state taxes reflected in the Canticle
Financial Statements are adequate to cover any such taxes that may
be assessed against Canticle in respect of its business and its
operations during the periods covered by the Canticle Financial
Statements and all prior periods.
4.17. NO VIOLATION. Consummation of the Exchange will not
constitute or result in a breach or default under any provision of
any charter, bylaw, indenture, mortgage, lease, or agreement, or any
order, judgment, decree, law, or regulation to which any property of
Canticle is subject or by which Canticle is bound.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, individually and separately, represent and
warrant as follows:
5.1. TITLE TO SHARES. The Shareholders, and each of them,
are the owners, free and clear of any liens and encumbrances, of the
number of Canticle shares which are listed in the attached Exhibit A
and which they have contracted to exchange.
5.2. LITIGATION. There is no litigation or proceeding
pending, or to each Shareholder's knowledge threatened, against or
relating to shares of Canticle held by the Shareholders.
6. REPRESENTATIONS AND WARRANTIES OF PSA
PSA represents and warrants as follows:
6.1. CORPORATE ORGANIZATION AND GOOD STANDING. PSA is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada and is qualified to do
business as a foreign corporation in each jurisdiction, if any, in
which its property or business requires such qualification.
6.2. CAPITALIZATION. PSA's authorized capital stock
consists of 75,000,000 shares of common stock, $.001 par value, of
which 31,500,235 shares are issued and outstanding, and no shares of
preferred stock.
6.3. ISSUED STOCK. All the outstanding shares of its
common stock are duly authorized and validly issued, fully paid and
non-assessable.
6.4. STOCK RIGHTS. Except as may be set out by attached
schedule, there are no stock grants, options, rights, warrants or
other rights to purchase or obtain PSA Common or Preferred Stock
issued or committed to be issued.
6.5. CORPORATE AUTHORITY. PSA has all requisite corporate
power and authority to own, operate and lease its properties, to
carry on its business as it is now being conducted and to execute,
deliver, perform and conclude the transactions contemplated by this
agreement and all other agreements and instruments related to this
agreement.
6.6. AUTHORIZATION. Execution of this agreement has been
duly authorized and approved by PSA's board of directors.
6.7. SUBSIDIARIES. PSA has no subsidiaries other than as
set out in the PSA Confidential Private Placement Memorandum of
September 1999 (the "Placement Memorandum").
6.8. FINANCIAL STATEMENTS. PSA's financial statements
dated as of December 31, 1999, copies of which will be delivered by
PSA to Canticle by March 31, 2000 (the "PSA Financial Statements"),
will fairly present the financial condition of PSA as of the date
therein and the results of its operations for the periods then ended
in conformity with generally accepted accounting principles
consistently applied.
6.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the
extent reflected or reserved against in the PSA Financial
Statements, PSA will not have at that date any liabilities or
obligations (secured, unsecured, contingent, or otherwise) of a
nature customarily reflected in a corporate balance sheet prepared
in accordance with generally accepted accounting principles.
6.10. LITIGATION. Except as set out in the Placement
Memorandum, there is not, to the knowledge of PSA, any pending,
threatened, or existing litigation, bankruptcy, criminal, civil, or
regulatory proceeding or investigation, threatened or contemplated
against PSA or against any of its officers.
6.11. CONTRACTS. Except as set in the Placement
Memorandum, PSA is not a party to any material contract not in the
ordinary course of business that is to be performed in whole or in
part at or after the date of this agreement.
6.12. TITLE. Except as set out in the Placement
Memorandum, PSA has good and marketable title to all the real
property and good and valid title to all other property included in
the PSA Financial Statements. Except as set out in the balance
sheet thereof, the properties of PSA are not subject to any
mortgage, encumbrance, or lien of any kind except minor encumbrances
that do not materially interfere with the use of the property in the
conduct of the business of PSA.
6.13. TAX RETURNS. All required tax returns for federal,
state, county, municipal, local, foreign and other taxes and
assessments have been properly prepared and filed by PSA for all
years for which such returns are due unless an extension for filing
any such return has been filed. Any and all federal, state, county,
municipal, local, foreign and other taxes and assessments, including
any and all interest, penalties and additions imposed with respect
to such amounts have been paid or provided for. The provisions for
federal and state taxes reflected in the PSA Financial Statements
are adequate to cover any such taxes that may be assessed against
PSA in respect of its business and its operations during the periods
covered by the PSA Financial Statements and all prior periods.
6.14. NO VIOLATION. Consummation of the Exchange will not
constitute or result in a breach or default under any provision of
any charter, bylaw, indenture, mortgage, lease, or agreement, or any
order, judgment, decree, law, or regulation to which any property of
PSA is subject or by which PSA is bound.
7. CONDUCT OF CANTICLE PENDING THE CLOSING. Canticle
covenants that between the date of this agreement and the Closing:
7.1. No change will be made in Canticle's certificate of
incorporation or bylaws.
7.2. Canticle will not make any change in its authorized
or issued capital stock, declare or pay any dividend or other
distribution or issue, encumber, purchase, or otherwise acquire any
of its capital stock other than as provided herein.
7.3. Canticle will use its best efforts to maintain and
preserve its business organization, employee relationships, and
goodwill intact, and will not enter into any material commitment
except in the ordinary course of business.
8. CONDUCT PENDING THE CLOSING
PSA, Canticle and the Shareholders covenant that between the
date of this agreement and the Closing as to each of them:
8.1. No change will be made in the charter documents,
by-laws, or other corporate documents of PSA or Canticle.
8.2. Canticle and PSA will use their best efforts to
maintain and preserve their business organization, employee
relationships, and goodwill intact, and will not enter into any
material commitment except in the ordinary course of business.
8.3. None of the Shareholders will sell, transfer, assign,
hypothecate, lien, or otherwise dispose or encumber the Canticle
shares of common stock owned by them.
9. CONDITIONS PRECEDENT TO OBLIGATION OF CANTICLE AND
THE SHAREHOLDERS
Canticle's and the Shareholders' obligation to consummate
the Exchange shall be subject to fulfillment on or before the
Closing of each of the following conditions, unless waived in
writing or by acceptance of PSA's shares by the Shareholders:
9.1. PSA'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of PSA set forth herein shall be true
and correct at the Closing as though made at and as of that date,
except as affected by transactions contemplated hereby.
9.2. PSA'S COVENANTS. PSA shall have performed all
covenants required by this agreement to be performed by it on or
before the Closing.
9.3. BOARD OF DIRECTOR APPROVAL. This agreement shall
have been approved by the Board of Directors of PSA.
9.4. SUPPORTING DOCUMENTS OF PSA. PSA shall have
delivered to Canticle and the Shareholders supporting documents in
form and substance reasonably satisfactory to Canticle and the
Shareholders, to the effect that:
(a) PSA is a corporation duly organized, validly existing,
and in good standing;
(b) PSA's authorized capital stock is as set forth herein;
(c) Certified copies of the resolutions of the board of
directors of PSA authorizing the execution of this agreement and the
consummation hereof;
(d) Secretary's certificate of incumbency of the officers
and directors of PSA;
(e) PSA's Financial Statements (to be delivered by March
31, 2000) and unaudited financial statement from the date of PSA's
Financial Statements to close of most recent fiscal quarter; and
(f) Any document as may be specified herein or required to
satisfy the conditions, representations and warranties enumerated
elsewhere herein.
10. CONDITIONS PRECEDENT TO OBLIGATION OF PSA
PSA's obligation to consummate the Exchange shall be subject
to fulfillment on or before the Closing of each of the following
conditions, unless waived in writing or by acceptance of Canticle's
shares by PSA:
10.1. CANTICLE'S AND THE SHAREHOLDERS' REPRESENTATIONS AND
WARRANTIES. The representations and warranties of Canticle and the
Shareholders set forth herein shall be true and correct at the
Closing as though made at and as of that date, except as affected by
transactions contemplated hereby.
10.2. CANTICLE'S AND THE SHAREHOLDERS' COVENANTS. Canticle
and the Shareholders shall have performed all covenants required by
this agreement to be performed by them on or before the Closing.
10.3. BOARD OF DIRECTOR APPROVAL. This agreement
shall have been approved by the Board of Directors of Canticle.
10.4. SHAREHOLDER EXECUTION. This agreement shall have
been executed by all of the shareholders of Canticle.
10.5. SUPPORTING DOCUMENTS OF CANTICLE. Canticle shall
have delivered to PSA supporting documents in form and substance
reasonably satisfactory to PSA to the effect that:
(a) Canticle is a corporation duly organized, validly
existing, and in good standing;
(b) Canticle's capital stock is as set forth herein;
(c) Certified copies of the resolutions of the board of
directors of Canticle authorizing the execution of this agreement
and the consummation hereof;
(d) Secretary's certificate of incumbency of the officers
and directors of Canticle;
(e) Canticle's Financial Statements and unaudited financial
statements for the period from the date of the Canticle's Financial
Statements to the close of the most recent fiscal quarter; and
(f) Any document as may be specified herein or required to
satisfy the conditions, representations and warranties enumerated
elsewhere herein.
11. SHAREHOLDERS' REPRESENTATIVE. The Shareholders
hereby irrevocably designate and appoint Cassidy & Associates,
Washington, D.C. as their agent and attorney in fact ("Shareholders'
Representative") with full power and authority until the Closing to
execute, deliver, and receive on their behalf all notices, requests,
and other communications hereunder; to fix and alter on their behalf
the date, time, and place of the Closing; to waive, amend, or modify
any provisions of this agreement, and to take such other action on
their behalf in connection with this agreement, the Closing, and the
transactions contemplated hereby as such agent or agents deem
appropriate; provided, however, that no such waiver, amendment, or
modification may be made if it would decrease the number of shares
to be issued to the Shareholders hereunder or increase the extent of
their obligation to indemnify PSA hereunder.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties
of Canticle, the Shareholders and PSA set out herein shall survive
the Closing.
13. ARBITRATION
13.1. SCOPE. The parties hereby agree that any and all
claims (except only for requests for injunctive or other equitable
relief) whether existing now, in the past or in the future as to
which the parties or any affiliates may be adverse parties, and
whether arising out of this agreement or from any other cause, will
be resolved by arbitration before the American Arbitration
Association within the District of Columbia.
13.2. CONSENT TO JURISDICTION, SITUS AND JUDGEMENT. The
parties hereby irrevocably consent to the jurisdiction of the
American Arbitration Association and the situs of the arbitration
(and any requests for injunctive or other equitable relief) within
the District of Columbia. Any award in arbitration may be entered
in any domestic or foreign court having jurisdiction over the
enforcement of such awards.
13.3. APPLICABLE LAW. The law applicable to the
arbitration and this agreement shall be that of the State of
Delaware, determined without regard to its provisions which would
otherwise apply to a question of conflict of laws.
13.4. DISCLOSURE AND DISCOVERY. The arbitrator may, in its
discretion, allow the parties to make reasonable disclosure and
discovery in regard to any matters which are the subject of the
arbitration and to compel compliance with such disclosure and
discovery order. The arbitrator may order the parties to comply
with all or any of the disclosure and discovery provisions of the
Federal Rules of Civil Procedure, as they then exist, as may be
modified by the arbitrator consistent with the desire to simplify
the conduct and minimize the expense of the arbitration.
13.5. RULES OF LAW. Regardless of any practices of
arbitration to the contrary, the arbitrator will apply the rules of
contract and other law of the jurisdiction whose law applies to the
arbitration so that the decision of the arbitrator will be, as much
as possible, the same as if the dispute had been determined by a
court of competent jurisdiction.
13.6. FINALITY AND FEES. Any award or decision by the
American Arbitration Association shall be final, binding and
non-appealable except as to errors of law or the failure of the
arbitrator to adhere to the arbitration provisions contained in this
agreement. Each party to the arbitration shall pay its own costs
and counsel fees except as specifically provided otherwise in this
agreement.
13.7. MEASURE OF DAMAGES. In any adverse action, the
parties shall restrict themselves to claims for compensatory damages
and\or securities issued or to be issued and no claims shall be made
by any party or affiliate for lost profits, punitive or multiple
damages.
13.8. COVENANT NOT TO SUE. The parties covenant that under
no conditions will any party or any affiliate file any action
against the other (except only requests for injunctive or other
equitable relief) in any forum other than before the American
Arbitration Association, and the parties agree that any such action,
if filed, shall be dismissed upon application and shall be referred
for arbitration hereunder with costs and attorney's fees to the
prevailing party.
13.9. INTENTION. It is the intention of the parties and
their affiliates that all disputes of any nature between them,
whenever arising, whether in regard to this agreement or any other
matter, from whatever cause, based on whatever law, rule or
regulation, whether statutory or common law, and however
characterized, be decided by arbitration as provided herein and that
no party or affiliate be required to litigate in any other forum any
disputes or other matters except for requests for injunctive or
equitable relief. This agreement shall be interpreted in
conformance with this stated intent of the parties and their
affiliates.
13.10. SURVIVAL. The provisions for arbitration contained
herein shall survive the termination of this agreement for any reason.
14. GENERAL PROVISIONS
14.1. FURTHER ASSURANCES. From time to time, each party
will execute such additional instruments and take such actions as
may be reasonably required to carry out the intent and purposes of
this agreement.
14.2. WAIVER. Any failure on the part of either party
hereto to comply with any of its obligations, agreements, or
conditions hereunder may be waived in writing by the party to whom
such compliance is owed.
14.3. BROKERS. Each party agrees to indemnify and hold
harmless the other party against any fee, loss, or expense arising
out of claims by brokers or finders employed or alleged to have been
employed by the indemnifying party.
14.4. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given
if delivered in person or sent by prepaid first-class certified
mail, return receipt requested, or recognized commercial courier
service, as follows:
If to PSA, to:
PSA, Inc.
9800 South Sepulveda Boulevard
Los Angeles, California 90045
If to Canticle, to:
Canticle Corporation
1504 R Street, N.W.
Washington, D.C. 20009
If to the Shareholders, to:
Cassidy & Associates
1504 R Street N.W.
Washington, D.C. 20009
14.5. GOVERNING LAW. This agreement shall be governed by
and construed and enforced in accordance with the laws of the State
of Delaware.
14.6. ASSIGNMENT. This agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their
successors and assigns; provided, however, that any assignment by
either party of its rights under this agreement without the written
consent of the other party shall be void.
14.7. COUNTERPARTS. This agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument. Signatures sent by facsimile transmission
shall be deemed to be evidence of the original execution thereof.
14.8. EXCHANGE AGENT AND CLOSING DATE. The Exchange Agent
shall be Cassidy & Associates, Washington, D.C. The Closing shall
take place upon the fulfillment by each party of all the conditions
of the Closing required herein, but not later than 15 days following
execution of this agreement unless extended by mutual consent of the
parties.
14.9. REVIEW OF AGREEMENT. Each party acknowledges that it
has had time to review this agreement and, as desired, consult with
counsel. In the interpretation of this agreement, no adverse
presumption shall be made against any party on the basis that it has
prepared, or participated in the preparation of, this agreement.
14.10. SCHEDULES. All schedules attached hereto, if any,
shall be acknowledged by each party by signature or initials thereon.
14.11. EFFECTIVE DATE. This effective date of this
agreement shall be February 16, 2000.
SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION
AMONG PSA, CANTICLE AND THE SHAREHOLDERS OF CANTICLE
IN WITNESS WHEREOF, the parties have executed this agreement.
PSA, INC.
By___________________________________
CANTICLE CORPORATION
By___________________________________
SHAREHOLDERS:
TPG CAPITAL CORPORATION
By___________________________________
Exhibit A
Number of Number of
Canticle Shares PSA Shares Name of Shareholder
to be To Be Address
Transferred Received
5,000,000 56,000 1504 R Street NW
Washington DC 20009
Exhibit B
Options, Warrants or Stock Rights
to Purchase PSA Common Stock
