<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                   FORM 10-KSB

                                  ANNUAL REPORT

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

                        COMMISSION FILE NUMBER: 33-3362-D


                                  MIGAMI, INC.
               (Exact Name of Registrant as specified in Charter)


             Nevada                                            87-0431043
   ----------------------------                           -------------------
   (State of Other Jurisdiction                            (I.R.S. Employer
        of Incorporation)                                 Identification No.)

 3701 Wilshire Boulevard, Suite 507,
       Los Angeles, California                                     90010
---------------------------------------                        ------------
(Address of Principal Executive Office)                         (Zip Code)

       Registrant's Telephone Number, Including Area Code: (213) 739-1700

      Securities registered under Section 12 (g) of the Exchange Act: None

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

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year: $0.00

The aggregate market value of the voting stock held by non-affiliates of the
registrant on December 31, 2006, was $6,309,221 based on the closing stock price
on that date.

The number of shares outstanding of the registrant's common stock on December
31, 2006, was 32,412,752 shares.

<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

         The Company was incorporated under the laws of the State of Nevada on
February 4, 1986, under the name of Covington Capital Corporation. In 1986, the
Company filed an S-18 and registered certain stock. From 1989 through 1994, the
Company underwent a series of name changes in order to explore various business
opportunities. However, none of the business opportunities was successfully
completed.

         In April, 1995, under the name Investment and Consulting International,
Inc., the Company acquired a patent for a proprietary device designed to
neutralize nitrogen oxide automobile emissions from a separate Company which was
then known as KleenAir Systems, Inc. Simultaneously with the acquisition of the
patent, the Company acquired the right to use the corporate name "KleenAir
Systems, Inc.," and changed its name to KleenAir Systems, Inc.

         From acquiring that patent in 1995 through November 30, 2006, the
Company has been a developmental stage company working towards the completion of
the development and testing of the NOxMaster(TM) technology. In 1993, the
Company was issued U.S. Patent #5,224,346, Engine NOx Reduction System. U.S.
Patent #5,609,026 Engine NOx Reduction System was issued in 1997. In 1999 the
Company was issued a third patent on Ammonia Injection in NOx Control, U.S.
Patent #5,992,141. The Company also applied for and maintained patent protection
under the Patent Cooperation Treaty (PCT) to protect its intellectual property
in a variety of countries that are significant producers of automotive products.

         The Company also applied for additional patents related to its
NOxMaster(TM) technology. In September 2002, U.S. patent # 6,446,940 B1 was
issued for the Sonic Flow Carburetor, a new emission control device that
atomizes fuel in gasoline powered engines. This process enhances operating
efficiency and reduces emissions. Another patent, U.S. # 6,499,463 B1 was issued
in December 2002 for a Diesel Fuel Atomizer. This device facilitates improved
diesel combustion, lower fuel use, and lower emissions of particulates and CO2.

         An additional patent was issued in February 2005, being U.S. Patent #
6,852,292. This patent covers the use of aqueous ammonia, which is ammonia
dissolved in water, and which is typically used as household or industrial
cleaner. When injected into the exhaust, this liquid solution reduces NOx in the
same manner as anhydrous ammonia (a gas), the catalyst in the previous
NOxMaster(TM) versions.

         Patent awards were confirmed for several European countries including
the U.K., Germany, France, Italy, Spain and Sweden and applications were filed
for Japan, Brazil, and China.


                                       2
<PAGE>

         All of the above patents were sold in August 2005 to KleenAir Systems
International plc (KSIP), London, England in exchange for a cash payment of
$180,000 and a royalty of 8% of gross sales for the life of the patents. KSIP
was a related party of KleenAir Systems Inc, which owned 23% of the common stock
of KSIP at the time.

         Ultimately, the business of the Company under the name KleenAir
Systems, Inc, was not successfully completed.

         Therefore, effective January 1, 2006, the Company entered into two
agreements. It entered into an agreement to purchase all of the assets and
liabilities of Innovay, Inc, a California corporation ("Innovay"), in exchange
for common stock in the Company and an agreement to transfer all of the
Company's then-current assets and liabilities to Kleenair Systems of North
America, Inc., a Nevada corporation ("KSNA") and to sell KNSA to Pollution
Control, Ltd., a Bahamian corporation ("PCL"), controlled by Lionel Simons (the
Company's then-president) for $1,800,000.

         On February 9, 2006, the Company amended its Articles of Incorporation
to change the corporate name to Migami, Inc., and to increase the number of its
authorized shares to 200,000,000. On March 2, 2006, we affected a reverse split
of its issued and outstanding shares on a 5 to 1 basis.

         On November 30, 2006, Migami, Inc. ("Company"), completed an Asset
Purchase Agreement with Innovay, Inc., a California corporation ("Innovay"). The
Agreement had been executed effective January 1, 2006. Under the Asset Purchase
Agreement, the Company acquired all of the assets and liabilities of Innovay in
exchange for 18,983,976 shares of the Company's restricted common stock.
Additionally, the Agreement entitled Innovay to receive an additional 52,733,266
shares of the Company's restricted common stock in the event that certain
milestones are reached within one year of the closing of the Asset Purchase
Agreement. The milestones are:

                  (a) The sale of distribution rights for ZenGen, Inc., a
         California corporation (""ZenGen"), and InnoZen, Inc., a Delaware
         corporation ("InnoZen"), products in China, Korea, and/or Japan for
         $2,000,000 (US). The written agreement shall provide for the payment of
         $2,000,000 (US) over the initial six (6) months of the Agreement and
         royalties on actual sale of products. Such sale must be to a bona fide
         licensee; and

                  (b) The sale of distribution rights for existing Innovay
         cosmetic products in China, Korea, and/or Japan for $1,000,000 (US).
         The written agreement shall provide for the payment of $1,000,000 (US)
         over the initial six (6) months of the Agreement and royalties on
         actual sale of products. Such sale must be to a bona fide licensee.

         As a result of the asset acquisition, the Company's main business has
become the purchase of licensing rights from U.S. and European based
pharmaceutical and cosmetics companies, the sublicense of these rights to Asian
pharmaceutical and cosmetics companies, the distribution of such pharmaceutical
products in Asia, and the distribution of such cosmetic products worldwide. The
Company will no longer engage in its prior business of the development and
testing of the NOxMaster(TM) technology.


                                       3
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         Among the assets acquired from Innovay are (1) License and
Collaboration Agreement, dated June 15, 2005, between Innovay and ZenGen, and
the Letter Amendments thereto, under which grants the exclusive right to market
pharmaceutical compositions containing certain alpha-melanocyte-stimulating
hormone-related peptides synthesized by ZenGen in certain parts of Asia; (2)
License Agreement, dated July 18, 2005, between Innovay and InnoZen, which
grants the exclusive right to market certain proprietary pharmaceutical products
of InnoZen in China, Japan, and South Korea; (3) Exclusive Purchase Supply and
Distributorship Agreement, dated November 14, 2006, between Innovay and New
Japan Total Consulting Company, Ltd., a Japanese corporation to distribute
Innovay's cosmetics products in Japan; (4) Operating and Management Agreement
with Beijing Xian Ji Xun Da Technology and Development Co., Ltd. ("BXJX"), a
Chinese corporation, dated June 2, 2006, under which BXJX is assisting in the
development of the Chinese Market for Innovay products; (5) Supply Agreement,
dated November 5, 2006, between Innovay, Inc., and BioZone Laboratories, Inc., a
California corporation ("BioZone"), under which BioZone is to manufacture
certain proprietary cosmetic products for Innovay.; (6) a small amount of
accounts receivable; and (7) a small amount of working capital.

         The products and technology which were acquired include the following:

                                 PHARMACEUTICALS
                                 ---------------

                                   TECHNOLOGY
                                   ----------

BI-LAYER FILM TECHNOLOGY
------------------------

         Innovay holds the license rights for all of Asia for Bi-Layer Film
Tech-nology, which enables the delivery of an active drug in a thin film strip.

NASAL GEL DELIVERY TECHNOLOGY
-----------------------------

         Innovay holds the license rights for Australia, Malaysia, Japan, China,
New Zealand, Philippines, Thailand, and Korea for Nasal Gel Delivery Technology,
which is known as a Nasal Transmucosal delivery system. This technology enables
the delivery of an active drug in a viscous gel to systemic circulation through
the nasal membrane.

ORAL TIME-CONTROLLED DELIVERY SYSTEM
------------------------------------

         Innovay is in the process of developing an oral time-controlled
delivery system in China. When developed, Innovay anticipates that this system
will allow the delivery of the active ingredients in oral medications to be
delivered to the taker on a timed controlled-release basis. However, this
delivery system is not completed and there can be no assurance that it will be
successfully completed.


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<PAGE>

                                  ETHICAL DRUGS
                                  -------------

COZ002S. Innovay acquired rights to several peptide molecules related to
alpha-melanocyte-stimulating hormone ("Peptide") to treat infection and
inflammation of the vagina associated with a variety of diseases and conditions.
The drug is patented, and is waiting for U.S. FDA approval.

                                    COSMETICS
                                    ---------

QUSOME AND INFLACIN TECHNOLOGIES.

Innovay holds an Exclusive Supply Agreement from BioZone which utilizes certain
proprietary technology, including, but not limited to, Qusome and Inflacin
technologies, production formulae, and manufacturing processes in the
manufacture of all of Innovay's cosmetic products.

COSMETIC PRODUCTS
-----------------

         WRINKLE REMOVER. The wrinkle remover tightens the skin around the eyes,
smoothing out unsightly fine wrinkles in five minutes. The effects are very
beneficial to the appearance and last up to twelve hours. In addition, everyday
use of the wrinkle remover has long term appearance benefits as well. To date,
all Innovay sales have been of this product.

         ANTI-AGING CREAM. The anti-aging cream helps reverse the skin cells'
aging process. Immediately after applying to the skin, the active ingredients
enter the skin cell's mitochondria, increases cellular respiration and ATP
production thus, allowing the cells to function at a younger level.

         DARK CIRCLE REMOVER. Free of irritants and irritating ingredients, the
dark circle remover effectively enhances the user's natural ability to prevent
dehydration of the skin, refines the eye areas, and restores the skin's
elasticity and brightness.

         WHITENING PRODUCT. The whitening product removes free radicals,
protects collagen and liposome from damage caused by free radicals, and hence
reduces the harmful effects to human skin.

         The liabilities being acquired consist of a small amount of trade
payables and the remaining balance due to ZenGen and InnoZen on the respective
licenses in the amount of $2,456,725, payable over the next approximately
thirteen (13) months.

         On November 30, 2006, the then-existing officers and directors resigned
and new officers and directors were appointed.

         Concurrently, on November 30, 2006, PCL, controlled by Lionel Simons
(the Company's former president), exercised its option to acquire Kleenair
Systems of North America, Inc., a Nevada corporation ("KSNA"), for the sum of
$1,800,000. PCL had acquired a three year Option to acquire all of the assets of
the Company under an Option Agreement, dated effective January 1, 2006, between


                                       5
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the Company and PCL. For the initial five years from the date of exercise, the
$1,800,000 purchase price is to be paid at the rate of fifty percent of the
eight percent royalty payments actually received by KSNA under the Agreement for
Assignment of Intellectual Property, dated effective August 29, 2005, with
Kleenair Systems International, PLC, which was to be assigned to KSNA prior to
the exercise of PCL's Option. As of the 5 year anniversary date of the exercise
of the Option, any balance due is to be paid. PCL or KSNA may prepay the balance
due at any time.

         Prior to the exercise of the Option, the following assets were
transferred to KSNA in order to permit PCL to acquire such assets on exercise of
the Option:

         a. All contracts between the Company and Kleenair Systems
International, PLC, a UK corporation ("KSIP"), including, without limitation,
the License Agreement, dated effective August 29, 2005, and the Agreement for
Assignment of Intellectual Property, dated effective August 29, 2005;

         b. All cash assets of the Company;

         c. All intellectual property rights (including all related software)and
other rights relating to any technology which pertains to any engine emissions
reduction system or any related technology and all related products and spares
manufactured or sold for such use, including any accounts receivable for same.,

         d. All contracts and contract rights of Company immediately before the
closing, including the agreements with AirTek, Inc., Dinex, Inc., Extengine
Transport Systems LLC, and Chong Qing Qinchuan Industry Group Co., Ltd.;

         e. All revenue generated by the assets being transferred to KSNA;

         f. All bank accounts of the Company, as of the closing date;

         g. All stock in Carbon Cloth Technologies, Inc., a California
corporation ("CCT") and all of its assets and all stock held by the Company in
KSIP;

         h. The name "Kleenair Systems, Inc." and all related trademarks and
copyrights; and

         i. All depreciable assets of the Company immediately prior to the
closing of the Asset Purchase agreement.

         Additionally, the closing of the Asset Purchase Agreement triggered the
effectiveness of a two year Consulting Agreement between PCL and the Company.
Under the Consulting Agreement, PCL has been retained to provide consulting
services to the Company with respect to its historical operations, changes
required by reason of the Asset Purchase and the Company's business in China and
the United Kingdom after the closing, and various other matters, including the
management and acquisition of assets by the Company and Company operations in
China and the United Kingdom. The services are to be provided by Lionel Simons
personally to the extent practicable. Under the Consulting Agreement, PCL is to
be paid 750,000 restricted Company shares per year.


                                       6
<PAGE>

         The closing of the Asset Purchase Agreement has resulted in a change of
control of the Company. As a result of the asset purchase, Innovay owns
approximately sixty percent of its issued and outstanding stock and if the
milestones are achieved (assuming no further stock issuance), Innovay will own
approximately 85% of the Company's issued and outstanding stock.

         The Company's current plan of operations is to exploit the ZeGen and
Innozen licenses and to market its cosmetic products in Asia.

         With respect to the ZenGen license, ZenGen has developed several
peptide molecules related to alpha-melanocyte-stimulating hormone to treat
infection and inflammation associated with a variety of diseases and conditions.
ZenGen is currently finishing United States Federal Drug Administration phase
two clinical tests on its product. One of the commercial uses is expected to be
in the treatment of vaginitis, a common female bacterial problem. Migami has the
exclusive right to market such products in China, Japan, and Korea. All of the
necessary approvals to sell the licensed products in Japan, China, or Korea have
not been obtained. However, Migami is negotiating with pharmaceutical companies
in China, Japan and Korea to market this product. In the event that Migami
enters into such a distribution agreement, it is anticipated that a sublicensing
fee from distributors in those countries would generate immediate cash flow
since the sublicensing fee would be paid upon entry into the distribution
agreement. Although Migami does not currently manufacture the product itself,
Migami intends to manufacture this product for sale to its distributors in those
countries which should also generate revenue.

         With respect to the InnoZen license, InnoZen has developed a drug
delivery system through the use of edible thin film strips containing active
drug ingredients. The potential for future development of products using this
delivery system is large. Research is being conducted by InnoZen in the
development and formulation of thin films for all types of medicinal treatments.
These applications encompass allergies, pain, cough and cold, insomnia,
intestinal disorders, electrolyte replacement, motion sickness, and animal
health. However, the research is not yet complete. The Company is marketing this
drug delivery system in China, Japan, and Korea.

         The Company is also marketing its cosmetic formulations in Asia.

         Prior to the Company's acquisition of Innovay's assets, Innovay was
unsuccessful in exploiting its pharmaceutical assets in Asia or elsewhere.
During such period, Innovay also unsuccessfully marketed its cosmetic products
in Asia. Innovay had only limited sales of its skin whitener product in Japan.
During this period, Innovay was hindered by its lack of operating capital and
was funded through cetain loans and its sale of its stock.

         The Company is a developmental stage company with virtually no revenue.
The Company intends to raise operating capital through private placements of its
securities.


                                       7
<PAGE>

         In December 1, 2006, the Company leased a 2,000 square foot office
facility at 3701 Wilshire Blvd., Suite 506, Los Angeles, CA 90010.

         The Company is actively seeking sources of funding for its operating
capital requirements, both to acquire additional licenses from US based
pharmaceutical companies and to support initial sales and production of its
cosmetic line.

         The Company has not been involved in any bankruptcy, receivership or
similar proceeding.

         In order to conserve operating capital, the Company currently has two
paid full-time employees. It has retained the services of its management,
officers and certain consultants through the issuance of restricted shares of
common stock.

         On November 30, 2007, Mr. Simons and Mr. Berriman resigned as members
of the Company's Board of Directors and officers. They were replaced on the
Board of Directors by Mr. John Park, Mr. Tehan Oh, and Mr. Young Suh.

         The Company does not intend to deliver an annual report to security
holders. The public may read and copy any materials filed with the SEC such as
this 10-KSB and 10-QSB reports. The Company is an electronic filer under the
SEC's EDGAR filing program. The SEC maintains an Internet site at www.sec.gov
that contains such reports and other information filed electronically which is
available to all security holders.

ITEM 2.  DESCRIPTION OF PROPERTY

         In December 1, 2006, the Company leased a 2000 square foot office
facility at 3701 Wilshire Blvd., Suite 507, Los Angeles, CA 90010. The Company
has also acquired office furniture.

         The Company does not engage in mining operations, oil and gas producing
activities or real estate activities.

ITEM 3.  LEGAL PROCEEDINGS.

         During 2006, the Company was not a prty to any litigation. However, the
party was named as a defendant in a lawsuit in January 2007.

         On November 3, 2006, a Complaint was filed as Case No. BC 361405 in the
Los Angeles County Superior Court, State of California. The case was entitled
Sandy Lang, Plaintiff, v. Innovay, Inc., A California corporation, John Park, an
individual, Tehan Oh, an individual, and Young Suh, an individual, and Does 1
through 50, Inclusive, Defendants. The Complaint asserted claims for fraud and
deceit and for negligent misrepresentation and sought an unstated amount of
damages. In his Complaint, Mr. Lang contends that he is owed certain stock in
Innovay, Inc. ("Innovay"), which was wrongfully withheld from him by Innovay and
its directors. Innovay and the other original defendants have denied Mr. Lang's
claims and are defending the lawsuit vigorously.


                                       8
<PAGE>

         On January 3, 2007, a Doe Amendment was filed, naming Migami, Inc.
("Migami"), as a Doe Defendant. On March 3, 2007, the Company filed its Answer,
denying specifically and generally, all of the allegations in the Complaint as
it pertains to it. Although not contained in any of the pleadings, Mr. Lang
contends that Migami is liable to him as a "successor" entity to Innovay.

         Based upon a preliminary evaluation of this lawsuit, it appears that,
in Migami's view, the claims against it are substantially without merit. Further
assessment will be made upon ongoing evaluation. In the meantime, Migami intends
to defend the suit vigorously and to put forward all appropriate defenses and
claims.

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

         There were no submissions to a vote of security holders during 2006.


                                    PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         MARKET INFORMATION: The principal trading market for the common equity
securities of the Company is the National Association of Securities Dealers OTC
Bulletin Board quotation system. The following are the highs and lows for each
quarter for fiscal year ended December 31, 2006 and 2005, respectively. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions, and may not represent actual transactions.

                                   2006                       2005
                             ----------------          -----------------
                              High     Low               High      Low
                             ------- --------          -------- --------
1st Quarter                  $0.55    $0.04             $0.14    $0.08
2nd Quarter                   0.53     0.13              0.22     0.10
3rd Quarter                   0.58     0.26              0.12     0.06
4th Quarter                   0.55     0.26              0.08     0.03

         SHAREHOLDERS: At December 31, 2006, there were 548 shareholders of
record with an additional approximately 73 shareholders registered with firms
reporting to the Depository Trust Company.

         DIVIDENDS: No dividends have been paid in the last two fiscal years.

ITEM 6.  MANAGEMENT'S DISCUSSION AND PLAN OF OPERATION.

         During 2006, the Company sold all of its subsidiary assets, KleenAir
Systems of North America, Inc. to Pollution Control, Ltd., for $1.8 million,
payable over 5 years.

         The Company plans to sublicense InnoZen's Bi-layer film technology to a
company in Korea during the first quarter of FY 2006. Once that has been
completed, the Company will look to invest in building a manufacturing plant in
Korea. As the company sublicenses the technology for various territories, the
Company intends to be able to manufacture the product for its sublicensees.


                                       9
<PAGE>

         The Company will try to sublicense InnoZen's technology in China during
the second quarter of FY 2006, and in Japan during the third quarter of FY 2006.

         The Company will wait to sublicense ZenGen's technology. The Company
would like to see the results of the phase two clinical study for the technology
since it may significantly affect the value of the technology being licensed. If
the phase two clinical study results are positive, the value of the technology
should increase and it should be much easier to sublicense the technology.

         As for the cosmetics, the Company is waiting for registration of its
cosmetic product line in Korea, Japan, and China. The Company anticipates that
this should be completed by the second quarter of 2006. Meanwhile, the Company
will be completing the product design, and packaging.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

         Where this Form 10-KSB includes "forward-looking" statements within the
meaning of Section 27A and Section 21E of the Securities Act, the Company
desires to take advantage of the "safe harbor" provisions thereof. Therefore,
the Company is including this statement for the express purpose of availing
itself of the protections of such safe harbor provisions with respect to all of
such forward-looking statements. The forward-looking statements in this Form
10-KSB reflect the Company's current views with respect to future events and
financial performance. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ from those
anticipated. These risks include, but are not limited to, economic conditions,
changes in environmental regulations, the market for venture capital, etc. In
this Form 10-KSB, the words "anticipates," "believes," "expects," "intends,"
"future" and similar expressions identify forward-looking statements. The
Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that may arise after the date
hereof. All subsequent written and oral forward-looking statements attributable
to the Company or persons acting on its behalf are expressly qualified in their
entirety by this section.

ITEM 7. FINANCIAL STATEMENTS

         See the Index to Financial Statements on page F-1 following the
signature page of this Form 10-KSB.

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

         None

ITEM 8A. CONTROLS AND PROCEDURES

         (a) Evaluation of disclosure controls and procedures.

         Under the supervision and with the participation of our President and
Chief Financial Officer, we conducted an evaluation of the effectiveness of the
design and operations of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of
December 31, 2003. Based on this evaluation, our President and Chief Financial
Officer concluded that our disclosure controls and procedures were effective
such that the material information required to be included in our Securities and
Exchange Commission ("SEC") reports is recorded, processed, summarized and
reported within the time periods specified in applicable SEC rules and forms
relating to our reporting obligations, and was made known to them by others
within the Company, particularly during the period when this report was being
prepared.

         (b) Changes in internal controls over financial reporting.

         There was no change in our internal control over financial reporting
during the period covered by this report that has materially affected, or is
reasonably likely to materially affect our internal control over financial
reporting.

ITEM 8B. OTHER INFORMATION

None


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

       Name          Age        Position/Office       Term      Served Since
------------------   ---    ---------------------    -------    ------------
John Park            40     Director/CEO/CFO         2 years      Dec. 2006

Tehan Oh             51     Director/Secretary       2 years      Dec. 2006

Young Suh            45     Director                 2 years      Dec. 2006

JOHN PARK
            John Park has served as the president of Innovay since January,
2005. Prior to joining Innovay, from February 2003 to January, 2005, Mr. Park
worked as Vice President of Mira Life Group, a cosmetic company, where he raised
capital for market launch and distribution in Asia. From 1997 to February 2003,
Mr. Park was the Chief Marketing Director of Paradigm Capital Management, a JK
Park Fund. Previously, Mr. Park managed a large portfolio of funds investing in
various different hedge funds. For the past 6 years, Mr. Park has been involved
in creating and bringing to the marketplace new technologies in the areas of
cosmeceuticals and OTC drugs designed to promote a healthier life. Mr. Park
holds a BS and MBA from Brigham Young University.


                                       10
<PAGE>

TEHAN OH
         Tehan Oh, has recently joined Innovay as an officer and director. Mr.
Oh received a BS-EE degree from Kwang Woon University In Korea in 1980 and a MBA
from Seoul National University in 2001. Prior to joining Innovay, Mr. Oh founded
Opicom Company Limited ("OCL"), a large Korean fiber optics company, in 1994 and
served as its CEO from 1994 through 2001. In 2000, OCL went public in Korea. OCL
was acquired by PSL Corporation, a California corporation, in 2002. PSL
Corporation is involved in the ownership and management of various corporations.
Mr. Oh is the CEO and a founder of PSL Corporation. Mr. Oh is also a founder and
CEO of Amerix Group, Inc., a California corporation. Founded in 1991, Amerix
Group, Inc., is an international distributor of high-technology components such
as semiconductors and telecommunications equipment. The company has offices in
the U.S. and South Korea. Mr. Oh currently serves on the Board of Directors of
PSL and Amerix Group, Inc.

DR. YOUNG SUH, DDS, MS
         Young Suh, DDS, MS, is presently an Associate Professor in Advanced
Periodontics and Implant Surgery Department as well as maintaining a private
dental practice in Periodontics and Implant Surgery in Los Angeles. In addition
to his well-established expertise, Dr. Suh's academic credentials provide him
entry into the Asian pharmaceutical marketplace through his seminars,
conferences and speaking engagements. Dr. Suh holds DDS and MS degrees from the
Loma Linda Dental School at Loma Linda University.

ITEM 10. EXECUTIVE COMPENSATION

(a) SUMMARY COMPENSATION TABLE

                        ANNUAL COMPENSATION
------------------------------------------------------------------------
   Names and                 Salary/            Other Annual     Market
Principle Position    Year     Fee     Bonus    Compensation     Value
-------------------   ----   -------   -----  ----------------  --------
John Park             2006   $4,000*   $ -0-      None          $    -0-
CEO

Lionel Simons**       2006

* Mr. Park also received $46,000 in compensation from Innovay.

** Pollution Control Systems, Ltd., Mr. Simons' company, was paid 750,000 shares
as consulting fees after Mr. Simons' departure from the Company.

(b) OPTION/STOCK APPRECIATION RIGHTS

         No stock options or free standing SARs to executive officers of the
Company were granted during 2005 and 2006.


                                       11
<PAGE>

(c) AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUE TABLE

         There was no exercise of stock options or free standing SARs by
executive officers of the Company during 2005 and 2006.

(d) LONG TERM INCENTIVE PLAN ("LITP") AWARDS TABLE

         The Company did not make any long-term incentive plan awards to any
executive officer in 2005 and 2006.

(e) COMPENSATION OF DIRECTORS

         No Directors of the Company received cash compensation for their
services as Director during 2005 and 2006.

(f) EMPLOYMENT CONTRACTS

         The Company has no employment contracts with its executive officers.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth a list of persons known to the Company
to be the beneficial owner of more than five percent of the Company's voting
stock.

Title of         Name and Address of          Shares of            Percent
 Class            Beneficial Owner            Record (1)           of Class
--------       ----------------------        ------------          --------
Common         Innovay, Inc.                  18,988,877            60.00%
               3701 Wilshire Blvd.
               Suite 506
               Los Angeles, CA 90010

Common         Lionel Simons,                  2,241,737             7.08%
               36 Corniche Drive
               Dana Point, CA 92629

Common         Jubilee Investment
               Trust Plc                       2,005,200             6.34%
               1 Great Cumberland Place
               London
               W1H 7AL

Common         Langley Park Investment
               Trust Plc                       2,000,000             6.32%
               30 Farrington Street
               London
               EC4A 4HJ


                                       12
<PAGE>

         The following table sets forth a list of the beneficial ownership in
the Company by officers and directors.

                                             Amount of
Title of        Name and Address of          Beneficial         Percent
 Class            Beneficial Owner          Ownership (1)       of Class
--------       ---------------------        -------------       --------
Common         John Park                    4,097,800 (2)        12.95%
               8025 Reseda Blvd
               Reseda, CA 91335

Common         Tehan Oh                     1,538,099 (2)         4.86%
               1883 Fox Bridge Ct.
               Fallbrook, CA 92028

(1)      All shares presented are common shares. No preferred shares were
         outstanding at December 31, 2006.

(2)      Neither Mr. Park nor Mr. Oh hold any shares in their own name. Mr. Park
         and Mr. Oh are both shareholders in Innovay, Inc., which owns
         18,988,877 shares of the Company's common staock. The above totals are
         based upon Innovay's stock ownership of Company common stock and their
         percentage ownership in Innovay.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Lionel Simons, former President of the Company, is also President and a
beneficial owner of Pollution Control, Ltd, through family trusts. Mr. Simons
has a Power of Attorney from Pollution Control which permits him to vote on its
behalf. In addition, while serving Mr. Simons is on the Board of Directors for
and serving as President of KleenAir Systems PLC in the U.K. The Company owns a
23% interest in and sells all of its European products to this entity for
resell.

         See also the discussion of related party transactions presented at Note
14 to the financial statements.


                                       13
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a) The following documents are filed as a part of this report or are
incorporated by reference.

Financial Statements -- The following information has been included in response
to Item 8.

                                                          Page

- Report of Independent Certified Public Accountants       F-2
- Consolidated Balance Sheets                              F-3
- Consolidated Statements of Operations                    F-4
- Consolidated Statements of Shareholders' Equity          F-5
- Consolidated Statements of Cash Flows                    F-8
- Notes to Consolidated Financial Statements               F-9

Exhibits - The following Exhibits are furnished as a part of this report:

  Exhibit No.                             Description
  -----------    ---------------------------------------------------------------

     31          * Certification of Chief Executive Officer and Chief Financial
                   Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
                   2002.

     32          * Certification of Chief Executive Officer and Chief Financial
                   Officer pursuant to Section 906 of Sarbanes Oxley Act

--------------
     *    Filed herewith.

     (1)  Incorporated by reference from our Current Report on Form 8-K filed
          with the Commission on January 3, 2006.

     (3)  Incorporated by reference from our Current Report on Form 8-K filed
          with the Commission on March 10, 2006.

     (3)  Incorporated by reference from our Current Report on Form 8-K filed
          with the Commission on March 10, 2007.

     (4)  Incorporated by reference from our Current Report on Form 8-K filed
          with the Commission on December 25, 2006.

     (5)  Incorporated by reference from our Current Report on Form 8-K filed
          with the Commission on April 20, 2007.


                                       14
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         As of the date of this Report, the Company has not appointed members to
an audit committee and, therefore, the respective role of an audit committee has
been conducted by the board of directors of the Company. When established, the
audit committee's primary function will be to provide advice with respect to the
Company's financial matters and to assist the board of Directors in fulfilling
its oversight responsibilities regarding finance, accounting, tax and legal
compliance. The audit committee's primary duties and responsibilities will be
to: (i) serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; (ii) review and
appraise the audit efforts of the Company's independent accountant's; (iii)
evaluate the Company's quarterly financial performance as well as its compliance
with laws and regulations; (iv) oversee management's establishment and
enforcement of financial policies and business practices; and (v) provide an
open avenue of communication among the independent accountants, management and
the board of directors.

         The firm of Chisholm Bierwolf & Nilson, LLC, served as the Company's
independent auditors for the year ended December 31, 2006. The Board of
Directors of the Company, in its discretion, may direct the appointment of
different public accountants at any time during the year, if the Board believes
that a change would be in the best interests of the stockholders. The Board of
Directors has considered the audit fees, audit-related fees, tax fees and other
fees paid to the Company's accountants, as disclosed below, and had determined
that the payment of such fees is compatible with maintaining the independence of
the accountants.

         AUDIT AND AUDIT-RELATED FEES: The aggregate fees, including expenses,
billed by the Company's principal accountant in connection with the audit of our
consolidated financial statements for the most recent fiscal year included in
our Annual Report on Form 10-KSB; and for the review of our financial
information and our quarterly reports on Form 10-QSB during the years ending
December 31, 2006 and 2005 were $5,000 and $32,250, respectively

         TAX FEES: The Company did not incur any fees for tax compliance, tax
advice and tax planning by the Company's principal accountant for 2006 and 2005.


                                       15
<PAGE>

                                   SIGNATURES

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

                                   MIGAMI, INC.


DATE:  MAY 18, 2007                /S/ John Park
                                   ---------------------------------------------
                                   BY: JOHN PARK
                                   CEO, PRESIDENT, PRINCIPAL ACCOUNTING OFFICER,
                                   & PRINCIPAL FINANCIAL OFFICER

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated:

        SIGNATURE                  TITLE                    DATE
-------------------------        ---------              --------------

 /S/  John Park
-------------------------
JOHN PARK                        DIRECTOR                MAY 18, 2007


 /S/  Tehan Oh
-----------------------          DIRECTOR                MAY 18, 2007
 TEHAN OH


                                       16
<PAGE>
<TABLE>

                                     INNOVAY, INC. & SUBSIDIARY
                                           Balance Sheet
                                   (A Development Stage Company)
                                      As of December 31, 2006


                                               ASSETS
                                                                   FY 2005           FY 2006
                                                                   -------           -------
<S>                                                             <C>               <C>
CURRENT ASSETS
Loan to Shareholder                                             $        --       $   257,059
Unamortized interest - Zengen license                           $   131,547       $    18,792
Prepaid products                                                $    39,398       $        --
Inventory                                                       $        --       $    38,605
                                                                -----------       -----------
     TOTAL CURRENT ASSETS                                       $   170,945       $   314,456

Furniture and fixtures                                          $        --       $     9,220
Office equipment                                                $     7,329       $    11,614
                                                                -----------       -----------
                                                                $     7,329       $    20,834
                                                                -----------       -----------
LESS: ACCUMLATED DEPRECIATION                                   $      (265)      $    (2,695)
                                                                -----------       -----------
     TOAL FIXED ASSETS                                          $     7,064       $    18,139

OTHER ASSETS
unamortized license fee                                         $ 3,431,947       $ 2,833,657
Available for sale securities                                   $   429,138       $        --
Notes Receivable                                                $   267,175       $ 1,800,000
Deposits                                                        $        --       $     6,737
                                                                -----------       -----------
  SUBTOTAL OTHER ASSETS                                         $ 4,128,260       $ 4,640,394
                                                                ===========       ===========

TOTAL ASSETS                                                    $ 4,306,269       $ 4,972,989



                                LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Bank Overdraft                                                  $     6,284       $    15,292
Payroll tax payable                                             $        --       $     1,348
Accounts payable                                                $     9,677       $    10,408
Advance payment from customers                                  $    52,932       $    43,982
Loan payable                                                    $    90,000       $        --
Contract payable                                                $ 3,650,000       $ 2,750,000
Income taxes payable                                            $       800       $     1,600
                                                                -----------       -----------
      TOTAL CURRENT LIABILITIES                                 $ 3,809,693       $ 2,822,630

Notes payable - loan from shareholders                          $   118,400       $    27,000

STOCKHOLDERS' EQUITY:

Common stock, $.001 par value (200,000 shares authorized,       $    16,132       $    32,413
32,412,752 outstanding)
Paid-in Capital                                                 $   935,368       $ 3,619,088
Accumulated other comprehensive income                          $  (160,862)      $        --
Accumulated deficit                                             $  (412,462)      $(1,528,141)
                                                                -----------       -----------
      TOTAL STOCKHOLDERS' EQUITY                                $   378,176       $ 2,123,359
                                                                -----------       -----------
                                                                $ 4,306,269       $ 4,972,989
                                                                ===========       ===========

              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

                                                F-1
<PAGE>

                                     INNOVAY, INC. & SUBSIDIARY
                                      Statements of Operations
                                    (A Development Stage Company)
                                       As of December 31, 2006

                                                                   FY 2005           FY 2006
                                                                   -------           -------
Sales                                                           $         --       $         --

Cost of Goods Sold
Purchases
                                                                ------------       ------------

Less: ending inventory                                          $         --
                                                                ------------       ------------
Total cost of goods sold                                        $         --

Gross Profit (Loss)                                             $         --       $         --

OPERATING EXPENSES
Expenses                                                        $    142,066       $    786,404
Depreciation including amortization                             $    125,695       $    200,720

                                                                ------------       ------------
          Total operating expenses                              $    267,761       $    987,124
                                                                ------------       ------------

Income (loss) from operation                                    $   (267,761)      $   (987,124)

OTHER INCOME AND EXPENSES
Interest expense                                                $     61,076       $    127,755
                                                                ------------       ------------
          Total other income (expenses)                         $     61,076       $    127,755
                                                                ------------       ------------

Income before income taxes                                      $   (328,837)      $ (1,114,879)
Provision for income taxes                                      $        800       $        800
                                                                ------------       ------------
Net loss                                                        $   (329,637)      $ (1,115,679)

OTHER COMPREHENSIVE INCOME
Unrealized loss on available for sale securities                $   (160,862)      $         --
                                                                ------------       ------------
Total Comprehensive Loss                                        $   (490,499)      $ (1,115,679)
Dividend declared

Accumlated deficit, beginning                                   $    (82,825)      $   (573,324)
                                                                ------------       ------------
Accumlated deficit, ending                                          (573,324)      $ (1,689,003)
                                                                ============       ============

Gain per common share:

Basic and diluted loss per common share                         $      (0.02)      $      (0.06)
                                                                ============       ============

Basic and diluted weighted average number of common shares        16,131,632         17,488,392
                                                                ============       ============


             THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

                                                F-2
<PAGE>

                                                    INNOVAY, INC. & SUBSIDIARY
                                                   (A Development Stage Company)
                                                Statements of Stockholders' Equity
                                                      As of December 31, 2006



                                                                                                                           Deficit
                                                                                                        Accumulated      Accumulated
                                    Preferred Stock            Common stock            Additional          Other           During
                                 --------------------    --------------------------      Paid-in       Comprehensive     Development
                                   Shares      Amount      Shares        Amount          Capital           Income           Stage
                                 ---------   --------    ------------  ------------   -------------  -----------------   -----------

Balance, January 4, 2005                                   5,896,495   $     5,896    $     (4,396)                      $        -

Stock issued:  For cash                                    9,580,036         9,580    $    940,420
  For puchase of Jovell USA                                  655,101           655    $       (655)                         (82,825)
  Unrealized loss on available
    for sale securities                                                                              $   (160,862)

Net loss for the period ended
December 31, 2005                                                                                                        $ (329,637)
                                 ---------------------------------------------------------------------------------------------------
Balance, December 31, 2005              -    $     -      16,131,632   $    16,132    $    935,368                       $ (412,462)

Stock issued:  For cash                                    1,792,928   $     1,793    $    898,207
  For service                                              1,064,317   $     1,064    $     (1,064)
Reverse Acquisition Adjustment                            12,673,875        12,674    $  1,787,326
Stock issued for service                                     750,000           750    $      (750)
  Unrealized loss on available
    for sale securities                                                                              $          -

Net loss for the year ended
December 31, 2006                                                                                                       $(1,115,679)
                                 ---------------------------------------------------------------------------------------------------
Balance, December 31, 2006              -    $     -      32,412,752   $    32,413    $  3,619,088                      $(1,528,141)



                             THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

                                                               F-3
<PAGE>

                                 STATEMENTS OF CASH FLOWS
                               (A Development Stage Company)
                                  As of December 31, 2006

                                                             FY 2005           FY 2006
                                                             -------           -------
Cash flows from operating activities:
Net Gain (Loss)                                           $  (573,324)      $(1,115,679)
Adjustment to reconcile net loss to net cash used in
operating activities:
    Depreciation and amortization                         $   125,695       $   200,720
    Unamortized Interest                                  $  (131,547)      $   112,755
Changes in assets and liabilities
  Decrease (increase) in prepaid products                 $   (39,398)      $    39,398
  Decrease (increase) in deposits                                           $    (6,737)
  Decrease (Increase) in inventory                        $        --       $   (38,605)
 Accrued expense
  Decrease (increase) in advance payment                  $    52,932       $    (8,950)
  Decrease (increase) Due from shareholder                                  $  (257,059)
  Decrease (increase) in accounts payable                 $     9,677       $     2,079
  Decrease (increase) in contract payable                 $ 3,650,000       $  (500,000)
  Decrease (increase) in taxes payable                    $       800       $       800
                                                          -----------       -----------
Net cash used by operating activities                     $ 3,668,159       $  (455,599)

CASH FLOW FROM INVESTING ACTIVITIES:
  Cash paid for property and equipment                    $    (7,329)      $   (13,505)
  Cash paid for licensing                                 $(3,557,377)      $   198,290
  Notes receivable                                        $  (696,313)      $(1,141,115)
                                                          -----------       -----------
Net cash provided by investing activities                 $(4,261,019)      $  (956,330)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuing stock                             $   951,500       $ 2,700,000
  Loan Payable                                            $    90,000       $   (90,000)
  Advances and loans from related parties                 $   118,400       $   (91,400)
                                                          -----------       -----------
Net Cash provided by Financing Activities                 $ 1,159,900       $ 2,518,600

NET INCREASE(DECREASE) IN CASH                                 (6,284)           (9,008)
                                                          -----------       -----------
CASH AT BEGINNING OF YEAR                                           0            (6,284)
                                                          -----------       -----------

Cash & cash equivalents, ending                           $    (6,284)      $   (15,292)
                                                          ===========       ===========


SUPPLEMENTAL CASH FLOW INFORMATION

  Cash Payments For:
  Contract payable                                                          $   400,000


         THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
</TABLE>
                                      F-4
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Migami, Inc. (the Company) was originally incorporated in 1986 in Nevada as
Covington Capital Corporation. Prior to its current name, the Company had
various names as endeavors were attempted. None of these proved fruitful. In
November 30, 2006, the Company formed a new wholly-owned Nevada subsidiary
corporation. The name of the new subsidiary is KleenAir Systems of North
America, Inc. All of the Company's current assets and liabilities were
transferred to that subsidiary. The Company sold the subsidiary along with all
of the current assets and liabilities to Pollution Control, Ltd for $1,800,000,
payable over 5 years. Also, in November 30, 2006, the Company purchased the
assets and liabilities of Innovay, Inc., a California corporation. The purchase
included the following assets:

     o    a license and Collaboration Agreement License and Collaboration
          Agreement, dated June 15, 2005, between Innovay and ZenGen, Inc., a
          California corporation, and the Letter Amendments thereto. This
          Agreement gives Innovay the exclusive right to market pharmaceutical
          compositions containing certain alpha-melanocyte-stimulating
          hormone-related peptides synthesized by ZenGen, Inc., in South Korea.

     o    On June 15, 2005, the Agreement was amended to include a Nasal Gel
          Delivery Technology which is known as a Nasal Transmucosal delivery
          system. The Nasal Transmucosal delivery system consists of a viscous
          nasal gel, delivering minor amounts of metal or other chemical
          elements or compositions into the bloodstream through the nasal
          membrane. This technology is licensed for distribution in South Korea,
          Australia, China, Japan, Malaysia, New Zealand, the Philippines, and
          Thailand.

     o    License Agreement, dated July 18, 2005, between Innovay and InnoZen,
          Inc., a Delaware corporation. This Agreement gives Innovay the
          exclusive right to market certain proprietary products of InnoZen in
          China, Japan, and South Korea. Technology which is a drug delivery
          system permitting the delivery of active drugs through an edible thin
          film strip. The License also covers Optizen eye drops.

     o    Proprietary cosmetic formulations used to manufacture Innovay's
          cosmetic products. The cosmetic products are wrinkle remover,
          anti-aging skin cream, dark circle remover, which removes dark circles
          from the eye area, and a skin whitener.

The Company will focus its efforts to sublicense these rights to Asian
Pharmaceutical companies, while acquiring additional license rights from US
based pharmaceutical companies..

The Company is in a development stage with its new acquisition. As a result the
Company is being classified as a development stage company as defined in
Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and
Reporting by Development Stage Enterprises." The Company is devoting
substantially all of its present efforts to establish a new business, and its
planned principal operations have not yet commenced. All losses accumulated
since inception has been considered as part of the Company's development stage
activities.

Accounting Methods
------------------

The Company's consolidated financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year end.

                                      F-5
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


Development stage reporting
---------------------------

Generally accepted accounting principles call for certain presentations of
cumulative financial statement information from inception to the date of the
financial statements. Since the Company restarted its operations (from a
position of inactivity) in April 1995, these statements present information from
the inception of its development stage.

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

Cash equivalents include short-term, highly liquid investments with maturities
of three months or less at the time of acquisition.

Inventory
---------

Inventories are stated at the lower of cost or market (net realizable value),
and consist mostly of parts.

Investments
-----------

The Company's securities investments are held principally for the purpose of
selling them in the near term and are all classified as trading securities.
Trading securities are carried at fair value on the balance sheet in current
assets, with any change in fair value during the period, i.e., net unrealizable
gains and losses, included in current operations. Costs associated with realized
gains are recognized on the first-in, first-out basis.

Marketable securities that are restricted for more than a year have been
classified as long term investments and are carried at cost. Impairments that
are other than temporary are expensed in the statement of operations, with a
corresponding decrease in the investment value.

Investments in Closely Held Entities
------------------------------------

The equity method of accounting is used when the Company has a 20% to 50%
interest in other entities. Under the equity method, original investments are
recorded at cost and adjusted by the Company's share of undistributed earnings
or losses of these entities, but not below zero.

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

Property and equipment is recorded at cost. Major additions and improvement are
capitalized. The cost and related accumulated depreciation of equipment retired
or sold are removed from the accounts and any differences between the
undepreciated amount and the proceeds from the sale are recorded as gain or loss
on sale. Depreciation is computed using the straight-line method over the
estimated useful life of the assets as follows:

                                      F-6
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


         Description                           Estimated Useful Life
         -----------                           ---------------------

         Buildings and improvements               30 years
         Machinery and equipment                  10 years
         Computer equipment                        3 years
         Automobiles                               5 years
         Office and other equipment                5 years

Depreciation expense for the years ended December 31, 2006 and 2005 was $2,695
and $265, respectively.

In accordance with Financial Accounting Standards Board Statement No. 144, the
Company records impairment of long-lived assets to be held and used or to be
disposed of when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the carrying
amount. At December 31, 2006, no impairments were recognized.

Intangible Assets
-----------------

Licensing rights are recorded at cost. Cost of acquired licenses is amortized on
the straight-line method over their remaining economic useful live of 15 years.
Amortization expense for the period was $112,755.

          Contract Rights - Zengen                     $2,707,113
          Contract Rights - InnoZen                       723,214
                                                       ----------
                     Total                             $3,430,327
          Amortization                                   (215,790)
                                                       ----------
                                                       $3,214,537
                                                       ==========

Amortization expenses for the next five years are as follows:

         Fiscal year -2007                             $  215,790
                     -2008                                215,790
                     -2009                                215,790
                     -2010                                215,790
                     -2011                                215,790
                    Thereafter                          2,135,590
                                                       ----------
                         Total                         $3,430,330
                                                       ==========
Research and Development Costs
------------------------------

Research, and development costs are treated as expenses during the year
incurred. Costs incurred are as disclosed in the income statement.

                                      F-7
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


Patent and Licensing Costs
--------------------------

Only the direct cost of obtaining license or patents and costs of extending or
perfecting the patents are eligible for capitalization. These capitalized costs
are amortized over the estimated useful life of the patent, generally five to
fifteen years, using the straight-line method. The cost of the patent
applications in process for new products is not amortized until the patents are
issued. Costs of patent applications for products that extend the use of
existing products are amortized with the cost of the existing product. In the
event that a patent is superseded, the unamortized costs are written off
immediately.

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

Sales are recorded when products are shipped to customers. Provisions for
discounts and rebates to customers, estimated returns and allowances, and other
adjustments are provided for in the same period the related sales are recorded.
In instances where products are configured to customer requirements, revenue is
recorded upon the successful completion of the Company's final test procedures.

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

The Company accounts for services acquired (and other expenses paid) using stock
as compensation (or payment) based on the fair value of the shares issued. Fair
value is determined based on the closing price of the stock on the date the
Company becomes obligated to issue the shares. Due to thin trading volume of the
Company's stock, most stock issuances are recorded at a discount to the market
price because of the effective limitations on disposal by the recipient of the
shares. Restricted shares issued for services are discounted at a greater
discount because of the added limitation on the tradability of the restricted
shares.

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

 The Company accounts for income taxes in accordance with FASB Statement No.
109, "Accounting for Income Taxes." Under FAS 109, deferred income tax assets
and liabilities are recorded for the income tax effects of differences between
the bases of assets and liabilities for financial reporting purposes and their
bases for income tax reporting. The Company's differences arise principally fro
the use of accelerated and modified accelerated cost recovery system for income
tax purposes versus straight line depreciation and from utilization of net
operating loss carry-forwards.

Deferred tax assets and liabilities are the amounts by which the Company's
future income taxes are expected to be impacted by these differences as they
reverse. Deferred tax assets are based on differences that are expected to
increase future income taxes as they reverse. Corresponding, deferred tax
liabilities are based on differences that are expected to increase future income
taxes as they reverse. The Note also presents the impact of significant
differences between financial reporting income and taxable income.

Estimates
---------

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and expenses
during the reporting period. In these financial statements, assets, liabilities
and expenses involve extensive reliance on management's estimates. Actual
results could differ from those estimates.

                                      F-8
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


Earnings Per Share
------------------

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share," which
requires the Company to present basic and diluted earnings per share, instead of
the primary and fully diluted earnings per share. The computation of basic
earning per share is based on the weighted average number of common shares
outstanding during the periods presented. The computation of diluted earnings
per shares is based in the weighted

average number of outstanding common shares during the year plus, when their
effect is dilutive, additional issuable shares, assuming the exercise of certain
vested and non-vested stock options and warrants and conversion rights, reduced
by the number of shares that could be purchased from any proceed generated.

Basic (Loss) Per Share
----------------------

The computations of basic (loss) per share of common stock are based on the
weighted average number of common shares outstanding during the period of the
consolidated financial statements.

                                                      December 31,
                                             -------------------------------
                                                  2006              2005
                                             ------------       ------------
         Numerator - (loss)                  $ (1,115,679)      $   (329,637)
         Denominator - weighted average
          number of shares outstanding         17,488,392         16,131,632
                                             ------------       ------------
         Loss per share                      $      (0.06)      $      (0.02)
                                             ============       ============


Financial Instruments
---------------------

Unless otherwise specified, Management believes the carrying value of its
financial instruments approximates their fair value due to the short term to
maturity. Investments in marketable securities are carried at market value.

Accounts Receivable
-------------------

Accounts receivable are shown net of an allowance for doubtful accounts. As of
December 31, 2006, the Company did not have any accounts receivable.

                                      F-9
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS



Newly Adopted Pronouncements
----------------------------

On December 16, 2004, the FASB issued SFAS No. 123(R), Share-Based Payment,
which is an amendment to SFAS No. 123, Accounting for Stock-Based Compensation.
This new standard eliminates the ability to account for share-based compensation
transactions using Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees, and generally requires such
transactions to be accounted for using a fair-value-based method and the
resulting cost recognized in our financial statements. This new standard is
effective for awards that are granted, modified or settled in cash in interim
and annual periods beginning after June 15, 2005. In addition, this new standard
will apply to unvested options granted prior to the effective date. The Company
has adopted this new standard effective for the fourth fiscal quarter of 2005,
the impact this standard has had on its financial position and results of
operations has been minimal.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs -- an amendment
of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43,
Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so abnormal as to require
treatment as current period charges. . . ." This Statement requires that those
items be recognized as current-period charges regardless of whether they meet
the criterion of "so abnormal." In addition, this Statement requires that
allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities. This statement is effective
for inventory costs incurred during fiscal years beginning after June 15, 2005
and has not had a material impact on the Company.

SFAS No. 153 -- In December 2004, the FASB issued SFAS No. 153 (SFAS 153)
"Exchange of Non-monetary assets". This statement was a result of a joint effort
by the FASB and the IASB to improve financial reporting by eliminating certain
narrow differences between their existing accounting standards. One such
difference was the exception from fair value measurement in APB Opinion No. 29,
Accounting for Non-Monetary Transactions, for non-monetary exchanges of similar
productive assets. SFAS 153 replaces this exception with a general exception
from fair value measurement for exchanges of non-monetary assets that do not
have commercial substance. A non-monetary exchange has commercial substance if
the future cash flows of the entity are expected to change significantly as a
result of the exchange. This statement is effective for non-monetary assets
exchanges occurring in fiscal periods beginning after June 15, 2005. The
adoption of SFAS 153 will not have a material effect on the Company's financial
position or results of operations.

SFAS No. 154--In May 2005, the Financial Accounting Standards Board, issued
Statement of Financial Accounting Standards ("SFAS, No. 154"), "Accounting
Changes and Error Corrections," which replaces Accounting Principles Board
Opinion No. 20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements -- An Amendment of APB Opinion No. 28".
SFAS No. 154 provides guidance on accounting for and reporting changes in
accounting principle and error corrections. SFAS No. 154 requires that changes
in accounting principle be applied retrospectively to prior period financial
statements and is effective for fiscal years beginning after December 15, 2005.
The Company does not expect SFAS No. 154 to have a material impact on our
consolidated financial position, results of operations, or cash flows.

                                      F-10
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


NOTE 2 - GOING CONCERN

The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has neither sufficient operating revenues nor disposable
assets to fund completion of its development program, current level of expenses,
or initial production stages. In this situation, the Company is reliant solely
upon its ability to raise capital through sales of its stock, debt financing, or
acquisition of services through issuances of the Company's stock. There is no
assurance that a market exists for the sale of the Company's stock or that
lenders could be found to lend money to the Company. Should financing not be
available, the Company would, in all likelihood, be forced to stop development
efforts and/or to shut down its activities completely.

These financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets of the amount of
liabilities that might be incurred should the Company be unable to continue in
existence.

NOTE 3 - RECEIVABLES

As a part of the Asset purchase agreement with Innovay, Inc., prior to the
transaction, all of our current assets and liabilities were transferred to
KleenAir Systems of North America, Inc., our newly formed wholly owned
subsidiary. An Option to purchase that subsidiary, with all of our current
assets and liabilities, was granted to Pollution Control, Ltd., a Bahamian
corporation ("PCL"), which is beneficially owned by Lionel Simons, for a total
of $1,800,000 over 5 year period..

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 2006:

              Office furniture and equipment                          $  20,834
                                                                      ---------
              Total property and equipment                            $  20,834
                                                                      =========

Depreciation expense totaled $2,695 for the year ending December 31, 2006. The
office furniture and equipment, the analysis equipment, and the test vehicles
are being depreciated on a straight-line basis over five years.

NOTE 5 - COMPENSATORY STOCK BENEFIT PLANS AND VALUATION BASIS

 During 1995, the Company adopted a Compensatory Stock Benefit Plan (the 1995
Plan) for the furtherance of the Company by allowing the Company the option of
compensating officers, directors, consultants, and certain other service
providers who render bona fide services to the Company through the award of the
Company's free trading common shares, Under the Plan, 33,333 shares were
approved by the Board of Directors, of the shares approved for the Plan, 13,000
shares were issued, 4,667 were committed in agreements with officers, and 2667,
were committed to a consultant during 1995. During 1996, 9,667 shares were
issued under this plan for directors' fees and officer compensation. These
shares have been issued primarily for marketing and promotion services,
directors' fees, and services to facilitate of the purchase of the patent.

                                      F-11
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


The 1995 Plan was terminated with the adoption of a "1996 Consultant and
Employee Stock compensation Plan" (the 1996 Plan). The 1996 Plan authorized the
issuance of up to 500,000 freely tradable shares. These shares were to be used
to further the growth through compensation of officers, directors, consultants,
and other service providers. The board was given the authority to increase the
number of shares as it deemed advisable and to file any necessary registration
statements required for such increases. Under the 1996 Plan, the Company issued
5,333 during 1996, but did not issue any shares under this plan in 1997 or 1998.
During 1999, the Company issued 300,000 shares under this plan for consulting
services.

In July 2000, the Company filed an S-8 registration (the S-8) to register
1,200,000 shares for compensation under five consulting agreements and reserved
750,000 shares for the future exercise of options under an Employee Stock Option
Plan, discussed at Note 12. The shares for the consultants were issued in July
2002 in order to obtain those services. Subsequent to this filing, the board has
issued 550,000 of the shares reserved for the ESOP. Directors/officers and a key
engineering consultant were issued 300,000 of these shares for his services
requested that he be allowed to exchange those shares for S-8 shares and was
allowed to do so under the advice of legal counsel. During 2002, the Company
issued an additional 76,800 shares under this plan.

In September 2001, the Company filed an amendment to the S-8 to register an
additional 2,200,000 shares. Of these shares, 1,270,000 were issued in October
to consultants for services to be provided over the next year. Another 21,687 of
these shares were issued to product development consultants. During 2002, the
Company issued (or contracted to issue), 576,192 shares to consultants and
employees.

In September 2004, the Company filed a second amendment to its S-8 to register
another 1,250,000 shares. All of these shares were issued to consultants for
services provided during the last quarter of the year.

During 2005, the Company issued 25,470 S-8 shares and 1,243,700 restricted
shares to consultants for services, performed.

As anticipated by these plans, the Company has acquired services with free
trading shares. The Company has also issued unregistered restricted (Rule 144)
stock in exchange for services. These transactions have been valued in
accordance with the Company's accounting policy regarding stock compensation.

NOTE 6 - EMPLOYEE STOCK OPTION PLAN

The Employee Stock Option Plan (ESOP) was established in July 2000 in
coincidence with the S-8 registration and is to provide incentives for the
attraction and retention of personnel. Its terms call for an exercise price of
100% of the closing price of the Company's stock on the date of the grant of the
options. No such grants have been made under this plan.

NOTE 7 - STOCKHOLDERS' EQUITY

During 1986, the Company completed an initial offering of 10,000,000 shares of
common stock with net proceeds (after commissions) of $112,233. Between that
time and December 31, 1993, it is apparent that there were many stock
transactions, reverse splits, and other actions. However, records regarding this
period of time are not available. Additionally, no records are available which


                                      F-12
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


would allow an analysis of the retained earnings balance prior to 1995. Due to
this lack of records, management believes that losses indicated by the negative
retained earnings would not yield tax benefits to current operations.
Inception-to-date information required for development stage companies is also
unavailable for this period.

In March 1995, the Company's Board approved a measure (ratified at a subsequent
shareholders' meeting) whereby the Company's outstanding common shares were
reverse split on the basis of one new share for ten shares held. In May 1997,
the Board approved another reverse split. This time the reverse split was on the
basis of one new share for 15 shares held. In the following discussion, the
share amounts have been restated to reflect the 1 for 15 reverse split. In
February 2000, the Board approved a 2 for 1 split of shares effective March 20,
2000 in accordance with advice from marketing and investment consultants. All
share amounts in the financial statements as well as share amounts presented
below have been adjusted as though all of these changes in stock had occurred
prior to the earliest presented information.

In April 1995, the Company issued 933,334 shares of convertible, non-voting
preferred stock and 60,000 common shares as consideration for the patent and a
facilitation fee to a consultant. This transaction was recorded at the par value
of the stock issued, $7,400.

During 1995, other consulting services not directly related to the patent
purchase were obtained through the issuance of 24,000 common shares valued at
total of $111,875. Directors were issued a total of 4,000 shares valued at
$22,500. This stock-based compensation and the transactions described below have
been valued as described in Note 1. The Company also issued 27,334 common shares
pursuant to a Regulation S offering. Net proceeds to the Company after
commissions were $66,804. in addition, $180,400 was received for 66,814 shares
under the Regulation S offering prior to December 31, 1995, with the shares
being issued during 1996. During 1996, the Company issued 24,666 common shares
and 13,334 preferred shares primarily to officers and directors pursuant to
agreements and directors' resolutions for services rendered. These shares were
valued at $201,875. Holders of options also exercised 75,000 options to acquire
a like number of common shares during March 1996 by trading amounts owed them by
the Company for the exercise price. This action effectively brought $112,500 to
the Company through the reduction in payables.

During 1997, the Company issued 66,666 preferred shares to its president in
accordance with his employment contract. During December 1998, the Board
approved the issuance of 320,000 shares of stock to themselves and key
consultants as compensation for services rendered during 1998. Both of these
sets of shares have been included as outstanding shares and the costs have been
recognized as expenses in the relevant periods. The shares were issued during
1999.

During 1998, preferred stockholders exchanged 403,330 preferred shares for a
like number of common shares. The Company issued 2,000,000 common shares to a
financial and public relations consultant for services; 2,000,000 and 800,000
shares to Pollution Control, Inc. for license and cash as discussed at Note 15;
and 100,000 shares to a development consultant. A director was issued 20,000
shares for his services.

During March 1999, the Company issued 600,000 shares under its S-8 plan
discussed at Note 11 for investment guidance. These shares were valued at
$75,000. Public relations/financial services were obtained during 1999 through
the issuance of 508,334 shares valued at $175,079. Analysis and test equipment
was acquired in exchange for 33,200 shares valued at $8,300. The Company also
issued 146,800 shares for $35,800 cash and exchanged 61,334 common shares for
the retirement for a like number of preferred shares.

                                      F-13
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


During 2000, the Company issued 1,400,000 shares to Ecologic, LLC (an affiliate
of ETS) for $350,000 under an agreement to provide funds for product testing.
The Company issued 300,000 shares valued at $51,000 to officers/directors and a
key engineering consultant in lieu of cash payments for their services to the
Company. Outside consulting services were obtained in exchange for 1,344,266
shares valued at $553,868. (See discussion at Note 11 regarding 1,200,000 of
these shares.) The Company also retired the last of its outstanding preferred
shares through their conversion to 163,334 common shares. One of the issuances
of shares for services included warrants (discussed below). The holders
exercised 14,000 of these warrants for proceeds of $8,750.

As discussed in Note 13, the Company also issued both common and preferred stock
for consulting services and employment agreements.

The Company issued options to purchase common shares during 1996. These options
arose from various transactions. Among these were 210,000 options granted as
incentives for enhanced product development efforts. Other options were granted
as incentives to sign contracts. All options issued were to purchase one share
for each option held. There was no market for these options. During 1996,
options were exercised to purchase 75,000 shares. Options were reduced by the 1
for 15 reverse split authorized by the board of directors. No options were
exercised during 1997 or 1998. At December 31, 1998, all options had expired.

As mentioned above, during 2000, the Company issued warrants in conjunction with
a stock issuance. These consisted of 138,000 warrants to buy one restricted
share at $0.625 per warrant and expired on November 30, 2001. Of these, 14,000
were exercised during 2000 and the rest expired. The Company also issued two
warrants to Ecologic. The first warrant which expired January 31, 2001, was for
the purchase of 1,000,000 shares at $.25 per share. Ecologic purchased 900,000
shares under this warrant during 2000, leaving a balance of 100,000 that were
allowed to expire. The second warrant, which expired January 31, 2002, was to
purchase 1,000,000 shares at the greater of $1 or one-half the average
thirty-day bid price per share. This warrant expired without exercise.

During 2001, the Company issued 218,500 restricted shares valued at $120,436 to
consultants. Another 850,000 restricted shares valued at $78,540 were issued to
directors and a key research person for services over the last year. Cash of
$105,000 was received for the issuance of 375,000 restricted shares. Consultants
were issued 1,368,487 unrestricted S-8 shares valued at $180,650.

During 2002, the Company issued the following restricted shares: 15,500 valued
at $3,500 for product development, 50,000 valued at $16,250 for legal services,
100,000 valued at $32,500 for contract settlement, 500,000 valued at $87,500 for
uncompleted acquisition, and 833,250 valued at $924,908 for Carbon Cloth
acquisition. Another 2,804,545 restricted shares were issued for cash totaling
$1,720,000. In addition to restricted shares, the Company issued free-trading
shares as follows: 524,192 valued at $257,342 for consulting services, 40,000
valued at $44,400 for Carbon Cloth acquisition, and 12,000 valued at $8,340 for
product development.

During 2003, the Company issued the following restricted shares as follows:
750,000 for a total of $75,000; 215,000 valued at $46,850 for consulting
services; 50,000 valued at $8,250 for legal services; 7,600,000 valued at
$519,090 to directors and a key research person for services; and 82,500 valued
at $12,788 for settlement of claims relating to marketing licenses. The Company
also issued unrestricted shares as follows: 2,100,673 valued at $317,003 for
consulting services; 22,500 valued at $4,534 for product development efforts;
50,000 valued at $11,625 for settlement of claims related to marketing licenses;
228,932 valued at $55,053 for legal and other professional services; and 52,000
valued at $7,537 for office and clerical services.

                                      F-14
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


In 2004, restricted shares issued by the Company were as follows: 750,000 for
$75,000; 2,509,483 valued at $183,842 for consulting services; 1,200,000 valued
at $79,719 for directors and management services; and 20,026,666 valued at
$1,315,487 for marketable securities. Unrestricted shares issued were as
follows: 1,690,563 valued at $229,303 for advisory services and 501,333 valued
at $75,200 directly related to acquiring marketable securities. A total of
501,333 warrants (discussed below) valued at $17,547 were also issued related to
acquiring the marketable securities.

The 501,333 warrants issued during 2004 (and outstanding at December 31, 2004)
are exercisable at any time before June 4, 2007. As an exercise option, the
holder may elect to take only the number of shares equal to the increase in the
price of the Company's stock after the date of the grant without having to pay
the exercise price.

The Company issued an option to a consultant to purchase $250,000 worth of stock
at a 33% discount off the average bid price for the 10-day period before
exercise. This option may be settled by an existing stockholder selling shares
rather than by the Company issuing shares, these shares expired in 2004.

During August 2005, the Company issued 4,000,000 shares of common stock for cash
of $180,000. An additional 1,269,170 shares were issued for services valued at
$111,701 which equaled the market price of the shares issued.

On February 9, 2006, the Company amended our Articles of Incorporation to change
the corporate name to Migami, Inc., and to increase the number of its authorized
shares to 200,000,000. On March 2, 2006, the Company affected a reverse split of
its issued and outstanding shares on a 5 to 1 basis.

On November 30, 2006, the Company issued 750,000 shares to Lionel Simons as
agreed for consulting services to be provided for the Company.

On November 30, 2006, the Company issued 18,988,877 shares of common stock to
Innovay, Inc. for the acquisition of Innovay's assets and liabilities.

NOTE 8 - RELATED PARTY TRANSACTION

During 1998, the Company sold 800,000 shares of common stock to Pollution
Control, Inc. for $200,000. These funds were used to prepay financial and public
relations services. The service provider also received 2,000,000 shares of
restricted common stock that it assigned to Pollution Control in exchange for an
equity interest in that entity. As discussed at Note 9, the Company issued
2,000,000 shares of restricted common stock to Pollution Control to repurchase
the U.S. marketing rights for its diesel product. Pollution Control is
controlled indirectly by the Company's President. Pollution Control's voting
rights are held by the Company's President. These transactions effectively
transferred control of the Company to Pollution Control and to the Company's
President through his control of that block of voting stock.

During July 1999, the Board approved the issuance of 420,000 shares of
restricted stock to themselves and an engineering consultant for loans provided
to the Company during 1998. In October 1998, the Board approved the issuance of
1,000,000 shares to themselves and the consultant in lieu of cash compensation
in recognition of services provided to the Company during 1999.

                                      F-15
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS


In December 2000, the Board approved the issuance of 300,000 free-trading S-8
shares to themselves and an engineering consultant in lieu of cash payment for
services rendered to the Company during 2000.

In July 2001, the Board approved the issuance of 850,000 restricted shares to
themselves and an engineering consultant in lieu of cash payment for services
rendered to the Company during 2001. Additionally, the Board approved allowing
the Board to purchase restricted shares to obtain cash. One member of the Board
and an entity related to a member of the Board paid $85,000 for 325,000 shares.

During December 2002, members of the Board purchased 350,000 shares of
restricted stock for $70,000. Additionally, Pollution Control loaned the Company
$50,000 documented in a demand note bearing interest at the rate of 7%
compounded monthly until repaid.

During 2003, the Board approved the issuance of 7,600,000 restricted shares to
themselves and an engineering consultant as compensation for their services in
lieu of cash payments. Loans from related parties totaled $147,000 during 2003.
These loans were documented in demand notes and bear interest at the rate of 7%
compounded monthly until repaid.

In 2003, the Company generated a significant portion ($202,544)of its revenues
from sales of its NOxMASTER(TM) product to KASI which, in turn, sold them to
KSL. KSL resold the products to a third party for installation on taxicabs and
busses in the U.K. The Company recognized its revenues at the first level, i.e.,
sales to KASI. At this point, there has been no inclusion of KASI's results of
operations in the Company's financials due to cumulative losses incurred by that
entity. No eliminations have taken place. This sales structure exists because of
licensing arrangements discussed at Note 9.

 During 2004, the Company borrowed an additional $138,015 on the same 7%
compounded terms set out above. It also repaid $104,015 of these loans. The
Board approved the issuance of 1,200,000 to themselves and an engineering
consultant as compensation for their services in lieu of cash payments.

The Company's president is also serving as a principle officer for KleenAir
Systems International Plc. in England and spends significant portions of his
time pursuing the activities of those eelated entities.

During 2005, the Company transferred all patents except Carbon Cloth Technology
to KleenAir Systems International, Inc. for $180,000 and an 8% royalty.

During 2005, officers of the Company advanced $9,694 to the Company to support
cash flow requirements. Several officers and employees were repaid a total of
$21,790 on their loans to the Company.

During FY 2006, prior to purchase of Innovay, Inc., all the assets and
liabilities of Migami, Inc. was transfer to KleenAir Systems North America,
Inc., a subsidiary company of Migami, Inc. KleenAir Systems North America, Inc.,
was sold to Pollution Control.

NOTE 9 - LEASE

Currently, the Company does not have a lease. The Company is using the office
space of Innovay, Inc. and paying monthly rent.

                                      F-16
<PAGE>

                                  MIGAMI, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS



NOTE 10 - SUBSEQUENT EVENTS

 Effective November 30, 2006, the Company granted an option to Pollution Control
to acquire all the outstanding shares of KleenAir Systems North America, a
wholly owned subsidiary of the Company to which the Company has transferred the
title to all assets and liabilities of the Company, including the patents and
technology of Carbon Cloth.

The option is exercisable for three years for the purchase price of $1,800,000
payable for five years from 50% of the 8% royalty owned by the Company for
revenues generated from Kleen Air Systems International.

On November 30, 2006, the Company, closed an Asset Purchase Agreement with
Innovay, Inc. In anticipation of the transaction, the Company changed its name
to Migami, Inc. from KleenAir Systems, Inc., and increased the authorized shares
to 200,000,000 shares,

Pursuant to the terms of the Asset Purchase Agreement, the company issued
18,988,877 shares of authorized but previously unissued common stock to Innovay,
Inc..




                                      F-17