SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
(Mark  One)
[  X  ]     Annual  report  pursuant  to  section  13 or 15(d) of the Securities
Exchange  Act  of  1934
     For  the  fiscal  year  ended  December  31,  2002

[   ]     Transition report under section 13 or 15(d) of the Securities Exchange
Act  of  1934
     For  the  transition  period  from  ___________________  to  ______________

                         Commission File Number 0-32892

                           CAL BAY INTERNATIONAL, INC.
                 (Name of small business issuer in its charter)

                              NEVADA     26-0021800
         (State or other jurisdiction of     (I.R.S. Employer I.D. No.)
                         incorporation or organization)

                  1582 PARKWAY LOOP, SUITE G, TUSTIN, CA 92780
              (Address and Zip Code of principal executive offices)

Issuer's  telephone  number,  including  area  code:  714-258-7070

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

Securities  registered  under  Section  12(g)  of  the  Exchange  Act:

                      $.001 par value, common voting shares
                                (Title of class)

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

Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation  S-B  is contained in this form, and no disclosure will be contained,
to  the  best  of the 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.  [    ]

The  issuer's  revenue  for  its  most  recent  fiscal  year  was:  $344,450

The  aggregate market value of the issuer's voting stock held as of December 31,
2002,  by  non-affiliates  of the issuers was $ 1,727,191.50. (10,794,947 shares
valued  at  $0.16  each)

As  of  December  31,  2002, issuer had 23,710,000 shares of its $.001 par value
common  stock  outstanding.

Transitional  Small  Business  Format:   Yes  [   ]   No  [  X  ]
Documents  incorporated  by  reference:  none


<PAGE>

<TABLE>
<CAPTION>

                                          FORM 10-KSB
                                    CAL BAY INTERNATIONAL
                                             INDEX

                                                                                             Page
<S>       <C>                                                                                <C>

PART I .  Item 1.  Description of Business                                                      3

          Item 2.  Description of Property                                                      7

          Item 3.  Legal Proceedings                                                            8

          Item 4.  Submission of Matters to a Vote of Security Holders                          8

PART II.  Item 5.  Market for Common Equity and Related Stockholder Matters                     8

          Item 6.  Management's Discussion and Analysis or Plan of Operation                    9

          Item 7.  Financial Statements                                                        10

          Item 8.  Changes In and Disagreements with Accountants on Accounting and
          Financial Disclosure                                                                 10

PART III  Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance
          with Section 16(a) of the Exchange Act                                               10

          Item 10.  Executive Compensation                                                     11

          Item 11.  Security Ownership of Certain Beneficial Owners and Management             12

          Item 12.  Certain Relationships and Related Transactions                             12

          Item 13.  Exhibits and Reports on Form 8-K                                           13

          Item 14.  Controls and Procedures                                                    13

          Signatures                                                                           14

          Certifications                                                                       15
</TABLE>

(Inapplicable  items  have  been  omitted)


                                        2
<PAGE>
                                     PART I

FORWARD-LOOKING  STATEMENT  NOTICE

When  used  in  this  report,  the  words "may," "will," "expect," "anticipate,"
"continue,"  "estimate,"  "project,"  "intend,"  and  similar  expressions  are
intended  to  identify  forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of  1934  regarding events, conditions, and financial trends that may affect the
Company's  future plans of operations, business strategy, operating results, and
financial  position.  Persons  reviewing  this  report  are  cautioned  that any
forward-looking  statements  are  not  guarantees  of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors.

ITEM  1.  DESCRIPTION  OF  BUSINESS.

GENERAL

The  Company originally incorporated in the State of Nevada on December 9, 1998,
under the name Var-Jazz Entertainment, Inc.  Var-Jazz was organized to engage in
the  business  of  music  production and sales.  Var-Jazz did not succeed in the
music business and the board of directors determined it was in the best interest
of  the  Company  to  seek additional business opportunities.  On March 8, 2001,
Var-Jazz  entered  into  an  Agreement  and  Plan of Reorganization with Cal-Bay
Controls, Inc. whereby Var-Jazz changed its name to Cal-Bay International, Inc.,
and acquired Cal-Bay Controls, Inc. as a wholly owned subsidiary in exchange for
17,112,000  shares  of  common  stock.

Cal-Bay  Controls,  Inc. originally formed in 1976 as a sole proprietorship that
was  acquired  by  Robert  J.  Thompson  in 1990.  On February 22, 2001, Cal-Bay
Controls  incorporated  in  the state of Nevada and was subsequently acquired by
Var-Jazz  on  March  8,  2001.  On  March  7,  2002,  the  SEC  approved Cal-Bay
International's  Form  10-SB registration statement and in June of 2002, Cal-Bay
received  approval  from  the  NASD to move from the Pink Sheets to the Over the
Counter  Bulletin  Board  (OTC BB) exchange where Cal-Bay currently trades under
the  symbol  CBYI.

OUR  BUSINESS

Cal-Bay  supplies analytical products, services and associated equipment through
license  and  distribution agreements. Cal-Bay also targets new technologies and
products  for  research  and  development,  marketing  and  distribution.

Cal-Bay  operates three divisions, the Representative/Distribution Division, the
Systems  Division  and  the  New  Products  Division.  Cal-Bay's  operations are
focused  mainly  in  California and Nevada with a small percentage of sales made
elsewhere  in  the  United  States.  Cal-Bay  does  not  currently  have  any
international  operations  and does not intend to pursue an international market
at  this  time,  but  expects  to  do  so  in  the  future.

REPRESENTATIVE/DISTRIBUTION  DIVISION

Cal-Bay's  Representative  and Distribution Division currently serves markets in
California,  Nevada  and Hawaii.  Cal-Bay represents and/or distributes products
from  many  manufacturers  of  engineered  products  for  the  process  control,
environmental,  safety  and  laboratory  markets.  The  process  control  market
involves instrumentation and equipment used to help manufacturing plants control
or  improve  the  operations  of  specific production or manufacturing processes


                                        3
<PAGE>

within  the  plant.  The  environmental  market  supplies  instrumentation  and
equipment  used to measure or help reduce air and/or water pollution produced by
industrial,  utility  or  municipal  facilities.  The  safety  market  primarily
supplies  instrumentation  used  by  various industries to meet personnel safety
requirements  typically  imposed  by  OSHA  regulations.  The  laboratory market
supplies equipment for research and development laboratories operated by private
industries,  universities  and  governmental  research  laboratories.

The  Company  has  a  signed  contract/agreement  with  each of the companies it
represents  which  grants  Cal-Bay  the  rights  to  sell  the  assigned
products/services within a defined sales territory (typically California, Nevada
and  Hawaii).  In  most cases these contracts are exclusive in the sense that no
other  sales  representative  is  allowed  to  sell  the products covered by the
contract  in  the  same sales area, however, there are a few contracts which are
non-exclusive  in  the  sense  that  there may be more than one authorized sales
agents in a given sales area.  Cal-Bay receives compensation for selling efforts
in  the  form  of  commissions  (typically 10-20% of the net sales price) on all
sales  of  products  within  the  specified  sales  territory.

     Within  the  designated  sales  territory,  Cal-Bay  serves  the  following
markets:

     *  Environmental  market
     *  Industrial  Process  Markets
     *  Petroleum  Refineries
     *  Chemical  plants
     *  Pharmaceutical  and  Biotechnology
     *  Computer  related
     *  Paint  and  coating
     *  Printing
     *  Metal  processing
     *  Bulk  industrial  gases  and  specialty  gases
     *  Semiconductor
     *  Aerospace
     *  Plastics/Polymers
     *  Original  Equipment  Manufactures  (OEM's)

The  environmental  market  is  typically  driven  by  local, state and national
regulations  promulgated by regulatory agencies, including:  the South Coast Air
Quality  Management District (SCAQMD), California Air Resources Board (CARB) and
the  U.S.  Environmental  Protection  Agency (EPA), which has both air and water
protection  departments.

During  the  1980's and 1990's there were many new regulations, on the local and
federal level, which required the installation of new analytical instrumentation
and  monitoring  systems  for both air and water pollution control.  Cal-Bay has
been  very  successful in selling analyzers for use in the environmental markets
and  we  believe the market will continue to be strong in this area.  During the
late 1990's the number of new regulations declined, however, Cal-Bay expects new
regulations to be implemented in several areas in the coming decade which should
result  in  an  increase  in  this  market  in  the  near  future.

The  safety  market  is  also regulatory driven, usually by OSHA rules.  Cal-Bay
anticipates  the  safety  market  to  remain  fairly  static in the near future.

The  EPA  and  OSHA  implement  new  regulations  every  year seeking to improve
quality,  safety  and  the  environment.  When  new regulations are implemented,
industry  is  required  to  comply with the regulations, often necessitating the


                                        4
<PAGE>

purchase  of  new  equipment  and  controls.  While  Cal-Bay  cannot  assure new
regulations  translate  directly  to  additional  sales  for  the Company, it is
management's  experience  that  increased  regulations  typically  result  in an
increase  of  the  Company's  sales.

Process, industrial, Quality Control and laboratory markets are much less likely
to be affected by regulatory concerns, however, these markets are more likely to
be affected by changes in the economy.  Sales to these markets are typically not
regulatory driven but are driven by the need for improved production efficiency,
reductions  in  cost,  improvement  in  product  quality,  etc.  New  technology
developments  are  often  the  driving  force behind sales of new equipment into
these  markets  as  each  company  searches  for  a  competitive  advantage.

SYSTEMS  DIVISION

In  addition  to  selling products and services as a representative/distributor,
Cal-Bay  produces a small number of operational systems that integrate a variety
of  products  and components from numerous vendors.  Notably, Cal-Bay is able to
provide Continuous Emissions Monitoring Systems ("CEMS") to selected clients for
regulatory  compliance.  These  clients  typically have unique requirements that
cannot  be  addressed  by  one of the larger CEM integration companies.  On CEMS
projects,  Cal-Bay  will  often  act  as  the  prime  contractor  with  several
sub-contractors  who  will  be  responsible for design, manufacture, test and/or
installation  and  certification to meet the regulatory requirements.  A typical
CEM  system  will  include sample probe, heated sample line, sample conditioning
system  to  remove  moisture  and  particulates,  sample  flow  controller  and
distribution  manifold,  analyzer(s)  for  the  gas  species  to  be measured, a
micro-processor based system controller, data-logger and/or data acquisition and
reporting  system,  and  calibration  gases.  Services  may include installation
supervision,  start-up and training, certification to meet regulatory standards,
maintenance  contracts  and  regulatory  permitting  assistance.

The  market for CEMS is entirely driven by local, state and national regulations
promulgated  by  regulatory  agencies,  including  the  South  Coast Air Quality
Management  District,  California Air Resources Board and the U.S. Environmental
Protection  Agency.

The  Company  is  interested  in  expanding  its core business into new areas of
business  opportunity.  Some potential methods of accomplishing this goal are to
expand  into  new  markets  with  existing products, develop and manufacture new
products  for  sale  into  our  existing  markets  and  search  for  acquisition
candidates.

NEW  PRODUCTS  DIVISION

Cal-Bay  is  currently  exploring  several opportunities to develop new products
and/or  technologies,  as  follows:

SPECTRA  UNLIMITED  -  PRODUCT  ACQUISITION/DEVELOPMENT
-------------------------------------------------------

Cal-Bay has reached tentative agreement and signed a letter of intent to acquire
the  technology  rights  to  several  products developed by Spectra Unlimited, a
recently  dissolved  company.  The  rights  to  these  products are owned by the
former partners in Spectra Unlimited. We believe that a final purchase agreement
will  be  negotiated  in  early  2003.

The  Spectra  products  include  the  following:

     -    Infrared  Spectrometer  - This is a highly sensitive NDIR spectrometer
          designed  for  gas  measurements  in  environmental or process control
          applications.  It  uses  dual  measurement  channels  and  an
          energy-balancing  circuit  that  allows  the  use  of the same optical
          filters  for  sample  and  reference  wavelengths.


                                        5
<PAGE>

     -    Streaming  Current  Analyzer  -  this  analyzer  uses  the  proven
          thermoconductivity  principle of analysis and is unique in that it can
          discriminate  a single component of interest from a complex mixture of
          different  components.  Potential applications include: measurement of
          solids  in a binary solution, selective measurement of a single gas in
          a  complex  mixture  of  gases  for purity or quality control, various
          solvent ratios for process control, product quality measurements, etc.

     -    Calorimeter  -  this  analyzer  is used to determine the energy or Btu
          value  of  gas  fuel  supplies.

     -    Catalytic  Scrubbers - A series of proprietary non-depleting catalytic
          scrubbers  that  can  turn  most  active  substances  inert to improve
          sampling  and  analysis  in  difficult  applications.

It  is currently unknown what the market potential of these products are, or the
amount  of  additional  research  and  product development that will be required
before  taking  these  products  to  market.  If  the  R&D  of these products is
successful  it  is anticipated that these products will be manufactured and sold
either  by  a  new  subsidiary  company  to be established or by a company to be
acquired  by  Cal-Bay  that  already  has  a  manufacturing capability and sales
organization.

PATTERN  RECOGNITION  TECHNOLOGY  -  PRODUCT  DEVELOPMENT

During  the  past  several  years  Cal-Bay  has  evaluated  several new types of
analytical products using "pattern recognition technology".  Pattern recognition
is  the  art  of  separating  and  identifying  complex  chemical  or electronic
signatures  from  even  more  complex  backgrounds.

Initially, Cal-Bay worked with an inventor who had developed a prototype pattern
recognition  device  using  neural net processing.  Based upon limited marketing
research, this new device had tremendous potential for use in a number of areas,
but  the  inventor  was  unable  or unwilling to perform the product development
required  to  produce  a commercially viable new product.  Cal-Bay was unable to
finalize  a  business  relationship  with the inventor, and as a result we began
evaluating  other  products  capable  of  performing  similar  measurements.

One  of  these other products and/or technologies which was evaluated by Cal-Bay
was  a new type of chemical sensor developed by a major university.  Cal-Bay was
approached  by the technology transfer agent for this university to consider the
possible  further  development  and  commercialization  of  this  new  sensor
technology.  After  reviewing  the  technology,  and  performing  initial market
research  studies and preparing cost estimates for the commercialization of this
product,  Cal-Bay  determined that the development costs and time to market were
not  within our preferred guidelines and therefore we decided not to pursue this
opportunity.

Cal-Bay  is  currently in discussions with another company that has developed an
"electronic  nose"  analytical  device  using fast gas chromatography with a new
proprietary  detector.  It  is  possible  that Cal-Bay may become an investor in
this  company,  and/or  may  become  a  sales  agent  for  the  product.


                                        6
<PAGE>

ANALYTICAL  SENSORS  -  PRODUCT  DEVELOPMENT
--------------------------------------------

Cal-Bay  has  had preliminary discussions with the former owner of an analytical
sensor  company  regarding  the  potential development of a new line of sensors.
Based  upon  these  initial  discussions,  we believe that a new line of sensors
could  be  developed  for  use  in a wide variety of analytical instrumentation.
Initial  development  would  be limited to specific sensors and markets with the
greatest  return  on  investment.  It  is  estimated  that the initial resources
required  for product research and development would be minimal, and that profit
margins  and  return on investment will be excellent.  In return for funding the
product R&D, providing manufacturing facilities and performing most of the sales
and  marketing  functions,  Cal-Bay  will  receive majority ownership of any new
sensors  developed.

FUTURE  PRODUCT  R&D

In  addition  to  the  product  development plans referenced above, Cal-Bay will
continually  be  searching  for  other  new technology ideas that we may develop
internally,  partner  with  or  acquire  in  the  future.

One resource that Cal-Bay will utilize to aid in the search for new technologies
is  the  services  of  "technology  brokers"  that specialize in identifying new
technology  and matching that technology with companies that are looking for new
products to develop.  Cal-Bay has recently used such a service to evaluate a new
technology  patented by the faculty of a public U.S. university that had reached
the  "proof  of  concept"  stage  and needed additional funding and resources to
complete  the  development  into  a  commercially-viable  product.

Each  year  there are many thousands of new patent applications filed, including
many  by  universities  or  by  small,  private  inventors  who  do not have the
resources  or facilities or inclination to complete the development of their new
idea  into  a  commercial  product.  Of  these new patents, many are in areas of
interest  to  Cal-Bay,  including  new  sensor  technology,  new  analytical
methodologies,  and new processes for environmental measurement and remediation.
Cal-Bay  will review new patents in these areas, and will select appropriate new
technologies  to  target  for  possible  acquisition  for  future  development.

FUTURE  POTENTIAL  MERGERS  &  ACQUISITIONS  BY  CAL-BAY  INTERNATIONAL

Cal-Bay  has  identified a number of companies that would be good candidates for
future  mergers  and/or acquisitions.  Each of these companies has been selected
based  upon  such criteria as profitability, existing management team, ownership
desire  for exit strategy, synergy/compatibility with Cal-Bay's goals and plans,
etc.  At  this  time,  Cal-Bay's management is evaluating each of the candidates
currently  identified  and we are actively searching for new candidates in order
to  determine  the  best  growth  strategy  for  the  future.

EMPLOYEES

Cal Bay's officers and directors are employed full time by Cal Bay.  The Company
intends to add an additional outside sales engineer in 2003 in order to increase
business in southern California.  The Company also plans to hire an inside sales
support  person  in  2003.

ITEM  2.  DESCRIPTION  OF  PROPERTY

Cal  Bay  currently leases a combined office/warehouse facility of approximately
2,328 square feet at 1582 Parkway Loop, Suite G, Tustin, CA 92780.  The lease is
paid  on  a monthly basis of $2,630.64 per month and expires on August 31, 2004.


                                        7
<PAGE>

Our facility is located in a small mixed use, commercial/light industrial office
park  in  Central  Orange  County,  California.  This  facility  consists  of  a
reception  area,  three  individual fully-enclosed offices, a conference room, a
restroom, sales literature storage area, printer/fax/copier area, and a combined
warehouse/system  production/equipment  test  area.  Management  believes  the
currently leased space is adequate to meet Cal Bay's needs for at least the term
of  the  lease.

ITEM  3.  LEGAL  PROCEEDINGS.

No legal proceedings are threatened or pending against the Company or any of its
officers  or directors.  Further, none of the Company's officers or directors or
affiliates  of  the Company are parties against the Company or have any material
interests  in  actions  that  are  adverse  to  the  Company's  interests.

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

No  matters  were submitted during the fourth quarter of the fiscal year covered
by  this  report  to  a  vote  of  security  holders.


                                     PART II

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

Our  common  stock  is  listed  on the Over the Counter Bulletin Board under the
symbol  "CBYI".  At  December  31,  2002 the Company had 67 shareholders holding
23,710,000  shares of common stock.  Of the issued and outstanding common stock,
7,687,800  are  free  trading, the balance of 16,022,200 are restricted stock as
that term is used in Rule 144 and may be sold pursuant to Rule 144.  The Company
has  not  agreed to register any shares for resale by selling stockholders.  The
following  table  shows  the  highs  and  lows of the closing bid and ask on the
Company's  stock since January 2, 2001 through the year ended December 31, 2002.

<TABLE>
<CAPTION>

                              CLOSING BID       CLOSING ASK

2001                          HIGH    LOW       HIGH    LOW
<S>                          <C>     <C>      <C>    <C>

Jan. 2 thru Mar. 13 . . . .    .61   .125      None     None
Mar. 14 thru Mar. 30
(After 3 for 1 split) . . .   1.30    .43       2.0      .65
June 1 thru June 30 . . . .   1.20    .30      1.60      .59
July 2 thru September 28. .   1.68   1.01      1.73     1.15
October 1 thru December 31.   1.21    .25      1.26      .50

2002

Jan 2 thru March 28 . . . .    .85    .35       .90      .40
April 1 thru June 28. . . .    .46   .215       .51      .23
July 1 thru September 30. .    .38    .20       .42      .23
October 1 thru December 31.   .275    .16       .30      .17
</TABLE>

The  above  quotations,  as  provided  by  the  National  Quotation Bureau, LLC,
represent  prices  between dealers and do not include retail markup, markdown or
commission.  In addition, these quotations do not represent actual transactions.



                                        8
<PAGE>

The  Company  has  not paid, nor declared, any dividends since its inception and
does  not  intend  to  declare any such dividends in the foreseeable future. The
Company's  ability  to pay dividends is subject to limitations imposed by Nevada
law.  Under  Nevada  law,  dividends  may  be  paid  to  the  extent  that  the
corporation's  assets  exceed its liabilities and it is able to pay its debts as
they  become  due  in  the  usual  course  of  business.

RECENT  SALES  OF  UNREGISTERED  SECURITIES.

In  March  2001, the Company exchanged 17,112,000 shares of common stock for all
of  the  issued  and  outstanding  shares  of  Cal-Bay  Controls, Inc., a Nevada
corporation.  The  transaction  was  a  tax-free  reorganization  under  Section
368(a)(1)(B) of the Internal Revenue Code of 1986 and were exchanged pursuant to
Section 4(2) of the Securities Act of 1933.  The transaction did not involve any
public  offering  and  no  commissions  were  paid  on  the  transaction.

On  November  15,  2002  the  Company issued 80,000 common shares to 1st Capital
Investments,  Inc.  for  investment  relations  services valued at $12,000.  The
shares  were issued in reliance on the exemption provided by Section 4(2) of the
Securities  Act  of  1933.  No  underwriters  were  involved in the issuance, no
public  solicitations  were  made  by  the Company and no commissions were paid.

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

RESULTS  OF  OPERATIONS FOR THE PERIODS ENDED DECEMBER 31, 2002 AND DECEMBER 31,
2001

For  the period ended December 31, 2002, the Company generated total revenues of
$344,450  with  cost  of  sales  totaling  $101,485 resulting in gross profit of
$242,965.  The Company's expenses were $954,331, mainly for professional fees of
$785,595  which  were  paid  in shares of common stock.  Other expenses, such as
telephone  and  utilities  charges, property rent, and equipment rentals totaled
$168,736.  As  a result, the Company realized a net loss after taxes of $713,766
during  the  year  ended  December  31,  2002.

For  the  period  ended  December  31, 2001, the Company generated revenues from
sales  and  commission  income  totaling  $396,150.  Costs of sales were $69,195
resulting  in  gross  profits  of $326,955. The Company had expenses of $349,993
resulting  in  a  net loss after taxes of $23,838.  Expenses were due chiefly to
salaries and wages, property rent, payroll taxes, and professional fees incurred
during  the  reverse  acquisition  of  Cal  Bay  Controls.

LIQUIDITY  AND  CAPITAL  RESOURCES

For the period ended December 31, 2002, the Company had total assets of $96,821.
Total  current  assets  were  $75,692  consisting of $36,973 in cash, $17,219 in
prepaid expenses and $21,500 due in a note receivable.  Other assets at December
31,  2002  consisted  of  $18,359  in  office  equipment,  and a $2,770 security
deposit.  Liabilities at December 31, 2002 were $18,320 consisting of $15,288 in
accrued  expenses,  $460  sales tax payable and the current portion of a capital
lease  payable  of  $2,572.

For  the period ended December 31, 2001, the Company had total assets of $33,193
consisting  of  $25,602 in cash, office equipment valued at $5,100, and a $2,491
security  deposit.  The  Company had total liabilities during the same period of
$39,254  consisting of $33,431 in accounts payable, $5,023 in sales tax payable,
and  $800  in  income  tax  payable.

A  majority  of  the  Company's  commission income is derived from two unrelated
manufacturing  companies  that  it represents.  The commission income from these


                                        9
<PAGE>

two  significant customers was $114,431 and $44,191, respectively for the period
ended  December  31, 2002 and $252,033 and $28,765, respectively, for the period
ended  December  31,  2001.

On  August  29,  2002,  the  Company  issued 2,240,000 shares of common stock as
payment  for  consulting  services  valued  at $739,200 as reported on Form S-8.

Subsequent  to  the  date  of  this  report,  the  Company  issued an additional
1,275,000  shares  as  reported on Form S-8 on January 9, 2003.  The shares were
issued  as  compensation  for  consulting  services  valued  at  $216,750.

The  Company  has  no material commitments for capital expenditures and believes
that  it has sufficient cash on hand to satisfy its administrative needs for the
next  twelve  months.

ITEM  7.  FINANCIAL  STATEMENTS.

The  financial  statements  of  the  Company  appear  at  the end of this report
beginning  with  the  Index  to  Financial  Statements  on  page  17.

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

None.


                                    PART III

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

The  following  table  sets  forth  as  of December 31, 2002, the name, age, and
position  of each executive officer and director and the term of office for each
director  of  the  Company.

<TABLE>
<CAPTION>

NAME                AGE                 POSITION                   SINCE
------------------  ---  --------------------------------------  ----------
<S>                 <C>  <C>                                     <C>

Robert J. Thompson   54  President, Secretary and Director       March 2001

Charles A. Prebay.   47  Vice President, Treasurer and Director  March 2001
</TABLE>

All  officers  hold  their positions at the will of the Board of Directors.  All
directors  hold  their positions for one year or until their successors are duly
elected  and  qualified.

The  following  is  a  brief  biography  of  the  officers  and  directors.

ROBERT  J. THOMPSON.  Mr. Thompson holds a B.S. degree in Mechanical Engineering
from  Ohio  State  University.  He  has  been  employed  in  the  analytical
instrumentation  industry  for over 20 years.  Since 1990, Mr. Thompson has been
self  employed as a representative/distributor in the analytical instrumentation
industry.  Prior  to  1990,  Mr.  Thompson  was  employed  by or associated with
Hartshaw Chemical as Chief Engineer, Teledyne Analytical Instruments as Regional
Sales  Manager,  and  Advanced  Micro  Instruments  as  a  Partner.

CHARLES  A.  PREBAY.  Mr. Prebay holds a B.S. degree in Biological Sciences from
Michigan  State  University  and  has  taken  graduate  courses in marketing and


                                       10
<PAGE>

management  from  the  University  of  Michigan  and  the  University  of
California/Irvine.  He  has  been  employed  in  the  analytical instrumentation
industry  for  over  20  years.  Mr.  Prebay  was employed by or associated with
Teledyne  Analytical  Instruments as a Sales Engineer from 1979 to 1980.  He was
at  Research-Cottrell/KVB  as  a Product Manager and Marketing Manager from 1980
until  1992 and served as Regional Sales Manager at Anarad from 1992 until 1995.
From  1995  until  2000,  Mr.  Prebay  worked  at Baseline Industries as Western
Regional  Sale  Manager.  Mr.  Prebay  has worked at Cal Bay Controls since June
2000.

ITEM  10.  EXECUTIVE  COMPENSATION

The  Company has no formal arrangements for the remuneration of its officers and
directors,  except that they will receive reimbursement for actual, demonstrable
out-of-pocket expenses, including travel expenses, if any, made on the Company's
behalf  in  the  investigation  of  business  opportunities.

<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                              Other Annual
Name and Principal Position      Year  Salary ($)  Bonus ($)  Compensation
<S>                              <C>   <C>         <C>        <C>
Robert J. Thompson. . . . . . .  2002      35,000        -0-           -0-
  President, Secretary and. . .  2001     126,039        -0-           -0-
  Director. . . . . . . . . . .  2000         -0-        -0-           -0-


Charles A. Prebay . . . . . . .  2002      32,000        -0-           -0-
  Vice President, Treasurer and  2001      62,937        -0-           -0-
  Director. . . . . . . . . . .  2000         -0-        -0-           -0-


Arthur E. Vargas. . . . . . . .  2002         -0-        -0-           -0-
  Former President. . . . . . .  2001         -0-        -0-      3,538 (1)
                                 2000         -0-        -0-           -0-
</TABLE>

(1)  The  Company gave Mr. Vargas, president of the Company from inception until
     March  8,  2001,  all  right,  title  and  interest  of  inventory  and the
     production  and distribution of compact discs featuring Nevada lounge acts,
     valued  at  $3,538  as  compensation  for  past  services  to  the Company.

EMPLOYMENT  CONTRACTS,  TERMINATION  OF  EMPLOYMENT  AND  CHANGE IN CONTROL

There  are  no  compensatory  plans  or  arrangements,  including payments to be
received  from  the  Company,  with respect to any person which would in any way
result  in  payments to any person because of employment with the Company or its
subsidiaries,  or  any  change  in  control  of  the Company, or a change in the
person's  responsibilities  following  a  change  in  control  of  the  Company.

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT.


                                       11
<PAGE>

The  following  table sets forth as of December 31, 2002 the name and the number
of  shares of the Registrant's Common Stock, no par value, held of record or was
known  by  the  Registrant  to  own  beneficially more than 5% of the 23,710,000
issued and outstanding shares of the Registrant's Common Stock, and the name and
shareholdings  of each officer and director individually and of all officers and
directors  as  a  group.

<TABLE>
<CAPTION>

                   Name and Address of       Amount and Nature of  Percentage
                                                                   -----------
Title of Class     Beneficial Owner (1)      Beneficial Ownership   of Class
--------------  ---------------------------  --------------------  -----------
<S>             <C>                          <C>                   <C>

Common . . . .  Robert J. Thompson (2)                 11,306,653        47.7%
                1582 Parkway Loop, Suite G
                Tustin, CA  92780

Common . . . .  Charles A. Prebay (2)                   1,608,400         6.8%
                1582 Parkway Loop, Suite G
                Tustin, CA  92780

Common . . . .  Cede & Co.                              7,868,650        33.2%
                PO Box 222
                Bowling Green Station
                New York, NY 10274

Common . . . .  Officers, Directors and                12,915,053       54.47%
                Nominees as a Group:
                                  2 persons
</TABLE>

(1)  For  purposes  of  this  table,  a beneficial owner is one who, directly or
     indirectly,  has  or shares with others (a) the power to vote or direct the
     voting  of the Voting Stock (b) investment power with respect to the Voting
     Stock  which includes the power to dispose or direct the disposition of the
     Voting  Stock.

(2)  Officer  and/or  director  of  the  Company.

There  are  no  contracts or other arrangements that could result in a change of
control  of  the  Company.

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

Between January 15, 2002 and May 31, 2002, the Company made a series of loans to
Mr.  Robert  Thompson,  the  Company's  Chief Executive Officer.  The loans were
issued  as  follows:

<TABLE>
<CAPTION>

DATE:                       AMOUNT:
<S>                         <C>
January 15, 2002 . . . . .  $  6,500
February 20, 2002. . . . .  $  6,000
April 15, 2002 . . . . . .  $  2,000
May 1, 2002. . . . . . . .  $  2,000
May 31, 2002 . . . . . . .  $  5,000

Total at December 31, 2002  $ 21,500
</TABLE>


                                       12
<PAGE>

There  are  no  formal  written  loan agreements on the above-listed notes.  The
notes  bear  no  interest and are payable to the Company on demand.  None of the
notes  had  been  repaid  as  of  December  31,  2002.

On  January  15, 2002 the Company loaned $6,000 to Charles Prebay, the Company's
Chief Financial Officer.  There was no written loan agreement.  The loan carried
no  interest  and  was  payable  on  demand.
Mr.  Prebay  repaid  the  loan  on  September  17,  2002.

The  Company  is  not  expected  to  have  significant  dealing with affiliates.
However,  if  there are such dealings, the parties will attempt to deal on terms
competitive  in  the  market  and on the same terms that either party would deal
with  a  third  person.

ITEM  13.  EXHIBITS  AND  REPORTS  ON  FORM  8-K.

<TABLE>
<CAPTION>

EXHIBIT NUMBER  TITLE                                                 LOCATION
<C>             <S>                                                   <C>

          99.1  Certification of Chief Executive Officer pursuant to  Attached
                 Section 906 of the Sarbanes-Oxley Act of 2002

          99.2  Certification of Chief Financial Officer pursuant to  Attached
                 Section 906 of the Sarbanes-Oxley Act of 2002

          99.3  Cal-Bay International Corporate Code of Ethics . . .  Attached
</TABLE>

REPORTS  ON  FORM  8-K

No  reports  on  Form 8-K were filed during the quarter ended December 31, 2002.

ITEM  14.  CONTROLS  AND  PROCEDURES

Within  the  90-day  period  prior  to the date of this report, we evaluated the
effectiveness  and  operation of our disclosure controls and procedures pursuant
to  Rule  13a-14  of  the  Securities  Exchange  Act  of  1934.  Based  on  that
evaluation,  our  Chief  Executive  Officer  and  Chief  Financial  Officer have
concluded that our disclosure controls and procedures are effective.  There have
been  no  significant  changes  in internal controls or other factors that could
significantly affect internal controls subsequent to the date we carried out our
evaluation.

To  demonstrate  our commitment to maintaining effective disclosure controls and
procedures,  we have recently adopted a Code of Ethics and Business Conduct.  In
pertinent  part,  the Code authorizes the establishment of an audit committee to
oversee the effectiveness of our disclosure controls and procedures.   A copy of
the  Code  is  attached  as  an  exhibit  to  this  report.


                                       13
<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.

                                              CAL  BAY  INTERNATIONAL,  INC.


Date:     March  21,  2003                    By:  /s/Robert  J.  Thompson
                                              ----------------------------
                                              Robert  J.  Thompson
                                              Chief  Executive  Officer



Date:     March  21,  2003                    By:  /s/Charles  A.  Prebay
                                              ----------------------------
                                              Charles  A.  Prebay
                                              Chief  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.



Date:      March  21,  2003                    By:  /s/Robert  J.  Thompson
                                               ----------------------------
                                               Robert  J.  Thompson
                                               Director



Date:     March  21,  2003                    By:  /s/Charles  A.  Prebay
                                              ---------------------------
                                              Charles  A.  Prebay
                                              Director


                                       14
<PAGE>

          CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I,  Robert  J.  Thompson,  the Chief Executive Officer of Cal Bay International,
Inc.  (the  "Company"),  certify  that:

1.  I  have  reviewed  this  annual  report  on  Form  10-KSB  of  the  Company;

2.  Based  on  my  knowledge,  this  annual  report  does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

     a) designed such disclosure controls and procedures to ensure that material
     information  relating  to  the  registrant,  including  its  consolidated
     subsidiaries,  is  made  known  to  us  by  others  within  those entities,
     particularly  during  the  period  in  which  this  annual  report is being
     prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
     procedures  as  of  a  date within 90 days prior to the filing date of this
     annual  report  (the  "Evaluation  Date");  and

     c)  presented in this annual report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation  Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a)  all  significant  deficiencies  in  the design or operation of internal
     controls  which  could adversely affect the registrant's ability to record,
     process,  summarize  and  report financial data and have identified for the
     registrant's  auditors  any  material  weaknesses in internal controls; and

     b)  any  fraud,  whether or not material, that involves management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls;  and

6.  The  registrant's  other  certifying  officers  and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

March  21,  2003                   /s/Robert  J.  Thompson
                                   --------------------------
                                   Robert  J.  Thompson
                                   Chief  Executive  Officer


                                       15
<PAGE>

          CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles A. Prebay, the Chief Financial Officer of Cal Bay International, Inc.
(the  "Company"),  certify  that:

1.  I  have  reviewed  this  annual  report  on  Form  10-KSB  of  the  Company;

2.  Based  on  my  knowledge,  this  annual  report  does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

     a) designed such disclosure controls and procedures to ensure that material
     information  relating  to  the  registrant,  including  its  consolidated
     subsidiaries,  is  made  known  to  us  by  others  within  those entities,
     particularly  during  the  period  in  which  this  annual  report is being
     prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
     procedures  as  of  a  date within 90 days prior to the filing date of this
     annual  report  (the  "Evaluation  Date");  and

     c)  presented in this annual report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation  Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a)  all  significant  deficiencies  in  the design or operation of internal
     controls  which  could adversely affect the registrant's ability to record,
     process,  summarize  and  report financial data and have identified for the
     registrant's  auditors  any  material  weaknesses in internal controls; and

     b)  any  fraud,  whether or not material, that involves management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls;  and

6.  The  registrant's  other  certifying  officers  and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.


March  21,  2003                   /s/Charles  A.  Prebay
                                   -------------------------
                                   Charles  A.  Prebay
                                   Chief  Financial  Officer


                                       16
<PAGE>

<TABLE>
<CAPTION>

                          CAL-BAY INTERNATIONAL, INC.
                                 And Subsidiary

                        CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001



                                      INDEX
                                      -----

                                                                      Page
                                                                      ----
<S>                                                                   <C>
Independent Auditor's Report . . . . . . . . . . . . . . . . . . . .    18

Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . .    19

Consolidated Statements of Operations. . . . . . . . . . . . . . . .    20

Consolidated Statements of Changes in Stockholders' Equity (Deficit)    21

Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . .    22

Notes to Consolidated Financial Statements . . . . . . . . . . . . .    23
</TABLE>


                                       17
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT



Board  of  Directors
CAL-BAY  INTERNATIONAL,  INC.


I  have  audited  the  accompanying  consolidated  balance  sheets  of  Cal-Bay
International,  Inc.  (A Nevada Corporation), and subsidiary, as of December 31,
2002 and 2001, and the related consolidated statements of operations, changes in
stockholders'  equity and cash flows for the periods then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is  to  express  an  opinion  on  these  financial statements based on my audit.

I  conducted  my audit in accordance with generally accepted auditing standards.
Those  standards  require that I plan and perform the audit to obtain reasonable
assurance  about  whether  the  financial  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts and disclosures in the financial statements. An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
I  believe  that  my  audit  provides  a  reasonable  basis  for  my  opinion.

In  my  opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  Cal-Bay
International,  Inc.  and  subsidiary, as of December 31, 2002 and 2001, and the
results  of  its  operations, changes in stockholders' equity and cash flows for
the  periods  then  ended,  in  conformity  with  generally  accepted accounting
principles.



                                  /s/  ARGY & COMPANY
                                  --------------------------


February  15,  2003
Fountain  Valley,  California


                                       18
<PAGE>

<TABLE>
<CAPTION>


                           CAL-BAY INTERNATIONAL, INC.
                                 And Subsidiary
                           CONSOLIDATED BALANCE SHEETS
                                  December 31,

                                     ASSETS


                                                              2002       2001
                                                           ----------  ---------
<S>                                                        <C>         <C>
Current Assets:

  Cash (Note 1c). . . . . . . . . . . . . . . . . . . . .  $  36,973   $ 25,602
  Prepaid Expenses. . . . . . . . . . . . . . . . . . . .     17,219        -0-
  Related Party Receivables (Note 4). . . . . . . . . . .     21,500        -0-
                                                           ----------  ---------

  TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . .     75,692     25,602

Office Furniture and Equipment, at cost,
  net of accumulated depreciation of
  $6,209 and $4,079 respectively (Notes 1h & 2) . . . . .     18,359      5,100

Deposit (Note 1g) . . . . . . . . . . . . . . . . . . . .      2,770      2,491
                                                           ----------  ---------

  TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . .  $  96,821   $ 33,193
                                                           ==========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

  Accounts Payable & Accrued Expenses (Note 1i) . . . . .  $  15,288   $ 33,431
  Sales Tax Payable . . . . . . . . . . . . . . . . . . .        460      5,023
  Income Taxes Payable (Notes 1j & 6) . . . . . . . . . .        -0-        800
  Current Portion of Capital Lease Obligation (Note 9). .      2,572        -0-
                                                           ----------  ---------

  TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . .     18,320     39,254

Capital Lease Obligation, net of Current Portion (Note 9)     11,928        -0-

Commitments and Contingencies (Note 8). . . . . . . . . .      - - -      - - -

Stockholders' Equity:

  Common Stock, $.001 par value; 75,000,000 shares
    authorized; shares issued and outstanding
    23,710,000 and 21,390,000 (Notes 1b, 1k, 3 & 5) . . .     23,710   $ 21,390
  Additional Paid in Capital - (Discount on Stock). . . .    780,467     (3,613)
  Retained Deficit. . . . . . . . . . . . . . . . . . . .   (737,604)   (23,838)
                                                           ----------  ---------

    TOTAL STOCKHOLDERS' EQUITY (DEFICIT). . . . . . . . .     66,573     (6,061)
                                                           ----------  ---------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . .  $  96,821   $ 33,193
                                                           ==========  =========
</TABLE>

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


                                       19
<PAGE>

<TABLE>
<CAPTION>


                           CAL-BAY INTERNATIONAL, INC.
                                 And Subsidiary
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31,


                                                          2002          2001
                                                      ------------  ------------
<S>                                                   <C>           <C>

REVENUES:

  Sales. . . . . . . . . . . . . . . . . . . . . . .  $   110,052   $    77,111
  Commission Income (Note 1e). . . . . . . . . . . .      228,498       319,039
  Other Income . . . . . . . . . . . . . . . . . . .        5,900           -0-
                                                      ------------  ------------

  TOTAL REVENUES . . . . . . . . . . . . . . . . . .      344,450       396,150

COST OF SALES:

  Purchases. . . . . . . . . . . . . . . . . . . . .      101,485        69,195
                                                      ------------  ------------

  GROSS PROFIT . . . . . . . . . . . . . . . . . . .      242,965       326,955

EXPENSES:

  Salaries and Wages . . . . . . . . . . . . . . . .       67,000       188,976
  Auto Expense . . . . . . . . . . . . . . . . . . .       14,573        14,270
  Depreciation Expense (Notes 1h & 2). . . . . . . .        2,130         1,262
  Equipment Rentals. . . . . . . . . . . . . . . . .        3,989         4,061
  Insurance. . . . . . . . . . . . . . . . . . . . .       12,480         7,763
  Telephones & Utilities . . . . . . . . . . . . . .        5,482         5,428
  Property Rent (Note 8) . . . . . . . . . . . . . .       33,212        23,979
  Office Expenses & Miscellaneous. . . . . . . . . .        5,943         4,606
  Organizational Costs (Note 1h) . . . . . . . . . .          -0-         1,554
  Outside Services . . . . . . . . . . . . . . . . .       12,649        12,409
  Payroll Taxes. . . . . . . . . . . . . . . . . . .        5,728        19,906
  Professional Fees. . . . . . . . . . . . . . . . .      785,595        59,860
  Travel and Entertainment . . . . . . . . . . . . .        5,550         5,919
                                                      ------------  ------------

  TOTAL EXPENDITURES . . . . . . . . . . . . . . . .      954,331       349,993
                                                      ------------  ------------

  NET LOSS BEFORE TAXES. . . . . . . . . . . . . . .     (711,366)      (23,038)

  TAXES ON INCOME (Note 1j & 6). . . . . . . . . . .        2,400           800
                                                      ------------  ------------

  NET LOSS AFTER TAXES . . . . . . . . . . . . . . .  $  (713,766)  $   (23,838)
                                                      ============  ============

Basic and Fully Diluted Earnings Per Share (Note 1l)  $      (.03)  $       .00
                                                      ============  ============

Weighted Average Shares Outstanding (Note 1l). . . .   22,162,205    21,198,038
                                                      ============  ============
</TABLE>

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


                                       20
<PAGE>

<TABLE>
<CAPTION>


                                     CAL-BAY INTERNATIONAL, INC.
                                         And Subsidiary
                     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            For The Years Ended December 31, 2002 And 2001


                                                                  Additional
                                                                  Paid-in
                                            Common  Stock          Capital                   Total
                                        Number  of  ($0.001 Par)  (Discount    Retained    Stockholders'
                                          Shares      $Amount     on Stock)    Deficit      Equity
                                        ----------  ------------  ----------  ----------  ----------
<S>                                     <C>         <C>           <C>         <C>         <C>

Balance at inception
  (February 22, 2001). . . . . . . . .  17,112,000  $17,112       $  (7,738)  $     -0-   $   9,374

  Recapitalization for Reverse
    Acquisition on March 8, 2001         4,278,000    4,278           4,125         ---       8,403

  Net Loss December 31, 2001                   ---      ---             ---     (23,838)    (23,838)
                                        ----------  -------       ----------  ----------  ----------

Balance at December 31, 2001 . . . . .  21,390,000   21,390          (3,613)    (23,838)     (6,061)

Issuance of Common Stock for Services    2,320,000    2,320         784,080         ---     786,400

  Net Loss December 31, 2002                   ---      ---             ---    (713,766)   (713,766)
                                        ----------  -------       ----------  ----------  ----------


Balance at December 31, 2002 . . . . .  23,710,000  $23,710       $ 780,467   $(737,604)  $  66,573
                                        ==========  =======       ==========  ==========  ==========
</TABLE>

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


                                       21
<PAGE>

<TABLE>
<CAPTION>

                             CAL-BAY  INTERNATIONAL,  INC.
                                    And Subsidiary
                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                           For The Years Ended December 31,


                                                                    2002       2001
<S>                                                              <C>         <C>

Cash Flows From Operating Activities:
  Loss from Operations. . . . . . . . . . . . . . . . . . . . .  $(713,766)  $(23,838)
  Adjustments to reconcile net income to net cash provided
    by operating activities:

    Depreciation (Note 1h & 2). . . . . . . . . . . . . . . . .      2,130      1,262
    Common stock issued for services. . . . . . . . . . . . . .    786,400        -0-
    (Increase) Decrease in Prepaid Expenses . . . . . . . . . .    (17,497)     2,275
    (Decrease) Increase in Accounts Payable & Accrued Expenses.    (18,144)    38,335
    (Decrease) Increase in Sales Tax Payable. . . . . . . . . .     (4,563)     5,023
    (Decrease) Increase in Income Taxes Payable . . . . . . . .       (800)       800
                                                                 ----------  ---------

  Total adjustments to net income . . . . . . . . . . . . . . .    747,526     47,695
                                                                 ----------  ---------

  Total Cash Provided by Operating Activities . . . . . . . . .     33,760     23,857

Cash Flows From Investing Activities:
    Purchase of Fixed Asset . . . . . . . . . . . . . . . . . .       (889)    (2,679)
    Loans to Related Party. . . . . . . . . . . . . . . . . . .    (21,500)       -0-
    Reverse acquisition of Cal-Bay International, Inc.
      (net of cash acquired). . . . . . . . . . . . . . . . . .        -0-      3,499
                                                                 ----------  ---------

  Total Cash (Used) Provided by Investing Activities. . . . . .    (22,389)       820
                                                                 ----------  ---------

Net Increase In Cash. . . . . . . . . . . . . . . . . . . . . .     11,371     24,677

Cash, beginning of period . . . . . . . . . . . . . . . . . . .     25,602        925
                                                                 ----------  ---------

Cash, end of period . . . . . . . . . . . . . . . . . . . . . .  $  36,973   $ 25,602
                                                                 ==========  =========

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the year for:
    Interest. . . . . . . . . . . . . . . . . . . . . . . . . .  $     -0-   $    -0-
    Income taxes (Note 1j). . . . . . . . . . . . . . . . . . .      3,200        -0-
                                                                 ----------  ---------

    Total . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   3,200   $    -0-
                                                                 ==========  =========
</TABLE>

     Acquisition  Note:  In  connection  with the reverse acquisition of Cal-Bay
International,  Inc. by Cal-Bay Controls, Inc., the Company acquired assets with
a  fair  value  of  $8,442 (including cash of $4,904) and assumed liabilities of
$39.  See  also  Note  3.

     Supplemental  disclosure  of  non-cash  activities:

     In  August  and  November  of  2002, the Company issued 2,320,000 shares of
common  stock as consideration for certain professional and consulting expenses.

    The accompanying notes are an integral part of the financial statements.


                                       22
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001


(1)  Summary  of  Significant  Accounting  Policies

     (a)  Nature  of  Business

          Cal-Bay  International,  Inc.  and  subsidiary  ("The  Company"),  was
          originally  organized  as Var-Jazz Entertainment, Inc., under the laws
          of  the  State  of  Nevada,  on  December  8,  1998. On March 8, 2001,
          Var-Jazz  Entertainment,  Inc. acquired 100% of the outstanding common
          shares  of  Cal-Bay  Controls, Inc., which has been accounted for as a
          reverse  acquisition.  Subsequent  to  this  acquisition,  Var-Jazz
          Entertainment,  Inc.  changed  its name to Cal-Bay International, Inc.
          The  Company  does not currently have any international operations but
          expects  to  in  the  future.  See  also  Note  3.

          Cal-Bay  Controls,  Inc.  (CBC)  was originally a sole proprietorship,
          being  operated since 1990 under the name Cal-Bay Controls, in Tustin,
          California,  by  its  owner Robert Thompson. CBC, which represents the
          only  operating  entity  of  the  Company,  is  a  manufacturer's
          representative  and  distribution firm, serving California, Nevada and
          Hawaii  in  process,  environmental, safety and laboratory markets. On
          February  22,  2001,  CBC  was  incorporated  under  the  name Cal-Bay
          Controls,  Inc.

          CBC  supplies  analytical  products, services and associated equipment
          through license distribution agreements, and receives compensation for
          its  selling  efforts  in the form of commissions, typically 10-20% of
          the  net  sales  price,  on all sales of products within the specified
          sales  territory.

     (b)  Capitalization

          Var-Jazz  Entertainment,  Inc.  was initially capitalized in December,
          1998  by  the  issuance  of  1,500,000  shares of its common stock, at
          $0.004  per  share,  totaling  $6,000.  In  June,  1999  the  Company
          circulated  a self written confidential offering memorandum, resulting
          in  the issuance of an additional 2,778,000 common shares, for a total
          of  $46,300,  less  offering  costs  of  $8,415.

          On  March  8,  2001,  Cal-Bay  International,  Inc. (formerly Var-Jazz
          Entertainment, Inc.) acquired all of the issued and outstanding common
          stock  of  CBC  in exchange for 17,112,000 shares of its common stock.
          The  shares  issued  in  the acquisition resulted in the owners of CBC
          having  operating  control  of Cal-Bay International, Inc. immediately
          following  the  acquisition.  Therefore,  for  financial  reporting
          purposes,  CBC  is deemed to have acquired Cal-Bay International, Inc.
          in  a  reverse  acquisition  accompanied  by  a  recapitalization.


                                       23
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (b)  Capitalization  (continued)

          The  surviving  entity  reflects the assets and liabilities of Cal-Bay
          International,  Inc.  and  CBC at their historical book values and the
          historical  operations  of  the  Company  are those of CBC. The issued
          common  stock  is that of Cal-Bay International, Inc. and the retained
          earnings  is  that  of  CBC.

          Immediately  subsequent to this acquisition, the Company increased its
          authorized  common stock from 25,000,000 to 75,000,000 and initiated a
          forward 3 for 1 stock split, resulting in 21,390,000 total outstanding
          common  shares.  See  also  Note  3.

          On  August  29,  2002,  the  Company  filed  a  Form  S-8 Registration
          Statement  with  the  Securities  and  Exchange  Commission and issued
          2,240,000  common  shares  in  payment for professional and consulting
          services.  On  November  15,  2002,  the  Company issued 80,000 common
          shares  in  payment  for  professional  services.

     (c)  Cash  and  Cash  Equivalents

          For purposes of the consolidated statements of cash flows, the Company
          considers  all highly liquid debt instruments with original maturities
          of  three  months  or  less to be cash equivalents. There were no cash
          equivalents  as  of  December  31,  2002.

     (d)  Principles  of  Consolidation  and  Basis  of  Accounting

          The  accompanying  consolidated  financial  statements  include  the
          accounts  of  Cal-Bay  International,  Inc.  and  of  its wholly owned
          subsidiary,  CBC. All material inter-company transactions and accounts
          have  been  eliminated in consolidation. The Company has no continuing
          operating  activities  other  than  that  of  CBC.

     (e)  Revenue  Recognition

          The  Company recognizes commission income in accordance with SAB 101 -
          Topic  13.A.3.  The  nature  of  each  of  CBC's  manufacturer's
          representation  agreements  requires that the products be shipped from
          the manufacturer to the customer, and that either a significant period
          of  time  elapse  thereafter  or  that  the  manufacturer must receive
          payment  from  the customer before payments are ultimately made to CBC
          for  orders  submitted. The determination as to exactly when the terms
          specified  in  the  sales  arrangements are substantially completed or
          fulfilled  by  the manufacturer and have been accepted by the customer
          and  the  ultimate  collectibility  of  the  commission  can  only  be
          reasonably  assured  when  the payments are ultimately received by the
          Company.  Commission  expense  is  recorded when the commission income
          that  it  is  related  to  is  recognized.


                                       24
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (e)  Revenue  Recognition  (continued)

          The  Company  recognizes sales revenue in the Systems and New Products
          divisions  on  the  date  of  delivery  of  goods  to  the customer in
          accordance  with  SAB  101.

     (f)  Loan  Receivable  From  Related  Parties

          The  balance  of  related  party  loan receivable is with the majority
          stockholder,  is  interest  free and is due and payable as of December
          31,  2002.

     (g)  Deposits

          This  balance  consists  of a security deposit on the Company's leased
          premises.

     (h)  Property  and  Equipment  and  Organizational  Expenditures

          Office  furniture  and  equipment is stated at cost and is depreciated
          using  the  straight  line  method  over their estimated useful lives,
          currently five years. Organizational expenditures for the Company were
          paid  as completed, totaling $1,554, as of December 31, 2001, and have
          been  expensed  as  incurred in accordance with SOP 98-5. Betterment's
          and  improvements are capitalized and depreciated over their estimated
          useful  lives,  while  repairs and maintenance costs are expensed when
          incurred.


     (i)  Accounts  Payable  an  Accrued  Expenses

          The  balance  consists  primarily of unpaid operating expenditures and
          contractual  obligations  due  currently.

     (j)  Income  Taxes

          The  Company  has  applied  the  Financial  Accounting Standards Board
          Statement  109,  Accounting  for  Income  Taxes  (SFAS  109),  to  all
          operations  since  inception,  for  all  periods  disclosed  in  this
          financial  examination,  and  all other disclosures of information for
          periods  prior  to  acquisitions  of  the  operating  subsidiary, CBC.

          SFAS  109  "Accounting for Income Taxes" requires the liability method
          in  accounting  for  income taxes. Deferred tax assets and liabilities
          arise  from  the  difference  between  the  tax  basis  of an asset or
          liability  and  its  reported  amount  on  the  financial  statements.
          Deferred tax amounts are determined by using the tax rates expected to
          be in effect when the taxes will actually be paid or refunds received,
          as  provided  under  currently  enacted  laws.


                                       25
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (j)  Income  Taxes  (continued)

          Valuation allowances are established when necessary to reduce deferred
          tax  assets  to the amount expected to be realized. Income tax expense
          or  benefit  is  the  tax payable or refundable, respectively, for the
          period,  plus  or  minus the change during the period, in deferred tax
          assets  and  liabilities.  The Company, exclusive of the operations of
          its  wholly  owned  subsidiary  CBC,  has experienced operating losses
          during  its  period  of existence. These losses occurred in a business
          activity  unrelated  to  that of CBC and the Company does not have any
          current plans to re-enter that market. Future profitability of current
          and  unrelated business activities cannot be assured, resulting in the
          recordation  of  reserves  for  the  valuation allowance of the entire
          amount  of  the  determined  deferred  tax  assets  (See also Note 6).

     (k)  Transactions  in  Capital  Stock

          All  securities issued by the Company and CBC have not been registered
          under  the  Securities  Act of 1933, as amended. They may not be sold,
          offered for sale, transferred, pledged or hypothecated, in the absence
          of  a  registration statement in effect with respect to the securities
          under  such  act,  or  an  opinion  of  counsel  or  other  evidence
          satisfactory to the Company that such registration is not required, or
          unless  sold  pursuant  to Rule 144 under such act. The Company's free
          trading stock is currently involved in limited trading on the Over the
          Counter  Bulletin  Board  under  the symbol CBYI. The trading price at
          December  31,  2002,  was  $0.16.  See  also  Notes  3  and  5.

     (l)  Earnings  Per  Share

          In  February  1997,  the  Financial  Accounting Standards Board issued
          Statement  of  Financial  Accounting  Standard  No. 128, "Earnings Per
          Share"  (SFAS  128). SFAS 128 specifies the computation, presentation,
          and  disclosure  requirements  of  earnings  per  share and supersedes
          Accounting Principles Board Opinion 15, "Earnings Per Share". SFAS 128
          requires  dual  presentation  of  basic and, where applicable, diluted
          earnings  per  share.  Basic  earnings  per  share, which excludes the
          impact  of  common  stock  equivalents,  replaces primary earnings per
          share.  Diluted  earnings  per share which utilizes the average market
          price  per  share  or  ending market price per share when applying the
          treasury  stock  method  in  determining  common  stock  equivalents,
          replaces  fully  diluted  earnings  per  share.


                                       26
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (l)  Earnings  Per  Share  (continued)

          SFAS  128  is  effective for the Company in all years since inception.
          However,  there  were  no  common  stock equivalents during the any of
          these  periods  and, therefore, there is no effect on the earnings per
          share  presented  for  any  of  these  periods,  due  to the Company's
          adoption  of  SFAS  128.  Basic  earnings per share have been computed
          using  the  weighted  average  number  of  common  shares outstanding.

     (m)  Recently  Issued  Accounting  Pronouncements

          In  June  2001, the Financial Standards Board ("FASB") issued SFAS No.
          141,  "Business  Combinations."  This  statement  addresses  financial
          accounting  and reporting for business combinations and supersedes APB
          Opinion  No. 16, "Business Combinations," and SFAS No. 38, "Accounting
          for  Pre-Acquisition  Contingencies  of  Purchased  Enterprises."  All
          business  combinations  in  the  scope  of  this  statement  are to be
          accounted for using one method, the purchase method. The provisions of
          this statement apply to all business combinations initiated after June
          30,  2001.  Use  of  the pooling-of-interest method for those business
          combinations  is  prohibited.  This  statement  also  applies  to  all
          business  combinations  accounted  for  using  the purchase method for
          which  the  date  of acquisition is July 1, 2001 or later. The Company
          does not expect adoption of SFAS No. 141 to have a material impact, if
          any,  on  its  financial  position  or  results  of  operations.


          In  June  2001,  the ("FASB") issued SFAS No. 142, "Goodwill and Other
          Intangible  Assets." This statement addresses financial accounting and
          reporting  for  acquired  goodwill  and  other  intangible  assets and
          supersedes  APB  Opinion No. 17, "Intangible Assets." It addresses how
          intangible  assets  that  are acquired individually or with a group of
          other assets (but not those acquired in a business combination) should
          be  accounted for in financial statements upon their acquisition. This
          statement  also  addresses  how  goodwill  and other intangible assets
          should  be  accounted for after they have been initially recognized in
          the  financial  statements. It is effective for fiscal years beginning
          after  December  15, 2001. Early application is permitted for entities
          with  fiscal  years  beginning after March 15, 2001, provided that the
          first  interim  financial  statements have not been issued previously.
          This  statement  is  not  applicable  to  the  Company.


                                       27
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (m)  Recently  Issued  Accounting  Pronouncements  -  (continued)

          In  June 2001, the ("FASB") issued SFAS No. 143, "Accounting for Asset
          Retirement  Obligations."  This statement applies to legal obligations
          associated  with  the retirement of long-lived assets that result from
          the acquisition construction, development, and/or the normal operation
          of  long-lived assets, except for certain obligations of lessees. This
          statement  is  not  applicable  to  the  Company.


          In  August 2001, the ("FASB") issued SFAS No. 144, "Accounting for the
          Impairment or Disposal of long-lived Assets." This statement addresses
          financial  accounting  and reporting for the impairment or disposal of
          long-lived  assets.  This statement replaces SFAS No. 121, "Accounting
          for  the  Impairment of Long-Lived Assets and for Long-Lived Assets to
          be  Disposed  of,"  the accounting and reporting provisions of APB No.
          30,  "Reporting  the  Results of Operations - Reporting the Effects of
          Disposal  of  a Segment of a Business, and Extraordinary, Unusual, and
          Infrequent  Occurring  Events and Transactions," for the disposal of a
          segment of a business, and amends Accounting Research Bulletin No. 51,
          "Consolidated  Financial  Statements,"  to  eliminate the exception to
          consolidation  for  a  subsidiary  for  which  control is likely to be
          temporary.  The  Company  does  not expect adoption of SFAS No. 144 to
          have  a  material impact, if any, on its financial position or results
          of  operations.


          In  April  2002, the ("FASB") issued SFAS No. 145, "Rescission of FASB
          Statements  No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
          Technical  Corrections."  SFAS  No.  145  updates,  clarifies,  and
          simplifies existing accounting pronouncements. This statement rescinds
          SFAS No. 4, which required all gains and losses from extinguishment of
          debt to be aggregated and, if material, classified as an extraordinary
          item,  net  of related income tax effect. As a result, the criteria in
          APB  No.  30 will now be used to classify those gains and losses. SFAS
          No. 64 amended SFAS No. 4 and is no longer necessary as SFAS No. 4 has
          been  rescinded.  SFAS  No.  44 has been rescinded, as it is no longer
          necessary.  SFAS  no.  145  amends SFAS No. 13 to require that certain
          lease  modifications  that  have  economic  effects  similar  to
          sale-leaseback  transactions  be  accounted  for in the same manner as
          sale-lease  transactions.  This  statement  also  makes  technical
          corrections  to  existing  pronouncements. While those corrections are
          not  substantive  in  nature,  in  some  instances,  they  may  change
          accounting  practice. The Company does not expect adoption of SFAS No.
          145  to  have  a material impact, if any, on its financial position or
          results  of  operations.


                                       28
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (m)  Recently  Issued  Accounting  Pronouncements  -  (continued)

          In  June 2002, the ("FASB") issued SFAS No. 146, "Accounting for Costs
          Associated with Exit or Disposal Activities." This statement addresses
          financial  accounting  and reporting for costs associated with exit or
          disposal  activities and nullifies Emerging Issues Task Force ("EITF")
          Issue No. 94-3 "Liability Recognition for Certain Employee Termination
          Benefits  and Other Costs to Exit an Activity (including Certain Costs
          Incurred  in  a  Restructuring)."  This  statement  requires  that  a
          liability  for  a cost associated with an exit or disposal activity be
          recognized  when  the  liability is incurred. Under EITF Issue 94-3, a
          liability  for an exit cost, as defined, was recognized at the date of
          an  entity's  commitment  to  an  exit  plan.  The  provisions of this
          statement  are  effective  for  exit  or  disposal activities that are
          initiated after December 31, 2002 with earlier application encouraged.
          The  Company  does  not  expect  adoption  of  SFAS  No. 146 to have a
          material  impact,  if  any,  on  its  financial position or results of
          operations.


          In  December  2002,  the ("FASB") issued SFAS No. 148, "Accounting for
          Stock-Based  Compensation - Transition and Disclosure." This statement
          amends  FASB  Statement  No.  123,  "Accounting  for  Stock-Based
          Compensation"  to  provide  alternative  methods  of  transition for a
          voluntary  change  to  the  fair  value based method of accounting for
          stock-based  employee compensation. In addition, this Statement amends
          the  disclosure  requirements  of  Statement  123 to require prominent
          disclosures  in both annual and interim financial statements about the
          method  of  accounting  for  stock-based employee compensation and the
          effect  of  the  method used on reported results. The Company does not
          expect  adoption of SFAS No. 148 to have a material impact, if any, on
          its  financial  position  or  results  of  operations.


(2)  Office  Furniture  and  Equipment

     A  summary  of  property  and  equipment  is  as  follows:

<TABLE>
<CAPTION>


                                  2002      2001
                                --------  --------
<S>                             <C>       <C>

Office Furniture &
  Computer Equipment . . . . .  $24,568   $ 9,179
Less: Accumulated Depreciation   (6,209)   (4,079)
                                --------  --------
  Net Furniture and Equipment.  $18,359   $ 5,100
                                ========  ========
</TABLE>


                                       29
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001


(3)  Acquisition  of  Cal-Bay  Controls,  Inc.

     As  previously  discussed in Note 1b, Cal-Bay International, Inc. (formerly
     Var-Jazz  Entertainment,  Inc.)  acquired all of the issued and outstanding
     common  stock of CBC in exchange for 17,112,000 shares of its common stock.
     The  transaction  has  been  accounted  for  as  a  reverse acquisition, in
     accordance  with  the  terms of Accounting Principles Board Opinion No. 16,
     paragraph  70  and  SAB  Topic  2A. Since Cal-Bay International, Inc. was a
     non-operating public shell company with minimal assets, the transaction has
     been  treated  as  a  capital transaction in substance, with no goodwill or
     intangible  being  recorded,  and  no pro forma financial information being
     presented.

     The  following  is  a  summary  of  the  financial  position of the Cal-Bay
     International,  Inc.  (CBYI)  and  CBC,  without  the  consolidating  and
     eliminating  adjustments  at:

<TABLE>
<CAPTION>


                                   December  31,  2002
                             -------------------------------

                              CBYI       CBC       Combined
                             -------  ----------  ----------
<S>                          <C>      <C>         <C>
Current assets. . . . . . .  $   -0-  $  75,692   $  75,692
Property and equipment, net      -0-     18,359      18,359
Other assets. . . . . . . .      -0-      2,770       2,770

                             -------  ----------  ----------
     . . . . . . . . . . .   $   -0-  $  96,821   $  96,821
                             =======  ==========  ==========

Current liabilities . . . .  $   -0-  $  18,320   $   18,320
Long term liability . . . .              11,928       11,928
Stockholders' equity. . . .      -0-     66,573       66,573

                             -------  ----------  ----------
     . . . . . . . . . . .   $   -0-  $  96,821   $   96,821
                             =======  ==========  ==========


                                   December  31,  2002
                             -------------------------------

                              CBYI       CBC       Combined
                             -------  ----------  ----------

Current assets. . . . . . .  $   -0-  $  25,602   $  25,602
Property and equipment, net      -0-      5,100       5,100
Other assets. . . . . . . .      -0-      2,491       2,491

                             -------  ----------  ----------
     . . . . . . . . . . .   $    -0-  $  33,193   $  33,193
                             =======  ==========  ==========

Current liabilities . . . .  $   -0-   $  39,254  $   39,254
Stockholders' equity. . . .      -0-     (6,061)     (6,061)

                             -------  ----------  ----------
     . . . . . . . . . . .       -0-  $  33,193   $   33,193
                             =======  ==========  ==========
</TABLE>


                                       30
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001

(4)  Related  Party  Transactions  &  Significant  Customers/Suppliers


     A  majority  of  CBC's  commission  income  is  derived  from two unrelated
     manufacturing  companies  that  it  represents.  The commission income from
     these two significant customers was $44,191 and $114,431, respectively, for
     the  period  ended  December  31,  2002  (see  also  Note  7).

     The Company has advanced the majority stockholder a total of $21,500, which
     is  included  in  the  accompanying  financial  statements as related party
     receivable.  The  advance  is  interest  free  and is due and payable as of
     December  31,  2002.


(5)  Certain  Beneficial  Owners  and  Management

     The following is a list of the officers and directors of the Company, along
     with  all  other shareholders owning over 1 million shares of the Company's
     shares  as  of:

<TABLE>
<CAPTION>

                                               December  31,  2002
                                         -------------------------------

Shareholder/Position/Title                 Shares Held       Ownership
---------------------------------------  -----------------  -------------
<S>                                      <C>                <C>

  Robert Thompson - President & CEO          11,306,653          47.7%
  Charles Prebay- Vice Presient & CFO         1,608,400            6.8
  Chris Walker                                1,059,000            4.5
  Cede  &  Co. - Investor                     7,868,650           33.2
  All  Other  Investors                       1,867,297            7.8
                                         -----------------  -------------
Total shares issued & outstanding            23,710,000         100.0%
                                         =================  =============


                                               December  31,  2001
                                         -------------------------------

Shareholder/Position/Title                 Shares Held       Ownership
---------------------------------------  -----------------  -------------

  Robert Thompson - President & CEO          12,026,953          56.2%
  Charles Prebay- Vice President & CFO        2,000,000            9.4
  Chris Walker                                1,059,000            5.0
  Cede  &  Co. - Investor                     1,188,000            5.5
  All  Other  Investors                       5,116,047           23.9
                                         -----------------  -------------
Total shares issued & outstanding            21,390,000         100.0%
                                         =================  =============
</TABLE>

Robert  Thompson, President and CEO was compensated $35,000 during the year 2002
and  $126,039  during  the  year  2001.


                                       31
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001


(6)  Income  Taxes

     As  of  December  31,  2002, the Company had provided taxes on consolidated
     income  for  Federal  and  State  income  taxes,  estimated  at  $1,600.

     At December 31, 2002deferred taxes consisted of a net tax assets (benefits)
     of  approximately  $343,000,  due  to  operating  loss carryforwards of the
     Company  totaling  $771,679  which  were  fully  offset  by equal valuation
     allowances  since there is no assurance of recovery. The net operating loss
     carryforwards  will  expire  beginning  in  2013.

(7)  Off  Balance  Sheet  Risk

     The  Company  could  be affected by the inability to establish a market for
     their  shares  of stock. Additionally, since the date of incorporation, the
     short-term  sales  revenue  for  the  Company  has  come primarily from two
     principal  accounts,  which  is  due  to  the fact that the markets for the
     products  from  these  accounts  have  been  very active recently. Over the
     long-term,  management  expects the markets for these products and accounts
     to  diversify.  Also, these principals are not the only suppliers for these
     products  and  management  has  other  sources for identical products if it
     becomes  necessary  to  find  other  suppliers.


(8)  Commitments  and  Contingencies

     CBC leases an office/warehouse facility in Tustin, California which expires
     in  August  31,  2004.  The future minimum annual aggregate rental payments
     required  for the remaining non-cancelable lease term in excess of one year
     are  as  follows:

     Period  Ended  December  31,

     2003              $     32,126
     2004                    22,163
     Thereafter                   0
                       ------------
     Total             $     54,289
                       ============

The  Company  was  not  involved  in  any  litigation  as  of  the  date of this
examination.


                                       32
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 And 2001


(9)  Leases

     The  Company  lease  certain  office  equipment  that is accounted for as a
     capital  lease  and  capitalized  using  interest  rates appropriate at the
     inception  of  the  lease.

     The future minimum commitments under this lease arrangement at December 31,
     2002  are  as  follows:

     Period  Ended  December  31,

<TABLE>
<CAPTION>

<S>                      <C>
2003. . . . . . . . . .  $ 2,572
2004. . . . . . . . . .    2,634
2005. . . . . . . . . .    2,910
2006. . . . . . . . . .    3,214
  Thereafter. . . . . .    3,170
                         -------

Net minimum commitments   14,500

  Less current portion.    2,572
                         -------

  Long-term commitments  $11,928
                         =======
</TABLE>


                                       33
<PAGE>