SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


(Mark One)

     [X]      Quarterly report under Section 13 or 15(d) of the Securities
              Exchange Act of 1934 for the quarterly period ended March 31, 2006

     [ ]      Transition report under Section 13 or 15(d) of the Exchange Act
              for the transition period from __________ to __________.


                        Commission File Number: 000-31451
                                                ---------

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



             NEVADA                                              75-3090496
             ------                                              ----------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)



           2434 Vineyard Ave, SUITE 101, Escondido, California 92029
          ------------------------------------------------------------
               (Address of principal executive office) (Zip Code)

                                 (760) 494-6497
                                ----------------
                           (Issuer's telephone number)




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

                          Yes    X                  No
                              -------                  -------

As of April 1, 2006,  the number of  outstanding  shares of the issuer's  common
stock, $0.001 par value, was 4,822,420 shares.


          TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: Yes [ ] No [x]





<PAGE>
                                TABLE OF CONTENTS

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS .............................................   3

         Consolidated Unaudited Balance Sheet as of March 31, 2006
                  and Audited Balance Sheet as of December 31, 2005........   3

         Consolidated Unaudited Statements of Operations for the
                  First Quarters ended March 31, 2006 and March 31, 2005...   5

         Consolidated Unaudited Statements of Cash Flows for the
            First Quarters ended March 31, 2006 and March 31, 2005.........   6

         Notes to Consolidated Financial Statements........................   7


ITEM 2.  MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS ............................................  15

         Business Organization and Description ............................  15

         Our Smog Check Test-Only Stations ................................  16

         Results of Operations For The Quarter Ended March 31, 2006
                  Compared To The Quarter Ended March 31, 2005.............  17


ITEM 3.  CONTROLS AND PROCEDURES...........................................  17


                           PART II - OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K..................................  18

INDEX TO EXHIBITS..........................................................  18

SIGNATURES.................................................................  18




















<PAGE>
ITEM 1.  FINANCIAL STATEMENTS.

                           CALIFORNIA CLEAN AIR, INC.
                                 BALANCE SHEETS

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


                                     ASSETS
                                     ------


                                             AS OF             AS OF
                                            March 31,       December 31,
                                              2006              2005
                                          (unaudited)        (Audited)
                                        ---------------   ---------------


CURRENT ASSETS

   Cash                                  $     12,351      $     13,458

   Prepaid expenses                            14,498            14,878

   Loans receivable                           100,000           100,000
                                        ---------------   ---------------


     TOTAL CURRENT ASSETS                     126,849           128,336


NET PROPERTY & EQUIPMENT                      153,324           164,402

OTHER ASSETS

      Deposits                                 12,533            12,532
                                        ---------------   ---------------


     TOTAL OTHER ASSETS                        12,533            12,532
                                        ---------------   ---------------


                  TOTAL ASSETS           $    292,706      $    305,270
                                        ===============   ===============











        The accompanying notes are an integral part of these statements.

                                        3
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                                 BALANCE SHEETS


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


                                                      AS OF           AS OF
                                                     March 31,     DECEMBER 31,
                                                       2006            2005
                                                   (unaudited)       (Audited)
                                                  --------------  --------------
CURRENT LIABILITIES
   Accounts payable                                $    216,668    $    139,590
   Accrued payroll and payroll related liabilities       82,880          46,285
   Accrued state minimum franchise taxes                  4,800           4,000
   Capitalized lease obligation - current portion        33,138          32,034
   Loans payable to related party                       280,022         255,172
                                                  --------------  --------------

     TOTAL CURRENT LIABILITIES                          617,508         477,081

LONG-TERM LIABILITIES
   Capitalized lease obligation                          99,529         107,439
                                                  --------------  --------------

     TOTAL LONG-TERM LIABILITIES                         99,529         107,439
                                                  --------------  --------------

TOTAL LIABILITIES                                       717,037         584,520

STOCKHOLDERS'  EQUITY (DEFICIT)
   Preferred stock ( $0.001 par value,
   20,000,000 shares authorized;
   4,000,000 shares issued and outstanding as of
   March 31, 2006 and 2005)                               4,000           4,000

   Common stock ($0.001 par value,
   100,000,000 shares authorized;
   4,822,420 and 4,822,420 shares issued and
   outstanding as of March 31, 2006 and 2005,
   respectively)                                          4,822           4,822

   Additional paid-in capital                         3,818,598       3,818,598
 Retained earnings (deficit)                         (4,251,751)     (4,106,670)
                                                  --------------  --------------

     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)              (424,331)       (279,250)
                                                  --------------  --------------
TOTAL LIABILITIES
  & STOCKHOLDERS' EQUITY (DEFICIT)                 $    292,706    $    305,270
                                                  ==============  ==============





        The accompanying notes are an integral part of these statements.

                                        4
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                 First Quarter    First Quarter
                                                    Ending           Ending
                                                   March 31,        March 31,
                                                     2006             2005
                                                  (unaudited)      (unaudited)
                                                ---------------  ---------------
<S>                                              <C>              <C>
SALES REVENUES                                   $     122,481    $      54,809
                                                ---------------  ---------------
Total Revenues                                         122,481           54,809
                                                ---------------  ---------------

COST OF REVENUES                                        90,729           37,382
                                                ---------------  ---------------

GROSS PROFIT                                            31,752           17,427
                                                ---------------  ---------------
OPERATING COSTS
   Operating expenses                                  156,697          749,129
   Depreciation expense                                 11,078            5,060
                                                ---------------  ---------------

Total Operating Costs                                  167,775          754,189
                                                ---------------  ---------------

OPERATING INCOME (LOSS)                               (136,024)        (736,762)
                                                ---------------  ---------------
OTHER INCOME &(Expenses)
      Interest expense                                  (8,257)               -
                                                ---------------  ---------------

INCOME (LOSS) BEFORE INCOME TAXES                $    (144,281)   $    (736,762)
                                                ---------------  ---------------

INCOME TAX (PROVISION) BENEFIT                            (800)          (1,600)
                                                ---------------  ---------------

NET INCOME (LOSS)                                $    (145,081)   $    (738,362)
                                                ---------------  ---------------

BASIC EARNINGS (LOSS) PER SHARE                  $        (.03)   $       (0.17)
                                                ---------------  ---------------
WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING                           4,822,420        4,472,686
                                                ===============  ===============
</TABLE>






        The accompanying notes are an integral part of these statements.

                                        5
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   First Quarter   First Quarter
                                                      Ending          Ending
                                                     March 31,       March 31,
                                                       2006            2005
                                                    (unaudited)     (unaudited)
                                                   -------------   -------------
CASH FLOWS FROM OPERATING ACTIVITIES

    NET INCOME (LOSS)                               $  (136,824)    $  (738,362)

ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED IN OPERATING ACTIVITIES:
    COMMON STOCK ISSUED FOR SERVICES                          -         637,480
    DEPRECIATION EXPENSE                                 11,078           5,060

Changes in assets and liabilities:
   (INCREASE) DECREASE IN LOAN RECEIVABLE                     -               -
   (INCREASE) DECREASE IN PREPAID EXPENSES                  380          (1,279)
   (INCREASE) DECREASE IN DEPOSITS                           (1)            427
    INCREASE (DECREASE) IN ACCOUNTS PAYABLE              77,078          (9,307)
    INCREASE (DECREASE) IN ACCRUED PAYROLL               36,595               -
    INCREASE (DECREASE) IN STATE INCOME TAXES               800           1,600
                                                   -------------   -------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES                                    (10,893)       (104,381)

CASH FLOWS FROM INVESTING ACTIVITIES
    NET SALE (PURCHASE) OF PROPERTY & EQUIPMENT               -               -
                                                   -------------   -------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES           -               -

  PAYMENTS ON (PROCEEDS FROM) CAPITALIZED
   LEASE OBLIGATIONS                                     (6,806)         75,316
  PAYMENTS ON NOTES PAYABLE TO RELATED PARTY             24,850             699
  CASH FLOWS FROM FINANCING ACTIVITIES
   PROCEEDS FROM STOCK SALES                                  -         201,500
                                                   -------------   -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES      18,043         277,516

    NET INCREASE (DECREASE) IN CASH                       7,150          92,118

    CASH AT BEGINNING OF PERIOD                          13,458          31,414
                                                   -------------   -------------
       CASH AT END OF PERIOD                        $    20,608     $   123,532
                                                   =============   =============

    SUPPLEMENTAL CASH FLOW DISCLOSURES:

    CASH PAID DURING YEAR FOR INTEREST              $     8,257     $     2,881
                                                   =============   =============
    CASH PAID DURING YEAR FOR TAXES                 $       800     $     1,600
                                                   =============   =============
    SUPPLEMENTAL NONCASH DISCLOSURES
    COMMON STOCK ISSUED FOR SERVICES                          -         637,480
    COMMON STOCK ISSUED FOR LOAN PAYABLE                      -               -

        The accompanying notes are an integral part of these statements.

                                        6
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  ORGANIZATION AND DESCRIPTION OF BUSINESS

GENERAL
-------

California Clean Air, Inc. (the "Company") is incorporated under the laws of the
State of Nevada.  From June 2, 2000, the date of original  incorporation,  until
August 21, 2003,  the Company was seeking a merger,  exchange of capital  stock,
participate in an asset  acquisition,  or any other business  combination with a
domestic or foreign  private  business and had not commenced any formal business
operations.  The  Company  was  considered  to be in the  development  stage and
accounted and reported its activities  using  Statement of Financial  Accounting
Standards No, 7, "Accounting and Reporting by Development Stage Enterprises". On
September  11,  2003,  the  Company's  subsidiary  began  operating  a test-only
vehicles emissions inspection facility.

The  Company is in the  business  of owning and  operating  "test-only"  vehicle
emissions  inspection  facilities under the Smog Check II program adopted in the
State of California. As a result of the federal Clean Air Act of 1990, the State
of  California  adopted  its Smog Check II program  designed  to reduce  vehicle
emissions pollution through the establishment of emissions inspection facilities
and mandating  periodic  emissions  testing by all vehicle  owners.  "Test-Only"
vehicle  emissions  inspection  facilities  are  privately  owned  and  operated
stations,  which are  authorized to conduct only the emissions  test but are not
permitted  to  make  any  vehicle  repairs.  The  Company's  current  inspection
facilities are located in Lemon Grove, Escondido, Santee, and Vista, California,
respectively.

The Company conducts business through its wholly owned affiliate  company,  Smog
Centers of California,  LLC. As a wholly owned subsidiary,  California Clean Air
(the  parent   Company)  has  complete   control  over  the  business  and  will
periodically  receive  distributions  and allocations of cash flow and operating
profits.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.       ACCOUNTING METHOD
         -----------------

The Company's  policy is to use the accrual  method of accounting to prepare and
present financial  statements,  which conform to generally  accepted  accounting
principles (GAAP). The Company has elected a December 31, year-end.

B.       BASIS OF CONSOLIDATION
         ----------------------

On November 21, 2002,  the Company  organized  Smog Centers of  California,  LLC
(`Smog  Centers"),  an Oregon limited liability  company.  California Clean Air,
Inc. is the sole owner of Smog Centers. California Clean Air, Inc. owns title to
all assets and liabilities of the consolidated



                                        7
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

financial  statements.  Smog Centers was  organized to acquire,  own and operate
test-only  vehicle  emissions  inspection  facilities in the State of California
under  their  Smog  Check II  program.  Smog  Centers  currently  operates  four
"test-only" vehicles emissions inspection facilities.

C.       CASH EQUIVALENTS
         ----------------

The Company  considers  all highly  liquid  investments  with  maturity of three
months or less when purchased to be cash equivalents.

D.       PROPERTY AND EQUIPMENT
         ----------------------

Property,  equipment  and  leasehold  improvements  are  stated  at  costs  less
accumulated  depreciation or amortization.  Maintenance and repairs,  as well as
renewals for minor amounts are charged to expenses.  Renewals and betterments of
substantial  amount are  capitalized,  and any  replaced or  disposed  units are
written off.

E.       ADVERTISING
         -----------

The Company  expenses the cost of  advertising  as it is  incurred.  Advertising
expense was $65,756 and $41,837 for the quarters  ended March 31, 2006 and 2005,
respectively.

F.       ESTIMATES
         ---------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates. In accordance with FASB 16 all
adjustments are normal and recurring.

G.       REVENUE RECOGNITION AND DEFERRED REVENUE
         ----------------------------------------

Smog Centers generates revenue through vehicle "test-only"  emissions facilities
in the State of  California  under  their  Smog  Check II  program.  Revenue  is
recognized when a sale is made.

H.       BASIC EARNINGS PER SHARE
         ------------------------

In February  1997,  the FASB issued SFAS No. 128,  "Earnings  Per Share",  which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities  with  publicly  held common  stock.  SFAS No. 128
supersedes the provisions of APB No. 15, and requires the  presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective June 2, 2000 (inception).

                                        8
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Basic net loss per share  amounts is computed by dividing  the net income by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic  earnings  per share due to the lack of dilutive  items in
the Company.

I.       INCOME TAXES
         ------------

The Company  accounts  for income  taxes using the asset and  liability  method.
Under the asset and liability  method,  deferred income taxes are recognized for
the tax consequences of "temporary  differences" by applying  enacted  statutory
tax rates  applicable  to future  years to  differences  between  the  financial
statement carrying amounts and the tax bases of existing assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management,  it is more likely than not that some portion or all of the deferred
tax assets will not be realized.

J.       SEGMENT REPORTING
         -----------------

The Company reports information about operating segments and related disclosures
about  products  and  services,  geographic  areas  and  major  customer.  Using
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information".  The Company views its operations and
manages its business in principally one segment,  test-only  vehicles  emissions
inspection facilities in the State of California.

K.       PRINCIPLES OF CONSOLIDATION
         ---------------------------

The Consolidated  financial  statements include the accounts of California Clean
Air, Inc., the parent company) and Smog Centers of California. The Subsidiary is
a  wholly  owned   subsidiary.   All  significant   intercompany   balances  and
transactions have been eliminated in consolidation.


NEW ACCOUNTING PRONOUNCEMENTS:

In November 2004, the Financial  Accounting  Standards  Board (FASB) issued SFAS
151,  Inventory  Costs - an amendment of ARB No. 43,  Chapter 4. This  Statement
amends the guidance in ARB No. 43,  Chapter 4,  "Inventory  Pricing," to clarify
the accounting for abnormal amounts of idle facility expense,  freight, handling
costs,  and  wasted  material  (spoilage).  Paragraph  5 of ARB 43,  Chapter  4,
previously  stated  that  "...  under  some  circumstances,  items  such as idle
facility expense,  excessive spoilage,  double freight, and rehandling costs may
be so  abnormal  as to require  treatment  as current  period  charges..."  This
Statement  requires  that those items be recognized  as  current-period  charges
regardless  of whether they meet the  criterion of "so  abnormal."  In addition,
this



                                        9
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

statement requires that allocation of fixed production overheads to the costs of
conversion be based on the normal  capacity of the production  facilities.  This
Statement  is  effective  for  inventory  costs  incurred  during  fiscal  years
beginning after June 15, 2005.  Management does not believe the adoption of this
Statement will have any immediate material impact on the Company.

In December  2004,  the FASB issued  SFAS No. 152,  "Accounting  for Real Estate
Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
152) The amendments  made by Statement 152 This Statement  amends FASB Statement
No.  66,  Accounting  for  Sales of Real  Estate,  to  reference  the  financial
accounting and reporting guidance for real estate time-sharing transactions that
is  provided in AICPA  Statement  of Position  (SOP)  04-2,  Accounting  No. 67,
Accounting for Costs and Initial Rental  Operations of Real Estate Projects,  to
state that the guidance for (a) incidental  operations and (b) costs incurred to
sell  real  estate   projects  does  not  apply  to  real  estate   time-sharing
transactions.  The accounting  for those  operations and costs is subject to the
guidance in SOP 04-2.  This Statement is effective for financial  statements for
fiscal years beginning after June 15, 2005, with earlier application encouraged.
The Company does not anticipate  that the  implementation  of this standard will
have a material impact on its financial position,  results of operations or cash
flows.

On  December  16,  2004,  the  Financial  Accounting  Standards  Board  ("FASB")
published  Statement of Financial  Accounting  Standards No. 123 (Revised 2004),
Shared-Based  Payment ("SFAS 123R).  SFAS 123R requires that  compensation  cost
related to  share-based  payment  transactions  be  recognized  in the financial
statements.  Share-based  payment  transactions  within  the  scope of SFAS 123R
include stock options,  restricted stock plans,  performance-based awards, stock
appreciation  rights,  and employee share purchase plans. The provisions of SFAS
123R are  effective  as of the first  interim  period that begins after June 15,
2005. Accordingly,  the Company will implement the revised standard in the third
quarter of fiscal year 2005. Currently, the Company accounts for its share-based
payment  transactions under the provisions of APB 25, which does not necessarily
require the  recognition  of  compensation  cost in the  consolidated  financial
statements.  The Company does not  anticipate  that the  implementation  of this
standard  will have a  material  impact on its  financial  position,  results of
operations or cash flows.

On December 16, 2004, FASB issued  Statement of Financial  Accounting  Standards
No. 153,  Exchanges of Nonmonetary  Assets,  an amendment of APB Opinion No. 29,
Accounting for Nonmonetary  transactions ("SFAS 153"). This statement amends APB
Opinion 29 to  eliminate  the  exception  for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  of  exchanges  of
nonmonetary assets that do not have commercial  substance.  Under SFAS 153, if a
nonmonetary  exchange of similar productive assets meets a  commercial-substance
criterion and fair value is determinable,  the transaction must be accounted for
at fair  value  resulting  in  recognition  of any  gain or  loss.  SFAS  153 is
effective for  nonmonetary  transactions in fiscal periods that begin after June
15,  2005.  The Company  does not  anticipate  that the  implementation  of this
standard  will have a  material  impact on its  financial  position,  results of
operations or cash flows.



                                       10
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3.  PROPERTY & EQUIPMENT

Property  and  equipment  is  stated  at  cost  less  accumulated  depreciation.
Additions,  renovations,  and  improvements  are  capitalized.  Maintenance  and
repairs  which do not extend asset lives are expensed as incurred.  Depreciation
is provided on a straight-line basis over 5 years.  Depreciation expense for the
quarters  ending  March 31,  2006 and March 31,  2005 was  $11,078  and  $5,060,
respectively.

NOTE 4.  CAPITALIZED LEASE OBLIGATION

Smog Centers has a  non-cancelable  lease obligation for the purchase of vehicle
emission inspection equipment. Under the terms of the agreement, Smog Centers is
obligated  to pay $899 per  month  through  October  2008 for the  equipment  in
Escondido.  Smog Centers has a non-cancelable lease for two more BAR 97 machines
on the  premises  of the Santee  location  the  second  for our Vista  location,
payments  per month for these two  machines is $1837.  December of 2005 a fourth
BAR 97 machine  was leased on a three year  contract  with  payments  of $1631 .
Lease  payments for the  quarters  ending March 31, 2006 and March 31, 2005 were
$11,3471 and $6,371  respectively.  Interest expense on the lease obligation for
the  quarters  ending  March 31,  2006 and March 31,  2005 was $4,665 and $2340,
respectively.


Aggregate minimum future lease payments under capitalized  leases are as follows
for the years ending subsequent to March 31, 2006:

             Years ending December 31:
             ------------------------

                   2006 (April 1-December 31)                            39,308
                   2007                                                  52,411
                   2008                                                  49,881
                   2009                                                  22,045
                   2010 (through May 2009)                                7,348
             Total minimum lease payments                               170,993
             Less amount representing interest                          (38,571)
                                                               -----------------

             Present value of minimum lease payments            $       132,422
















                                       11
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.  OPERATING LEASE COMMITMENTS

Smog Centers  entered  into a  non-cancelable  assignment  of lease for the smog
station  premises in Lemon  Grove,  California,  which  requires  monthly  lease
payments  of  $1,500  through  July  1,  2006.   Smog  Centers  entered  into  a
non-cancelable  lease for the smog station  premises in  Escondido,  California,
which requires monthly payments of $1,500 through November 15, 2006; $1,700 from
November 15, 2006 through  November 14, 2007;  and $1,800 from November 15, 2007
through  November 14, 2008.  Smog Centers  entered into a 5-year  non-cancelable
lease for the smog  station  premises  in  Santee,  California,  which  requires
monthly payments of $1,500 through December 31, 2005; the next four years of the
lease  can be  increased  by the cost of living  index  increase.  Smog  Centers
entered  into a  non-cancelable  lease for the smog  station  premises in Vista,
California,  which  requires  monthly  payments of $1,500 through June 30, 2008;
$1,700 from July 1, 2008  through  June 30,  2009;  and $1,800 from July 1, 2009
through June 30, 2010. Smog Centers entered into a non-cancelable  lease for the
smog station premises in El Cajon,  California,  which requires monthly payments
of $1,750  through  November  30,  2008;  $2,000 from  December 1, 2008  through
November 30, 2009;  and $2,100 from December 1, 2009 through  November 30, 2010.
The  Company has an option to extend the lease  terms for all  locations  for an
additional five (5) years.

Aggregate  minimum  future lease  payments for the smog stations as of March 31,
2006, are:

                 2006                                               61,825
                 2007                                               78,500
                 2008                                               77,350
                 2009                                               64,100
                 2010                                               33,900
                                                          -----------------

           Total minimum lease payments                    $       315,675
                                                          =================

Lease expense for the smog  stations for the quarters  ending March 31, 2006 and
March 31, 2005 were $23,475 and $16,090, respectively.


NOTE 6.  TRANSACTIONS WITH RELATED PARTIES

Our  President,  Stephen D. Wilson,  has  advanced  $280,022 to the company from
inception  through March 31, 2006.  These advances were used for  administrative
expenses such as legal and accounting fees, smog station operating expenses, and
to acquire the smog station assets at the Company's  Lemon Grove  facility.  The
advances  are  reflected  as  "Payable  to  Related  Parties"  in the  Company's
financial statements and are non-interest bearing and due on demand.








                                       12
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  BASIC & DILUTED INCOME (LOSS) PER COMMON SHARE

Basic  earnings  (loss)  per  common  share  have been  calculated  based on the
weighted average number of shares of common stock outstanding during the period.
Diluted  earnings  (loss)  per  common  share has been  calculated  based on the
weighted  average  number of shares of common and  preferred  stock  outstanding
during the period.  The variance  between basic and diluted  weighted average is
the addition of preferred stock in the calculation of diluted  weighted  average
per share.

                                                2006                 2005
                                           March 31, 2006       March 31, 2005
                                            (Unaudited)          (Unaudited)
                                        -------------------- -------------------
NET INCOME (LOSS)                        $         (145,081)  $        (736,362)
BASIC EARNINGS (LOSS) PER SHARE          $            (0.03)  $            (.17)

                                        ==================== ===================
WEIGHED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                                4,822,420           4,472,686
                                        ==================== ===================

As of  September  30,  2005 no  dividends  have been  issued  that would  reduce
earnings available to common shareholders.

NOTE 8.  INCOME TAXES

Deferred income taxes consist of the following:

                                                   March 30,       DECEMBER 31,
                                                     2006             2005
                                                  (Unaudited)       (Audited)
                                                 --------------   --------------
    Deferred tax asset:
    Net operating loss carryover                  $  4,251,751     $  4,106,670
                                                 --------------   --------------
                                                     4,251,751        4,106,670
    Valuation allowance                             (4,251,751)      (4,106,670)
                                                 --------------   --------------
    Net deferred income taxes                                0                0
                                                 ==============   ==============














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<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.  STOCKHOLDERS' EQUITY

The stockholders'  equity section of the Company's financial statements contains
the following classes of capital stock as of March 31, 2006:

(A)  Preferred stock, $0.001 par value; 20,000,000 shares authorized;  4,000,000
     shares issued and outstanding;

(B)  Common stock, $ 0.001 par value;  100,000,000 shares authorized;  4,822,420
     shares issued and outstanding.

The Company is authorized to issue up to 100,000,000 shares of common stock. The
holders of common  stock are  entitled to one vote per share of common  stock on
all matters to be voted on by the  stockholders.  There are no cumulative voting
rights.  Subject  to  preferences  that  may be  applicable  to any  outstanding
preferred stock, the holders of common stock are entitled to receive  dividends,
if any,  as may be  declared  by the  board of  directors  out of funds  legally
available for dividends.  In the event of a liquidation,  dissolution or winding
up, the holders of common stock are entitled to share  ratably in the net assets
remaining  after  payment  in full of all of  liabilities,  subject to the prior
rights of preferred stock, if any, then outstanding.  There are no redemption or
sinking fund  provisions  applicable  to the common  stock.  As of September 30,
2005, there were 4,822,420 shares of common stock issued and outstanding.

The  Company  is  authorized  to issue up to  20,000,000  shares  of  designated
preferred  stock.  The board of  directors  has the  authority,  without vote or
action by the  stockholders,  to designate and issue  preferred  stock in one or
more series and to designate the number of shares,  and the rights,  preferences
and  privileges  of each  series,  any or all of which may be  greater  than the
rights of the common stock. It is not possible to state the actual effect of the
issuance  of any  additional  shares of  preferred  stock upon the rights of the
holders of common  stock until the board of  directors  determines  the specific
rights of the holders of the preferred stock. However, the effects might include
restricting  dividends  on the common  stock,  diluting  the voting power of the
common stock,  impairing  liquidation rights of the common stock and delaying or
preventing a change in control of the Company.

As of March 31,  2006,  there  were  4,000,000  shares  of Series A  Convertible
Preferred Stock issued and outstanding.  The holders of the Series A Convertible
Preferred  Stock  have  the  following  rights  and  preferences:  the  Series A
Preferred Stock is convertible into common stock on a one-for-basis,  subject to
adjustment for stock splits and similar  extraordinary  stock events; each share
of Series A  Preferred  Stock has ten (10) votes for each share of common  stock
into which the preferred  stock can be converted;  the Series A Preferred  Stock
votes with the common stock as a single class;  and the Series A Preferred Stock
is entitled to receive  dividends (1) upon the  commencement of operations of no
less than ten (10) vehicle  emissions test centers by Smog Centers;  (2) 800,000
shares  of the  Series  A  Preferred  Stock  will be each  entitled  to  receive
dividends as and when declared and paid on the common  stock;  (3) an additional
800,000 shares of Series A Stock will






                                       14
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.  STOCKHOLDERS' EQUITY- CONTINUED

be each  entitled  to receive  dividends  as and when  declared  and paid on the
common stock for each  additional  ten (10) vehicle  emissions  test centers for
which  operations have commenced,  up to a total of fifty (50) such vehicle test
centers;  and (4) the liquidation rights will be subordinated to the outstanding
common  stock.  The  board of  directors  has no  present  plans  to  issue  any
additional preferred stock in addition to the Series A Stock.

NOTE 10. ISSUANCE OF SHARES FOR SERVICES - STOCK OPTIONS

The Company has a  non-qualified  stock  option  plan,  which  provides  for the
granting of options to key employees, consultants, and non-employee directors of
the Company.  These  issuances shall be accounted for based on the fair value of
the consideration  received or the fair value of the equity instruments  issued,
whichever is more readily  determinable.  The Company has elected to account for
the stock  option plan in  accordance  with  paragraph  30 of SFAS 123 where the
compensation  to employees  should be recognized over the period(s) in which the
related employee services are rendered.  In accordance with paragraph 19 of SFAS
123  the  fair  value  of  a  stock  option   granted  is  estimated   using  an
option-pricing  model.  As of  September  30,  2005 there were no stock  options
issued or outstanding.

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

BUSINESS ORGANIZATION & DESCRIPTION

We are in the business of owning and  operating  "test-only"  vehicle  emissions
inspection  facilities  under the Smog Check II program  adopted by the State of
California. As a result of the federal Clean Air Act of 1990, California adopted
the Smog  Check II  program,  which was  designed  to reduce  vehicle  emissions
pollution  through the  establishment  of emissions  inspection  facilities  and
mandating periodic emissions testing by all vehicle owners.  "Test-Only" vehicle
emissions inspection facilities are privately owned and operated stations, which
are  authorized to conduct the emissions  test and are not permitted to make any
vehicle repairs.  We currently have four inspection  facilities located in Lemon
Grove, Escondido, Santee, and Vista, California.

California  Clean Air, Inc.  (the  "Company")  was  originally  incorporated  in
Delaware on June 2, 2000 under the name of Breakthrough  Technology  Partners I,
Inc. We never commenced any business under our original name. Effective December
17, 2002,  we  reincorporated  in Nevada  under our current name  pursuant to an
Agreement  and Plan of Merger with  California  Clean Air, Inc. The sole purpose
for the merger was to change our legal  domicile  from  Delaware to Nevada.  Mr.
Stephen D. Wilson is our President,  Chief Executive Officer and Chief Financial
Officer.  We qualified  to do business in  California  on August 26, 2003.  Smog
Centers of California,  LLC ("Smog Centers"), was organized as an Oregon limited
liability company on November 21, 2002,







                                       15
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS ORGANIZATION & DESCRIPTION- CONTINUED

and  registered to do business in California on December 10, 2002.  Through Smog
Centers we intend to own and operate smog check test-only stations,  principally
in Southern  California  and in the Bay Area.  The Company is the sole member of
Smog Centers, and as such we have complete control over the business. Mr. Wilson
is the manager of Smog Centers.

Our principal executive and administrative offices and those of Smog Centers are
located at 2434 Vineyard Ave, Suite 101, Escondido, California 92029.

OUR SMOG CHECK TEST-ONLY STATIONS

On  September  11,  2003,  Smog  Centers  opened its first smog check  test-only
facility, located at 7310 Broadway in Lemon Grove, California

On November  26,  2003,  Smog  Centers  opened its second  smog check  test-only
facility, located at 555 West Grand Avenue in Escondido, California.

On April 20, 2005, Smog Centers opened its third smog check test-only  facility,
located at 8665 Mission Gorge Rd, Suite A-3 in Santee, California.

On  September  6, 2005 Smog  Centers  opened  its fourth  smog  check  test-only
facility, located at 485 N. Melrose Dr, Vista, California.

On February 1, 2006 Smog Centers opened its fifth smog check test-only facility,
located at 710 N. 2nd St, El Cajon,  California 92021. Smog Centers entered into
a five-year  lease for  approximately  600 square feet of space comprised of one
automotive  bay  in a gas  station.  The  lease  is for a term  of  five  years,
commencing Dec. 1, 2005 and continuing until Nov. 30, 2010. El Cajon, California
has a population of  approximately  96,000 and is located  approximately  twelve
miles east of San Diego. At the present time, there are twelve other "test-only"
stations in the area. The equipment lease requires monthly payments of $1637 for
36 months  and  provides  for an  option  to  purchase  the  equipment  at lease
expiration for one dollar.  Mr. Wilson has executed a personal guaranty with the
equipment lessor.

We  charge a total of  $60.00  for a smog test for a  vehicle  that  passes  the
emissions test, which includes $50.00 for the inspection fee, $8.25 for the smog
certificate (a  pass-through  cost) and $ 1.75 for the  transmission  fee to the
Vehicle Information  Database.  If the vehicle does not pass the emissions test,
we only charge $50.00,  because the smog certificate is not issued. The stations
that  have the room to test  RV's we  charge a total of  $110.00.  We  advertise
extensively for all stations in a weekly publication with discount coupons.












                                       16
<PAGE>
RESULTS OF  OPERATIONS  FOR THE QUARTER  ENDED  MARCH 31,  2006  COMPARED TO THE
QUARTER ENDED MARCH 31, 2005:

Sales Revenues: For the first quarter of 2006, the Company had sales revenues of
$122,481,  compared to $54,809 in sales  revenues for the first quarter of 2005.
For the first quarter 2006 same store sales of $74,110 compared to first quarter
2005 sales of $54,793. This shows a same store sales increase of 35%.

Cost of Revenues:  Cost of revenues is comprised  of smog  technician  expenses,
Vehicle Information Database  transmission fees, and smog certificates.  Cost of
revenues for the first quarter of 2006 totaled  $90,729,  as compared to $37,382
for the first  quarter of 2005.  The cost of revenues  increased  because of the
company  increasing the number of station open and hiring  technicians.  Cost of
revenues  for the first  quarter  of 2006  equaled  74% of sales  revenue.  This
increase is because of the  company's  efforts to grow from two stations to five
stations.

Gross Profit: Gross profit is comprised of sales revenues less cost of revenues.
Gross  profit for the first  quarter of 2006  totaled  $31,752,  or 16% of sales
revenue, as compared to $17,427 for the first quarter of 2005.

Operating  Costs:  Operating  costs  consist  of  the  Company's  administrative
expenses,  and  smog  station  operating  expenses  including  depreciation  and
amortization.  Operating costs totaled $167,775 for the first quarter of 2006 as
compared to $754,189  for the first  quarter of 2005.  The decrease in operating
costs is  attributable  to no  consulting  fees incurred in the first quarter of
2006.

Operating  Loss: The Company's  operating loss for the first quarter of 2006 was
$136,024 as compared to $736,762 for the first quarter of 2005.  The decrease in
operating  loss is  attributable  to no consulting  fees in the first quarter of
2006.

Other (Non-Operating) Loss: The Company recognized other (non-operating) loss of
$0 in the first  quarter of 2005 as compared  to $8,257 in the first  quarter of
2006.

Net Loss Before Income Taxes: Net loss before income taxes represents  operating
loss plus other  (non-operating)  loss.  For the first quarter of 2006,  our net
loss was $144,281 as compared to $736,762 for the first quarter of 2005.

Income  Tax  Provision:  For the first  quarter of 2006 $800 was  recognized  as
minimum franchise tax fee as compared to $1600 for the first quarter of 2005.

Liquidity  And Capital  Resources:  During the first three  months of 2006,  the
Company  used cash in  operations  of $10,893,  as compared to $104,381  for the
first three  months of 2005.  The  principal  reason for the  comparative  three
months  decrease of $93,488 in cash used in  operations is  attributable  to the
Company owing more to accounts payable, an increase in notes payable of $77,078.

ITEM 3.  CONTROLS AND PROCEDURES.

Based on an evaluation of our disclosure controls and procedures as of September
30, 2005, we are satisfied as to the  effectiveness  of our disclosure  controls
and  procedures,  as Stephen D. Wilson,  our President,  is responsible  for the
day-to-day  operations  of our four smog check  stations  and also serves as our
Chief Financial Officer.


                                       17
<PAGE>
There was no significant change in the Company's internal control over financial
reporting that occurred during the fiscal quarter ending September 30, 2005 that
has  materially  affected,  or is reasonably  likely to materially  affect,  the
Company's internal control over financial reporting.

PART II - OTHER INFORMATION

The following documents are filed as part of this report:

Exhibits.

INDEX TO EXHIBITS:

EXHIBIT
NO.             DESCRIPTION
-------         -----------

  31          Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
              2002 (Rules 13a-14 and 15d-14 of the Exchange Act)

  32          Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
              2002 (18 U.S.C. ss. 1350)

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

Date: May 15, 2006               CALIFORNIA CLEAN AIR, INC.

                                 By: /s/ STEPHEN D. WILSON
                                    ------------------------------------
                                    President, Chief Executive Officer,
                                    Chief Financial Officer, Secretary
























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