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 June 30, 2005

   [ ]      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 August 1, 2005,  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 ................................................

         Consolidated Unaudited Balance Sheet as of June 30, 2005
             and Audited Balance Sheet as of December 31, 2004................

         Consolidated Unaudited Statements of Operations for the
             Quarters & Half ended June 30, 2005 and June 30, 2004............

         Consolidated Unaudited Statements of Cash Flows for the
             Half ended June 30, 2005 and June 30, 2004.......................

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


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

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

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

         Results of Operations For The Quarter Ended June 30, 2005
             Compared To The Quarter Ended June 30, 2004 .....................


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


                           PART II - OTHER INFORMATION


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

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

SIGNATURES....................................................................




















<PAGE>
ITEM 1.  FINANCIAL STATEMENTS.

                           CALIFORNIA CLEAN AIR, INC.
                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                     ------
                                                 AS OF                AS OF
                                            JUNE 30, 2005      DECEMBER 31, 2004
                                             (Unaudited)           (Audited)
                                             ------------         ------------
CURRENT ASSETS
   Cash                                     $      7,934          $     31,414
   Prepaid expenses                                3,925                 2,076
   Accounts Receivable                           100,000                     0
                                             ------------         ------------
     TOTAL CURRENT ASSETS                        111,859                33,490


NET PROPERTY & EQUIPMENT                         142,917                76,055

OTHER ASSETS

   Deposits                                       13,196                12,123
                                             ------------         ------------
     TOTAL OTHER ASSETS                           13,196                12,123
                                             ------------         ------------
                  TOTAL ASSETS              $    267,972         $     121,668
                                             ============         ============





























        The accompanying notes are an integral part of these statements.
                                       3
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                           CONSOLIDATED BALANCE SHEETS

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------
                                                 AS OF              AS OF
                                             JUNE 30, 2005    DECEMBER 31, 2004
                                              (Unaudited)         (Audited)
                                           -----------------  -----------------
CURRENT LIABILITIES
   Accounts payable                         $        25,071    $         9,309
   Accrued payroll and payroll related
     Liabilities                                     11,840                  0
   Accrued state minimum franchise taxes              4,000               2400
   Capitalized lease obligation
      - current portion                              18,993              6,372
   Notes payable to related party                   123,164            155,863
                                           -----------------  -----------------
     TOTAL CURRENT LIABILITIES                      215,767            141,245

LONG-TERM LIABILITIES
     Capitalized lease obligation                    85,435             25,238
                                           -----------------  -----------------
     TOTAL LONG-TERM LIABILITIES                     85,435             25,238
                                           -----------------  -----------------
TOTAL LIABILITIES                                   301,202            166,483

STOCKHOLDERS' EQUITY (DEFICIT)
   Preferred stock ($0.001 par value),
   20,000,000 shares authorized;
   4,000,000 shares issued & outstanding              4,000              4,000

   Common stock ($0.001 par value,
   100,000,000 shares authorized;  4,822,420
   and 3,953,540 shares issued and outstanding
   as of June 30, 2005 and December 31, 2004,
   respectively)                                      4,822              3,953

   Additional paid in capital                     3,818,598          2,950,487
 Retained earnings (deficit)                     (3,860,651)        (3,003,255)
                                           -----------------  -----------------
   TOTAL STOCKHOLDERS' EQUITY (DEFICIT)             (33,231)           (44,815)
                                           -----------------  -----------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY (DEFICIT)              $       267,971    $       121,668
                                           =================  =================












        The accompanying notes are an integral part of these statements.
                                        4
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                  SECOND QUARTER                 FIRST HALF
                                  ENDING JUNE 30               ENDING JUNE 30
                                    (Unaudited)                  (Unaudited)
                             --------------------------  --------------------------
                                 2005          2004          2005          2004
                             ------------  ------------  ------------  ------------

<S>                           <C>           <C>           <C>           <C>
SALES REVENUES                $   65,737    $   55,054    $  120,546    $  104,016
                             ------------  ------------  ------------  ------------
Total Revenues                    65,737        55,054       120,546       104,016
                             ------------  ------------  ------------  ------------
COST OF REVENUES                  68,496        25,998       105,878        50,832
                             ------------  ------------  ------------  ------------
GROSS PROFIT                      (2,758)       29,056        14,669        53,184
                             ------------  ------------  ------------  ------------
OPERATING COSTS
  Operating expenses             107,181        99,854       856,310       204,706
  Depreciation expense             9,094         5,060        14,154        10,121
                             ------------  ------------  ------------  ------------
Total Operating Costs            116,275       104,914       870,464       214,826
                             ------------  ------------  ------------  ------------

OPERATING INCOME (LOSS)         (119,034)      (75,858)     (855,796)     (161,641)

ORDINARY (NON-OPERATING)
   INCOME (LOSS)                       0             0             0         4,667
                             ------------  ------------  ------------  ------------
INCOME (LOSS) BEFORE
   INCOME TAXES               $ (119,034)   $  (75,858)     (855,796)     (156,974)
                             ------------  ------------  ------------  ------------

INCOME TAX (PROVISION)
    BENEFIT                            0             0         1,600         1,600
                             ------------  ------------  ------------  ------------

NET INCOME (LOSS)             $ (119,034)   $  (75,858)     (857,396)     (158,574)
                             ------------  ------------  ------------  ------------

BASIC EARNINGS
  (LOSS) PER SHARE            $    (0.02)   $    (0.08)   $    (0.18)   $    (0.16)
                             ------------  ------------  ------------  ------------

WEIGHTED AVERAGE NO. OF
COMMON SHARES OUTSTANDING      4,818,753     1,000,000     4,645,720     5,000,000
                             ------------  ------------  ------------  ------------
</TABLE>






        The accompanying notes are an integral part of these statements.
                                        5
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                     FIRST HALF      FIRST HALF
                                                       2005             2004
                                                    (Unaudited)     (Unaudited)
                                                   -------------  --------------
CASH FLOWS FROM OPERATING ACTIVITIES

   NET INCOME (LOSS)                               $   (857,396)  $    (158,574)

   DEPRECIATION EXPENSE                                  14,154          10,121

   COMMON STOCK ISSUED FOR SERVICES                     637,480               0
   (INCREASE) DECREASE IN ACCOUNTS RECEIVABLE          (100,000)              0
   (INCREASE) DECREASE IN PREPAID EXPENSES               (1,849)         (2,195)
   (INCREASE) DECREASE IN DEPOSITS                       (1,073)           (149)
    INCREASE (DECREASE) IN ACCOUNTS PAYABLE              15,762          (1,567)
    INCREASE (DECREASE) IN ACCRUED PAYROLL               11,840          13,182
    INCREASE (DECREASE) IN ACCRUED STATE
         MINIMUM FRANCHISE TAXES                          1,600           1,600
                                                   -------------  --------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES                                   (279,482)       (137,582)


CASH FLOWS FROM INVESTING ACTIVITIES

   NET SALE (PURCHASE) OF PROPERTY & EQUIPMENT          (81,017)              0
                                                   -------------  --------------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES     (81,017)              0

CASH FLOWS FROM FINANCING ACTIVITIES
  PROCEEDS FROM STOCK SALES                             231,500

  PAYMENTS ON (PROCEEDS FROM) CAPITALIZED
   LEASE OBLIGATIONS                                     72,818          (2,631)

  PAYMENTS ON NOTES PAYABLE TO RELATED PARTY             32,699         141,248
                                                   -------------  --------------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES     337,017         138,617

    NET INCREASE (DECREASE) IN CASH                     (23,481)          1,035

    CASH AT BEGINNING OF PERIOD                          31,414           3,285
                                                   -------------  --------------

    CASH AT END OF PERIOD                          $      7,933   $       4,320

    SUPPLEMENTAL CASH FLOW DISCLOSURES:

    CASH PAID DURING YEAR FOR INTEREST             $      2,036   $       2,763
                                                   =============  ==============
    CASH PAID DURING YEAR FOR TAXES                $          0   $           0
                                                   =============  ==============

        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,  and  Santee,  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.















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

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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  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 three 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 $32,266 and $28,923 for the  quarters  ended June 30, 2005 and 2004,
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.














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


NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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).

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.       REPORTING CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

The Company reports and displays  consolidated  comprehensive  income (loss) and
Its components as separate amounts in the consolidated financial statements with
the same prominence as other financial  statements.  Consolidated  comprehensive
income  (loss)  includes all changes in equity during the year that results from
recognized  transactions and other economic events other than  transactions with
owners. There were no components of consolidated  comprehensive income to report
for the years ended December 31, 2004 and 2003.

K.       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 en 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.




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


NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

L.       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 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.











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


NEW ACCOUNTING PRONOUNCEMENTS - CONINTUED:

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.


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  June  30,  2005  and June 30,  2004  was  $9,094  and  $5,060,
respectively.














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


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 San Marcos  location.
These two machines are have been personally guaranteed for by Mr. Wilson and the
lease  payment per month is $1837.  This new lease was entered into on March 18,
2005.  Lease  payments for the  quarters  ending June 30, 2005 and June 30, 2004
were $4,534 and $2,697  respectively.  Interest  expense on the lease obligation
for the  quarters  ending June 30, 2005 and June 30, 2004 was $2,036 and $1,356,
respectively.


Aggregate minimum future lease payments under capitalized  leases are as follows
for the years ending subsequent to December 31, 2004:

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

          2005     (July through end of year)                 $      16,417
          2006                                                       32,833
          2007                                                       32,833
          2008                                                       31,035
          2009    (through April 2009)                                9,185
    Total minimum lease payments                                    122,303
    Less amount representing interest                               (37,383)
                                                                  ----------

    Present value of minimum lease payments                   $      84,920
























                                       12
<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.  The Company has an option to extend the lease terms
for both locations for an additional five (5) years. 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, 2006; the next
four years of the lease can be increased  by the cost of living index  increase.
Smog  Centers  entered into a 3-year  non-cancelable  lease for the smog station
premises in San Marcos,  California,  which requires  monthly payments of $1,295
through  December  31,  2006;  the next two years  there can be a cost of living
index increase every year.

Aggregate  minimum  future lease  payments for the smog  stations as of June 30,
2005, are:

                 2005 (April through December)             $        34,770
                 2006                                               61,948
                 2007                                               56,180
                 2008                                               37,668
                 2009                                               20,256
                                                          -----------------

           Total minimum lease payments                    $       210,822
                                                          =================

Lease  expense for the smog  stations for the quarters  ending June 30, 2005 and
June 30, 2004 were $17,385 and $9,000, respectively.


NOTE 6.  TRANSACTIONS WITH RELATED PARTIES

Our President, Stephen D. Wilson, has advanced $155,863 on behalf of the company
from   inception   through  June  30,  2005.   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.











                                       13
<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.

                                             MARCH 31,            DECEMBER 31,
                                               2005                  2004
                                            (Unaudited)            (Audited)
                                        -------------------- -------------------
NET INCOME (LOSS)                       $          (857,396) $       (2,737,924)
BASIC EARNINGS (LOSS) PER SHARE         $             (0.18) $            (2.48)

                                        ==================== ===================
WEIGHED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                                4,645,720           1,103,445
                                        ==================== ===================


As of June 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:

                                                   JUNE 30,      DECEMBER 31,
                                                     2005            2004
                                                 (Unaudited)      (Audited)
                                                --------------  -------------
    Deferred tax asset:
    Net operating loss carryover                $   3,860,651    $ 3,003,255
                                                --------------  -------------
                                                    3,860,651      3,003,255
    Valuation allowance                            (3,860,651)    (3,003,255)
                                                --------------  -------------
    Net deferred income taxes                               0              0
                                                ==============  =============












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


NOTE 9.  ASSET PURCHASE

On March  18,  2005,  Smog  Centers  entered  into  leases  with  National  City
Commercial Capital for two bar 97 emission analyzers and other test-only related
equipment.  The lease for the two smog machines is personally  guaranteed by Mr.
Wilson:

    Fair value of smog-testing & station equipment              $  81,017

                                                          ----------------
    Cash paid                                                   $   5,343
                                                          ================

NOTE 10.  STOCKHOLDERS' EQUITY

The stockholders'  equity section of the Company's financial statements contains
the following classes of capital stock as of June 30, 2005:

(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;  1,000,000
     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 June 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.






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


NOTE 10.  STOCKHOLDERS' EQUITY- CONTINUED

As of June 30,  2005,  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 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 11.  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 June 30, 2005 there were no stock options issued or
outstanding.



















                                       16
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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 three inspection  facilities located in Lemon
Grove, Escondido, and Santee, California.  There was a fourth station that is in
the  licensing  stage in San  Marcos,  California  that the city of San  Marco's
denied a business license to.

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, 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













                                       17
<PAGE>
On  September  11,  2003,  Smog  Centers  opened its first smog check  test-only
facility,  located at 7310  Broadway in Lemon  Grove,  California.  Smog Centers
assumed the seller's obligations under the existing lease, which has a remaining
initial  term through  July 1, 2006,  with an option to renew for an  additional
term of five  years.  The lease  payments  are $1,500  per month,  subject to an
annual increase of 5%.

On November  26,  2003,  Smog  Centers  opened its second  smog check  test-only
facility,  located  at 555 West  Grand  Avenue in  Escondido,  California.  Smog
Centers  entered into a five-year lease for  approximately  1,028 square feet of
space,  comprised  of two  automotive  bays,  located  within  the All  Star Gas
Station,  which sits at a highly visible location  bordering three streets.  The
lease requires monthly payments of $1,500, with an increase of $100 per month in
November of 2006 and an  increase  of $100 per month in  November  of 2007.  The
lease contains an option to extend the lease term for an additional  five years.
Smog  Centers also leased  smog-testing  equipment  consisting  of a BAR 97 Host
Emissions  Analyzer and a Low Profile Maha  Dynamometer  for the  facility.  The
equipment lease requires monthly payments of $899 for 60 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.

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.  Smog Centers
entered  into a five-year  lease for  approximately  1,500 square feet of space,
comprised of one automotive bay. The lease requires  monthly payments of $1,500,
with an increase of the cost of living index every year.  The lease  contains an
option to extend the lease term for an additional five years.  Smog Centers also
leased smog-testing equipment consisting of a BAR 97 Host Emissions Analyzer and
a Maha  Dynamometer  for the facility.  The  equipment  lease  requires  monthly
payments  of $919 for 60 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.

Our fourth location  located at 1232 Los Vallecitos Blvd, Ste 104 in San Marcos,
California  will  not open  because  the city of San  Marcos  denied a  variance
conditional use.

We  charge a total of  $58.60  for a smog test for a  vehicle  that  passes  the
emissions test, which includes $49.75 for the inspection fee, $8.25 for the smog
certificate  (a  pass-through  cost) and $ .60 for the  transmission  fee to the
Vehicle Information Database (a pass-through cost). If the vehicle does not pass
the emissions test, we only charge $50.35,  because the smog  certificate is not
issued.  The  stations  that  have  the room to test  RV's we  charge a total of
$108.60. We advertise  extensively for all stations in a weekly publication with
discount coupons.














                                       18
<PAGE>
RESULTS OF  OPERATIONS  FOR THE  QUARTER  ENDED JUNE 30,  2005  COMPARED  TO THE
QUARTER ENDED JUNE 30, 2004:

Sales  Revenues:  For the second quarter of 2005, the Company had sales revenues
of $65,737,  compared  to $55,054 in sales  revenues  for the second  quarter of
2004.  For the first half of 2005,  the Company had sales  revenues of $120,546,
compared  to  $104,016  in sales  revenues  for the first half of 2004.  For the
second  quarter 2005 same store sales  $57,618  compared to second  quarter 2004
$55,054. This shows a same store increase of 4.65%.

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 second quarter of 2005 totaled $68,496,  as compared to $25,998
for the second  quarter of 2004. The cost of revenues  increased  because of the
company  trying to increase  the number of station  open and hiring  technicians
prior to a new station  opening,  and in the second quarter of 2004 the stations
were  open  for a total  of 46  hours a week now they are open for at least 60 a
week.  Cost of revenues  for the second  quarter of 2005  equaled  104% of sales
revenue.  First half 2005 cost of revenues  totaled $105,  878 compared to first
half 2004 of $50,832.  This increase is because of the company's efforts to grow
from two stations to three stations and preparing for a fourth.

Gross Profit: Gross profit is comprised of sales revenues less cost of revenues.
Gross profit for the second quarter of 2005 totaled  $(2,758),  or 104% of sales
revenue,  as compared to $14,669 for the second  quarter of 2004.  First half of
2005 totaled $14,669, as compared to $53,184 for the first half 2004.

Operating  Costs:  Operating  costs  consist  of  the  Company's  administrative
expenses,  and  smog  station  operating  expenses  including  depreciation  and
amortization. Operating costs totaled $107,181 for the second quarter of 2005 as
compared to $99,854 for the second  quarter of 2004.  The  increase in operating
costs is  attributable  to a third station opening up. First half 2005 operating
cost totaled $856,310 as compared to $204,706 in the first half of 2004.

Operating Loss: The Company's  operating loss for the second quarter of 2005 was
$119,034 as compared to $75,858 for the second  quarter of 2004. The increase in
operating loss is attributable to a new station.  First half loss is $855,796 as
compared to a loss of $156,974 in the first half of 2004.

Ordinary (Non-Operating) Income: The Company recognized ordinary (non-operating)
income of $0 in the  second  quarter  of 2004 as  compared  to $0 in the  second
quarter of 2005 and first  half 2005  income of $0 as  compared  to $4667 in the
first  half of 2004 due to the  write-off  of  accounts  payable  of $6,153  and
adjustments to income of ($1,486) to accurately  reflect asset  balances  during
the second quarter of 2004.

Net Loss Before Income Taxes: Net loss before income taxes represents  operating
loss plus ordinary  (non-operating)  income. For the second quarter of 2005, our
net loss was  $119,034 as  compared  to $75,858 for the second  quarter of 2004.
First half 2005 loss  $857,396  as  compared to  $156,974.  The  increase in the
Company's net loss is attributable to expansion efforts and consulting fees.








                                       19
<PAGE>
Income Tax  Provision:  Due to the Company's net loss of $119,034 for the second
quarter of 2005 and $75,858 for the second  quarter of 2004,  the  provision for
income tax for each of these quarters was $0.

Liquidity And Capital Resources: During the first half of 2005, the Company used
cash in operations of $279,482, compared to $137,582 for the first half of 2004.
The principal reason for the comparative first half increase of $141,900 in cash
used in  operations  is  attributable  to the  Company  growing  the  number  of
stations.  During the first half of 2005, cash provided by financing  activities
totaled  $337,017,  compared  to  $138,617  for  the  first  half of  2004.  The
comparative  first half  increase  of $198,400  in cash  provided  by  financing
activities is attributable the selling of shares at $1 per share of $231,500, an
increase in  capitalized  lease  obligations of $75,316 and an increase in notes
payable of $32,699.


ITEM 3.  CONTROLS AND PROCEDURES.

Based on an evaluation of our disclosure  controls and procedures as of June 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 two smog check  stations  and also  serves as our
Chief Financial Officer.

There was no significant change in the Company's internal control over financial
reporting that occurred  during the fiscal quarter ending June 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

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

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)

Reports on Form 8-K.

None filed in 2nd Quarter 2005






                                       20
<PAGE>
                                   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: August 10, 2005                   CALIFORNIA CLEAN AIR, INC.

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