U.S. 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,  2004

[  ]  TRANSITION  REPORT  UNDER  SECTION  13  OR  15(d)  OF  THE  EXCHANGE  ACT
     For  the  transition  period  from  _____________  to  ______________

                         Commission file number: 0-32893

                           CAL-BAYINTERNATIONAL, INC.
        (Exact name of small business issuer as specified in its charter)


           NEVADA                                         26-0021800
(State  or other jurisdiction of             (IRS Employer Identification  No.)
incorporation  or  organization)

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

                                 (714) 258-7070
                           (Issuer's telephone number)

                                 NOT APPLICABLE
    (Former name, former address and former fiscal year, if changed since last
                                     report)

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 [  ]

      APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
                            THE PRECEDING FIVE YEARS

Check  whether  the  registrant  filed  all documents and reports required to be
filed  by  Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities  under  plan  confirmed  by  a  court.  Yes  ____  No  ____

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The  aggregate  number  of  shares issued and outstanding of the issuer's common
stock  as  of  March  31,  2004  was  32,669,031  shares  of  $0.001  par value.

Transitional  Small  Business  Disclosure  Format  (Check  one):
Yes  [  ]  No  [X]


<PAGE>

<TABLE>
<CAPTION>


                   CAL-BAY INTERNATIONAL, INC. AND SUBSIDIARIES


                                      INDEX


PART I.      FINANCIAL INFORMATION                              PAGE NO.
                                                                --------
<S>         <C>                                                 <C>
   Item 1.   Financial Statements                                    3-6

             Consolidated Balance Sheets as of
             March 31, 2004 and 2003                                   3

             Comparative Consolidated Statements of
             Operations for the Three Months Ended
             March 31, 2004 and 2003                                   4

             Consolidated Statement of Changes in
             Stockholders' Equity for the Period Ended
             March 31, 2004                                            5

             Comparative Consolidated Statements of
             Cash Flows for the Three Months Ended
             March 31, 2004 and 2003                                   6

             Notes to the Consolidated Financial
             Statements                                             7-17

  Item 2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                   18-24

  Item 3.    Controls and Procedures                                  24


PART II.     OTHER INFORMATION

  Item 2.    Changes in Securities and Use of Proceeds                24

  Item 6.    Exhibits and Reports on Form 8-K                         25
             (a) Exhibits
             (b) Reports on Form 8-K

  Signatures                                                          26
</TABLE>


                                        2
<PAGE>

<TABLE>
<CAPTION>


                          CAL-BAY INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS (unaudited)
                                    March 31,

                                     ASSETS


                                                               2004          2003
                                                           ------------  ------------
<S>                                                        <C>           <C>
Current Assets:

  Cash (Note 1c). . . . . . . . . . . . . . . . . . . . .  $     2,931   $     8,244
  Prepaid Expenses. . . . . . . . . . . . . . . . . . . .          -0-         9,884
  Related Party Receivables (Note 1f) . . . . . . . . . .          -0-        21,500
                                                           ------------  ------------

  TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . .        2,931        39,628

Office Furniture and Equipment, at cost,
  net of accumulated depreciation of
  $12,255 and $7,437 respectively (Notes 1h & 2). . . . .       14,248        17,131

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

  TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . .  $    19,949   $    59,529
                                                           ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

  Accounts Payable & Accrued Expenses (Note 1i) . . . . .  $    61,985   $    27,737
  Income Taxes Payable (Notes 1j & 6) . . . . . . . . . .        1,600         1,600
  Current Portion of Capital Lease Obligation (Note 9). .        2,700         2,020
                                                           ------------  ------------

  TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . .       66,285        31,357

Capital Lease Obligation, net of Current Portion (Note 9)        8,594        11,718
                                                           ------------  ------------

  TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . .       74,879        43,075
                                                           ------------  ------------

Commitments and Contingencies (Note 10) . . . . . . . . .        - - -         - - -


Stockholders' Equity:

  Common Stock, $.001 par value; 75,000,000 shares
    authorized; shares issued and outstanding
    32,669,031 and 24,985,000 (Notes 1b, 1k, 3 & 5) . . .       32,669        24,985
  Additional Paid in Capital. . . . . . . . . . . . . . .    1,270,383       995,942
  Retained Deficit. . . . . . . . . . . . . . . . . . . .   (1,357,982)   (1,004,473)
                                                           ------------  ------------

    TOTAL STOCKHOLDERS' EQUITY (DEFICIT). . . . . . . . .      (54,930)       16,454
                                                           ------------  ------------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . .  $    19,949   $    59,529
                                                           ============  ============
</TABLE>


See  notes  to  consolidated  financial  statements.


                                        3
<PAGE>

<TABLE>
<CAPTION>


         CAL-BAY INTERNATIONAL, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS
                        (unaudited)
       For the Three Months Ended March 31, 2004 & 2003

                                  Three  Months  Ended
                                       March  31
                               --------------------------
                                   2004          2003
                               ------------  ------------

<S>                            <C>           <C>
Revenues
  Sales . . . . . . . . . . .  $       752   $       -0-
  Commission Income . . . . .       19,151        16,376
                               ------------  ------------

Total Revenues. . . . . . . .       19,903        16,376
                               ------------  ------------

Cost of Sales
  Purchases . . . . . . . . .          563           -0-
  Commission expense. . . . .          -0-           -0-
                               ------------  ------------

Total Cost of Sales . . . . .          563           -0-
                               ------------  ------------


  Gross profit. . . . . . . .       19,340        16,376

  Operating expenses. . . . .       69,296       283,245
                               ------------  ------------


  Net (loss) income . . . . .  $   (49,956)  $  (266,869)
                               ------------  ------------


  Net income
          Per share:
            Basic & Diluted .  $     (0.00)  $     (0.01)

  Weighted average
          Shares outstanding:
            Basic & Diluted .   31,669,031    24,857,501
</TABLE>


See  notes  to  consolidated  financial  statements.


                                        4
<PAGE>

<TABLE>
<CAPTION>


                                               CAL-BAY  INTERNATIONAL,  INC.
                                                        AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                         (unaudited)
                                             For the Period Ended March 31, 2004


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

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

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


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

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

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

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

 Balance at December 31, 2002. . . . .  23,710,000   23,710         780,467       (737,604)       66,573

Issuance of Common Stock for Services    7,409,031    7,409         452,466           ---       459,875

Private Sale of Common Stock . . . . .      50,000       50           1,450           ---         1,500

  Net Loss December 31, 2003                   ---      ---             ---      (570,422)     (570,422)
                                        ----------  ------------  ----------  ------------  ------------

Balance at December 31, 2003 . . . . .  31,169,031   31,169        1,234,383   (1,308,026)      (42,474)

Issuance of Common Stock for Services    1,500,000    1,500           36,000           ---       37,500

  Net (Loss) March 31, 2004                   ---       ---            ---         (49,956)     (49,956)
                                        ----------  ------------  ----------  ------------  ------------

Balance at March 31, 2004. . . . . . .  32,669,031  $32,669       $1,270,383   $(1,357,982)  $  (54,930)
                                        ==========  ============  ==========  =============  ============
</TABLE>


See  notes  to  consolidated  financial  statements.


                                        5
<PAGE>

<TABLE>
<CAPTION>


        CAL-BAY INTERNATIONAL, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (unaudited)
       For the Three Months Ended March 31, 2004 & 2003


                                             Three  Months  Ended
                                                  March  31
                                            ---------------------
                                              2004        2003
                                            ---------  ----------
<S>                                         <C>        <C>
  CASH FLOWS FROM
  OPERATING ACTIVITIES:

Net (loss) income. . . . . . . . . . . . .  $(49,956)  $(266,869)
                                            ---------  ----------
Adjustments to reconcile net
  Income (loss) to net cash
  Provided by operating activities
Depreciation . . . . . . . . . . . . . . .     1,006       1,228
Common stock issued for services . . . . .    37,500     216,750
Net (Decrease)
  To current assets &
  Current liabilities. . . . . . . . . . .      (203)     20,162
                                            ---------  ----------

Total adjustments. . . . . . . . . . . . .    38,403     238,140
                                            ---------  ----------

Total cash (used) by
  Operating activities . . . . . . . . . .   (11,653)    (28,729)
                                            ---------  ----------

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of lease payable . . . . . . . . .      (423)        -0-
                                            ---------  ----------

Total cash (used) by Financing activities.      (423)        -0-
                                            ---------  ----------

Net (decrease) . . . . . . . . . . . . . .   (12,076)    (28,729)
  In Cash

Cash & equivalents,
  Beginning of period. . . . . . . . . . .    15,007      36,973
                                            ---------  ----------

Cash & equivalents,
  End of period. . . . . . . . . . . . . .  $  2,931   $   8,244
                                            =========  ==========

Supplemental cash flow information:
Cash paid for interest . . . . . . . . . .  $    313   $     -0-
                                            =========  ==========
Cash paid for taxes. . . . . . . . . . . .  $    -0-   $     -0-
                                            =========  ==========
</TABLE>

Supplemental  disclosure  of  non-cash  activities:

In  January  of  2003,  the  Company  issued 1,275,000 shares of common stock as
consideration  for  certain  professional  and  consulting  expenses.

In  March  of  2004,  the  Company  issued  1,500,000  shares of common stock as
consideration  for  certain  professional  and  consulting  expenses.


See  notes  to  consolidated  financial  statements


                                        6
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(1)  Summary  of  Significant  Accounting  Policies

     (a)  Nature  of  Business

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

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

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

          On  August  17, 2003, the Company formed a Nevada corporation, Cal-Bay
          Analytical,  Inc.,  (CBA)  a  wholly owned subsidiary. As of March 31,
          2004,  this  subsidiary  does  not  have any business transactions and
          therefore  does not have an impact on the Company's financial position
          or  results  of  operations.

     (b)  Capitalization

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

          On  March  8,  2001,  Cal-Bay  International,  Inc. (formerly Var-Jazz
          Entertainment, Inc.) acquired all of the issued and outstanding common
          stock  of  CBC  in exchange for 17,112,000 shares of its common stock.
          The  shares  issued  in  the acquisition resulted in the owners of CBC
          having  operating  control  of Cal-Bay International, Inc. immediately
          following  the  acquisition.


                                        7
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (b)  Capitalization  (continued)

          Therefore,  for  financial  reporting  purposes, CBC is deemed to have
          acquired  Cal-Bay  International,  Inc.  in  a  reverse  acquisition
          accompanied  by  a recapitalization. The surviving entity reflects the
          assets and liabilities of Cal-Bay International, Inc. and CBC at their
          historical  book  values  and the historical operations of the Company
          are  those  of  CBC.  The  issued  common  stock  is  that  of Cal-Bay
          International,  Inc.  and  the  retained  earnings  is  that  of  CBC.

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

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

          On  January  9,  2003,  the  Company  filed  a  Form  S-8 Registration
          Statement  with  the  Securities  and  Exchange  Commission and issued
          1,275,000  common  shares  in  payment for professional and consulting
          services.

          On  May 7, July 9 and September 11, 2003, the Company issued 3,684,031
          restricted  common  shares in payment for consulting services. Also on
          September 9, 2003, the Company filed a Form S-8 Registration Statement
          with  the  Securities  and  Exchange  Commission  and issued 2,450,000
          common  shares  in  payment  for professional and consulting services.
          Most  recently,  in  March  of  2004,  the  Company  filed  a Form S-8
          Registration Statement with the Securities and Exchange Commission and
          issued  1,500,000 unrestricted common shares in payment for consulting
          services.

          (c)  Cash  and  Cash  Equivalents

          For purposes of the consolidated statements of cash flows, the Company
          considers  all highly liquid debt instruments with original maturities
          of  three  months  or  less to be cash equivalents. There were no cash
          equivalents  as  of  March  31,  2004.


                                        8
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (d)  Principles  of  Consolidation  and  Basis  of  Accounting

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

     (e)  Revenue  Recognition

          The  Company recognizes commission income in accordance with SAB 101 -
          Topic  13.A.3.  The  nature  of  each  of  CBC's  manufacturer's
          representation  agreements  requires that the products be shipped from
          the manufacturer to the customer, and that either a significant period
          of  time  elapse  thereafter  or  that  the  manufacturer must receive
          payment  from  the customer before payments are ultimately made to CBC
          for  orders  submitted. The determination as to exactly when the terms
          specified  in  the  sales  arrangements are substantially completed or
          fulfilled  by  the manufacturer and have been accepted by the customer
          and  the  ultimate  collectibility  of  the  commission  can  only  be
          reasonably  assured  when  the payments are ultimately received by the
          Company.  Commission  expenses earned by outside sales representatives
          are  recorded  as  cost of sales when the commission income that it is
          related  to  is  recognized;  however,  there  has  been no commission
          expenses  incurred  or  deferred  as  of  the  date of these financial
          statements.

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

     (f)  Related  Party  Receivables

          The  balance of related party receivables at March 31, 2003 was with a
          majority  stockholder,  was  interest  free  and due and payable as of
          March  31,  2003.

     (g)  Deposits

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

     (h)  Property  and  Equipment  and  Organizational  Expenditures

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


                                        9
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (i)  Accounts  Payable  an  Accrued  Expenses

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

     (j)  Income  Taxes

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

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

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

     (k)  Transactions  in  Capital  Stock

          All  securities  issued  by  the Company and its subsidiaries have not
          been registered under the Securities Act of 1933, as amended. They may
          not  be  sold, offered for sale, transferred, pledged or hypothecated,
          in  the  absence of a registration statement in effect with respect to
          the  securities  under  such  act,  or  an opinion of counsel or other
          evidence  satisfactory  to  the  Company that such registration is not
          required,  or  unless  sold  pursuant  to Rule 144 under such act. The
          Company's  free trading stock is currently involved in limited trading
          on  the  Over  the  Counter  Bulletin Board under the symbol CBYI. The
          trading  price  at March 31, 2004, was $0.022. See also Notes 3 and 5.


                                       10
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (l)  Earnings  Per  Share

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

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

     (m)  Recently  Issued  Accounting  Pronouncements

          In  April  2002, the ("FASB") issued SFAS No. 145, "Rescission of FASB
          Statements  No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
          Technical  Corrections."  SFAS  No.  145  updates,  clarifies,  and
          simplifies existing accounting pronouncements. This statement rescinds
          SFAS No. 4, which required all gains and losses from extinguishment of
          debt to be aggregated and, if material, classified as an extraordinary
          item,  net  of related income tax effect. As a result, the criteria in
          APB  No.  30 will now be used to classify those gains and losses. SFAS
          No. 64 amended SFAS No. 4 and is no longer necessary as SFAS No. 4 has
          been  rescinded.  SFAS  No.  44 has been rescinded, as it is no longer
          necessary.  SFAS  no.  145  amends SFAS No. 13 to require that certain
          lease  modifications  that  have  economic  effects  similar  to
          sale-leaseback  transactions  be  accounted  for in the same manner as
          sale-lease  transactions.

          This  statement  also  makes  technical  corrections  to  existing
          pronouncements. While those corrections are not substantive in nature,
          in  some  instances,  they may change accounting practice. The Company
          does not expect adoption of SFAS No. 145 to have a material impact, if
          any,  on  its  financial  position  or  results  of  operations.


                                       11
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (m)  Recently  Issued  Accounting  Pronouncements  -  (continued)

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

          SFAS  No.  147,  issued  in  October 2002 regarding the acquisition of
          certain  financial  institutions  does  not  apply  to  the  Company.

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

          In  April  2003,  the  ("FASB")  issued  SFAS No. 149, "Accounting for
          Derivative  Instruments and Hedging Activities". This statement amends
          FASB  Statement  No.  133  to improve financial reporting by requiring
          that  contracts  with  comparable  characteristics  be  accounted  for
          similarly.  This  statement is effective for contracts entered into or
          modified  after  June 30, 2003. The changes due to this statement will
          result in more consistent reporting of contracts as either derivatives
          or  hybrid  instruments.  The Company does not expect adoption of SFAS
          No.  149  to have a material impact, if any, on its financial position
          or  results  of  operations.


                                       12
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (m)  Recently  Issued  Accounting  Pronouncements  -  (continued)

          In May 2003, the ("FASB") issued SFAS No. 150, "Accounting for Certain
          Financial  Instruments  with  Characteristics  of both Liabilities and
          Equity".  This  statement  establishes  standards  for  how  an issuer
          classifies  and  measures  certain  financial  instruments  with
          characteristics  of  both  liabilities and equity. The changes in this
          statement  will  result  in  a  more complete depiction of an entity's
          liabilities and equity. The changes will also enhance the relevance of
          accounting  information  by  providing  more  information  about  the
          entity's  obligations  to transfer assets or issue shares. The Company
          does not expect adoption of SFAS No. 150 to have a material impact, if
          any,  on  its  financial  position  or  results  of  operations.

     (n)  Basis  of  Presentation

          The  Company's  financial  statements  have  been  prepared on a going
          concern basis, which contemplates, among other things, the realization
          of  assets and the satisfaction of liabilities in the normal course of
          business.  However,  there  is  substantial  doubt about the Company's
          ability  to  continue as a going concern because of its losses and its
          net deficit as of March 31, 2004. The Company's continued existence is
          dependent  upon  its  ability  to  generate  more  profitable business
          activities from its customers. The financial statements do not include
          any  adjustments  relating to the recoverability and classification of
          recorded  asset  amounts  or  the  amount  and  classification  of
          liabilities,  or  any  other adjustment that might be necessary should
          the  Company  be unable to continue as a going concern. The outcome of
          this  uncertainty  cannot  be  determined  at  this  time.

(2)  Office  Furniture  and  Equipment

     A  summary  of  property  and  equipment  is  as  follows  as  of March 31:

<TABLE>
<CAPTION>

                                  2004       2003
                                ---------  --------
<S>                             <C>        <C>
Office Furniture &
  Computer Equipment . . . . .  $ 26,503   $24,568
Less: Accumulated Depreciation   (12,255)   (7,437)
                                ---------  --------
  Net Furniture and Equipment.  $ 14,248   $17,131
                                =========  ========
</TABLE>


                                       13
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

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

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

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


<TABLE>
<CAPTION>

                                          Mach  31,  2002
                               -------------------------------
                                CBYI       CBC       Combined
                               & CBA
                               -------  ----------  ----------
<S>                            <C>      <C>         <C>
  Current assets. . . . . . .  $   -0-  $   2,931   $   2,931
  Property and equipment, net      -0-     14,248      14,248
  Other assets. . . . . . . .      -0-      2,770       2,770

                               -------  ----------  ----------
                                   -0-  $  19,949   $  19,949
                               =======  ==========  ==========

  Current liabilities . . . .  $   -0-  $  66,285   $  66,285
  Long term liability . . . .               8,594       8,594
  Stockholders' equity. . . .      -0-    (54,930)    (54,930)

                               -------  ----------  ----------
                               $   -0-  $  19,949   $  19,949
                               =======  ==========   =========

                                          Mach  31,  2003
                               -------------------------------
                                CBYI       CBC       Combined
                               -------  ----------  ----------
  Current assets. . . . . . .  $   -0-  $  39,628   $  39,628
  Property and equipment, net      -0-     17,131      17,131
  Other assets. . . . . . . .      -0-      2,770       2,770

                               -------  ----------  ----------
                               $   -0-  $  59,529   $  59,529
                               =======  ==========  ==========

  Current liabilities . . . .  $   -0-  $  31,357   $  31,357
  Long term liability . . . .              11,718      11,718
  Stockholders' equity. . . .      -0-     16,454      16,454

                               -------  ----------  ----------
                               $   -0-  $  59,529   $   59,529
                               =======  ==========  ==========
</TABLE>


                                       14
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004


(4)  Significant  Customers/Suppliers

     A  majority  of  CBC's  commission  income  is  derived from five unrelated
     manufacturing  companies  that  it  represents.  The commission income from
     these five significant customers was $18,750 and $12,214, respectively, for
     the  three  months  ended  March  31,  2004  and  2003  (see  also Note 7).

(5)  Certain  Beneficial  Owners  and  Management

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

<TABLE>
<CAPTION>

                                               March  31, 2004
                                         -------------------------------

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

  Robert Thompson - President & CEO          10,826,653          33.1%
  Charles Prebay- Vice President & CFO        1,750,000            5.4
  Linwood C. Meehan III                       2,750,000            8.4
  Dante Panella                               1,050,000            3.2
  Cede  &  Co. - Investor                    14,345,660           43.9
  All  Other  Investors                       1,946,718            6.0
                                         -----------------  -------------

Total shares issued & outstanding            32,669,031         100.0%
                                         =================  =============


                                               March  31,  2003
                                         -------------------------------

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

  Robert Thompson - President & CEO          11,306,653          45.3%
  Charles Prebay- Vice Presient & CFO         1,608,400            6.4
  Chris Walker                                1,059,000            4.2
  Cede  &  Co. - Investor                     7,868,650           31.5
  All  Other  Investors                       3,142,297           12.6
                                         -----------------  -------------

Total shares issued & outstanding            24,985,000         100.0%
                                         =================  =============
</TABLE>

(6)  Income  Taxes

     As of March 31, 2004, the Company had provided taxes on consolidated income
     for  Federal  and  State  income  taxes,  estimated  at  $1,600.

     At  March  31, 2004 deferred taxes consisted of a net tax assets (benefits)
     of  approximately  $620,762,  due  to  operating  loss carryforwards of the
     Company  totaling  $1,389,708  which  were  fully offset by equal valuation
     allowances  since there is no assurance of recovery. The net operating loss
     carryforwards  will  expire  beginning  in  2013.


                                       15
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(7)  Off  Balance  Sheet  Risk

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

(8)  Equity  Line  of  Credit

     In April 2003, the Company entered into an equity line of credit investment
     agreement  with Dutchess Private Equities Fund, L.P. (Dutchess). Under this
     equity  line  of credit, the Company may periodically sell shares of common
     stock  to  Duchess  to  raise  capital.  The  Company  is in the process of
     registering 10,675,675 shares of common stock to undertake this equity line
     of  credit  and issued 675,675 shares to Dutchess as consulting fees. There
     are  no  transactions  under  this  agreement  as  of  March  31,  2004.

(9)  Leases

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

     The  future  minimum  commitments under this lease arrangement at March 31,
     2004  are  as  follows:


<TABLE>
<CAPTION>

Period  Ended  March  31,

<S>                      <C>

2004. . . . . . . . . .  $ 2,700
2005. . . . . . . . . .    2,983
2006. . . . . . . . . .    3,295
2007. . . . . . . . . .    2,316
  Thereafter. . . . . .      -0-
                         -------

Net minimum commitments   11,294

  Less current portion.    2,700
                         -------

  Long-term commitments  $ 8,594
                         =======
</TABLE>


                                       16
<PAGE>

CAL-BAY  INTERNATIONAL,  INC.
AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
March  31,  2004

(10)  Commitments  and  Contingencies

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


<TABLE>
<CAPTION>

Period  Ended  March  31,

<S>           <C>
2005 . . . .   13,850
  Thereafter        0
              -------
  Total. . .  $13,850
              =======
</TABLE>


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


                                       17
<PAGE>

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION

FORWARD-LOOKING  STATEMENT  NOTICE

When  used  in  this  report,  the  words "may," "will," "expect," "anticipate,"
"continue,"  "estimate,"  "project,"  "intend,"  and  similar  expressions  are
intended  to  identify  forward-looking statements within the meaning of Section
27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of  1934  regarding events, conditions, and financial trends that may affect the
Company's  future plans of operations, business strategy, operating results, and
financial  position.  Persons  reviewing  this  report  are  cautioned  that any
forward-looking  statements  are  not  guarantees  of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors.  Such factors are discussed under the "Item 2.  Management's Discussion
and  Analysis  of  Financial  Condition or Plan of Operations," and also include
general  economic  factors and conditions that may directly or indirectly impact
the  Company's  financial  condition  or  results  of  operations.

BUSINESS  DESCRIPTION

GENERAL

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

Cal-Bay  Controls,  Inc. originally formed in 1976 as a sole proprietorship that
was  acquired  by  Robert  J.  Thompson  in 1990.  On February 22, 2001, Cal-Bay
Controls  incorporated  in  the State of Nevada and was subsequently acquired by
Var-Jazz  on  March  8,  2001.

On March 7, 2002, Cal-Bay International's Form 10-SB registration statement went
effective  and  in June of 2002, Cal-Bay International, Inc. moved from the Pink
Sheets to the Over the Counter Bulletin Board where the Company currently trades
under  the  symbol  CBYI.

Cal-Bay  Analytical,  Inc.  was  incorporated  on August 7, 2003 in the State of
Nevada  and  is  also  operated  as  a  wholly  owned  subsidiary.

OUR  BUSINESS

Cal-Bay  International's  operating  subsidiaries are Cal-Bay Controls (CBC) and
Cal-Bay  Analytical  (CBA).  Both  CBC  and  CBA operate as manufacturer's sales
representatives and distributors of analytical products, services and associated
equipment through license and distribution agreements.  CBC primarily serves the
process,  environmental  and  safety  markets,  while  CBA  primarily serves the
laboratory markets. Cal-Bay does not currently have any international operations
and  does not intend to pursue an international market at this time, but expects
to  do  so  in  the  future.


                                       18
<PAGE>

CAL-BAY  CONTROLS  (CBC)

CBC  is  composed  of three divisions, the Representative/Distribution Division,
the  Systems  Division  and  the  New  Products  Division.  CBC's operations are
focused  mainly  in  California and Nevada with a small percentage of sales made
elsewhere  in  the  United  States.

REPRESENTATIVE/DISTRIBUTION  DIVISION

CBC's  Representative  and  Distribution  Division  currently  serves markets in
California,  Nevada  and  Hawaii. Cal-Bay represents and/or distributes products
from  many  manufacturers  of  engineered  products  for  the  process  control,
environmental  and  safety  markets.  The  process  control  market  involves
instrumentation  and  equipment  used  to  help  manufacturing plants control or
improve  the operations of specific production or manufacturing processes within
the  plant.  The  environmental  market  uses  instrumentation  and equipment to
measure  or  help  reduce  air  and/or  water  pollution produced by industrial,
utility  or municipal facilities. The safety market requires instrumentation for
use  in  various  industries  to  meet  personnel  safety requirements typically
imposed  by  OSHA  regulations.

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

     Within  the  designated  sales territory, CBC serves the following markets:

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

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

During  the  1980's and 1990's there were many new regulations, on the local and
federal level, which required the installation of new analytical instrumentation
and  monitoring  systems for both air and water pollution control.  CBC has been
very successful in selling analyzers for use in the environmental markets and we


                                       19
<PAGE>

believe  the  market  will  continue to be strong in this area.  During the late
1990's  the  number  of  new  regulations  declined,  however,  CBC  expects new
regulations  to  be  implemented  in  several  areas in the coming decade, which
should  result  in  an  increase  in  this  market  in  the  near  future.

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

The  EPA  and  OSHA  frequently  implement  new  regulations  seeking to improve
quality,  safety  and  the  environment.  When  new regulations are implemented,
industry  is  required  to  comply with the regulations, often necessitating the
purchase  of new equipment and controls. While CBC cannot assure new regulations
translate  directly  to  additional  sales,  it  is management's experience that
increased  regulations  typically  result  in  an  increase  in  sales.

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

SYSTEMS  DIVISION

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

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

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

NEW  PRODUCTS  DIVISION

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


                                       20
<PAGE>

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

During  the  first  quarter  of 2003 Cal-Bay reached an agreement to acquire the
technology rights to several products developed by Spectra Unlimited, a recently
dissolved  company.  Cal-Bay  had  been  in negotiations with the owners of this
technology  during  the  past  year,  and  a letter of intent had been signed in
late-2002.  After  completion  of  the  due  diligence  process,  a  contractual
agreement  for  Cal-Bay  to  acquire  the  rights to the technology developed by
Spectra  Unlimited  was  reached  and  signed  by  all  parties.

     The  Spectra  products  include  the  following:

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

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

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

It  is currently unknown what the market potential of these products are, or the
amount  of  additional  research  and  product development that will be required
before  taking  these  products to market, however Cal-Bay believes that each of
these  products  can  be developed with a fairly limited amount of resources and
that  these products will fit very well into our existing areas of business.  If
the  R&D  of  these products is successful it is anticipated that these products
will  be  manufactured  and  sold  either  by  a  new  subsidiary  company to be
established  or  by  a  company  to  be  acquired  by Cal-Bay that already has a
manufacturing  capability  and  sales  organization.

PATTERN  RECOGNITION  TECHNOLOGY  -  PRODUCT  DEVELOPMENT
---------------------------------------------------------

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

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


                                       21
<PAGE>

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

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

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

Cal-Bay  has  had preliminary discussions with the former owner of an analytical
sensor  company  regarding  the  potential development of a new line of sensors.
Unfortunately,  these discussions have not progressed and are currently on hold.
It is possible that these discussions will continue in the future, but there are
currently  no  plans  or  schedule  for  this  to  occur.

FUTURE  PRODUCT  R&D

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

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

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

CAL-BAY  ANALYTICAL  (CBA)

CBA  operates  as  a  manufacturer's  sales  representative  and  distributor of
analytical  products,  services  and  associated  equipment  through license and
distribution  agreements.

CBA  primarily  serves the laboratory markets.  The laboratory markets include a
variety of industrial, governmental and private contract testing laboratories as
well  as  research  and development laboratories operated by private industries,
universities  and  governmental  research  laboratories.

CBA  has  a  signed  contract/agreement with each of the companies it represents
which  grants  CBA  the  rights  to sell the assigned products/services within a
defined  sales  territory  (typically  California,  Nevada,  Arizona,  Utah  and


                                       22
<PAGE>

Hawaii).  In most cases these contracts are exclusive in the sense that no other
sales  representative is allowed to sell the products covered by the contract in
the  same sales area, however, there are a few contracts which are non-exclusive
in  the sense that there may be more than one authorized sales agents in a given
sales  area.  CBA  receives  compensation  for  selling  efforts  in the form of
commissions  (typically  10-20% of the net sales price) on all sales of products
within  the  specified  sales  territory.

FUTURE  POTENTIAL  MERGERS  & ACQUISITIONS AND/OR NEW SUBSIDIARY COMPANIES TO BE
FORMED  BY  CAL-BAY  INTERNATIONAL

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

Alternatively,  the  Company  may  decide  to  form  a new subsidiary company or
companies  n  the  future  as  it either develops new products or identifies new
areas  of  business  opportunity.

THREE  MONTH  PERIODS  ENDED  MARCH  31,  2004  AND  2003

Cal-Bay  Analytical  did not have any business transactions as of March 31, 2004
and  therefore  had no impact on the total Company business results.  All of the
following  business  results are from the Cal-Bay Controls operating subsidiary.

Cal-Bay  generated  $19,151  in  commission  income  from  our
representative/distributor  division,  and product sales in the systems division
of  $752,  for a total revenue of $19,903 for the three-month period ended March
31,  2004  with  cost  of  sales  of  $563  for a gross profit of $19,340. These
revenues  compare  with  $16,376 in commission income and product sales revenues
for  the  three-month  period  ended March 31, 2003 with cost of sales of $0 and
gross profit of $16,376. Gross profit for the three-month period ended March 31,
2004  was  $2,964 more than the same period ended in 2003. The net cash provided
by  operating activities for the three months ended March 31, 2004 was ($49,956)
compared  to  net  cash  of  ($266,869)  from  the  comparable  period  in 2003.

Operating  expenses were $69,296 for the three-month period ended March 31, 2004
compared with $283,245 for the three-month period ended March 31, 2003, which is
a  decrease  of  $213,949.  The  net gain (loss) in income was ($49,956) for the
three-month  period  ended  March  31,  2004 compared to ($266,869) for the same
period  ended  in  2003,  which  is  an  increase in net income of $216,913. The
majority  of  the  expenses during the current period are a direct result of the
issuance  of  1,500,000  shares  of  common Cal-Bay stock, valued at $37,500, as
consideration  for  certain  existing  and  future  professional  and consulting
expenses.  For accounting purposes, the value of this stock is being taken as an
expense  in  this  period,  although  much  of  the  professional and consulting
services  will  be performed in the future, which should help to reduce expenses
in  the  future.


                                       23
<PAGE>

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  March  31, 2004, Cal-Bay had total assets of $19,949 including $2,931 in
cash on hand, security deposits of $2,770, and office furniture and equipment of
$14,248  net  accumulated depreciation.  Current liabilities totaled $66,285 and
included  $61,985  in  accounts  payable  and accrued expenses, $1,600 in income
taxes  payable,  and  $2,700 in the current portion of a capital lease of office
equipment.

Cal-Bay  does  not  anticipate  any substantial new capital expenditures for the
next  twelve months, and does not plan to move to a new facility or to otherwise
increase  the  overhead  expense level in any way. Cal-Bay plans to continue the
current  operations  of  all subsidiaries with the present management structure,
financial  and  operational  goals  for  the  near  term.  Based upon the sales,
expense  and  income  results  from  the  first  quarter  of  operations and our
projections  for  the  remainder  of  the year, the Company believes that it can
maintain the current level of operations for the rest of the year without having
to  raise  additional funds for operational purposes.  The company believes that
its  cash  needs to maintain current operations can be met with cash on hand and
revenues from accounts receivable on orders for at least the next twelve months.
However,  should  the  Company  require additional capital, the Company may sell
additional  stock,  arrange  debt  financing  or  seek  other avenues of raising
capital.

ITEM  3.  CONTROLS  AND  PROCEDURES

As  of  March 31, 2004, under the supervision of our Chief Executive Officer and
Chief  Financial  Officer,  we  evaluated the effectiveness and operation of our
information disclosure controls and reporting procedures pursuant to Rule 13a-14
of  the  Securities  Exchange  Act of 1934.  Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that our disclosure
controls  and  procedures are effective.  There have been no significant changes
in  internal  controls or other factors that could significantly affect internal
controls  subsequent  to  the  date  we  carried  out  our  evaluation.

PART  II.  OTHER  INFORMATION

ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS

On  January  9,  2003  we issued 1,275,000 common shares to four individuals for
professional  and  consulting  services.  The services were not connected to any
fund  raising  activities.  At the time of issuance, the common stock was valued
at  $216,750.  The  shares  were  registered  on  Form  S-8  as  filed  with the
Securities  and  Exchange  Commission.

On  September 2, 2003 we filed a registration statement on Form S-8 dated August
29,  2003  reporting  the  issuance  of 2,450,000 shares valued at $73,500.  The
shares  were issued to two individuals for ongoing consulting and legal services
unrelated  to  fund  raising  activities.

In  July and September of 2003, we issued a total of 3,008,356 restricted common
shares  of  Cal-Bay  to  three  unrelated  individuals  for  ongoing  consulting
services.  The  shares were issued in a private transaction without registration
in  reliance  of  the  exemption provided by Section 4(2) of the Securities Act.
The  investors  had access to all material information pertaining to Cal-Bay and
its  financial  condition.  The  investors  also completed and signed investment
agreements  attesting  to their sophistication or accredited investor status and
investment  intent.  No  broker was involved and no commissions were paid on the
transactions.

On  July  29,  2003, we sold 50,000 shares Cal-Bay common stock to an accredited
investor  for  $1,500.  The  shares were issued in a private transaction without


                                       24
<PAGE>

registration  in  reliance  of  the  exemption  provided  by Section 4(2) of the
Securities  Act.  The investor had access to all material information pertaining
to  Cal-Bay  and  its  financial condition.  The investor completed and signed a
statement  attesting  to  his  sophistication  or accredited investor status and
investment  intent.  No  broker was involved and no commissions were paid on the
transaction.

On  February  12,  2004 we filed a registration statement on Form S-8  reporting
the  issuance  of 1,500,000 shares valued at $37,500.  The shares were issued to
two individuals for ongoing consulting and investor relations services unrelated
to  fund  raising  activities.

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

REPORTS  ON  FORM  8-K:

Cal-Bay  did not file any reports on Form 8-K during the 90 days ended March 31,
2004.

<TABLE>
<CAPTION>


EXHIBITS:


NUMBER  TITLE                                                 LOCATION

<C>     <S>                                                   <C>
31.1    Certification of Chief Executive Officer pursuant to  Attached
        Section 302 of the Sarbanes-Oxley Act of 2002

31.2    Certification of Chief Financial Officer pursuant to  Attached
        Section 302 of the Sarbanes-Oxley Act of 2002

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

32.2    Certification of Chief Financial Officer pursuant to  Attached
        Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>


                                       25
<PAGE>

                                   SIGNATURES

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

                              CAL-BAY  INTERNATIONAL,  INC.


Date:  May 13, 2004           By: /s/ Robert  J.  Thompson
                              ----------------------------
                              Robert  J.  Thompson
                              Chief  Executive  Officer



Date:  May 13, 2004           By: /s/ Charles  A.  Prebay
                              ---------------------------
                              Charles  A.  Prebay
                              Chief  Financial  Officer


                                       26
<PAGE>