U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                   FORM 10-QSB

     [  X  ]     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF THE
SECURITIES  EXCHANGE  ACT  OF  1934

     For  the  quarterly  period  ended  March  31,  2003

     [   ]     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
SECURITIES  EXCHANGE  ACT  OF  1934

     For  the  transition  period  from     to

                           Commission File No. 0-32893
                           CAL-BAY INTERNATIONAL, 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, address and fiscal year, if changed since last report)

Check  whether  the  issuer  (1)  has  filed all reports required to be filed by
Section  13  or 15(d) of the Exchange Act during the preceding 12 months (or for
such  shorter period that the issuer 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 has filed all documents and reports required to be
filed  by  Sections  12,  13,  or  15(d)  of  the Exchange Act subsequent to the
distribution  of  securities under a plan confirmed by a court. Yes [  ] No [  ]

APPLICABLE  ONLY  TO  CORPORATE  ISSUERS:

State the number of shares outstanding of each of the issuer's classes of common
equity,  as  of  March  31,  2003:  24,985,000  shares  of  common  stock.

Transitional  Small  Business  Format:  Yes  [   ]  No  [  X  ]


<PAGE>

<TABLE>
<CAPTION>


                   CAL-BAY INTERNATIONAL, INC. AND SUBSIDIARY


                                      INDEX


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

             Unaudited Consolidated Balance Sheets as of
             March 31, 2003 and 2002                                   3

             Comparative Unaudited Consolidated Statements of
             Operations for the Three Months Ended
             March 31, 2003, and 2002                                  4

             Unaudited Consolidated Statement of Changes in
             Stockholders' Equity for the Period Ended
             March 31, 2003                                            5

             Comparative Unaudited Consolidated Statements of
             Cash Flows for the Three Months Ended
             March 31, 2003, and 2002                                  6

             Notes to the Unaudited Consolidated Financial
             Statements                                             7-16

  Item 2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                   17-23

  Item 3.    Controls and Procedures                                  23


PART II.     OTHER INFORMATION

  Item 6.    Exhibits and Reports on Form 8-K                         23

             Signatures                                               24
</TABLE>

(Inapplicable Items have been omitted)


                                        2
<PAGE>

<TABLE>
<CAPTION>


                          CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                    CONSOLIDATED BALANCE SHEETS (unaudited)
                              March 31, 2003 & 2002

                                     ASSETS

                                                               2003        2002
                                                           ------------  ---------
<S>                                                        <C>           <C>
Current Assets:

  Cash (Note 1c). . . . . . . . . . . . . . . . . . . . .  $     8,244   $  7,676
  Prepaid Expenses. . . . . . . . . . . . . . . . . . . .        9,884        -0-
  Related Party Receivables (Note 4). . . . . . . . . . .       21,500     18,500
                                                           ------------  ---------

  TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . .       39,628     26,176

Office Furniture and Equipment, at cost,
  net of accumulated depreciation of
  $7,437 and $4,538 respectively (Notes 1h & 2) . . . . .       17,131      4,641

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

  TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . .  $    59,529   $ 33,308
                                                           ============  =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

  Accounts Payable & Accrued Expenses (Note 1i) . . . . .  $    27,737   $ 34,972
  Income Taxes Payable (Notes 1j & 6) . . . . . . . . . .        1,600      1,600
  Current Portion of Capital Lease Obligation (Note 9). .        2,020        -0-
                                                           ------------  ---------

  TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . .       31,357     36,572

Capital Lease Obligation, net of Current Portion (Note 9)       11,718        -0-

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

Stockholders' Equity:

  Common Stock, $.001 par value; 75,000,000 shares
    authorized; shares issued and outstanding
    24,985,000 and 21,390,000 (Notes 1b, 1k, 3 & 5) . . .       24,985   $ 21,390
  Additional Paid in Capital - (Discount on Stock). . . .      995,942     (3,613)
  Retained Deficit. . . . . . . . . . . . . . . . . . . .   (1,004,473)   (21,041)
                                                           ------------  ---------

    TOTAL STOCKHOLDERS' EQUITY (DEFICIT). . . . . . . . .       16,454     (3,264)
                                                           ------------  ---------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . .  $    59,529   $ 33,308
                                                           ============  =========
</TABLE>

                See notes to consolidated financial statements.


                                        3
<PAGE>

<TABLE>
<CAPTION>



           CAL-BAY INTERNATIONAL, INC. AND SUBSIDIARY
             CONSOLIDATED STATEMENTS OF OPERATIONS
        For the Three Months Ended March 31, 2003 & 2002


                                   Three  Months  Ended
                                        March  31
                                -------------------------
                                    2003         2002
                                ------------  -----------
                                (unaudited)   (unaudited)
<S>                             <C>           <C>
  Revenues . . . . . . . . . .  $    16,376   $    84,001

  Cost of Sales. . . . . . . .          -0-           -0-
                                ------------  -----------


  Gross profit . . . . . . . .       16,376        84,001

  Operating expenses . . . . .      283,245        81,204
                                ------------  -----------


  Net (loss) income. . . . . .  $  (266,869)  $     2,797
                                ------------  -----------


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

  Weighted average
          Shares outstanding:
            Basic & Diluted. .   24,857,501    21,390,000
</TABLE>

                 See notes to consolidated financial statements.


                                        4
<PAGE>

<TABLE>
<CAPTION>


                                               CAL-BAY  INTERNATIONAL,  INC.
                                                        AND SUBSIDIARY
                                  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                         (unaudited)
                                             For the Period Ended March 31, 2003


                                                                  Additional
                                                                  Paid-in
                                            Common  Stock         Capital
                                        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    1,275,000    1,275         215,475           ---        216,750

  Net (Loss) March 31, 2003                   ---       ---            ---        (266,869)     (266,869)
                                        ----------  -----------  ------------  -------------  ------------

Balance at March 31, 2003. . . . . . .  24,985,000  $24,985       $ 995,942    $(1,004,473)      $ 16,454
                                        ==========  ===========  ============  =============  =============
</TABLE>

                 See notes to consolidated financial statements.


                                        5
<PAGE>

<TABLE>
<CAPTION>


         CAL-BAY  INTERNATIONAL,  INC.  AND  SUBSIDIARY
            CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
    For  the  Three  Months  Ended  March  31,  2003  &  2002


                                        Three  Months  Ended
                                             March  31
                                      --------------------------
                                         2003           2002
                                      ------------  ------------
                                      (unaudited)   (unaudited)
<S>                                   <C>           <C>
CASH FLOWS FROM
  OPERATING ACTIVITIES:

Net (loss) income. . . . . . . . . .  $  (266,869)  $     2,797
                                      ------------  ------------
Adjustments to reconcile net
  Income (loss) to net cash
  Provided by operating activities
Depreciation . . . . . . . . . . . .        1,228           459
Common stock issued for services . .      216,750           -0-
Net (Decrease)
  To current assets &
  Current liabilities. . . . . . . .       20,162       (21,182)
                                      ------------  ------------

Total adjustments. . . . . . . . . .      238,144       (20,723)
                                      ------------  ------------

Net cash (used) by
  Operating activities . . . . . . .      (28,729)      (17,926)
                                      ------------  ------------


Net (decrease) increase. . . . . . .      (28,729)      (17,926)
  In Cash

Cash & equivalents,
  Beginning of period. . . . . . . .       36,973        25,602
                                      ------------  ------------

Cash & equivalents,
  End of period. . . . . . . . . . .  $     8,244   $     7,676
                                      ============  ============

Supplemental cash flow information:
Cash paid for interest . . . . . . .  $       -0-   $       -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.




                 See notes to consolidated financial statements


                                        6
<PAGE>


                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)


(1)  Summary  of  Significant  Accounting  Policies

     (a)  Nature  of  Business

          Cal-Bay  International,  Inc.  and  subsidiary  ("The  Company"),  was
          originally  organized  as Var-Jazz Entertainment, Inc., under the laws
          of  the  State  of  Nevada,  on  December  8,  1998. On March 8, 2001,
          Var-Jazz  Entertainment,  Inc. acquired 100% of the outstanding common
          shares  of  Cal-Bay  Controls, Inc., which has been accounted for as a
          reverse  acquisition.  Subsequent  to  this  acquisition,  Var-Jazz
          Entertainment,  Inc.  changed  its name to Cal-Bay International, Inc.
          The  Company  does not currently have any international operations but
          expects  to  in  the  future.  See also Note 3. Cal-Bay Controls, Inc.
          (CBC)  was originally a sole proprietorship, being operated since 1990
          under  the  name Cal-Bay Controls, in Tustin, California, by its owner
          Robert  Thompson.  CBC,  which represents the only operating entity of
          the Company, is a manufacturer's representative and distribution firm,
          serving  California,  Nevada  and  Hawaii  in  process, environmental,
          safety  and  laboratory  markets.  On  February  22,  2001,  CBC  was
          incorporated  under  the  name  Cal-Bay  Controls,  Inc.

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

     (b)  Capitalization

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

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


                                        7
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (b)  Capitalization  (continued)

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

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

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

          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.

     (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,  2003.

     (d)  Principles  of  Consolidation  and  Basis  of  Accounting

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

     (e)  Revenue  Recognition

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


                                        8
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)


(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (e)  Revenue  Recognition  (continued)

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

     (f)  Loan  Receivable  From  Related  Parties

          The  balance  of  related  party  loan receivable is with the majority
          stockholder,  is  interest free and is due and payable as of 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, totaling $1,554, as of December 31, 2001, and have
          been  expensed  as  incurred in accordance with SOP 98-5. Betterment's
          and  improvements are capitalized and depreciated over their estimated
          useful  lives,  while  repairs and maintenance costs are expensed when
          incurred.


     (i)  Accounts  Payable  an  Accrued  Expenses

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

     (j)  Income  Taxes

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

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


                                        9
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)


(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (j)  Income  Taxes  (continued)

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

     (k)  Transactions  in  Capital  Stock

          All  securities issued by the Company and CBC have not been registered
          under  the  Securities  Act of 1933, as amended. They may not be sold,
          offered for sale, transferred, pledged or hypothecated, in the absence
          of  a  registration statement in effect with respect to the securities
          under  such  act,  or  an  opinion  of  counsel  or  other  evidence
          satisfactory to the Company that such registration is not required, or
          unless  sold  pursuant  to Rule 144 under such act. The Company's free
          trading stock is currently involved in limited trading on the Over the
          Counter  Bulletin  Board  under  the symbol CBYI. The trading price at
          March  31,  2003,  was  $0.07.  See  also  Notes  3  and  5.

     (l)  Earnings  Per  Share

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


                                       10
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (l)  Earnings  Per  Share  (continued)

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

     (m)  Recently  Issued  Accounting  Pronouncements

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


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


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


                                       11
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (m)  Recently  Issued  Accounting  Pronouncements  -  (continued)

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

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

          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.


                                       12
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (m)  Recently  Issued  Accounting  Pronouncements  -  (continued)


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


(2)  Office  Furniture  and  Equipment

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

<TABLE>
<CAPTION>

                                  2003      2002
                                --------  --------
<S>                             <C>       <C>
Office Furniture &
  Computer Equipment . . . . .  $24,568   $ 9,179
Less: Accumulated Depreciation   (7,437)   (4,538)
                                --------  --------
  Net Furniture and Equipment.  $17,131   $ 4,641
                                ========  ========
</TABLE>

(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.


                                       13
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)


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


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

<TABLE>
<CAPTION>


                                          Mach  31,  2003
                               -------------------------------
                                CBYI       CBC       Combined
                               -------  ----------  ----------
<S>                            <C>      <C>         <C>
  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
                               =======  ==========  ==========


                                          Mach  31,  2002
                               -------------------------------
                                CBYI       CBC       Combined
                               -------  ----------  ----------
  Current assets. . . . . . .  $   -0-  $  26,176   $  26,176
  Property and equipment, net      -0-      4,641       4,641
  Other assets. . . . . . . .      -0-      2,491       2,491

                               -------  ----------  ----------
                                   -0-  $  33,308   $  33,308
                               =======  ==========  ==========

  Current liabilities . . . .  $   -0-  $  36,572   $  36,572
  Stockholders' equity. . . .      -0-     (3,264)     (3,264)

                               -------  ----------  ----------
                               $   -0-  $  33,308   $  33,308
                               =======  ==========   =========
</TABLE>


(4)  Related  Party  Transactions  &  Significant  Customers/Suppliers

     The Company has advanced the majority stockholder a total of $21,500, which
     is  included  in  the  accompanying  financial  statements as related party
     receivable. The advance is interest free and is due and payable as of March
     31,  2003.


                                       14
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)


(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,  2003
                                           -------------------------
Shareholder/Position/Title                 Shares  Held   Ownership
----------------------------------------   ------------  -----------
<S>                                        <C>           <C>
Robert  Thompson - President & CEO          11,306,653        45.3 %
  Charles  Prebay - Vice President & 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 %
                                           ============  ===========


                                                March  31,  2002
                                           -------------------------
Shareholder/Position/Title                 Shares  Held   Ownership
----------------------------------------   ------------  -----------
<S>                                        <C>           <C>
Robert  Thompson - President & CEO          12,026,953        56.2 %
  Charles  Prebay - Vice President & CFO     2,000,000         9.4
  Chris  Walker                              1,059,000         5.0
  Cede  &  Co. - Investor                    1,188,000         5.5
  All  Other  Investors                      5,116,047        23.9
                                           ------------  -----------
Total  shares  issued & outstanding         21,390,000       100.0 %
                                           ============  ===========
</TABLE>

     Robert  Thompson,  President  and CEO was compensated $6,500 during the 1st
     quarter  of  the  year  2003.

(6)  Income  Taxes

     As of March 31, 2003, the Company had provided taxes on consolidated income
     for  Federal  and  State  income  taxes,  estimated  at  $1,600.

     At  March  31, 2003 deferred taxes consisted of a net tax assets (benefits)
     of  approximately  $462,915,  due  to  operating  loss carryforwards of the
     Company  totaling  $1,004,473  which  were  fully offset by equal valuation
     allowances  since there is no assurance of recovery. The net operating loss
     carryforwards  will  expire  beginning  in  2013.

(7)  Off  Balance  Sheet  Risk

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


                                       15
<PAGE>

                           CAL-BAY INTERNATIONAL, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2003 (unaudited)

(8)  Commitments  and  Contingencies

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

     Period  Ended  March  31,

<TABLE>
<CAPTION>

<S>           <C>
2003 . . . .  $32,126
2004 . . . .   14,271
  Thereafter        0
              -------
  Total. . .  $46,397
              =======
</TABLE>

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


(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,
     2003  are  as  follows:

     Period  Ended  December  31,

<TABLE>
<CAPTION>

<S>                      <C>
2003. . . . . . . . . .  $ 2,020
2004. . . . . . . . . .    2,656
2005. . . . . . . . . .    2,933
2006. . . . . . . . . .    3,241
  Thereafter. . . . . .    2,888
                         -------

Net minimum commitments   13,738

  Less current portion.    2,020
                         -------

  Long-term commitments  $11,718
                         =======
</TABLE>


                                       16
<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,  the  SEC  approved Cal-Bay
International's  Form  10-SB registration statement and in June of 2002, Cal-Bay
received  approval  from  the  NASD to move from the Pink Sheets to the Over the
Counter  Bulletin  Board  (OTC BB) exchange where Cal-Bay currently trades under
the  symbol  CBYI.

OUR  BUSINESS

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

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


                                       17
<PAGE>

REPRESENTATIVE/DISTRIBUTION  DIVISION

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

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

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

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

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

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


                                       18
<PAGE>

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

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

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

SYSTEMS  DIVISION

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

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

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

NEW  PRODUCTS  DIVISION

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


                                       19
<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.

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


                                       20
<PAGE>

approached  by the technology transfer agent for this university to consider the
possible  further  development  and  commercialization  of  this  new  sensor
technology.  After  reviewing  the  technology,  and  performing  initial market
research  studies and preparing cost estimates for the commercialization of this
product,  Cal-Bay  determined that the development costs and time to market were
not  within our preferred guidelines and therefore we decided not to pursue this
opportunity.

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

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.

FUTURE  POTENTIAL  MERGERS  &  ACQUISITIONS  BY  CAL-BAY  INTERNATIONAL

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


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<PAGE>

THREE  MONTH  PERIODS  ENDED  MARCH  31,  2003  AND  2002

Cal-Bay  generated  $16,376  in  commission  income  from  our
representative/distributor  division,  and product sales in the systems division
of $0, for a total revenue of $16,376 for the three-month period ended March 31,
2003  with  cost  of  sales of $0 for a gross profit of $16,376.  These revenues
compare  with  $84,001  in  commission income and product sales revenues for the
three-month  period  ended  March  31,  2002  with cost of sales of $0 and gross
profit  of $84,001. Gross profit for the three-month period ended March 31, 2003
was  $67,625 less than the same period ended in 2002. Cash provided by operating
activities  was  ($266,869)  for  the  three-month  period  ended March 31, 2003
compared  to  $2,797  for  the  same  period  ended  in  2002.

The  revenues  generated  for  the three-month period ending March 31, 2003 were
lower than the normal levels of revenues forecast for this period, primarily due
to  lowered  commissions  from a decrease in new orders during the later part of
2002, and the lack of any business from our systems division. Many projects that
we had forecast for this time period have been delayed, and we have been told by
many  clients  that capital spending budgets have been reduced or placed on hold
until  later  in  the  year  or  until  next  year.

Operating  expenses  for  the  three  months  ended March 31, 2003 were $283,245
compared  to  $81,204  for  the  same  period  in  2002,  which is a increase of
$202,041.  For  the  three  month period ended March 31, 2003, Cal-Bay had a net
loss of $266,869 compared to a net profit of $2,797 for the same period in 2002,
which is an decrease in net income of $269,666. The majority of this increase in
expenses  and  corresponding  decrease  in  net income is a direct result of the
issuance  of  1,275,000  shares  of common Cal-Bay stock registered on Form S-8,
valued  at  $216,750,  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.

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  March  31,  2003,  Cal-Bay has total assets of $39,628 including cash on
hand,  loan  receivables,  prepaid rent, security deposits, and office furniture
and  equipment.  Current  liabilities total $31,357 in accrued expenses, accrued
salaries  and  wages,  and  income  taxes  payable.  Legal  and accounting costs
increased  substantially in 2001, 2002 and early 2003 for the Company due to the
public  company reporting requirements imposed as a result of the Company's Form
10-SB  registration  statement, which was approved by the SEC in March, 2002. In
June  of  2002  Cal-Bay  received  approval  from the NASD to move from the Pink
Sheets  to  a  listing on the Over the Counter Bulletin Board.  Cal-Bay does not
anticipate any substantial new capital expenditures for its current business 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 divisions 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.


                                       22
<PAGE>

EMPLOYEES

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

DESCRIPTION  OF  PROPERTY

Cal  Bay  currently leases a combined office/warehouse facility of approximately
2,328 square feet at 1582 Parkway Loop, Suite G, Tustin, CA 92780.  The lease is
paid  on  a monthly basis of $2,630.64 per month and expires on August 31, 2004.
Our facility is located in a small mixed use, commercial/light industrial office
park  in  Central  Orange  County,  California.  This  facility  consists  of  a
reception  area,  three  individual fully-enclosed offices, a conference room, a
restroom, sales literature storage area, printer/fax/copier area, and a combined
warehouse/system  production/equipment  test  area.  Management  believes  the
currently leased space is adequate to meet Cal Bay's needs for at least the term
of  the  lease.

ITEM  3.  CONTROLS  AND  PROCEDURES

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

PART  II.  OTHER  INFORMATION

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

Reports  on  Form  8-K:  No reports on Form 8-K were filed by the Company during
the  quarter  ended  March  31,  2003.

<TABLE>
<CAPTION>

Exhibits:

EXHIBIT NUMBER  TITLE                                                   LOCATION
<C>             <S>                                                     <C>
          99.1  Certification of Chief Executive Officer pursuant to    Attached
                Section 906 of the Sarbanes-Oxley Act of 2002

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

          99.3  Certification of Chief Executive Officer pursuant to    Attached
                Section 302 of the Sarbanes-Oxley Act of 2002

          99.4  Certification of Chief Financial Officer pursuant to    Attached
                Section 302 of the Sarbanes-Oxley Act of 2002
</TABLE>


                                       23
<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  12,  2003         /s/Robert  Thompson
                              -------------------------
                              Robert  Thompson
                              Chief  Executive  Officer




Date:  May  12,  2003         /s/Charles  A.  Prebay
                              -------------------------
                              Charles  A.  Prebay
                              Chief  Financial  Officer


                                       24
<PAGE>