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,  2006

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

                         Commission file number: 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)

              2111 Palomar Airport Road, Suite 100, Carlsbad, CA 92009
                    (Address of principal executive offices)

                                 (760) 930-0100
                           (Issuer's telephone number)

                    P. O. Box 502548, San Diego, CA 92150-2548
    (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,  2006  was:  10,034,808 shares  at  $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
             for the Three Months Ended March 31, 2006 and 2005             3

             Comparative Consolidated Statements of Operations
             for the Three Months Ended March 31, 2006 and 2005             4


             Comparative Consolidated Statements of Cash Flows
             for the Three Months Ended March 31, 2006 and 2005             5

             Notes to the Consolidated Financial
             Statements                                                  7-16

  Item 2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                        17-19

  Item 3.    Controls and Procedures                                       19


PART II.     OTHER INFORMATION

  Item 2.    Changes in Securities and Use of Proceeds                     19

  Item 6.    Exhibits and Reports on Form 8-K                              20
             (a) Exhibits
             (b) Reports on Form 8-K

  Signatures                                                               20
</TABLE>


                                        2
<PAGE>

ITEM  1.  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>


                                  Cal Bay International, Inc.
                                         BALANCE SHEET
                                   March 31, 2006 and 2005

                                     ASSETS


                                                                 2006           2005
                                                           ------------     ------------
<S>                                                        <C>               <C>
Current Assets:

  Cash (Note 1c). . . . . . . . . . . . . . . . . . . . .  $    31,498       $    1,274
  Short Term Loan Receivable  . . . . . . . . . . . . . .            0           17,000
  Loan to Aspen Cove Resort Property (Note 1f). . . . . .       57,745                0
  Escrowed Funds for Real Estate Purchase
    North Hollywood Property(Note 1a and 3)  .  . . . . .      120,000                0
    Las Vegas Distribution Center(Note 1a and 3)  . . . .      173,000                0
    Warehouse, Las Vegas (Note 1a and 3)  . . . . . . . .       50,000                0
    Carlsbad Properties (Note 1a and 3) . . . . . . . . .      225,000                0
    Omaha Properties (Note 1a and 3). . . . . . . . . . .      100,000                0
    San Francisco Property(Note 1a and 3) . . . . . . . .  $   143,500       $        0
                                                           ------------     ------------

  TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . .      900,743           18,274

Office Furniture and Equipment, at cost,
  net of accumulated depreciation of
  $5,335 (Notes 1h & 2) . . . . . . . . . . . . . . . . .       51,850           73,414

Other Assets:


  Deposit (Note 1g)                                                  0          113,750
  Proprietary Technology (Note 1b)                             225,000          225,000
  Real Estate (Note 1a and 3)
    Aspen Cove Resort . . . . . . . . . . . . . . . . . .    2,600,000                0
    Valley Lane Property  . . . . . . . . . . . . . . . .      250,000                0
    West Palm Beach Land Parcel . . . . . . . . . . . . .    8,000,000                0
                                                            ------------    ------------

  TOTAL OTHER ASSETS. . . . . . . . . . . . . . . . . . .   11,075,000          338,750
                                                           ------------     ------------

  TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . .  $11,975,743        $ 430,438
                                                           ============     ============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

  Accounts Payable & Accrued Expenses (Note 1i) . . . . .  $         0        $   4,756
  Sales tax payable . . . . . . . . . . . . . . . . . . .            0                0
  Income Taxes Payable (Notes 1j & 6) . . . . . . . . . .            0              800
  Loans from Officer (Notes 1f & 7)     . . . . . . . . .      557,241                0
  Loans from Shareholder (Notes 7) . . . . . . . . .  . .      313,750          231,771
  Loans Payable (Note 8)                                             0           97,000
  Aspen Cove 1st Trust Deed (Note 3). . . . . . . . . . .            0                0
  Valley Lane 1st Trust Deed  (Note 3). . . . . . . . . .      150,000                0
  West palm Beach Land parcel Note (Note 3) . . . . . . .    1,452,000                0

  Current Portion of Capital Lease Obligation (Note 8). .           -0-               0
                                                           ------------     ------------

  TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . .    2,472,991          334,327


Capital Lease Obligation, net of Current Portion (Note 8)           -0-                0
                                                           ------------     ------------

  TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . .    2,472,991          334,327
                                                           ------------     ------------


Commitments and Contingencies (Note 9) . . . . . . . . .        - - -             - - -

Stockholders' Equity:

  Common Stock, $.001 par value; 200,000,000 shares
    authorized; shares issued and outstanding
    10,034,808 (Notes 1b, 1k, 3 & 4)  . . . . . . . . . .       10,035           57,669
  Preferred A Stock, $.001 par value; 50,000,000 shares
    authorized; shares issued and outstanding
     18,500,000 (Notes 1b, 1k, 3 & 4) . . . . . . . . . .       18,500                0
  Preferred B Stock, $.001 par value; 500,000,000 shares
    authorized; shares issued and outstanding
     72,760,216 (Notes 1b, 1k, 3 & 4)  . . . . . . . . .        72,760                0
  Additional Paid in Capital - (Discount on Stock). . . .   15,306,024        1,818,383
  Retained Deficit. . . . . . . . . . . . . . . . . . . .   (5,822,155)      (1,741,841)
  Less Treasury Stock at Cost . . . . . . . . . . . . . .      (82,412)         (38,100)
                                                           ------------     ------------


    TOTAL STOCKHOLDERS' EQUITY (DEFICIT). . . . . . . . .    9,502,752           96,111
                                                           ------------     ------------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . .  $11,975,743      $   430,438
                                                           ============     ============
</TABLE>

See  notes  to  consolidated  financial  statements.
                                  F-3
<PAGE>

<TABLE>
<CAPTION>
                                   Cal Bay International, Inc.
                                    Statement of Operations
                         For the Three Monts Ended March 31, 2006 & 2005



                                            ------------------------------------
                                                2006                     2005
                                            ------------            ------------
<S>                                        <C>                      <C>
Revenues

  Sales                                             -0-                     -0-
  Rental Income (Note 3)                     $   5,172               $      -0-
  Operational Income .                              -0-                     -0-
  Commission Income  .                              -0-                     -0-
                                           ------------            ------------

Total Revenues . . . .                           5,172                      -0-
                                           ------------            ------------
Cost of Sales (Real Estate
  Acquisitions)

  Purchases  . . . . .                              -0-                     -0-
  Real Estate Purchase                         800,000                      -0-
  Real Estate Commission                        82,500                      -0-
  Commission Expense .                              -0-                     -0-
                                           ------------            ------------

Total Cost of Sales. .                         882,500                      -0-
                                           ------------            ------------


Gross profit . . . . .                        (877,328)                     -0-

OTHER COSTS AND EXPENSES:
  General and Administrative                   517,143                 347,963
  Consulting Fees                              143,000                      -0-
  Professional Fees                             76,884                      -0-
  Public Relations                              37,980                      -0-
  Payroll                                       15,854                      -0-
                                          ------------              ------------
  Total   expenses . .                        (790,861)               (347,963)
                                          ------------              ------------

OTHER INCOME (EXPENSE):
    Interest Expense                           (2,500)                      -0-
    Escrow Refund                              (1,665)                      -0-
    Interest and other expense                     -0-                      -0-
    Repayment of Loan                          25,000                       -0-
    Interest and other income                      -0-                      -0-
                                          ------------              ------------
             Total other income                20,835                       -0-
                                          ------------              ------------
OPERATING INCOME:

Net (loss) . . . . . .                   $ (1,647,354)              $ (347,963)
                                          ============              ============
Net (loss)
  Per share:
    Basic & Diluted. .                   $       (.16)              $    (0.01)

Weighted average
  Shares outstanding:
    Basic & Diluted. .                     10,034,808               47,169,031
</TABLE>


See  notes  to  consolidated  financial  statements.


                                       F-4
<PAGE>


<TABLE>
<CAPTION>



                                             Cal Bay International, Inc.
                                              Statement of Cash Flows
                                   For the Three Monts Ended March 31, 2006 & 2005



                                                  ------------------------------------
                                                      2006                     2005
                                                  ------------            ------------

<S>                                               <C>                     <C>
CASH FLOWS FROM
  OPERATING ACTIVITIES:

Net income (loss). . . . . . . . . .             $(1,647,354)              $(347,963)
                                                  ------------            ------------
Adjustments to reconcile net
  Income (loss) to net cash
  Provided by operating activities
Depreciation . . . . . . . . . . . .                   5,335                   1,244
Common stock issued for services . .                       0                 288,000
Common Stock issued for Real Estate
  related services towards acquisitions              245,239                       0
Decrease in Prepaid Expenses                                                       0
( Decrease)Increase in Accounts payable
& Accrued Expenses                                         0                 (50,888)
                                                  ------------            ------------

Total adjustments. . . . . . . . . .                 250,574                 238,356
                                                  ------------            ------------
Net cash provided (used) by
  Operating activities . . . . . . .              (1,396,780)               (109,607)
                                                  ------------            ------------
CASH FLOWS FROM
  INVESTING ACTIVITIES:

Short Term Loans Made to Others                           -0-                (17,000)
Deposits made on Potential
  Acquisitions                                            -0-               (110,000)
Purchase of fixed asset. . . . . . .                   5,000                 (48,477)
                                                  ------------            ------------
Net cash used by
  Investing activities . . . . . . .                   5,000                (175,477)
                                                  ------------            ------------
CASH FLOWS FROM
  FINANCING ACTIVITIES:

Stock Issuance for Cash                              265,652                      -0-
Payment of Lease Payable                                  -0-                 (9,524)
Proceeds from Short Term Loans (Note 7)              338,846                 328,771
Warrant Issuance for Cash                          1,075,448
West Palm Beach Property Note (Note 4)                     0                      -0-
Purchase of Treasury Stock                                 0                 (38,100)
                                                  ------------            ------------

Total Cash Provided (used) by                      1,679,946               281,147
   financing activities                           ------------            ------------


Net increase (decrease). . . . . . .                  14,088                 (3,937)
  In Cash

Cash & equivalents,
  Beginning of period. . . . . . . .                  17,410                   5,211
                                                  ------------            ------------
Cash & equivalents,
  End of period. . . . . . . . . . .                $ 31,498                $  1,274
                                                  ------------            ------------
Cash Paid for taxes  . . . . . . . .                      -0-                     -0-
                                                  ============            ============

</TABLE>

See  notes  to  consolidated  financial  statements.


                                       F-5
<PAGE>


                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

                                       F-6
<PAGE>

                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006


(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.

          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  supplied  analytical  products, services and associated equipment
          through license distribution agreements, and received 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 January 6,
          2005, all the assets and liabilities of CBA were sold along with   CBC
          to Robert Thompson and Charles Prebay in exchange for their shares  in
          CBYI and delivery of Atlantis Holdings, Inc., a shell company   traded
          on the pink sheets.    As a result of this transaction the Company was
          reorganized with the Company's  primary  focus being  the acquisition,
          management and sales of real estate.

          In the year ended December 31, 2005 the Company entered into contracts
          or escrows for the following properties:

          Current Projects

          Aspen Cove, utah

          In the second quarter the company acquired Aspen Cove, Utah. Comprised
          of a 45 acre lakefront package of development land and an  operational
          14 room lakefront lodge.    The Company plans to build 21 luxury 3000+
          square feet vacation homes on the mountaintop lakefront, each on app-
          roximately one acre. The property was acquired for $2.6 Million. There
          was an $800,000 first trust deed against the property.       Estimated
          appraised value by the Companys management is $4 Million.  The company
          acquired the property  through  the  acquisition  of a first  mortgage
          on  the property.    In the third quarter ending March 31, 2005 the
          Company assumed control of Aspen Cove Resort, Inc., the administrative
          company for the Aspen Cove resort and property.

                                           on March 14, 2006 the Company entered
          into  two   SENIOR  SECURED  CONVERTIBLE  PROMISSORY  NOTE  Agreements
          totaling $1,626,458.33.   The company used a portion of those funds to
          pay off the $800,000.00 first trust deed.An 8-k was filed on March 20,
          2006 disclosing the event.

          Las Vegas Warehouse, NV

          Also in the second quarter the Company entered into escrow to purchase
          the Las Vegas Distribution Center,a 30,000+ square feet facility, with
          4 commercial loading docks,within minutes of the Internatl.   Airport.
          The purchase price is $3.1 Million. The Company has currently $173,000
          in escrow for the purchase.

          Las Vegas Single Family

          A single family  2500  square  feet  residence  on Valley Drive in Las
          Vegas was acquired for $250,000.     The property has a $150,000 first
          trust deed and is currently rented.

                   The property is currently valued at $300,000.00


          West Palm Beach Land Parcel, Fla

          In the 3rd quarter ending March 31, 2005 the Company purchased  the
          first mortgage position on a parcel of land comprising   approximately
          290 acres in  west  Palm Beach,  Florida.  The  company  purchased the
          mortgage on the property for $5,500,000 payable as follows; $1,500,000
          cash and  $4,000,000  in the Company's Preferred B stock. This note is
          accruing at the rate of approximately $32,000.00 per month and matures
          in the first quarter of 2006. Its value upon maturity is approximately
          $8,000,000.00.     The Company purchased  the mortgage on the property
          through  funds raised via a private offering.

                  The balance of funding for the note was completed in the first
                  quarter 2006.

          Southern California Residential

          The Company is in escrow to acquire a Southern California  residential
          property for the sum of $2,600,000. The Company currently has $125,000
          in escrow for the acquisition.  The property has an appraised value of
          $3,200,000  and  will generate approximately  $144,000  per  annum  in
          revenue. The Company has an additional $100,000 in escrow for a single
          family residence in southern california.

          Warehouse, Las Vegas, Nevada

          The Company is  in escrow  for the  acquisition of a newly constructed
          warehouse in Las Vegas, NV for $1,300,000.  The property currently has
          three  satellite  licenses  which  will  generate  additional  monthly
          revenue over the  warehouse leased revenue which is  estimated  to  be
          $9,000 per month. The  Company currently has  $50,000  in  escrow  for
          the acquisition.




     (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.


                                      F-7
<PAGE>

                            CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

(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,  2004,  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, 2004, the Company issued 3,684,031
          restricted  common  shares in payment for consulting services. Also on
          September 9, 2004, 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. 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.

          In March and November of 2004, the Company filed Form S-8 Registration
          Statements with the Securities  and  Exchange  Commission  and  issued
          5,500,000   unrestricted   common  shares in  payment  for  consulting
          services.

          On January 5, 2005, the Company issued 15,000,000 restricted    common
          shares to Roger Pawson to acquire TLCO Software, Inc. (TLCO). TLCO has
          no  recent  history of operations and its only  asset  is  proprietary
          technology consisting of source code forcertain software applications.
          The condensed unaudited pro forma disclosure is not  provided  herein,
          as the resulting pro forma financial statements after the transactions
          above result in no activities over the last two fiscal years.

          On January 6, 2005, the former CEO, Robert Thompson, and  former  Vice
          President, Charles Prebay, resigned as officers and directors  of  the
          Company exchanging all their remaining shares with  Mr.  Roger Pawson,
          the new CEO and director.  As part of  the transaction, the   Companys
          subsidiaries CBC and CBA have  been spun  off  into  Atlantis  Holding
          Corporation, a pink  sheet company  now  owned by  Robert Thompson and
          Chuck Prebay.

          On February 17, 2005, the Company issued 6,000,000 unrestricted common
          shares  for  consulting  services and  another  4,000,000  shares  for
          consulting services.

          On June 25 the Company issued 5,277,142 restricted shares as a  result
          of completing a Private Placement for $378,290.

          During the three months ended June 30, 2005, as detailed in a  Form 8K
          filing,  the  Company  repurchased  from  the open market shares  at a
          total repurchase cost of $127,000.       The Company has retired those
          shares.    The accounting for treasury stock transactions is under the
          cost method.

          On November 25, 2005  the board of  directors approved a reverse split
          of the Company's common stock and a PRE 14c information statement  was
          filed with the  Securities and Exchange Commission  whereby  each   25
          common shares were converted to 1 share   (a one for twenty five share
          reverse stock split).       Total outstanding shares subsequent to the
          reverse split equated to 2,077,847 shares.86,699 shares were cancelled
          The issued and outstanding shares as of year end March 31, 2006 was
          1,991,148 shares.

          In  the  first  quarter  of 2006  8,043,660 common shares were issued;
          2,043,660 for $245,652 cash through a private offering;the balance for
          real estate related services and acquisitions.       At the end of the
          quarter ending March 31, 2006 there were 10,034,808 shares issued.

          On March 14, 2006 CAL BAY INTERNATIONAL, INC. entered into two SENIOR
          SECURED CONVERTIBLE PROMISSORY NOTE Agreements totaling $1,626,458.33.
          As part of the Note Agreements the Company entered into four Warrant
          agreements.

          Warrants  were  issued on  March 14, 2006  pursuant  to SENIOR SECURED
          CONVERTIBLE  PROMISSORY  NOTES      covering  the  resale  by  selling
          shareholders of up to 1,694,228 shares of common stock as follows:

                 o     1,016,537 shares of common stock underlying warrants
                       exercisable at $.80 issued to certain of the selling
                       stockholders pursuant to SENIOR SECURED CONVERTIBLE
                       PROMISSORY NOTES on March 14, 2006;

                 o     677,691 shares of common stock underlying warrants
                       exercisable at $1.20 issued to certain of the selling
                       stockholders pursuant to SENIOR SECURED CONVERTIBLE
                       PROMISSORY NOTES on March 14, 2006;

          An 8-k information statement was filed disclosing the SENIOR SECURED
          CONVERTIBLE PROMISSORY NOTES and subsequent issuance of warrants as
          part of that agreement.

     (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,  2006.

     (d)  Principles  of  Consolidation  and  Basis  of  Accounting

          The  accompanying  consolidated  financial  statements  included   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.


                                      F-8
<PAGE>

                            CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (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  /  Payables

          In the year ended 2006, Roger Pawson the  CEO of the Company, has made
          loans to the Company in the amount of $557,241.

          The Company has made loans to the Aspen Cove property for operationas
          which will be repaid out of opertional cash flow from the property.

     (g)  Deposits

          This  balance consisted  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.

     (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.


                                      F-9
<PAGE>

                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (j)  Income  Taxes  (Continued)

          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, 2006, was $0.025   pre reverse split;
          and .62 post reverse split.
          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.


                                     F-10
<PAGE>

                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

(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  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 March 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.


                                     F-11
<PAGE>

                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

(1)  Summary  of  Significant  Accounting  Policies  (Continued)

     (m)  Recently  Issued  Accounting  Pronouncements  -  (continued)

          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  2004,  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, 2004. 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.


          In May 2004, 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 Dec. 31, 2005. 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.


                                    F-12
<PAGE>

                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

(2)  Office  Furniture  and  Equipment

   A  summary  of equipment is as follows as of March 31, 2006, and 2005:

<TABLE>
<CAPTION>

                                  2006       2005
                                ---------  --------
<S>                             <C>        <C>


Office Furniture &
  Computer Equipment . . . . .  $ 57,180   $26,181

Subtotal . . . . . . . . . . .    50,336    26,503
Less: Accumulated Depreciation    (5,335)  (15,273)
                                ---------  --------
  Net Furniture and Equipment.  $ 51,850   $10,908
                                =========  ========
</TABLE>



(3)  Acquisition  of  Real Estate


          The Company's current Real Estate Holdings:

          Aspen Cove, utah

                        In 2005 the company acquired Aspen Cove, Utah. Comprised
          of a 45 acre lakefront package of development land and an  operational
          14 room lakefront lodge.    The Company plans to build 21 luxury 3000+
          square feet vacation homes on the mountaintop lakefront, each on app-
          roximately one acre. The property was acquired for $2.6 Million.

          In the first quarter 2006 the $800,000 first trust deed against    the
          property was paid in full.

          Estimated appraised value by the Companys management is $4 Million.

          The Company entered into two SENIOR  SECURED  CONVERTIBLE   PROMISSORY
          NOTE  Agreements totaling $1,626,458.33.   The company used a portion
          of those funds to pay off the $800,000.00 first trust deed. An 8-k was
          filed on March 20, 2006 disclosing the event.

          Las Vegas Warehouse, NV

          In the second quarter 2005 the Company entered into escrow to purchase
          the Las Vegas Distribution Center,a 30,000+ square feet facility, with
          4 commercial loading docks,within minutes of the Internatl.   Airport.
          The purchase price is $3.1 Million. The Company has currently $173,000
          in escrow for the purchase.

          Las Vegas Single Family

          A single family  2500  square  feet  residence  on Valley Drive in Las
          Vegas was acquired for $250,000.     The property has a $150,000 first
          trust deed and is currently rented.


          West Palm Beach Land Parcel, Fla

          In the 3rd quarter ending March 31, 2005 the Company purchased  the
          first mortgage position on a parcel of land comprising   approximately
          290 acres in  west  Palm Beach,  Florida.  The  company  purchased the
          mortgage on the property for $5,500,000 payable as follows; $1,500,000
          cash and  $4,000,000  in the Company's Preferred B stock. This note is
          accruing at the rate of approximately $32,000.00 per month and matures
          in the first quarter of 2006. Its value upon maturity is approximately
          $8,000,000.00.     The Company purchased  the mortgage on the property
          through  funds raised via a private offering.

                  Subsequent to year end the balance of funding for the note was
                  completed.

          Southern California Residential

          The Company is in escrow to acquire a Southern California  residential
          property for the sum of $2,600,000. The Company currently has $125,000
          in escrow for the acquisition.  The property has an appraised value of
          $3,200,000  and  will generate approximately  $144,000  per  annum  in
          revenue.

          Warehouse, Las Vegas, Nevada

          The Company is  in escrow  for the  acquisition of a newly constructed
          warehouse in Las Vegas, NV for $1,300,000.  The property currently has
          three  satellite  licenses  which  will  generate  additional  monthly
          revenue over the  warehouse leased revenue which is  estimated  to  be
          $9,000 per month. The  Company currently has  $50,000  in  escrow  for
          the acquisition.

          The following table reflects the properties acquired  during the  year
          ended March 31, 2006.

Property           Location        Purchase Price        Debt  Appraised Value*
________________________________________________________________________________
Aspen cove          Utah            $  2,600,000   $        0** $  4,000,000
Valley Drive       Las Vegas, NV         250,000      150,000        300,000
West Palm Beach  W. Palm Beach, FL     5,500,000      600,000      8,000,000***
--------------------------------------------------------------------------------
 *appraisals are by management
 ** subsequent to year end the 1st trust deed was paid in full by the Company.
 ***the West Palm Beach Property is secured by a note which will mature in the
   first quarter of 2006. At maturity the notes value is $8,000,000. Subsequent
   to year end the note was paid in full by the Company.


(3)  Acquisition  of  Real Estate

    (a)   Subsequent Events\Acquisition of real Estate

Subsequent Events

Real Estate Acquisitions:
----------------------------
----------------------------

  The Company is in contractual agreements for several
  real estate acquisitions which have occurred subsequent
  to   the quarter ended March 31, 2006:

Columbus, Ohio
--------------------

  A Letter of Intent contractual agreement was entered into
  on April 7, 2006 for the purchase of 409 single family
  residences for the purchase price of approximately
  $25,000,000.00. the acquisition would provide approximately
  $200,000 per month in revenues. Management anticipates
  closure on this acquisition in May of 2006.

Omaha Nebraska
--------------------

  Escrow was opened for the purchase of 48 single family
  Residences in Omaha, Nebraska on April 3, 2006.  Purchase
  price for the properties is approximately $5,000,000.00.
  Which will add additional monthly rental revenue of
  approximately $60,000? A deposit of $100,000 was placed
  into escrow. Anticipated closing date is the second quarter
  of 2006.

9th Street, San Francisco, CA
--------------------

  Escrow closed on the 9th Street, San Francisco land parcel
  on April 1, 2006. Purchase price of the property was
  $2,650,000.00. There property carries mortgage positions
  The Company is planning to demolish the existing structure
  and is currently considering the construction of 12-14
  luxury apartments; or the construction of a Company owned
  and operated self storage facility .Construction is expected
  to start in the third quarter of 2006.

Cobs Homes
--------------------

  On April 21, 2006 The company entered in to a Letter of Intent
  for the purchase of COBS as a wholly owned subsidiary of Cal-Bay.

  COBS (Complete Owner-Builder Services) was founded to help
  people through the process of building their own homes.
  The company has developed an A B C program to help with finance,
  real estate, and construction decisions. COBS provides services
  to help  with construction loans, home plans, building lots,
  building materials, construction budgeting, and the entire
  process of building a home. COBS was founded by President
  Rob Mackle in 2000 and has had consistent growth and success
  in the online Owner-Builder Services arena. COBS annual revenues
  are currently in excess of $5M per year.

  COBS has  business partnerships with several major Nationwide
  Hardware chains, COBS revenues for 2005 are approximately
  $5M per year. COBS has assisted with the building of over
  6,000 homes since inception. www.cobshomes.com

  Upon successful completion of the acquisition COBS will
  relocate to  Cal-Bay Corporate Offices in Carlsbad, California
  bringing the total number of employees at the corporate location
  to 40 people.

  The Company plans to expand its administrative square footage to
  approximately 5,000 Square feet subsequent to the acquisition.


Other Potential acquisitions
-----------------------------

  The Company is contemplating additional acquisitions in the
  Las Vegas, Nevada area and Northern Nevada.

  Also a multiple single family 14 home portfolio in the South
  Eastern Region of the US.

Summary of Subsequent transactions if all are closed:
-----------------------------

  Should the current real estate and Company acquisitions currently
  under contract be completed Management's assesment is as follows:

  Upon completion of the real estate acquisitions currently in
  contract or escrow, the Cal-bay property portfolio will exceed
  $47M with an equity position of over $22M, and will increase
  annual rental revenues to in excess of $3M. Combined with Cobs
  Homes revenues the consolidated income will be approaching $10M
  annually.



                                     F-13
<PAGE>

                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006


(4)  Certain  Beneficial  Owners  and  Management

 The following table sets forth as of March 31, 2006 the name and the
number of shares of the Registrant's Common Stock, no par value, held of
record or was known by the Registrant to own beneficially more than 5%
of the 1,991,148 issued and outstanding shares of the Registrant's Common
Stock, and the name and shareholdings of each officer and director
individually  and of all officers and directors as a group.

 <TABLE>
<CAPTION>

                                                  March 31, 2006
                                         -------------------------------
<S>                                      <C>                <C>
Shareholder/Position/Title                 Shares Held       Ownership
---------------------------------------  -----------------  -------------
  Roger Pawson, President & CEO*                      0            0%
  Professional Offshore Opportunity
  Fund, Ltd.                                    650,000          6.5%
                                            -----------------  -----------
Total held by Officers & Directors
  and held by shareholders with over
  5% of the issued and outstanding
  shares.                                       650,000          6.5%
                                         -----------------  -------------
Total shares issued & outstanding            10,034,808         100.0%
                                         =================  =============
</TABLE>

    *Roger Pawson, CEO of the Company was issued 15 Million shares of Preferred
    A shares for cancellation of 15 Million shares of common stock held  by him
    which was issued for the acquisition of TLCO, Inc.

Preferred A Shares

    As of March 31, 2006 there were 18,500,000 shares of Preferred A stock
    issued.  Shares were issued for financing and acquisition activities.


Preferred B Shares

    As of March 31, 2006 there were 72,760,216 shares of Preferred B stock
    issued and outstanding.  Shares were issued for financing and acquisitions.


                                     F-14
<PAGE>

                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

(5)  Income  Taxes

     As  of March 31, 2006, the Company had provided taxes on consolidated
     income  for  Federal  and  State  income  taxes,  estimated  at  $0.

(6)  Off  Balance  Sheet  Risk

     The  Company  could  be affected by the inability to establish a   market
     for their  shares  of stock.

(7)  Loans Payable and Receivable


     Roger Pawson the  CEO of the  Company  has  made loans to the Company in
     the amount of $557,241.

     In the fourth quarter 2005 a loan was made to the Company by R&H Holdings,
     Inc. in the amount of $300,000.00. $50,000.00 was paid in interest towards
     the note. There is a balance remaining of $313,750.00.



                                     F- 15
<PAGE>

                           CAL-BAY  INTERNATIONAL,  INC.
                         NOTES  TO  FINANCIAL  STATEMENTS
                                March 31,  2006

(8)  Leases

     The  Company  leased  certain  office  equipment  that was terminated upon
     the spinoff.

(9) Commitments  and  Contingencies

     The Company leased an office facility in Carlsbad, California at the   rate
     of $1,500 a month through the end of the quarter ending December 31, 2005.
     In the fourth quarter subsequently the Company has moved into larger office
     space at 2111 Palomar Airport Road, Suite 100, Carlsbad, CA 92009.

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


(10) Subsequent events

     Subsequent Real Estate acquisitions are noted in Note 3a.


                                     F-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, 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.

On January 5, 2005, Cal-Bay International,Inc. completed the acquisition of TLCO
Software, Inc. TLCO  Software  is  a Nevada corporation that designs proprietary
software programs for  commercial  use  in the  internet  web-hosting  industry.
One-hundred percent  (100%)   of   the   outstanding  shares of  TLCO  Softwares
common  stock  were  acquired   from   the   former owner,  Mr. Roger Pawson  of
San Diego,  California   for   consideration  of  Fifteen   million (15,000,000)
shares of  Cal-Bay International  (CBYI)  common stock.  TLCO Software, Inc. now
operates  as a wholly-owned subsidiary of Cal-Bay International, Inc.

On January 6, 2005, Cal-Bay International, Inc. also completed  the  sale of its
subsidiary  companies,  Cal-Bay Controls, Inc.,  Cal-Bay  Analytical, Inc.,  and
WetChem, Inc.  to  Atlantis Holding Corp.  Both  Cal-Bay Controls  and   Cal-Bay
Analytical are Nevada corporations  that  operate as  sales  representative  and
distribution companies in the  Western  US  for  environmental, process-control,
safety and laboratory instrumentation and related products and services.

Cal-Bay Controls, Cal-Bay Analytical and WetChem will operate in the  future  as
wholly-owned subsidiaries of  Atlantis Holding Corp. Atlantis Holding Corp  is a
Pink Sheet company,  incorporated in the State of Nevada.

On January 7, 2005, Cal-Bay International, Inc.  announced  the  resignations of
Robert J. Thompson and Charles A. Prebay  from its  board  of directors  and  as
officers of the company and  announced  the  appointment  of Roger Pawson to its
Board of Directors,  where he will  serve as Chairman of the Board.   Mr. Pawson
was also  appointed  to  the  positions  of  President  and  CEO, Secretary  and
Treasurer of Cal-Bay International, Inc.

OUR  BUSINESS

Cal-Bay International has acquired three real estate properties and is in escrow
for the acquisition of four other properties.       The Company will continue to
expand  its current  properties  where  feasible and will  continue  to  acquire
additional properties  as  well.    In addition where necessary the Company will
manage its properties.

The Company is dependent upon raising additional funds both for expansion  plans
and for its operations.

In addition the Company is negotiating  for  distribution  of its  TLCO software
products. The Company is also looking to the feasibility of selling TLCO.


                                       17
<PAGE>

THREE  MONTH  PERIODS  ENDED  March 31, 2006  AND  2005

Cal Bay  generated  $5,172 in  revenues  for  the three  months  ended March 31,
2006  compared  to  $0  in  revenues  for the same period in 2005.     Operating
expenses for the   three months ended  March 31, 2006 were $790,861 compared  to
$347,963 for the same period in 2005.  Total net loss for the three months ended
March 31, 2006 was $1,647,354 compared to $347,963.     The significant increase
in net loss was due to the Company's real estate acquisitions.

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  March 31,  2006,  Cal-Bay  had  total  assets of $11,975,743.    Those
assets are  comprised  primarily  of  the  real  estate  the  company acquired.
$225,000 of the assets are comprised of the proprietary software TLCO and  cash
in hand  of $31,499.

Current liabilities  totaled  $2,472,991 and include  $1,602,000 in Trust deeds
and $870,991 in loans.

The  company believes that in order to maintain its current real estate holdings
and to close escrow on the  properties currently in escrow,    the Company  must
raise additional capital.      The Company has no current plan in place to raise
additional capital.  The  Company  may  sell  additional  stock,  arrange   debt
financing  or  seek  other  avenues  of  raising capital.


                                       18
<PAGE>

ITEM  3.  CONTROLS  AND  PROCEDURES

(a) Evaluation of disclosure controls and procedures. Based on the evaluation of
our disclosure controls and procedures (as defined in Securities Exchange Act of
1934  Rules  13a-15(e)  and 15d-15(e)) required by Securities Exchange Act Rules
13a-15(b)  or  15d-15(b),  our  Chief  Executive Officer and our Chief Financial
Officer  have concluded that as of the end of the period covered by this report,
our  disclosure  controls  and  procedures  were  effective.

(b)  Changes in internal controls. There were no changes in our internal control
over  financial  reporting  that  occurred during our most recent fiscal quarter
that  have  materially  affected, or are reasonably likely to materially affect,
our  internal  control  over  financial  reporting.

PART  II.  OTHER  INFORMATION

ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS

On  January  9,  2004  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, 2004 we filed a registration statement on Form S-8 dated August
29,  2004  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 2004, 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,  2004, 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
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.

In January 2005, we issued 15,000,000 shares of restricted common stock for  the
acquisition of TLCO Software, a Nevada corporation.  The shares were issued   to
Mr. Roger E. Pawson who then became the sole officerand director of the Company.
The shares were sold to  an  accredited  investor in a  private  transaction in
reliance on the exemption provided by Section 4(2)of the Securities Act of 1933.
Cal-Bay did not pay any commissions, use  any  underwriters or make  any  public
solicitations in effecting the sale.

In February 2005, we filed a registration  statement on Form S-8  reporting  the
issuance  of  6,000,000  valued  at  $288,000 and an additional 4,000,000 shares
valued at $64,000.   The  shares were issued  for consulting services  unrelated
to fund raising activities.

In June of 2005 we  raised  $378,290  through  the sale of 5,277,142  shares  of
restricted stock.
The shares were sold to  an  accredited  investor in a  private  transaction in
reliance on the exemption provided by Section 4(2)of the Securities Act of 1933.
Cal-Bay did not pay any commissions, use  any  underwriters or make  any  public
solicitations in effecting the sale.

          In  the  first  quarter  of 2006  8,043,660 common shares were issued;
          2,043,660 for $245,652 cash through a private offering;the balance for
          real estate related services and acquisitions.       At the end of the
          quarter ending March 31, 2006 there were a total of  10,034,808 shares
          of common stock issued and outstanding.

          On March 14, 2006 CAL BAY INTERNATIONAL, INC. entered into two SENIOR
          SECURED CONVERTIBLE PROMISSORY NOTE Agreements totaling $1,626,458.33.
          As part of the Note Agreements the Company entered into four Warrant
          agreements.

          Warrants  were  issued on  March 14, 2006  pursuant  to SENIOR SECURED
          CONVERTIBLE  PROMISSORY  NOTES      covering  the  resale  by  selling
          shareholders of up to 1,694,228 shares of common stock as follows:

                 o     1,016,537 shares of common stock underlying warrants
                       exercisable at $.80 issued to certain of the selling
                       stockholders pursuant to SENIOR SECURED CONVERTIBLE
                       PROMISSORY NOTES on March 14, 2006;

                 o     677,691 shares of common stock underlying warrants
                       exercisable at $1.20 issued to certain of the selling
                       stockholders pursuant to SENIOR SECURED CONVERTIBLE
                       PROMISSORY NOTES on March 14, 2006;

          An 8-k information statement was filed disclosing the SENIOR SECURED
          CONVERTIBLE PROMISSORY NOTES and subsequent issuance of warrants as
          part of that agreement.

As of March 31, 2006 there were 18,500,000 shares of Preferred A stock issued.
Shares were issued for financing and acquisition activities.

As of March 31, 2006 there were 72,760,216 shares of Preferred B stock issued
and outstanding.  Shares were issued for financing and acquisitions.



                                       19
<PAGE>

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

REPORTS  ON  FORM  8-K:

8-k March 14, 2006

On March 14, 2006 CAL BAY INTERNATIONAL, INC. entered into two SENIOR
SECURED CONVERTIBLE PROMISSORY NOTE Agreements totaling $1,626,458.
The entire agreement and notes were filed as exhibits in the 8-k
dated March 14, 2006.

8-k March 30, 2006

On March 29, 2006 the Company dismissed Argy & Company as its
accounting firm and engaged Lawrence Scharfman & Company.
The notice was filed via an 8-k dated March 29, 2006.

<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>


                                   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,  2006      By:  /s/Roger Pawson
                              ----------------------------
                              Roger Pawson
                              Chief  Executive  Officer



Date:  May 12,  2006      By:  /s/Roger Pawson
                              ---------------------------
                              Roger Pawson
                              Chief  Financial  Officer


                                       20
<PAGE>