UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


(Mark One)

   [X]   Annual report under Section 13 or 15(d) of the Securities  Exchange Act
         Of 1934 for the fiscal year ended December 31, 2004.

   [ ]   Transition  report  under  Section  13 or  15(d)  of the  Securities
         Exchange  Act of 1934 for the  transition  period  from  __________  to
         __________.


         Commission file number: 000-31451
                                 ---------

                           CALIFORNIA CLEAN AIR, INC.
                           --------------------------
                 (Name of small business issuer in its charter)



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



            2434 VINEYARD AVE, SUITE 101, ESCONDIDO, CALIFORNIA 92029
          ------------------------------------------------------------
               (Address of principal executive office) (Zip Code)


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


Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act:

                         COMMON STOCK, $.001, PAR VALUE

         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    XX                  No
                              --------                  --------

Check if there is no disclosure of delinquent  filers in response to Item 405 of



<PAGE>
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ].

         Issuer's revenues for its most recent fiscal year were $201,644.

         The  aggregate  market  value  of the  voting  common  equity  held  by
non-affiliates computed by reference to the price at which the common equity was
sold as of      N/A            was    N/A         .
           -------------------     ---------------

         As of April 11, 2005 the number of  outstanding  shares of the issuer's
common stock, $0.001 par value, was 4,822,420.


DOCUMENTS INCORPORATED BY REFERENCE: Prospectus filed on August 9, 2004 pursuant
to Rule 424(b) of the Securities Act of 1933.

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







































                                        2
<PAGE>
                                TABLE OF CONTENTS

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS...............................................4

ITEM 2.  DESCRIPTION OF PROPERTY...............................................9

ITEM 3.  LEGAL PROCEEDINGS.....................................................9

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................9

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.............10

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS.................................10

ITEM 7.  FINANCIAL STATEMENTS.................................................11

         Auditor's Report.....................................................12

         Balance Sheets as of December 31, 2004 and 2003......................13

         Statement of Operations for the years ended December 31, 2004 and
         2003.................................................................15

         Statement of Changes in Stockholder's Equity for the years ended
         December 31, 2004 and 2003...........................................16

         Statement of Cash Flows for the years ended December 31, 2004 and
         2003.................................................................17

         Notes to Financial Statements........................................18
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.................................................29

ITEM 8A. CONTROLS AND PROCEDURES..............................................29

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT....................30

ITEM 10. EXECUTIVE COMPENSATION...............................................31

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS..........................................32

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................32

ITEM 13. EXHIBITS ............................................................32

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES...............................33

SIGNATURES....................................................................33

INDEX TO EXHIBITS.............................................................34

                                        3
<PAGE>
--------------------------------------------------------------------------------
                                     PART I


ITEM  1.          DESCRIPTION OF BUSINESS

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

         We conduct our business through our affiliated company, Smog Centers of
California  LLC,  of which we are the only  member.  As the only  member of Smog
Centers of  California,  LLC, we have complete  control over the business of our
affiliated company and we will receive periodic distributions and allocations of
cash flow and operating profits.

         We were  originally  incorporated in Delaware on June 2, 2000 under the
name of Breakthrough Technology Partners I, Inc. We never commenced any business
under our original name.  Effective  December 18, 2002, we reincorporated in the
State of Nevada  under our current  name  pursuant to an  Agreement  and Plan of
Merger with California Clean Air, Inc. dated December 18, 2002. The sole purpose
for the merger was to change our legal domicile from Delaware to Nevada.

         Smog Centers of  California,  LLC was  organized  as an Oregon  limited
liability  company on November 21,  2002.  It was  registered  to do business in
California  effective  December 10, 2002. We are the sole member of Smog Centers
of  California  LLC through the  ownership of all of the  outstanding  ownership
interests.  Mr. Stephen D. Wilson, our President, is the manager of Smog Centers
of California LLC.

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

         CALIFORNIA SMOG CHECK PROGRAM

         As a result of the federal Clean Air Act of 1990 and studies  conducted
by the United  States  Environmental  Protection  Agency  ("EPA"),  the State of
California adopted its Smog Check II program which is administered through the
Bureau of Automotive  Repair ("BAR").  Studies by the EPA found that independent
testing  facilities were more effective in reducing vehicle emissions  pollution
than testing facilities operated by vehicle repair shops.  Test-only  facilities
are  privately  owned and  operated  stations  which are  authorized  to conduct
emissions  tests and, in the event that a vehicle  fails,  are not  permitted to
make any repairs.






                                        4

<PAGE>
         BAR sends three types of vehicles to  test-only  facilities.  The first
type are motor vehicles  which are more likely to fail a smog check;  the second
type are those designated as "gross  polluters",  which are vehicles that failed
an initial smog check at double the maximum emissions levels and have since been
repaired.  These are vehicles  will be directed to test-only  facilities to have
their  repairs  verified  before the vehicle  can be  registered.  Thirdly,  BAR
directs 1.9% of registered vehicles at random to test-only facilities.

         The regulations  adopted by BAR require that all smog check  facilities
apply for a license through the BAR Licensing Division.  A required component of
Smog  Check II is the  Electronic  Transmission  (ET)  service  provided  by MCI
Telecommunications Corporation. Under contract with the State of California, MCI
has developed and maintains a central Vehicle  Information  Database (VID) and a
statewide  network  that  provides  electronic  access  between  all Smog  Check
machines throughout the state. In order to comply with the ET mandate,  all Smog
Check  facilities  are required to obtain and maintain ET services  through MCI.
Each new Smog Check  facility is be required to enter into an agreement with MCI
to secure ET services.  Prior to  certification,  all Smog Check facilities must
have  fully  functional  ET service  and must be  operational  with all  current
software and hardware updates.

         Through  the  ET  system,  smog  check  information  is  electronically
transmitted  directly to the Department of Motor Vehicles ( DMV). Vehicle owners
are not required to submit certificates to the DMV at vehicle registration time.
At the  beginning  of the smog test,  following  the  technician's  entry of the
vehicle  license  number and the vehicle  identification  number,  the ET system
initiates an automated call to the VID.  Vehicle-specific  information  and test
requirements are electronically  returned from the VID. At the conclusion of the
smog check test,  the test results,  including the smog  certificate  for passed
tests, are transmitted  electronically  to the VID. In turn, the VID immediately
transmits the  certificate to the DMV. The Vehicle  Inspection  Report serves as
the vehicle owner's receipt.

         The Smog Check  facilities are required to use loaded mode  dynamometer
test equipment.  The licensing  standards under the BAR regulations may include,
but  are  not   limited   to,   requirements   for  use  of   computerized   and
tamper-resistant testing equipment,  including test analyzer systems meeting the
current requirements of BAR.

         Licensed test-only stations are required to have the testing equipment,
basic hand tools, and emission control system  application  manuals necessary to
conduct smog tests in accordance  with  California  law. The required  equipment
must be on the station  premises in proper  working  order and  calibrated.  The
required equipment includes, but is not limited to:

         a. A certified  emission tests analyzer  equipped with a functional BAR
            code reader (BAR 97). Each analyzer must be connected to a separate,
            dedicated, standard single party telephone line at all times;

         b. Emission timing light which measures emission advance;

         c. Hand vacuum pump and vacuum gauge;

         d. Basic  hand  tools  necessary  to  inspect  vehicle  ignition,  fuel
            delivery and emissions control systems;



                                        5

<PAGE>
         e. Fuel fill-pipe restrictor dowel gauge meeting BAR specifications;

         f. BAR-certified fuel cap tester;

         g. The most currently available BAR bulletins and publications; and

         h. The most currently  available  emission  control system  application
            information   as  contained  in  any  nationally   distributed   and
            periodically  updated manuals that address  emission control systems
            applications.

                     The  reference  materials  must include  applicable  vacuum
            diagrams,   functional   test   procedures   and   ignition   timing
            specifications  satisfactory to BAR.  Electronic  forms (such as CD-
            ROM) of the reference materials are acceptable.

         Each test-only station is required to have a current,  valid Automotive
Repair  Dealer (ARD)  license and a Smog Station  License  issued by BAR. An ARD
license can be obtained by  submitting  a completed  application  and paying the
application  fee.  The Smog  Station  License can be obtained  by  submitting  a
completed application, paying the station license fee, passing a BAR inspection,
having the testing  equipment on site, and retaining at least one  appropriately
licensed technician.

         All  emissions  tests must be performed by a qualified,  licensed  smog
check  technician.  Each  technician  must be  licensed by BAR for the class and
category  of  vehicle  being  tested.   Smog  Check   technicians  must  pass  a
qualification  tested  administered by BAR, in addition to meeting  prerequisite
minimum experience and training  criteria.  Passage of the qualification test is
required every two years in order have the license renewed.

         The  Advanced  Emissions   Specialist   Technician  license  allows  an
individual to inspect, diagnose, adjust, repair and certify the emission control
systems on vehicles subject to the Smog Check II Program statewide. This license
requires a BAR  examination  and is valid for all areas  within  the state.  The
following  BAR  certified   courses  satisfy   certification   requirements  for
licensing. Course completion is valid for five years:

         a. Electrical/Electronics systems (20 hour minimum);

         b. Engine Performance (24 hour minimum);

         c. Advanced Engine Performance/Emissions Systems (28 hours minimum).

         Unexpired ASE  certifications  or passing test scores in the area of A6
and A8 and L1 are acceptable in lieu of the above courses.

         There  are  education  and  experience  requirements  for the  Advanced
Emissions  Specialist  Technician.  In  order  to be  eligible  to take  the BAR
examination  the technician must be able to provide proof of at least one of the
following requirements:

         a. A valid Advanced Emission Specialist Technician license; or

         b. A Basic Area  Technician  license and  completion of BAR's  Advanced
            Clean Air Course within the last 24 months;


                                        6

<PAGE>
         c. A valid unexpired Intern Technician  license,  one year's experience
            as an Intern Technician,  and completion of BAR's Advanced Clean Air
            Course within the last 24 months;

         d. One year's  experience  and/or  education in the engine  performance
            area and  completion of BAR'S Basic Area Clean Air Course within the
            last 24 months;

         e. Possess an AA, AS or higher degree in Automotive  Technology  from a
            state  accredited  or  recognized  college,  public  school or trade
            school and  successful  completion  of BAR's  Basic Clean Air Course
            within the last 24 months;

            or

         f. Possess  a  certificate  in  Automotive   Technology  from  a  state
            accredited or recognized college, public school or trade school with
            a  minimum  of 360 hours of course  work in the  engine  performance
            area,  and  successful  completion  of BAR's  Basic Clean Air Course
            within the last 24 months

         Update  training is also required for the technicians to maintain their
license.  An applicant  for an initial or renewal  license must provide proof of
successful  completion of BAR's certified OBDII update training  course.  Update
training  courses  may be up to 20 hours.  The  technician  must pass the 8-Hour
BAR97  Transition  Class.  Although  this  is not a  prerequisite  to  take  the
licensing  examination,  the Class must be passed before the technician  will be
given access to the BAR97 Emissions Inspection System.

         COMPANY'S SMOG CHECK FACILITIES

         The Smog Check  stations  will be owned and  operated by us through our
affiliated company,  Smog Centers of California LLC. Our facilities will consist
of "test-only"  stations.  These stations will either be purchased from existing
owner-operators  or will be  facilities  leased and  equipped by Smog Centers of
California, LLC.

         New Smog Check Stations

         Through Smog Centers of  California,  LLC, we intend to establish,  own
and operate new Smog Check stations,  principally in Southern  California and in
the Bay Area. We will seek to find suitable  locations for our stations based on
a number of factors,  among which  include the lack of any  existing  Smog Check
stations in the vicinity;  demographic  analysis;  ability to negotiate a ground
lease for a station on acceptable  terms and conditions;  ease of vehicle access
to the station and overall traffic patterns in the vicinity.

         When we open a new Smog Check station,  we will first secure a building
lease for a suitable  period of time,  typically  five years.  No  build-out  or
remodeling is expected since we intend to operate in an existing structure, such
as a gas station. We intend to lease the smog-testing equipment. Lease terms and
financing options are negotiable with the equipment manufacturers. Typical lease
terms  would  be  for a term  of 60  months  with a  purchase  option  at  lease
termination.  Lease payments are expected to be approximately  $900 per month. A
typical  location will need a BAR code reader ( BAR 97); a dynamometer;  gas cap
tester;  diagram books;  timing light,  hand vacuum pump; dowel gauge; and basic
automotive hand tools.

                                        7

<PAGE>
         As is the case for the purchase of an existing Smog Check  station,  it
will be necessary to hire at least one licensed smog check technician.

         On November 26, 2003, Smog Centers of California, LLC opened its second
Smog  Check  station  which  is  located  at 555  West  Grand  Ave.,  Escondido,
California.  The station is situated  within the All Star Gas Station,  which is
sits in a highly  visible  location  bordering  Grand Avenue,  Quince and Second
Street  in  Escondido's  business  improvement  district,  which is the focus of
ongoing revitalization efforts.

         Smog  Centers of  California,  LLC entered  into a five-year  lease for
approximately  1,028  square feet of space,  comprised of two  automotive  bays.
Previously,  automotive repair services were offered at the leased premises. The
leased space had been vacant of some time, although the gas station has operated
continuously  for years.  The terms of the lease call for monthly lease payments
of $1,500 until 2006,  at which time the  payments  increase to $1,700 per month
until 2007.  After 2007,  the lease payments  increase to $1,800 per month.  The
lease  provides  for an option to extend the lease term for an  additional  five
years.

          Competitive Business Conditions

         Competitive business conditions are comprised primarily of smog testing
stations owned by sole proprietors who are  owner-operators.  Marketing  efforts
and advertising campaigns by the typical  sole-proprietor in Southern California
appear to be minimal and infrequent. Print advertising by competitors is limited
to a small number of publications,  within defined geographical  regions.  There
appears  to be no  marketing  campaigns  to target the  return  customer,  or to
educate the public.  There  appears to be no  sustained  advertising  efforts of
duration or frequency within the relatively few  publications  that are utilized
by the sole proprietor.

      Enhanced smog testing  requirements  became  effective for the Bay Area in
July, 2003.  Because the Bay Area is newly designated as an Enhanced Area, there
is a shortage  of smog  test- only  stations  in the Bay Area.  We believe  that
competition  is minimal,  and the supply of test-only  stations to conduct tests
lags behind consumer demand.

         Competitive  business  conditions are affected  significantly  by state
regulation.  In Enhanced Areas,  vehicle owners are generally required to pass a
smog inspection  every two years if the vehicle is over five years old. Based on
information from BAR and based on the general  registered  vehicle population in
the state of California,  50% of those  registered  vehicles over five years old
must  undergo  a smog  inspection  every  two  years.  Approximately  33% of the
registered vehicles required to undergo a smog inspection are directed by BAR to
a test-only  station.  Vehicle  owners are  generally  unaware  that there is an
option to proceed to a test-only  station when not directed by BAR  specifically
to a test-only  station.  Upon a change of  ownership,  vehicles are required to
undergo a smog test, which can also be performed at a test-only station, or at a
test and repair station. No targeted marketing efforts have been directed by our
competitors to educate the public regarding the test-only station option,  which
is always  available to the consumer.  The Company's  strategy is to educate the
public about the test-only station  inspection option through sustained targeted
advertising.




                                        8

<PAGE>
         The price we can charge for a smog check test is not  regulated  by the
Smog Check II program or BAR. Prices we have seen range from  approximately  $30
to $100 in San Diego county  depending  on the location of the station.  We have
determined that the average price charged by a test-only  station is $48 for the
smog check  inspection plus $8.25 for the certificates and $3.00 for the Vehicle
Information Database transmission fee, for a total of $59.25.

         Our marketing strategy will be to devote a significant portion of gross
sales  revenues to  advertising  for the purpose of informing  the public of the
"test-only" smog check option.

         We  will  need  only  one  smog-check   technician  for  each  station.
Typically,  one  technician can perform up to twenty tests in a business day. We
will  need to hire an  additional  technician  if and when the  number  of tests
exceeds twenty in a single business day.

         Regulatory conditions

         Our  business is  significantly  affected by the state of  California's
Smog Check II program  which  mandates  that a certain  percentage of registered
motor  vehicles  be  subject  to smog  check  testing.  The  state's  regulatory
requirements  are  impacted by federal  clean air laws.  Since the  inception of
California's  Smog Check II program,  the state's  population  and the number of
registered  motor  vehicles  has  increased.  If  federal  and  state  clean air
regulations are eliminated or reduced,  our business would be adversely affected
because of the  elimination  or  reduction  of vehicles  emissions  testing.  We
believe that a reduction or elimination of emissions testing is highly unlikely.

         Although  environmental  laws and regulations  play a significant  role
with respect to our revenues,  compliance by us with environmental laws is not a
significant  factor in our  operations  because  we do not  handle or dispose of
hazardous or environmentally sensitive materials.


ITEM  2.          DESCRIPTION OF PROPERTY

         As  previously  described,  we operate two smog  test-only  stations in
Lemon Grove and Escondido,  California,  respectively.  Both of these properties
are leased from third-party  lessors.  In addition,  our principal executive and
administrative offices and those of Smog Centers of California,  LLC are located
at 2434 Vineyard Ave, Suite 101, Escondido, California 92029.

ITEM  3.          LEGAL PROCEEDINGS

         We are not a party to any legal proceeding.

ITEM  4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         N/A









                                        9

<PAGE>
                                     PART II

ITEM  5.          MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         At the present time,  our common stock is not traded on any market.  We
intend to make  application  to NASD in order to have our common stock quoted on
the OTC Bulletin Board.

         RECORD HOLDERS

         There is only one class of common  stock.  As of April 11, 2005,  there
are 242  shareholders  of record for the  Company's  common stock and a total of
4,822,420 shares of common stock issued and outstanding.

         The  holders  of  common  stock are  entitled  to one vote per share of
common  stock on all  matters  to be vote on by the  stockholders.  There are no
cumulative  voting rights.  Subject to preferences that may be applicable to any
outstanding preferred stock, the holders of common stock are entitled to receive
dividends,  if any, as may be declared  by the board of  directors  out of funds
legally available for dividends.  In the event of a liquidation,  dissolution or
winding up, the holders of common stock are entitled to share ratably in the net
assets  remaining  after payment in full of all of  liabilities,  subject to the
prior  rights  of  preferred  stock,  if any,  then  outstanding.  There  are no
redemption or sinking fund provisions applicable to the common stock.

         DIVIDENDS

         We have not declared any dividends  since our  inception.  We intend to
declare and pay dividends to our shareholders  from the distributions to be made
to us by Smog Centers of California, LLC. We are dependent on the distributions
from Smog Centers of California, LLC in order to have the funds necessary to pay
dividends.  Though we control the affairs of Smog Centers of California, LLC and
therefore  are able to decide when it will make  distributions  to us, we cannot
predict  when  dividends  will be paid or the  amount  and  frequency  of  those
dividends.

         RECENT SALES OF UNREGISTERED SECURITIES

         We did not sale unregistered securities in 2004.


ITEM  6.          PLAN OF OPERATION

         From  inception  until  September  2003,  we did not  have  any  formal
business operations and no revenues from operations.  All activities during that
time were devoted toward identifying business  opportunities.  All expenses from
inception  to  September  2003  consisted  of   organizational   and  regulatory
compliance  costs,  which have been advanced by Daniel M. Smith,  the husband of
one of our controlling shareholders and our President,  Stephen D. Wilson. These
advances are reflected in our financial statements as "payable to related party"
in the amount of $ . These  advances  are  non-interest  bearing  and are due on
demand.  Mr. Smith and Mr. Wilson have each agreed not to demand repayment until
sufficient  funds are  available  from  either this  offering  or from  revenues
derived from operations.




                                       10

<PAGE>
         As of December 31,  2004,  we had minimal cash on hand in the amount of
$31,414.  In order to expand  our  business,  we will  need to obtain  financing
during the next twelve months.  The Lemon Grove and Escondido stations currently
operated by Smog Centers of California, LLC, generate revenues which are
utilized for station operating expenses.  It is anticipated that additional cash
requirements  for Lemon  Grove  during the next  twelve  months will be minimal.
There may even be some  revenue  generated  by Lemon Grove which can be utilized
for the Escondido station's operating expenses.

         Additional  funding  will be  required  until the  company  reaches the
breakeven  point.  If we are  unable to  realize  sufficient  proceeds  from our
offering  and cash flow  from the Lemon  Grove  and  Escondido  stations  is not
sufficient to cover the company's operating  expenses,  we would request funding
from Daniel M. Smith and Stephen D. Wilson.  If none of these  contingencies  is
sufficient to cover the cash shortfall,  the company will do what it needs to do
to survive.

         We do not incur product  research and development  expenses.  We do not
expect to purchase  any plant or  significant  equipment  during the next twelve
months  unless we  acquire or build out new  stations  with  proceeds  from this
offering.  For each  station we put into  operation,  we will need to employ one
licensed smog technician.

ITEM  7.          FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS

Auditor's Report.............................................................12

Balance Sheets as of December 31, 2004 and  2003.............................13

Statement of Operations for the years ended December 31, 2004 and  2003......15

Statement of Changes in Stockholder's Equity for the years ended December 31,
2004 and 2003................................................................16

Statement of Cash Flows for the years ended December 31, 2003 and 2002.......17

Notes to Financial Statements................................................18



















                                       11

<PAGE>
         ---------- -------- ------- ----------------------------------
                                             ARMANDO C. IBARRA
             A         C        I        Certified Public Accountants
                                          A Professional Corporation
         ---------- -------- ------- ----------------------------------



Armando C. Ibarra, C.P.A.                   Members of the California Society of
                                             Certified Public Accountants
Armando Ibarra, Jr., C.P.A., JD             Members of the American Institute of
                                             Certified Public Accountants
                                            Registered with the Public Company
                                             Accounting Oversight Board



To the Board of Directors
California Clean Air, Inc.



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of California Clean
Air,  Inc.  as of  December  31,  2004  and 2003  and the  related  consolidated
statements of operations,  changes in  stockholders'  equity  (deficit) and cash
flows for the years then ended. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
California  Clean Air, Inc. as of December 31, 2004 and 2003, and the results of
their  operations and its cash flows for the years then ended in conformity with
U.S. generally accepted accounting principles.


/s/ ARMANDO C. IBARRA
--------------------------
ARMANDO C. IBARRA, CPA

March 4, 2005
Chula Vista, Ca. 91910




                                       12

<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                                 BALANCE SHEETS

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


                                     ASSETS
                                     ------

                                             AS OF            AS OF
                                          DECEMBER 31,      DECEMBER 31,
                                              2004             2003

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


CURRENT ASSETS

   Cash                                  $     31,414      $      3,285

   Prepaid expenses                             2,076             1,417

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


     TOTAL CURRENT ASSETS                      33,490             4,702


NET PROPERTY & EQUIPMENT                       76,055            96,296

OTHER ASSETS

      Deposits                                 12,123             6,649

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


     TOTAL OTHER ASSETS                        12,123             6,649

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


                  TOTAL ASSETS           $    121,668      $    107,647

                                          ============      ============













                                       13

<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                                 BALANCE SHEETS

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


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

                                                    AS OF
                                                   DECEMBER 31,    DECEMBER 31,
                                                      2004            2003

                                                   ------------    ------------
CURRENT LIABILITIES
   Accounts payable                                 $     9,309     $    39,903
   Accrued payroll and payroll related liabilities            -          25,860
   Accrued state income taxes                             2,400             800
   Capitalized lease obligation - current portion         6,372           5,471
   Notes payable to related party                       123,164         265,134
                                                   ------------    ------------

     TOTAL CURRENT LIABILITIES                          141,245         337,168

LONG-TERM LIABILITIES
   Capitalized lease obligation                          25,238          31,610
                                                   ------------    ------------

     TOTAL LONG-TERM LIABILITIES                         25,238          31,610
                                                   ------------    ------------

TOTAL LIABILITIES                                       166,483         368,778

STOCKHOLDERS' EQUITY (DEFICIT)
   Preferred stock ( $0.001 par value,
20,000,000 shares authorized;
4,000,000 shares issued and outstanding as of
December 31, 2003)                                        4,000           4,000
Common stock ( $0.001 par value,
100,000,000 shares authorized;
1,000,000 and 5,000,000 shares issued and
outstanding as of December 31, 2003 and 2002,
respectively)                                             3,953           1,000
Additional paid-in capital
   Retained earnings (deficit)                       (3,003,255)       (266,131)
                                                   ------------    ------------

     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)               (44,815)       (261,131)

TOTAL LIABILITIES                                  ------------    ------------
  & STOCKHOLDERS' EQUITY (DEFICIT)                 $    121,668     $   107,647
                                                   ============    ============






                                       14

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

                                         YEAR ENDED      YEAR ENDED
                                        DECEMBER 31,    DECEMBER 31,
                                            2004            2003
                                        ------------    ------------
REVENUES
   Sales                               $    201,644    $     27,503
                                        ------------    ------------
Total Revenues                              201,644          27,503
                                        ------------    ------------

COST OF REVENUES                            116,307          20,863
                                        ------------    ------------

GROSS PROFIT                                 85,337           6,640
                                        ------------    ------------
OPERATING COSTS
   Operating expenses                     2,686,951         193,031
   Advertising expense                      110,029          19,497
   Depreciation expense                      20,242           4,912
                                        ------------    ------------

Total Operating Costs                     2,817,222         217,440
                                        ------------    ------------

OPERATING INCOME (LOSS)                  (2,731,885)       (210,800)
                                        ------------    ------------
OTHER INCOME & (EXPENSES)

   Other income                               4,667               -
   Interest expense                          (9,106)              -
                                        ------------    ------------
Total Other Income & (Expenses)              (4,439)              -
                                        ------------    ------------

INCOME (LOSS) BEFORE INCOME TAXES      $ (2,736,324)     $ (210,800)
                                        ------------    ------------

INCOME TAX (PROVISION) BENEFIT                 (800)           (800)
                                        ------------    ------------

NET INCOME (LOSS)                      $ (2,737,124)     $ (211,600)
                                        ------------    ------------

BASIC EARNINGS (LOSS) PER SHARE        $      (2.48)      $   (0.08)
                                        ------------    ------------
WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING                 1,103,445      2,621,918
                                        ------------    ------------
                                        ------------    ------------






                                       15

<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                   FROM DECEMBER 31, 2002 TO DECEMBER 31, 2004

<TABLE>
<CAPTION>
  ----------------------------------------------------------------------------------------------------------------------------------
                                        PREFERRED       PREFERRED       COMMON        COMMON    ADDITIONAL      RETAINED     TOTAL
                                        SHARES          STOCK           SHARES        STOCK     PAID-IN         EARNINGS
                                                                                                CAPITAL         (DEFICIT)
  ----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>             <C>           <C>           <C>         <C>          <C>           <C>
     BALANCE,  DECEMBER 31, 2002               -        $      -      5,000,000     $   5,000   $       -    $ (54,531)    $(49,531)
  ----------------------------------------------------------------------------------------------------------------------------------

     Common stock exchanged for
     convertible preferred stock        4,000,000           4,000    (4,000,000)       (4,000)                                   -
     Net loss for the year ended
     December 31, 2003                                                                                        (211,600)    (211,600)

  ----------------------------------------------------------------------------------------------------------------------------------
     BALANCE,  DECEMBER 31, 2003        4,000,000           4,000     1,000,000         1,000           -     (266,131)    (261,131)
  ----------------------------------------------------------------------------------------------------------------------------------

     Common stock issued on August 11,
       2004 for debt settlement                                         293,800           293      293,507                  293,800
     Common stock issued on August 20,
       2004 for cash                                                      7,820             8        7,812                    7,820
     Common stock issued on August 20,
       2004 for services rendered                                       330,000           330      329,670                  330,000
     Common stock issued on Sept 15,
       2004 for cash                                                     21,800            22       21,678                   21,700
     Common stock issued on Sept 20,
       2004 for debt settlement                                           1,000             1          999                    1,000
     Common stock issued on Sept 22,
       2004 for services rendered                                     1,725,000         1,724    1,723,276                1,725,000
     Common stock issued on Sept 29,
       2004 for cash                                                    100,300           100      100,200                  100,300
     Common stock issued on October 21,
       2004 for services rendered                                       272,500           272      272,228                  272,500
     Common stock issued on October 25,
       2004 for cash                                                      3,000             4        2,996                    3,000
     Common stock issued on Nov 18,
       2004 for cash                                                    161,500           162      161,338                  161,500
     Common stock issued on Dec 20,
       2004 for services rendered                                        35,020            35       34,985                   35,020
     Common stock issued on Dec 27,
       2004 for cash                                                      1,800             2        1,798                    1,800
     Net loss for the year ended
     December 31, 2004                                                                                      (2,737,124)  (2,737,124)

  ----------------------------------------------------------------------------------------------------------------------------------
     BALANCE,  DECEMBER 31, 2004        4,000,000       $   4,000     3,953,540     $   3,953   $2,950,487 $(3,003,255)  $  (44,815)
  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       16

<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                   YEAR ENDED         YEAR ENDED
                                                                                  DECEMBER 31,       DECEMBER 31,
                                                                                     2004               2003
                                                                                 --------------     --------------
<S>                                                                              <C>                <C>
     CASH FLOWS FROM OPERATING ACTIVITIES
           Net income (loss)                                                     $  (2,737,124)     $    (211,600)
       Adjustments  to  reconcile  net loss to net cash  provided  (used  in) by
           operating activities:
           Common stock issued for debt settlements                                    294,800                  -
           Common stock issued for services                                          2,362,520                  -
           Depreciation expense                                                         20,242              4,912
       Changes in operating assets and liabilities:
          (Increase) decrease in prepaid expenses                                         (659)            (1,417)
          (Increase) decrease in deposits                                               (5,474)            (6,649)
           Increase (decrease) in accounts payable                                     (30,594)            39,903
           Increase (decrease) in accrued payroll and payroll related liabilities      (25,860)            25,860
           Increase (decrease) in accrued state income taxes                             1,600                800
                                                                                 --------------     --------------
          NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                         (120,549)          (148,191)

     CASH FLOWS FROM INVESTING ACTIVITIES
           Purchase of property and equipment                                                -           (101,208)
                                                                                 --------------     --------------
          NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                -           (101,208)

     CASH FLOWS FROM FINANCING ACTIVITIES
          Payments on capitalized lease obligations                                     (5,471)            37,081
          Payments on loans payable to related party                                  (141,970)           215,603
          Proceeds from sale of common stock                                           296,120                  -
                                                                                 --------------     --------------
          NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                          148,679            252,684
                                                                                 --------------     --------------

         NET INCREASE (DECREASE) IN CASH                                                28,129              3,285
         CASH AT BEGINNING OF YEAR                                                       3,285                  -
                                                                                 --------------     --------------
         CASH AT END OF YEAR                                                     $      31,414      $       3,285
                                                                                 --------------     --------------
                                                                                 --------------     --------------
         SUPPLEMENTAL  CASH FLOW DISCLOSURES:
         Cash paid during year for interest                                      $       9,106      $           -
                                                                                 --------------     --------------
                                                                                 --------------     --------------
         Cash paid during year for taxes                                         $       1,600      $           -
                                                                                 --------------     --------------
                                                                                 --------------     --------------
         SCHEDULE OF NON-CASH ACTIVITIES:

         Common stock issued for services rendered                               $   2,362,520      $           -
                                                                                 --------------     --------------
                                                                                 --------------     --------------
         Common stock for relief of debt                                         $     294,800      $           -
                                                                                 --------------     --------------
                                                                                 --------------     --------------
</TABLE>
                                       17

<PAGE>
NOTE 1.  ORGANIZATION AND DESCRIPTION OF BUSINESS

GENERAL

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


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

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

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

On November 21, 2002,  the Company  organized  Smog Centers of  California,  LLC
(`Smog  Centers"),  an Oregon limited liability  company.  California Clean Air,
Inc. is the sole owner of Smog Centers. California Clean Air, Inc. owns title to
all  assets and  liabilities  of the  consolidated  financial  statements.  Smog
Centers was organized to acquire,  own and operate test-only  vehicles emissions
inspection  facilities  in the State of  California  under  their  Smog Check II
program.  Smog Centers  currently  operates  two  test-only  vehicles  emissions
inspection facilities.



                                       18

<PAGE>
NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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

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

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

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

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

The Company  expenses the cost of  advertising  as it is  incurred.  Advertising
expense was $110,029 and $19,497 for the years ended December 31, 2004 and 2003,
respectively.

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

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

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

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

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

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

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


                                       19

<PAGE>
NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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

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

J.       REPORTING CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
         --------------------------------------------------

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

K.       SEGMENT REPORTING
         -----------------

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

L.       PRINCIPLES OF CONSOLIDATION
         ---------------------------

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
















                                       20

<PAGE>
NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

NEW ACCOUNTING PRONOUNCEMENTS:

In November 2004, the Financial  Accounting  Standards  Board (FASB) issued SFAS
151,  Inventory  Costs - an amendment of ARB No. 43,  Chapter 4. This  Statement
amends the guidance in ARB No. 43,  Chapter 4,  "Inventory  Pricing," to clarify
the accounting for abnormal amounts of idle facility expense,  freight, handling
costs,  and  wasted  material  (spoilage).  Paragraph  5 of ARB 43,  Chapter  4,
previously  stated  that  "...  under  some  circumstances,  itemS  such as idle
facility expense,  excessive spoilage,  double freight, and rehandling costs may
be so  abnormal  as to require  treatment  as current  period  charges..."  This
Statement  requires  that those items be recognized  aS  current-period  charges
regardless  of whether they meet the  criterion of "so  abnormal."  In addition,
this Statement  requires that  allocation of fixed  production  overheads to the
costs  of  conversion  be  based  on  the  normal  capacity  of  the  production
facilities.  This  Statement is effective for inventory  costs  incurred  during
fiscal  years  beginning  after June 15, 2005.  Management  does not believe the
adoption  of this  Statement  will  have any  immediate  material  impact on the
Company.

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

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






                                       21

<PAGE>
NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

NEW ACCOUNTING PRONOUNCEMENTS:

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

NOTE 3.  PROPERTY & EQUIPMENT

Property  is  stated  at cost.  Additions,  renovations,  and  improvements  are
capitalized.  Maintenance  and repairs,  which do not extend  asset  lives,  are
expensed as incurred. Depreciation is provided on a straight-line basis over the
estimated useful lives ranging from 27.5 years for commercial rental properties,
5 years for tenant improvements, and 5 - 7 years on furniture and equipment.

                                             DECEMBER 31,         DECEMBER 31,
                                                2004                 2003

        Office equipment                   $        11,708      $        11,708
        Equipment                                   89,500               89,500
                                           $       101,208      $       101,208
        Less Accumulated Depreciation              (25,153)              (4,912)
        NET PROPERTY AND EQUIPMENT         $        76,055      $        96,296

Depreciation  for the year  ending  December  31,  2004 and 2003 was $20,242 and
$4,912, respectively.





















                                       22

<PAGE>
NOTE 4.  CAPITALIZED LEASE OBLIGATION

Smog Centers has a  non-cancelable  lease obligation for the purchase of vehicle
emission inspection equipment. Under the terms of the agreement, Smog Centers is
obligated to pay $899 per month through October 2008.

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

             Years ending December 31:

                   2005                                 $    10,788
                   2006                                      10,788
                   2007                                      10,788
                   2008  (through October 2008)               8,990

             Total minimum lease payments                    41,354
             Less amount representing interest                9,744

             Present value of minimum lease payments    $    31,610


NOTE 5.  OPERATING LEASE COMMITMENTS

Smog  Centers has entered  into two  non-cancelable  lease  agreements  for smog
center  facilities,  under the terms of the agreements,  a monthly lease payment
for the Escondido location of $1,500 as of November 14, 2003 through November 15
2006;  $1,700 from November 15, 2006 through  November 14, 2007; and $1,800 from
November 15, 2007 through  November 14, 2008.  Also, a monthly lease payment for
the Lemon Grove  location of $1,500  through July 01,  2006.  The Company has an
option to extend the terms of the lease on both locations for an additional five
(5) years. On January 1, 2005, subsequent to the financial statement the Company
entered into two additional lease agreements (see note 16 for full disclosure).


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

                   Years ending December 31:
                   -------------------------
                         2005                           $    36,200
                         2006                                27,500
                         2007                                20,600
                         2008                                19,800

                   Total minimum lease payments         $   140,100












                                       23

<PAGE>
NOTE 6.  TRANSACTIONS WITH RELATED PARTIES

The operating expenses of California Clean Air, Inc., consisting  principally of
business investment activities, and they have been paid for by advances received
from  an  individual  considered  to  be  a  related  party.  The  advances  are
non-interest bearing and are due on demand;  however, this individual has orally
agreed not to demand  repayment  until cash is available from operations and not
before  July 1, 2005.  As of  December  31,  2004 the loans  payable  amount was
$123,164.

NOTE 7.  ASSET PURCHASE

On August 21, 2003,  Smog Centers  acquired all of the  smog-testing  assets for
$60,000.  These assets are currently used in the Company's Lemon Grove location;
Broadway Smog Check. The acquisition can be summarized as follows:

         Fair vale of vehicle emission Inspection equipment      $      60,000
         Cash paid                                               $      60,000


NOTE 8.  BASIC & DILUTED INCOME (LOSS) PER COMMON SHARE

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

                                                 DECEMBER 31,      DECEMBER 31,
                                                    2004              2003

NET INCOME (LOSS) FROM OPERATIONS              $   (2,737,924)   $     (211,600)

Basic income (loss) per share                  $        (2.48)   $        (0.08)

Weighed average number of shares outstanding        1,103,445         2,621,918

As of December 31, 2004 there have not been any preferred  dividends issued that
would reduce earnings available to common shareholders.  Therefore,  calculation
of diluted  earning per share was omitted due to the exercise of preferred stock
will be antidilutive.














                                       24

<PAGE>
NOTE 9.  INCOME TAXES

Deferred income taxes consisted of the following:

                                                       DECEMBER 31,
                                               2004                    2003
                                          --------------------------------------
     Deferred tax asset:
     Net operating loss carryover          $  3,004,055            $    266,131
                                              3,004,055                 266,131
     Valuation allowance                     (3,004,055)               (266,131)
     Net deferred income taxes                       -0-                     -0-

The net operating  loss expires twenty years from the date the loss was incurred
for federal tax purposes.  In accordance  with SFAS 109 paragraph 18 the Company
has  reduced its  deferred  tax benefit  asset by a valuation  allowance  due to
negative evidence that has caused the Company to feel it is more likely than not
that some  portion or all of the  deferred  tax asset will not be  realized.  No
portion of the valuation allowance will be allocated to reduce goodwill or other
noncurrent  intangible  asset of an  acquired  entity.  There  are no  temporary
differences  or  carryforward  tax effects that would  significantly  affect the
Companies deferred tax asset.


Utilization of the net operating losses and credit  carryforwards may be subject
to a substantial  annual limitation due to the "change in ownership"  provisions
of the Internal  Revenue Code of 1986.  The annual  limitation may result in the
expiration of net operating losses and credits before  utilization.  None of the
valuation  allowance  recognized  was  allocated  to  reduce  goodwill  or other
noncurrent  intangible  assets of an acquired  entity or directly to contributed
capital.


NOTE 10.  OPERATING SEGMENTS

     For the Year Ended 2004                CALIFORNIA         SMOG CENTERS OF
                                          CLEAN AIR, INC.      CALIFORNIA, LLC

     Total Revenue                        $            0       $       201,644
     Costs of Revenues                                 0              (116,307)

     Gross Profit                                      0                85,337
     Total Operating Costs                    (2,611,451)             (205,771)

     Operating Income (Loss)                  (2,611,451)             (120,434)
     Total Other Income & (Expenses)                 878                (5,317)

Income (Loss) before Income Tax
      and Extraordinary Items             $   (2,610,573)      $      (125,751)











                                       25

<PAGE>
NOTE 10.  OPERATING SEGMENTS - CONTINUED


      For the Year Ended 2003                  CALIFORNIA        SMOG CENTERS OF
                                             CLEAN AIR, INC.     CALIFORNIA, LLC

      Total Revenue                          $            0      $       27,503
      Costs of Revenues                                   0             (20,863)

      Gross Profit                                        0               6,640
      Total Operating Costs                         (60,885)           (156,555)

      Operating Income (Loss)                       (60,885)           (149,915)

      Total Other Income & (Expenses)                     0                   0

Income (Loss) before Income Tax
      and Extraordinary Items
                                             $      (60,885)     $     (149,915)


In  accordance  with  FASB  131  paragraph  18  the  Company  is  reporting  the
information of their operating segments that meet the quantitative thresholds.

NOTE 11. TRANSACTIONS WITH STOCKHOLDERS

Effective  December 20, 2002, the authorized  capital stock of California  Clean
Air, Inc. was increased to 20,000,000  shares of preferred stock and 100,000,000
shares of common stock and changed the par value of each class of capital  stock
from $.0001 per share to $.001 per share.  All share  amounts have been restated
in the accompanying consolidated financial statements.

On May 29, 2003 stockholders' who owned 4,000,000 shares of California Clean Air
Inc.'s common stock agreed to exchange their shares for 4,000,000  shares of the
Company's Series A Convertible Preferred Stock. The Company's Series A Preferred
Stock may be voting or have other rights and preferences as determined from time
to time by the Board of Directors.

NOTE 12.  STOCK TRANSACTIONS

Transactions,  other than  employees'  stock  issuance,  are in accordance  with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs  (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration  received or the fair
value  of  the  equity   instruments   issued,  or  whichever  is  more  readily
determinable.











                                       26

<PAGE>
NOTE 12. STOCK TRANSACTIONS - CONTINUED

In May the Company issued 4,000,000 shares of preferred stock in a conversion of
common  stock On August 11, 2004 the  Company  issued  293,800  shares of common
stock in a debt  settlement.  On August 20, 2004 the Company issued 7,820 shares
of common stock for cash valued at $1.00 per share.

On August  20,  2004 the  Company  issued  330,000  shares  of common  stock for
services rendered valued at $1.00 per share.

On September 15, 2004 the Company  issued 21,800 shares of common stock for cash
valued at $0.76 per share. On September 20, 2004 the Company issued 1,000 shares
of common stock in a debt settlement.

On September 22, 2004 the Company  issued  1,725,000  shares of common stock for
services rendered valued at $1.00 per share.

On September 29, 2004 the Company issued 100,300 shares of common stock for cash
valued at $1.00 per share.

On October  21,  2004 the  Company  issued  272,500  shares of common  stock for
services rendered valued at $1.00 per share.

On October 25, 2004 the Company  issued  3,000  shares of common  stock for cash
valued at $1.00 per share.

On November 18, 2004 the Company  issued 161,500 shares of common stock for cash
valued at $1.00 per share.

On December  20,  2004 the  Company  issued  35,020  shares of common  stock for
services rendered valued at $1.00 per share.

On December  27, 2004 the Company  issued  1,800 shares of common stock for cash
valued at $1.00 per share.

As of December 31, 2004 the Company had 3,953,540  shares of common stock issued
and outstanding.

NOTE 13. STOCKHOLDERS' EQUITY

The  stockholders'  equity section of the Company contains the following classes
of capital stock as of December 31, 2004:

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

(B)  Common stock,  $0.001 par value;  100,000,000 shares authorized:  3,953,540
     shares issued and outstanding.










                                       27

<PAGE>
NOTE 14. ISSUANCE OF SHARES FOR SERVICES - STOCK OPTIONS

The company  has a  nonqualified  stock  option  plan,  which  provides  for the
granting of options to key employees,  consultants,  and nonemployee's directors
of the Company.  These  issuances shall be accounted for based on the fair value
of the  consideration  received  or the  fair  value of the  equity  instruments
issued,  whichever  is more  readily  determinable.  The  Company has elected to
account for the stock option plan in  accordance  with  paragraph 30 of SFAS 123
were the  compensation  to employees  should be recognized over the period(s) in
which the related employee  services are rendered.  In accordance with paragraph
19 of SFAS 123 the fair value of a stock option  granted is  estimated  using an
option-pricing model.

As of December 31, 2004 there were no stock options issued or outstanding.

NOTE 15. DEVELOPMENT STAGE ENTERPRISE

On  August  21,  2003,  the  Company  was  no  longer  considered  to be in  the
development  stage. The deficit  accumulated  during the development  stage from
June 2, 2000 (inception)  through August 20, 2003 was $54,731 and is included in
retained deficit in the accompanying consolidated balance sheets.

NOTE 16. SUBSEQUENT EVENTS

On January 1, 2005, subsequent to the audited consolidated  financial statements
the Company entered into two new lease agreements.  Under the terms of the first
lease,  the  Company  will  incur a monthly  lease  payment  for the San  Marcos
location of $1,150 for base rent and $145 per month for operation expenses.  The
term of this lease is for approximately  three years commencing  January 1, 2005
and ending on December 31,  2008.  The Company has the option to renew the lease
for 3 years upon  expiration  of this lease by  providing  lessor  with a 30 day
notice prior to completion of lease.

Under the terms of the second  lease,  the  Company  will incur a monthly  lease
payment for the Santee location of $1,500 as of January 1, 2005 through December
31, 2005;  $1,500 per month plus a cost of living  increase of at least 5% as of
January  1, 2006  through  December  31,  2006;  $2,006 per month plus a cost of
living increase of at least 5% as of January 1, 2007 through December 31,
 2007;  $2,007  per month  plus a cost of living  increase  of at least 5% as of
January 1, 2008 through  December 31, 2008;  and $2,008 per month plus a cost of
living increase of at least 5% as of January 1, 2009 through  December 31, 2009.
The  Company has an option to extend the term of the lease for an  additional  5
years,  from January 1, 2010,  through  December  31,  2014,  on the same terms,
covenants and conditions contained in this lease.














                                       28

<PAGE>
ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURES

         In its two most recent  fiscal years or any later interim  period,  the
Company has had no disagreements  with its certifying  accountants on accounting
and financial disclosures. On February 23, 2004, we dismissed Timothy J. Steers,
CPA,  LLC,  as  the  Company's  certifying   accountants.   Our  new  certifying
accountants are Armando Ibarra, CPA, of Chula Vista, California.

ITEM 8A. CONTROLS AND PROCEDURES

         Based on an evaluation of our disclosure  controls and procedures as of
December 31, 2003, we are satisfied as to the  effectiveness  of our  disclosure
controls  and  procedures,  inasmuch as Stephen D.  Wilson,  our  President,  is
responsible  for the  day-to-day  operations of our two smog check  stations and
also serves as our chief accounting officer.


                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following  persons  constitute  all of our  executive  officers and
directors:

     NAME                      AGE              POSITION
     ----                      ---              --------

Stephen D. Wilson              29               President, Corporate Secretary,
                                                Director

William Leonard                51               Director

Dewitt H. Montgomery III       52               Director

Michael G. Conner              58               Director


         Stephen D. Wilson  became  President  and a director in December  2002.
Prior to joining the Company,  Mr. Wilson owned and operated  Stephen D. Wilson,
Inc. a general  contracting firm which he founded in 1998. From 1995 to 1998, he
was an account representative with Coca-Cola Bottling in Portland, Oregon.

         William  Leonard became a director in 2003. For the past 17 years,  Mr.
Leonard has been a certified public accountant in Portland, Oregon. From 1977 to
1986,  Mr.  Leonard was a Revenue  Agent with the  Internal  Revenue  Service in
Portland,  Oregon.  Mr. Leonard has a Masters Degree in Business  Administration
from the University of Portland.

         Dewitt H.  Montgomery  III became a director in 2003.  Since 1999,  Mr.
Montgomery  has been  associated  with  Imaginata  Network  Service in Portland,
Oregon which is in the business of providing small business computer  networking
services.  For the past four years,  Mr.  Montgomery  has been the  President of
Imaginata Network Services. He is also the owner of Montgomery Apartment




                                       29

<PAGE>
Management which owns and manages  residential and commercial real estate in the
Portland,  Oregon  metropolitan area. Mr. Montgomery holds a Bachelors degree in
economics from Portland State University.

         Michael G.  Conner  became a director  in 2003.  Mr.  Conner has been a
self-employed certified public accountant in Lake Oswego, Oregon since 1990. Mr.
Conner is a member of the American  Institute of Certified  Public  Accountants.
Mr. Conner holds a Bachelor of Science degree from Oregon State University.

         Our Bylaws currently authorize up to seven directors.  Each director is
elected for one year at the annual meeting of stockholders  and serves until the
next annual  meeting or until a successor  is duly  elected and  qualified.  Our
executive officers serve at the discretion of our board of directors.  There are
no family relationships among any of our directors and executive officers.

         BOARD COMMITTEES.

         The Board has established an audit committee. The committee consists of
our directors, William Leonard and Michael G. Conner. The audit committee:

         o        reviews  and  monitors  our  internal  accounting  procedures,
                  corporate financial  reporting,  external and internal audits,
                  the  results and scope of the annual  audit and other  matters
                  required by the  Sarbanes-Oxley  Act of 2002 and the rules and
                  regulations  of  the   Securities   and  Exchange   Commission
                  thereunder;
         o        makes  recommendations to the board of directors regarding the
                  selection of independent auditors.

         CODE OF ETHICS.

         Effective  January 1, 2004,  the Board of  Directors  adopted a Code of
Ethics for Senior Financial Officers. The Code of Ethics was adopted pursuant to
the  requirements  of the  Sarbanes-  Oxley  Act  of  2002  and  the  rules  and
regulations of the Securities and Exchange Commission thereunder.  A copy of the
Code of Ethics will be made available upon request at no charge. Requests should
be  directed  in  writing  to the  Company  at 2434  Vineyard  Ave,  Suite  101,
Escondido, California 92029.

ITEM 10. EXECUTIVE COMPENSATION

         From  January  2004  to  November   2004,  Mr.  Wilson  was  been  paid
compensation of $6,000 per month,  and health  insurance of $550 per month.  For
the 2004 yaer Mr. Wilson received compensation of $78,600.

         We  currently  have no express  agreement  or  understanding,  with any
officer, director, or principal stockholder,  or their affiliates or associates,
regarding employment or compensation for services.  We have no plan,  agreement,
or understanding,  express or implied, with any officer,  director, or principal
stockholder,  or their affiliates or associates,  regarding the issuance to such
persons of any shares of our authorized and unissued  common stock.  There is no
understanding between us and any of our present stockholders  regarding the sale
of a portion or all of the common stock currently held by them in connection





                                       30

<PAGE>
with any  future  participation  us in a  business.  There  are no other  plans,
understandings,  or  arrangements  whereby any of our  officers,  directors,  or
principal stockholders,  or any of their affiliates or associates, would receive
funds,  stock,  or  other  assets  in  connection  with our  participation  in a
business.  No advances have been made or  contemplated  by the Company to any of
its officers,  directors, or principal stockholders,  or any of their affiliates
or associates.  There is no policy that prevents management from adopting a plan
or  agreement  in the  future  that  would  provide  for  cash  or  stock  based
compensation for services rendered to the Company.

         COMPENSATION OF DIRECTORS

         We will  reimburse  directors  for  reasonable  out-of-pocket  expenses
incurred in attending meetings of the board of directors.

ITEM 11. SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS &  MANAGEMENT  AND
         RELATED STOCKHOLDER MATTERS.

         The following  table sets forth,  as of March 30, 2004,  the number and
percentage  of  outstanding  shares  of common  stock  which,  according  to the
information  supplied  to  us,  were  beneficially  owned  by (i)  each  current
director,  (ii) each current executive officer,  (iii) all current directors and
executive  officers as a group,  and (iv) each person who, to our knowledge,  is
the beneficial owner of more than 5% of our outstanding common stock.  Except as
otherwise  indicated,  the persons named in the table below have sole voting and
dispositive  power with  respect to all shares  beneficially  owned,  subject to
community property laws (where applicable).

<TABLE>
<CAPTION>
TITLE OF CLASS           NAME AND ADDRESS OF              AMOUNT OF               PERCENT OF
                         BENEFICIAL OWNER                 BENEFICIAL OWNERSHIP    CLASS

<S>                      <C>                                     <C>                 <C>
Common Stock             Stephen D. Wilson                      -0-                  0 %
                         2434 Vineyard Ave, Ste.101
                         Escondido, California 92029

Common Stock             William Leonard                        -0-                  0 %
                         888 SW Fifth Ave. Suite 650
                         Portland, Oregon 97204

Common Stock             Dewitt H. Montgomery III               -0-                  0 %
                         55533 SW Boundary
                         Portland, Oregon 97221

Common Stock             Michael G. Conner                      -0-                  0 %
                         4500 SW Kruse Way, Suite 290
                         Lake Oswego, Oregon 97035









                                       31

<PAGE>

Common Stock             Joy E. Livingston                 500,000                  11 %
                         PMB 109
                         PO Box 439060
                         San Diego, California 92143


Preferred Stock          Joy Livingston                  1,100,000                  27.5%
                         PMB 109
                         PO Box 439060
                         San Diego, California

Preferred Stock          Stephen D. Wilson               1,200,007                  30 %
                         2434 Vineyard Ave, Ste.101
                         Escondido, California 92029

Common Stock (all officers and directors as a group-4 persons) -0-                 -0- %
</TABLE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Our President, Stephen D. Wilson, has advanced a total of 123,163 as of
December 31, 2004.

         The funds advanced Mr. Wilson are reflected in our financial statements
as "Payable to related party".  These advances are non-interest  bearing and are
due on demand. Mr. Wilson has agreed to not to demand repayment until sufficient
funds are  available  from either this  offering or from  revenues  derived from
operations. Mr. Smith had advanced money to the company and in the third quarter
of 2004 he accepted  293,800  registered  shares of common stock and forgave the
$293,800 the company owed him.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a)      Exhibits

         Exhibits  required  to be attached  by Item 601 of  Regulation  S-B are
         listed  in  the  Index  to  Exhibits  of  this  Form  10-KSB,  and  are
         incorporated hereinby this reference.

(b)      Reports on Form 8-K.

         The following  reports on Form 8-K were filed during the period covered
         by this Form 10-KSB:

         February 27, 2004           Item 4. CHANGES IN REGISTRANT'S CERTIFYING
                                     ACCOUNTANTS;
                                     ------------------------------------------
                                     Item 7. FINANCIAL STATEMENTS, PRO FORMA
                                     FINANCIAL INFORMATION AND EXHIBITS.
                                     ------------------------------------------

         December 17, 2004           Item 1.01  ENTRY INTO A MATERIAL DEFINITIVE
                                     AGREEMENT;
                                     ------------------------------------------
                                     Item 8.01  OTHER EVENTS;
                                     ------------------------------------------
                                     Item 9.01  FINANCIAL STATEMENTS AND
                                     EXHIBITS.
                                     ------------------------------------------

                                       32

<PAGE>
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

                                              2003               2004
                                              ----               ----

           Audit Fees                         $ 7,200            $ 7,200
           Audit-Related Fees                     -0-                -0-
           Tax Fees                               -0-                -0-
           All Other Fees                         -0-                -0-

         The  audit  committee,   upon  the   recommendation  of  the  Company's
President,  Stephen D.  Wilson,  approved the  engagement  of Armando C. Ibarra,
Certified Public  Accountants,  as the Company  independent  auditors


                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed  on its  behalf  by the  undersigned,  hereunto  duly
authorized, this 11th day of April , 2005.


                                              CALIFORNIA CLEAN AIR, INC.

                                              /s/ STEPHEN D. WILSON
                                              ---------------------------------
                                              Stephen D. Wilson
                                              President, Secretary and Director


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
Signature                                            Title                              Date
<S>                                         <C>                                      <C>
/s/ STEPHEN D. WILSON                       President; Chief Executive Officer;
    -----------------                       Secretary; Chief Financial Officer;
                                            Chief Accounting Officer; Director       April 11, 2005
    Stephen D. Wilson

/s/ WILLIAM LEONARD                         Director                                 April 11, 2005
    ---------------
    William Leonard

/s/ DEWITT H. MONTGOMERY III                Director                                 April 11, 2005
    -----------------------
    Dewitt H. Montgomery III

                                       33

<PAGE>

/s/ MICHAEL G. CONNER                       Director                                 April 11, 2005
    -----------------
    Michael G. Conner
</TABLE>

                                INDEX TO EXHIBITS
EXHIBIT
NO.                       DESCRIPTION
---                       -----------

                             PLAN OF REORGANIZATION

2.1        *            Agreement and Plan of Merger dated December 18, 2002

                      ARTICLES OF INCORPORATION AND BY-LAWS

3(i)       *            Articles of  Incorporation  of  Breakthrough  Technology
                        Partners I, Inc., dated June 2, 2000.

3(i)       *            Articles of  Incorporation of California Clean Air, Inc.
                        dated December 17, 2002.

3(ii)      *            Certificate  of Amendment of California  Clean Air, Inc.
                        dated June 3, 2003.

3(iii)     *            Bylaws of California Clean Air, Inc.

3(iv)      *            Articles of  Organization of Smog Centers of California,
                        LLC dated November 21, 2002.

3(v)       *            Operating  Agreement of Smog Centers of California,  LLC
                        dated January 9, 2003.

                               MATERIAL CONTRACTS

10.1       *            Lease  Agreement  dated  January  1, 2005  between  John
                        Bessone and Smog Centers of California LLC.


                                  SUBSIDIARIES

21         *            Smog  Centers  of  California  LLC,  an  Oregon  limited
                        liability company.


                        CERTIFICATIONS

31                      Rule 15d-14(a) certification of Stephen D. Wilson.

32                      Section 1350 certification of Stephen D. Wilson.

           *            Incorporated herein by reference from filings previously
                        made by the Company



                                       34