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, 2003.

   [ ]   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.
                           --------------------------
        (Exact name of small business issuer as specified in its charter)



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



           3790 VIA DE LA VALLE, SUITE 103, DEL MAR, CALIFORNIA 92014
          ------------------------------------------------------------
               (Address of principal executive office) (Zip Code)

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

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

As of March 30, 2004 , the number of outstanding  shares of the issuer's  common
stock, $0.001 par value was 1,000,000 shares.





<PAGE>
Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                          Yes    X                   No
                              --------                  --------


Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation SB 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 of its most recent fiscal year was $ 27,503

         As of  December  31,  2003 , the  number of  outstanding  shares of the
issuer's common stock, $0.001 par value was 1,000,000 shares.


                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

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
































                                        2

<PAGE>
                                TABLE OF CONTENTS

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS...............................................3

ITEM 2.  DESCRIPTION OF PROPERTY..............................................12

ITEM 3.  LEGAL PROCEEDINGS....................................................12

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................12

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.............12

ITEM 6.  PLAN OF OPERATION....................................................13

ITEM 7.  FINANCIAL STATEMENTS.................................................14

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS........................14

ITEM 8A. CONTROLS AND PROCEDURES..............................................14

                                    PART III

ITEM 9.  DIRECTORS AND  EXECUTIVE OFFICERS OF THE REGISTRANT..................15

ITEM 10. EXECUTIVE COMPENSATION...............................................16

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT.........17

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................18

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.....................................18

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES...............................19

SIGNATURES....................................................................20

INDEX TO EXHIBITS.............................................................21

                                    PART F/S

                          INDEX TO FINANCIAL STATEMENTS

Auditor's Report.............................................................F-2

Balance Sheets as of December 31, 2003 and  2002.............................F-3

Statement of Operations for the years ended December 31, 2003 and  2002......F-5

Statement of Changes in Stockholder's Equity for the years ended December 31,
2003 and 2002................................................................F-6

Statement of Cash Flows for the years ended December 31, 2003 and 2002.......F-7

Notes to Financial Statements...............................................F-10

                                        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.

         At this time,  Smog  Centers  of  California  LLC has had very  limited
revenues from operations. Most references to our business will apply directly to
the  emissions  inspection  facilities  and  the  business  of Smog  Centers  of
California.

         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 3790 Via de la Valle,  Suite 103, Del
Mar, California 92014.














                                        4

<PAGE>
         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").  According to the Sacramento Bee ,under the
Smog Check II program,  BAR directs  about  800,000  cars  annually to test-only
inspection centers,  which are smog check facilities that do not perform vehicle
repairs.  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.

         BAR sends three types of vehicles to  test-only  facilities.  The first
type are motor vehicles  which are 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 the higher  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.

         Smog Check II covered every  metropolitan area in California except the
Bay Area. In September 2002, the California legislature adopted legislation that
extended Smog Check II to the Bay Area.  As reported by MediaNews  Group and ANG
Newspapers,  owners of The Oakland Tribune and other Bay Area newspapers,  it is
estimated  by BAR that up to 4.5 million  vehicles in the  nine-county  Bay Area
were subject to the new testing requirements.  The Bay Area Smog Check went into
effect  January  1,  2003.  According  to the  California  Smog  Check  Consumer
Assistance program,  which handles special cases affecting smog check consumers,
the Bay Area Smog Check will divert  approximately  15% of vehicles to test-only
facilities,  in addition to  requiring  more  stringent  tests.  However,  state
officials have indicated that the new testing program may take as long as a year
to implement because of the need to install the testing infrastructure.

         The  legislation  creating the Bay Area Smog Check program also amended
Smog Check II by  providing  that owners of  vehicles  less than six model years
old, up from the original  four,  will be exempted  statewide  from the biennial
smog tests.

         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.






                                        5

<PAGE>
         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  be  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;

         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.









                                        6

<PAGE>
         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;

         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;










                                        7

<PAGE>
         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. Our first locations will be in Southern California,  principally
in the San Diego metropolitan area.

         Purchase of Existing Smog Check Stations

         Smog Centers of California LLC purchased the Smog Check station located
at 7310 Broadway, Lemon Grove,  California.  The purchase price was $60,000. The
purchase  was  closed  on  August  21,  2003  pursuant  to an Asset  Acquisition
Agreement,  with payment in full made at the closing. As part of the purchase of
the business,  Smog Centers of California LLC assumed the  obligations  under an
existing real estate ground lease.  The ground lease has a remaining  term until
July 1, 2006,  with an option to renew for an  additional  five year  term.  The
ground  lease  payments  are $1,500 per  month,  which are  subject to an annual
increase of 5% for each year during the remaining initial term of the lease.

         The assets  acquired as part of the Lemon Grove facility  consisted of,
among other things, the following:

        o         all exterior signage;
        o         current BAR manuals and publications;
        o         Smog Check Inspection Manual;
        o         smog testing equipment;
        o         computer and telecommunications equipment;
        o         general office equipment










                                        8

<PAGE>
         The Lemon Grove facility is fully  operational and is licensed with BAR
to operate as a "test-  only"  inspection  station and has fully  functional  ET
services with MCI.

         This  facility,  known as  "Broadways  Smog Check",  is located at 7310
Broadway, Lemon Grove,  California.  Broadway is a four-lane road with no median
divider and is the main street  through  Lemon Grove.  The property on which the
station is situated is zoned for commercial  use.  There are several  automobile
businesses in the area  surrounding the station,  including  several  automobile
dealerships and a repair shop. The station is approximately 25 feet wide and 100
feet deep and has good signage which is fully visible from Broadway.

         Lemon Grove has a  population  of  approximately  27,000 and is located
approximately  seven miles northeast of downtown San Diego. At the present time,
there are three other  "test-only"  stations in the area: Grove Test Only; Lemon
Grove Smog Test Only  Location # 1 and Lemon Grove Test Only  Location # 2. Both
Lemon  Grove  Smog  Test Only  Locations  are  owned  and  operated  by the same
business.  The Grove Test Only  location is less than one mile from our location
and both  Lemon  Grove Smog Test Only  Locations  are less than 2 miles from our
location. All three locations charge $59.95 per test.

         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.

         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.














                                        9

<PAGE>
         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.

         The  smog-testing  equipment is leased  under an  equipment  lease with
Mainstreet  Finance  Corporation,  Kirkland,  Washington for a term of 60 months
with lease  payments  of $899 per  month.  The lease  provides  for an option to
purchase the equipment at the lease  expiration  for one dollar.  Our President,
Stephen D. Wilson, has personally  executed a Guaranty Agreement with Mainstreet
Finance  Corporation.  The leased equipment  consists of a BAR 97 Host Emissions
Analyzer and a Low Profile Maha Dynamometer.

         The Escondido  station is fully operational and is licensed with BAR to
operate  as a "test-  only"  inspection  station  and has  fully  functional  ET
services with MCI.

         The smog check  technician  at our Lemon Grove station is now operating
the Escondido facility. He has over 20 years experience in the emissions testing
industry.  He relocated  because his residence is in Escondido.  We have hired a
new technician for the Lemon Grove station.

          Escondido is located approximately 30 miles northwest of San Diego and
100 miles south of Los Angeles.  It has a population of  approximately  138,000.
Our competition in Escondido consists of seven test-only facilities. The station
nearest to ours is approximately  one-half mile away and the farthest station is
a little over 3 miles away.  The prices charged by these seven stations for smog
tests range from $50 to $72.20.  Our price for the smog test is $58.60.  We have
began an advertising campaign for the station. The campaign consists of discount
coupons.

         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.




                                       10

<PAGE>
         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.

         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.








                                       11

<PAGE>
         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 3790 Via de la Valle, Suite 103, Del Mar, California 92014.

ITEM  3.          LEGAL PROCEEDINGS

         We are not a party to any legal proceeding.

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

         On May 29,  2003,  our two  shareholders  approved an  amendment to our
Certificate  of  Incorporation  pursuant  to which  the  class  of our  Series A
Convertible  Preferred  Stock was created.  At the same time,  our  shareholders
approved the exchange of  4,000,000  shares of their common stock for  4,000,000
shares of the Series A Convertible Preferred Stock.

         On October 1, 2003, our shareholders elected William Leonard, Dewitt H.
Montgomery  II and Michael G. Conner to the Board of  Directors.  The actions of
our  shareholders  were  taken  upon  written  consent  without a meeting by the
holders of a majority of our issued and outstanding common stock pursuant to the
provisions of the Nevada Business Corporation Act.

                                     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 NASDA 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 March 30, 2004,  there
are only 2 shareholders of record for the Company's  common stock and a total of
1,000,000 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





                                       12

<PAGE>
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

         The following is a description of  unregistered  securities  sold by us
within  the  last  three  years  including  the  date  sold,  the  title  of the
securities,  the amount  sold,  the  identity  of the person who  purchased  the
securities,  the price or other  consideration paid for the securities,  and the
section  of the  Securities  Act of 1933 under  which the sale was  exempt  from
registration as well as the factual basis for claiming such exemption.

         On March 19, 2001,  Dotcom Internet  Ventures Ltd., who at the time was
our sole shareholder when we were known as Breakthrough  Technology  Partners I,
Inc.  sold  5,000,000  shares  of common  stock to  Daniel  M.  Smith and Joy E.
Livingston.

         On May 29, 2003, we issued 2 million shares of our Series A Convertible
Preferred  Stock to Joy E.  Livingston  and 2  million  shares  of our  Series A
Convertible  Preferred  Stock to Jennifer Louise Smith in  consideration  of the
exchange and  cancellation of 4 million shares of common stock of the Company by
Mrs. Livingston and Mrs. Smith.

         Each of these  transactions is considered  exempt from the registration
requirements  of the  Securities  Act of 1933 in reliance  upon the exemption at
Section 4(2) and 4(6) of said Act.

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 $ 265,134.  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.






                                       13

<PAGE>
         As of December 31,  2003,  we had minimal cash on hand in the amount of
$3,285.00.  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.  Lemon Grove is in its sixth full month
of operations  and is operating  with a small profit  margin.  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.

          Escondido is in its fourth full month of operation. Additional funding
will  be  required  until  the  station  reaches  the  breakeven  point.  It  is
anticipated  that the station will come very close to the breakeven point in the
next 30 days, and therefore the cash  requirements to cover any shortfall should
be minimal.  Additional  funding will be provided from the Lemon Grove station's
cash  flow to cover  any  shortfall.  If we are  unable  to  realize  sufficient
proceeds  from this  offering and cash flow from the Lemon Grove  station is not
sufficient to cover the Escondido station'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 Escondido  station
could cease operations.

         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

         As used herein,  the term  "Company"  refers to  California  Clean Air,
Inc.,  a  Nevada  corporation,  and its  subsidiaries  and  predecessors  unless
otherwise  indicated.  Consolidated,  audited,  condensed  financial  statements
including a balance sheet for the Company as of the year ended December 31, 2003
and audited statements of income, cash flows and changes in shareholders' equity
up to the date of such balance sheet and the comparable  period of the preceding
year are attached hereto as Pages F-1 through F-11 and are  incorporated  herein
by this reference.

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.




                                       14
<PAGE>
                                    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              28               President, Corporate Secretary,
                                                Director

William Leonard                50               Director

Dewitt H. Montgomery II        51               Director

Michael G. Conner              57               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  II 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
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.









                                       15

<PAGE>
         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 3790 Via de la Valle,  Suite 103,  Del
Mar, California 92014.

ITEM  10.         EXECUTIVE COMPENSATION

         From June 2003 to November 2003, Mr. Wilson was been paid  compensation
of $6,000 per month  from  funds  contributed  to us by Daniel M.  Smith.  Since
November  2003,  Mr. Wilson has been paid $6,000 per month from a combination of
funds contributed by Daniel M. Smith and cash flow from operations.

          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
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.





                                       16

<PAGE>
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 %
                         3790 Via de la Valle, Ste.103
                         Del Mar, California 92014

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

Common Stock             Dewitt H. Montgomery II                -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

Common Stock             Jennifer Louise Smith                500,000                50 %
                         32005 NE Wilsonville Rd.
                         Newberg, Oregon 97132
                                                              500,000                50 %
Common Stock             Joy E. Livingston
                         PMB 109
                         PO Box 439060
                         San Diego, California 92143

Preferred Stock          Jennifer Louise Smith              2,000,000                50 %
                         32005 NE Wilsonville Rd.
                         Newberg, Oregon 97132

Preferred Stock          Joy Livingston
                         PMB 109
                         PO Box 439060
                         San Diego, California              2,000,000                50 %

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


                                       17

<PAGE>
ITEM  12.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Daniel  M.  Smith,  husband  of one of  our  controlling  shareholders,
Jennifer Louise Smith,  has advanced  operating funds to the Company since March
2001. Through December 31, 2003, Mr. Smith has advanced  approximately $ 265,134
to the Company.  These funds have been used to pay administrative  expenses such
as legal and  accounting  fees and  compensation  to our  President,  Stephen D.
Wilson,  in the  amount of $6,000  per month  since  June  2003.  Mr.  Smith has
advanced a total of $ 58,900 to our affiliate  Smog Centers of California LLC to
acquire our initial  smog check test  facility in Lemon  Grove,  California.  In
addition,  our President,  Stephen D. Wilson,  has advanced a total of $5,520 to
Smog Centers of California LLC.

         The funds  advanced by Mr.  Smith and 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. Smith and Mr. Wilson have each
agreed to not to demand  repayment  until  sufficient  funds are available  from
either this offering or from revenues derived from operations.

         Daniel M. Smith is considered a "promoter"  of the Company  pursuant to
the Securities  Act of 1933. Mr. Smith has not  contributed or sold any property
to the Company other than advancing operating funds as described.

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 herein
by 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:

         January 8, 2003     Item 5. Other Events and Regulation FD Disclosures
                                     ------------------------------------------

         August 28, 2003     Item 2. Acquisition or Disposition of Assets;
                                     ------------------------------------------
                             Item 5. Other Events and FD Disclosures.
                                     ------------------------------------------

         October 31, 2003    Item 2. Acquisition or Disposition of Assets;
                                     ------------------------------------------
                             Item 7. Financial Statements, Pro Forma Financial
                                     Information and Exhibits.
                                     ------------------------------------------

         December 16, 2003   Item 2. Acquisition or Disposition of Assets
                                     ------------------------------------------







                                       18
<PAGE>
ITEM  14.         PRINCIPAL ACCOUNTANT FEES AND SERVICES

                                              2003               2002
                                              ----               ----

           Audit Fees                         $ 7,200            $ 4,100
           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 to replace
Timothy  J.  Steers,  CPA,  LLC.  The  audit  committee  determined  that it was
advisable for the new auditors to be located in Southern  California so as to be
in close proximity to the Company's administrative offices and the Company's two
emission test centers.










































                                       19
<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed  on its  behalf  by the  undersigned,  hereunto  duly
authorized, this 9th day of April, 2004.


                                              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>
<S>                                         <C>                                         <C>
Signature                                            Title                              Date

/s/ STEPHEN D. WILSON                       President; Chief Executive Officer;
    -----------------                       Secretary; Chief Financial Officer;
                                            Chief Accounting Officer; Director       April 9, 2004
    Stephen D. Wilson

/s/ WILLIAM LEONARD                         Director                                 April 9, 2004
    ---------------
    William Leonard

/s/ DEWITT H. MONTGOMERY II                 Director                                 April 9, 2004
    -----------------------
    Dewitt H. Montgomery II

/s/ MICHAEL G. CONNER                       Director                                 April 9, 2004
    -----------------
    Michael G. Conner
</TABLE>

















                                       20

<PAGE>
                               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       *            Asset Acquisition Agreement dated August 21, 2003
                        between Smog Centers of California, LLC and Quang Vuong.

10.2       *            Assignment and Assumption Agreement dated August 21,
                        2003.

10.3                    Lease Agreement dated November 15, 2003 between APPRO
                        LLC and Smog Centers of California LLC.

                        LETTER ON CHANGE OF CERTIFYING ACCOUNTANT

16         *            Letter of Timothy J. Steers, CPA, LLC dated  February
                        27, 2004.

                        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


                                       21
<PAGE>
                                    PART F/S

                          INDEX TO FINANCIAL STATEMENTS

Auditor's Report.............................................................F-2

Balance Sheets as of December 31, 2003 and  2002.............................F-3

Statement of Operations for the years ended December 31, 2003 and  2002......F-5

Statement of Changes in Stockholder's Equity for the years ended December 31,
2003 and 2002................................................................F-6

Statement of Cash Flows for the years ended December 31, 2003 and 2002.......F-7

Notes to Financial Statements...............................................F-10











































                                       F-1
<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
Armando Ibarra, Jr., C.P.A., JD   Public Accountants

                                  Members of the American Institute of
                                  Certified Public Accountants

                                  Members of the Better Business Bureau since
                                  1997


To the Board of Directors
California Clean Air, Inc.


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

We have audited the accompanying consolidated balance sheets of California Clean
Air,  Inc.  as of  December  31,  2003 and 2002 and the  related  statements  of
operations,  changes in  stockholders'  equity and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of California Clean
Air, Inc. as of December 31, 2003 and 2002, and the results of their  operations
and their  cash flows for the years then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.



----------------------------------
ARMANDO C. IBARRA, CPA

March 31, 2004
Chula Vista, Ca. 91910




                      371 "E" STREET, CHULA VISTA, CA 91910
                     TEL: (619) 422-1348 FAX: (619) 422-1465

                                       F-2
<PAGE>

                           CALIFORNIA CLEAN AIR, INC.
                                 BALANCE SHEETS

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


                                     ASSETS
                                     ------

                                             AS OF            AS OF
                                          DECEMBER 31,      DECEMBER 31,
                                              2003             2002

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


CURRENT ASSETS

   Cash                                  $      3,285      $          -

   Prepaid expenses                             1,417                 -

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


     TOTAL CURRENT ASSETS                       4,702                 -


NET PROPERTY & EQUIPMENT                       73,948                 -

OTHER ASSETS

   Godwill, net of amortization                15,834                 -

   Deposits                                     6,649                 -

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


     TOTAL OTHER ASSETS                        22,483                 -

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


                  TOTAL ASSETS           $    101,133      $          -

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












                                       F-3
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                                 BALANCE SHEETS

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


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

<TABLE>
<CAPTION>
                                                                        AS OF           AS OF
                                                                     DECEMBER 31,    DECEMBER 31,
                                                                         2003            2002

                                                                     ------------    ------------
<S>                                                                  <C>             <C>
CURRENT LIABILITIES
   Accounts payable                                                  $    39,903     $         -
   Accrued payroll and payroll related liabilities                        25,860               -
   Accrued state income taxes                                                800               -
   Capitalized lease obligation - current portion                          5,471               -
                                                                     ------------    ------------

     TOTAL CURRENT LIABILITIES                                            72,034               -

LONG-TERM LIABILITIES
   Capitalized lease obligation                                           31,610               -
   Notes payable to related party                                        265,134          49,531
                                                                     ------------    ------------

     TOTAL LONG-TERM LIABILITIES                                         296,744          49,531

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

TOTAL LIABILITIES                                                        368,778          49,531

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               -
   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)           1,000           5,000
   Retained earnings (deficit)                                          (272,645)        (54,531)
                                                                     ------------    ------------

     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                               (267,645)        (49,531)

TOTAL LIABILITIES
                                                                     ------------    ------------

                   & STOCKHOLDERS' EQUITY (DEFICIT)                 $    101,133     $         -
                                                                     ============    ============
</TABLE>




                                       F-4
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                            STATEMENTS OF OPERATIONS

                                         YEAR ENDED      YEAR ENDED
                                        DECEMBER 31,    DECEMBER 31,
                                            2003            2002
                                        ------------    ------------
REVENUES
   Sales                               $     27,503    $          -
                                        ------------    ------------

Total Revenues                               27,503               -
                                        ------------    ------------

COST OF REVENUES                             20,863               -
                                        ------------    ------------

GROSS PROFIT                                  6,640               -
                                        ------------    ------------
OPERATING COSTS
   Operating expenses                       212,528          23,110
   Depreciation expense                       7,260               -
   Amortization expense                       4,166               -
                                        ------------    ------------

Total Operating Costs                       223,954          23,110
                                        ------------    ------------

OPERATING INCOME (LOSS)                    (217,314)        (23,110)
                                        ------------    ------------

INCOME (LOSS) BEFORE INCOME TAXES      $   (217,314)     $  (23,110)
                                        ------------    ------------

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

NET INCOME (LOSS)                      $   (218,114)     $  (23,110)
                                        ------------    ------------

BASIC EARNINGS (LOSS) PER SHARE        $      (0.08)      $   (0.00)
                                        ------------    ------------
WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING                 2,621,918      5,000,000
                                        ------------    ------------

DILUTED EARNINGS (LOSS) PER SHARE      $      (0.03)
                                        ------------    ------------
WEIGHTED AVERAGE OF DILUTED
 COMMON SHARES OUTSTANDING                 7,378,082
                                        ------------    ------------








                                       F-5
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                        STATEMENT OF STOCKHOLDERS' EQUITY
                   FROM DECEMBER 31, 2001 TO DECEMBER 31, 2003

<TABLE>
<CAPTION>
-------------------------------- -------------- ------------- ---------------- -------------- ---------------- ---------------

                                   PREFERRED     PREFERRED        COMMON         COMMON          RETAINED          TOTAL
                                    SHARES         STOCK          SHARES           STOCK         EARNINGS
                                                                                                 (DEFICIT)
-------------------------------- -------------- ------------- ---------------- -------------- ---------------- ---------------

<S>                              <C>             <C>                <C>                <C>            <C>             <C>
 BALANCE, DECEMBER 31, 2001                  -   $         -        5,000,000          5,000          (31,421)        (26,421)

 Net loss for the year ended
 December 31, 2002                                                                                    (23,110)        (23,110)
-------------------------------- -------------- ------------- ---------------- -------------- ---------------- ---------------

 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                                                                                   (218,114)       (218,114)
-------------------------------- -------------- ------------- ---------------- -------------- ---------------- ---------------

 BALANCE,  DECEMBER 31, 2003         4,000,000   $     4,000        1,000,000   $      1,000   $     (272,645)  $    (267,645)

================================ ============== ============= ================ ============== ================ ===============
</TABLE>
























                                       F-6
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                   YEAR ENDED          YEAR ENDED
                                                                  DECEMBER 31,        DECEMBER 31,
                                                                      2003                2002
                                                                -----------------   -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                             <C>                <C>
                NET INCOME (LOSS)                               $       (218,114)  $         (23,110)
        DEPRECIATION EXPENSE AND AMORTIZATION                             11,426                   -

             (INCREASE) DECREASE IN GOODWILL                             (20,000)

        (INCREASE) DECREASE IN PREPAID EXPENSES                           (1,417)

             (INCREASE) DECREASE IN DEPOSITS                              (6,649)
        INCREASE (DECREASE) IN ACCOUNTS PAYABLE                           39,903                   -

    Increase (decrease) in accrued payroll and payroll related
    liabilities                                                           25,860                   -

    Increase (decrease) in accrued state income taxes                        800                   -

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

    NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                 (168,191)            (23,110)
CASH FLOWS FROM INVESTING ACTIVITIES

    NET SALE (PURCHASE) OF PROPERTY AND EQUIPMENT                        (81,208)                  -


    NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                  (81,208)                  -
CASH FLOWS FROM FINANCING ACTIVITIES

    CHANGE IN CAPITALIZED LEASE OBLIGATIONS                               37,081                   -

    CHANGE IN NOTES PAYABLE TO RELATED PARTY                             215,603              23,110


    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                  252,684              23,110


    NET INCREASE (DECREASE) IN CASH                                        3,285                   -

    CASH AT BEGINNING OF YEAR                                                  -                   -


    CASH AT END OF YEAR                                         $          3,285   $               -

    SUPPLEMENTAL  CASH FLOW DISCLOSURES:

    CASH PAID DURING YEAR FOR INTEREST                          $              -   $               -

    CASH PAID DURING YEAR FOR TAXES                             $              -   $               -
</TABLE>


                                       F-7
<PAGE>
                              CALIFORNIA CLEAN AIR
                            WEIGHTED AVERAGE ANALYSIS
                  FOR THE YEAR ENDED DECEMBER 31, 2003 AND 2002
<TABLE>
<CAPTION>
----------------------- ---------------- ----------------- ----------------- ------- --------------- -------------
                                                              CUMULATIVE
                                              COMMON            COMMON        DAYS      WEIGHTED
                                              SHARES            SHARES        365       AVERAGE
<S>      <C>            <C>              <C>               <C>               <C>     <C>             <C>
         2003
-----------------------
                               1-Jan-03                           5,000,000     148       2,027,397
                              29-May-03       (4,000,000)         1,000,000     217         594,521
                               1-Jan-04                 0                 0      0                0

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

SHARES ISSUED                                 (4,000,000)
                                         =================
CUMULATIVE SHARES                                                 1,000,000     365
                                                           ================= =======

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                                      2,621,918
                                                                                     ===============

                        EARNING (LOSS) AVAILABLE TO COMMON STOCKHOLDERS                                 (218,114)
                                                                                                     -------------

                                         BASIC EARNINGS (LOSS) PER SHARE                                   (0.08)
                                                                                                     =============

----------------------- ---------------- ----------------- ----------------- ------- --------------- -------------
                                                              CUMULATIVE
                                              COMMON            COMMON        DAYS      WEIGHTED
                                              SHARES            SHARES        365       AVERAGE
         2002
-----------------------
                              31-Dec-01                           5,000,000     365       5,000,000
                              31-Dec-02                           5,000,000                       0

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

SHARES ISSUED                                           0
                                         =================
CUMULATIVE SHARES                                                 5,000,000     365
                                                           ================= =======

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                                      5,000,000
                                                                                     ===============

                        EARNING (LOSS) AVAILABLE TO COMMON STOCKHOLDERS                                  (23,110)
                                                                                                     -------------

                                         BASIC EARNINGS (LOSS) PER SHARE                                   (0.00)
                                                                                                     =============

</TABLE>
            EARNING PER SHARE = EARNING (LOSS) AVAILABLE TO COMMON STOCKHOLDERS/
NOTE:       WEIGHTED SHARES OUTSTANDING

                                       F-8
<PAGE>
                              CALIFORNIA CLEAN AIR
                            WEIGHTED AVERAGE ANALYSIS
                  FOR THE YEAR ENDED DECEMBER 31, 2003 AND 2002
<TABLE>
<CAPTION>
----------------------- --------------- ----------------- ----------------- ------- -------------- -------------
                                                             CUMULATIVE
                                             COMMON            COMMON        DAYS     WEIGHTED
                                             SHARES            SHARES        365       AVERAGE
<S>                     <C>             <C>               <C>               <C>     <C>
         2003
-----------------------
                              1-Jan-03                           5,000,000     148      2,027,397
                             29-May-03       (4,000,000)         1,000,000      0               0
                             29-May-03         8,000,000         9,000,000     217      5,350,685
                              1-Jan-04                 0                 0      0               0

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

SHARES ISSUED                                  4,000,000
                                        =================
CUMULATIVE SHARES                                                9,000,000     365
                                                          ================= =======

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                                    7,378,082
                                                                                    ==============

                        EARNING (LOSS) AVAILABLE TO COMMON STOCKHOLDERS                               (218,114)
                                                                                                   -------------

                                        BASIC EARNINGS (LOSS) PER SHARE                                  (0.03)
                                                                                                   =============


                                                             CUMULATIVE
                                             COMMON            COMMON        DAYS     WEIGHTED
                                             SHARES            SHARES        365       AVERAGE
         2002
-----------------------
                              1-Jul-01                           1,233,000     365      1,233,000
                              1-Jul-02                           1,233,000                      0

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

SHARES ISSUED                                          0
                                        =================
CUMULATIVE SHARES                                                1,233,000     365
                                                          ================= =======

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                                    1,233,000
                                                                                    ==============

                        EARNING (LOSS) AVAILABLE TO COMMON STOCKHOLDERS                                 (1,517)
                                                                                                   -------------

                                        BASIC EARNINGS (LOSS) PER SHARE                                  (0.00)
                                                                                                   =============
</TABLE>
           EARNING PER SHARE = EARNING (LOSS) AVAILABLE TO COMMON STOCKHOLDERS/
NOTE :     WEIGHTED SHARES OUTSTANDING

                                       F-9
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003



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.


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.

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.

                                      F-10
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

e.       GOODWILL
         --------

Goodwill  represents the excess  purchase price over the estimated fair value of
the net assets of smog  centers  acquired.  Amortization  is computed  using the
straight-line method over thirty-six months.

f.       ADVERTISING
         -----------

The  Company  expenses  the cost of  advertising  as it is  incurred  avertising
expense was approximately $19,497 for the year ended December 31, 2003.

g.       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.

h.       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.

i.       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.








                                      F-11
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

j.       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.

k.       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, 2003 and 2002.

l.       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.

m.       PRINCIPLES OF CONSOLIDATION
         ---------------------------

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

NEW ACCOUNTING PRONOUNCEMENTS:

In April 2002,  the Financial  Accounting  Standards  Board issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44 and 64,  Amendment of FASB Statement No.
13, and  Technical  Corrections  ("SFAS  145").  Among  other  things,  SFAS 145
eliminates the  requirement  that gains and losses from the  extinguishments  of
debt be  classified  as  extraordinary  items.  SFAS 145 is effective for fiscal
years beginning after May 15, 2002, with early adoption permitted.  The




                                      F-12
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003

adoption  of  SFAS  145  did  not  have  a  material  effect  on  the  Company's
consolidated financial statements.


NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

NEW ACCOUNTING PRONOUNCEMENTS:

In June 2002, the Financial  Accounting Standards Board issued SFAS No. 146. The
standard requires  companies to recognize costs associated with exit or disposal
activities  when they are incurred rather than at the date of a commitment to an
exit or disposal  plan.  The  adoption of SFAS 146 did not have an effect on the
Company's consolidated financial statements.

In October 2002, the Financial  Accounting  Standards Board issued SFAS No. 147,
"Acquisitions  of  Certain  Financial   Institutions  -  an  amendment  of  FASB
Statements  No. 72 and 144 and FASB  interpretation  No.  9".  SFAS 147  removes
acquisitions of financial  institutions  from the scope of both Statement 72 and
interpretation  9 and  requires  that those  transactions  be  accounted  for in
accordance  with FASB  Statements No. 141,  Business  Combinations,  and No. 142
Goodwill and Other  Intangible  Assets.  Thus, the requirement in paragraph 5 of
Statement 72 to recognize  (and  subsequently  amortize)  any excess of the fair
value of  liabilities  assumed over the fair value of tangible and  identifiable
intangible  assets  acquired  as an  unidentifiable  intangible  asset no longer
applies to acquisitions  within the scope of this Statement.  In addition,  this
Statement  amends FASB  Statement  No. 144,  Accounting  for the  Impairment  or
Disposal   of   Long-Lived   Assets,   to   include   in  its  scope   long-term
customer-relationship  intangible  assets  of  financial  institutions  such  as
depositor  and borrower  relationship  intangible  assets and credit  cardholder
intangible assets. Consequently, those intangible assets are subject to the same
undiscounted cash flow  recoverability  test and impairment loss recognition and
measurement  provisions that Statement 144 requires for other long-lived  assets
that are held and used.  SFAS 147 is effective  October 1, 2002. The adoption of
SFAS  147 did  not  have  an  effect  on the  Company's  consolidated  financial
statements.

In December 2002, the Financial  Accounting Standards Board issued SFAS No. 148,
"Accounting  for  Stock-Based  Compensation - Transition and  Disclosure"  (SFAS
148). SFAS 148 amends SFAS No. 123  "Accounting  for  Stock-Based  compensation"
(SFAS 123), to provide  alternative methods of transition for a voluntary change
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  In addition,  SFAS 148 amends the disclosure requirements of SFAS
123 to  require  prominent  disclosures  in both  annual and  interim  financial
statements about the method of accounting for stock-based employee  compensation
and the effect of the method used on reported results. SFAS 148 is effective for
fiscal  years  beginning  after  December  15,  2002.  The  interim   disclosure
provisions are effective for financial reports containing  financial  statements
for interim periods  beginning after December 15, 2002. The adoption of SFAS 148
did not have an effect on the Company's consolidated financial statements.






                                      F-13
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003

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,
                                                                2003
                                                       -----------------------
          Office equipment                                  $         11,708
          Equipment                                                   39,500
                                                       -----------------------
                                                            $         81,208
          Less Accumulated Depreciation                               (7,260)
                                                       -----------------------
          NET PROPERTY AND EQUIPMENT                        $         73,948
                                                       =======================

Depreciation for the year ending December 31, 2003 was $7,260.  Amortization for
the year ending December 31, 2003 was $4,166.


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, 2003:

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

                 2004                                              $ 10,788
                 2005                                                10,788
                 2006                                                10,788
                 2007                                                10,788
                 2008  (through October 2008)                         8,990
                                                          ------------------

           Total minimum lease payments                              52,142
           Less amount representing interest                         15,061
                                                          ------------------

           Present value of minimum lease payments                 $ 37,081
                                                          ==================






                                      F-14
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003

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 Lemon  Grove  location  of $1,500 as of  November  14,  2003 and 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 Escondido  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.

Aggregate minimum future lease payments under these non-cancelable leases are as
follows for the years ending subsequent to December 31, 2003:

           Years ending December 31:

                 2004                                             $ 36,000
                 2005                                               36,200
                 2006                                               27,500
                 2007                                               20,600
                 2008                                               19,800
                                                          -----------------

           Total minimum lease payments                          $ 140,100
                                                          =================

Lease  expense  under  the  above  non-cancelable  lease  agreements  aggregated
approximately $8,250 for the year ending December 31, 2003.


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  February  2006.  As of  December  31,  2003 the note  payable  amount is
$265,134.
















                                      F-15
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003

NOTE 7. 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.

<TABLE>
<CAPTION>
                                                               DECEMBER 31,         DECEMBER 31,
                                                                   2003                 2002
                                                           -------------------- -------------------
<S>                                                        <C>                  <C>
NET INCOME (LOSS) FROM OPERATIONS                          $         (218,114)  $         (23,130)

BASIC INCOME / (LOSS) PER SHARE                            $            (0.08)  $           (0.00)
                                                           ==================== ===================

WEIGHED AVERAGE NUMBER OF SHARES OUTSTANDING                        2,621,918           5,000,000
                                                           ==================== ===================

                                                              DECEMBER 31,
                                                                   2003
                                                           --------------------

NET INCOME (LOSS) FROM OPERATIONS                          $         (218,114)

DILUTED INCOME / (LOSS) PER SHARE                          $            (0.03)
                                                           ====================

DILUTED WEIGHED AVERAGE NUMBER OF SHARES OUTSTANDING                7,378,082
                                                           ====================
</TABLE>

As of December 31, 2003 there have not been any preferred  dividends issued that
would reduce earnings available to common shareholders.

NOTE 8.  INCOME TAXES

Deferred income taxes consisted of the following:

                                                     DECEMBER 31,
                                                 2003            2002
                                             --------------  -------------
    Deferred tax asset:
    Net operating loss carryover             $    272,645    $   (54,531)
                                             --------------  -------------
                                                  272,645         54,531
    Valuation allowance                          (272,645)       (54,531)




                                      F-16
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003

                                             --------------  -------------
    Net deferred income taxes                        -0-            -0-
                                             ==============  =============





NOTE 9.  ACQUISITIONS

On August 21, 2003,  Smog Centers  acquired all of the assets used in a business
operating under the name Broadway Smog Check.  The acquisition was accounted for
as a purchase.  Broadway Smog Check is a test-only vehicles emissions inspection
facility in the State of  California,  under  their Smog Check II program.  Smog
Centers of California, LLC paid $60,000 for the assets of Broadway Smog Check.

The acquisition can be summarized as follows:

    Fair vale of vehicle emission Inspection equipment          $  40,000
    Goodwill                                                       20,000
                                                          ----------------
    Cash paid                                                   $  60,000
                                                          ================

The  results  of   operations  of  Broadway  Smog  Check  are  included  in  the
accompanying consolidated financial statements as of September 1, 2003.


NOTE 10.  OPERATING SEGMENTS

<TABLE>
<CAPTION>
               FOR THE YEAR ENDED 2003                      CALIFORNIA               SMOG CENTERS OF
                                                          CLEAN AIR, INC.            CALIFORNIA, LLC
                                                     -------------------------- ---------------------------

<S>                                                    <C>                        <C>
      Total Revenue                                    $                    0     $             27,503
      Costs of Revenues                                                     0                  (20,863)
                                                     -------------------------- ---------------------------

      Gross Profit                                                          0                    6,640
      Total Operating Costs                                           (60,885)                (163,069)
                                                     -------------------------- ---------------------------

      Operating income (loss)                                         (60,885)                (156,429)

      Total other income & (expenses)                                       0                        0
                                                     -------------------------- ---------------------------
      Income (loss) before income tax
            and extraordinary items                    $              (60,885)    $           (156,429)
                                                     ========================== ===========================
</TABLE>


                                      F-17
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003






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. shareholders 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.  STOCKHOLDERS' EQUITY

The  stockholders'  equity section of the Company contains the following classes
of capital stock as of December 31, 2003.

(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:  1,000,000
     shares issued and outstanding as of December 31, 2003.

The holders of  preferred  stock are  entitled to receive  dividends  calculated
using an  "Available  Cash Flow" formula as  prescribed  by the  Certificate  of
Designation of Preferred Stock. There have not been any dividends declared as of
December 31, 2003.

The preferred stock is (1) non-voting; (2) convertible at the second anniversary
from issuance on a two for one (2:1) basis to common stock; (3) has a preference
over common stock to be paid $1.00 per share as a preferential liquidation.
















                                      F-18
<PAGE>
                           CALIFORNIA CLEAN AIR, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2003






NOTE 13.  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, 2003 there were no stock options issued or outstanding.


NOTE 14.  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 sheet.




























                                      F-19









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