U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended March 31, 2002
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[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition Period from to
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CALIFORNIA CLEAN AIR, INC.
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(Exact name of registrant as specified in its charter)
Commission File No. 0-23111
Nevada 23-3048624
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification Number)
10345 SW 69th Avenue, Tigard, OR 97223
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(Address of principal executive offices, including zip code)
(503) 803-0300
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(Issuer's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the
preceding 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 [_]
The number of shares of the registrant's common stock, $0.0001 par value, as of
March 31, 2003: 5,000,000.
CALIFORNIA CLEAN AIR, INC.
(A Development Stage Enterprise)
Consolidated Balance Sheets
March 31, December 31,
2003 2002
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Assets
Current assets -
Cash $ 162 $ -
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Total current assets 162 -
Other assets - -
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$ 162 $ -
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LIABILITIES AND NET CAPITAL DEFICIENCY
Current liabilities:
Accounts payable $ 7,100 $ -
Accrued state taxes payable 30 20
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Total current liabilities 7,130 20
Payable to related parties 59,563 49,531
Net capital deficiency:
Preferred stock; $.001 par value; authorized 20,000,000 shares - - Common
stock; $.001 par value; authorized 100,000,000 shares; issued and
outstanding
5,000,000 shares 5,000 5,000
Deficit accumulated during the development stage (71,531) (54,551)
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Net capital deficiency (66,531) (49,551)
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$ 162 $ -
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See accompanying notes.
CALIFORNIA CLEAN AIR, INC.
(A Development Stage Enterprise)
Consolidated Statements of Operations
Cumulative
activity during
development
stage
June 2, 2000
Three months ended (inception)
------------------------- through
2003 2002 March 31, 2003
------------ --------- ---------------
Operating expenses $ 16,970 $ 1,680 $ 67,001
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Net loss from operations (16,970) (1,680) (67,001)
Provision for income taxes - State of Oregon 10 10 30
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Net loss $ (16,980) $ (1,690) $ (67,031)
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Net loss per common share $ (.003) $ (.001) $ (.013)
============ ========= ===============
See accompanying notes.
CALIFORNIA CLEAN AIR, INC.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
Cumulative
activity during
development
stage
June 2, 2000
Three months ended (inception)
------------------------- through
2003 2002 March 31, 2003
------------ --------- --------------
Cash flows from operating activities:
Net loss $ (16,980) $ (1,690) $ (67,031)
Adjustment to reconcile net loss to net cash
provided by operating activities-
Shares issued in exchange for services - - 500
Changes in liabilities:
Accounts payable 7,100 - 7,100
Accrued state income taxes 10 10 30
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(9,870) (1,680) (59,401)
Cash flows from financing activities -
Expenses paid by related parties on behalf of Company 10,032 1,680 59,563
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Net change in cash 162 - 162
Cash at beginning of period - - -
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Cash at end of period $ 162 $ - $ 162
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Supplemental schedule of noncash financing activities -
Common stock issued in exchange for services $ - $ - $ 500
============ ========= ==============
See accompanying notes.
CALIFORNIA CLEAN AIR, INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
March 31, 2003
1. Summary of Significant Accounting Policies
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COMPANY: California Clean Air, Inc. (the "Company") was originally
incorporated in the State of Delaware as Breakthrough Technology
Partners I, Inc. on June 2, 2000 to serve as a vehicle to affect a
merger, exchange capital stock, participate in an asset acquisition, or
any other business combination with a domestic or foreign private
business.
Effective December 20, 2002, the Company changed its state of
incorporation and legal domicile to the State of Nevada and
simultaneously changed its name to California Clean Air, Inc. The
change of legal domicile and change of name occurred pursuant to an
Agreement and Plan of Merger dated December 18, 2002 between the
Company and California Clean Air, Inc., a Nevada corporation.
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. 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.
The consolidated financial statements include the accounts of
California Clean Air, Inc. and Smog Centers. All intercompany accounts
and transactions have been eliminated.
DEVELOPMENT STAGE ENTERPRISE: Since inception, the Company has not
commenced any formal business operations. The Company is considered to
be in the development stage and therefore has adopted the accounting
and reporting standards of Statement of Financial Accounting Standards
No. 7, "Accounting and Reporting by Development Stage Enterprises".
INTERIM REPORTING: The Company's year-end for accounting and tax
purposes is December 31. In the opinion of Management, the accompanying
consolidated financial statements as of March 31, 2003 and 2002 and for
the three months then ended and for the cumulative period from June 2,
2000 (inception) through March 31, 2003 contain all adjustments,
consisting of only normal recurring adjustments, except as noted
elsewhere in the notes to the consolidated financial statements,
necessary to present fairly its financial position, results of its
operations and cash flows. The results of operations for the three
months ended March 31, 2003 and 2002 are not necessarily indicative of
the results to be expected for the full year.
CASH EQUIVALENTS: For purposes of the statement of cash flows, cash
equivalents include all highly liquid investments purchased with
original maturities of three months or less.
CALIFORNIA CLEAN AIR, INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
March 31, 2003
1. Summary of Significant Accounting Policies (continued)
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INCOME TAXES: The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"). Under SFAS 109, income taxes are provided on the
liability method whereby deferred tax assets and liabilities are
recognized for the expected tax consequences of temporary differences
between the tax bases and reported amounts of assets and liabilities.
Deferred tax assets and liabilities are computed using enacted tax
rates expected to apply to taxable income in the periods in which
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities from a change in tax
rates is recognized in income in the period that includes the enactment
date. The Company provides a valuation allowance for certain deferred
tax assets, if it is more likely than not that the Company will not
realize tax assets through future operations.
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 three months ended
March 31, 2003 and 2002.
NET LOSS PER SHARE: Net loss per share is computed by dividing net loss
by the weighted average number of shares outstanding during the period.
The weighted average number of shares outstanding was 5,000,000 for the
three months ended March 31, 2003 and 2002 and for the cumulative
period from June 2, 2000 (inception) through March 31, 2003.
USE OF ESTIMATES: The preparation of consolidated financial statements
in conformity with U.S. 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.
2. Transactions with related parties
---------------------------------
The Company's operating expenses since inception, consisting
principally of professional services, has been paid for by individuals
considered to be related parties. The advances are non-interest bearing
and due on demand; however, the individuals have agreed not to demand
repayment until cash is available from a merger, capital stock
exchange, asset acquisition, or other business combination, or from
operations.
3. Preferred Stock
---------------
The Company's preferred stock may be voting or have other rights and
preferences as determined from time to time by the Board of Directors.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's discussion and analysis should be read in conjunction with
the financial statements and the notes thereto.
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2002 AND THE PERIOD FROM JUNE 2, 2000 (INCEPTION) THROUGH MARCH 31, 2003:
Since inception, the Company has not commenced any formal business
operations. Operating expenses incurred during the three months ended March 31,
2003 of $16,970 and $66,501 for the period from June 2, 2000 (inception) through
March 31, 2003 resulted from expenses for regulatory compliance.
Revenues:
- --------
The Company had no revenues for the three months ended March 31, 2003
or 2002 or for the period from June 2, 2000 (inception) through March 31, 2003.
Operating expenses:
- ------------------
Operating expenses for the three months ended March 31, 2003 increased
$15,290 compared to the three months ended March 31, 2002 primarily as a result
of the Company's Agreement and Plan of Merger and the organization of its wholly
owned subsidiary Smog Centers of California, LLC.
FINANCIAL POSITION & LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------------------------
The Company had substantially no assets as of March 31, 2003 or
December 31, 2002.
Liabilities as of March 31, 2003 consisted primarily of $59,563 payable
to related parties for expenses paid on behalf of the Company and $7,100 of
trade accounts payable. Liabilities as of December 31, 2002 consisted primarily
of $49,531 payables to a related party for expenses he paid on behalf of the
Company. The Board of Directors of the Company has agreed to reimburse these
related parties for these expenses without interest. These individual have
agreed not to demand repayment until cash is available from a merger, capital
stock exchange, asset acquisition, or other business combination, or from
operations.
ITEM 3 CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. The Company's chief
executive officer and chief financial officer, after evaluating the
effectiveness of the Company's "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and
15d-14(c)) as of a date (the "Evaluation Date") within 90 days before the
filing date of this quarterly report, have concluded that as of the
Evaluation Date, the Company's disclosure controls and procedures were
effective and designed to ensure that material information relating to the
Company and the Company's consolidated subsidiaries would be made known to
them by others within those entities.
(b) Changes in internal controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly
affect those controls subsequent to the Evaluation Date.
PART II
OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
* (2.0) Stock Purchase Agreement dated March 19, 2001 between Daniel M.
Smith; Joy Livingston; Breakthrough Technology Partners I, Inc.;
and DotCom Internet Ventures Ltd.
* (2.1) Agreement and Plan of Merger dated December 18, 2002 between
Breakthrough Technology Partners I, Ltd. and California Clean
Air, Inc.
* (3.1) Certificate of Incorporation of Breakthrough Technology Partners
I, Inc.
* (3.2) Certificate of Incorporation of California Clean Air, Inc.
* (3.3) Amended and Restated Bylaws.
* (3.4) Articles of Organization of Smog Centers of California, LLC.
* (3.5) Operating Agreement of Smog Centers of California, LLC dated
January 9, 2003.
* (4.0) Specimen Stock Certificates.
* Incorporated herein by reference.
(b) Reports on Form 8-K.
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CALIFORNIA CLEAN AIR, INC.
By: /s/ STEPHEN D. WILSON
-----------------------------------
Stephen D. Wilson
President
Date: May 15, 2003
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:
Signature Title Date
- --------- ----- ----
/s/ STEPHEN D. WILSON May 15, 2003
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Stephen D. Wilson, President
FORM 10-QSB CERTIFICATION
I, Stephen D. Wilson, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of California
Clean Air, Inc;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures ( as
defined in Exchange Act Rules 13a- 14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors ( or person
performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial date and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there are significant changes in
internal controls or other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 15, 2003
/s/ STEPHEN D. WILSON
Title: President and Chief Executive Officer