- --------------------------------------------------------------------------------
As filed with the Securities and Exchange Commission on August____2004
Registration No.333-110057

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
-----------------------------

FORM SB-2

POST EFFECTIVE AMENDMENT NO.1

REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------------------

CALIFORNIA CLEAN AIR, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

NEVADA 7549 75-3090496
------ ---- ----------
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)

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

(760) 494-6497
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(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES
AND PRINCIPAL PLACE OF BUSINESS)

Robert McNeely
702 Stafford Way
Carson City, NV 89701
(775) 887-1230

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

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)

COPY TO:

ROBERT C. LASKOWSKI, ESQ.
520 S.W.YAMHILL, SUITE 600
PORTLAND, OREGON 97204
(503) 241-0780

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Rule 424(b)(1)
File No. 333-110057

PROSPECTUS

CALIFORNIA CLEAN AIR, INC.

2,000,000 SHARES OF COMMON STOCK
PRICE PER SHARE: $1.00

California Clean Air, Inc. is offering 2,000,000 shares of common
stock. This is our initial public offering and no public market currently exists
for our shares. The price for the common stock of $1.00 was arbitrarily
determined by our Board of Directors. The common stock will be offered by us on
a continuous basis until all shares being offered are subscribed for or until
the offering is terminated, whichever first occurs, but will not extend beyond
two years from the date of this Prospectus. No minimum amount is required to be
sold in the offering. As soon as possible after the completion of the offering,
we will apply to the OTC Bulletin Board for the listing of the common stock.

We have engaged in limited operations to date and consequently we have
limited revenues from operations.
----------------------------------------

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON
PAGE 5.

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions (2) Company (3)
- --------------------------------------------------------------------------------

Per Share $1.00 -0- $ 2,000,000
- --------------------------------------------------------------------------------

TOTAL $1.00 -0- $ 2,000,000
================================================================================

(1) There is no established public market for our common stock as this time.
Consequently, the price per share for our common stock has been arbitrarily
determined by us.

(2) We will not use the services of an underwriter or selling agent for the
offering of our Common Stock. The offering will be conducted on a best efforts
basis by our executive officers and directors. We will not pay any commissions
or other compensation on the sales of the common stock.

(3) Before the payment of expenses which we estimate to be approximately
$50,000. These expenses will be paid out of the proceeds of the offering.

The date of this Prospectus is August 5, 2004

TABLE OF CONTENTS

PAGE PAGE

Prospectus Summary 3 Business 15
Selected Financial Data 5 Management 22
Risk Factors 5 Related Party Transactions 24
Special Note Regarding Forward- Principal Shareholders 25
Looking Statements 8 Description of Capital Stock 26
Use of Proceeds 9 Shares Eligible for Future Sale 27
Dividend Policy 10 Plan of Distribution 28
Dilution 11 Legal Proceedings 29
Plan of Operation 12 Legal Matters 29
Experts 29
Additional Information Available
to You 29
Index to Financial Statements 30

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

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR
TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF
DELIVERY OF THE PROSPECTUS OR OF ANY SALE OF THE COMMON STOCK.

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding California Clean Air, Inc. and our financial statements
and notes to those statements appearing elsewhere in this Prospectus.

THE COMPANY

We are a development stage company. 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 and 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 wholly-owned subsidiary, 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 wholly-owned subsidiary 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. Breakthrough Technology
Partners I, Inc. was a "blank check" company as that term is defined in
Regulation C of the Securities Act of 1933. From June 2, 2000 through March 18,
2001, the sole shareholder of Breakthrough Technology Partners I, Inc. was
Dotcom Internet Ventures Ltd. The principal of Dotcom Internet Ventures Ltd. was
William Tay. On March 19, 2001, Joy Livingston and Daniel M. Smith became the
controlling shareholder 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. On January 9, 2003, Daniel M. Smith transferred all of his
shares of common stock of California Clean Air, Inc. to his wife, Jennifer
Louise Smith.

Our registered agent in Nevada is Robert McNeely, 702 Stafford Way,
Carson City, Nevada 89701. Our registered agent in California is Jennifer
Quayle, Attorney at Law, 3790 Via de la Valle, Suite 103, Del Mar, California
92014.

Smog Centers of California LLC was organized as an Oregon limited
liability company on November 21, 2002. It is 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.

THE OFFERING

Common Stock offered: 2,000,000 Shares

Price per Share $1.00

Duration of Offering: On a continuous basis until
all shares being offered
are subscribed for or until
the offering is terminated,
whichever first occurs, but
will not extend beyond two
years from the date of this
Prospectus.

Common Stock to be outstanding
after the offering: 3,000,000 Shares

Use of Proceeds: Purchase and development of
additional vehicle
emissions inspection
facilities; purchase of
testing and
telecommunications
equipment; hire
administrative and
technical personnel and
general working capital.

Proposed OTC Bulletin Board
Stock Symbol: To be determined.

SUMMARY OF SELECTED FINANCIAL DATA

You should read the selected financial date set forth below with "Plan
of Operation" and our consolidated financial statements and the related notes
included elsewhere in this Prospectus. The statement of operations data set
forth below for the fiscal year ended December 31, 2003 and 2002 and the
three-months ended March 31, 2004 and March 31, 2003 and the balance sheet data
as of December 31, 2003 and 2002 and the three -months ended March 31, 2004 and
March 31, 2003 have been derived from financial statements elsewhere in this
Prospectus.

3 MONTHS ENDED YEARS ENDED
MARCH 31 MARCH 31 DECEMBER 31
2004 2003 2003 2002
STATEMENT OF OPERATIONS DATA:

Sales Revenues $48,963 -0- $27,503 -0-
--------------

Other Operating Costs and Expenses 111,512 16,980 217,440 23,110

Net Loss (82,716) (16,980) (211,600) (23,130)

Loss Per Common Per Share (.08) (.003) (.08) (.00)

Weighted Average
Common Shares Outstanding 1,000,000 5,000,000 2,621,918 5,000,000

MARCH 31, 2004 DECEMBER 31, 2003
BALANCE SHEET DATA:
Total Assets $107,021 $ 107,647
Total Liabilities 450,868 368,778
Long Term Liabilities 367,339 296,744
Shareholders' Equity (Deficit) (343,847) (261,131)

RISK FACTORS

This offering and an investment in our common stock involve a high
degree of risk. You should carefully consider the following material risk
factors and the other information in this Prospectus before investing in our
common stock. Our business and results of operations could be seriously harmed
by any of the following risks.

RISKS RELATED TO OUR BUSINESS

WE HAVE A VERY LIMITED OPERATING HISTORY UPON WHICH TO EVALUATE OUR
BUSINESS AND TO FORECAST OUR FINANCIAL RESULTS.

We have had very limited revenues from operations to date. Our
activities and the activities of Smog Centers of California LLC have been
limited to developing our business plan, locating and acquiring our initial smog
check facility and establishing our second facility and as a result we have a
limited history upon which an investor may evaluate our business and prospects.
Our potential for future profitability must be considered in light of the risks,
uncertainties, expenses and difficulties

frequently encountered by companies in their early stages of development. These
include the risk that revenues from operations may not be sufficient to meet
administrative and operating expenses; that those expenses may be greater than
anticipated; that the costs of acquiring and establishing new smog check
facilities may be greater than anticipated; and competition from other operators
of smog check facilities with greater financial resources than us. We may not
successfully address these risks. If we do not successfully address these risks,
our business will be seriously harmed. As a result of our limited operating
history, it is difficult to forecast our total revenues, leasing and labor costs
and other financial and operating data. We have a limited amount of meaningful
historical data from other emissions test centers upon which to base planned
expenses. Operating revenues are difficult to forecast because they generally
depend on the number of motor vehicles that will require smog inspection testing
in the geographical areas of our facilities. As a result, we may not be able to
make accurate financial forecasts. This inability to accurately forecast our
results could cause our profitability in a given quarter to be less than
expected.

WE ARE INSOLVENT AND HAVE A MATERIAL WORKING CAPITAL DEFICIT AS OF THE
LATEST BALANCE SHEET DATE.

As of March 31, 2004, we have a material working capital deficit and
are insolvent. Insolvent means that we are unable to pay debts as they fall due
in the usual course of business and/or our liabilities exceed our assets.
Consequently, we may be unable to pay our on-going operating expenses or pay
other obligations when they become due without a significant sale of our common
stock in this offering. Without the proceeds from such a significant sale of our
common stock and in the absence of other sources of working capital, our ability
to continue our operations could be seriously impaired because our liabilities
exceed our assets.

OUR MANAGEMENT HAS HAD NO PRIOR EXPERIENCE IN VEHICLE EMISSIONS
TESTING.

Our executive management have had no prior experience in operating and
managing vehicle emissions test centers. As a result, it will be necessary for
us through Smog Centers of California LLC to hire experienced managers and other
employees to operate our test facilities. If we are unable to hire such
experienced managers and other employees, our business could be seriously harmed
because we may not have the technical and administrative personnel to implement
our business plan and to perform the highly technical aspects of vehicle
emissions testing. Our future success depends on our ability to attract and
retain highly qualified licensed technical personnel. Competition for such
personnel could be intense. It will be necessary for us to coordinate and manage
various emissions test centers in multiple, geographically distant locations and
to establish and maintain adequate management and information systems and
financial controls. Our failure to successfully address these factors could
inhibit our growth.

WE MAY INCUR UNEXPECTED COSTS OR FACE SUBSTANTIAL DELAYS FINDING
ADEQUATE FACILITIES FOR OUR EMISSIONS TEST CENTERS, WHICH COULD HURT OUR
BUSINESS.

Our business depends on our ability to locate and purchase or lease
suitable sites for our vehicle emissions test centers. We may be unable to find
adequate facilities to lease that meet our timing, location and cost
expectations. Even if we are able to locate adequate facilities, we may face
additional delays and costs in negotiating and reviewing lease agreements,
examining the site for

compliance with governmental regulations, such as zoning and environmental
compliance and procuring necessary permits and licenses for our operations. If
we incur significant unexpected costs or face substantial delays in finding
adequate facilities for our test centers, we may never achieve profitability.

OUR BUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION.

Our business is significantly affected by the State of California's
Smog Check II program which mandates that a certain percentage of registered
motor vehicles be subject to smog check testing. The state's regulatory
requirements are impacted by federal clean air laws. Since the inception of
California's Smog Check II program, the state's population and the number of
registered motor vehicles has increased. If federal and state clean air
regulations are eliminated or reduced, our business would be adversely affected
because of the elimination or reduction of vehicles emissions testing. We
believe that a reduction or elimination of emissions testing is highly unlikely.
Although environmental laws and regulations play a significant role with respect
to our revenues, compliance by us with environmental laws is not a significant
factor in our operations because we do not handle or dispose of hazardous or
environmentally sensitive materials. Vehicle emissions test centers are subject
to extensive regulation by the State of California Bureau of Automotive Repair,
under the Department of Consumer Affairs, which was established by the
California legislature for the enforcement and administration of its vehicle
emissions inspection program. The Bureau of Automotive Repair has adopted rules
and regulations with which we will be required to comply. These rules and
regulations require, among other things, that all emissions test centers obtain
a state license and that all smog check technicians obtain their own licensing.
The rules and regulations also impose fines and penalties for any compliance
failures. It will be necessary for us to be familiar with these rules and
regulations and to establish compliance procedures in all of our facilities. The
failure to comply with any of these rules and regulations will subject us to
investigations and the imposition of fines and penalties which could affect our
business significantly by possibly suspending or revoking our license or the
license of our smog check technicians for failure to meet or maintain the
standards prescribed for qualification, equipment, performance or conduct. In
addition, our regulatory relationship with the Bureau of Automotive Repair may
be adversely affected.

RISKS RELATED TO AN INVESTMENT IN OUR COMMON STOCK

LACK OF AN UNDERWRITER.

We are not employing the services of an underwriter in connection with
the offering of our common stock. We will use our best efforts to offer and sell
our common stock through our executive officers and our directors. There is no
assurance that we will sell all or any of the Common Stock being offered. Any
delay in the sale of our common stock in this offering could cause a delay in
implementing our business plan.

THERE IS NO MINIMUM OFFERING ESTABLISHED.

We have not established any minimum offering amount for this offering
and as a result, we will be able to utilize any and all proceeds received
immediately and therefore no investor will have

their money returned. In addition, the proceeds we may receive from the offering
may be inadequate to meet our financial requirements to successfully implement
our business plan. In such an eventuality, we may be required to obtain
additional capital from other sources. No such other sources of capital are
currently identified.

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.

The initial public offering price of our common stock is substantially
higher than the book value per share of the outstanding common stock immediately
after this offering. Accordingly, if you purchase shares of common stock in this
offering, you will suffer immediate and substantial price dilution. In addition,
the issuance or exercise of any future options or warrants to purchase our
capital stock, or the conversion of any preferred stock into our common stock,
could be dilutive to purchasers of shares in this offering.

THERE IS CURRENTLY NO MARKET FOR OUR COMMON STOCK AND YOU MAY BE UNABLE
TO RESELL YOUR SHARES.

Before this offering, there has not been a public market for our common
stock and an active trading market for our common stock may not develop or be
sustained after this offering.

SUBSTANTIAL FUTURE SALES OF SHARES MAY IMPACT THE MARKET PRICE OF OUR
COMMON STOCK.

If our stockholders sell substantial amounts of our common stock,
including any shares issued upon the exercise of any future options or warrants
or common stock issued upon conversion of any outstanding preferred stock, the
market price of our common stock may fall. Such sales might also make it more
difficult for us to sell equity or equity-related securities in the future at a
time and place that we deem appropriate.

AFTER THIS OFFERING, OUR CURRENT SHAREHOLDERS WILL CONTROL THE VOTING
POWER OF OUR OUTSTANDING CAPITAL STOCK AND COULD PREVENT OR DELAY CORPORATE
ACTION.

After this offering, our two current shareholder will control the
voting power of our outstanding capital stock through their respective holding
of our Series A Convertible Preferred stock which has 10 votes for each share.
As a result, these shareholders are able to exercise significant control over
all matters requiring stockholder approval, including the election of directors
and approval of significant corporate transactions.

FORWARD-LOOKING STATEMENTS

This Prospectus contains statements that plan for or anticipate the
future. Forward-looking statements include statements about the known and
unknown risks, uncertainties and other factors that cause our actual results,
performance or achievements to be materially different from any future results.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable as of the date of this Prospectus, we cannot guarantee
future results, levels of activity, performance or achievements.

USE OF PROCEEDS

Assuming we sell all of our common stock being offered, we will receive
gross proceeds of $2,000,000. From those proceeds, we will first pay the costs
and expenses of the offering which are estimated to be $50,000.00. The remaining
proceeds will be used to make the capital contribution to our affiliated
company, Smog Centers of California LLC, which will in turn use the funds to
acquire or lease locations, purchase the required emissions testing equipment,
hire technicians and other personnel and purchase office equipment such as
computer and telecommunications systems. Some funds will be retained for working
capital purposes. None of the proceeds will be used to repay loans and advances
made to the Company by Daniel M. Smith and Stephen D. Wilson. Mr. Smith and Mr.
Wilson have each agreed not to demand repayment on the notes payable prior to
July 1, 2005 and repayment will only be made from revenues derived from
operations. The following table describes in greater detail the proposed use of
proceeds based on various percentages of gross proceeds raised from the
offering.

25% 50% 75% 100%

Gross Proceeds $500,000 $1,000,000 $1,500,000 $2,000,000

Offering expenses: 50,000 50,000 50,000 50,000
Smog test equipment, lease expenses,
leasehold improvements, office
equipment: 150,000(a) 620,000(b) 1,205,000(c) 1,870,000(d)

Repayment of notes payable to
related parties -0- -0- -0- -0-

Working Capital 300,000 330,000 245,000 80,000

(a) Assumes the startup of 10 new stations at a cost of $15,000 per station;
(b) Assumes the startup of 12 new stations at a cost of $15,000 per station and
the acquisition of 4 existing stations at $110,000 per station; (c) Assumes the
startup of 7 new stations at a cost of $15,000 per station and the acquisition
of 10 existing stations at a cost of $110,000 per station; (d) Assumes the
acquisition of 17 existing stations at a cost of $110,000 per station.

If gross proceeds raised from the offering are less than $500,000, the
proceeds will be first allocated to maintaining our existing two facilities, if
necessary and then to cover costs related to this offering. Proceeds will then
be allocated to general working capital requirements. Any remaining available
proceeds will be allocated to start-up smog testing facilities at an estimated
cost of $15,000 per facility.

DIVIDEND POLICY

We intend to 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. Factors that we may consider in determining when dividends
will be paid to our shareholders and the amount of any such dividend include,
among other things, our cash requirements to sustain operations; our
profitability; and our capital commitments for the development of additional
smog testing stations.

DILUTION

Our net tangible book value as of March 31, 2004 was ($ 343,847) or
($0.34) per share of common stock. Net tangible book value per common share
represents the amount of our total tangible assets less total liabilities
divided by the number of shares of common stock issued and outstanding. Dilution
in net tangible book value per share represents the difference between the
amount per share paid by purchasers of shares of common stock in this offering
and the net tangible book value per share of common stock immediately after the
completion of this offering, assuming the conversion of all outstanding shares
of Series A Convertible Preferred Stock into common stock. After giving effect
to the sale of 2,000,000 shares of common stock in this offering, our net
tangible book value at March 31, 2004 would have been $1,656,153 or
approximately $0.24 per share. This represents an immediate increase in the net
tangible book value of $0.58 to our existing shareholders and an immediate
dilution of $0.76 per share to new investors purchasing shares in this offering.
The following table illustrates this dilution on a per share basis.

Assumed initial public offering price per share . . . . . . . $ 1.00
Net tangible book value per share as of March 31, 2004. . . .$ (0.34)
Increase per share attributable to new investors. . . . . . .$ 0.58

Adjusted net tangible book value per share after this offering.$ 0.24

Dilution per share to new investors. . . . . . . . . . . . . . $ 0.76

The following table sets forth, as of March 31, 2004, the differences
between the number of shares of common stock purchased from us, the total
consideration paid and the average price per share paid by existing stockholders
and by new investors:

Shares Purchased Total Consideration Average
---------------- ------------------- Price per
Amount Percentage Amount Percentage Share
------ ---------- ------ ---------- -----
Existing
Shareholders 1,000,000 33 1/3 % $1,000 - $0.001

New Investors 2,000,000 66 2/3 % $2,000,000 100 % $1.00

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 in the amount of $406,382 as of June 30, 2004. These advances are
non-interest bearing and are due on demand. Mr. Smith and Mr. Wilson have each
agreed not to demand repayment prior to July 1, 2005 and repayment will be made
only from revenues derived from operations. We have accrued payroll comprised of
salary that is owed and past due to Mr. Wilson and payroll taxes that will be
owed when the salary is paid totaling $44,689 as of March 31, 2004. Payroll
taxes are not in arrears because these taxes will be due when the salary is
paid. Both the salary and taxes were recognized as expenses in the periods in
which they were incurred.

As of June 30, 2004, we had minimal cash on hand in the amount of
$4,320. Currently, there are two operational smog check stations, one in Lemon
Grove, California and another in Escondido, California. In order to expand our
business, we will need to obtain financing during the next twelve months. The
Lemon Grove and Escondido stations generate revenues which are utilized for
station operating expenses. It is anticipated that additional cash requirements
for Lemon Grove during the next twelve months will be minimal.

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 neither 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 establish new stations with proceeds from this offering. For
each station we put into operation, we will need to employ one licensed smog
technician for each smog testing machine at the station.

It is our intention to be the leader in the smog test-only business.
Through Smog Centers of California, LLC, we intend to acquire and start up smog
check test-only stations principally in Southern California and in the San
Francisco 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.

During the course of the next twelve months, we will focus our efforts
to develop and establish additional smog testing stations in San Diego County.
After we are established in San Diego County, we plan to expand our geographical
presence to the San Francisco Bay Area, because we believe that there is a need
for smog test-only stations there since the San Francisco Bay Area has been
reclassified by the State of California pursuant to its Smog Check II Program
from a Basic Area to an Enhanced Area. In Enhanced Areas, the Department of
Motor Vehicles directs one-third of all vehicles required to have a smog test to
a test-only station of the customer's choice. Subsequent to establishing our
presence in the San Francisco Bay Area, we will strengthen our presence in the
Southern California region by establishing smog test-only stations in Riverside,
San Bernardino, Orange and Los Angeles counties. All of these counties have been
classified by the State of California as Enhanced Areas.

The number of these stations that we will be able to establish within
the next twelve months will depend largely on the amount of capital we are able
to raise from the sale of our common stock pursuant to this offering. If we
raise $500,000 we intend to startup 10 new stations at a cost of $15,000 per
station. If we raise $1,000,000 we intend to startup 12 new stations at a cost
of $15,000 per station and acquire 4 existing stations at a cost of $110,000 per
station. If we raise $1,500,000 we plan to startup 7 new stations at a cost of
$15,000 per station, and acquire 10 existing stations at a cost of $110,000 per
station. If we raise $2,000,000, we plan on acquiring 17 existing stations at a
cost of $110,000 per station.

We will concentrate our efforts during the first 12 months in San Diego
County and we anticipate that will be able to open between one to two stations
per month, assuming we receive a minimum of 25% of our offering. During the
first three months subsequent to the date of this Prospectus, we plan to open
between three to six stations and we do not anticipate that we will be
profitable. During the seventh through the ninth month, we plan to open an
additional three to six stations and we do not anticipate that we will be
profitable. During the tenth through the twelfth month, we plan to open an
additional three to six stations. At the end of the twelfth month, we expect
that we will achieve profitability since we believe each station will need to
perform approximately 250 smog tests per month to be profitable. This projected
milestone should be achieved sometime during the seventh through the ninth month
of each station's operations.

When we open a new smog check station, the most important factor in
selecting a site will be location. Location is important because we believe that
high visibility and convenience to customers play a significant role in
attracting customers. We will secure a building lease for a suitable period of
time, typically no less than five years. No build-out or remodeling is expected
since we intend to operate in existing structures with available automotive
bays. We intend to lease the smog-testing equipment. Equipment lease terms and
financing options are negotiable with the equipment manufacturers. Typical
equipment lease terms would include a term of 60 months with a purchase option
at lease termination. Equipment lease payments are expected to be approximately
$900 per month. A typical location will need a BAR 97 emission machine, a
dynamometer, a gas cap tester, diagram books, a timing light, a hand vacuum
pump, a dowel gauge and basic automotive hand tools. We anticipate that a new
station will perform approximately 50 - 100 smog tests in its first month of
operation, and that the number of smog tests performed each month will increase
thereafter.

When we acquire existing smog stations, our primary consideration will
be location. Location is important because we believe that high visibility and
convenience to customers play a significant role in attracting customers. We
must be able to negotiate a favorable building lease for a significant period of
time. No build-out or remodeling is expected, although we may consider making
station improvements. We anticipate that we would purchase most, if not all, of
the equipment needed to operate the station. We will consider the condition of
the equipment that we are purchasing, the age of the equipment and its estimated
useful life, the quality and condition of the office furnishings, and whether
improvements are needed to the building's exterior or interior in the site
selection process. Due diligence and review of the seller's financial records
will be needed to support the acquisition. We anticipate that an acquired
station will generate revenue immediately, performing approximately 150 - 250
tests in the first month attributable to the station existing customer base. The
number of smog tests performed monthly should increase subsequent to the
acquisition.

The only thing smog test-only facilities can provide are smog tests. We
will distinguish the manner in which we provide this service to become the first
choice for customers seeking a smog test. We will accomplish this by providing
superior customer service, courteous and professional technicians, and clean
stations. An important component in providing superior customer service is the
first impression our technicians and our site make with our customers. We will
train our technicians uniformly regarding communication with customers and
responsiveness to customer needs. We want our customers to feel comfortable
coming to our stations and being present at our stations during their smog test.
Station procedures and cleanliness will always be maintained to the highest
standards. We want our customers to be assured that they are receiving a true
and honest smog test result.

Our 12-month expansion plan is contingent on raising proceeds from this
offering. Our inability to raise proceeds from this offering or a minimal amount
of capital would mean that we would be unable to move forward with our plans to
acquire and establish additional smog-testing stations.

BUSINESS

We will be 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. We will conduct our business through our affiliated
company, Smog Centers of California LLC, of which we are the only member.

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. The sole purpose of the merger was to
change our legal domicile from Delaware to Nevada. There was no change in our
corporate structure resulting from the merger other than a change of domicile
and a change of name. Our registered agent on Nevada is Robert McNeely, 702
Stafford Way, Carson City, Nevada 89701. Our registered agent in California is
Jennifer Quayle, Attorney at Law, 3790 Via de la Valle, Suite 103, Del Mar,
California 92014.

Smog Centers of California LLC was organized as an Oregon limited
liability company on November 21,2002. It is registered to do business in
California effective as of 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 and will be responsible for the overall
administration 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.

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"). Information from BAR at
www.smogcheck.ca.gov indicates that in 2002, the California Department of Motor
Vehicles ("DMV") directed 2,036,504 vehicles 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. In 2003, DMV directed 2,142,212
vehicles to "test-only" facilities, and in the first quarter of 2004 there were
637,407 vehicles directed to "test-only" facilities.

DMV directs three types of vehicles to "test-only" facilities. The
first type are motor vehicles which are labeled High Emitter Profile based on
make, model and year of the vehilce. The second type are vehicles designated as
"gross polluters", which failed an initial smog check at double the emissions
levels and have since been repaired. These vehicles will be directed to
test-only"

facilities to have their repairs verified before the vehicle can be registered.
Thirdly, DMV randomly directs 1.9% of vehicles due for a smog inspection to
"test-only" stations.

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 will be required to enter into an agreement with
MCI to secure ET services. Prior to certification, all Smog Check facilities
must have fully functional ET service and must be operational with all current
software and hardware updates.

Through the ET system, smog check information is electronically
transmitted directly to the 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 will 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 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.

Each test-only station is required to have a current, valid Automotive
Repair Dealer (ARD) registration and a Smog Station License issued by BAR. An
ARD registration 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, have 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 qualified by BAR for the class and
category of vehicle being tested. Smog Check technicians must pass a
qualification test 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 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;

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 new facilities 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 certain smog-testing assets
from a 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. The
Company borrowed funds from Daniel M. Smith, the husband of one of our
shareholders Jennifer Louise Smith, in order to make payment in full at 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

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 "Broadway's Smog Check", is located at 7310
Broadway, Lemon Grove, California. Broadway is a four-lane road with 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 acquire,
establish 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
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.

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 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 for 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 retained a
new technician for the Lemon Grove station.

Escondido is located approximately 30 miles northeast 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
begun 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.

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 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, 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 inspection plus $8.25 for the certificate 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.

Employees

We have two full-time employees and we have retained two full-time smog
technicians through our wholly-owned subsidiary, Smog Centers of California,
LLC.

Regulatory conditions

MANAGEMENT

Our directors and executive officers are as follows:

Name Age Position
- ---- --- --------

Stephen D. Wilson 29 President, Corporate Secretary, Director

William Leonard 50 Director

Dewitt H. Montgomery II 51 Director

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

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

BOARD COMPENSATION.

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

BOARD COMMITTEES.

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

EXECUTIVE COMPENSATION.

Mr. Wilson's salary has been at the rate of $6,000 per month from June
2003. The compensation to Mr. Wilson for the fiscal year ended December 31, 2003
was $42,000, which was the only executive compensation paid. 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 us to any officer, director, or principal stockholder, or any of
their affiliates or associates. There is no policy that prevents us from
adopting a plan or agreement in the future that would provide for cash or stock
based compensation for services rendered to the Company.

RELATED PARTY TRANSACTIONS

Daniel M. Smith, husband of one of our controlling shareholders,
Jennifer Louise Smith, has advanced $282,048 to the Company through June 30
2004. Our President, Stephen D. Wilson, has advanced $124,334 to the Company
through June 30,2004. These advances total $406,382. The funds have been used to
pay administrative expenses such as legal and accounting fees; executive
compensation to Mr. Wilson in the amount of $6,000 per month since June
2003;operating expenses; and to acquire our initial test facility in Lemon
Grove. The amounts advanced by Mr. Smith include $58,900 for assets purchased
for the Lemon Grove facility. The amount advanced by Mr. Wilson includes $5,520
for the Lemon Grove facility.

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. However, Mr. Smith and Mr. Wilson
have each agreed to not demand repayment prior to July 1, 2005 and repayment
will be made only from revenues 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. Our executive
officers and our directors consisting of Stephen D. Wilson; William Leonard;
Michael G. Conner; and Dewitt H. Montgomery III are also each considered a "
promoter" of the Company under the Securities Act of 1933. Dotcom Internet
Ventures, Ltd. and its principal, William Tay, were the original "promoters" of
the Company when it was known as Breakthrough Technology Partners I, Inc.

PRINCIPAL SHAREHOLDERS

The following table sets forth information regarding beneficial
ownership of our Common Stock as of March 31, 2004, and as adjusted to reflect
the sale of the shares offered by this offering, as to:

o each person known by us to own beneficially more than 5% of our
Common Stock;
o each of our directors and executive officers;
o all of our directors and executive officers as a group.

TITLE OF CLASS NAME AND ADDRESS OF AMOUNT OF PERCENT OF
- -------------- BENEFICIAL OWNER BENEFICIAL CLASS
---------------- OWNERSHIP -----
---------
Common Stock Stephen D. Wilson -0- 0 %
3790 Via de la Valle, Suite 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 III -0- 0 %
55533 SW Boundary
Portland, Oregon 97221

Common Stock Michael G. Connor -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 (a) Jennifer Louise Smith 2,000,000 50 %
32005 NE Wilsonville Rd.
Newberg, Oregon 97132

Preferred Stock (a) Joy E. Livingston
PMB 109
PO Box 439060
San Diego, California 92143 2,000,000 50 %

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

(a) Each share of Series A Convertible Preferred Stock has ten times as
many votes as the common stockholders. Consequently, the holders of the
Series A Convertible Preferred Stock have and will continue to have
absolute control over the affairs of the Company.

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $0.001 per share and 20,000,000 shares of Preferred Stock, par
value $0.001 per share.

COMMON STOCK. As of the date of this Prospectus, there were 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 voted 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 of California Clean Air, Inc., the holders of common stock are
entitled to share ratably in the net assets remaining after payment in full of
all of liabilities, subject to the prior rights of preferred stock, if any, then
outstanding. There are no redemption or sinking fund provisions applicable to
the common stock.

PREFERRED STOCK. We are authorized to issue 20,000,000 shares of
designated preferred stock. As of the date of this Prospectus, there are
4,000,000 shares of Series A Convertible Preferred Stock issued and outstanding.
The Series A Preferred Stock have the following rights and preferences:

o The Series A Preferred Stock is convertible at any time into a
common stock on a one-for- one basis, subject to adjustment for
stock splits and similar extraordinary stock events;

o Each share of Series A Preferred Stock has ten (10) votes for each
share of common stock into which the preferred stock can be
converted;

o The Series A Preferred Stock votes with the common stock as a
single class;

o The Series A Preferred Stock will entitled to receive dividends in
the following manner:

(a) Upon the commencement of operations of no less than ten (10)
vehicle emissions test centers by Smog Centers of California LLC,
800,000 shares of the Series A Preferred Stock will be each
entitled to receive dividends as and when declared and paid on the
common stock;

(b) An additional 800,000 shares of Series A Stock will be each
entitled to receive dividends as and when declared and paid on the
common stock for each additional ten (10) vehicle emissions test
centers for which operations have commenced, up to a total of
fifty (50) such vehicle test centers.

The board of directors has the authority, without vote or action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the number of shares, and the rights, preferences and privileges of
each series, any or all of which may be greater than the rights of the common
stock. It is not possible to state the actual effect of the issuance of any
additional shares of preferred stock upon the rights of the holders of common
stock until the board of directors determines the specific rights of the holders
of the preferred stock. However, the effects might include restricting dividends
on the common stock, diluting the voting power of the common stock, impairing
liquidation rights of the common stock and delaying or preventing a change in
control of California Clean Air, Inc. without further action by the stockholders
and may adversely affect the rights of the holders of common stock. We have no
present plans to issue any additional preferred stock in addition to the Series
A Stock.

TRANSFER AGENT. Our transfer agent and registrar is OTR, Inc., 1000
S.W. Broadway, Suite 920, Portland, Oregon 97205.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common
stock. We intend to qualify our common stock for quotation on the
Over-the-Counter Bulletin Board (OTCBB) upon completion of this offering. There
can be no assurances that we will obtain such qualification or that a public
market for our common stock will develop even if qualification on the OTCBB is
obtained. As of the date of this Prospectus, there are two (2) shareholders of
record holding all of the 1,000,000 shares of common stock issued and
outstanding.

Future sales of substantial amounts of our common stock in any public
market that may be established after this offering could adversely affect its
market price and impair our ability to raise equity capital in the future. Only
a limited number of shares will be available for sale shortly after this
offering because of legal restrictions on resale described below; however, after
these restrictions lapse, sales of substantial amounts of our common stock in
the public market are possible.

After the completion of the offering, assuming all shares of common
stock being offered are sold, we will have 3,000,000 shares of common stock
issued and outstanding. Of these shares, the 2,000,000 shares intended to be
sold in the offering will be freely tradeable without restriction under the
Securities Act of 1933, unless purchased by our "affiliates" as that term is
defined in Rule 144 under the Securities Act of 1933. Affiliates are generally
our officers, directors and 10% stockholders.

The remaining 1,000,000 shares of our outstanding common stock are
"restricted securities" within the meaning of Rule 144. Restricted securities
may be sold in the public market only if registered or if they qualify for an
exemption from registration under Rule 144 which is summarized below. Sales of
the restricted stock in the public market or the availability of these shares
for sale could adversely affect the market price of the common stock.

Under Rule 144, the number of shares that may be sold by our affiliates
are subject to volume restrictions. In general, under Rule 144, a person who has
beneficially owned restricted stock for at least one year would be entitled to
sell within any three-month period a number of shares that does not exceed the
greater of the following:

o one percent of the number of shares of common stock then
outstanding, which will equal approximately 30,000 shares
immediately after the offering;

o the average weekly trading volume of the common stock during the
four calendar weeks preceding the sale.

Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements and to the availability of current public
information about us. Under Rule 144(k), a person who is not deemed to have been
our affiliate at any time during the three moths preceding a sale and who has
beneficially owned the shares to be sold for at least two years, is entitled to
sell these shares without complying with the manner of sale, public information,
volume limitations or notice provisions of Rule 144.

PLAN OF DISTRIBUTION

We will not be employing the services of an underwriter or placement
agent in connection with this offering. The common stock will be offered on a
"best efforts" basis by our executive officers and directors without the payment
of any commissions or other remuneration. In addition, we will not be paying any
commissions or fees, directly or indirectly, to a finder or dealer in connection
with the solicitation of purchasers of our common stock being offered. The
offering will be conducted on a continuous basis until all shares being offer ed
are subscribed for or until the offering is terminated by us, whichever first
occurs, but will not extend beyond two years from the date of this Prospectus.

Our executive officers and directors, Stephen D. Wilson; William
Leonard; Michael G. Connor; and Dewitt H. Montgomery III, will seek to sell our
common stock in this offering by contacting persons with whom they have had a
prior contact and by contacting other persons through various methods, including
mail, telephone and other means. We will rely on Rule 3a4-1 under the Securities
Exchange Act of 1934 which sets forth conditions under which a person associated
with an issuer of securities may participate in the offering and not be deemed a
broker-dealer. These conditions are as follows:

o The person is not subject to a statutory disqualification, as that
terms is defined in Section 3(a)(39) of the Securities Exchange
Act of 1934, at the of his participation;
o The person is not compensated in connection with is participation
by payment of commissions or other remuneration based either
directly or indirectly on transactions in our common stock;
o The person is not, at the time of his participation, an associated
person of a broker- dealer; and

o The person primarily performs, or is intended primarily to perform
at the end of the offering, substantial duties for or on behalf of
the issuer otherwise than in connection with transactions in
securities; and has not been an associated person of a broker -
dealer within the preceding twelve months and does not participate
in offering and selling securities for any issue more than once
every twelve months other than in reliance on Section 3(a)4-1. Our
executive officer and our directors satisfy all of the foregoing
conditions of Rule 3(a)4-1.

We reserve the right to accept or reject any subscription delivered to
us under this offering. There is no minimum investment or minimum number of
shares of common stock that must be sold under this offering. Any subscription
funds accepted by us will be immediately available to us for the uses set forth
in the Use of Proceeds.

Each person who wishes to purchase shares of common stock under this
offering will be required to complete and deliver to us a Subscription Agreement
which contains, among other things, certain warranties and representations of
the subscriber.

LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for
California Clean Air, by Robert C. Laskowski, Attorney at Law, Portland, Oregon.

EXPERTS

Armando C. Ibarra, CPA, independent auditors, have audited our
consolidated financial statements at December 31, 2003. We have included our
financial statements in this prospectus in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.

ADDITIONAL INFORMATIONAL AVAILABLE TO YOU

We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2 under the Securities Act of 1933 with
respect to the common stock offered hereby. This prospectus does not contain all
of the information set forth in the registration statement and the exhibits and
schedules. We also file periodic reports with the Securities and Exchange
Commission such as quarterly reports on Form 10-QSB: Annual Reports on Form
10-KSB; and current reports on Form 8-K. For further information with respect to
California Clean Air, Inc. and the common stock offered hereby, we refer you to
the registration statement and to the exhibits and schedules.

Statements made in this prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed as an exhibit to the registration statement, we refer you to
the exhibit for a more complete description of the matter involved. The
registration statement and the exhibits and schedules, and any periodic reports
we file, may be inspected without charge at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
called the SEC at 1-800-SEC-0033, Copies of all or any part of the registration
statement may be obtained from the SEC's offices upon payment of fees prescribed
by the SEC. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. The address of the site is www. sec.gov.

INDEX TO FINANCIAL STATEMENTS Page

Report of Independent Auditors................................................ F-1

Consolidated Financial Statements:

Balance Sheets as of December 31, 2003 and December 31, 2002 ................. F-2

Statements of Operations for the year ended December 31, 2003 and 2002........ F-4

Statement of Stockholders' Equity for the year ended December 31, 2003
and 2002...................................................................... F-5

Statements of Cash Flows for the year ended December 31, 2003 and 2002........ F-6

Notes to Financial Statements................................................. F-7

Unaudited Balance Sheet for the three months ended March 31, 2004............. F-16

Unaudited Statements of Operations for the three months ended March 31, 2004.. F-18

Unaudited Statements of Cash Flows for the three months ended March 31, 2004.. F-19

Notes to Unaudited Financial Statements....................................... F-20

371 "E" STREET, CHULA VISTA, CA 91910
TEL: (619) 422-1348 FAX: (619) 422-1465
---------- -------- --------
A C I ARMANDO C. IBARRA
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.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of California Clean
Air, Inc. as of December 31, 2003 (restated) and 2002 and the related statements
of operations, changes in stockholders' equity and cash flows for 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 audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits 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 its cash flows for the years then ended in conformity with U.S. generally
accepted accounting principles.

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

March 31, 2004
June 22, 2004 (restated)
July 14, 2004 (restated - See Note 9)

Chula Vista, Ca. 91910

F-1

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 96,296 -

OTHER ASSETS

Deposits 6,649 -

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

TOTAL OTHER ASSETS 6,649 -

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

TOTAL ASSETS $ 107,647 $ -

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

F-2

CALIFORNIA CLEAN AIR, INC.
BALANCE SHEETS

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

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

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

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) (266,131) (54,531)
------------ ------------

TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (261,131) (49,531)

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

& STOCKHOLDERS' EQUITY (DEFICIT) $ 107,647 $ -
============ ============

F-3

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 4,912 -
------------ ------------

Total Operating Costs 217,440 23,110
------------ ------------

OPERATING INCOME (LOSS) (210,800) (23,110)
------------ ------------

INCOME (LOSS) BEFORE INCOME TAXES $ (210,800) $ (23,110)
------------ ------------

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

NET INCOME (LOSS) $ (211,600) $ (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-4

CALIFORNIA CLEAN AIR, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FROM DECEMBER 31, 2001 TO DECEMBER 31, 2003

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

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

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 (211,600) (211,600)
- -------------------------------- -------------- ------------- ---------------- -------------- ---------------- ---------------

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

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

F-5

CALIFORNIA CLEAN AIR, INC.
STATEMENTS OF CASH FLOWS

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2003 2002
----------------- -----------------

CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) $ (211,600) $ (23,110)
DEPRECIATION EXPENSE 4,912 -

(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 (148,191) (23,110)
CASH FLOWS FROM INVESTING ACTIVITIES

NET SALE (PURCHASE) OF PROPERTY AND EQUIPMENT (101,208) -

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (101,208) -
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 $ - $ -

F-6

CALIFORNIA CLEAN AIR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003 (RESTATED)

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-7

CALIFORNIA CLEAN AIR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003 (RESTATED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

e. 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.

f. Estimates

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

g. Revenue Recognition and Deferred Revenue

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

h. Basic Earnings per Share

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

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

i. Income Taxes

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

F-8

CALIFORNIA CLEAN AIR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

j. Reporting Consolidated Comprehensive Income (Loss)

The Company reports and displays consolidated comprehensive income (loss) and
Its components as separate amounts in the consolidated financial statements with
the same prominence as other financial statements. Consolidated comprehensive
Income (loss) includes all changes in equity during the year that results from
recognized transactions and other economic events other than transactions with
owners. There were no components of consolidated comprehensive income to report
for the years ended December 31, 2003 and 2002.

k. Segment Reporting

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

l. Principles of Consolidation

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

F-9

CALIFORNIA CLEAN AIR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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

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-10

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 89,500
-----------------------
$ 101,208
Less Accumulated Depreciation (4,912)
-----------------------
Net Property and Equipment $ 96,296
=======================

Depreciation for the year ending December 31, 2003 was $4,912.

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-11

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-12

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.

DECEMBER 31, DECEMBER 31,
2003 2002
-------------------- -------------------

NET INCOME (LOSS) FROM OPERATIONS $ (211,600) $ (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 $ (211,600)

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

DILUTED WEIGHED AVERAGE NUMBER OF SHARES OUTSTANDING 7,378,082
====================

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 $ 266,131 $ (54,531)
-------------- -------------
266,131 54,531
Valuation allowance (266,131) (54,531)

F-13

CALIFORNIA CLEAN AIR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003

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

Net operating losses expire twenty years from the time they are incurred for
federal tax purposes.

NOTE 9. RECLASSIFICATION OF GOODWILL TO EQUIPMENT

On August 21, 2003, Smog Centers acquired smog-testing assets for $60,000. These
assets are currently used in the Company's Lemon Grove location, Broadway Smog
Check.

The acquisition can be summarized as follows:

Fair value of vehicle emission inspection equipment $ 60,000
-------------
Cash paid $ 60,000
=============

This transaction had previously been accounted for in the audited financial
statements in the Company's Form 10-KSB for the fiscal year ending December 31,
2003, as a business combination, which included $20,000 in goodwill and $40,000
in equipment. Upon further review, it was determined that this transaction was
an asset purchase and $20,000 in goodwill was reclassified as equipment.
Amortization expense being recognized over a 3 year period was reclassified as
depreciation expense being recognized over a 5 year period. The audited
financial statements for the fiscal year ending December 31, 2003, were restated
to reflect these changes. The impact on the financial statements was to decrease
total operating costs by $6,514 since the depreciation expense recognition
period of 5 years is longer than the amortization expense recognition period of
3 years. Because total operating costs decreased for the fiscal year ending
December 31, 2003, assets reflected as of December 31, 2003, increased by
$6,514.

NOTE 10. OPERATING SEGMENTS

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

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

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

Operating income (loss) (60,885) (149,915)

Total other income & (expenses) 0 0
-------------------------- ---------------------------
Income (loss) before income tax
and extraordinary items $ (60,885) $ (149,915)
========================== ===========================

F-14

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, $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.

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-15

CALIFORNIA CLEAN AIR, INC.
CONSOLIDATED BALANCE SHEETS

ASSETS
------

AS OF AS OF
MARCH 31, 2004 DECEMBER 31, 2003
(Unaudited) (Audited)
-------------- --------------
CURRENT ASSETS
Cash $ 6,864 $ 3,285
Prepaid expenses 2,838 1,417
-------------- --------------
TOTAL CURRENT ASSETS 9,702 4,702

NET PROPERTY & EQUIPMENT 91,236 96,296

OTHER ASSETS
Deposits 6,083 6,649
-------------- --------------
TOTAL OTHER ASSETS 6,083 6,649
-------------- --------------
TOTAL ASSETS $ 107,021 $ 107,647
============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
AS OF AS OF
MARCH 31, 2004 DECEMBER 31, 2003
(Unaudited) (Audited)
------------ -------------
CURRENT LIABILITIES
Accounts payable $ 30,757 $ 39,903
Accrued payroll and payroll
related liabilities 44,689 25,860
Accrued state minimum franchise taxes 2,400 800
Capitalized lease obligation
- current portion 5,683 5,471
------------ -------------
TOTAL CURRENT LIABILITIES 83,529 72,034

The accompanying notes are an integral part of these statements.

F-16

CALIFORNIA CLEAN AIR, INC.
CONSOLIDATED BALANCE SHEETS

AS OF AS OF
MARCH 31, 2004 DECEMBER 31, 2003
(Unaudited) (Audited)
-------------- -----------------
LONG-TERM LIABILITIES
Capitalized lease obligation 30,107 31,610
Notes payable to related party 337,232 265,134
-------------- -----------------
TOTAL LONG-TERM LIABILITIES 367,339 296,744
-------------- -----------------
TOTAL LIABILITIES 450,868 368,778

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock ($0.001 par value),
20,000,000 shares authorized;
4,000,000 shares issued & outstanding 4,000 4,000

Common stock ($0.001 par value),
100,000,000 shares authorized;
1,000,000 shares issued & outstanding 1,000 1,000
Retained earnings (deficit) (348,847) (266,131)
-------------- -----------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (343,847) (261,131)
-------------- -----------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY (DEFICIT) $ 107,021 $ 107,647
============== =================

The accompanying notes are an integral part of these statements.

F-17

CALIFORNIA CLEAN AIR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

QUARTER ENDING QUARTER ENDING
MARCH 31, 2004 MARCH 31, 2003
(Unaudited) (Unaudited)
-------------- --------------
SALES REVENUES $ 48,963 $ 0
-------------- --------------
Total Revenues 48,963 0
-------------- --------------
COST OF REVENUES 24,834 0
-------------- --------------
GROSS PROFIT 24,129 0
-------------- --------------
OPERATING COSTS
Operating expenses 106,452 16,980
Depreciation expense 5,060 0
-------------- --------------
Total Operating Costs 111,512 0
-------------- --------------

OPERATING INCOME (LOSS) (87,383) (16,980)

ORDINARY (NON-OPERATING) INCOME (LOSS) 4,667 0
-------------- --------------

INCOME (LOSS) BEFORE INCOME TAXES $ (82,716) $ (16,980)
-------------- --------------

INCOME TAX (PROVISION) BENEFIT 0 0
-------------- --------------

NET INCOME (LOSS) $ (82,716) $ (16,980)
-------------- --------------

BASIC EARNINGS (LOSS) PER SHARE $ (0.08) $ (0.003)
-------------- --------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,000,000 5,000,000
-------------- --------------

DILUTED EARNINGS (LOSS) PER SHARE $ (0.02)
--------------
WEIGHTED AVERAGE OF DILUTED
COMMON SHARES OUTSTANDING 5,000,000
--------------

The accompanying notes are an integral part of these statements.

F-18

CALIFORNIA CLEAN AIR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

QUARTER ENDING QUARTER ENDING
MARCH 31, 2004 MARCH 31, 2003
(Unaudited) (Unaudited)
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES

NET INCOME (LOSS) $ (82,716) $ (16,980)

DEPRECIATION EXPENSE 5,060

(INCREASE) DECREASE IN PREPAID EXPENSES (1,421)

(INCREASE) DECREASE IN DEPOSITS 566

INCREASE (DECREASE) IN ACCOUNTS PAYABLE (9,146) 7,100

INCREASE (DECREASE) IN ACCRUED PAYROLL $ 18,829
AND PAYROLL RELATED LIABILITIES

INCREASE (DECREASE) IN ACCRUED STATE
MINIMUM FRANCHISE TAXES 1,600 10
-------------- --------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (67,228) (9,870)

CASH FLOWS FROM INVESTING ACTIVITIES

NET SALE (PURCHASE) OF PROPERTY & EQUIPMENT 0 0
-------------- --------------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 0 0

CASH FLOWS FROM FINANCING ACTIVITIES

CHANGE IN CAPITALIZED LEASE OBLIGATIONS (1,291)

CHANGE IN NOTES PAYABLE TO RELATED PARTY 72,098 10,032
-------------- --------------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 70,807 10,032

NET INCREASE (DECREASE) IN CASH 3,579 162

CASH AT BEGINNING OF QUARTER 3,285 0
CASH AT END OF QUARTER $ 6,864 $ 162

SUPPLEMENTAL CASH FLOW DISCLOSURES:

CASH PAID DURING YEAR FOR INTEREST $ 1,407 $ 0
CASH PAID DURING YEAR FOR TAXES $ 0 $ 0

The accompanying notes are an integral part of these statements.

F-19

CALIFORNIA CLEAN AIR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

GENERAL
- -------
California Clean Air, Inc. (the "Company") was originally incorporated in
Delaware on June 2, 2000, under the name of Breakthrough Technology Partners I,
Inc. On December 17, 2002, the Company reincorporated in Nevada under the name
of California Clean Air, Inc. pursuant to an Agreement and Plan of Merger. The
sole purpose for the merger was to change the Company's legal domicile from
Delaware to Nevada. From June 2, 2000, the date of original incorporation, until
August 21, 2003, the Company was seeking a merger, exchange of capital stock,
participation 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 its first test-only
vehicle emissions inspection facility and 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 Company's consolidated balance sheets for
the quarter ending March 31, 2004 and for the fiscal year ending December 31,
2003.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. ACCOUNTING METHOD
-----------------
The Company utilizes 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, to own and operate
test-only vehicle emissions inspection facilities in California. The Company is
the sole member of Smog Centers, and owns title to all assets and liabilities of
the consolidated financial statements. Smog Centers currently operates two
test-only vehicle emissions inspection facilities.

c. CASH EQUIVALENTS
----------------
The Company considers credit card sales receipts to be cash equivalents.

d. PROPERTY AND EQUIPMENT
----------------------
Property and equipment are stated at cost less accumulated depreciation.
Maintenance and repairs, as well as renewals for minor amounts are charged to
expenses. Renewals and betterments of substantial amounts are capitalized, and
any replaced or disposed units are written off.

F-20

e. PRE-PAID ASSETS
---------------
Prepaid assets are comprised of smog testing equipment warranty and smog
certificates. Equipment warranty is represented net of accumulated expense and
the expense is recognized using the straight-line method over the remaining
warranty term. Equipment warranty expense was approximately $851 and $0 for the
quarters ending March 31, 2004 and March 31, 2003, respectively. Smog
certificates are reflected at cost of the number of certificates on hand as of
March 31, 2004.

f. ADVERTISING
-----------
The Company expenses the cost of advertising as it is incurred. Advertising
expense was approximately $25,361 and $0 for the quarters ending March 31, 2004
and March 31, 2003, respectively.

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 the Smog Check II program. Revenue is recognized
when a sale is made.

i. 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).

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.

F-21

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 quarter and year that
result from recognized transactions and other economic events other than
transactions with owners. There were no components of consolidated comprehensive
income to report for the quarter ending March 31, 2004 or for the fiscal year
ending December 31, 2003.

l. SEGMENT REPORTING
-----------------
The Company reports information about operating segments and related disclosures
using Statement of Financial Accounting Standards No. 131, "Disclosures About
Segments of An 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).
The subsidiary is a wholly owned subsidiary. All significant inter-company
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 Statement Nos. 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 adoption
of SFAS 145 did not have a material effect on the Company's consolidated
financial statements for the fiscal year ending December 31, 2003 but did result
in the recognition of ordinary income for the quarter ending March 31, 2004 of
$6,153 from a write-off of company accounts payable.

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 for
the quarter ending March 31, 2004 or the fiscal year ending December 31, 2003.

F-22

NOTE 3. PROPERTY & EQUIPMENT

Property and equipment is stated at cost less accumulated depreciation.
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 5 years. Depreciation expense for the
quarters ending March 31, 2004 and March 31, 2003 was $430 and $0, respectively.

NOTE 4. CAPITALIZED LEASE OBLIGATION

Smog Centers entered into a non-cancelable lease for the purchase of vehicle
emission inspection equipment at its Escondido, California facility in October,
2003. Under the terms of the lease, Smog Centers is obligated to pay $899 per
month through October, 2008. The lease obligation has been capitalized because
Smog Centers has the option of purchasing the smog testing equipment at the
expiration of the lease term for $1. Lease payments for the quarters ending
March 31, 2004 and March 31, 2003 were $2,697 and $0, respectively. Interest
expense on the lease obligation for the quarters ending March 31, 2004 and March
31, 2003 was $1,406 and $0, respectively.

Aggregate minimum future lease payments under the capitalized lease as of March
31, 2004 are:

2004 (April through December) 8,091
2005 10,788
2006 10,788
2007 10,788
2008 (January through October) 8,990
------------------

Total minimum lease payments 49,445
Less amount representing interest 13,655
------------------

Present value of minimum lease payments $ 35,790
==================

NOTE 5. OPERATING LEASE COMMITMENTS

Smog Centers entered into a non-cancelable assignment of lease for the smog
station premises in Lemon Grove, California which requires monthly lease
payments of $1,500 through July 1, 2006. Smog Centers entered into a
non-cancelable lease for the smog station premises in Escondido, California,
which requires monthly payments of $1,500 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. The Company has an option to extend the lease terms
for both locations for an additional five (5) years.

Aggregate minimum future lease payments for the smog stations as of March 31,
2004, are:

2004 (April through December) $ 27,000
2005 36,200
2006 27,500
2007 20,600
2008 19,800
-----------------

Total minimum lease payments $ 131,100
=================

Lease expense for the smog stations for the quarters ending March 31, 2004 and
March 31, 2003 were $9,000 and $0, respectively.

F-23

NOTE 6. TRANSACTIONS WITH RELATED PARTIES

Daniel M. Smith, husband of one of our controlling shareholders, and our
President, Stephen D. Wilson, have advanced $265,134 on behalf of the company
from inception through December 31, 2003. For the quarter ending March 31, 2004,
Mssrs. Smith and Wilson advanced $72,098, for a total amount advanced of
$337,232 through March 31, 2004. These advances were used for administrative
expenses such as legal and accounting fees, smog station operating expenses, and
to acquire the smog station assets at the Company's Lemon Grove facility. The
advances are reflected as "Payable to Related Parties" in the Company's
financial statements and are non-interest bearing and due on demand. Mssrs.
Smith and Wilson have agreed not to demand repayment until sufficient funds are
available from proceeds of the Company's offering of its common stock pursuant
to an effective SB-2 Registration Statement or from revenue derived from
operations.

NOTE 7. BASIC & DILUTED INCOME (LOSS) PER COMMON SHARE

Basic earnings (loss) per common share has been calculated based on the weighted
average number of shares of common stock outstanding during the period. Diluted
earnings (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.

MARCH 31, DECEMBER 31,
2004 2003
(Unaudited) (Audited)
-------------------- -------------------
NET INCOME (LOSS) $ (82,716) $ (211,818)
BASIC EARNINGS (LOSS) PER SHARE $ (0.08) $ (0.08)

==================== ===================
WEIGHED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 1,000,000 2,621,918
==================== ===================

DILUTED EARNINGS (LOSS) PER SHARE $ (0.02) $ (0.03)

==================== ===================
WEIGHED AVERAGE NUMBER OF DILUTED
COMMON SHARES OUTSTANDING 5,000,000 7,378,082
==================== ===================

As of March 31, 2004 no preferred dividends have been issued that would reduce
earnings available to common shareholders.

NOTE 8. INCOME TAXES

Deferred income taxes consist of the following:

MARCH 31, DECEMBER 31,
2004 2003
(Unaudited) (Audited)
------------- -------------
Deferred tax asset:
Net operating loss carryover $ 349,065 $ 266,349
------------- -------------
349,065 266,349
Valuation allowance (349,065) (266,349)
-------------- -------------
Net deferred income taxes 0 0
============== =============

F-24

NOTE 9. RECLASSIFICATION OF GOODWILL TO EQUIPMENT

On August 21, 2003, Smog Centers acquired smog-testing assets for $60,000. These
assets are currently used in the Company's Lemon Grove location, Broadway Smog
Check.

The acquisition can be summarized as follows:

Fair value of vehicle emission inspection equipment $ 60,000
-------------
Cash paid $ 60,000
=============

NOTE 10. OPERATING SEGMENTS

FOR THE QUARTER FOR THE YEAR
ENDED MARCH 31, 2004 ENDED DECEMBER 31, 2003
(Unaudited) (Audited)
-------------------------- ---------------------------
CALIFORNIA SMOG CENTERS CALIFORNIA SMOG CENTERS
CLEAN AIR OF CALIFORNIA CLEAN AIR OF CALIFORNIA
------------ ------------- ------------ --------------
Total Revenue $ 0 $ 48,963 $ 0 $ 27,503
Costs of Revenues 0 (24,834) 0 (20,863)
-------------------------- ---------------------------
Gross Profit 0 24,129 0 6,640

Total Operating Costs (61,034) (50,478) (60,885) (156,773)
-------------------------- ---------------------------
Operating Income (Loss) (61,034) (26,349) (60,885) (150,133)

Total Other Income (Loss) 4,667 0 0 0
-------------------------- ---------------------------
Income (Loss) Before
Income Tax And
Extraordinary items $ (56,367) (26,349) (60,885) (150,133)
========================== ===========================

NOTE 11. STOCKHOLDERS' EQUITY

The stockholders' equity section of the Company's financial statements contains
the following classes of capital stock as of March 31, 2004:

(A) Preferred stock, $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.

F-25

The Company is authorized to issue up to 100,000,000 shares of common stock. The
holders of common stock are entitled to one vote per share of common stock on
all matters to be voted on by the stockholders. There are no cumulative voting
rights. Subject to preferences that may be applicable to any outstanding
preferred stock, the holders of common stock are entitled to receive dividends,
if any, as may be declared by the board of directors out of funds legally
available for dividends. In the event of a liquidation, dissolution or winding
up, the holders of common stock are entitled to share ratably in the net assets
remaining after payment in full of all of liabilities, subject to the prior
rights of preferred stock, if any, then outstanding. There are no redemption or
sinking fund provisions applicable to the common stock. As of March 31, 2004,
there were 1,000,0000 shares of common stock issued and outstanding.

The Company is authorized to issue up to 20,000,000 shares of designated
preferred stock. The board of directors has the authority, without vote or
action by the stockholders, to designate and issue preferred stock in one or
more series and to designate the number of shares, and the rights, preferences
and privileges of each series, any or all of which may be greater than the
rights of the common stock. It is not possible to state the actual effect of the
issuance of any additional shares of preferred stock upon the rights of the
holders of common stock until the board of directors determines the specific
rights of the holders of the preferred stock. However, the effects might include
restricting dividends on the common stock, diluting the voting power of the
common stock, impairing liquidation rights of the common stock and delaying or
preventing a change in control of the Company.

As of March 31, 2004, there were 4,000,000 shares of Series A Convertible
Preferred Stock issued and outstanding. The holders of the Series A Convertible
Preferred Stock have the following rights and preferences: the Series A
Preferred Stock is convertible into common stock on a one-for-basis, subject to
adjustment for stock splits and similar extraordinary stock events; each share
of Series A Preferred Stock has ten (10) votes for each share of common stock
into which the preferred stock can be converted; the Series A Preferred Stock
votes with the common stock as a single class; and the Series A Preferred Stock
is entitled to receive dividends (1) upon the commencement of operations of no
less than ten (10) vehicle emissions test centers by Smog Centers; (2) 800,000
shares of the Series A Preferred Stock will be each entitled to receive
dividends as and when declared and paid on the common stock; (3) an additional
800,000 shares of Series A Stock will be each entitled to receive dividends as
and when declared and paid on the common stock for each additional ten (10)
vehicle emissions test centers for which operations have commenced, up to a
total of fifty (50) such vehicle test centers; and (4) the liquidation rights
will be subordinated to the outstanding common stock. The board of directors has
no present plans to issue any additional preferred stock in addition to the
Series A Stock.

NOTE 12. ISSUANCE OF SHARES FOR SERVICES - STOCK OPTIONS

The Company has a non-qualified stock option plan, which provides for the
granting of options to key employees, consultants, and non-employee 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 where 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 March 31, 2004 there were no stock options issued or
outstanding.
F-26

Until 90 days after the effective date
of this Prospectus, all dealers that
effect transactions in these securities,
whether or not participating in this
offering, may be required to deliver a
Prospectus. This is in addition to the
dealers' obligation to deliver a
Prospectus when acting as underwriters
and with respect to their unsold
allotment or subscriptions.

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

2,000,000 Shares

CALIFORNIA CLEAN AIR, INC.

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

PROSPECTUS

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

August 5, 2004