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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL QUARTER ENDED MARCH 31, 2008
COMMISSION FILE NO.: 0-28887
CARBONICS CAPITAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 22-3328734
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(State of other jurisdiction of IRS Employer
incorporation or organization) Identification No.)
One Penn Plaza, Suite 1612, New York, New York 10119
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(Address of principal executive offices) (Zip Code)
(212) 994-5374
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(Registrant's telephone number including area code)
Check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant as required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No __.
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One)
Large accelerated filer Accelerated filer
---- ----
Non-accelerated filer Small reporting company X
---- ----
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes No X
The number of outstanding shares of common stock as of May 20, 2007 was
119,141,090.
CARBONICS CAPITAL CORPORATION
QUARTERLY REPORT ON FORM 10QSB
FOR THE FISCAL QUARTER ENDED MARCH 31, 2008
TABLE OF CONTENTS
Page No
Part I Financial Information
Item 1. Financial Statements (unaudited)................................................................2
Condensed Consolidated Balance Sheet - March 31, 2008 (unaudited)...............................3
Condensed Consolidated Statements of Operations - for the Three Months Ended
March 31, 2008 (unaudited) and 2007 (unaudited)...............................................4
Condensed Consolidated Statements of Cash Flows - for the Three Months Ended
March 31, 2008 (unaudited) and 2007 (unaudited)...............................................5
Notes to Condensed Consolidated Financial Statements............................................6
Item 2. Management's Discussion and Analysis ...........................................................9
Item 3 Quantitative and Qualitative Disclosures about Market Risk.....................................11
Item 4. Controls and Procedures........................................................................11
Part II Other Information
Item 1. Legal Proceedings..............................................................................11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds....................................11
Item 3. Defaults upon Senior Securities................................................................11
Item 4. Submission of Matters to a Vote of Security Holders............................................11
Item 5. Other Information .............................................................................11
Item 6. Exhibits ......................................................................................11
Signatures 13
2
PART I
ITEM 1 FINANCIAL STATEMENTS
3
CARBONICS CAPITAL CORPORATION
CONDENSED BALANCE SHEET
AS OF MARCH 31, 2008 (UNAUDITED) AND DECEMBER 31, 2007
3/31/2008 12/31/2007
------------------------------
ASSETS
Current Assets:
Cash ........................................................ $ 2,472 $ --
Note receivable - related party ............................. 497,556 2,948,831
Interest receivable - related party ......................... -- 196,832
------------- -------------
Total current assets ..................................... 500,028 3,145,663
Furniture and equipment - net .................................. 64,040 69,628
Deposits .................................................... -- 32,515
------------- -------------
TOTAL ASSETS ................................................... $ 564,068 $ 3,247,806
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses ....................... $ 682,439 $ 1,064,672
Liabilities to be settled in stock .......................... -- 407,333
Accrued interest ............................................ 299,874 262,445
Current portion of convertible debentures, net of discount .. 602,907 622,660
Derivative liability ........................................ 214,329 1,781,903
Current maturities of long term debt ........................ -- 26,329
------------- -------------
Total current liabilities ................................ 1,799,549 4,165,342
Lease Payable ............................................... 25,324 --
Convertible debentures, net of current ...................... 1,009,761 867,587
------------- -------------
Total long term liabilities ............................... 1,035,085 867,587
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TOTAL LIABILITIES .............................................. 2,834,634 5,032,929
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Preferred stock
Series C, par $0.001, 1,000,000 shares authorized,
974,140 issued and outstanding .............................. 974 974
Common stock, par $0.001, 500,000,000 authorized
12,694,513 and 9,549,266 issued and outstanding, respectively 12,695 9,549
Additional paid-in capital ..................................... 124,845,114 126,524,280
Accumulated deficit ............................................ (127,129,349) (128,319,926)
------------- -------------
Total stockholders' deficiency .............................. (2,270,566) (1,785,123)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY ................. $ 564,068 $ 3,247,806
============= =============
The notes to the financial statement are an integral
part of these statements.
4
CARBONICS CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Three Months Ended
March 31 March 31
2008 2007
--------------------------------------
Revenue $ -- $ --
Cost of revenues ..................................... -- --
----------- -----------
Gross profit ....................................... -- --
----------- -----------
Operating expenses:
General and administrative expenses ............... 96,846 891,600
Stock based compensation ......................... 90,000 492,696
----------- -----------
Total operating expenses ........................ 186,846 1,384,296
----------- -----------
Operating loss ....................................... (186,846) (1,384,296)
----------- -----------
Other income (expense):
Gain (loss) on fair value of derivative instruments 1,567,573 570
Amortization of deferred financing costs and
debt discount ................................... (152,720) (73,342)
Loss on impairment of assets ...................... -- --
Loss on extinguishment of debt .................... -- --
Settlement expense ................................ -- --
Interest expense .................................. (37,429) (63,180)
----------- -----------
Total other income (expense) .................... 1,377,424 (135,952)
Net income before provision for income taxes ......... 1,190,578 (1,520,248)
Provision benefit for income taxes ................... -- --
Net income from continuing operations ................ 1,190,578 (1,520,248)
----------- -----------
Discontinued operations:
Loss from discontinued operations .................... -- (9,000,711)
Gain on disposal of discontinued operations .......... -- --
----------- -----------
Total discontinued operations ..................... -- (9,000,711)
----------- -----------
Net Loss ............................................. $ 1,190,578 $(10,520,959)
=========== ===========
Common share, basic and diluted
loss per share from continuing operations ............ $ .12 $ (0.24)
Common share, basic and diluted
loss per share from discontinued operations .......... $ -- $ (1.40)
----------- -----------
Common share, basic and diluted
loss per share ....................................... $ .12 $ (1.64)
=========== ===========
Weighted average share of common stock
outstanding, basic and diluted .................... 9,937,290 6,424,015
=========== ===========
The notes to the Consolidated Financial Statement are an
integral part of these statements.
5
CARBONICS CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended Three Months Ended
March 31 March 31
2008 2007
---------------- ---------------
CASH FLOW FROM OPERATING ACTIVITIES
Net cash used in continuing operations ............................ $ (651,696) $ (265,623)
Net cash used in discontinued operations .......................... -- (132,811)
----------- -----------
Net cash provided by (used in) operating activities ............ (651,696) (398,434)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Issuance of note receivable ....................................... -- (73,877)
Investment in unconsolidated subsidiaries ......................... -- --
----------- -----------
Net cash used in investing activities .......................... -- (73,877)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuances (Repayments) of short-term borrowings ................... -- (5,275)
Proceeds from convertible debenture ............................... -- 224,577
Redemption of preferred stock ..................................... -- (9)
Proceeds from the issuance of common stock ........................ -- 313,695
Proceeds from notes receivable - related party .................... 854,168 --
Repayment of notes payable - related party ........................ (200,000) --
----------- -----------
Net cash provided by financing activities ...................... 654,168 532,988
----------- -----------
Net increase in cash .............................................. 2,472 60,677
Cash at beginning of period ....................................... -- 2,006,131
----------- -----------
Cash at end of period ............................................. $ 2,472 $ 2,066,808
=========== ===========
Supplemental statement of non-cash investing and financing activities:
Conversion of convertible debentures ........................... $ 30,300 --
Transfer of net assets to related party ........................ $ 2,203,653 --
The notes to the financial statement are an integral
part of these statements.
6
CARBONICS CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q of Rule 310(b) of Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all normal recurring adjustments considered necessary for a fair
statement of the results of operations have been included. The results of
operations for the three months ended March 31, 2008 are not necessarily
indicative of the results of operations for the full year. When reading the
financial information contained in this Quarterly Report, reference should be
made to the financial statements, schedule and notes contained in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2007.
2 NATURE OF OPERATIONS
COMPLETION OF NAME CHANGE AND REVERSE STOCK SPLIT
Effective February 11, 2008, the Company changed its name from GreenShift
Corporation to Carbonics Capital Corporation and completed a 1 for 20 reverse
stock split.
FORGIVENESS OF REALATED PARTY DEBT
During the first quarter of 2008, the company waived $2,000,000 of the debenture
receivable from GreenShift Corporation. Additionally, the company waived
interest receivable from GreenShift in the amount of $196,832, as well as other
related company notes receivable of $6,821 in the first quarter of 2008.
3 GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company had a net income of
$1,190,578, which was primarily composed of a gain on derivative valuation for
the three months ended March 31, 2008 and had an accumulated deficit. As of
March 31, 2008 the Company's current liabilities exceeded current assets by
$1,299,521. These matters raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans include raising additional
proceeds from debt and equity transactions and completing strategic
acquisitions.
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
For the quarter ended March 31, 2008 the company had no consolidated
subsidiaries. For the quarter ended March 31, 2007 the operations of all
consolidated companies are reflected in discontinued operations.
5 FINANCING ARRANGEMENTS
The following is a summary of the Company's financing arrangements as of March
31, 2008:
Current portion of convertible debentures:
YAGI convertible debenture payable from Carbonics Capital issued October 2005 602,907
-----------
Total current portion of convertible debentures ........................ $ 602,907
===========
Long-term convertible debenture:
YAGI convertible debenture payable from Carbonics Capital issued July 2005 .. $ 570,000
YAGI convertible debenture payable from Carbonics Capital issued April 2006 . 1,150,369
Note discounts .............................................................. (710,608)
-----------
Total long-term convertible debentures ................................. $ 1,009,761
===========
CONVERTIBLE DEBENTURES
YA Global Investments, LP
On April 2, 2007 YA Global Investments, LP ("YAGI") declared certain debentures
issued by the Company to YAGI to be in default for the failure by the Company to
maintain an effective registration statement as required by the Investor
7
Registration Rights Agreement executed contemporaneous with the issuance of the
debentures. The Debentures are unconditionally guaranteed by Viridis Capital,
LLC ("Viridis"), a wholly-owned affiliate of Kevin Kreisler, the Company's
chairman and chief executive officer (the "Guaranty").
In addition, on April 2, 2007 the Company, YAGI and Viridis entered into a
Forbearance Agreement, pursuant to which YAGI agreed to forbear from exercising
the remedies available to it under the Debentures and the related security and
stock pledge agreements, which would have included the liquidation by YAGI of a
portion of the Company's holdings. The terms of the Forbearance Agreement
provided that YAGI shall instead accept, convert and liquidate sufficient shares
of Viridis' Series C Preferred Stock in the Company to facilitate the full
repayment of the Debentures. YAGI shall accept the Series C Preferred Stock in
tranches, and it shall not convert a tranche until it has sold 80% of the shares
of Company common stock issuable upon conversion of the previous tranche. Any
such conversions shall be subject to the ownership limitations specified in the
Debentures (i.e., limitations to ownership of no more than 4.9% of the
outstanding capital stock of the Company. YAGI shall apply the net proceeds,
which are defined in the Forbearance Agreement as 90% of the lowest closing bid
price for the Company's common stock for the five trading days preceding the
conversion date of the Series C shares, to the full satisfaction of the
Company's obligations under the Debentures in the following priorities: (a)
first, to accrued interest on the most recently issued Debenture, (b) then to
principal on the most recently issued Debenture, (c) then to accrued interest on
the next most recently issued Debenture, (d) then to principal on the next most
recently issued Debenture, and so forth until all of the Company's obligations
under the Debentures have been satisfied in full.
On June 26, 2007, Carbonics entered into a Securities Purchase Agreement (this
"Agreement"), with YAGI. In connection with this Agreement, YAGI purchased
secured convertible debentures amounting to $570,000 due on June 26, 2009. The
June 26, 2007 YAGI debentures provide for interest in the amount of 12% per
annum and are convertible at the lesser of $0.60 or 90% of the lowest closing
bid price of Carbonics' common stock during the 30 trading days immediately
preceding the conversion date. YAGI will be entitled to convert the June 26,
2007 debenture on the basis of the conversion price into Carbonics' common
stock, provided that YAGI cannot convert into shares that would cause YAGI to
own more 4.9% of Carbonics Capital's outstanding common stock.
In addition, Carbonics issued to YAGI a warrant to purchase 500,000 shares of
Carbonics Capital's common stock at $1.00 per share. The value of the warrant
was calculated to be $570,000 at the time of the issuance using the guidance
found in APB Opinion 14, "Accounting for Convertible Debt and Debt issued with
Detachable Stock Purchase Warrants" and was recorded as a discount. The discount
is amortized to interest expense over the term of the loan using the effective
interest method of amortization. During the three months ended March 31, 2008,
interest expense from accretion of the debt discount was $49,172.
On June 29, 2007 the Company and Viridis, entered into a letter agreement dated
with YAGI. The agreement recited that the Company had defaulted in its
obligation to file a registration statement to permit YAGI to resell the
Company's common stock issuable upon conversion of certain convertible
debentures that the Company sold to YAGI. YAGI agreed to waive the penalties
available to it as a result of the default if the following conditions were met:
1. The Company agreed to permit one conversion by YAGI of Series C Preferred
Stock pledged to it by Viridis in excess of the stated limit on conversion
(4.99% of outstanding shares). The converted principal amount was $390,000,
which was converted into approximately 9.99% of the outstanding common
shares on June 28, 2007.
2. The Company agreed to increase its authorized shares as promptly as
reasonably possible in order to permit the conversion of the Series C
Preferred Stock.
3. The Company agreed to effect restructuring of the Company as soon as
practicable, but no later than March 1, 2008. In addition the Company
agreed to increase its authorized capital stock to an amount sufficient to
permit YAGI after the restructuring, to convert into common stock all of
the convertible debentures issued to it by the Company.
4. The Company agreed to file a registration statement with the Securities and
Exchange Commission that will, when declared effective, permit YAGI to
resell to the public the common stock issuable upon conversion of the
debentures issued to it by the Company and the debentures issued to it by
the Company.
As of March 31, 2008 YAGI had reduced accrued interest and principal on the
debentures of $118,107 and $1,079,733 (less $390,000 for shares issued during
8
2008), respectively, based on these agreements through the acceptance of the
Company Series C Preferred Stock from Viridis. As a result, the Company issued a
note to Viridis in the amount of $807,840.
6 DERIVATIVES
In accordance with SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" and EITF 00-19 "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock", the
conversion features associated with the convertible debentures are variable and
contain an embedded derivative that requires bifurcation from their hosts
contacts. The Company has recognized the embedded derivatives as a liability at
the date the debentures were issued.
As of March 31, 2008 the change in the fair value of the derivative resulted in
an accounting gain of $1,567,573.. Amortization of the debt discount totaled
$152,720 for the quarter ended d March 31, 2008. The unamortized portion of the
debt discount related to the derivatives was $710,608 at March 31, 2008. As of
March 31, 2008, the fair value of the derivative liabilities was $214,329.
7 RELATED PARTY TRANSACTIONS
On November 9, 2007, the Company and GreenShift Corporation completed a series
of transactions, including the transfer to GreenShift of Carbonics' stakes in GS
AgriFuels Corporation and EcoSystem Corporation. GreenShift assumed all of
Carbonics' intercompany, affiliate related party notes payable and receivable,
all trade payables, and all receivables, but did not assume Carbonics' debt to
YA Global Investments, LP. In exchange GreenShift issued to Carbonics a
promissory note in the aggregate amount of $2,948,831 (the "Carbonics Note").
The principal and interest on the Carbonics Note, which accrues at the per annum
rate of 8%, are due and payable in full on December 31, 2009. The Carbonics Note
was reduced by $2,000,000 in the first quarter 2008. This reduction was in part
attributable to the fact that the appraised value of GS AgriFuels, which
appraisal was completed during the first quarter of 2008, was assessed to be
less than the total debt payable by GS AgriFuels, and the fact that GreenShift
realized impairment charges of $11,153,816 relating to the impairment of GS
AgriFuels' NextGen Fuel, Inc., and Sustainable Systems, Inc. subsidiaries.
Additionally the company waived the interest receivable from GreenShift as well
as other related party notes in the amount of $196,832.
On November 9, 2007, in connection with the transfer to GreenShift of Carbonics'
stakes in GS AgriFuels and EcoSystem, GreenShift assumed liability for a term
note issued by Carbonics to Viridis Capital, LLC with a face amount of
$1,339,704 (the "Viridis Note"), which amount is due upon demand and bears
interest at the rate of 8%. As of December 31, 2007, the balance due from
Carbonics to Viridis was $0.
On December 12, 2007, Carbonics distributed 2,000,000 and 1,000,000 common
shares of EcoSystem Corporation and GS EnviroServices, Inc., respectively, to
all shareholders of Carbonics except for Viridis Capital, LLC, the Company's
majority shareholder. On December 12, 2007, Carbonics distributed all of what
was then Carbonics' 80% stake in GreenShift on a pro-rated basis to all of
Carbonics' shareholders. This was accomplished by Carbonics' conversion of
200,000 shares of GreenShift Series D Preferred Stock into 20,800,000 shares of
GreenShift common stock, which were distributed to the minority shareholders of
Carbonics, and the distribution by Carbonics of 800,000 shares of GreenShift
Series D Preferred Stock to Viridis Capital, LLC, the Company's majority
shareholder. Kevin Kreisler, the sole member of Viridis Capital, is the Chairman
and Chief Executive Officer of the Company.
8 SUBSEQUENT EVENTS
None.
9
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS
OVERVIEW
We develop renewable energy projects based on established technological,
geographical or other advantages. Our ambition is to develop successful
renewable energy projects that facilitate the more efficient use of carbon in
energy supply chains. Our plan to achieve this involves the planned completion
of one or more of the following activities:
>> Direct development of qualified projects;
>> Majority investments in qualified projects; and/or,
>> Acquisition of qualified distressed or other assets.
We are also actively seeking to retain new senior management and plan to do so
in conjunction with one or more of the above activities.
We also hold the rights to a process for preferential separation of plastics
from mixed waste streams developed by Argonne National Laboratory under a
contract with the U.S. Department of Energy. This technology cost-effectively
preferentially separates and recovers targeted plastics from a mixed plastics
stream which enhances the value of recycled plastics. The Company views targeted
waste plastics as a valuable, large volume, chemically consistent source of
carbon and hydrogen for possible thermal and catalytic conversion into liquid
fuels. Our business plan also involves developing compatible projects that can
exploit the value of this technology.
DIVESTMENT
During the fourth quarter 2007, the Company divested 100% of its interest in
EcoSystem Corporation, GS AgriFuels Corporation, GS EnviroServices, Inc., and
GreenShift Corporation (f/k/a GS CleanTech Corporation). The results of these
companies are reported herein as discontinued operations.
RESULTS OF OPERATIONS
Quarter ended March 31, 2008 Compared to Quarter Ended March 31, 2007
Revenues
There were no revenues from continuing operations for the quarter ended March
31, 2008.
Cost of Revenues
There was no cost of revenues for the quarter ended March 31, 2008.
Selling, General and Administrative Expenses Operating Expenses
Selling, general and administrative expenses during the quarter ended March 31,
2008 totaled $186,846. In the comparable period of the prior year, selling,
general and administrative expenses totaled $1,384,296 attributable to selling,
general and administrative expenses with $492,696 related to stock based
compensation. Selling, general and administrative expenses during the quarter
ended March 31, 2008 primarily consisted of accounting and legal fees, office
related expenses as well as costs associated with payroll. Due to the divestment
of our operations at the end of 2007, selling, general and administrative
expenses in 2008 will consist of development costs associated with our planned
future projects. General and administrative expenses are expected to remain high
as a percentage of sales until such time that the Company can achieve initiate
and sustain sufficient revenue to support these expenses.
Interest Expense
Interest expense for the three months ended March 31, 2008 was $37,429, and was
$63,180 for the same period in 2007.
Expenses Associated with Derivative Instruments
As of March 31, 2008 Carbonics Capital had several convertible debentures due to
YA Global Investments, LP. The conversion feature on these debentures is
variable based on trailing market prices and therefore contains an embedded
derivative. We value the conversion feature at the time of issuance using the
Black-Scholes Model and record a note discount and derivative liability for the
calculated value. We recognize interest expense for accretion of the note
discount over the term of the note. The derivative liability is valued at the
10
end of each reporting period and results in a gain or loss for the change in
fair value. Due to the volatile nature of our stock, as well as the stock of our
subsidiaries, the change in the derivative liability and the resulting gain or
loss is usually material to our results. The principal amount on our convertible
debentures due to Global was $2,323,276, $1,612,668 net of $710,608 discount as
of March 31, 2008. For the three months ended March 31, 2008, we recognized a
gain for the change in fair value of the derivative of $1,567,573 for these
debentures. The derivative liability as of March 31, 2008 was $214,329.
Net Income or Loss
Net income from continuing operations for the three months ended March 31, 2008
was $1,190,578 as compared to a loss from continuing operations of $1,520,248
from the same period in 2007. The Company transferred its interest in all of its
subsidiaries to GreenShift Corporation during the three months ended December
31, 2007. Net loss from discontinued operations was $9,000,711 in 2007.
Liquidity and Capital Resources
The Company had $2,834,634 in liabilities at the end of the three months ended
March 31, 2008, and may need to obtain additional financing to satisfy these
obligations.
Our primary sources of liquidity are cash provided by investing and financing
activities. For the three months ended March 31, 2008, net cash used in our
operating activities was $651,696. The Company's capital requirements consist of
general working capital needs, scheduled principal and interest payments on
debt, obligations and capital leases and planned capital expenditures. The
Company's capital resources consist primarily of proceeds from issuance of debt
and common stock. The Company plans to fund ongoing operations during 2008 with
a combination of proceeds from the issuance of debt and equity as well as the
repayment to the Company of loans receivable and other amounts due.
Cash Flows
Our operating activities during the three months ended March 31, 2008 used
$651,696 in cash. At March 31, 2008, accounts payable and accrued expenses
totaled $682,439. At March 31, 2008 the Company had $2,472 cash. For the three
months ended March 31, 2008, investing activities used $0 in cash, and cash from
financing activities provided $654,168. The Company had a working capital
deficit of $1,299,521 at March 31, 2008, which includes derivative liabilities
of $214,329 and convertible debentures of $1,612,668, net of discounts.
At the present time, Carbonics Capital has no source of committed capital. We
are currently investigating the availability of both equity and debt financing
necessary to complete the Company's current projects. We do not know at this
time if the necessary funds can be obtained nor on what terms they may be
available.
Off Balance Sheet Arrangements
None.
11
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4 CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our principal executive officer and principal financial officer participated in
and supervised the evaluation of our disclosure controls and procedures (as
defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed by us in the reports that we file is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that the information required to be disclosed by us in the reports that
we file or submit under the Act is accumulated and communicated to our
management, including our principal executive officer or officers and principal
financial officer, to allow timely decisions regarding required disclosure. The
Company's chief executive officer and chief financial officer determined that,
as of the end of the period covered by this report, these controls and
procedures are adequate and effective in alerting them in a timely manner to
material information relating to the Company required to be included in the
Company's periodic SEC filings.
There was no change in internal controls over financial reporting (as defined in
Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934) identified
in connection with the evaluation described in the preceding paragraph that
occurred during the Company's first fiscal year that has materially affected or
is reasonably likely to materially affect the Company's internal control over
financial reporting.
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 OTHER INFORMATION
None.
ITEM 6 EXHIBITS
INDEX TO EXHIBITS
Exhibit
Number Description
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to the
Sarbanes-Oxley Act of 2002.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the date indicated.
CARBONICS CAPITAL CORPORATION
/S/ KEVIN KREISLER
-----------------------
By: KEVIN KREISLER
Chairman and Chief Executive Officer
Date: May 19, 2008
/S/ JACQUELINE FLYNN
-------------------------
By: JAQUELINE FLYNN
Chief Financial Officer
Date: May 20, 2008
13