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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                                   FORM 10-Q/A
                                (Amendment No. 1)
                            -------------------------

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL QUARTER ENDED JUNE 30, 2009

                          COMMISSION FILE NO.: 0-28887



                          CARBONICS CAPITAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


Delaware                                                            22-3328734
--------------------------------------------------------------------------------
(State of other jurisdiction of                                    IRS Employer
incorporation or organization)                               Identification No.)


One Penn Plaza, Suite 1612, New York, New York                         10119
--------------------------------------------------------------------------------
(Address of principal executive offices)                           (Zip Code)

                                 (212) 994-5374
--------------------------------------------------------------------------------
               (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 has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files.) Yes __ 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 August  19,  2009 was
416,927,937.

<PAGE>

                                 Amendment No. 1

This  Amendment No.1 on Form 10Q/A,  which amends and restates items  identified
below with respect to the Form 10Q, filed by Carbonics Capital Corporation ("we"
or "the Company") with the  Securities  and Exchange  Commission  (the "SEC") on
August 19, 2009 (the "Original Filing"), is being filed in order to :

     o    Include restated  financial  statements as described in Note 10 to the
          financial statements;

     o    Amend Item 2,  Management's  Discussion  and Analysis,  to reflect the
          amended financial statements;

     o    Amend Item 4, Controls and Procedures,  to reflect the modification to
          management's  assessment  of its  disclosure  controls and  procedures
          caused by the restatement and to provide further disclosures;

     o    Amend the  following  notes  under Item 1,  Financial  Statements  and
          Supplementary Schedules, to reflect the amended financial statements:

          o    Note 3, Going  Concern,  was  updated to  restate  the  Company's
               working capital deficit;

          o    Note 5,  Financing  Arrangements,  was  updated  to  restate  the
               schedule of financial  obligations and the description of amounts
               previously recorded due were deleted in the paragraph  describing
               the Stock Purchase Agreement between the Company and GS AgriFuels
               Corporation ("GS AgriFuels");

          o    Note 6, Related Party  Transactions,  was updated with respect to
               the  description  of the Stock  Purchase  Agreement  between  the
               Company and GS AgriFuels;

          o    Note 8,  Acquisitions,  was updated  with respect to the terms of
               the  Stock  Purchase   Agreement   between  the  Company  and  GS
               AgriFuels;

          o    Note 10,  Restatements,  was updated to outline the changes  that
               were made to the financial statements.

None of the other  disclosures in this Report have been amended or updated.  For
updated  information about the Company,  please refer to the more recent filings
made with the SEC.
















                                       2
<PAGE>

<TABLE>
                          CARBONICS CAPITAL CORPORATION
                          QUARTERLY REPORT ON FORM 10Q
                   FOR THE FISCAL QUARTER ENDED JUNE 30, 2009

                                TABLE OF CONTENTS



<CAPTION>

                                                                                                           Page No
Part I            Financial Information
<S>               <C>                                                                                           <C>
Item 1.           Financial Statements ..........................................................................3
                  Condensed Consolidated Balance Sheet - June 30, 2009 (unaudited)
                    and December 31, 2008........................................................................4
                  Condensed Consolidated Statements of Operations - for the Three and Six Months
                     Ended June 30, 2009 (unaudited) and 2008 (unaudited)........................................5
                  Statement of Stockholders' Equity - December 31, 2008 and Six Months
                     Ended June 30, 2009.........................................................................6
                  Condensed Consolidated Statements of Cash Flows - for the Six Months
                    Ended June 30, 2009 (unaudited) and 2008 (unaudited).........................................7
                  Notes to Condensed Consolidated Financial Statements...........................................8
Item 2.           Management's Discussion and Analysis .........................................................12
Item 3            Quantitative and Qualitative Disclosures about Market Risk....................................14
Item 4.           Controls and Procedures.......................................................................14

Part II           Other Information

Item 1.           Legal Proceedings.............................................................................15
Items 1A.         Risk Factors..................................................................................15
Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds...................................15
Item 3.           Defaults upon Senior Securities...............................................................15
Item 4.           Submission of Matters to a Vote of Security Holders...........................................15
Item 5.           Other Information ............................................................................15
Item 6.           Exhibits .....................................................................................15

Signatures                                                                                                      16
</TABLE>






                                       3
<PAGE>



                                     PART I


ITEM 1            FINANCIAL STATEMENTS


























                                       4
<PAGE>

<TABLE>
                          CARBONICS CAPITAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
              AS OF JUNE 30, 2009 (UNAUDITED) AND DECEMBER 31, 2008
<CAPTION>
                                                                                      RESTATED
                                                                                      6/30/2009       12/31/2008
ASSETS                                                                            ------------------------------
Current Assets:
<S>                                                                               <C>              <C>
   Cash .......................................................................   $     100,623    $        --
   Accounts receivable, net of allowance for doubtful accounts of $3,094 and $0         226,738             --
   Inventory ..................................................................         141,872             --
   Note receivable - related party ............................................         378,111          386,132
   Prepaid expenses ...........................................................          45,667             --
                                                                                  -------------    -------------
      Total current assets ....................................................         893,010          386,132

   Equipment, net of accumulated depreciation of $8,708 .......................          21,097             --
   Idle property, plant and equipment held for use ............................       1,299,365             --

Other Assets:

   Construction in progress ...................................................         554,720             --
   Restricted cash ............................................................         468,935             --
   Deferred financing fees, net ...............................................            --               --
   Notes receivable, noncurrent ...............................................         525,000             --
                                                                                  -------------    -------------
      Total other assets ......................................................       1,548,655             --
                                                                                  -------------    -------------

TOTAL ASSETS ..................................................................   $   3,762,127    $     386,132
                                                                                  =============    =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:

   Accounts payable and accrued expenses ......................................   $   2,320,502    $     591,511
   Accrued interest ...........................................................         678,979          439,870
   Accrued interest - related party ...........................................          11,212             --
   Deferred grant revenue .....................................................          24,083             --
   Note payable ...............................................................       1,400,000             --
   Note payable - related party ...............................................         106,148             --
   Convertible debentures - related party .....................................         597,823             --
   Convertible debentures .....................................................       8,819,662        9,178,820
   Current maturities of long term debt .......................................         185,941             --
                                                                                  -------------    -------------
      Total current liabilities ...............................................      14,144,351       10,210,201

   Long term debt net of current maturities ...................................         952,272             --
                                                                                  -------------    -------------

      TOTAL LIABILITIES .......................................................      15,096,623       10,519,001
                                                                                  -------------    -------------


Preferred stock
Series C, par $0.001, 1,000,000 shares authorized, 805,767 issued
   and outstanding ............................................................             806              806
Common stock, par $0.001, 500,000,000 authorized
   187,938,551 and 127,279,405 issued and outstanding, respectively ...........         187,938          127,279
Additional paid-in capital ....................................................     123,738,904      128,559,537
Accumulated deficit ...........................................................    (135,262,144)    (138,511,691)
                                                                                  -------------    -------------
   Total stockholders' deficiency .............................................     (11,334,496)      (9,824,069)
                                                                                  -------------    -------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY ................................   $   3,762,127    $     386,132
                                                                                  =============    =============


              The notes to the financial statement are an integral
                           part of these statements.
</TABLE>
                                       5
<PAGE>

<TABLE>
                          CARBONICS CAPITAL CORPORATION
         [OBJECT OMITTED]CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2009 AND 2008
                                   (UNAUDITED)

<CAPTION>

                                                                      Three Months Ended                  Six Months Ended
                                                                              (Restated)                        (Restated)
                                                               6/30/09           6/30/08          6/30/09          6/30/08
                                                         -------------     -------------    -------------     ------------

<S>                                                       <C>              <C>              <C>              <C>
Revenue ...............................................   $     785,932    $   2,523,489    $   1,637,830    $   6,183,443
Cost of revenues ......................................         981,007        2,339,926        1,977,013        5,601,729
                                                          -------------    -------------    -------------    -------------
                                                               (195,075)         183,563         (339,184)         581,714

Operating expenses:
   General and administrative expenses ................         194,127          248,907          580,513          724,359
   Selling expenses ...................................          15,792            7,897           16,191           34,459
   Stock based compensation ...........................            --            200,000             --            245,000
                                                          -------------    -------------    -------------    -------------
     Total operating expenses .........................         209,919          456,804          596,704        1,003,818
                                                          -------------    -------------    -------------    -------------

Operating loss ........................................        (404,995)        (273,242)        (935,887)        (422,104)
                                                          -------------    -------------    -------------    -------------

Other income (expense):
   Interest income ....................................          28,042             --             28,134             --
   Interest income - related party ....................          49,315             --             49,315             --
   Other income/expense ...............................             200            1,906            1,707            9,556
   Loss on sale of equipment ..........................         (13,455)            --            (14,005)            --
   Grant income .......................................          (2,615)            --             59,563             --
   Amortization of deferred financing costs and
     debt discount ....................................            --               (250)         (46,712)            (500)
   Settlement expense .................................            --               --            (62,500)            --
Costs related to conversion features ..................        (342,032)            --           (342,032)            --
   Costs related to conversion features - related party        (372,138)            --
                                                                                                 (372,138)            --
   Change in fair value of  conversion features .......       5,183,296       (2,528,363)      5, 183,296       (2,528,363)
   Interest expense - related party ...................         (61,075)            --            (61,075)            --
   Interest expense ...................................        (133,474)        (135,890)        (238,119)        (287,325)
                                                          -------------    -------------    -------------    -------------
     Total other income (expense) .....................       4,336,064       (2,662,597)       4,185,434       (2,806,632)

Income (loss) before provision for income taxes .......       3,931,069       (2,935,839)       3,249,547       (3,228,735)

Provision/benefit for income taxes ....................            --               --               --               --
                                                          -------------    -------------    -------------    -------------

Net Income (Loss) .....................................   $   3,931,069    $  (2,935,839)   $   3,249,547    $  (3,228,735)
                                                          =============    =============    =============    =============

Earnings (loss) per share, basic ......................   $        0.02    $       (0.03)   $        0.02    $       (0.03)
                                                          =============    =============    =============    =============

Earnings (loss) per share, dilutive ...................   $        0.01    $       (0.03)   $        0.01    $       (0.03)
                                                          =============    =============    =============    =============
Weighted average share of common stock
   outstanding, basic .................................     154,423,038       95,802,303      140,586,425       95,802,303
                                                          =============    =============    =============    =============

Weighted average shares of common stock
     outstanding, dilutive ............................     500,000,000       95,802,303      500,000,000       95,802,303
                                                          =============    =============    =============    =============




             The notes to the condensed financial statements are an
                       integral part of these statements.

</TABLE>

                                       6


<PAGE>
                         CARBONICS CAPITAL CORPORATION
                       STATEMENTS OF STOCKHOLDERS' EQUITY
     FOR THE YEAR ENDED DECEMBER 31, 2008 AND SIX MONTHS ENDED JUNE 30, 2009

<TABLE>
<CAPTION>
                                                             Series C  Preferred Stock            Common Stock
                                                               Shares         Amount         Shares        Amount
                                                          -----------    ----------     -----------   ------------
<S>                                                       <C>        <C>              <C>         <C>
Balance, December 31, 2007 ............................       974,140    $       974      9,549,266   $     9,549
                                                          ===========    ===========    ===========   ===========

Issuance of common stock upon conversion of debt ......          --             --        9,730,140         9,730
Stock issued for services .............................          --             --        3,000,000         3,000
Stock issued for compensation .........................          --             --       10,000,000        10,000
Conversion of Series C Preferred into common stock ....      (168,373)          (168)    95,000,000        95,000
Forgiveness of affiliate debt .........................          --             --             --            --
Restatement-recapitalization from acquisition of entity
under common control ..................................          --             --             --            --
Net loss ..............................................          --             --             --            --
                                                          -----------    -----------    -----------   -----------

Balance, December 31, 2008 ............................       805,767    $       806    127,279,406   $   127,279
                                                          ===========    ===========    ===========   ===========

Issuance of common stock upon conversion of debt ......          --             --       60,659,145        60,659
Acquisition of entity under common control ............          --             --             --            --
Net income ............................................          --             --             --            --
                                                          -----------    -----------    -----------   -----------

Balance, June 30, 2009, Restated ......................       805,767    $       806    187,938,551   $   187,938
                                                          ===========    ===========    ===========   ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     Total
                                                             Additional      Accumulated     Stockholders'
                                                        Paid-In-Capital          Deficit           Equity
                                                          -------------    -------------    --------------
<S>                                                       <C>              <C>              <C>
Balance, December 31, 2007 ............................   $ 126,524,280    $(128,319,926)   $  (1,785,123)
                                                          =============    =============    =============

Issuance of common stock upon conversion of debt ......         109,770             --            119,500
Stock issued for services .............................          87,000             --             90,000
Stock issued for compensation .........................         190,000             --            200,000
Conversion of Series B Preferred into common stock ....         (94,832)            --               --
Forgiveness of affiliate debt .........................      (1,796,320)            --         (1,796,320)
Restatement-recapitalization from acquisition of entity
under common control ..................................       3,539,639       (3,539,639)            --
Net (loss) ............................................            --         (6,652,126)      (6,652,126)
                                                          -------------    -------------    -------------
Balance, December 31, 2008 ............................   $ 128,559,537    $(138,511,691)   $  (9,824,069)
                                                          =============    =============    =============

Issuance of common stock upon conversion of debt ......          17,235             --             77,894
Acquisition of entity under common control ............      (4,837,868)            --         (4,837,868)
Net income ............................................            --          3,249,547        3,249,547
                                                          -------------    -------------    -------------

Balance, June 30, 2009, Restated ......................   $ 123,738,904    $(135,262,144)   $ (11,334,496
                                                          =============    =============    =============



             The notes to the condensed financial statements are an
                       integral part of these statements.

</TABLE>






                                       7
<PAGE>

<TABLE>
                          CARBONICS CAPITAL CORPORATION
         [OBJECT OMITTED]CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                                   (UNAUDITED)
<CAPTION>
                                                                                    (RESTATED)
                                                                             Six Months Ended  Six Months Ended
                                                                                      6/30/09          6/30/08
                                                                                -------------    -------------
CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                               <C>            <C>
Net income from continuing operations .........................................   $ 3,249,547    $(3,228,735)

Adjustments to reconcile net income to net cash used
 in operating activities:
Depreciation and amortization .................................................        88,387           --
Inventory reserve .............................................................        72,027           --
Bad debt expense ..............................................................         3,766           --
Change in fair value of conversion liabilities ................................    (5,183,296)     2,528,363
Recognition and accretion of conversion liabilities ...........................       714,170           --
Accretion of interest income to note receivable principal .....................       (25,000)          --
Loss on sale of equipment .....................................................        14,005           --
Changes in Assets and Liabilities
   Accounts receivable ........................................................       (80,318)          --
   Inventory ..................................................................     1,344,119           --
Prepaid expenses ..............................................................        23,842           --
   Accounts payable and accrued expenses ......................................      (253,931)       130,880
   Accrued interest ...........................................................       138,103           --
   Deferred revenue ...........................................................       (83,242)          --
                                                                                  -----------    -----------
      Net cash provided by (used in) operating activities .....................        22,180       (569,492)
                                                                                  -----------    -----------
CASH FLOW FROM INVESTING ACTIVITIES

   Cash placed under restrictions .............................................      (261,751)          --
   Cash acquired from acquisition .............................................       266,605           --
   Proceeds from sale of equipment ............................................        50,000           --
   Proceeds from related party receivable .....................................         8,021           --
   Project development costs ..................................................          --             --
   Additions to and acquisition of property, plant and equipment ..............          (860)          --
                                                                                  -----------    -----------
      Net cash provided by investing activities ...............................        62,014           --
                                                                                  -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES

   Issuances (Repayments) of long-term debt ...................................        (8,006)       (66,203)
   Advances from related party ................................................        24,435        828,940
   Proceeds from convertible debenture ........................................          --           10,548
   Repayment of note receivable - related party ...............................          --         (200,000)
                                                                                  -----------    -----------
      Net cash provided by financing activities ...............................        16,429        573,285
                                                                                  -----------    -----------

   Net (decrease) increase in cash ............................................       100,623          3,793

   Cash at beginning of period ................................................          --           (3,793)
                                                                                  -----------    -----------

   Cash at end of period ......................................................   $   100,623    $      --
                                                                                  ===========    ===========

Supplemental statement of non-cash investing and financing activities:

Conversion of debentures ......................................................   $    40,368         30,300
Transfer of net assets to related party .......................................   $      --        2,203,653
Stock based compensation ......................................................   $      --          245,000
Increase in related party note due to expenses paid on behalf  of related party   $      --          477,407
Decrease in related party note due to expenses paid on behalf of related party    $      --           14,173
Forgiveness of amount owed to related party ...................................   $      --        2,000,000
Notes receivable for convertible debt .........................................   $   500,000           --
Debt conversions into common stock ............................................   $    37,526           --
Cancellation of accounts payable ..............................................   $   926,739           --
Assumption of accounts payable under convertible debt .........................   $   285,185           --

             The notes to the condensed financial statements are an
                       integral part of these statements.
</TABLE>

                                       8
<PAGE>



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  10Q  of  Regulation  S-X.  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 six months ended June 30, 2009 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 and notes contained in the Company's Annual Report on Form
10-K for the year ended December 31, 2008.

ACQUISITION

Sustainable Systems, Inc.

Effective  June  30,  2009,  GS  AgriFuels  Corporation  and  Carbonics  Capital
Corporation  entered into a Stock Purchase Agreement pursuant to which Carbonics
acquired 100% of the stock of Sustainable Systems,  Inc.  ("Culbertson") from GS
AgriFuels in return for  assumption of $4,000,000 of GS AgriFuels'  indebtedness
to YA Global  Investments,  L.P.  ("YAGI").  In connection  with this Agreement,
Carbonics  issued an amended  and  restated  convertible  debenture  to YAGI for
$4,000,000  due on December 31, 2011. The financial  results of this  subsidiary
are included in the combined  results of operations  for the three and six ended
June 30, 2009 in accordance with Statement on Financial Accounting Standards No.
141(R), Appendix D, for acquisitions of entities under common control.

2        NATURE OF OPERATIONS

Carbonics Capital Corporation ("we," "our," "us," "Carbonics," or the "Company")
was founded to recycle carbon dioxide into value-added products.

Our development  activities during 2009 have primarily involved  evaluation of a
number of  different  biological,  chemical and other  technologies  designed to
recycle  carbon  dioxide into  value-added  products.  Our  strategic  plan also
involves the  acquisition of accretive  assets and cash flows that are strategic
to our technology  development  efforts. We are currently evaluating a number of
qualified   opportunities   that  produce  the  raw  materials  needed  for  our
technologies, or that have the infrastructure we need to scale our technologies,
or that have the ability to refine the products we produce with our technologies
into finished goods. Our plan in this respect is to leverage the targeted assets
and cash flows to defray our technology  and financing risk as we  commercialize
our technologies.

3        GOING CONCERN

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. The Company had an accumulated deficit
of  ($135,262,145)  at June 30, 2009. As of June 30, 2009 the Company's  current
liabilities  exceeded  current  assets  by  $13,251,341.   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

The financial  statements for the periods ended June 30, 2009 and 2008 have been
consolidated to include the accounts of the Company and its subsidiaries.


                                       9
<PAGE>



USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities,  revenues,  expenses,  and disclosures of contingencies  during the
reporting period. Actual results could differ from management's estimates.

STOCK BASED COMPENSATION

The  Company  accounts  for stock and stock  options  issued  for  services  and
compensation to employees under SFAS 123(R). For non-employees,  the fair market
value of the Company's  stock on the date of stock issuance or  option/grant  is
used.  The Company  determines the fair market value of options issued under the
Black-Scholes  Pricing Model.  Under the provisions of SFAS 123(R),  share-based
compensation  cost is measured at the grant date, based on the fair value of the
award,  and is recognized as an expense over the  employee's  requisite  service
period (generally the vesting period of the equity grant).

FINANCIAL INSTRUMENTS

The Company accounted for the convertible debentures in accordance with SFAS No.
150, Accounting for Certain Financial  Instruments with  Characteristics of both
Liabilities  and Equity (SFAS 150), as the  conversion  feature  embedded in the
convertible  debentures  could result in the note principal and related  accrued
interest being converted to a variable number of the Company's common shares.

5        FINANCING ARRANGEMENTS
<TABLE>

The following is a summary of the Company's  financing  arrangements  as of June
30, 2009:
<CAPTION>

Current portion of notes payable and long term debt:                                    6/30/2009
                                                                                     ---------------
<S>                                                                                  <C>
Current portion of installment debt payable from Culbertson                          $     1,400,000
Mortgages and other term notes                                                               185,941
                                                                                     ---------------
     Total current portion of notes payable and long term debt                       $     1,585,941
                                                                                     ===============
Long-term debt, net of current maturities:
Notes payable from CICS to Montana Dept of Agriculture                               $       124,052
Notes payable from CICS to Great Northern Development                                        828,220
                                                                                     ---------------
         Total long term debt                                                        $       952,272
                                                                                     ===============
Current portion of convertible debentures:

Convertible debenture payable to YAGI issued October 2005                            $     1,205,814
Convertible debenture payable to YAGI issued June 2007                                       633,333
Convertible debenture payable to YAGI issued February 2006                                 2,113,134
Convertible debenture payable to YAGI issued June 2009                                     4,000,000
Convertible debenture payable to Minority Interest Fund (II), LLC                            597,823
Convertible debenture payable to RAKJ issued April 2009                                       77,941
Convertible debenture payable to Blackfield issued April 2009                                789,440
                                                                                     ===============
     Total current convertible debentures                                            $     9,417,485
                                                                                     ===============
</TABLE>

CONVERTIBLE DEBENTURES

As of June 30, 2009, the Company had convertible  debentures payable to Minority
Interest Fund (II), LLC ("MIF") in an aggregate  amount of $1,225,685  (the "MIF
Debentures").  The MIF Debentures  include $223,185 in debt due to various third
parties that was assumed by MIF on April 1, 2009,  $62,500 assumed by MIF on May
5, 2009,  less $60,000  assigned to RAKJ  Holdings,  Inc.  (see below).  The MIF
Debentures also include an additional  debenture  issued on April 1, 2009 in the
amount of  $1,000,000  (the "MIF  Debenture")  in return for a  promissory  note
issued by MIF to the Company in the amount of $1,000,000  (the "MIF Note").  The
MIF Note bears  interest at the rate of 20% per year and matures on December 31,
2010. The MIF  Debentures  bear interest at a rate of 20% per year and mature on

                                       10
<PAGE>

December 31, 2010. MIF is entitled to convert the accrued interest and principal
of  $225,685of  the  MIF  Debentures  into  common  stock  of the  Company  at a
conversion  price of $0.001 per share,  and the remaining  $1,000,000 of the MIF
Debentures  at a rate equal to 60% of the lowest  closing  market  price for the
Company's common stock for the twenty trading days preceding conversion. The MIF
Note has been  recorded  net of the MIF  Debenture as of June 30, 2009 given the
presumed right of offset accorded to related  parties.  The interest  receivable
due under the MIF Note has also been  presented net of the interest  payable due
under the MIF Debenture.  The Company  determined the value of the MIF Debenture
at April 1,  2009 to be  $1,362,732,  which  represented  the face  value of the
debenture  plus the present value of the conversion  feature.  The liability for
the conversion  feature shall be increased from its present value of $362,732 at
April 1, 2009 to its  estimated  settlement  amount of $428,571 at December  31,
2010.  As of June 30, 2009,  an expense of $9,406 has been  recorded as interest
expense for the  accretion  of the  discount on the  convertible  note  payable,
thereby  increasing  the carrying value of the MIF Debenture to $372,138 at June
30,  2009.  On May 7, 2009,  $60,000 of the  principal  amount due under the MIF
Debentures was assigned to RAKJ Holdings,  Inc. (see below).  For the six months
ended June 30, 2009,  interest income of $49,315 and interest expense of $61,075
for the MIF Debentures  were incurred.  The managing member of MIF is a relative
of the Company's chairman.

On  April  1,  2009,  the  Company  issued  Blackfield,   LLC  ("Blackfield")  a
convertible debenture in the amount of $500,000 (the "Blackfield  Debenture") in
return for a promissory  note issued by  Blackfield to the Company in the amount
of $500,000 (the "Blackfield  Note").  The Blackfield Note bears interest at the
rate of 20% per year and matures on December 31, 2010. The balance due under the
Blackfield  Note at June  30,  2009 was  $500,000  and the  interest  receivable
balance was $25,000.  The principal and accrued interest for the Blackfield Note
and Blackfield  Debenture have been presented as of June 30, 2009, at their face
value,  without  offset.  The  Company  issued  no  shares  of  common  stock to
Blackfield  upon the  conversion of debt during the quarter ended June 30, 2009.
The  Blackfield  Debenture is  convertible  into Company  common stock at a rate
equal to 60% of the lowest closing  market price for the Company's  common stock
for the twenty trading days  preceding  conversion.  The Company  determined the
value  of the  Blackfield  Debenture  at  April  1,  2009 to be  $782,125  which
represented  the face  value of the  debenture  plus  the  present  value of the
conversion feature.  The liability for the conversion feature shall be increased
from its present value of $282,125 at April 1, 2009 to its estimated  settlement
amount of $333,333 at December  31,  2010.  As of June 30,  2009,  an expense of
$7,315 has been  recorded as interest  expense for the accretion of the discount
on the convertible  note payable,  thereby  increasing the carrying value of the
Blackfield Debenture to $789,440 at June 30, 2009. For the six months ended June
30, 2009,  interest  income of $25,000 and interest  expenses of $24,932 for the
Blackfield Debentures were incurred.

The balance of convertible debt due to RAKJ Holdings,  Inc.  ("RAKJ") as of June
30, 2009 was $77,941  (the "RAKJ  Debenture").  The  Company  issued  24,759,146
shares of common stock to RAKJ,  upon the  conversion  of $18,500 in debt during
the quarter ended June 30, 2009. The RAKJ Debenture is convertible  into Company
common stock at a rate equal to 50% of the lowest  closing  market price for the
Company's  common stock for the twenty  trading days preceding  conversion.  The
Company  determined  the  value of the  RAKJ  Debenture  at April 1,  2009 to be
$110,782  which  represented  the face value of the  debenture  plus the present
value of the conversion feature.  The liability for the conversion feature shall
be increased from its present value of $50,782 at April 1, 2009 to its estimated
settlement  amount of $120,000 at December  31, 2010.  As of June 30,  2009,  an
expense of $1,317 has been recorded as interest expense for the accretion of the
discount on the convertible note payable, thereby, increasing the carrying value
of the RAKJ Debenture.  Conversely,  the carrying value was decreased during the
period for the conversions  into common stock. For the six months ended June 30,
2009 interest expenses of $2,518 for the RAKJ Debenture were incurred.

The Company  accounted for each of the MIF Debenture,  the Blackfield  Debenture
and the RAKJ Debenture in accordance  with SFAS No. 150,  Accounting for Certain
Financial  Instruments with Characteristics of both Liabilities and Equity (SFAS
150), as the conversion  feature  embedded in each debenture could result in the
note  principal  being  converted to a variable  number of the Company's  common
shares.

On August 14, 2008, the Company and YA Global Investments,  L.P. ("YAGI") agreed
to extend the maturity  date of the  following  secured  convertible  debentures
previously  issued  to YAGI to  December  31,  2011:  that  certain  convertible
debenture dated October 12, 2005 in the original principal amount of $1,475,000;
that  certain  convertible  debenture  dated  February  8, 2006 in the  original
principal amount of $3,050,369;  and, that certain  convertible  debenture dated
June 26, 2007 in the original principal amount of $570,000.  The current balance
due against these  debentures was $2,268,608 as of June 30, 2009. Each debenture
provides 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.

Effective June 30, 2009, the Company and GS AgriFuels Corporation entered into a
Stock  Purchase  Agreement  pursuant to which the Company  acquired  100% of the
stock of Sustainable  Systems,  Inc.  ("Culbertson") from GS AgriFuels in return
for  assumption  of  $4,000,000  of GS  AgriFuels'  indebtedness  to  YA  Global
Investments,  L.P.  ("YAGI").  In connection  with this  Agreement,  the Company
issued an amended and restated convertible  debenture to YAGI for $4,000,000 due
on December 31, 2011. This debenture  provides for interest in the amount of 12%
per annum and is  convertible  at the  lesser of the fixed  conversion  price of
$0.01 or 90% of the lowest daily volume  weighted  average  price of  Carbonics'
common stock during the 20 trading days  immediately  preceding  the  conversion
date.

                                       11
<PAGE>

The  Company  accounted  for  the  YAGI  Debenture  dated  October  12,  2005 in
accordance with SFAS No. 150, Accounting for Certain Financial  Instruments with
Characteristics  of both  Liabilities  and Equity (SFAS 150), as the  conversion
feature  embedded in the YAGI Debenture could result in the note principal being
converted to a variable  number of the  Company's  common  shares.  The carrying
amount of the debenture has been restated for the prior year (please see Note 10
Restatement of Prior Years Financials,  below). The Company determined the value
of the YAGI  Debenture at December 31, 2008 to be $3,014,535  which  represented
the  face  value  of the  debenture  plus the  present  value of the  $2,411,628
conversion  feature. As of June 30, 2009, income of $1,808,721 has been recorded
from a reduction in the fair value of the conversion  feature on the convertible
note payable,  thereby,  decreasing  the carrying value of the YAGI Debenture to
$1,205,814 at June 30, 2009.

The  Company  accounted  for  the  YAGI  Debenture  dated  February  8,  2006 in
accordance with SFAS No. 150, Accounting for Certain Financial  Instruments with
Characteristics  of both  Liabilities  and Equity (SFAS 150), as the  conversion
feature  embedded in the YAGI Debenture could result in the note principal being
converted to a variable  number of the  Company's  common  shares.  The carrying
amount of the debenture has been restated for the prior year (please see Note 10
Restatement of Prior Years Financials,  below). The Company determined the value
of the YAGI  Debenture at December 31, 2008 to be $5,587,845  which  represented
the  face  value  of the  debenture  plus the  present  value of the  $4,470,276
conversion  feature. As of June 30, 2009, income of $3,374,575 has been recorded
from a reduction in the fair value of the conversion  feature on the convertible
note payable,  thereby,  decreasing  the carrying value of the YAGI Debenture to
$2,113,134 at June 30, 2009.

The  Company  accounted  for  the  YAGI  Debenture  dated  October  12,  2005 in
accordance with SFAS No. 150, Accounting for Certain Financial  Instruments with
Characteristics  of both  Liabilities  and Equity (SFAS 150), as the  conversion
feature  embedded in the YAGI Debenture could result in the note principal being
converted to a variable  number of the  Company's  common  shares.  The carrying
amount of the debenture has been restated for the prior year (please see Note 10
Restatement of Prior Years Financials,  below). The Company determined the value
of the YAGI Debenture at December 31, 2008 to be $632,840 which  represented the
face value of the  debenture  plus the present  value of the $62,840  conversion
feature.  As of June 30, 2009,  an expense of $493 has been recorded as interest
expense for the  accretion  of the  discount on the  convertible  note  payable,
thereby, increasing the carrying value of the YAGI Debenture to $633,333 at June
30, 2009.

NOTES PAYABLE

Secured Promissory Note

In December  2008,  Sustainable  Systems  ("Culbertson")  and Anchor  Light,  LP
entered into a Secured  Promissory  Note in the amount of $1,400,000.  Under the
agreement,  the Anchor Light note accrues interest at a rate of 13.5% per annum.
Monthly  payments  consist of all accrued  interest on the unpaid balance with a
final balloon payment plus any accrued unpaid interest due when the note matures
on  December  4, 2009.  This note is secured by an interest in all the assets of
Culbertson including the accounts receivable.  For the six months ended June 30,
2009,  interest  expense of $47,775 was accrued.  As of June 30, 2009, the total
principal  balance on this note was $1,400,000.  While the regular  payments due
under the Anchor  Light note were  fully  paid as of June 30,  2009,  the Anchor
Light note was in default as of that date due to the inventory  liquidation (see
Note 7, Commitment and  Contingencies,  below). The Company is currently engaged
in discussions with Anchor Light relative to the restructuring of this note.

Term Notes

Culbertson  has various notes  payable with two other  lenders.  Culbertson  has
signed three notes payable with the Montana  Department of Agriculture  totaling
$124,052. These notes were issued by the Montana Agriculture Development Council
under Return On Investment Agreements,  numbers 0250714, 0350764, and 0450785. A
return on  investment  (ROI)  pursuant to these  agreements is an award of money
with the  expectation  that all or a part of the money  will be  repaid  after a
deferral period. No payments are required, and no interest is accrued during the
initial time period.  After the deferral period,  the award recipient repays the
investment  plus  interest over a remaining  period (up to seven  years).  As of
December 31, 2005,  all three notes were in the  deferral  period with  expected
deferral of interest and payments until February 2006. The deferral periods were
subsequently  extended  and the  notes  were  further  modified  with  regard to
interest  and  subordination.  ROI note  number  0450785 is secured by a lien on
specific equipment including pumps, blending vessels, storage bins and a solvent
recovery  system.  All notes accrue  interest at the rate of 3.2% per annum with
payments  of  principal  and  interest  beginning  March 6, 2011.  The notes are
secured by an interest in various equipment including eleven pumps and a solvent
recovery  system.  For the six months ended June 30, 2009,  interest  expense of
$1,035 for these obligations was incurred and accrued.

                                       12
<PAGE>

Culbertson has signed four notes with Great Northern  Development.  Three of the
notes totaling  $393,780 at June 30, 2009 accrue  interest at the rate of 6% per
annum. The payment terms for the notes are as follows:  the $10,206 and $116,599
notes are to be paid off with 180 monthly payments  beginning  December 15, 2005
with a maturity  date of November 15, 2020 and the  $266,975  note is to be paid
off with 120 monthly  payments  beginning March 15, 2006 with a maturity date of
January 15,  2016;  the monthly  payments on this note are $1,800 per month from
April  2007 to March  2008 and  then  $3,300  thereafter.  The  fourth  note for
$615,781 (as of June 30, 2009) accrues interest at the rate of 5% per annum with
payments of principal  only through  November  2007 and  principal  and interest
payments until the maturity date of November 15, 2010;  the monthly  payments on
this note are $7,500 during 2007,  $10,000  during 2008;  $5,000 during 2009 and
$17,302 thereafter.  For the six months ended June 30, 2009, interest expense of
$13,567 for these obligations was incurred. The principal balance of these notes
at June 30, 2009 was $1,009,561.

6        RELATED PARTY TRANSACTIONS

Effective June 30, 2009, the Company and GS AgriFuels Corporation entered into a
Stock  Purchase  Agreement  pursuant to which the Company  acquired  100% of the
stock of Sustainable  Systems,  Inc.  ("Culbertson") from GS AgriFuels in return
for  assumption  of  $4,000,000  of GS  AgriFuels'  indebtedness  to  YA  Global
Investments,   L.P.  ("YAGI").  GS  AgriFuels  is  a  subsidiary  of  GreenShift
Corporation,   which  company  is  majority  owned  by  the  Company's  majority
shareholder, Viridis Capital, LLC.

Minority  Interest  Fund  (II),  LLC  ("MIF")  is party to  certain  convertible
debentures  issued by the Company (see Note 5, Convertible  Debentures,  above).
The managing member of MIF is a relative of the Company's chairman.

7        COMMITMENTS AND CONTINGENCIES

On May 4, 2009, the Superior Court of the State of California  entered a default
against the Company in the amount of $62,500.  Golden  State  Equity  Investors,
Inc. alleged claims against the Company in which they asserted a cause of action
for breach of contract regarding a Settlement  Agreement dated July 9, 2008. The
Company has recorded this default amount effective January 1, 2009.

The Company's  Culbertson oilseed processing  facility did not receive a line of
credit for 2008 crop purchases,  voluntarily  surrendered its commodity  dealers
license and, on April 27, 2009,  entered  into a settlement  agreement  with the
states of Montana and North Dakota  pertaining to  outstanding  payments due for
purchase of oilseeds  during 2008 that were contracted at rates far greater than
current oilseed values.  Culbertson had previously  negotiated with two separate
banks  to  receive  working  capital  financing   sufficient  to  service  these
obligations.  Neither  bank was able to close due to  strain  in the  prevailing
commodity and financial markets. Culbertson has accordingly idled its operations
pending  liquidation by the Montana  Department of  Agriculture of  Culbertson's
inventories  to  satisfy  the  oilseed  payables.  Culbertson  is  permitted  to
reacquire  its  commodity  license upon the  completion  of  sufficient  working
capital  and equity  financing  to  operate.  The  liquidation  of  Culbertson's
inventory  is ongoing and is expected  to be complete  during the third  quarter
2009.  Approximately  $1,216,136  was due to growers who had delivered  seed, of
which amount $950,723 had been paid as of July 17, 2009.

On June 26, 2009, the Company  appointed Paul T. Miller,  PhD to the position of
president and chief executive officer.

8        ACQUISITION

The Company  follows  Appendix D of SFAS No.  141(R),  "Business  Combinations."
Effective June 30, 2009, the Company and GS AgriFuels Corporation entered into a
Stock  Purchase  Agreement  pursuant to which the Company  acquired  100% of the
stock of Sustainable  Systems,  Inc.  ("Culbertson") from GS AgriFuels in return
for  assumption  of  $4,000,000  of GS  AgriFuels'  indebtedness  to  YA  Global
Investments,   L.P.  ("YAGI").  GS  AgriFuels  is  a  subsidiary  of  GreenShift
Corporation,   which  company  is  majority  owned  by  the  Company's  majority
shareholder, Viridis Capital, LLC.

9        SUBSEQUENT EVENTS

On July 24, 2009, the Company and GS CleanTech Corporation entered into an Early
Adopter  License   Agreement  (the  "EALA")  involving  use  of  GS  CleanTech's
bioreactor and related technologies. The EALA calls for the payment of royalties
to GS CleanTech  equal to 10% of the Company's  pre-tax net income deriving from
the use of GS CleanTech's feedstock conditioning technologies, lipid production,
extraction and refining technologies, and carbon dioxide mitigation technologies
in  select  municipal  and  industrial   applications,   not  including  ethanol
production.  The EALA additionally  provides for reciprocal license rights to GS
CleanTech  such that GS  CleanTech  shall  have the  exclusive  right to use any
technology  acquired by Carbonics  (not including the licensed  technologies  or
technologies  developed from the licensed technologies under the EALA). The EALA
is  non-exclusive  but the Company has been granted most favored licensee status

                                       13
<PAGE>

in the EALA.  This status shall be subject to cancellation in the event that the
Company  fails to  commercialize  the  licensed  technologies  on the  following
schedule:  bench testing shall be completed on or before the second  anniversary
of the EALA; pilot testing shall be completed on or before the third anniversary
of the EALA; a  commercial-scale  pilot facility shall be built on or before the
fourth anniversary of the EALA; and,  commercial sales shall have been initiated
on or before the fifth anniversary of the EALA. The Company shall provide all of
the  capital  resources  needed  to build  bench,  pilot  and  commercial  scale
facilities  based on these  technologies  under  the  EALA.  GS  CleanTech  is a
wholly-owned  subsidiary  of GreenShift  Corporation,  which company is majority
owned by our majority shareholder, Viridis Capital, LLC.

On August 18, 2009, Viridis Capital,  LLC, the Company's  majority  shareholder,
converted 52,893 shares of the Company's Series C Preferred Stock (the "Series C
Shares") in return for 215,000,000 Company common shares.

10       RESTATEMENTS

The Company has restated its financial  statements  for the year ended  December
31, 2008.  During  preparation of this report,  Management  determined  that the
Company's  prior  policies  relating to accounting  for the impact of conversion
features  embedded in the  Company's  various  derivative  securities  should be
revised to be consistent with recent guidance  involving the  interpretation  of
SFAS No. 150, Accounting for Certain Financial  Instruments with Characteristics
of both  Liabilities  and Equity (SFAS 150),  due to the variable  number of the
Company's  common  shares  issuable upon  conversion  of the  company's  various
derivative  securities.   Accordingly,   Management  reviewed  and  revised  its
conclusions regarding the Company's derivative instruments at December 31, 2008.

The Company has restated its financial  statements for the six months ended June
30, 2009.  The Company and GS  AgriFuels  had  previously  intended to effect an
assignment of GS AgriFuels' note payable and convertible  debenture  obligations
and related accrued interest that may be due (the "Purchase  Obligations")  from
GS AgriFuels to certain selling shareholders (the "Selling Shareholders") of the
Company's Sustainable Systems, Inc. subsidiary ("Culbertson").  GS AgriFuels did
not receive the consent of the Selling  Shareholders  to the  assignment  of the
Purchase  Obligations  to  the  Company,  which  was  required  pursuant  to the
agreement  between GS  AgriFuels  and the Selling  Shareholders.  Therefore,  GS
AgriFuels  was not  permitted  to  assign  the  relevant  debt  to the  Company.
Accordingly,  this debt and related accrued  interest have been removed from the
Company's  balance  sheet  presented in this filing and have been returned to GS
AgriFuels.

The following shows the effect of the restatements on the financial statements:
<TABLE>
<CAPTION>
                                                                         6/30/09        6/30/09
Balance Sheets:                                                       As reported    As restated
                                                                      --------------------------
<S>                                                                  <C>            <C>
Accrued interest payable .........................................   $  1,238,433   $    678,979
Notes payable ....................................................      2,417,451      1,400,000
Convertible debentures ...........................................     12,623,949      8,819,662
Additional paid-in capital .......................................    118,357,712    123,738,904

                                                                         12/31/08       12/31/08
                                                                      As reported    As restated
                                                                      --------------------------
Total liabilities ................................................   $  1,238,433   $    678,979
Total equity .....................................................      2,603,392      1,585,941
</TABLE>
<TABLE>
<CAPTION>
                                                       Three months ended 6/30/08       Six month ended 6/30/08
Statements of Operations:                             As reported     As restated    As reported    As restated
                                                     ------------    ------------   ------------  -------------

<S>                                                   <C>           <C>             <C>           <C>
Total other income (expense)......................... $ (755,851)   $ (2,662,597)   $   621,572   $ (2,806,632)
Net income (loss) ................................... $ (962,916)   $ (2,935,839)   $   227,661   $ (3,228,735)
Earnings (loss) per share ........................... $    (0.01)   $      (0.03)   $      --     $      (0.03)
</TABLE>

<TABLE>
<CAPTION>
                                                           6/30/09         6/30/09
Statements of Stockholders' Equity:                    As reported     As restated
                                                       ---------------------------
<S>                                                  <C>               <C>
Acquisition of entity under common control           (10,219,060)      (4,837,868)
</TABLE>
                                       14

<PAGE>



ITEM 2    MANAGEMENT DISCUSSION AND ANALYSIS

Carbonics Capital Corporation ("we," "our," "us," "Carbonics," or the "Company")
was founded to recycle carbon dioxide into value-added products.

Our development  activities during 2009 have primarily involved  evaluation of a
number of  different  biological,  chemical and other  technologies  designed to
recycle  carbon  dioxide into  value-added  products.  Our  strategic  plan also
involves the  acquisition of accretive  assets and cash flows that are strategic
to our technology  development  efforts. We are currently evaluating a number of
qualified   opportunities   that  produce  the  raw  materials  needed  for  our
technologies, or that have the infrastructure we need to scale our technologies,
or that have the ability to refine the products we produce with our technologies
into finished goods. Our plan in this respect is to leverage the targeted assets
and cash flows to defray our technology  and financing risk as we  commercialize
our technologies.

Our primary  objective for the balance of 2009 is to complete  sufficient equity
financing to properly capitalize our planned development activities.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

Revenues

Total  revenues  for the three  months  ended  June 30,  2009 were  $785,932  as
compared to the three months  ended June 30, 2008  revenues of  $2,523,489.  All
revenue  for the three  months  ended June 30, 2009 and 2008  resulted  from the
Company's oilseed crush facility.

Cost of Revenues

Cost of revenues for the three months ended June 30, 2009 were $981,007 compared
to $2,339,926  for the same period in 2008.  All cost of revenues  resulted from
the Company's oilseed crush facility.

General and Administrative Expenses Operating Expenses

General and administrative  expenses during the three months ended June 30, 2009
totaled $209,919 with $0 related to stock based compensation.  In the comparable
period of the prior year, general and  administrative  expenses totaled $456,804
with $200,000 related to stock based  compensation.  General and  administrative
expenses  during the three  months  ended June 30, 2009  primarily  consisted of
legal fees and office related expenses and expenses resulting from the Company's
oilseed crush facility.

Interest Expense

Interest  expenses for the three  months  ended June 30, 2009 were  $908,719 and
$135,890 for the three months ended June 30, 2008.  Included in the three months
ended June 30, 2009 was $194,548 of interest expense,  consisting of $133,473 in
accrued  interest,  $61,075  in accrued  interest  due to a related  party,  and
$714,170 in non-cash expenses  associated with the conversion  features embedded
in the  convertible  debentures  issued by the Company  during the three  months
ended June 30, 2009. Amortization of note discount was $0 and $250, respectively
for the three months ended June 30, 2009 and 2008.

Gain Associated with Change in Convertible Liabilities

As of June 30, 2009, Carbonics Capital had several convertible debentures due to
YA Global Investments,  LP. The Company accounted for the convertible debentures
in accordance with SFAS No. 150,  Accounting for Certain  Financial  Instruments
with  Characteristics  of  both  Liabilities  and  Equity  (SFAS  150),  as  the
conversion  feature  embedded in the convertible  debentures could result in the
note principal and related accrued interest being converted to a variable number
of the Company's  common  shares.  We calculate the fair value of the conversion
feature  at the time of  issuance  and  record a  conversion  liability  for the
calculated  value. We recognize  interest  expense for the conversion  liability
which is added to the principal of the  debenture.  We also  recognize  interest
expense for accretion of the conversion liability over the term of the note. For
the three  months  ended June 30, 2009 and 2008,  we  recognized  a gain for the
change in fair value of the  conversion  liability of  $5,183,296  and a loss of
$2,528,363 for these debentures.

Net Income

Net income  (loss) for the three  months ended June 30, 2009 was  $3,931,069  as
compared to a net loss of $2,935,839 from the same period in 2008.

                                       15
<PAGE>

Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008

Revenues

Total  revenues  for the six  months  ended  June 30,  2009 were  $1,637,830  as
compared to the six months ended June 30, 2008 revenues of  $6,183,443.  Revenue
for the six months  ended June 30,  2009 and 2008  resulted  from the  Company's
oilseed crush facility.

Cost of Revenues

Cost of  revenues  for the three  months  ended  June 30,  2009 were  $1,977,013
compared to $5,601,729  for the same period in 2008.  Cost of revenues  resulted
from the Company's oilseed crush facility, which was acquired on June 30, 2009.

General and Administrative Expenses Operating Expenses

General and  administrative  expenses  during the six months ended June 30, 2009
totaled $596,704 with $0 related to stock based compensation.  In the comparable
period of the prior year, general and administrative expenses totaled $1,003,818
with $245,000 related to stock based  compensation.  General and  administrative
expenses during the six months ended June 30, 2009 primarily  consisted of legal
fees and office  related  expenses and  expenses  resulting  from the  Company's
oilseed crush facility.

Interest Expense

Interest  expense  for the six months  ended June 30,  2009 was  $1,013,364  and
$287,325 for the same period in 2008.  Included in the six months ended June 30,
2009 was  $299,194  of  interest  expense,  consisting  of  $238,119  in accrued
interest,  $61,075  accrued  interest  due to a related  party,  and  714,170 in
non-cash  expenses  associated  with the  conversion  features  embedded  in the
convertible  debentures  issued by the Company  during the six months ended June
30, 2009.  Amortization of note discount was $46,712 and $500,  respectively for
the six months ended June 30, 2009 and 2008.

Gain Associated with Change in Convertible Liabilities

As of June 30, 2009, Carbonics Capital had several convertible debentures due to
YA Global Investments,  LP. The Company accounted for the convertible debentures
in accordance with SFAS No. 150,  Accounting for Certain  Financial  Instruments
with  Characteristics  of  both  Liabilities  and  Equity  (SFAS  150),  as  the
conversion  feature  embedded in the convertible  debentures could result in the
note principal and related accrued interest being converted to a variable number
of the Company's  common  shares.  We calculate the fair value of the conversion
feature  at the time of  issuance  and  record a  conversion  liability  for the
calculated  value. We recognize  interest  expense for the conversion  liability
which is added to the principal of the  debenture.  We also  recognize  interest
expense for accretion of the conversion liability over the term of the note. For
the six months ended June 30, 2009 and 2008, we recognized a gain for the change
in fair value of the conversion liability of $5,413,828 and a loss of $2,528,363
for these debentures.

Net Income

Net income for the six months ended June 30, 2009 was  $3,249,547 as compared to
a net loss of $3,228,735 from the same period in 2008.

Liquidity and Capital Resources

The Company had  $14,144,351  in current  liabilities  at June 30, 2009, and may
need to obtain additional financing to satisfy these obligations.

Our primary sources of liquidity are cash provided by and financing  activities.
For the six months  ended June 30,  2009,  net cash  provided  in our  operating
activities was $22,180 as compared to $569,492 used in the six months ended June
30, 2008. 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 2009 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.

                                       16

<PAGE>

Cash Flows

Our  operating  activities  during the six months  ended June 30, 2009  provided
$22,180 in cash. At June 30, 2009, accounts payable and accrued expenses totaled
$2,320,503.  At June 30,  2009,  the Company had  $100,623 in cash.  For the six
months ended June 30, 2009,  investing  activities provided $62,014 in cash, and
cash from  financing  activities  provided  $16,429.  The  Company had a working
capital  deficit of  $13,251,341 at June 30, 2009,  which  includes  convertible
debentures of $8,819,662.

At the  present  time,  Carbonics  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.















                                       17

<PAGE>


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.

In the course of making our  assessment of the  effectiveness  of our disclosure
controls and  procedures,  we  identified  a material  weakness.  This  material
weakness consisted of inadequate staffing and supervision within the bookkeeping
and accounting operations of our company. The lack of employees prevents us from
segregating  disclosure  duties.  The  inadequate  segregation  of  duties  is a
weakness because it could lead to the untimely  identification and resolution of
accounting and  disclosure  matters or could lead to a failure to perform timely
and  effective  reviews.  Based on the  results  of this  assessment,  our Chief
Executive  Officer and our Chief Financial Officer concluded that because of the
above condition, our disclosure controls and procedures were not effective as of
the end of the period covered by this report.

There have been no changes in the  Company's  internal  control  over  financial
reporting during the most recently completed fiscal quarter that have materially
affected or are reasonably  likely to materially  affect the Company's  internal
control over financial reporting.





















                                       18
<PAGE>



PART II

                                OTHER INFORMATION


ITEM 1   LEGAL PROCEEDINGS

The Company's Culbertson subsidiary is party to the matter entitled GS AgriFuels
Corporation v. Chaykin,  et al. The action was filed in the Supreme Court of the
State of New York,  County of New York, on February 2, 2009. The Complaint seeks
damages for defendants'  fraudulent  misrepresentations,  tortious interference,
breach of acquisition  agreements  and related  claims.  The defendants  filed a
separate  action  entitled  Max et al. v. GS  AgriFuels  Corporation,  et al. in
response to the Complaint.  The case was only recently  commenced and Management
is unable to evaluate the  probability of an  unfavorable  outcome at this time.
Accordingly,  an  estimate  of  loss  cannot  be  determined  at this  time  and
therefore, no accrual has been made in connection with this contingency.

ITEM 1A  RISK FACTORS

Not  Applicable.

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.


                                       19
<PAGE>



                                   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/      PAUL T. MILLER
                -----------------------
By:                      PAUL T. MILLER
                         President and Chief Executive Officer

Date:                    August 19, 2009

                /S/      JACQUELINE FLYNN
                -------------------------
By:                      JAQUELINE FLYNN
                         Chief Financial Officer

Date:                    August 19, 2009