------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                                    FORM 10-Q
                            -------------------------



                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL QUARTER ENDED MARCH 31, 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  May 19, 2009 was
148,689,737.

<PAGE>


<TABLE>


                          CARBONICS CAPITAL CORPORATION
                          QUARTERLY REPORT ON FORM 10Q
                   FOR THE FISCAL QUARTER ENDED MARCH 31, 2009

                                TABLE OF CONTENTS


<CAPTION>


                                                                                                           Page No
Part I            Financial Information

<S>               <C>                                                                                           <C>
Item 1.           Financial Statements ..........................................................................3
                  Condensed Consolidated Balance Sheet - March 31, 2009 (unaudited)
                    and December 31, 2008 (audited)............................................................. 4
                  Condensed Consolidated Statements of Operations - for the Three Months
                    Ended March 31, 2009 (unaudited) and 2008 (unaudited)........................................5
                  Statement of Stockholders' Equity - December 31, 2008 and Three Months Ended
                    March 31, 2009...............................................................................6
                  Condensed Consolidated Statements of Cash Flows - for the Three Months Ended
                    March 31, 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>







                                       2
<PAGE>





                                     PART I


ITEM 1            FINANCIAL STATEMENTS










































                                       3
<PAGE>


<TABLE>


                          CARBONICS CAPITAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
             AS OF MARCH 31, 2009 (UNAUDITED) AND DECEMBER 31, 2008


<CAPTION>
                                                                                            3/31/2009       12/31/2008
                                                                                        ------------------------------
ASSETS
Current Assets:
<S>                                                                                     <C>              <C>
   Cash .............................................................................   $      62,247    $        --
   Note receivable - related party ..................................................         320,691          386,132
                                                                                        -------------    -------------
      Total current assets ..........................................................         382,938          386,132


TOTAL ASSETS ........................................................................   $     382,938    $     386,132
                                                                                        =============    =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:

   Accounts payable and accrued expenses ............................................   $     672,698    $     591,511
   Accrued interest .................................................................         477,948          439,870
   Convertible debentures, net of discount ..........................................       2,049,074        2,006,387
   Derivative liability .............................................................       4,650,932       10,310,380
                                                                                        -------------    -------------
      Total current liabilities .....................................................       7,850,652       13,348,148

   TOTAL LIABILITIES ................................................................       7,850,652       13,348,148
                                                                                        -------------    -------------

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
   133,179,405 and 127,279,405 issued and outstanding, respectively .................         133,179          127,279
Additional paid-in capital ..........................................................     124,962,259      124,963,498
Accumulated deficit .................................................................    (132,563,958)    (138,053,599)
                                                                                        -------------    -------------
   Total stockholders' deficiency ...................................................      (7,467,714)     (12,962,016)
                                                                                        -------------    -------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY ......................................   $     382,938    $     386,132
                                                                                        =============    =============


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

</TABLE>






                                       4
<PAGE>


<TABLE>

                          CARBONICS CAPITAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2009 AND 2008
                                   (UNAUDITED)

<CAPTION>
                                                  Three Months Ended   Three Months Ended
                                                             3/31/09              3/31/08
                                                   --------------------------------------

<S>                                                <C>                  <C>
Revenue ........................................   $            --      $            --
                                                   -----------------    -----------------
Operating expenses:
    General and administrative expenses ........              21,882               96,846
     Stock based compensation ..................                --                 90,000
                                                   -----------------    -----------------
      Total operating expenses .................              21,882              186,846
                                                   -----------------    -----------------

Operating loss .................................             (21,882)            (186,846)
                                                   -----------------    -----------------

Other income (expense):
    Gain on fair value of derivative instruments           5,659,448            1,567,573
    Amortization of deferred financing costs and
      debt discount ............................             (47,348)            (152,720)
    Settlement expense .........................             (62,500)                --
    Interest expense ...........................             (38,077)             (37,429)
                                                   -----------------    -----------------
      Total other income (expense) .............           5,511,523            1,377,424

Net income before provision for income taxes ...           5,489,641            1,190,578

Provision for income taxes .....................                --                   --

Net Income .....................................   $       5,489,641    $       1,190,578
                                                   =================    =================

Common share, basic and diluted
income per share from continuing operations ....   $            0.04    $            0.12

Common share, basic and diluted
income per share ...............................   $            0.04    $            0.12
                                                   =================    =================

Weighted average share of common stock
    outstanding, basic and diluted .............         127,607,259            9,937,290
                                                   =================    =================




            The notes to the Consolidated Financial Statement are an
                       integral part of these statements.


</TABLE>







                                       5


<PAGE>
<TABLE>

                          CARBONICS CAPITAL CORPORATION
                       STATEMENTS OF STOCKHOLDERS' EQUITY
   FOR THE YEAR ENDED DECEMBER 31, 2008 AND THREE MONTHS ENDED MARCH 31, 2009


<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          9730
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 ....................          --             --             --            --
Net loss .........................................          --             --             --            --
                                                     -----------    -----------    -----------   -----------

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

Issuance of common stock upon conversion of debt .          --             --        5,900,000         5,900
Net income .......................................          --             --             --            --
                                                     -----------    -----------    -----------   -----------

Balance, March 31, 2009 ..........................       805,767    $       806    133,179,406   $   133,179
                                                     ===========    ===========    ===========   ===========
</TABLE>

<TABLE>

<CAPTION>

                                                                                               Total
                                                        Additional       Cumulative    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 .          53,370             --             63,100
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)
Net (loss) .......................................            --         (9,733,673)      (9,733,673)
                                                     -------------    -------------    -------------
Balance, December 31, 2008 .......................   $ 124,963,498    $(138,053,599)   $ (12,962,016)
                                                     =============    =============    =============

Issuance of common stock upon conversion of debt .          (1,239)            --              4,661
Net income .......................................            --          5,489,641        5,489,641
                                                     -------------    -------------    -------------

Balance, March 31, 2009 ..........................   $ 124,962,259    $(132,563,958)   $  (7,467,714)
                                                     =============    =============    =============

</TABLE>




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

                                       6
<PAGE>

<TABLE>

                          CARBONICS CAPITAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
                                   (UNAUDITED)

<CAPTION>
                                                                       Three Months Ended Three Months Ended
                                                                                  3/31/09            3/31/08
                                                                       -------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES

<S>                                                                           <C>            <C>
Net income from continuing operations .....................................   $ 5,489,641    $ 1,190,577

Adjustments to reconcile net income to net cash
used in operating activities:

   Depreciation ...........................................................          --            5,588
   Amortization of debt discount and deferred financing fees ..............        47,348        152,720
   Stock based compensation ...............................................          --           90,000
   Changes in fair market value of derivatives ............................    (5,659,448)    (1,567,573)


Changes in Assets and Liabilities
   Deposits ...............................................................          --           32,152
   Accounts payable .......................................................        13,233       (254,808)
   Accrued expenses .......................................................        67,955        (83,334)
   Deferred financing fees ................................................          --          (43,946)
   Liabilities to be settled in stock .....................................          --         (407,333)
   Interest payable - related party .......................................          --          196,832
   Interest payable .......................................................        38,077         37,429
                                                                              -----------    -----------
      Net cash used in operating activities ...............................        (3,194)      (651,696)
                                                                              -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

   Issuances (Repayments) of short-term borrowings ........................        65,441           --
   Proceeds from notes receivable - related party .........................          --          854,168
   Issuance of note receivable ............................................          --             --
   Repayment of notes payable - related party .............................          --         (200,000)
                                                                              -----------    -----------
      Net cash provided by financing activities ...........................        65,441        654,168
                                                                              -----------    -----------

   Net (decrease) increase in cash ........................................        62,247          2,472

   Cash at beginning of period ............................................          --             --
                                                                              -----------    -----------

   Cash at end of period ..................................................   $    62,247    $     2,472
                                                                              ===========    ===========

Supplemental statement of non-cash investing
and financing activities:

      Conversion of debentures ............................................   $     4,661         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.

</TABLE>


                                       7
<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  three  months  ended  March  31,  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.

2        NATURE OF OPERATIONS

We develop  renewable  energy projects that facilitate the more efficient use of
carbon in energy supply chains. Our development activities during 2009 primarily
involved  evaluation  of a number of different  chemical and other  technologies
designed to separate carbon dioxide from exhaust for conversion into value-added
carbonaceous products.

We  are  party  to a  technology  commercialization  agreement  with  GreenShift
Corporation,  which  company  is  majority  owned by our  majority  shareholder,
Viridis  Capital,  LLC,  pursuant  to which  GreenShift  has  agreed to  provide
commercialization support services and access to GreenShift's rights to sell and
use a proprietary  biomass  gasification  technology in fields of use outside of
the corn ethanol industry.  Carbonics will pay GreenShift a royalty equal to 10%
of the pre-tax net income generated by Carbonics through use of this technology.

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  ($132,563,958)at  March 31, 2009. As of March 31, 2009 the Company's current
liabilities   exceeded  current  assets  by  $7,467,715.   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

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).

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the balance sheet as of March 31, 2009 for cash
equivalents,  accounts  receivable,  other  receivables,  accounts payable,  and
accrued  expenses  approximate fair value because of the immediate or short-term
maturity of these  financial  instruments.  The fair value of notes  payable and
long-term  debt  approximates  their  carrying value as the stated or discounted
rates of the debt reflect  recent  market  conditions.  It was not  practical to

                                       8
<PAGE>
estimate  the fair  value of the  convertible  debt due to the  nature  of these
items.  These  estimates  would be based on the  carrying  amounts,  maturities,
effective interest rates and volatility of the Company's stock. The Company does
not believe it is practical due to the  significant  volatility of the Company's
stock.

Fair value estimates are made at a specific point in time, based on the terms of
the financial  instrument.  These estimates are subjective in nature and involve
uncertainties  and  matters of  significant  judgment  and  therefore  cannot be
determined with precision.  Changes in assumptions  could  significantly  affect
these estimates.

The Company  adopted SFAS 157 on January 1, 2008.  This statement  establishes a
framework for measuring  fair value,  and expands  disclosures  about fair value
measurements.  SFAS 157 establishes a fair value hierarchy that  prioritizes the
inputs to valuation  techniques  used to measure fair value into three levels as
follows:

o    Level 1 -- quoted  prices  (unadjusted)  in active  markets  for  identical
     assets or liabilities  that the Company has the ability to access as of the
     measurement date. Financial assets and liabilities utilizing Level 1 inputs
     include active exchange-traded securities and exchange-based derivatives.

o    Level 2 -- inputs other than quoted prices included within Level 1 that are
     directly  observable  for the asset or liability or  indirectly  observable
     through  corroboration  with observable  market data.  Financial assets and
     liabilities  utilizing  Level 2 inputs  include  fixed  income  securities,
     non-exchange-based derivatives, mutual funds, and fair-value hedges.

o    Level 3 --  unobservable  inputs for the asset or liability  only used when
     there is little,  if any, market activity for the asset or liability at the
     measurement date. Financial assets and liabilities utilizing Level 3 inputs
     include infrequently-traded,  non-exchange-based derivatives and commingled
     investment funds, and are measured using present value pricing models.

The  following  table  presents  the embedded  derivative,  the  Company's  only
financial   assets  measured  and  recorded  at  fair  value  on  the  Company's
Consolidated Balance Sheets on a recurring basis and their level within the fair
value hierarchy during the three months ended March 31, 2009:

                                                 Fair Value
As of March 31, 2009              Level 1    Level 2      Level 3         Total
                                  ---------------------------------------------
Embedded derivative liabilities    $ --      $ --     $ 4,650,932   $ 4,650,932

The following table  reconciles,  for the three months ended March 31, 2009, the
beginning and ending balances for financial  instruments  that are recognized at
fair value in the consolidated financial statements:

Balance of Embedded derivative at December 31, 2007 .......   $  1,781,903
Loss on fair value adjustments to embedded derivatives ....      8,528,477
                                                              ------------
Balance of embedded derivatives at December 31, 2008 ......     10,310,380
Gain on fair value adjustments to embedded derivatives.....     (5,659,448)
                                                              ------------
Balance at March 31, 2009 .................................   $  4,650,932
                                                              ============

The valuation of the derivatives are calculated using a complex binomial pricing
model that is based on changes in the volatility of our shares, our stock price,
the probability of a reduction in exercise and conversion price, and the time to
conversion of the related financial instruments. See Note 6 for more information
on the valuation methods used.

DEFERRED FINANCING COSTS AND DEBT DISCOUNTS

Deferred  finance costs  represent  costs which may include direct costs paid or
warrants issued to third parties in order to obtain long-term financing and have
been  reflected as other assets.  Costs  incurred with parties who are providing
the actual long-term  financing,  which generally include the value of warrants,
fair value of the  derivative  conversion  feature,  or the  intrinsic  value of
beneficial   conversion  features  associated  with  the  underlying  debt,  are
reflected as a debt discount.  These costs and discounts are generally amortized
over the life of the related debt. On April 2, 2007,  YA Global  Investment,  LP
declared certain debentures to be in default (See Note 5). As a result, deferred
financing  fees  related  to these  debentures  were  deemed  to be  permanently
impaired and were written off to amortization expense.

Amortization expense related to discounts was $47,348 for the three months ended
March 31, 2009.
                                       9
<PAGE>
5        FINANCING ARRANGEMENTS

The following is a summary of the Company's  financing  arrangements as of March
31,:
<TABLE>
<CAPTION>
Current portion of convertible debentures:

<S>                                                                      <C>
Convertible debenture payable from CICS to YAGI issued October 2005      $   602,907
Convertible debenture payable from CICS to YAGI issued June 2007             570,000
Convertible debenture payable from CICS to YAGI issued February 2006       1,112,908
Note discounts                                                              (236,741)
                                                                         -----------
     Total current convertible debentures                                $ 2,049,074
                                                                         ===========
</TABLE>

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
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, 2009
and 2008,  interest  expense from accretion of the debt discount was $47,348 and
$152,720, respectively.

On January 25,  2008,  a financing  was  completed  that  resulted in  Carbonics
becoming  the  guarantor of the debts of several of its former  affiliates.  The
beneficiary  of the  guarantees was YA Global  Investments,  LP ("YAGI"),  which
committed  to extend  credit to those  affiliates.  As of March  31,  2009,  the
outstanding principal and accrued interest of the debt was $48,406,629.

On August 14, 2008,  certain Secured  Convertible  Debentures  between Carbonics
Capital Corporation and YA Global Investments,  L.P. were amended.  The maturity

                                       10
<PAGE>

date of the following  Secured  Convertible  Debentures have been extended until
December 31,  2011:  a certain  Secured  Convertible  Debenture  No. CCP-2 dated
October 12,  2005 in the  original  principal  amount of  $1,475,000;  a certain
Secured  Convertible  Debenture No. CCP-4 dated February 8, 2006 in the original
principal  amount of $3,050,369;  a certain  Secured  Convertible  Debenture No.
GSHF-3-1 dated June 26, 2007 in the original principal amount of $570,000.

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.

During the three  months  ended March 31, 2009 and 2008,  the change in the fair
value  of the  derivative  resulted  in an  accounting  gain of  $5,659,448  and
$1,567,573, respectively. As of March 31, 2009, the fair value of the derivative
liabilities was $4,650,932.

7        RELATED PARTY TRANSACTIONS

REDUCTION OF DEBT PAYABLE TO RELATED PARTIES

Effective March 31, 2008, the Company waived  $2,000,000 of note receivable from
GreenShift,  which  note was  issued in  connection  with the  November  9, 2007
transfer of GS AgriFuels  Corporation  and EcoSystem  Corporation  to GreenShift
Corporation.  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.

On January 25,  2008,  a financing  was  completed  that  resulted in  Carbonics
becoming  the  guarantor of the debts of several of its former  affiliates.  The
beneficiary  of the  guarantees was YA Global  Investments,  LP ("YAGI"),  which
committed  to extend  credit to those  affiliates.  As of March  31,  2009,  the
outstanding principal and accrued interest of the debt was $48,406,629.

8        SUBSEQUENT EVENTS

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.

















                                       11
<PAGE>

ITEM 2          MANAGEMENT DISCUSSION AND ANALYSIS

We develop  renewable  energy projects that facilitate the more efficient use of
carbon in energy supply chains. Our development activities during 2009 primarily
involved  evaluation  of a number of different  chemical and other  technologies
designed to separate carbon dioxide from exhaust for conversion into value-added
carbonaceous products.

We  are  party  to a  technology  commercialization  agreement  with  GreenShift
Corporation,  which  company  is  majority  owned by our  majority  shareholder,
Viridis  Capital,  LLC,  pursuant  to which  GreenShift  has  agreed to  provide
commercialization support services and access to GreenShift's rights to sell and
use a proprietary  biomass  gasification  technology in fields of use outside of
the corn ethanol industry.  Carbonics will pay GreenShift a royalty equal to 10%
of the pre-tax net income generated by Carbonics through use of this technology.

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.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Revenues

There were no revenues  from  continuing  operations  for the three months ended
March 31, 2009 and 2008.

Cost of Revenues

There was no cost of  revenues  for the three  months  ended  March 31, 2009 and
2008.

General and Administrative Expenses Operating Expenses

General and administrative expenses during the three months ended March 31, 2009
totaled $21,882 with $0 related to stock based  compensation.  In the comparable
period of the prior year, general and  administrative  expenses totaled $186,846
with $90,000  related to stock based  compensation.  General and  administrative
expenses  during the three  months ended March 31, 2009  primarily  consisted of
legal fees and office related expenses.

Interest Expense

Interest  expense for the three  months  ended March 31, 2009 was  $38,077,  and
$37,429 for the same period in 2008.

Gain Associated with Derivative Instruments

As of March 31, 2009,  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
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 the change in the derivative
liability and the resulting gain or loss is usually material to our results. The
total  principal  amount on our  convertible  debentures  due to YA  Global  was
$2,285,815.  The balance was  $2,049,074 net of the $236,741 note discount as of
March 31,  2009.  For the  three  months  ended  March  31,  2009 and  2008,  we
recognized a gain for the change in fair value of the  derivative  of $5,659,448
and $1,567,573 for these  debentures.  The derivative  liability as of March 31,
2009 was $4,650,932.

Net Income

Net income for the three months ended March 31, 2009 was  $5,489,641 as compared
to a net income of $1,190,578 from the same period in 2008.

Liquidity and Capital Resources

The Company had  $7,850,652 in current  liabilities  at March 31, 2009,  and may
need to obtain additional financing to satisfy these obligations.

                                       12
<PAGE>

Our primary sources of liquidity are cash provided by and financing  activities.
For the three  months  ended  March  31,  2009,  net cash used in our  operating
activities  was $3,194 as compared to $651,696  used in the three  months  ended
March 31, 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.

Cash Flows

Our  operating  activities  during the three  months  ended  March 31, 2009 used
$3,194 in cash. At March 31, 2009, accounts payable and accrued expenses totaled
$672,699.  At March 31,  2009 the  Company  had  $62,247 in cash.  For the three
months ended March 31, 2009, investing activities used $0 in cash, and cash from
financing activities provided $65,442. The Company had a working capital deficit
of  $7,467,715  at March 31, 2009,  which  includes  derivative  liabilities  of
$4,650,932 and convertible debentures of $2,049,074, 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.














                                       13
<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.  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.

The  Company's  disclosure  controls  and  procedures  are  designed  to provide
reasonable  assurance that  information  required to be disclosed in its reports
filed under the Exchange Act,  such as this Form 10-Q,  is recorded,  processed,
summarized and reported  within the time periods  specified in the SEC rules and
forms.  The Company's  disclosure  controls and  procedures are also designed to
ensure that such  information is accumulated  and  communicated to management to
allow timely decisions  regarding  required  disclosure.  The Company's internal
controls are designed to provide reasonable  assurance regarding the reliability
of financial  reporting  and the  preparation  of its  financial  statements  in
conformity with GAAP.  Management determined that at March 31, 2009, the Company
had a material weakness because it did not have a sufficient number of personnel
with an  appropriate  level of knowledge and  experience  of generally  accepted
accounting  principles  in the  United  States of America  (U.S.  GAAP) that are
commensurate with the Company's financial reporting  requirements.  As a result,
Management  concluded that the Company's disclosure controls and procedures were
not effective at March 31, 2009.

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.







                                       14
<PAGE>



                                     PART II

                                OTHER INFORMATION


ITEM 1   LEGAL PROCEEDINGS

None.

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.










                                       15
<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/      KEVIN KREISLER
                -----------------------
By:                      KEVIN KREISLER
                         Chairman and Chief Executive Officer
Date:                    May 20, 2009

                /S/      JACQUELINE FLYNN
                -------------------------
By:                      JAQUELINE FLYNN
                         Chief Financial Officer
Date:                    May 20, 2009