------------------------------------------------------------------------------
                       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 SEPTEMBER 30, 2008

                          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 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 November  14, 2008 was
121,379,481.






<PAGE>

<TABLE>

                          CARBONICS CAPITAL CORPORATION
                         QUARTERLY REPORT ON FORM 10QSB
                 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2008

                                TABLE OF CONTENTS



<CAPTION>

                                                                                                             Page No
Part I            Financial Information

<S>                                                                                                             <C>
Item 1.           Financial Statements (unaudited)...............................................................3
                  Condensed Consolidated Balance Sheet - September 30, 2008 (unaudited)..........................4
                  Condensed Consolidated Statements of Operations - for the Three and
                   Nine Months Ended September 30, 2008 (unaudited) and 2007 (unaudited).........................5
                  Statement of Shareholders' Equity - December 31, 2007 and Nine Months Ended
                    September 30, 2008...........................................................................6
                  Condensed Consolidated Statements of Cash Flows - for the Nine Months Ended
                    September 30, 2008 (unaudited) and 2007 (unaudited)..........................................8
                  Notes to Condensed Consolidated Financial Statements...........................................9
Item 2.           Management's Discussion and Analysis .........................................................13
Item 3            Quantitative and Qualitative Disclosures about Market Risk....................................16
Item 4.           Controls and Procedures.......................................................................16

Part II           Other Information

Item 1.           Legal Proceedings.............................................................................17
Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds...................................17
Item 3.           Defaults upon Senior Securities...............................................................17
Item 4.           Submission of Matters to a Vote of Security Holders...........................................17
Item 5.           Other Information ............................................................................17
Item 6.           Exhibits .....................................................................................17

Signatures                                                                                                      18

</TABLE>








                                       2
<PAGE>



                                     PART I


ITEM 1            FINANCIAL STATEMENTS

































                                       3
<PAGE>

<TABLE>

                          CARBONICS CAPITAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
           AS OF SEPTEMBER 30, 2008 (UNAUDITED) AND DECEMBER 31, 2007


<CAPTION>
                                                                        9/30/2008        12/31/2007
                                                                    -------------------------------
ASSETS
Current Assets:
<S>                                                                 <C>              <C>
   Cash .........................................................   $        --      $        --
   Note receivable - related party ..............................         391,123        2,948,831
   Interest receivable - related party ..........................            --            196,832
                                                                    -------------    -------------
      Total current assets ......................................         391,123        3,145,663

Furniture and equipment - net ...................................            --             69,628

   Deposits .....................................................            --             32,515
                                                                    -------------    -------------
TOTAL ASSETS ....................................................   $     391,123    $   3,247,806
                                                                    =============    =============
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:

   Accounts payable and accrued expenses ........................   $     562,971    $   1,064,672
   Liabilities to be settled in stock ...........................            --            407,333
   Accrued interest .............................................         377,654          262,445
   Convertible debentures, net of discount ......................       1,876,014        1,490,247
   Derivative liability .........................................         683,550        1,781,903
   Current maturities of long term debt .........................             314           26,329
                                                                    -------------    -------------
      Total current liabilities .................................       3,500,503        5,032,929

   TOTAL LIABILITIES ............................................       3,500,503        5,032,929
                                                                    -------------    -------------
Preferred stock
   Series C, par $0.001, 1,000,000 shares authorized,
   974,140 issued and outstanding ...............................             806              974
Common stock, par $0.001, 500,000,000 authorized
   121,379,405 and 9,549,649 issued and outstanding, respectively         121,379            9,549
Additional paid-in capital ......................................     124,957,598      126,524,280
Accumulated deficit .............................................    (128,189,163)    (128,319,926)
                                                                    -------------    -------------
   Total stockholders' deficiency ...............................      (3,109,380)      (1,785,123)
                                                                    -------------    -------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY ..................   $     391,123    $   3,247,806
                                                                    =============    =============

              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 AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
                                   (UNAUDITED)
<CAPTION>
                                                                Three Months Ended                Nine Months Ended
                                                     September 30,    September 30,   September 30,   September 30,
                                                             2008             2007            2008            2007
                                                     -----------------------------    -----------------------------
<S>                                                   <C>             <C>             <C>             <C>
Revenue ...........................................   $       --      $       --      $       --      $       --
                                                      ------------    ------------    ------------    ------------
Operating expenses:
   General and administrative expenses ............         21,403         520,109         170,314       1,320,819
    Stock based compensation ......................           --         3,199,707         245,000       3,692,403
                                                      ------------    ------------    ------------    ------------
     Total operating expenses .....................         21,403       3,719,816         415,314       5,013,222
                                                      ------------    ------------    ------------    ------------
Operating loss ....................................        (21,403)     (3,719,816)       (415,314)     (5,013,222)
                                                      ------------    ------------    ------------    ------------
Other income (expense):
   Gain (loss) on fair value of
     derivative instruments .......................        105,753      (1,804,648)      1,098,353      (1,804,078)
   Amortization of deferred financing costs and
     debt discount ................................       (142,173)       (586,277)       (437,066)       (961,409)
   Interest expense ...............................        (39,075)       (949,945)       (115,210)     (1,013,123)
                                                      ------------    ------------    ------------    ------------
     Total other income (expense) .................        (75,495)     (3,340,870)        546,078      (3,778,610)

Net income (loss) before provision for income taxes        (96,898)     (7,060,686)        130,763      (8,791,832)

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

Net income (loss) from continuing operations ......        (96,898)     (7,060,686)        130,763      (8,791,832)
                                                      ------------    ------------    ------------    ------------
Discontinued operations:
Loss from discontinued operations .................           --        (5,872,572)           --       (14,662,385)
Gain on disposal of discontinued operations .......           --              --              --              --
                                                      ------------    ------------    ------------    ------------
   Total discontinued operations ..................           --        (5,872,572)           --       (14,662,385)
                                                      ------------    ------------    ------------    ------------
Net Income (Loss) .................................   $    (96,898)   $(12,933,258)   $    130,763    $(23,454,217)
                                                      ============    ============    ============    ============
Common share, basic and diluted
loss per share from continuing operations .........           --             (0.79)           --             (0.98)

Common share, basic and diluted
loss per share from discontinued operations .......           --             (0.66)           --             (1.64)
                                                      ------------    ------------    ------------    ------------
Common share, basic and diluted
loss per share ....................................   $       --      $      (1.45)   $       --      $      (2.62)
                                                      ============    ============    ============    ============
Weighted average share of common stock
   outstanding, basic and diluted .................     95,802,303       8,946,828      95,802,303       8,946,828
                                                      ============    ============    ============    ============




            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, 2007 AND NINE MONTHS ENDED SEPTEMBER 30, 2008

<CAPTION>
                                                              Series C  Preferred Stock          Common Stock
                                                                Shares           Amount        Shares          Amount
                                                         -------------------------------------------------------------

<S>               <C> <C>                                   <C>          <C>                <C>          <C>
Balance, December 31, 2006 ...........................      1,000,000    $      1,000       5,911,292    $      5,911
                                                         ============    ============    ============    ============

Issuance of common stock upon conversion of debt .....           --              --           274,414             274
Stock issued for compensation ........................           --              --         1,412,500           1,413
Liabilities to be settled in stock ...................           --              --              --              --
Stock compensation included in discontinued operations           --              --           698,191             698
Conversion of Series C Preferred into common stock ...        (25,860)            (26)      2,006,202           2,006
Warrants issued for deferred financing fees ..........           --              --              --              --
Stock issued in consideration of cancellation of debt            --              --           513,250             513
Forgiveness of affiliate debt ........................           --              --              --              --
Issuance of note payable in consideration of
  cancellation of shares .............................           --              --        (1,263,250)         (1,263)
Cancellation of shares by related party ..............           --              --            (3,333)             (3)
Distribution of subsidiaries to GreenShift ...........           --              --              --              --
Property distribution to shareholders ................           --              --              --              --
Net loss .............................................           --              --              --              --
                                                         ------------    ------------    ------------    ------------

Balance, December 31, 2007 ...........................        974,140    $        974       9,549,266    $      9,549
                                                         ============    ============    ============    ============
Common stock issued for services .....................           --              --        13,000,000          13,000
Write off of debt and receivables ....................           --              --              --              --
Conversion of Series C Preferred into common stock ...       (168,373)           (168)     95,000,000          95,000
Issuance of common stock upon conversion of debt .....           --              --         3,830,140           3,830
Net loss .............................................           --              --              --
                                                         ------------    ------------    ------------    ------------

Balance, September 30, 2008 ..........................        805,767    $        806     121,379,406    $    121,379
                                                         ============    ============    ============    ============



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


</TABLE>


                                       6
<PAGE>


<TABLE>

                          CARBONICS CAPITAL CORPORATION
                       STATEMENTS OF STOCKHOLDERS' EQUITY
  FOR THE YEAR ENDED DECEMBER 31, 2007 AND NINE MONTHS ENDED SEPTEMBER 30, 2008


<CAPTION>

                                                                                                   Total
                                                            Additional       Cumulative     Stockholders'
                                                       Paid-In-Capital          Deficit           Equity
                                                       -------------------------------------------------
<S>                                                      <C>              <C>              <C>
Balance, December 31, 2006 ...........................   $  58,695,961    $ (71,042,862)   $ (12,339,990)
                                                         =============    =============    =============

Issuance of common stock upon conversion of debt .....             209,814                 --                210,088
Stock issued for compensation ........................           2,560,146                 --              2,561,559
Liabilities to be settled in stock ...................            (407,333)                --               (407,333)
Stock compensation included in discontinued operations             794,489                 --                795,187
Conversion of Series B Preferred into common stock ...             (40,098)                --                (38,118)
Warrants issued for deferred financing fees ..........             266,361                 --                266,361
Stock issued in consideration of cancellation of debt            2,126,068                 --              2,126,581
Forgiveness of affiliate debt ........................             108,763                 --                108,763
Issuance of note payable in consideration of
  cancellation of share ..............................            (732,587)                --               (733,850)
Cancellation of shares by related party ..............                  67                 --                     64
Distribution of subsidiaries to GreenShift ...........          62,942,629          (12,601,487)          50,341,142
Property distribution to shareholders ................                --             (1,604,000)          (1,604,000)
Net loss .............................................                --            (43,071,577)         (43,071,577)
                                                             -------------        -------------        -------------

Balance, December 31, 2007 ...........................       $ 126,524,280        $(128,319,926)       $  (1,785,123)
                                                             =============        =============        =============

Common stock issued for services .....................             277,000                 --                290,000
Write off of debt and receivables ....................          (1,796,320)                --             (1,796,320)
Conversion of Series B Preferred into common stock ...             (94,832)                --                   --
Issuance of common stock upon conversion of debt .....              47,470                 --                 51,300
Net loss .............................................                --                130,763              130,763
                                                             -------------        -------------        -------------

Balance, September 30, 2008 ..........................       $ 124,957,598        $(128,189,163)       $  (3,109,380)
                                                             =============        =============        =============





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

</TABLE>
                                       7
<PAGE>

<TABLE>

                          CARBONICS CAPITAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<CAPTION>


                                                                       Nine Months Ended   Nine Months Ended
                                                                            September 30        September 30
                                                                                    2008                2007
                                                                        ----------------   -----------------
CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                          <C>                <C>
   Net cash used in continuing operations ............................       $  (620,191)       $(3,023,220)
   Net cash used in discontinued operations ..........................              --              836,314
                                                                             -----------        -----------
      Net cash provided by (used in) operating activities ............          (620,191)        (2,186,906)
                                                                             -----------        -----------
CASH FLOW FROM INVESTING ACTIVITIES

   Investment in unconsolidated subsidiaries .........................              --             (931,669)
                                                                             -----------        -----------
      Net cash used in investing activities ..........................              --             (931,669)
                                                                             -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES

   Issuances (Repayments) of short-term borrowings ...................           (66,314)           (16,148)
   Proceeds from convertible debenture - related party ...............              --              564,109
   Proceeds from convertible debenture ...............................            10,548            185,201
   Redemption of preferred stock .....................................              --                 --
   Proceeds from the issuance of common stock ........................              --                 --
   Proceeds from notes receivable - related party ....................           879,750           (234,387)
   Issuance of note receivable .......................................              --            2,554,967
   Repayment of notes payable - related party ........................          (200,000)              --
                                                                             -----------        -----------
      Net cash provided by financing activities ......................           623,984          3,053,742
                                                                             -----------        -----------

   Net (decrease) increase in cash ...................................             3,793            (64,833)

   Cash at beginning of period .......................................            (3,793)           128,763
                                                                             -----------        -----------

   Cash at end of period .............................................       $      --          $    63,930
                                                                             ===========        ===========

Supplemental statement of non-cash investing and financing activities:

      Stock based compensation .......................................       $   290,000               --

      Conversion of debentures .......................................       $    51,300               --

      Increase  in related party note due to expenses paid on behalf
      of related party ...............................................       $   717,680               --

      Decrease  in related party note due to expenses paid on behalf
      of related party ...............................................       $ 1,275,388               --

      Forgiveness of amount owed to related party ....................       $ 2,000,000               --


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

                                       8
</TABLE>


<PAGE>
                          CARBONICS CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information  and with the  instructions to
Form  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 nine months  ended  September  30, 2008 are not  necessarily
indicative  of the results of  operations  for the full year.  When  reading the
financial  information  contained in this Quarterly Report,  reference should be
made to the financial  statements  and notes  contained in the Company's  Annual
Report on Form 10-KSB for the year ended December 31, 2007.

2        NATURE OF OPERATIONS

COMPLETION OF NAME CHANGE AND REVERSE STOCK SPLIT

Effective  February  11,  2008,  the Company  changed  its name from  GreenShift
Corporation to Carbonics Capital Corporation (f/k/a GreenShift  Corporation) and
completed a 1 for 20 reverse stock split.

FORGIVENESS OF RELATED PARTY DEBT

During the nine months ending September 30, 2008, the company waived  $2,000,000
of the debenture  receivable  from  GreenShift  Corporation.  Additionally,  the
company waived interest receivable from GreenShift in the amount of $196,832, as
well as other related company notes receivable of $6,821 in the first quarter of
2008.

3        GOING CONCERN

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. The Company had net income of $130,763
for the nine months ended  September 30, 2008 and had an accumulated  deficit of
($128,189,163).  As of  September  30, 2008 the  Company's  current  liabilities
exceeded  current assets by $3,109,380.  These matters raise  substantial  doubt
about the Company's ability to continue as a going concern.  Management's  plans
include  raising  additional  proceeds  from debt and  equity  transactions  and
completing strategic acquisitions.

4        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

For the nine months  ended  September  30, 2008 the company had no  consolidated
subsidiaries. For the nine months ended September 30, 2007 the operations of all
consolidated companies are reflected in discontinued operations.

5        FINANCING ARRANGEMENTS

The following is a summary of the Company's financing arrangements as of
September 30, 2008:
<TABLE>
<CAPTION>
Current portion of convertible debentures:
<S>                                                                                <C>
YAGI convertible debenture payable from Carbonics Capital issued October 2005       $   602,907
YAGI convertible debenture payable from Carbonics Capital issued July 2005 ..           570,000
YAGI convertible debenture payable from Carbonics Capital issued April 2006 .         1,129,369
Note discounts                                                                         (426,262)
                                                                                    -----------
     Total current convertible debentures ...................................       $ 1,876,014
                                                                                    ===========
</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").

                                       9
<PAGE>


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 nine months ended  September  30,
2008, interest expense from accretion of the debt discount was $94,696.

On June 29, 2007 the Company and Viridis,  entered into a letter agreement dated
with  YAGI.  The  agreement  recited  that  the  Company  had  defaulted  in its
obligation  to file a  registration  statement  to  permit  YAGI to  resell  the
Company's   common  stock  issuable  upon  conversion  of  certain   convertible
debentures  that the Company  sold to YAGI.  YAGI agreed to waive the  penalties
available to it as a result of the default if the following conditions were met:

1.   The Company  agreed to permit one  conversion by YAGI of Series C Preferred
     Stock  pledged to it by Viridis in excess of the stated limit on conversion
     (4.99% of outstanding shares). The converted principal amount was $390,000,
     which was converted  into  approximately  9.99% of the  outstanding  common
     shares on June 28, 2007.

2.   The  Company  agreed to  increase  its  authorized  shares as  promptly  as
     reasonably  possible  in order to permit  the  conversion  of the  Series C
     Preferred Stock.

3.   The  Company  agreed  to effect  restructuring  of the  Company  as soon as
     practicable,  but no later than  March 1, 2008.  In  addition  the  Company
     agreed to increase its authorized  capital stock to an amount sufficient to
     permit YAGI after the  restructuring,  to convert  into common stock all of
     the convertible debentures issued to it by the Company.

4.   The Company agreed to file a registration statement with the Securities and
     Exchange  Commission  that will,  when declared  effective,  permit YAGI to
     resell to the public the  common  stock  issuable  upon  conversion  of the
     debentures  issued to it by the Company and the debentures  issued to it by
     the Company.

On January 25,  2008,  a financing  was  completed  that  resulted in  EcoSystem
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 September 30, 2008,  the
outstanding principal and accrued interest of the debt was $43,040,070.

                                       10
<PAGE>

On August 14, 2008,  certain Secured  Convertible  Debentures  between Carbonics
Capital Corporation and YA Global Investments,  L.P. were amended.  The maturity
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 nine months ended  September 30, 2008 the change in the fair value of
the derivative resulted in an accounting gain of $1,098,353. Amortization of the
debt discount totaled $437,066 for the nine months ended September 30, 2008. The
unamortized portion of the debt discount related to the derivatives was $426,262
at  September  30,  2008.  As of  September  30,  2008,  the  fair  value of the
derivative liabilities was $683,550.

7        STOCKHOLDERS EQUITY

COMMON STOCK

During the nine months ended  September 30, 2008,  the Company issued a total of
10,000,000  shares of Common Stock,  $0.001 par value, for services  provided to
the Company.  The Company's  directors,  David Winsness and Kurt Gordon received
3,000,000 and 2,000,000 of these shares, respectively.

The shares were issued at $0.02,  the market price as of the date of issuance on
April 23,  2008 for a total  value of  $200,000.  During the nine  months  ended
September 30, 2008,  Viridis  Capital LLC converted  168,373  shares of Series C
Preferred  Stock into a total of 95,000,000  shares of Common Stock,  $0.001 par
value.

8        RELATED PARTY TRANSACTIONS

On November 9, 2007, the Company and GreenShift  Corporation  completed a series
of transactions, including the transfer to GreenShift of Carbonics' stakes in GS
AgriFuels  Corporation  and  EcoSystem  Corporation.  GreenShift  assumed all of
Carbonics'  intercompany,  affiliate related party notes payable and receivable,
all trade payables,  and all receivables,  but did not assume Carbonics' debt to
YA Global  Investments,  LP.  In  exchange  GreenShift  issued  to  Carbonics  a
promissory note in the aggregate  amount of $2,948,831  (the "Carbonics  Note").
The principal and interest on the Carbonics Note, which accrues at the per annum
rate of 8%, are due and payable in full on December 31, 2009. The Carbonics Note
was reduced by $2,000,000 in the first quarter 2008.  This reduction was in part
attributable  to the  fact  that the  appraised  value  of GS  AgriFuels,  which
appraisal  was completed  during the first  quarter of 2008,  was assessed to be
less than the total debt payable by GS AgriFuels,  and the fact that  GreenShift
realized  impairment  charges of  $11,153,816  relating to the  impairment of GS
AgriFuels'  NextGen Fuel,  Inc., and  Sustainable  Systems,  Inc.  subsidiaries.
During the nine months ended  September  30, 2008,  the note  increased a net of
$12,234 due to expenses paid on behalf of GreenShift and the note also increased
$443,674  due to the  reclassification  of  amounts  that were  owed by  various
subsidiaries  to Carbonics.  These amounts were reclassed so that the subsidiary
owed Greenshift rather than Carbonics and GreenShift in turn owed the amounts to
Carbonics.   Additionally  the  company  waived  the  interest  receivable  from
GreenShift as well as other related party notes in the amount of $196,832.

On November 9, 2007, in connection with the transfer to GreenShift of Carbonics'
stakes in GS AgriFuels and EcoSystem,  GreenShift  assumed  liability for a term
note  issued  by  Carbonics  to  Viridis  Capital,  LLC  with a face  amount  of
$1,339,704  (the  "Viridis  Note"),  which  amount is due upon  demand and bears
interest  at the rate of 8%. As of  December  31,  2007,  the  balance  due from
Carbonics to Viridis was $0.

On December 12, 2007,  Carbonics  distributed  2,000,000  and  1,000,000  common
shares of EcoSystem Corporation and GS EnviroServices,  Inc.,  respectively,  to
all  shareholders of Carbonics  except for Viridis  Capital,  LLC, the Company's
majority  shareholder.  On December 12, 2007, Carbonics  distributed all of what
was then  Carbonics'  80% stake in  GreenShift  on a  pro-rated  basis to all of

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<PAGE>

Carbonics'  shareholders.  This was  accomplished  by  Carbonics'  conversion of
200,000 shares of GreenShift  Series D Preferred Stock into 20,800,000 shares of
GreenShift common stock, which were distributed to the minority  shareholders of
Carbonics,  and the  distribution  by Carbonics of 800,000  shares of GreenShift
Series D  Preferred  Stock to  Viridis  Capital,  LLC,  the  Company's  majority
shareholder. Kevin Kreisler, the sole member of Viridis Capital, is the Chairman
and Chief Executive Officer of the Company.

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 September 30, 2008,  the
outstanding principal and accrued interest of the debt was $43,040,070.



































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<PAGE>




ITEM 2          MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

We  develop  renewable  energy  projects  based  on  established  technological,
geographical  or  other  advantages.  Our  ambition  is  to  develop  successful
renewable  energy  projects that  facilitate the more efficient use of carbon in
energy supply chains.  Our plan to achieve this involves the planned  completion
of one or more of the following activities:

     >>   Direct development of qualified projects;

     >>   Majority investments in qualified projects; and/or,

     >>   Acquisition of qualified distressed or other assets.

We are also actively  seeking to retain new senior  management and plan to do so
in conjunction with one or more of the above activities.

RESULTS OF OPERATIONS

Three Months Ended  September 30, 2008 Compared to Three Months Ended  September
30, 2007

Revenues

There were no revenues  from  continuing  operations  for the three months ended
September 30, 2008.

Cost of Revenues

There was no cost of revenues for the three months ended September 30, 2008.

Selling, General and Administrative Expenses Operating Expenses

Selling,  general and  administrative  expenses  during the three  months  ended
September 30, 2008 totaled $21,403 with $0 related to stock based  compensation.
In the comparable period of the prior year, selling,  general and administrative
expenses totaled $3,719,816 attributable to selling,  general and administrative
expenses with $3,199,707 related to stock based compensation.  Selling,  general
and  administrative  expenses  during the three months ended  September 30, 2008
primarily consisted of accounting and legal fees, and office related. Due to the
divestment  of  our  subsidiaries  at the  end of  2007,  selling,  general  and
administrative  expenses in 2008 will consist of  development  costs  associated
with  our  current   operation  and  planned   future   projects.   General  and
administrative  expenses are  expected to remain high as a  percentage  of sales
until such time that the  Company can achieve  initiate  and sustain  sufficient
revenue to support these expenses.

Interest Expense

Interest expense for the three months ended September 30, 2008 was $39,075,  and
was $949,945 for the same period in 2007.

Expenses Associated with Derivative Instruments

As of September 30, 2008 Carbonics  Capital had several  convertible  debentures
due to YA Global Investments,  LP. The conversion feature on these debentures is
variable  based on trailing  market  prices and  therefore  contains an embedded
derivative.  We value the  conversion  feature at the time of issuance using the
Black-Scholes Model and record a note discount and derivative  liability for the
calculated  value.  We  recognize  interest  expense for  accretion  of the note
discount over the term of the note.  The  derivative  liability is valued at the
end of each  reporting  period  and  results in a gain or loss for the change in
fair value. Due to the volatile nature of our stock, as well as the stock of our
subsidiaries,  the change in the derivative  liability and the resulting gain or
loss is usually  material  to our  results.  The total  principal  amount on our
convertible  debentures  due  to YA  Global  was  $2,302,276.  The  balance  was
$1,876,014  net of the $426,262 note discount as of September 30, 2008.  For the
three months ended  September  30, 2008,  we recognized a gain for the change in
fair value of the  derivative of $105,753 for these  debentures.  The derivative
liability as of September 30, 2008 was $683,550.


                                       13
<PAGE>



Net Income or Loss

Net loss from  continuing  operations  for the three months ended  September 30,
2008 was $96,898 as compared to a loss from continuing  operations of $7,060,686
from the same period in 2007. The Company transferred its interest in all of its
subsidiaries  to GreenShift  Corporation  during the three months ended December
31, 2007. Net loss from discontinued operations was $5,872,572 in 2007.

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30,
2007

Revenues

There were no revenues from continuing operations for the nine months ended
September 30, 2008.

Cost of Revenues

There was no cost of revenues for the nine months ended September 30, 2008.

Selling, General and Administrative Expenses Operating Expenses

Selling,  general  and  administrative  expenses  during the nine  months  ended
September  30,  2008  totaled  $415,314  with  $245,000  related to stock  based
compensation.  In the comparable period of the prior year, selling,  general and
administrative expenses totaled $5,013,222 attributable to selling,  general and
administrative  expenses with  $3,692,403  related to stock based  compensation.
Selling,  general  and  administrative  expenses  during the nine  months  ended
September 30, 2008 primarily  consisted of accounting and legal fees, and office
related.  Due to the divestment of our subsidiaries at the end of 2007, selling,
general and  administrative  expenses in 2008 will consist of development  costs
associated with our current operations and planned future projects.  General and
administrative  expenses are  expected to remain high as a  percentage  of sales
until such time that the  Company can achieve  initiate  and sustain  sufficient
revenue to support these expenses.

Interest Expense

Interest expense for the nine months ended September 30, 2008 was $115,210,  and
was $1,013,123 for the same period in 2007.

Expenses Associated with Derivative Instruments

As of September 30, 2008 Carbonics  Capital had several  convertible  debentures
due to YA Global Investments,  LP. The conversion feature on these debentures is
variable  based on trailing  market  prices and  therefore  contains an embedded
derivative.  We value the  conversion  feature at the time of issuance using the
Black-Scholes Model and record a note discount and derivative  liability for the
calculated  value.  We  recognize  interest  expense for  accretion  of the note
discount over the term of the note.  The  derivative  liability is valued at the
end of each  reporting  period  and  results in a gain or loss for the change in
fair value. Due to the volatile nature of our stock, as well as the stock of our
subsidiaries,  the change in the derivative  liability and the resulting gain or
loss is usually  material  to our  results.  The total  principal  amount on our
convertible  debentures  due  to YA  Global  was  $2,302,276.  The  balance  was
$1,876,014  net of the $426,262 note discount as of September 30, 2008.  For the
nine months ended  September  30, 2008,  we  recognized a gain for the change in
fair value of the derivative of $1,098,353 for these debentures.  The derivative
liability as of September 30, 2008 was $683,550.

Net Income or Loss

Net income from  continuing  operations for the nine months ended  September 30,
2008 was $130,763  compared to a loss from  continuing  operations of $8,791,832
from the same period in 2007. The Company transferred its interest in all of its
subsidiaries to GreenShift Corporation during the nine months ended December 31,
2007. Net loss from discontinued  operations was $14,662,385 for the nine months
ended September 30, 2007.

Liquidity and Capital Resources

The Company had $3,500,503 in current  liabilities at the end of the nine months
ended September 30, 2008, and may need to obtain additional financing to satisfy
these obligations.

Our primary  sources of liquidity  are cash  provided by investing and financing
activities.  For the nine months ended  September 30, 2008, net cash used in our
operating activities was $620,191. 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

                                       14

<PAGE>

and common stock. The Company plans to fund ongoing  operations during 2008 with
a  combination  of proceeds  from the issuance of debt and equity as well as the
repayment to the Company of loans receivable and other amounts due.

Cash Flows

Our operating  activities  during the nine months ended  September 30, 2008 used
$620,191 in cash. At September 30, 2008,  accounts  payable and accrued expenses
totaled  $562,971.  At September 30, 2008 the Company had $0 cash.  For the nine
months ended September 30, 2008,  investing activities used $0 in cash, and cash
from financing  activities provided $623,984.  The Company had a working capital
deficit  of  $3,109,380  at  September  30,  2008,  which  includes   derivative
liabilities  of  $683,550  and  convertible  debentures  of  $1,876,014,  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.





















                                       15
<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.

There was no change in internal controls over financial reporting (as defined in
Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934) identified
in connection  with the  evaluation  described in the preceding  paragraph  that
occurred during the Company's third fiscal quarter that has materially  affected
or is reasonably likely to materially affect the Company's internal control over
financial reporting.
















                                       16
<PAGE>



                                     PART II

                                OTHER INFORMATION


ITEM 1            LEGAL PROCEEDINGS

None.

ITEM 1A

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.





















                                       17
<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:                    November 14, 2008


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

                         November 14, 2008
































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