| Nevada(State      or other jurisdiction of incorporation or organization) | 20-5451302 (I.R.S.      Employer Identification No.)  |
|---------------------------------------------------------------------------|-----------------------------------------------------------------|

----

| PART I: FINANCIAL      INFORMATION |   | 3                                                                                                |   |
|------------------------------------|--------|-------------------------------------------------------------------------------------------------------|--------|
| ITEM 1:                            |   | FINANCIAL STATEMENTS      (Unaudited)                                                                 |   | 3  |   |
|                               |   | Balance    Sheets                                                                                     |   | 3  |   |
|                               |   | Statements of      Operations                                                                         |   | 4  |   |
|                               |   | Statements of Cash      Flows                                                                         |   | 6  |   |
|                               |   | Notes to the Financial      Statements                                                                |   | 7  |   |
| ITEM 2:                            |   | MANAGEMENT’S DISCUSSION AND      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS |   | 9  |   |
| ITEM 3 :                           |   | QUANTITATIVE AND QUALITATIVE      DISCLOSURES ABOUT MARKET RISK                                       |   | 11  |   |
| ITEM 4:                            |   | CONTROLS AND PROCEDURES                                                                               |   | 11  |   |
| PART II: OTHER      INFORMATION    |   | 11                                                                                               |   |
| Item      1                        |   | LEGAL PROCEEDINGS                                                                                     |   |        11  |   |
| ITEM 1A :                          |   | RISK    FACTORS                                                                                       |   | 12  |   |
| ITEM 2                             |   | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS                                      |   |        12  |   |
| ITEM 3                             |   | DEFAULTS UPON SENIOR    SECURITIES                                                                    |   |        12  |   |
| ITEM 4                             |   | SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS                                              |   |        12  |   |
| ITEM 5                             |   | OTHER INFORMATION                                                                                     |   |        12  |    |
| ITEM 6:                            |   | EXHIBITS                                                                                              |   | 12  |   |
| SIGNATURES                         |   | 13                                                                                               |   |

----

 – FINANCIALINFORMATION

|                                                                                                                                                                                |   |                                      |       |   |                   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|------------|--------|------------------------|--------|
|                                                                                                                                                                                |   | March      31, 2008      (unaudited) |       |   | December      31, 2007 |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |
| ASSETS                                                                                                                                                                              |   |                                 |       |   |                   |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |
| CURRENT      ASSETS                                                                                                                                                                 |   |                                 |       |   |                   |   |
|   Cash                                                                                                                                                                    |   | $                                    | 2,696      |   |                   | $      | 9,539 |   |
|   Certificate      of deposits                                                                                                                                            |   |                                 | 630,064    |   |                   |   | 821,505 |   |
|   Other      receviable                                                                                                                                                   |   |                                 | 12,000     |   |                   |   | - |   |
|   Prepaid      expenses                                                                                                                                                   |   |                                 | 82,845     |   |                   |   | 122,488 |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
|                         Total      Current Assets           |   |                                 | 727,605    |   |                   |   | 953,532 |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
| PROPERTY      & EQUIPMENT, at cost                                                                                                                                              |   |                                 |       |   |                   |   |   |   |
|    Machinery      & equipment                                                                                                                                    |   |                                 | 20,599     |   |                   |   | 20,599 |   |
|    Computer      equipment                                                                                                                                           |   |                                 | 17,559     |   |                   |   | 17,559 |   |
|    Mobile      Vehicle                                                                                                                                               |   |                                 | 40,252     |   |                   |   | 40,252 |   |
|                                                                                                                                                                                |   |                                 | 78,410     |   |                   |   | 78,410 |   |
|    Less      accumulated depreciation                                                                                                                                |   |                                 | (13,849    | )      |                   |   | (9,637 | ) |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
|                         Net      Property and Equipment     |   |                                 | 64,561     |   |                   |   | 68,773 |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
|                        TOTAL      ASSETS                         |   | $                                    | 792,166    |   |                   | $      | 1,022,305 |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                                                                           |   |                                 |       |   |                   |   |   |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
| CURRENT      LIABILITIES                                                                                                                                                            |   |                                 |       |   |                   |   |   |   |
|     Accounts      Payable                                                                                                                                       |   | $                                    | -          |   |                   | $      | 2,676 |   |
|     Accrued      Expenses                                                                                                                                       |   |                                 | 6,926      |   |                   |   | 8,074 |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
|                        TOTAL      CURRENT LIABILITIES            |   |                                 | 6,926      |   |                   |   | 10,750 |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
| SHAREHOLDERS'      EQUITY EQUITY                                                                                                                                                    |   |                                 |       |   |                   |   |   |   |
|    Common      Stock, $0.001 par value;                                                                                                                              |   |                                 |       |   |                   |   |   |   |
|    500,000,000      authorized common shares                                                                                                                         |   |                                 |       |   |                   |   |   |   |
|    148,342,000      shares issued and outstanding                                                                                                                    |   |                                 | 148,342    |   |                   |   | 148,342 |   |
|    Additional      Paid in Capital                                                                                                                                   |   |                                 | 2,155,533  |   |                   |   | 2,155,533 |   |
|    Accumulated      Deficit during the development stage                                                                                                             |   |                                 | (1,518,635 | )      |                   |   | (1,292,320 | ) |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
|                       TOTAL      SHAREHOLDERS' EQUITY                 |   |                                 | 785,240    |   |                   |   | 1,011,555 |   |
|                                                                                                                                                                                |   |                                 |       |   |                   |   |   |   |
|                       TOTAL      LIABILITIES AND SHAREHOLDERS' EQUITY |   | $                                    | 792,166    |   |                   | $      | 1,022,305 |   |

----

|                                                                |   |                    |        |   |                |   |        | From      Inception on |   |
|---------------------------------------------------------------------|--------|-------------------------|-------------|--------|---------------------|--------|-------------|------------------------|--------|
|                                                                |   |                    |        |   | August      25,2006 |   |
|                                                                |   | Three      Months Ended |        |   | through             |   |
|                                                                |   | 3/31/2008               |        |   | 3/31/2007           |   |        | March      31, 2008    |   |
|                                                                |   |                    |        |   |                |   |        |                   |   |
|                                                                |   |                    |        |   |                |   |        |                   |   |
| REVENUE                                                             |   | $                       | -           |   |                | $      | -           |                   |   | $ | - |   |
|                                                                |   |                    |        |   |                |   |        |                   |   |   |   |   |
| OPERATING      EXPENSES                                             |   |                    |        |   |                |   |        |                   |   |   |   |   |
|   Selling      and marketing expenses                     |   |                    | 149,638     |   |                |   | 292,526     |                   |   |   | 1,136,209 |   |
|   General      and administrative expenses                |   |                    | 38,767      |   |                |   | 41,621      |                   |   |   | 284,090 |   |
|   Research      and development                           |   |                    | 42,258      |   |                |   | 1,000       |                   |   |   | 112,941 |   |
|   Depreciation      expense                               |   |                    | 4,212       |   |                |   | 1,463       |                   |   |   | 13,849 |   |
|                                                                |   |                    |        |   |                |   |        |                   |   |   |   |   |
| TOTAL      OPERATING EXPENSES                                       |   |                    | 234,875     |   |                |   | 336,610     |                   |   |   | 1,547,089 |   |
|                                                                |   |                    |        |   |                |   |        |                   |   |   |   |   |
| LOSS      FROM OPERATIONS BEFORE  OTHER INCOME/(EXPENSES) |   |                    | (234,875    | )      |                |   | (336,610    | )                      |   |   | (1,547,089 | ) |
|                                                                |   |                    |        |   |                |   |        |                   |   |   |   |   |
| OTHER      INCOME/(EXPENSE)                                         |   |                    |        |   |                |   |        |                   |   |   |   |   |
|     Interest      income                        |   |                    | 8,560       |   |                |   | -           |                   |   |   | 30,065 |   |
|     Interest      expense                       |   |                    | -           |   |                |   | (937        | )                      |   |   | (1,611 | ) |
|                                                                |   |                    |        |   |                |   |        |                   |   |   |   |   |
| TOTAL      OTHER INCOME/(EXPENSE)                              |   |                    | 8,560       |   |                |   | (937        | )                      |   |   | 28,454 |   |
|                                                                |   |                    |        |   |                |   |        |                   |   |   |   |   |
| NET      LOSS                                                       |   |                    | (226,315    | )      |                |   | (337,547    | )                      |   |   | (1,518,635 | ) |
|                                                                |   |                    |        |   |                |   |        |                   |   |   |   |   |
| BASIC      AND DILUTED LOSS PER SHARE                               |   | $                       | -           |   |                | $      | (0.00       | )                      |   |   |   |   |
|                                                                |   |                    |        |   |                |   |        |                   |   |   |   |   |
| WEIGHTED-AVERAGE      COMMON SHARES OUTSTANDING                     |   |                    |        |   |                |   |        |                   |   |   |   |   |
|       BASIC      AND DILUTED          |   |                    | 148,342,000 |   |                |   | 129,128,833 |                   |   |   |   |   |

----

|                                       |   |              |        |   |    |   |    |        |   |   | Deficit         |   |   |   |       |
|--------------------------------------------|--------|-------------------|-------------|--------|---------|--------|---------|-------------|--------|--------|-----------------|--------|--------|--------|------------|
|                                       |   |              |        |   |    |   |    |        |   |   | Accumulated     |   |   |   |       |
|                                       |   |              |        |   |    |   |    | Additional  |   |   | during      the |   |   |   |       |
|                                       |   | Common      stock |        |   | Paid-in |   |    | Development |   |   |            |   |
|                                       |   | Shares            |        |   | Amount  |   |    | Capital     |   |   | Stage           |   |   | Total  |       |
|                                       |   |              |        |   |    |   |    |        |   |   |            |   |   |   |       |
| Balance      at December 31, 2007          |   |              | 148,342,000 |   |    | $      | 148,342 |        |   | $      | 2,155,533       |   |   | $      | (1,292,320 | ) |   | $ | 1,011,555 |   |
|                                       |   |              |        |   |    |   |    |        |   |   |            |   |   |   |       |   |   |   |   |   |
| Net      Loss (unaudited)                  |   |              | -           |   |    |   | -       |        |   |   | -               |   |   |   | (226,315   | ) |   |   | (226,315 | ) |
|                                       |   |              |        |   |    |   |    |        |   |   |            |   |   |   |       |   |   |   |   |   |
| Balance      at March 31, 2008 (unaudited) |   |              | 148,342,000 |   |    | $      | 148,342 |        |   | $      | 2,155,533       |   |   | $      | (1,518,635 | ) |   | $ | 785,240 |   |

----

|                                                                                                |   |                    |     |   |      |   |     | From      Inception on |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------|----------|--------|-----------|--------|----------|------------------------|--------|
|                                                                                                |   |                    |     |   |      |   |     | August      25,2006    |   |
|                                                                                                |   | Three      Months Ended |     |   | through   |   |
|                                                                                                |   | 3/31/2008               |     |   | 3/31/2007 |   |     | March      31, 2008    |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                          |   |                    |     |   |      |   |     |                   |   |
|        Net loss                                                                                |   | $                       | (226,315 | )      |      | $      | (337,547 | )                      |   | $ | (1,518,635 | ) |
|        Adjustment to reconcile net loss to net cash                                            |   |                    |     |   |      |   |     |                   |   |   |   |   |
|          used in operating activities                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
|   Depreciation      expense                                                               |   |                    | 4,212    |   |      |   | 1,463    |                   |   |   | 13,849 |   |
|        Stock issuance for services                                                             |   |                    | -        |   |      |   | -        |                   |   |   | 75,000 |   |
|        (Increase)      Decrease in:                              |   |                    |     |   |      |   |     |                   |   |   |   |   |
|              Other      receivable |   |                    | (12,000  | )      |      |   | -        |                   |   |   | (12,000 | ) |
|              Prepaid      expenses |   |                    | 39,643   |   |      |   | 44,801   |                   |   |   | (82,845 | ) |
|         Increase      (Decrease) in:                        |   |                    |     |   |      |   |     |                   |   |   |   |   |
|              Accounts      payable |   |                    | (2,676   | )      |      |   | 24,087   |                   |   |   | - |   |
|              Accrued      expenses |   |                    | (1,148   | )      |      |   | 295      |                   |   |   | 6,926 |   |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| NET      CASH USED IN OPERATING ACTIVITIES                                                          |   |                    | (198,284 | )      |      |   | (266,901 | )                      |   |   | (1,517,705 | ) |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| CASH      FLOWS PROVIDED/(USED) IN INVESTING ACTIVITIES:                                            |   |                    |     |   |      |   |     |                   |   |   |   |   |
|    Investment      in certificates of deposit                                        |   |                    | 191,441  |   |      |   | -        |                   |   |   | (630,064 | ) |
| Purchase      of equipment                                                                          |   |                    | -        |   |      |   | -        |                   |   |   | (78,410 | ) |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| NET      CASH PROVIDED/(USED) IN INVESTING ACTIVITIES                                               |   |                    | 191,441  |   |      |   | -        |                   |   |   | (708,474 | ) |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                          |   |                    |     |   |      |   |     |                   |   |   |   |   |
|     Advances      from officer                                                  |   |                    | -        |   |      |   | 62,000   |                   |   |   | 73,000 |   |
|     Loan      from investor                                                     |   |                    | -        |   |      |   | 50,000   |                   |   |   | 160,000 |   |
|     Repayment      of advances and loans                                        |   |                    | -        |   |      |   | (112,000 | )                      |   |   | (233,000 | ) |
|  Proceeds      from issuance of common stock                                                   |   |                    | -        |   |      |   | 315,500  |                   |   |   | 2,228,875 |   |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| NET      CASH PROVIDED BY FINANCING  ACTIVITIES                                           |   |                    | -        |   |      |   | 315,500  |                   |   |   | 2,228,875 |   |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| NET      INCREASE/(DECREASE) IN CASH                                                                |   |                    | (6,843   | )      |      |   | 48,599   |                   |   |   | 2,696 |   |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| CASH,      BEGINNING OF PERIOD                                                                      |   |                    | 9,539    |   |      |   | 75,142   |                   |   |   | - |   |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| CASH,      END OF PERIOD                                                                            |   | $                       | 2,696    |   |      | $      | 123,741  |                   |   | $ | 2,696 |   |
|                                                                                                |   |                    |     |   |      |   |     |                   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION                                              |   |                    |     |   |      |   |     |                   |   |   |   |   |
|    Interest      paid                                                                |   | $                       | -        |   |      | $      | 937      |                   |   | $ | 1,611 |   |
|    Taxes      paid                                                                   |   | $                       | -        |   |      | $      | -        |                   |   | $ | 800 |   |

----

----

| 3. | CAPITAL      STOCK |
|----|--------------------|

|   | 4.   INCOME      TAXES |
|--------|---------------------------------------|

|   | The      Company files income tax returns in the U.S. Federal jurisdiction, and the      state of California. With few exceptions, the Company is no longer subject      to U.S. federal, state and local, or non-U.S. income tax examinations by      tax authorities for years before2004. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company adopted the provisions of FASB Interpretation No. 48, Accounting      for Uncertainty in Income Taxes, on January 1, 2007.  Deferred      income taxes have been provided by temporary differences between the      carrying amounts of assets and liabilities for financial reporting      purposes and the amounts used for tax purposes. To the extent allowed by      GAAP, we provide valuation allowances against the deferred tax assets for      amounts when the realization isuncertain. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Included      in the balance at March 31, 2008, are no tax positions for which the      ultimate deductibility is highly certain but for which there is      uncertainty about the timing of such  deductibility. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company's policy is to recognize interest accrued related to unrecognized      tax benefits in interest expense and penalties in operating      expenses. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

OPERATIONS

OVERVIEW

Critical Accounting Policies

----

----

We are developing a technology to transform harmfulcarbon dioxide (CO2) into high value, earth-friendly products. We call thistechnology GreenCarbon Technology.  The Company’s management believes thatenergy and CO2 intensive industries, such as paper production, will welcome thisinnovative clean technology because it offers two very important benefits –lower cost and carbon neutrality.

----

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES ANDUSE OF PROCEEDS

| Exhibit      No. | Description                                                                                                                                                                                                                                                             |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                                                                                                    |
| 3.1              | Articles      of Incorporation of Carbon Sciences, Inc. filed with the Nevada      Secretary of State on August 25, 2007. (Incorporated by reference to the      Company’s Registration Statement on Form SB-2 filed on July 27,      2007)                  |
|             |                                                                                                                                                                                                                                                                    |
| 3.2              | Articles      of Amendment of Articles of Incorporation of Carbon Sciences, Inc. filed      with the Nevada Secretary of State on April 9, 2007 (Incorporated by      reference to the Company’s Registration Statement on Form SB-2 filed on      July 27, 2007) |
|             |                                                                                                                                                                                                                                                                    |
| 3.4              | Bylaws      of Carbon Sciences, Inc. (Incorporated by reference to the Company’s      Registration Statement on Form SB-2 filed on July 27,  2007)                                                                                                                |
|             |                                                                                                                                                                                                                                                                    |
| 5.1              | Opinion      of Sichenzia Ross Friedman Ference LLP. (Incorporated by reference to the      Company’s Registration Statement on Form SB-2 filed on July 27,      2007)                                                                                            |
|             |                                                                                                                                                                                                                                                                    |
| 10.1             | Form      of Subscription Agreement dated as of September 18, 2006 (Incorporated by      reference to the Company’s Registration Statement on Form SB-2 filed on      July 27, 2007)                                                                              |
|             |                                                                                                                                                                                                                                                                    |
| 10.2             | Form      of Subscription Agreement dated as of October 2, 2006(Incorporated by      reference to the Company’s Registration Statement on Form SB-2 filed on      July 27, 2007)                                                                                  |
|             |                                                                                                                                                                                                                                                                    |
| 10.3             | Form      of Subscription Agreement dated as of March 1, 2007(Incorporated by      reference to the Company’s Registration Statement on Form SB-2 filed on      July 27, 2007)                                                                                    |
|             |                                                                                                                                                                                                                                                                    |
| 10.4             | Form      of Subscription Agreement dated as of April 16, 2007(Incorporated by      reference to the Company’s Registration Statement on Form SB-2 filed on      July 27, 2007)                                                                                   |
|             |                                                                                                                                                                                                                                                                    |
| 31.1             | Certification      by Chief Executive Officer and Chief Financial Officer pursuant to      Sarbanes-Oxley Section 302 (filed herewith).                                                                                                                                 |
|             |                                                                                                                                                                                                                                                                    |
| 32.1             | Certification      by Chief Executive Officer and Acting Chief Financial Officer pursuant to      18 U.S.C. Section 1350 (filedherewith).                                                                                                                               |

----

|   | CARBON      SCIENCES, INC. |                                                                                             |
|--------|----------------------------|--------------------------------------------------------------------------------------------------|
|   |                       |                                                                                             |   |
|   | By:                        | /s/ Derek      W. McLeish                                                                   |   |
|   |                       | Chief      Executive Officer (Principal Executive Officer ) and Acting                           |   |
|   |                       | Chief      Financial Officer (Principal      Financial Officer and Principal Accounting Officer) |   |
|   |                       |                                                                                             |   |