UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q


(Mark
One)





x 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED March 31,
2009




 ̈ TRANSITION REPORT UNDER
SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




FOR THE
TRANSITION PERIOD FROM __________ TO __________


COMMISSION
FILE NUMBER: 333-144931





CARBON SCIENCES,
INC.


(Name of
registrant in its charter)





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




5511C  Ekwill
Street, Santa Barbara, California 93111


(Address
of principal executive offices) (Zip Code)





Issuer’s
telephone Number: (805)
456-7000





WITH
COPIES TO:





Gregory
Sichenzia, Esq.


Marcelle
S. Balcombe, Esq.


Sichenzia
Ross Friedman Ference LLP


61
Broadway, 32 nd
Flr.


New York,
New York 10006


(212)
930-9700





Indicate
by check mark whether the registrant (1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  x
  No  o




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
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer o
            
            Accelerated
      filer oNon-accelerated
      filer o
            
            Smaller
      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  o
  No  x




The
number of shares of registrant’s common stock outstanding, as of May 7, 2009 was
154,021,000.




















CARBON
SCIENCES, INC.


INDEX





PART
      I: FINANCIAL INFORMATIONITEM
      1:
                                                
                                                FINANCIAL
      STATEMENTS (Unaudited)
                                                
                                                3Balance
      Sheets
                                                
                                                3Statements
      of Operations
                                                
                                                4Statements
      of Cash Flows
                                                
                                                6Notes
      to the Financial Statements
                                                
                                                7ITEM
      2:
                                                
                                                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                                                
                                                9ITEM
      3 :
                                                
                                                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                                
                                                12ITEM
      4:
                                                
                                                CONTROLS
      AND PROCEDURES
                                                
                                                12PART
      II: OTHER INFORMATIONItem
      1
                                                
                                                LEGAL
      PROCEEDINGS
                                                
                                                13ITEM
      1A :
                                                
                                                RISK
      FACTORS
                                                
                                                13ITEM
      2
                                                
                                                UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
                                                
                                                13ITEM
      3
                                                
                                                DEFAULTS
      UPON SENIOR SECURITIES
                                                
                                                13ITEM
      4
                                                
                                                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                                                
                                                13ITEM
      6:
                                                
                                                EXHIBITS
                                                
                                                14SIGNATURES
                                                
                                                15







2










PART I   – FINANCIAL INFORMATION




ITEM
1. FINANCIAL STATEMENTS





CARBON
SCIENCES, INC.
 (A
Development Stage Company)
 BALANCE
SHEETS
 March
      31, 2009
                                      
                                      
                                      December
      31, 2008(unaudited)ASSETSCURRENT
      ASSETSCash
                                      
                                      $
                                      49,701
                                      
                                      
                                      $
                                      45,292Other
      receviable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      2,400Prepaid
      expenses
                                      
                                      
                                      28,272
                                      
                                      
                                      
                                      2,720Total
      Current Assets
                                      
                                      
                                      77,973
                                      
                                      
                                      
                                      50,412PROPERTY
      & EQUIPMENT, at costMachinery
      & equipment
                                      
                                      
                                      71,498
                                      
                                      
                                      
                                      71,498Computer
      equipment
                                      
                                      
                                      17,559
                                      
                                      
                                      
                                      17,559Mobile
      Vehicle
                                      
                                      
                                      40,252
                                      
                                      
                                      
                                      40,252129,309
                                      
                                      
                                      
                                      129,309Less
      accumulated depreciation
                                      
                                      
                                      (33,980
                                      )
                                      
                                      
                                      (28,302
                                      )Net
      Property and Equipment
                                      
                                      
                                      95,329
                                      
                                      
                                      
                                      101,007OTHER
      ASSETSPatents
                                      
                                      
                                      8,773
                                      
                                      
                                      
                                      8,773TOTAL
      ASSETS
                                      
                                      $
                                      182,075
                                      
                                      
                                      $
                                      160,192LIABILITIES
      AND SHAREHOLDERS' EQUITY/(DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
                                      
                                      $
                                      40,010
                                      
                                      
                                      $
                                      34,806Accrued
      expenses
                                      
                                      
                                      35,407
                                      
                                      
                                      
                                      43,552Note
      payable, investor
                                      
                                      
                                      140,000
                                      
                                      
                                      
                                      50,000Note
      payable, officer
                                      
                                      
                                      18,000
                                      
                                      
                                      
                                      -TOTAL
      CURRENT LIABILITIES
                                      
                                      
                                      233,417
                                      
                                      
                                      
                                      128,358SHAREHOLDERS'
      EQUITY/(DEFICIT)Common
      Stock, $0.001 par value;500,000,000
      authorized common shares148,342,000
      shares issued and outstanding
                                      
                                      
                                      148,342
                                      
                                      
                                      
                                      148,342Additional
      Paid in Capital
                                      
                                      
                                      2,155,533
                                      
                                      
                                      
                                      2,155,533Stock
      subscription payable
                                      
                                      
                                      275,650
                                      
                                      
                                      
                                      62,000Accumulated
      Deficit during the development stage
                                      
                                      
                                      (2,630,867
                                      )
                                      
                                      
                                      (2,334,041
                                      )TOTAL
      SHAREHOLDERS' EQUITY/(DEFICIT)
                                      
                                      
                                      (51,342
                                      )
                                      
                                      
                                      31,834TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
                                      
                                      $
                                      182,075
                                      
                                      
                                      $
                                      160,192
       3
  CARBON
SCIENCES, INC.
 (A
Development Stage Company)
 STATEMENTS OF
OPERATIONS
  From
      Inception onThree
      Months Ended

                                                March
      31,
                                            
                                            
                                            August
      25,2006

                                                through2009
                                            
                                            
                                            2008
                                            
                                            
                                            March
      31, 2009REVENUE
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            -OPERATING
      EXPENSESSelling
      and marketing expenses
                                            
                                            
                                            176,286
                                            
                                            
                                            
                                            149,638
                                            
                                            
                                            
                                            1,705,367General
      and administrative expenses
                                            
                                            
                                            60,929
                                            
                                            
                                            
                                            38,767
                                            
                                            
                                            
                                            501,888Research
      and development
                                            
                                            
                                            51,861
                                            
                                            
                                            
                                            42,258
                                            
                                            
                                            
                                            425,471Depreciation
      expense
                                            
                                            
                                            5,678
                                            
                                            
                                            
                                            4,212
                                            
                                            
                                            
                                            33,980TOTAL
      OPERATING EXPENSES
                                            
                                            
                                            294,754
                                            
                                            
                                            
                                            234,875
                                            
                                            
                                            
                                            2,666,706LOSS
      FROM OPERATIONS BEFORE  OTHER INCOME/(EXPENSES)
                                            
                                            
                                            (294,754
                                            )
                                            
                                            
                                            (234,875
                                            )
                                            
                                            
                                            (2,666,706
                                            )OTHER
      INCOME/(EXPENSE)Interest
      income
                                            
                                            
                                            -
                                            
                                            
                                            
                                            8,560
                                            
                                            
                                            
                                            39,521Interest
      expense
                                            
                                            
                                            (2,072
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (3,682
                                            )TOTAL
      OTHER INCOME (EXPENSE)
                                            
                                            
                                            (2,072
                                            )
                                            
                                            
                                            8,560
                                            
                                            
                                            
                                            35,839NET
      LOSS
                                            
                                            $
                                            (296,826
                                            )
                                            
                                            $
                                            (226,315
                                            )
                                            
                                            $
                                            (2,630,867
                                            )BASIC
      AND DILUTED LOSS PER SHARE
                                            
                                            $
                                            (0.00
                                            )
                                            
                                            $
                                            (0.00
                                            )WEIGHTED-AVERAGE
      COMMON SHARES OUTSTANDING
                                            
                                            
                                            148,342,000
                                            
                                            
                                            
                                            148,342,000
   The
accompanying notes are an integral part to these financial
statements
    4
  CARBON
SCIENCES, INC.
 (A
Development Stage Company)
 STATEMENT OF SHAREHOLDERS' EQUITY
(DEFICIT)
 DeficitAccumulatedAdditional
                      
                      
                      Stock
                      
                      
                      during
      theCommon
      stock
                      
                      
                      Paid-in
                      
                      
                      Subscriptions
                      
                      
                      DevelopmentShares
                      
                      
                      Amount
                      
                      
                      Capital
                      
                      
                      Payable
                      
                      
                      Stage
                      
                      
                      TotalBalance
      at December 31, 2008
                      
                      
                      148,342,000
                      
                      
                      
                      148,342
                      
                      
                      
                      2,155,533
                      
                      
                      
                      62,000
                      
                      
                      
                      (2,334,041
                      )
                      
                      
                      31,834Stock
      subscription payable (unaudited)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      213,650
                      
                      
                      
                      -
                      
                      
                      
                      213,650Net
      Loss for the three months ended March 31, 2009 (unaudited)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (296,826
                      )
                      
                      
                      (296,826
                      )Balance
      at March 31, 2009 (unaudited)
                      
                      
                      148,342,000
                      
                      
                      $
                      148,342
                      
                      
                      $
                      2,155,533
                      
                      
                      $
                      275,650
                      
                      
                      $
                      (2,630,867
                      )
                      
                      $
                      (51,342
                      )
   5
   CARBON
SCIENCES, INC.
 (A
Development Stage Company)
 STATEMENT OF CASH
FLOWS
 (Unaudited)
  From
      Inception onAugust
      25,2006Three
      Months Ended
                                      
                                      
                                      through3/31/2009
                                      
                                      
                                      3/31/2008
                                      
                                      
                                      March
      31, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                      
                                      $
                                      (296,826
                                      )
                                      
                                      $
                                      (226,315
                                      )
                                      
                                      $
                                      (2,630,867
                                      )Adjustment
      to reconcile net loss to net cashused
      in operating activitiesDepreciation
      expense
                                      
                                      
                                      5,678
                                      
                                      
                                      
                                      4,212
                                      
                                      
                                      
                                      33,980Stock
      issuance for services
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      75,000(Increase)
      Decrease in:Other
      receivable
                                      
                                      
                                      2,400
                                      
                                      
                                      
                                      (12,000
                                      )
                                      
                                      
                                      -Prepaid
      expenses
                                      
                                      
                                      (25,552
                                      )
                                      
                                      
                                      39,643
                                      
                                      
                                      
                                      (28,272
                                      )Increase
      (Decrease) in:Accounts
      payable
                                      
                                      
                                      5,204
                                      
                                      
                                      
                                      (2,676
                                      )
                                      
                                      
                                      40,010Accrued
      expenses
                                      
                                      
                                      (8,145
                                      )
                                      
                                      
                                      (1,148
                                      )
                                      
                                      
                                      35,407NET
      CASH USED IN OPERATING ACTIVITIES
                                      
                                      
                                      (317,241
                                      )
                                      
                                      
                                      (198,284
                                      )
                                      
                                      
                                      (2,474,742
                                      )CASH
      FLOWS PROVIDED/(USED) IN INVESTING ACTIVITIES:Investment
      in certificates of deposit
                                      
                                      
                                      -
                                      
                                      
                                      
                                      191,441
                                      
                                      
                                      
                                      -Patent
      expenditures
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (8,773
                                      )Purchase
      of equipment
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (129,309
                                      )NET
      CASH PROVIDED/(USED) IN INVESTING ACTIVITIES
                                      
                                      
                                      -
                                      
                                      
                                      
                                      191,441
                                      
                                      
                                      
                                      (138,082
                                      )CASH
      FLOWS FROM FINANCING ACTIVITIES:Advances
      from officer
                                      
                                      
                                      40,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      113,000Loan
      from investor
                                      
                                      
                                      90,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      300,000Repayment
      of advances and loans
                                      
                                      
                                      (22,000
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (255,000
                                      )Proceeds
      from subscriptions payable
                                      
                                      
                                      213,650
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      275,650Proceeds
      from issuance of common stock
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      2,228,875NET
      CASH PROVIDED BY FINANCING  ACTIVITIES
                                      
                                      
                                      321,650
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      2,662,525NET
      INCREASE/(DECREASE) IN CASH
                                      
                                      
                                      4,409
                                      
                                      
                                      
                                      (6,843
                                      )
                                      
                                      
                                      49,701CASH,
      BEGINNING OF PERIOD
                                      
                                      
                                      45,292
                                      
                                      
                                      
                                      9,539
                                      
                                      
                                      
                                      -CASH,
      END OF PERIOD
                                      
                                      $
                                      49,701
                                      
                                      
                                      $
                                      2,696
                                      
                                      
                                      $
                                      49,701SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATIONInterest
      paid
                                      
                                      $
                                      2,072
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      1,611Taxes
      paid
                                      
                                      $
                                      800
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      800
   
   6
    CARBON
SCIENCES, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS-UNAUDITED
 MARCH 31,
2009
  1.    Basis of
Presentation
 The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
normal recurring adjustments considered necessary for a fair presentation have
been included.  Operating results for the three month period ended
March 31, 2009 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2009.  For further
information refer to the financial statements and footnotes thereto included in
the Company's Form 10-K for the year ended December 31, 2008.
 
 Going
Concern
 The
accompanying financial statements have been prepared on a going concern basis of
accounting, which contemplates continuity of operations, realization of assets
and liabilities and commitments in the normal course of business.  The
accompanying financial statements do not reflect any adjustments that might
result if the Company is unable to continue as a going concern.  The
Company does not generate significant revenue, and has negative cash flows from
operations, which raise substantial doubt about the Company’s ability to
continue as a going concern.  The ability of the Company to continue
as a going concern and appropriateness of using the going concern basis is
dependent upon, among other things, additional cash infusion.  The
Company has obtained funds from its shareholders since its inception , and
believes this funding will continue, and is also actively seeking new
investors.  Management believes the existing shareholders and the
prospective new investors will provide the additional cash needed to meet the
Company’s obligations as they become due, and will allow the development of its
core of business.
 
 2.   SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
 
 This
summary of significant accounting policies of Carbon Sciences, Inc. is presented
to assist in understanding the Company’s financial statements. The financial
statements and notes are representations of the Company’s management, which is
responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States of
America and have been consistently applied in the preparation of the financial
statements.
 
 Development Stage Activities
and Operations
 The
Company is in its initial stages of formation and has insignificant revenues.
FASB #7 defines a development stage activity as one in which all efforts are
devoted substantially to establishing a new business and even if planned
principal operations have commenced, revenues are insignificant.
 
 Revenue
Recognition
 The
Company will recognize revenue when services are performed, and at the time of
shipment of products, provided that evidence of an arrangement exists, title and
risk of loss have passed to the customer, fees are fixed or determinable, and
collection of the related receivable is reasonably assured. To date, the Company
has had no revenues and is in the development stage.
 
 Cash and Cash
Equivalents
 The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
 
 7
 
  CARBON
SCIENCES, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS-UNAUDITED
 MARCH 31,
2009
 2.   SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Loss per Share
Calculations
 The
Company adopted Statement of Financial Standards (“SFAS”) No. 128 for the
calculation of “Loss per Share”.  SFAS No. 128 dictates the
calculation of basic earnings per share and diluted earnings per share. Basic
earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares available. Diluted
earnings per share is computed similar to basic earnings per share except that
the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilutive. The Company’s diluted loss
per share is the same as the basic loss per share for the period ended March 31,
2009 as the inclusion of any potential shares would have had an anti-dilutive
effect due to the Company generating a loss.
 
 3.
              CAPITAL
      STOCK
 
 During
the three months ended March 31, 2009, the Company received $213,650 for
subscriptions payable to purchase shares of common stock through a private
placement at a price of $0.10 per share. During the three months ended March 31,
2009, the Company issued no shares of common 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 before
2005.
 
 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 is
uncertain.
 
 Included
      in the balance at March 31, 2009, are no tax positions for which the
      ultimate deductibility is highly certain but for which there is
      uncertainty about the timing of such deductibility.  Because of
      the impact of deferred tax accounting, other than interest and penalties,
      the disallowance of the shorter deductibility period would not affect the
      annual effective tax rate but would accelerate the payment of cash to the
      taxing authority to an earlier
period.
 
 The
      Company's policy is to recognize interest accrued related to unrecognized
      tax benefits in interest expense and penalties in operating
      expenses.
 
 5.
                SUBSEQUENT
      EVENTS
 
 During
      April 2009, the Company received $202,250 for stock subscriptions payable
      to purchase shares of common stock at a price of $0.10 per
      share.
 
 On
      April 5, 2009, the Company and Dr. Naveed Aslam, the Company’s Chief
      Technology Officer entered into a stock option agreement, whereby Dr.
      Aslam purchased the option to acquire 5,000,000 shares of the Company’s
      common stock at an exercise price of $0.10 per share.  Dr. Aslam
      was appointed as Chief Technology Officer on January 5,
    2009.
 
 On
      April 5, 2009, the Company and Mr. Byron Elton, the Company’s President
      entered into a stock option agreement, whereby Mr. Elton purchased the
      option to acquire 15,000,000 shares of the Company’s common stock at an
      exercise price of $0.10 per share. Mr. Elton was appointed President and
      Chief Operating Officer on January 5,
2009.




8








I TEM 2:  MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




Some of
the information in this report contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "expect," "anticipate," "believe,"
"estimate" and "continue," or similar words. You should read statements that
contain these words carefully because they:




·
            discuss
      our future expectations;




·
            contain
      projections of our future results of operations or of our financial
      condition; and




·
            state
      other "forward-looking"
information.




We
believe it is important to communicate our expectations. However, there may be
events in the future that we are not able to accurately predict or over which we
have no control. Our actual results and the timing of certain events could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth under "Risk Factors,"
"Business" and elsewhere in this report. See "Risk Factors."




OVERVIEW




Carbon
Sciences is developing a technology to convert the greenhouse gas, carbon
dioxide (CO2), into gasoline and other fuels.





The fuels
we use today, such as gasoline and jet fuel, are made up of chains of hydrogen
and carbon atoms aptly called hydrocarbons. In general, the greater the number
of carbon atoms there are in a hydrocarbon molecule, the greater the energy
content of that fuel. For example, gasoline has hydrocarbons with 7 to 10 carbon
atoms and jet fuel has 10 to 16 carbon atoms. Hydrocarbons are naturally
occurring in fuel sources such as petroleum and natural gas. To create fuel,
hydrogen and carbon atoms must be bonded together to create hydrocarbon
molecules.





Our
CO2-to-Fuel technology directly transforms CO2 and H20 (water) into low level
hydrocarbons.  These low level hydrocarbons can then be easily used to
produce high level fuels, such as gasoline and jet fuel with readily available
technology.  The key to our CO2-to-Fuel technology lies in a
proprietary multi-step biocatalytic process. Instead of using expensive
inorganic catalysts, such as zinc, gold or zeolite, with traditional high energy
catalytic chemical processes, our process uses inexpensive, renewable
biomolecules to catalyze certain chemical reactions required to transform CO2
into basic hydrocarbon building blocks. Of greatest significance, our process
occurs at low temperature and low pressure, thereby requiring far less energy
than other approaches.





The
energy efficient biocatalytic processes we are exploiting in our technology
actually occur in all living organisms where carbon atoms, extracted from CO2,
and hydrogen atoms, extracted from H2O, are combined to create hydrocarbon
molecules.  Our breakthrough technology allows these processes to
operate on a very large industrial scale through advance nano-engineering of the
biocatalysts and highly efficient process design.





Our
corporate mission is to enable a sustainable world of fuel consumption and
climate stability by transforming CO2 into fuel. When commercially developed,
our CO2-to-Fuel technology can be used to transform CO2 emitted from fossil fuel
power plants into gasoline, to power our cars.







Corporate
Overview




We were
incorporated in the State of Nevada on August 25, 2006, as Zingerang, Inc. Our
name was changed to Carbon Sciences, Inc. on April 9, 2007. Our principal
executive offices are located at 5511C Ekwill Street, Santa Barbara, California
93111, and our telephone number is (805) 456-7000. Our fiscal year end is
December 31







9






Our
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosures of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates, including those related to impairment
of property, plant and equipment, intangible assets, deferred tax assets and
fair value computation using the Black Scholes option pricing model. We base our
estimates on historical experience and on various other assumptions, such as the
trading value of our common stock and estimated future undiscounted cash flows,
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions; however,
we believe that our estimates, including those for the above-described items,
are reasonable.




Revenue
Recognition





Revenue on product sales is
recognized when persuasive evidence of an
arrangement exists, such as when a purchase order or contract is
received from the customer, the selling price is fixed, title to the goods
has changed and there is a reasonable assurance of collection of the
sales proceeds.  We obtain written purchase authorizations from
our customers for a specified amount of product at a specified price
and consider delivery to have occurred at the time
of shipment.  Revenue is recognized at shipment and we
record a reserve for estimated sales returns, which
is reflected as a reduction of revenue at the time of revenue recognition.
We defer revenue on products sold directly to the consumer with a fifteen day
right of return. Revenue is recognized upon the expiration of the right of
return.





Revenues
from research and development activities relating to firm fixed-price
contracts are generally recognized on the percentage-of-completion
method of accounting as costs are incurred (cost-to-cost basis). 
Revenues from research and development activities relating to
cost-plus-fee contracts include costs incurred plus a portion of
estimated fees or profits based on the relationship of costs incurred to
total estimated costs.  Contract costs include all direct
material and labor costs and an allocation of allowable
indirect costs as defined by each contract, as periodically adjusted to
reflect revised agreed upon rates. These rates are subject to audit by the
other party.





Use
of Estimates





In
accordance with accounting principles generally accepted in the United States,
management utilizes estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements as well as the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. These estimates and assumptions relate to
recording net revenue, collectability of accounts receivable, useful lives and
impairment of tangible and intangible assets, accruals, income taxes, inventory
realization, stock-based compensation expense and other factors. Management
believes it has exercised reasonable judgment in deriving these estimates.
Consequently, a change in conditions could affect these estimates.





Fair
Value of Financial Instruments





The
Company's cash, cash equivalents, investments, accounts receivable and accounts
payable are stated at cost which approximates fair value due to the short-term
nature of these instruments.





Recently
Issued Accounting Pronouncements





In
December 2004, the Financial Accounting Standards Board issued two FASB Staff
Positions - FSP FAS 109-1, Application of FASB Statement 109 "Accounting for
Income Taxes" to the Tax Deduction on Qualified Production Activities Provided
by the American Jobs Creation Act of 2004, and FSP FAS 109-2 Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision within the
American Jobs Creation Act of 2004. Neither of these affected the Company as it
does not participate in the related activities.




In May 2005, the FASB issued FASB Statement No.
154, “Accounting Changes and Error Corrections.” This new standard replaces APB
Opinion No. 20, “Accounting Changes, and FASB Statement No. 3, Reporting
Accounting Changes in Interim Financial Statements,” and represents another step
in the FASB’s goal to converge its standards with those issued by the IASB.
Among other changes, Statement 154 requires that a voluntary change in
accounting principle be applied retrospectively with all prior period financial
statements presented on the new accounting principle, unless it is impracticable
to do so. Statement 154 also provides that (1) a change in method of
depreciating or amortizing a long-lived non-financial asset be accounted for as
a change in estimate (prospectively) that was effected by a change in accounting
principle, and (2) correction of errors in previously issued financial
statements should be termed a “restatement.” The new standard is effective for
accounting changes and correction of errors made in fiscal years beginning after
December 15, 2005. Early adoption of this standard is permitted for accounting
changes and correction of errors made in fiscal years beginning after June 1,
2005. The Company has evaluated the impact of the adoption of Statement 154 and
does not believe the impact will be significant to the Company's overall results
of operations or financial position.







10






RESULTS
OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2009 COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 2008




Selling and Marketing
Expenses




Selling
and Marketing ("S&M") expenses increased by $56,648 or 37.86% to $206,286
for the three months ended March 31, 2009, compared to the prior period. The
increase in S&M expenses was due primarily to an increase in market
exposure.




General and Administrative
Expenses




General
and administrative ("G&A") expenses increased by $22,162 or 57.17% to
$60,929 for the three months ended March 31, 2009, compared to the prior period.
The increase in G&A expenses was due primarily to an increase in rent
expense.




Research and
Development




Research
and Development ("R&D") costs increased by $9,603 or 22.72% to $51,861 for
the three months ended March 31, 2009, compared to the prior period. The
increase in R&D was the result of an increase in employee salaries.




Net Loss




Net Loss
for the three months ended March 31, 2009 was $296,826 compared to $226,315 for
the prior period. Currently the Company is in its development stage and had no
revenues.




Liquidity
and Capital Resources




As of March 31, 2009, we had a ($155,444) working
capital deficit as compared to working capital of $720,679 as of March
31, 2008. This decrease of $876,123 was due primarily to use of funds for
operating expenses.





During the three months ended March 31, 2009, the Company used $317,241 of
cash for operating activities, as compared to $198,284 for the three months
ended March 31, 2008. The increase in the use of cash for operating activities
was a result of an increase in selling and marketing, and general and
administrative expenses, and research & development.





Cash
provided by investing activities was $0 and $191,441 for the three months ended
March 31, 2009 and 2008, respectively.





Cash provided from financing activities during the three months ended March 31,
2009 was $321,650 as compared to $0 for the three months ended March 31, 2008.
Our capital needs have primarily been met from the proceeds of
private placements, as we are currently in the development stage and had no
revenues.





Our
financial statements as of March 31, 2009 have been prepared under the
assumption that we will continue as a going concern. Our independent registered
public accounting firm has issued their report dated May 7, 2009 that included
an explanatory paragraph expressing substantial doubt in our ability to continue
as a going concern without additional capital becoming available. Our ability to
continue as a going concern ultimately is dependent on our ability to generate a
profit which is dependent upon our ability to obtain additional equity or debt
financing, attain further operating efficiencies and, ultimately, to achieve
profitable operations. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.





PLAN
OF OPERATION AND FINANCING NEEDS





We are
engaged in developing a technology to convert the greenhouse gas, carbon dioxide
(CO2), into a useful form that will not contribute to global warming. We plan to
develop our products and thereafter focus our efforts on establishing markets in
the power plants and industrial factories sectors by 2010.





Our plan
of operation within the next twelve months is to utilize our cash balances to
continue research and development of our CO2-to-Fuel technology.  We
believe that our current cash and investment balances will be sufficient to
support development activity and general and administrative expenses for the
next twelve months. Management estimates that it will require additional cash
resources during 2009, based upon its current operating plan and condition. We
will be investigating additional financing alternatives, including equity and/or
debt financing. There is no assurance that capital in any form would be
available to us, and if available, on terms and conditions that are acceptable.
If we are unable to obtain sufficient funds during the next twelve months, we
may be forced to reduce the size of our organization, which could have a
material adverse impact on, or cause us to curtail and/or cease, the development
of our products.






11






Off-Balance
Sheet Arrangements





We do not
have any off balance sheet arrangements that are reasonably likely to have a
current or future effect on our financial condition, revenues, and results of
operations, liquidity or capital expenditures.





ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





n/a




ITEM 4T. CONTROLS AND
PROCEDURES





As of the
end of the period covered by this report, we conducted an evaluation, under the
supervision and with the participation of our chief executive officer and chief
financial officer of our disclosure controls and procedures (as defined in Rule
13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation,
our chief executive officer and chief financial officer concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is: (1) accumulated and communicated to our management, including
our chief executive officer and chief financial officer, as appropriate to allow
timely decisions regarding required disclosure; and (2) recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms. There was no change to our internal controls or in other
factors that could affect these controls during our last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.







12







PART II - OTHER
INFORMATION





ITEM
1. LEGAL PROCEEDINGS





We are
not a party to any pending legal proceeding, nor is our property the subject of
a pending legal proceeding, that is not in the ordinary course of business or
otherwise material to the financial condition of our business. None of our
directors, officers or affiliates is involved in a proceeding adverse to our
business or has a material interest adverse to our business.




ITEM 1A. RISK FACTORS




There are
no material changes from the risk factors previously disclosed in the
Registrant’s Form 10-K filed on April 14, 2009.




ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS




The
Company issued an aggregate of 5,256,500 shares of common stock at a purchase
price of $.10 per share for cash in the amount of $525,650, through a private
placement offering which closed on April 8, 2009.





The
offering was conducted in reliance on an exemption from the registration
requirements of the Securities Act of 1933, as amended (the “Act”), pursuant to
Rule 506 and Section 4(2) of the Act.





ITEM
3. DEFAULTS UPON SENIOR SECURITIES




None




ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




None









13





ITEM 6. EXHIBITS




Exhibit
      No.
                              
                              Description3.1
                              
                              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)3.3
                              
                              Bylaws
      of Carbon Sciences, Inc. (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 10.2on 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 10.3on 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 10.4on Form SB-2 filed
      on July 27, 2007)14.1
                              
                              Code
      of Ethics (Incorporated by reference to the Company’s Annual Report on
      Form 10-K for the year ended December 31, 2007 14.1filed on March 26,
      2008)31.1*
                              
                              Certification
      by Chief Executive Officer and Acting Chief Financial Officer pursuant to
      Sarbanes-Oxley Section 30232.1*
                              
                              Certification
      by Chief Executive Officer and Acting Chief Financial Officer pursuant to
      18 U.S.C. Section
1350
 *Filed
herewith








14







SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on May 13,
2009.





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















15