UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 _________________________
 
 FORM 10-K/A
 (Amendment No. 1)
 _________________________
 
 ANNUAL REPORT UNDER SECTION 13 OR 15 (D)
 OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
 
 COMMISSION FILE NO.: 0-28887
 CARBONICS CAPITAL CORPORATION
 (Exact name of registrant as specified in its charter)
 
 Delaware

22-3328734(State of other jurisdiction of

(IRS Employerincorporation or organization

Identification No.)One Penn Plaza, Suite 1612, New York, NY
10119(Address of principal executive offices)
(Zip Code)(212) 994-5374(Registrant’s telephone number)
 
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 406 of the Securities Act.  Yes __ No XIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes __ No XIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 __Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes ___  No _____Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (Check One): Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer___ Small reporting company XIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes _ No XAs of June 30, 2009 (the last business day of the most recently completed second fiscal quarter) the aggregate market value of the common stock held by non-affiliateswas approximately $338,289.As of April 15, 2010, there were 2,129,610,016 shares of common stock outstanding.
 
 
 Amendment No. 1
 
 This Amendment No.1 on Form 10-K/A, which amends and restates items identified below with respect to the Form 10- K, filed by Carbonics Corporation ("we" or "the Company") with the Securities and Exchange Commission (the "SEC") on April 15, 2010 (the "Original Filing"), is being filed  in order to :
  ·
Include restated financial statements as described in Note 11 to the financial statements;
 ·
Amend Item 2, Management’s Discussion and Analysis, to reflect the amended financial statements;
 ·
Amend the following notes under Item 7, Financial Statements and Supplementary Schedules, to reflect the amended financial statements:
 o
Note 3, Summary of Significant Accounting Policies, was updated to add the Company’s cash equivalents policy and correct the values in the table reconciling changes in embedded conversion liabilities;
 o
Note 4, Financing Arrangements, was updated to correct the fixed debt service amounts for the year ending December 31, 2010 and to correct certain disclosures about changes in fair value and other activity for conversion features underlying convertible debentures;
 o
Note 5, Income Taxes, to update the effect of net operating loss carry forwards on deferred tax assets in 2009 and the related change in valuation allowance;
 o
Note 6, Related Party Transactions, was updated for transaction activity during 2009;
 o
Note 7, Discontinued Operations, was updated to disclose the major classes of assets and liabilities and the components of discontinued operations for the year ended December 31, 2009 were updated;
 o
Note 11, Restatements, was added to outline the changes that were made to the financial statements;
 o
Note 12, Subsequent Events, (formerly Note 11) was updated to show the common stock conversions that occurred subsequent to year-end.
 None of the other disclosures in this Report have been amended or updated.  For updated information about Carbonics Corporation, please refer to the more recent filings made with the SEC.
 2
 CARBONICS CAPITAL CORPORATION
 ANNUAL REPORT ON FORM 10K
 FOR THE FISCALYEAR ENDED DECEMBER 31, 2009
 
 TABLE OF CONTENTS
 PagePart IItem 1
Business
4Item 1A
Risk Factors
5Item 2
Description of Properties
7Item 3
Legal Proceedings
7Part IIItem 4
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities
8Item 5
Selected Financial DataItem 6
Management’s Discussion and Analysis
9Item 7
Financial Statements and Supplementary Data
11Item 9
Changes and Disagreements with Accountants on Accounting and Financial Disclosure
23Item 8A
Controls and Procedures
23Item 8B
Other Information
25Part IIIItem 9
Directors, Executive Officers and Corporate Governance
25Item 10
Executive Compensation
25Item 11
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
26Item 12
Certain Relationships and Related Transactions and Director Independence
26Item 13
Principal Accountant Fees and Services
28Part IVItem 14
Exhibits and Financial Statement Schedules
28Signatures

34
 
 2
 PART I
  Basis of Presentation
 In this Annual Report on Form 10-K, the terms “we,” “our,” “us,” “Carbonics,” “Carbonics Corporation” or the “Company” refer to Carbonics Capital Corporation, and its subsidiaries on a consolidated basis. The term “Carbonics Capital Corporation” refers to Carbonics Capital Corporation on a stand-alone basis only, and not its subsidiaries.
  Forward Looking Statements
 We make certain forward-looking statements in this Annual Report on Form 10-K and in the documents that are incorporated herein by reference. These forward-looking statements relate to our outlook or expectations for earnings, revenues, expenses, asset quality or other future financial or business performance, strategies or expectations, or the impact of legal, regulatory or supervisory matters on our business, results of operations or financial condition. Specifically, forward-looking statements may include statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions. These statements reflect our management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Future performance cannot be ensured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause our actual results to differ include:
 
 Ø
the volatility and uncertainty of commodity prices;Ø
the costs and business risks associated with developing new products and entering new markets;Ø
our ability to locate and integrate future acquisitions;Ø
the impact of new, emerging and competing technologies on our business;Ø
the possibility of one or more of the markets in which we compete being impacted by political, legal and regulatory changes or other external factors over which they have no control;Ø
changes in or elimination of governmental laws, tariffs, trade or other controls or enforcement practices;Ø
our reliance on key management personnel;Ø
limitations and restrictions contained in the instruments and agreements governing our indebtedness;Ø
our ability to raise additional capital and secure additional financing;Ø
our ability to implement additional financial and management controls, reporting systems and procedures and comply with Section 404 of the Sarbanes-Oxley Act, as amended; andØ
other risks referenced from time to time in our filings with the SEC and those factors listed in this Form 10K under Item 1A, Risks Factors. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Form 10-K, or in the case of a document incorporated by reference, as of the date of that document. Except as required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this Form 10-K or to reflect the occurrence of unanticipated events.
 
 3
 ITEM 1
BUSINESS
 OVERVIEW
 Carbonics Capital Corporation (“we,” “our,” “us,” “Carbonics,” or the “Company”) was founded to recycle carbon dioxide into value-added products.
  Our activities during 2009 primarily involved evaluation of a number of different biological, chemical and other technologies designed to recycle carbon dioxide into value-added products, the execution of a license agreement for a technology capable of recycling of carbon dioxide in applications involving coal-fired power production, and the completion of research and development activities involving the carbon recycling technologies.
  Our operations during 2009 also involved the maintenance of our idled oilseed crush facility in Culbertson, Montana. A lender to the subsidiary that operated the facility took assignment of this property in lieu of foreclosure during February 2010, and the results of operations of this facility are reported herein in discontinued operations. We are currently seeking buyers for the Company’s remaining oilseed crush assets, as well as opportunities to provide design, engineering and project development services relating to these assets.
  Our strategic plan moving forward involves the acquisition of strategic and accretive assets. We are currently evaluating qualified opportunities that produce the raw materials needed for our technologies, or that have the infrastructure we need to scale our technologies, or that have the ability to refine the products we produce with our technologies into finished goods. Our plan in this respect is to leverage the targeted assets and cash flows to defray our technology and financing risk as we commercialize our technologies.
  INTELLECTUAL PROPERTIES
 Carbonics, Carbonics Capital Corporation, and the “Carbonics Logo” are the registered trademarks of Carbonics Capital Corporation.
  Carbonics is party to a technology commercialization agreement with GreenShift, pursuant to which GreenShift has agreed to provide commercialization support services and access to GreenShift’s technologies in applications outside of the ethanol industry. Carbonics is also party to an Early Adopter License Agreement (“EALA”) pertaining to the exclusive use of technology capable of recycling of carbon dioxide in applications involving coal-fired power production. The Company’s ongoing research and development activities mostly involve laboratory scale bench testing, with a view towards construction of a demonstration scale pilot facility based on the Company’s licensed technologies by 2011.
  EMPLOYEES
 As of December 31, 2009, Carbonics Capital employed three at-will employees. There is no union representation for any of our employees.
 
 ITEM 1A
RISK FACTORS
 There are many important factors that have affected, and in the future could affect, Carbonics’ business, including, but not limited to the factors discussed below, which should be reviewed carefully together with other information contained in this report. Some of the factors are beyond our control and future trends are difficult to predict.
  There is substantial doubt concerning our ability to continue as a going concern.
 Carbonics had an operating loss of $440,855 and used cash in operations of $605,770 for the year ended December 31, 2009, and had $5,800 in cash at December 31, 2009. These matters raise substantial doubt about our ability to continue as a going concern. Management’s plans include raising additional proceeds from debt and equity transactions and completing strategic acquisitions.
  We are implementing new business plans which make the results of our business uncertain.
 Our limited operating history makes it difficult for potential investors to evaluate our business. Therefore, our proposed operations are subject to all of the risks inherent in the initial expenses, challenges, complications and delays frequently encountered in connection with the
 
 4
 
 formation of any new business, as well as those risks that are specific to early-stage technology development companies in general. Investors should evaluate an investment in our company in light of the problems and uncertainties frequently encountered by companies attempting to develop markets for new products, services and technologies. Despite best efforts, we may never overcome these obstacles to achieve financial success. Our business is speculative and dependent upon the implementation of our business plan, as well as our ability to enter into agreements with third parties for necessary financing. There can be no assurance that our efforts will be successful or result in revenue or profit. There is no assurance that we will earn significant revenues or that our investors will not lose their entire investment.
  The fiscal efficiencies of highly capitalized competitors could defeat our efforts to capture a viable market share.
 The business of developing new technologies is a capital-intense business, requiring substantial capital resources. The costs that we may incur in obtaining capital are substantially greater per dollar than the cost incurred by large scale enterprises in the industry. This situation could cause us to be unable to compete effectively.
  The exercise of our outstanding warrants and options and Carbonics Capital Corporation’s various anti-dilution and price-protection agreements could cause the market price of our common stock to fall, and may have dilutive and other effects on our existing stockholders.
 The exercise of our outstanding warrants and options could result in the issuance of up to 2,750,000 shares of common stock, assuming all outstanding warrants and options are currently exercisable. Such issuances would reduce the percentage of ownership of our existing common stockholders and could, among other things, depress the price of our common stock. This result could detrimentally affect our ability to raise additional equity capital. In addition, the sale of these additional shares of common stock may cause the market price of our stock to decrease.
  We lack capital to fund our operations.
 During the twelve months ended December 31, 2009 our operations used $605,770 in cash, but our debt service obligations required cash in excess of that amount. Loans from some of our shareholders and the issuance of convertible debentures funded our debt service. Those individuals may not be able to continue to fund our operations or our debt service.
  Our failure to attract qualified engineers and management personnel could hinder our success.
 Our ability to attract and retain qualified engineers and other professional personnel when we need them will be a major factor in determining our future success. There is a very competitive market for individuals with advanced engineering training, and we are not assured of being able to retain the personnel we will need.
  Key personnel are critical to our business and our future success depends on our ability to retain them
 Our success depends on the contributions of our key management, and engineering personnel. The loss of these officers could result in lost sales opportunities, lost business, difficulties operating our assets, difficulties raising additional funds and could therefore significantly impair our financial condition. Our future success depends on our ability to retain and expand our staff of qualified personnel, including environmental technicians, sales personnel and engineers.
  Viridis Capital can exert control over us and may not make decisions that further the best interests of all stockholders.
 Viridis Capital, LLC controls the majority of our outstanding Series C preferred stock. The preferred shares are convertible into about 78% of our Common Stock. As a result, Viridis exerts a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change in control of us and might affect the market price of our common stock, even when a change in control may be in the best interest of all stockholders. Furthermore, the interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders and accordingly, they could cause us to enter into transactions or agreements which we would not otherwise consider.
 
 5
 
 Investing in our stock is highly speculative and you could lose some or all of your investment.
 The value of our common stock may decline and may be affected by numerous market conditions, which could result in the loss of some or the entire amount invested in our stock. The securities markets frequently experience extreme price and volume fluctuations that affect market prices for securities of companies generally and very small capitalization companies such as us in particular.
  The volatility of the market for Carbonics Capital Corporation common stock may prevent a shareholder from obtaining a fair price for his shares.
 The common stock of Carbonics Corporation is quoted on the OTC Bulletin Board. It is impossible to say that the market price on any given day reflects the fair value of Carbonics Corporation, since the price sometimes moves up or down by 50% or more in a week’s time. A shareholder in Carbonics Corporation who wants to sell his shares, therefore, runs the risk that at the time he wants to sell, the market price may be much less than the price he would consider to be fair.
 
 Our common stock qualifies as a "penny stock" under SEC rules which may make it more difficult for our stockholders to resell their shares of our common stock.
 Our common stock trades on the OTC Bulletin Board. As a result, the holders of our common stock may find it more difficult to obtain accurate quotations concerning the market value of the stock. Stockholders also may experience greater difficulties in attempting to sell the stock than if it were listed on a stock exchange or quoted on the NASDAQ Global Market or the NASDAQ Capital Market. Because our common stock does not trade on a stock exchange or on the NASDAQ Global Market or the NASDAQ Capital Market, and the market price of the common stock is less than $5.00 per share, the common stock qualifies as a "penny stock." SEC Rule 15g-9 under the Securities Exchange Act of 1934 imposes additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as an "established customer" or an "accredited investor." This includes the requirement that a broker-dealer must make a determination on the appropriateness of investments in penny stocks for the customer and must make special disclosures to the customer concerning the risks of penny stocks. Application of the penny stock rules to our common stock affects the market liquidity of the shares, which in turn may affect the ability of holders of our common stock to resell the stock.
  Only a small portion of the investment community will purchase “penny stocks” such as our common stock.
 Carbonics Corporation common stock is defined by the SEC as a “penny stock” because it trades at a price less than $5.00 per share. Carbonics Corporation common stock also meets most common definitions of a “penny stock,” since it trades for less than $1.00 per share. Many brokerage firms will discourage their customers from purchasing penny stocks, and even more brokerage firms will not recommend a penny stock to their customers. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not consider a purchase of a penny stock due, among other things, to the negative reputation that attends the penny stock market. As a result of this widespread disdain for penny stocks, there will be a limited market for Carbonics Corporation common stock as long as it remains a “penny stock.” This situation may limit the liquidity of your shares.
  ITEM 2
DESCRIPTION OF PROPERTIES Carbonics Capital Corporation currently maintains office at One Penn Plaza, Suite 1612, New York, NY. The lease for this space expires in May of 2011. We paid $0 in rent during 2009. During 2010, we are being permitted to use the premises for no charge by GreenShift Corporation, the primary tenant. We believe these offices will be sufficient for our needs for the foreseeable future.
  ITEM 3
LEGAL PROCEEDINGS None.
 
 6
 PART II
  ITEM 4
MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDERMATTERS Carbonics Capital Corporation’s Common Stock trades on the OTC Bulletin Board under the symbol “CICS.” The following table sets forth, for the periods indicated, the range of high and low closing bid prices for the Company's Common Stock during the past two years as reported by the National Association of Securities Dealers composite feed or other qualified inter-dealer quotation medium. The reported bid quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions.
 
 Period

High


Low2008 First Quarter


0.030



0.02002008 Second Quarter


0.004



0.00402008 Third Quarter


0.004



0.00402008 Fourth Quarter


0.002



0.00122009 First Quarter


0.003



0.0032009 Second Quarter


0.0015



0.00122009 Third Quarter


0.0019



0.00162009 Fourth Quarter


0.0005



0.0004
 
 Title of Class
Approximate Number of Holders of Record as of April 15, 2010Common Stock, 0.001 par

145
 
 The number of holders does not give effect to beneficial ownership of shares held in the street name of stock brokerage houses or clearing agents and does not necessarily reflect the actual ownership of the shares.
  REVERSE SPLIT
 On February 11, 2008, the Company completed a 1 for 20 reverse stock-split. All stock prices, share amounts, per share information, stock options and stock warrants in this Report reflect the reverse stock split.
  DIVIDENDS
 We have no present intention of paying dividends in the foreseeable future. Our policy for the time being is to retain earnings and utilize the funds for operations and growth. Future dividend policies will be determined by the Board of Directors based on our earnings, financial condition, capital requirements and other existing conditions.
  SALE OF UNREGISTERED SECURITIES
 Carbonics Capital Corporation did not sell any unregistered equity securities during the 4th quarter of 2009.
  REPURCHASE OF EQUITY SECURITIES
 Carbonics Capital Corporation did not repurchase any of its equity securities that were registered under Section 12 of the Securities Act during the 4th quarter of 2009.
  ITEM 5
SELECTED FINANCIAL DATA Not applicable.
  ITEM 6
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONSAND RESULTS OF OPERATION
 Carbonics Capital Corporation (“we,” “our,” “us,” “Carbonics,” or the “Company”) was founded to recycle carbon dioxide into value-added products.
  Our activities during 2009 primarily involved evaluation of a number of different biological, chemical and other technologies designed to recycle carbon dioxide into value-added products, the execution of a license agreement for a technology capable of recycling of carbon dioxide in applications involving coal-fired power production, and the completion of research and development activities involving the carbon recycling technologies
 .
 7
 
 Our operations during 2009 also involved the maintenance of our idled oilseed crush facility in Culbertson, Montana. A lender to the subsidiary that operated the facility took assignment of this property in lieu of foreclosure during February 2010, and the results of operations of this facility are reported herein in discontinued operations. We are currently seeking buyers for the Company’s remaining oilseed crush assets, as well as opportunities to provide design, engineering and project development services relating to these assets.
  Our strategic plan moving forward involves the acquisition of strategic and accretive assets as well as exploitation of the technology licensed by the Company under the EALA. We are currently evaluating qualified opportunities that produce the raw materials needed for our technologies, or that have the infrastructure we need to scale our technologies, or that have the ability to refine the products we produce with our technologies into finished goods. Our plan in this respect is to leverage the targeted assets and cash flows to defray our technology and financing risk as we commercialize our technologies. The Company’s ongoing research and development activities mostly involve laboratory scale bench testing, with a view towards construction of a demonstration scale pilot facility based on the Company’s licensed technologies by 2011.
  RESULTS OF OPERATIONS
  Year Ended December 31, 2009 Compared to Year Ended December 31, 200
 Revenues
 There were no revenues from continuing operations for the year ended December 31, 2009 or for the year ended December 31, 2008.
  Cost of Revenues
 There was no cost of revenues for the year ended December 31, 2009 or for the year ended December 31, 2008.
  Operating Expenses
 Operating expenses during the year ended December 31, 2009 totaled $440,855 including $192,900 in stock based compensation. In the comparable period of the prior year, operating expenses totaled $448,532, including $203,532 in expenses and $245,000 in stock based compensation. General and administrative expenses during 2009 primarily consisted of accounting and legal fees, office related expenses as well as costs associated with payroll.
  Interest/Other Expense
 Total interest and other financing income (expense) for the year ended December 31, 2009 was $5,882,576 and $(5,934,504) for the same period in 2008. Included in the year ended December 31, 2009 was $398,872 in accrued interest and $124,825 accrued interest due to a related party. Other expenses included $6,353,477 and $(5,757,079) in non-cash income (expense) associated with the conversion features embedded in the convertible debentures issued by the Company during the year ended December 31, 2009 and 2008, respectively.
  Gain Associated with Change in Convertible Liabilities
 As of December 31, 2009, Carbonics Capital had several convertible debentures due to YA Global Investments, LP.The Company accounted for the convertible debentures in accordance with ASC 480, Distinguishing Liabilities from Equity , as the conversion feature embedded in the convertible debentures could result in the note principal and related accrued interest being converted to a variable number of the Company’s common shares. We calculate the fair value of the conversion feature at the time of issuance and record a conversion liability for the calculated value. We recognize interest expense for the conversion liability which is added to the principal of the debenture. We also recognize interest expense for accretion of the conversion liability over the term of the note. For the year ended December 31, 2009 and 2008, we recognized a gain (loss) for the change in fair value of the conversion liability of $6,353,477 and $(5,757,079), respectively, for these debentures.
 
 8
 
 Income (Loss) From Continuing Operations
 Income from continuing operations for the year ended December 31, 2009, was $5,441,721 as compared to a loss from continuing operations of $6,383,036 from the same period in 2008.  Loss from discontinued operations for the year ended December 31, 2009, was $1,706,069 as compared to $2,806,216 for the same period in 2008. Net income of $3,735,652 for the year ended December 31, 2009 as compared to a net loss of $9,189,252 for the same period in 2008 was due primarily to decreased operating expenses, interest and amortization charges associated with financing, the $6.4M gain for the change in fair value of the conversion liability, the $1.7M loss from discontinued operations and issuance of stock based compensation.
  Liquidity and Capital Resources
 The Company had $11,932,819 in current liabilities at December 31, 2009, and may need to obtain additional financing to satisfy these obligations. Thus, the Company’s liquidity needs have decreased relative to the amounts required by the Company during 2009, however, the Company requires new sources of capital to execute on its ongoing and planned research and development and other business development activities. The Company is also in need of financing to acquire targeted strategic assets.
  Our primary sources of liquidity are cash provided by financing activities. For the year ended December 31, 2009, net cash used in our operating activities was $605,770 as compared to $607,566 used in the year ended December 31, 2008. The Company’s capital requirements consist of general working capital needs. The Company’s capital resources consist primarily of proceeds from issuance of debt and common stock. The Company plans to fund ongoing operations during 2010 with a combination of proceeds from the issuance of debt and equity.
  Cash Flows
 Our operating activities during the year ended December 31, 2009 used $605,770 in cash. At December 31, 2009, accounts payable and accrued expenses totaled $461,661.  At December 31, 2009 the Company had $5,800 in cash.  For the year ended December 31, 2009, investing activities provided $611,570 in cash, and used cash from financing activities of $0. The Company had a working capital deficit of $10,280,781 at December 31, 2009, which includes convertible debentures of $6,730,124.
  At the present time, Carbonics Capital has no source of committed capital. We are currently investigating the availability of both equity and debt financing necessary to complete the Company’s current projects. We do not know at this time if the necessary funds can be obtained nor on what terms they may be available.
  Off Balance Sheet Arrangements\
 None.
 
 9
 ITEM 7
FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
 
 Page NoFINANCIAL STATEMENTSReport of Independent Registered Public Accounting Firm
11Consolidated Balance Sheets
12Consolidated Statements of Operations
13Consolidated Statements of Stockholders’ Equity (Deficiency)
14Consolidated Statements of Cash Flows
15Notes to Consolidated Financial Statements
16
 
 10
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the Board of Directors and
 Stockholders of Carbonics Capital Corporation
 
 We have audited the accompanying balance sheets of Carbonics Capital Corporation as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the two-year period then ended. Carbonics Capital Corporation’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Carbonics Capital Corporation as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the years in the two-year period then ended in conformity with accounting principles generally accepted in the United States of America.
 
 The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully discussed in Note 2 to the financial statements, the Company has suffered losses from operations and has a working capital deficiency as of December 31, 2009. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 As described in Note 11 to the financial statements, the Company has restated the financial statements and notes for the correction of certain errors and omissions in the financial statements.
 
 /s/ Rosenberg Rich Baker Berman & Company
 Somerset, New Jersey
 April 15, 2010, except as to Note 11, which is May 21, 2010
 11
 
 12
 CARBONICS CAPITAL CORPORATION
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2009
  RESTATED


RESTATED12/31/2009


12/31/2008ASSETSCurrent Assets:Cash

$
5,800


$
--Accounts receivable, net of allowance for doubtful accounts of $3,094 and $0


--



--Note receivable – related party


--



386,132Assets to be disposed, current


1,646,238



--Total current assets


1,652,038



386,132TOTAL ASSETS

$
1,652,038


$
386,132LIABILITIES AND STOCKHOLDERS’ DEFICIENCYCurrent liabilities:Accounts payable and accrued expenses

$
461,661


$
591,511Accrued interest


838,599



439,870Accrued interest – related party


1,718



--Convertible debentures – related party


108,724



--Convertible debentures


6,621,400



9, 235,713Liabilities to be disposed, current


3,900,716



--Total current liabilities


11,932,819



10,267,094TOTAL LIABILITIES


11,932,819



10,267,094STOCKHOLDERS’ EQUITY (DEFICIENCY)Convertible preferred stockSeries C, par $0.001, 1,000,000 shares authorized, 972,042 and 805,767 issued and outstanding


972



806Common stock, par $0.001, 500,000,000 authorized

482,842,103 and 127,279,406 issued and outstanding, respectively


482,842



127,279Additional paid-in capital


124,075,672



128,566,870Accumulated deficit


(134,840,265
)


(138,575,917
)Total stockholders’ deficiency


(10,280,780
)


(9,880,962
)TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

$
1,652,038


$
386,132
 
 The notes to the financial statement are an integral part of these statements.
 
 13
 CARBONICS CAPITAL CORPORATION
 CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
 
 RESTATED2009


2008Revenue

$
--


$
--Cost of revenues


--



--Gross profit


--



--Operating expenses:General and administrative expenses


247,955



203,532Stock based compensation


192,900



245,000Total operating expenses


440,855



448,532Operating loss


(440,855
)


(448,532
)Other income (expense):Interest income – related party


115,296



--Settlement expense


(62,500
)


--Change in fair value of conversion features


6,363,462



(5,757,079
)Change in fair value of conversion features – related party


(9,985
)


--Interest expense – related party


(124,825
)


--Interest expense


(398,872
)


(177,425
)Total other income (expense)


5,882,576



(5,934,504
)Income (loss) before provision for income taxes


5,441,721



(6,383,036
)Provision for income taxes


--



--Net income (loss) from continuing operations


5,441,721



(6,383,036
)Discontinued operations:Loss from discontinued operations


(1,706,069
)


(2,806,216)Total discontinued operations


(1,706,069
)


(2,806,216)Net Income (Loss)

$
3,735,652


$
(9,189,252
)Earnings (loss) per share, basic from continuing operations

$
0.03


$
(0.06
)Earnings (loss) per share, basic from discontinued operations

$
(0.01
)

$
(0.03
)Earnings (loss) per share, basic

$
0.02


$
(0.09
)Earnings (loss) per share, diluted from continuing operations

$
0.00



(0.06
)Earnings (loss) per share, diluted from discontinued operations

$
0.00


$
(0.03
)Earnings (loss) per share, diluted from continuing operations

$
0.00


$
0.09
)Weighted average share of common stock outstanding, basic


210,597,050



100,532,324Weighted average share of common stock outstanding, dilutive


2,527,384,986



100,532,324
 
 The notes to the financial statements are an integral part of these statements.
 
 14
 CARBONICS CAPITAL CORPORATION
 STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
 FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
 
 Series C Preferred Stock


Common StockShares


Amount


Shares


AmountBalance, December 31, 2007


974,140


$
974



9,549,266


$
9,549Issuance of common stock upon conversion of debt


--



--



9,730,140



9,730Stock issued for services


--



--



3,000,000



3,000Stock issued for compensation


--



--



10,000,000



10,000Conversion of Series C Preferred into common stock


(168,373
)


(168
)


95,000,000



95,000Forgiveness of affiliate debt


--



--



--



--Restatement – recapitalization from acquisition of entity under common control


--



--



--



--Net loss


--



--



--



--Balance, December 31, 2008 (restated)


805,767


$
806



127,279,406


$
127,279Issuance of common stock upon conversion of debt


--



--



220,662,697



220,663Acquisition of entity under common control


--



--



--



--Stock issued for compensation


--



--



114,900,000



114,900Conversion of Series C Preferred into common stock


(2,098
)


(2
)


105,000,000



105,000Change in conversion feature due to conversion liabilities


--



--



--



--Cancellation of issuance of common stock


168,373



168



(95,000,000
)


(95,000
)Forgiveness of affiliate debt


--



--



--



--Issuance of common stock for accounts payable


--



--



10,000,000



10,000Net loss


--



--



--



--Balance, December 31, 2009 (restated)


972,042


$
972



482,842,103


$
482,842
 
 Additional

Paid-In-Capital


Cumulative

Deficit


Total

Stockholders'

EquityBalance, December 31, 2007

$
126,524,280


$
(128,653,242
)

$
(2,118,439
)Issuance of common stock upon conversion of debt


117,103



--



126,833Stock issued for services


87,000



--



90,000Stock issued for compensation


190,000



--



200,000Conversion of Series B Preferred into common stock


(94,832
)


--



--Forgiveness of affiliate debt


(1,796,320
)


--



(1,796,320
)Restatement – recapitalization from acquisition of entity under common control


3,539,639



(3,539,639
)


--Net income (loss)


--



(6,383,036
)


(6, 383,036
)Balance, December 31, 2008 (restated)

$
128,566,870


$
(138,575,917
)

$
(9,880,962
)Issuance of common stock upon conversion of debt


7,926



--



228,589Acquisition of entity under common control


(4,837,867
)


--



(4,837,867
)Stock issued for compensation


8,000



--



122,900Conversion of Series C Preferred into common stock


(104,998
)


--



--Change in conversion feature due to conversion liabilities


119,716



--



119,716Cancellation of issuance of common stock


94,832



--



--Forgiveness of affiliate debt


217,508



--



217,508Issuance of common stock for accounts payable


3,685



--



13,685Net income (loss)


--



3,735,652



3,735,652Balance, December 31, 2009 (restated)

$
124,075,672


$
(134,840,265
)

$
(10,280,780
)
 The notes to the financial statement are an integral part of these statements.
 
 15
 CARBONICS CAPITAL CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
 
 RESTATED2009


2008CASH FLOW FROM OPERATING ACTIVITIESNet income (loss)

$
3,735,652


$
(6,383,036
)Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization


--



59,235Stock based compensation


122,900



245,000Stock for services


--



60,000Changes in conversion features


(6,353,477
)


5,757,079Changes in Assets and Liabilities


--Assets of discontinued operations


2,365,372



--Accounts payable


(9,191
)


(122,924
)Accrued expenses


--



(432,850
)Accrued interest


400,589



--Interest payable – affiliates


--



177,415Deposits


--



32,515Expense paid for issuance of convertible debentures


133,549



--Liabilities of discontinued operations, net


(1,001,164
)


--Net cash used in operating activities


(605,770
)


(607,566
)CASH FLOWS FROM INVESTING ACTIVITIESCash acquired from acquisition


266,605



--Proceeds from related party receivables


344,965



--Net cash provided by investing activities


611,570



--CASH FLOWS FROM FINANCING ACTIVITIESIssuances (repayments) of long-term debt


--



(66,628
)Advances from related party


--



(10,547
)Proceeds from convertible debentures


--



684,741Repayment of note receivable – related party


--



--Net cash provided by financing activities


--



607,566Net increase (decrease) in cash


5,800



--Cash at beginning of period


--



--Cash at end of period

$
5,800


$
--Supplemental statement of non-cash investing and financing activities:Acquisition of subsidiary


4,000,000



--Forgiveness of amount owed to related party


217,508



177,415Debt conversions into common stock


(228,588
)


(314,380
)Cancellation of accounts payable


--



177,415Assumption of accounts payable under convertible debentures


62,500



--Preferred stock conversion for common stock


105,000



--Cancelation of preferred stock


95,000



--Accounts payable conversions into common stock


13,685



--Conversion of fair value related to conversion liabilities


119,715



--Write off of accounts payable


926,739



--
 The notes to the financial statement are an integral part of these statements.
 
 16
 
  CARBONICS CAPITAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1
BASIS OF PRESENTATION
 OVERVIEW
 Carbonics Capital Corporation (“we,” “our,” “us,” “Carbonics,” or the “Company”) was founded to recycle carbon dioxide into value-added products.
  Our activities during 2009 primarily involved evaluation of a number of different biological, chemical and other technologies designed to recycle carbon dioxide into value-added products, the execution of a license agreement for a technology capable of recycling carbon dioxide in applications involving coal-fired power production, and the completion of research and development activities involving the carbon recycling technologies.
  Our operations during 2009 also involved the maintenance of our idled oilseed crush facility in Culbertson, Montana. A strategic investor acquired this facility during February 2010, and the results of operations of this facility are reported herein in discontinued operations. We are currently seeking buyers for the Company’s remaining oilseed crush assets, as well as opportunities to provide design, engineering and project development services relating to these assets.
  Our strategic plan moving forward involves the acquisition of strategic and accretive assets. We are currently evaluating qualified opportunities that produce the raw materials needed for our technologies, or that have the infrastructure we need to scale our technologies, or that have the ability to refine the products we produce with our technologies into finished goods. Our plan in this respect is to leverage the targeted assets and cash flows to defray our technology and financing risk as we commercialize our technologies..
  The Company’s ongoing research and development activities mostly involve laboratory scale bench testing, with a view towards construction of a demonstration scale pilot facility based on the Company’s licensed technologies by 2011.
  ACQUISITION OF SUSTAINABLE SYSTEMS, INC.
 Effective June 30, 2009, GS AgriFuels Corporation and Carbonics Capital Corporation entered into a Stock Purchase Agreement pursuant to which Carbonics acquired 100% of the stock of Sustainable Systems, Inc. (“Culbertson”) from GS AgriFuels in return for assumption of $4,000,000 of GS AgriFuels’ indebtedness to YAGI Investments, L.P. (“YAGI”). In connection with this Agreement, Carbonics issued an amended and restated convertible debenture to YAGI for $4,000,000 due on December 31, 2011. GS AgriFuels is a wholly-owned subsidiary of GreenShift Corporation, a company that is majority owned by the Company's majority shareholder, Viridis Capital, LLC.
 
 NOTE 2
GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company had net income of $3,735,652 for the twelve months ended December 31, 2009 and had an accumulated deficit and negative cash flow from operations. As of December 31, 2009 the Company’s current liabilities exceeded current assets by $10,280,781. These matters raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans include raising additional proceeds from debt and equity transactions and completing strategic acquisitions.
 
 NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 PRINCIPLES OF CONSOLIDATION
 The financial statements for the year ended December 31, 2009 and 2008, have been consolidated to include the accounts of the Company and its subsidiaries.
  USE OF ESTIMATES
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosures of contingencies during the reporting period. Actual results could differ from management’s estimates.
 
 17
 
 STOCK BASED COMPENSATION
 The Company accounts for stock and stock options issued for services and compensation to employees under FASB Accounting Standards Codification 718. For non-employees, the fair market value of the Company's stock on the date of stock issuance or option/grant is used. The Company determines the fair market value of options issued under the Black-Scholes Pricing Model. Under the provisions of FASB Accounting Standards Codification 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity grant).
  BASIC AND DILUTED EARNINGS PER SHARE (“EPS”)
 Basic (loss) earnings per share is computed by dividing net income by the weighted average common shares outstanding during a period. Diluted (loss) earnings per share is based on the treasury stock method and includes the effect from potential issuance of common stock such as shares issuable pursuant to the exercise of stock options, assuming the exercise of all in-the-money stock options. Common share equivalents have been excluded where their inclusion would be anti-dilutive.
  CASH AND EQUIVALENTS
 The Company considers cash and equivalents to be cash and short-term investments with original maturities of three months or less from the date of acquisition.
  FURNITURE AND EQUIPMENT
 Furniture and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. Gains and losses on depreciable assets retired or sold are recognized in statement of operations in the year of disposal, and repair and maintenance expenditures are expensed as incurred. Property, plant and equipment are stated at cost.
  LOAN AND DEBT SECURITIES
 For loans and debt securities, fair value generally approximates cost unless the borrower’s enterprise value, overall financial condition or other factors lead to a determination of fair value at a different amount.
  When the Company issues nominal cost warrants or free equity securities ("nominal cost equity"), the Company allocates its cost basis in its investment between its debt securities and its nominal cost equity at the time of origination. At that time, the original issue discount basis of the nominal cost equity is recorded by increasing the cost basis in the equity and decreasing the cost basis in the related debt securities.
  FAIR VALUE OF FINANCIAL INSTRUMENTS
 The carrying amounts reported in the balance sheet as of December 31, 2009 for cash equivalents, accounts receivable, other receivables, accounts payable, and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value of notes payable and long-term debt approximates their carrying value as the stated or discounted rates of the debt reflect recent market conditions. It was not practical to estimate the fair value of the convertible debt due to the nature of these items. These estimates would be based on the carrying amounts, maturities, effective interest rates and volatility of the Company's stock. The Company does not believe it is practical due to the significant volatility of the Company's stock.
  Effective July 1 2009, the Company adopted ASC 820, Fair Value Measurements and Disclosures. This topic defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance supersedes all other accounting pronouncements that require or permit fair value measurements.
  The Company accounted for the convertible debentures in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the convertible debentures could result in the note principal and related accrued interest being converted to a variable number of the Company’s common shares.
 
 18
 Under ASC 820, a framework was established for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. The Company measured the fair value of the preferred equity interest outstanding at September 30, 2008 since the number of common shares issuable under the Company’s Series E convertible preferred stock was indeterminable during the year then ended. The value at September 30, 2008 was determined to be $9,000,000, measured using significant unobservable inputs (Level 3) using the present value of the shares based on the average fair market value of the Company’s stock for the three days before and after the acquisition date.
  Effective July 1 2009, the Company adopted ASC 820-10-55-23A, Scope Application to Certain Non-Financial Assets and Certain Non-Financial Liabilities, delaying application for non-financial assets and non-financial liabilities as permitted. ASC 820 establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
  
 The following table presents the embedded derivative, the Company’s only financial assets measured and recorded at fair value on the Company’s Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy during the year ended December 31, 2009:
 Fair ValueAs of December 31, 2009

Level 1


Level 2


Level 3


TotalEmbedded conversion liabilities

$
--


$
--


$
472,045


$
472,045
 
 The following table reconciles, for the year ended December 31, 2009, the beginning and ending balances for financial instruments that are recognized at fair value in the consolidated financial statements:
 Balance of Embedded Conversion Liability at December 31, 2007

$
1,251,891Reductions in fair value due to principal conversions


(63,733)Present Value of beneficial conversion features of debentures


5,757,079Balance of embedded conversion liability at December 31, 2008


6,945,237Reductions in fair value due to principal conversions


(119,715)Present Value of beneficial conversion features of debentures


(6,353,477)Balance at December 31, 2009

$
472,045
 
 
 19
 
 IMPAIRMENT OF LONG-LIVED ASSETS
 The Company follows ASC 113, “Accounting for the Impairment or Disposal of Long-Lived Assets." ASC 113 requires that long-lived assets, including property and equipment, be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. Impairment is measured as the difference between carrying value and fair market value. Fair value is based on appraised values or estimated sales values of similar assets in recent transactions. ASC 113 also requires companies to separately report discontinued operations for a component of an entity that has been disposed of or is classified as held for sale.
  LIMITATIONS
 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
  DEFERRED FINANCING COSTS AND DEBT DISCOUNTS
 Deferred finance costs represent costs which may include direct costs paid to or warrants issued to third parties in order to obtain long-term financing and have been reflected as other assets. Costs incurred with parties who are providing the actual long-term financing, which generally include the value of warrants, fair value of the derivative conversion feature, or the intrinsic  value of beneficial conversion features associated with the underlying  debt,  are reflected as a debt discount.  These costs and discounts are generally amortized over the life of the related debt.  On April 2, 2007, YA Global Investment, LP declared certain debentures to be in default (See Note 5, Financing Arrangements, below).  As a result, deferred financing fees related to these debentures were deemed to be permanently impaired and were written off to amortization expense. Amortization expense related to these costs and discounts was $0 and $0 for the years ended December 31, 2009 and 2008, respectively.
  RECENT ACCOUNTING PRONOUNCEMENTS\
 Effective July 1, 2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles, which establishes the FASB Accounting Standards Codification as the sole source of authoritative generally accepted accounting principles. Pursuant to the provisions of FASB ASC 105, the Company has updated references to GAAP in our financial statements issued for the year ended December 31, 2009. The adoption of FASB ASC did not impact the Company’s financial position or results of operations.
 
 NOTE 4
FINANCING ARRANGEMENTS The following is a summary of the Company’s financing arrangements as of December 31, 2009:
 Current portion of convertible debentures:Convertible debenture payable to YA Global Investments issued October 2005

$
602,907Convertible debenture payable to YA Global Investments issued July 2007


570,000Convertible debenture payable to YA Global Investments issued February 2006


956,380Convertible debenture payable to YA Global Investments issued June 209


4,000,000Convertible debenture payable to Minority Interest Fund (II)


98,739Convertible debenture payable to RAKJ Holdings issued April 2009


30,053Convertible debenture conversion liabilities


472,045Total current convertible debentures

$
6,730,124
 
 The following chart is presented to assist the reader in analyzing the Company’s ability to fulfill its fixed debt service requirements (net of note discounts) of as of December 31, 2009:
 Year

Amount2010

$
6,258,079Total minimum payments due under current and long term obligations

$
6,258,079
 
 20
 
 CONVERTIBLE DEBENTURES
 As of December 31, 2009, the Company had convertible debentures payable to Minority Interest Fund (II), LLC (“MIF”) in an aggregate amount of $98,739 (the “MIF Debentures”) which are due December 31, 2010 and carry interest at 20%. The MIF Debentures are convertible into Company common stock at a rate equal to 90% of the lowest volume weighted average price for the Company’s common stock for the twenty trading days preceding conversion. During the year ended December 31, 2009, MIF purchased additional debentures from the Company in the amount of $188,239, assigned $89,500of the principal amount due to MIF to RAKJ Holdings, Inc. (“RAKJ”) ($69,500) and Mammoth Corporation (“Mammoth”) ($20,000). The Company also assigned $7,810 in accrued interest on MIF Debentures to RAKJ. The Company determined the value of the MIF Debenture at December 31, 2009 to be $108,724, which represented the face value of the debenture plus the present value of the conversion feature. The liability for the conversion feature shall be increased from its present value of $49,985 at December 31, 2009 to its estimated settlement amount of $10,971 at December 31, 2010. As of December 31, 2009, an expense of $9,985 has been recorded as expense for the accretion to fair value on the convertible note payable, thereby increasing the carrying value of the MIF Debenture to $108,724 at December 31, 2009. The MIF Debentures had included an additional debenture that was issued on April 1, 2009 in the amount of $1,000,000 (the “$1MM MIF Debenture”) in return for a promissory note issued by MIF to the Company in the amount of $1,000,000 (the “MIF Note”). The MIF Note did bear interest at the rate of 20% per year and was to mature on December 31, 2010. The $1MM MIF Debenture did bear interest at a rate of 20% per year and was to mature on December 31, 2010. The MIF Note had been recorded net of the $1MM MIF Debenture as of September 30, 2009 given the presumed right of offset accorded to related parties. The interest receivable due under the MIF Note had also been presented net of the interest payable due under the $1 MM MIF Debenture. Both the $1MM MIF Debenture and the MIF Note were cancelled during the fourth quarter. For the year ended December 31, 2009, interest expense of $124,825 for the MIF Debentures was incurred including interest accruals on the cancelled MIF Note and $1MM MIF Debenture . The managing member of MIF is a relative of the Company’s chairman.
  The balance of convertible debt due to RAKJ as of December 31, 2009 was $30,053 (the “RAKJ Debenture”). The Company issued 46,703,258 shares of common stock to RAKJ, upon the conversion of $47,257 in debt during the year ended December 31, 2009. The RAKJ Debenture is convertible into Company common stock at a rate equal to 50% of the lowest closing market price for the Company’s common stock for the twenty trading days preceding conversion. The Company determined the value of the RAKJ Debenture at December 31, 2009 to be $59,719, which represented the face value of the debenture plus the present value of the conversion feature. The liability for the conversion feature shall be increased from its present value of $29,666 at December 31, 2009 to its estimated settlement amount of $36,478 at December 31, 2010. As of December 31, 2009, an expense of $70,498 has been recorded as expense for the accretion fair value on the convertible note payable, thereby, increasing the carrying value of the RAKJ Debenture to $59,719. Conversely, the carrying value was decreased during the period for the conversions into common stock. For the year ended December 31, 2009 interest expenses of $4,999 for the RAKJ Debenture were incurred.'
  The Company issued 20,000,000 shares of common stock to Mammoth, upon the conversion of $20,000 in debt plus accrued interest of $142 during the quarter ended September 30, 2009, which amounts paid off the debenture in full. The Mammoth Debenture was convertible into Company common stock at a rate equal to 50% of the lowest closing market price for the Company’s common stock for the twenty trading days preceding conversion. For the year ended December 31, 2009, interest expense of $142 was paid. The balance due under the Mammoth Debenture at December 31, 2009 was $0.
  The Company accounted for each of the MIF Debenture, the Mammoth Debenture and the RAKJ Debenture in accordance with FASB Accounting Standards Codification 480, as the conversion feature embedded in each debenture could result in the note principal being converted to a variable number of the Company’s common shares.
 
 21
 
 YA Global Investments, LP
 On August 14, 2008, the Company and YA Global Investments, L.P. (“YAGI”) agreed to extend the maturity date of the following secured convertible debentures previously issued to YAGI to December 31, 2011: that certain convertible debenture dated October 12, 2005 in the original principal amount of $1,475,000; that certain convertible debenture dated February 8, 2006 in the original principal amount of $3,050,369; and, that certain convertible debenture dated June 26, 2007 in the original principal amount of $570,000. The current balance due against these debentures was $2,129,287 as of December 31, 2009. Each debenture provides for interest in the amount of 12% per annum.
  Effective June 30, 2009, the Company and GS AgriFuels Corporation entered into a Stock Purchase Agreement pursuant to which the Company acquired 100% of the stock of Sustainable Systems, Inc. (“Culbertson”) from GS AgriFuels in return for assumption of $4,000,000 of GS AgriFuels’ indebtedness to YA Global Investments, L.P. (“YAGI”). In connection with this Agreement, the Company issued an amended and restated convertible debenture to YAGI for $4,000,000 due on December 31, 2011. This debenture provides for interest in the amount of 12% per annum and is convertible at the lesser of the fixed conversion price of $0.01 or 90% of the lowest daily volume weighted average price of Carbonics’ common stock during the 20 trading days immediately preceding the conversion date.
  The Company accounted for the YAGI Debenture dated June 30, 2009 in accordance with FASB Accounting Standards Codification 480, as the conversion feature embedded in the YAGI Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the YAGI Debenture at December 31, 2009 to be $4,369,061 which represented the face value of the debenture plus the present value of the $369,061 conversion feature. As of December 31, 2009, accretion expense of $369,061 has been recorded increasing the carrying value of the YAGI Debenture to $4,369,061 at December 31, 2009.
  The Company accounted for the YAGI Debenture dated October 12, 2005 in accordance with FASB Accounting Standards Codification 480, as the conversion feature embedded in the YAGI Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The carrying amount of the debenture has been restated for the prior year.The Company determined the value of the YAGI Debenture at December 31, 2008 to be $3,014,535 which represented the face value of the debenture plus the present value of the $2,411,628 conversion feature. For the year ended December 31, 2009, income of $2,411,628 has been recorded from a reduction in the fair value of the conversion feature on the convertible note payable, thereby, decreasing the carrying value of the YAGI Debenture to $602,900 at December 31, 2009.
  The Company accounted for the YAGI Debenture dated February 8, 2006 in accordance with FASB Accounting Standards Codification 480, as the conversion feature embedded in the YAGI Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The carrying amount of the debenture has been restated for the prior year.The Company determined the value of the YAGI Debenture at December 31, 2008 to be $5,587,845 which represented the face value of the debenture plus the present value of the $4,470,276 conversion feature. For the year ended December 31, 2009, income of $4,409,596 has been recorded from a reduction in the fair value of the conversion feature on the convertible note payable and reductions of $60,680 were recognized to capital for conversions of debt, thereby, decreasing the carrying value of the YAGI Debenture to $0 at December 31, 2009.
  The Company accounted for the YAGI Debenture dated October 12, 2005 in accordance with FASB Accounting Standards Codification 480, as the conversion feature embedded in the YAGI Debenture could result in the note principal being converted to a variable number of the Company’s common shares. The Company determined the value of the YAGI Debenture at December 31, 2008 to be $633,333 which represented the face value of the debenture plus the present value of the $63,333 conversion feature. The carrying value of the YAGI Debenture was $633,333 at December 31, 2009.
 
 22
 NOTE 5
INCOME TAXES
 The Company adopted the provisions of FASB ASC 740-10, “Accounting for Income Taxes.” As a result, the Company recognized no material adjustment in the liability for unrecognized income tax benefits. At the adoption date of January 1, 2007, and at December 31, 2009, there were no unrecognized tax benefits. Interest and penalties related to uncertain tax positions will be recognized in income tax expense. As of December 31, 2009, no interest related to uncertain tax positions had been accrued.
  The Company has incurred losses, which have generated net operating loss carry forwards for the Company as of December 31, 2009. These loss carry forwards are subject to limitation in future years should certain ownership changes occur. For the years ended December 31, 2009 and 2008, the Company’s effective tax rate differs from the federal statutory rate principally due to net operating losses and other temporary differences for which no benefit was recorded. The provision for income taxes for the years ended December 31, 2009 and 2008 consisted of state income tax provisions. Deferred tax assets are as follows:
 
 12/31/2009


12/31/2008Deferred Tax Asset:Net operating loss carry forwards

$
87,956,000


$
87,956,000Total deferred tax assets


28,564,348



32,300,000Less: Valuation allowance


(28,564,348
)


(32,300,000
)Net deferred tax asset

$
--


$
--
 
 NOTE 6RELATED PARTY TRANSACTIONS
 During the year ended December 31, 2009, the Company transferred $273,252 of its accounts payable to GreenShift and the intercompany between the Company and GreenShift was further reduced by $65,619 from payments on behalf of the Company. At December 31, 2009,  the remaining $47,261 balance of the note receivable from GreenShift was waived. As of the year ended December 31, 2009, the $105,669 balance of the note payable owed by Culbertson to GreenShift for payments made by GreenShift during 2009 was waived.
  Minority Interest Fund (II), LLC (“MIF”) is party to certain convertible debentures issued by the Company (see Note 5, Financing Arrangements, above). The managing member of MIF is a relative of the Company’s chairman.
 
 NOTE 7
DISCONTINUED OPERATIONS
 Effective June 30, 2009, GS AgriFuels Corporation and Carbonics Capital Corporation entered into a Stock Purchase Agreement pursuant to which Carbonics acquired 100% of the stock of Sustainable Systems, Inc. (“Culbertson”) from GS AgriFuels in return for assumption of $4,000,000 of GS AgriFuels’ indebtedness to YAGI Investments, L.P. (“YAGI”). In connection with this Agreement, Carbonics issued an amended and restated convertible debenture to YAGI for $4,000,000 due on December 31, 2011. GS AgriFuels is a wholly-owned subsidiary of GreenShift Corporation, a company that is majority owned by the Company's majority shareholder, Viridis Capital, LLC.
  The operations of Culbertson were idled during 2009. A lender to the subsidiary that operated the facility took assignment of this property in lieu of foreclosure during February 2010. The financial results of Culbertson are presented as discontinued operations in the combined results of operations for the year ended December 31, 2009 and 2008.  The major assets and liabilities within the disposal group relating to the planned divestiture of Culbertson are as follows at December 31, 2009:
 
 23
 Major assets:Idled property, plant and equipment

$
1,586,253Restricted cash


49,725Major liabilities:Accounts payable and accrued expenses


1,192,982Long term debt


1,134,399Notes payable - other


1,404,600
 
 The Company realized a loss from discontinued operations for Culbertson of $1,706,069 and $2,806,216 for the twelve months ended December 31, 2009 and 2008, respectively. The components of discontinued operations for the twelve months ended December 31, 2009 and 2008 are as follows:
 2009


2008Revenues

$
1,788,482


$
8,362,534Cost of revenues


2,118,557



7,631,614Gross profit


(330,075
)


730,920Selling, general and administrative expense


872,827



3,428,938Impairment of property, plant and equipment


316,151



2,000,000Loss from operations


(1,519,053
)


(1,698,018
)Interest expense


(270,055
)


(303,181
)Other income and expenses, net


83,039



194,983Total other income and expense


(187,016
)


(108,198
)Income before provision for income taxes


(1,706,069
)


(2,806,216
)Total provision for tax


--



--Net loss

$
(1,706,069
)

$
(2,806,216
)
  NOTE 8
WARRANTS The Company's February 7, 2006 financing with YA Global Investment, LP provides that Carbonics will issue to YA Global five year Warrants to purchase 2,250,000 common shares. The warrants will permit YA Global to purchase 750,000 shares at $3.00 per share, 750,000 shares at $4.00 per share, and 750,000 shares at $5.00 per share. On June 30, 2006, Carbonics issued 2,250,000 warrants to YA Global. Summarized information about GreenShift's stock warrants outstanding at December 31, 2009 is as follows:
 
 Number of

Weighted AverageShares


Exercise PriceOutstanding at December 31, 2007


2,750,000


$
4.00Granted at fair value


--



--Forfeited


--



--Exercised


--



--Outstanding at December 31, 2008


2,750,000


$
4.00Granted at fair value


--



--Forfeited


--



--Exercised


--



--Outstanding at December 31, 2009


2,750,000


$
3.45
 All of the above noted warrants were exercisable as of December 31, 2009.
  NOTE 9
STOCKHOLDERS’ EQUITY
 COMPLETION OF NAME CHANGE AND REVERSE STOCK SPLIT
 Effective February 11, 2008, the Company changed its name from GreenShift Corporation to Carbonics Capital Corporation (f/k/a GreenShift Corporation) and completed a 1 for 20 reverse stock split. All stock prices, share amounts, per share information, stock options and stock warrants in this Report reflect the reverse split.
 
 24
 
 FORGIVENESS OF RELATED PARTY DEBT
 During the year ended December 31, 2009, the Company waived $47,261 of the debenture receivable from GreenShift Corporation.
  During the year ended December 31, 2008, the company waived $2,000,000 of the debenture receivable from GreenShift Corporation. Additionally, the Company waived interest receivable from GreenShift in the amount of $196,832, as well as other related company notes receivable of $6,821 in the first quarter of 2008.
  COMMON STOCK
 The Company issued 220,662,697 shares of common stock upon the conversion of an aggregate of $228,588 in debt during the year ended December 31, 2009 consisting of: 153,959,439 common shares issued to YAGI, upon the conversion of $161,189 in debt; 46,703,258 common shares issued to RAKJ Holdings, Inc. (“RAKJ”), upon the conversion of $47,257 in debt; and, 20,000,000 common shares were issued to Mammoth Corporation (“Mammoth”) upon the conversion of $20,142 in debt.
  During the year ended December 31, 2009, the Company issued a total of 90,000,000 shares of Common Stock, $0.001 par value, for services provided to the Company. The Company’s former director, David Winsness, received 12,500,000 of these shares.
  During the year ended December 31, 2009, the Company issued a total of 24,900,000 shares of Common Stock, $0.001 par value, to Paul Miller, the Company’s Chief Executive Officer, for stock compensation.
  SERIES C PREFERRED STOCK
 On February 15, 2006 Carbonics filed a Certificate of Designation creating a class of 1,000,000 shares of Series C Preferred Stock. The Certificate of Designation was corrected by a Certificate of Correction filed on September 11, 2006. The holder of all 1,000,000 shares of Series C Preferred Stock may convert it  into common shares representing 80% of the Carbonics  common  shares outstanding  after  conversion,  but  only if,  at the  time of the  conversion, Carbonics is not registered with the SEC as a Business Development Company. The holder  of the  Series C Preferred  Stock  may cast  the  number  of votes at a shareholders  meeting or by  written  consent that  equals the number of common shares into which the Preferred Stock is convertible on the record date for the shareholder action. In the event that the Board of Directors declares a dividend, the holder of each share of Series C Preferred Stock will receive a dividend equal to the dividend that would be payable if the Series C Preferred Stock were converted into common stock. In the event of a liquidation of Carbonics, the holder of a share of Series C Preferred Stock will receive $.001 and have no further participation in the liquidation.
  Shares of the Company’s Series C Preferred Stock (the “Series C Shares”) may be converted by the holder into Company common stock. The conversion ratio is such that the full 1,000,000 Series C Shares originally issued convert into Company common shares representing 80% of the fully diluted outstanding common shares outstanding after the conversion (which includes all common shares outstanding plus all common shares potentially issuable upon the conversion of all derivative securities not held by the holder). The holder of Series C Shares may cast the number of votes at a shareholders meeting or by written consent that equals the number of common shares into which the Series C Shares are convertible on the record date for the shareholder action. In the event the Board of Directors declares a dividend payable to Company common shareholders, the holders of Series C Shares will receive the dividend that would be payable if the Series C Shares were converted into Company common shares prior to the dividend. In the event of a liquidation of the Company, the holders of Series C Shares will receive a preferential distribution of $0.001 per share, and will share in the distribution as if the Series C Shares had been converted into common shares. At December 31, 2009, there were 972,042 Series C Shares outstanding, 921,890 of which were held by the Company’s majority shareholder, Viridis Capital, LLC.
 
 25
 NOTE 10
COMITMENTS AND CONTINGENCIES
 On May 4, 2009, the Superior Court of the State of California entered a default against the Company in the amount of $62,500. Golden State Equity Investors, Inc. alleged claims against the Company in which they asserted a cause of action for breach of contract regarding a Settlement Agreement dated July 9, 2008. The Company has recorded this default amount effective January 1, 2009.
  The Company’s Culbertson oilseed processing facility did not receive a line of credit for 2008 crop purchases, voluntarily surrendered its commodity dealers license and, on April 27, 2009, entered into a settlement agreement with the states of Montana and North Dakota pertaining to outstanding payments due for purchase of oilseeds during 2008 that were contracted at rates far greater than current oilseed values. Culbertson had previously negotiated with two separate banks to receive working capital financing sufficient to service these obligations. Neither bank was able to close due to strain in the prevailing commodity and financial markets. Culbertson has accordingly idled its operations pending liquidation by the Montana Department of Agriculture of Culbertson's inventories to satisfy the oilseed payables. Culbertson is permitted to reacquire its commodity license upon the completion of sufficient working capital and equity financing to operate. The liquidation of Culbertson's inventory was completed during the fourth quarter 2009. Approximately $1,216,136 was due to growers who had delivered seed, of which amount $950,723 had been paid as of July 17, 2009. The remaining amount due and owing to the growers of $265,413 was paid in September of 2009.  Sustainable Systems, LLC is party to numberous collections matters pertaining to outstanding accouants payable due to vendors.
  
 NOTE 11
RESTATEMENT
 26
  The Company has restated its financial statements for the years ended December 31, 2009 and 2008. Subsequent tothe filing of the original financial statements for the years then ended, management determined that there was avariance in the beginning retained deficit account at  December 31, 2008 relating to accounting for conversionfeatures as liabilities under FASB ASC 480, Distinguishing Liabilities From Equity, which also required a correction of the current year change in fair value ofconversion liabilities. The disclosure of dilutive earnings per share for the year ended December 31, 2009 was alsorevised. In addition, stockholders’ equity for the year ended December 31, 2008 was restated for the acquisition ofCulbertson, an entity under common control, in June 2009 by increasing paid-in capital and accumulated deficit by$3,539,639. In accordance with FASB ASC 250, Accounting Changes and Error Corrections, the Company hasrestated the financial statements for the year ended December 31, 2009 and 2008 in accordance with this standard.The following shows the effect of the restatements on the financial statements:
  Balance sheets

12/31/09

As reported


12/31/09

As restated


12/31/08

As reported


12/31/08

As restatedTotal current liabilities

$



$



$
10,210,201



10,267,094Additional paid in capital


124,086,092



124,075,672



128,559,537



128,566,870Retained deficit


(134,850,686)



(134,840,265)



(138,511,691)



(138,575,917)Statements of operationsConversion liability income


1,105,519



--



--



--Change in fair value of conversion features


5,183,296



6,363,462Income from continuing operations


5,367,074



5,441,721



--



--
  27
 Net income


3,661,005



3,735,652



--



--Earnings (loss) per share, diluted


0.03



0.00



--



--Weighted average share of common stock outstanding, diluted


123,514,099



210,597,050



--



--Statements of stockholders’ equityIssuance of common stock upon conversion of debt


--



--



119,500



126,833Net income (loss)


3,661,005



3,735,652



--



--Statements of cash flowsNet income (loss)


3,661,005



3,735,652



--



--Changes in conversion features


(6,647,891)



(6,353,477)



--



--Expense paid for issuances of convertible debentures


502,610



133,549



--



--
  NOTE 12
SUBSEQUENT EVENTS
 On February 16, 2010 the Company’s subsidiary, Sustainable Systems LLC, executed a Deed in Lieu of Foreclosure Agreement with Anchor Light, LP. The Deed in Lieu of Foreclosure Agreement referenced a Loan Agreement dated December 8, 2008, pursuant to which on February 16, 2010 Sustainable Systems LLC owed Anchor Light, LP $1,586,253.27 and under which Sustainable Systems LLC was in default. The obligations under the Loan Agreement had been secured by a mortgage of the real and personal property in Culbertson, Montana on which Sustainable Systems carried out its operations. Pursuant to the deed in Lieu of Foreclosure Agreement, Sustainable Systems LLC transferred the property to a subsidiary of Anchor Light, LP, and Anchor Light, LP agreed that it would not initiate action against Sustainable Systems, LLC to enforce the Loan Agreement, except as necessary to enforce its rights in foreclosure.
 
 Between January 1, 2010 and April 15, 2010, the Company issued a total of 257,798,372 common shares upon the conversion of $71,700 in debt.
  ITEM 8
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
  ITEM 8A
CONTROLS AND PROCEDURES
 EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
 Our principal executive officer and principal financial officer participated in and supervised the evaluation of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by us in the reports that we file is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive officer or officers and principal financial officer, to allow timely decisions regarding required disclosure. The Company’s chief executive officer and chief financial officer determined that, as of the end of the period covered by this report, the Company had a material weakness because it did not have a sufficient number of personnel with an appropriate level of knowledge and experience of generally accepted accounting principles in the United States of America (U.S. GAAP) that are commensurate with the Company’s financial reporting requirements. As a result, Management concluded that the Company’s disclosure controls and procedures were not effective at December 31, 2009.
  Other than described above, there have been no changes in the company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, the company’s internal control over financial reporting.
 
 28
 
 Management’s Report on Internal Control Over Financial Reporting
 Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in rules 13a-15(f) and 15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
  Management has conducted, with the participation of the Chief Executive Officer and the Chief Financial Officer, an assessment, including testing of the effectiveness of our internal control over financial reporting. The assessment was conducted using the criteria in Internal Control—Integrated Framework issued by the committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
  A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of the company’s internal control over financial reporting, management identified the following material weakness in the company’s internal control over financial reporting as of December 31, 2009. Management determined that at December 31, 2009, the company had a material weakness related to its control environment because it did not have a sufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience commensurate with its financial reporting requirements. Contributing to this lack of sufficient resources was the unanticipated voluntary turnover of key personnel late in the year. This material weakness resulted in the identification of adjustment during the financial statement close process that have been recorded in the financial statements.
  Because of the material weakness described above, management has concluded that the company did not maintain effective internal control over financial reporting as of December 31, 2009, based on the Internal Control—Integrated Framework issued by COSO.
  This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
 
 ITEM 8B
OTHER INFORMATION
 None.
 
 29
 PART III
  ITEM 9
DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
 Name

Age

PositionKevin Kreisler


37

ChairmanPaul Miller


35

Chief Executive OfficerJacqueline Flynn


43

Chief Financial Officer
 
 Kevin Kreisler is the chairman of the Company. Mr. Kreisler is the founder, chairman and chief executive officer of GreenShift Corporation. Mr. Kreisler served as GreenShift’s vice president from 1998 to 2000, president from 2000 to 2002, chief executive officer from 2002 to 2005 and has served as GreenShift’s chairman from 2005 to the present. Mr. Kreisler is a graduate of Rutgers University College of Engineering (B.S., Civil and Environmental Engineering, 1994), Rutgers University Graduate School of Management (M.B.A., 1995), and Rutgers University School of Law (J.D., 1997). Mr. Kreisler is admitted to practice law in New Jersey and the United States District Court for the District of New Jersey.
  Dr. Paul Miller is the chief executive officer of the Company. Dr. Miller was the founder of Sustainable Systems, LLC in 2001 and served as its managing member until 2005 and its manager from 2005 to the present. In addition, Dr. Miller served as the president of Sustainable Systems, Inc., the sole member of Sustainable Systems, LLC from 2007 to the present. Dr. Miller is a graduate of Radford University (B.S., Chemistry, 1996) and the University of Montana (Ph.D., Chemistry, 2007).
  Jacqueline Flynn has over twenty years experience in financial accounting for both public and private companies. Ms. Flynn has been employed since 2006 as Controller of GreenShift Corporation, an affiliate of Carbonics Capital. From 2002 to 2005, Ms. Flynn was employed as Chief Financial Officer by Accent Mortgage Company of Alpharetta, Georgia. During the three years prior to 2002 Ms. Flynn was employed by Lahaina Acquisitions, Inc., a public company that owned Accent Mortgage Company during that period. She was employed by Lahaina Acquisitions first as Controller and then as Chief Financial Officer. Ms. Flynn was awarded an M.B.A. in 1994 by Brenau University.
  NOMINATING, COMPENSATION AND AUDIT COMMITTEE
 The Board of Directors does not have an audit committee or a nominating or compensation committee due to the fact that there is only one member of the Board of Directors.
  CODE OF ETHICS
 The Company does not have a written code of ethics applicable to its executive officers. The Board of Directors has not adopted a written code of ethics because there are only two members of management.
  SHAREHOLDER COMMUNICATIONS
 The Board of Directors will not adopt a procedure for shareholders to send communications to the Board of Directors until it has reviewed the merits of several alternative procedures.
  SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 None of the officers, directors or beneficial owners of more than 10% of the Company’s common stock failed to file on a timely basis the reports required by Section 16(a) of the Exchange Act during the year ended December 31, 2009.
 
 30
 ITEM 10
EXECUTIVE COMPENSATION The following table sets forth compensation information for Carbonics Capital Corporation’s executive officers during the years indicated as relevant. As of December 31, 2009, no executive officer held options for Carbonics Capital Corporation’s Common Stock.
 Annual Compensation


Long-term Compensation


All OtherName and Principal Position
Year

Salary


Bonus


Other


Shares Granted


CompensationKevin Kreisler
2009

$
--


$
--



--



--


$
50,000Chairman
2008


--



--



--



--



--2007


--



--



--



--



--Jacqueline Flynn
2009

$
--



--



--



--


$
--Chief Financial Officer
2008


--



--



--



--



--2007


--



--



--



--



--Paul Miller
2009

$
83,333



--



--



--


$
24,900Chief Executive Officer
2008


--



--



--



--



--2007


--



--



--



--



--
 EMPLOYMENT AGREEMENTS
 The Company’s relationships with its officers are on an at-will basis.
  COMPENSATION OF DIRECTORS
 Employees who are also members of the Board of Directors are not additionally compensated for their services as a director. We currently have no directors who are not also employees.
  Equity Grants
 The following tables set forth certain information regarding the stock options acquired by the Company’s Chief Executive Officer during the year ended December 31, 2009 and those options held by him on December 31, 2009.
 Number of securities

underlying option granted


Percent of total options

granted to employees

in fiscal year


Exercise Price ($/share)


Expiration Date





Potential realizable value at assumed

annual rates of appreciation

for option term5
%


10
%Paul Miller


--



--



--



--



--



--
 
 Option Grants in the Last Fiscal Year
 The following tables set forth certain information regarding the stock grants received by the executive officers named in the table above during the year ended December 31, 2009 and held by them unvested at December 31, 2009.
  Unvested Stock Awards in the Last Fiscal Year
  Number of Shares That Have Not Vested
Market Value of Shares That Have Not VestedPaul Miller
--
--
  ITEM 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 The following table sets forth information regarding the voting stock beneficially owned by any person who, to our knowledge, owned beneficially more than 5% of any class of voting stock as well as by the members of our Board of Directors and by all officers and directors as a group.
 
 Name and Address(1)

Of Beneficial Owner

Common


% of Class


Preferred


Series C % of Class


Percentage of Voting PowerKevin Kreisler(2)


--



--



921,890



100



73.75
%Paul Miller


24,900,000



--



--



--



--Jacqueline Flynn


--



--



--



--



--All officers and directors as a group (3 persons)


20,000,000



--


921,890



100



73.75
%(1
)
The address of each shareholder is c/o GreenShift Corporation, One Penn Plaza, Suite 1612, New York, NY 10119.(2
)
All shares listed for Mr. Kreisler are owned of record by Viridis Capital, LLC, of which Mr. Kreisler is the sole member
 
 31
 ITEM 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 RELATED PARTY TRANSACTIONS
 On January 25, 2008, a financing was completed that resulted in Carbonics becoming the guarantor of the debts of several of its former affiliates. The beneficiary of the guarantees was YA Global Investments, LP (“YAGI”), which committed to extend credit to those affiliates. As of December 31, 2009, the outstanding principal and accrued interest of the debt was $42,559,964.
  Effective June 30, 2009, the Company and GS AgriFuels Corporation entered into a Stock Purchase Agreement pursuant to which the Company acquired 100% of the stock of Sustainable Systems, Inc. (“Culbertson”) from GS AgriFuels in return for assumption of $4,000,000 of GS AgriFuels’ indebtedness to YA Global Investments, L.P. (“YAGI”). GS AgriFuels is a subsidiary of GreenShift Corporation, which company is majority owned by the Company’s majority shareholder, Viridis Capital, LLC.
  Minority Interest Fund (II), LLC (“MIF”) is party to certain convertible debentures issued by the Company (see Note 5, Financing Arrangements, above). The managing member of MIF is a relative of the Company’s chairman.
  DIRECTOR INDEPENDENCE
 None of the members of our Board of Directors is independent, as “independent” is defined in the rules of the NASDAQ Stock Market.
 
 ITEM 13
PRINCIPAL ACCOUNTANT FEES AND SERVICES
 INDEPENDENT AUDITOR FEES
 
 Audit Fees
 Rosenberg Rich Baker Berman & Company, P.A. billed $8,250 for professional services rendered for the audit of our 2009 financial statements and review of the financial statements included in our 2009 10-K filings. For the year ended 2008, $8,250 was billed for services rendered.
  Audit-Related Fees
 Rosenberg Rich Baker Berman & Company, P.A. billed $34,480 to the Company in 2009 and $34,620 in 2008 for services that are reasonably related to the performance of the audit or review of the yearly financial statements.
  Tax Fees
 Rosenberg Rich Baker Berman & Company, P.A. billed $0 in 2009 and $10,000 to the Company in 2008 for professional services rendered for tax compliance, tax advice and tax planning.
  All Other Fees
 Rosenberg Rich Baker Berman & Company, P.A. billed $0 to the Company in 2009 and $10,000 to the Company in 2008 for services not described above.
  It is the policy of the Company's Board of Directors that all services other than audit, review or attest services must be pre-approved by the Board of Directors. All of the services described above were approved by the Audit Committee.
 
 32
 ITEM 14
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
 INDEX TO EXHIBITS
 Exhibit Number
Description3-a
Certificate of Incorporation, as amended through January 2000 - filed as an exhibit to the Registration Statement on Form 10-SB and incorporated herein by reference.3-a(1)
Certificate of Amendment of Certificate of Incorporation dated January 8, 2003 - filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2003 and incorporated herein by reference.3-a(2)
Certificate of Amendment of Certificate of Incorporation dated December 2004 - filed as an exhibit to the Current Report on Form 8-K dated December 27, 2004 and incorporated herein by reference.3-a(3)
Certificate of Amendment of Certificate of Incorporation - filed as an exhibit to the Current Report on Form 8-K filed on May 19, 2005, and incorporated herein by reference.3-a(4)
Certificate of Amendment of Certificate of Incorporation - filed as an exhibit to the Current Report on Form 8-K filed on February 13, 2008, and incorporated herein by reference.3-a(5)
Certificate of Designation, Preferences and Rights of Series C Preferred Stock of Carbonics Capital Corporation - filed as an exhibit to the Current Report on Form 8-K dated February 15, 2006 and incorporated herein by reference.3-a(6)
Certificate of Correction of Certificate of Designation, Preferences and Rights of Series C Preferred Stock of Carbonics Capital Corporation - filed as an exhibit to the Current Report on Form 8-K/A (Amendment No. 1) dated February 15, 2006 and incorporated herein by reference.3-b
Bylaws - filed as an exhibit to the Registration Statement on Form 10-SB and incorporated herein by reference.10-a
Guaranty Agreement dated October 25, 2006 among Stillwater Asset-Based Fund, LP and Carbonics Capital Corporation, GS AgriFuels Corporation, EcoSystem Corporation and GreenShift Corporation - filed as an exhibit to the Current Report on Form 8-K dated October 31, 2006 and incorporated herein by reference.10-b
Security Agreement dated October 25, 2006 between Stillwater Asset-Based Fund, LP and Carbonics Capital Corporation - filed as an exhibit to the Current Report on Form 8-K dated October 31, 2006 and incorporated herein by reference.10-c
Security Agreement dated October 25, 2006 among GS AgriFuels Corporation, Carbonics Capital Corporation, EcoSystem Corporation and GreenShift Corporation and YA Global Investments, LP - filed as an exhibit to the Current Report on Form 8-K dated October 31, 2006 and incorporated herein by reference.10-d
Form of Secured Convertible Debenture due February 8, 2009 – filed as an exhibit to the Company’s Current Report on Form 8-K dated February 2, 2006 and incorporated herein by reference.10-e
Second Amended and Restated Security Agreement dated February 2, 2006 between Carbonics Capital Corporation and YA Global Investments, LP – filed as an exhibit to the Company’s Current Report on Form 8-K dated February 2, 2006 and incorporated herein by reference.10-f
Credit Agreement dated January 11, 2008 between GS COES (Yorkville I) LLC and YA Global Investments, LP – filed as an exhibit to the Current Report on Form 8-K filed on January 31, 2008, and incorporated herein by reference.10-g
Amended and Restated Forbearance Agreement dated as of January 11, 2008 among Carbonics Capital Corporation, GreenShift Corporation, Viridis Capital, LLC and YA Global Investments, LP – filed as an exhibit to the Current Report on Form 8-K filed on January 31, 2008, and incorporated herein by reference.10-h
Global Guaranty Agreement dated January 11, 2008 among Viridis Capital LLC, Kevin Kreisler, Carbonics Capital Corporation, GreenShift Corporation, GS AgriFuels Corporation, each of their subsidiaries, and YA Global Investments, LP – filed as an exhibit to the Current Report on Form 8-K filed on January 31, 2008, and incorporated herein by reference.31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant  to  Section  302 of the Sarbanes-Oxley Act of 2002.31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to the Sarbanes-Oxley Act of 2002.
  33
 
 SIGNATURES
 
 Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the date indicated.
  CARBONICS CAPITAL CORPORATION
 
 By:  /s/
PAUL MILLER

PAUL MILLER

Chief Executive OfficerDate:
May 21, 2010 In accordance with the Exchange Act, this Report has been signed below on March 31, 2008 by the following persons, on behalf of the Registrant and in the capacities and on the dates indicated.
 
 /s/      PAUL MILLER

PAUL MILLER

Director, Chief Executive OfficerDate:
May 21, 2010/s/      JACQUELINE FLYNN

JACQUELINE FLYNN

Chief Financial Officer, Principal Accounting OfficerDate:
May 21, 2010/s/      KEVIN KREISLER

KEVIN KREISLER

DirectorDate:
May 21, 2010