Digital Locations, Inc. - Quarter Report: 2009 March (Form 10-Q)

form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

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

FOR THE TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER: 333-144931

CARBON SCIENCES, INC.

(Name of registrant in its charter)

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

5511C Ekwill Street, Santa Barbara, California 93111

(Address of principal executive offices) (Zip Code)

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

WITH COPIES TO:

Gregory Sichenzia, Esq.

Marcelle S. Balcombe, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32 nd Flr.

New York, New York 10006

(212) 930-9700

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

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

CARBON SCIENCES, INC.

INDEX

PART I: FINANCIAL INFORMATION

ITEM 1:	FINANCIAL STATEMENTS (Unaudited)	3

	Balance Sheets	3

	Statements of Operations	4

	Statements of Cash Flows	6

	Notes to the Financial Statements	7

ITEM 2:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9

ITEM 3 :	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	12

ITEM 4:	CONTROLS AND PROCEDURES	12

PART II: OTHER INFORMATION

Item 1	LEGAL PROCEEDINGS	13

ITEM 1A :	RISK FACTORS	13

ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	13

ITEM 3	DEFAULTS UPON SENIOR SECURITIES	13

ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	13

ITEM 6:	EXHIBITS	14

SIGNATURES		15

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARBON SCIENCES, INC.

(A Development Stage Company)

BALANCE SHEETS


	March 31, 2009			December 31, 2008
	(unaudited)
ASSETS

CURRENT ASSETS
Cash	$	49,701		$	45,292
Other receviable		-			2,400
Prepaid expenses		28,272			2,720

Total Current Assets		77,973			50,412

PROPERTY & EQUIPMENT, at cost
Machinery & equipment		71,498			71,498
Computer equipment		17,559			17,559
Mobile Vehicle		40,252			40,252
		129,309			129,309
Less accumulated depreciation		(33,980	)		(28,302	)

Net Property and Equipment		95,329			101,007

OTHER ASSETS
Patents		8,773			8,773


TOTAL ASSETS	$	182,075		$	160,192



LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	40,010		$	34,806
Accrued expenses		35,407			43,552
Note payable, investor		140,000			50,000
Note payable, officer		18,000			-

TOTAL CURRENT LIABILITIES		233,417			128,358

SHAREHOLDERS' EQUITY/(DEFICIT)
Common Stock, $0.001 par value;
500,000,000 authorized common shares
148,342,000 shares issued and outstanding		148,342			148,342
Additional Paid in Capital		2,155,533			2,155,533
Stock subscription payable		275,650			62,000
Accumulated Deficit during the development stage		(2,630,867	)		(2,334,041	)

TOTAL SHAREHOLDERS' EQUITY/(DEFICIT)		(51,342	)		31,834

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)	$	182,075		$	160,192

The accompanying notes are an integral part to these financial statements

CARBON SCIENCES, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)

							From Inception on
	Three Months Ended March 31,						August 25,2006 through
	2009			2008			March 31, 2009

REVENUE	$	-		$	-		$	-

OPERATING EXPENSES
Selling and marketing expenses		176,286			149,638			1,705,367
General and administrative expenses		60,929			38,767			501,888
Research and development		51,861			42,258			425,471
Depreciation expense		5,678			4,212			33,980

TOTAL OPERATING EXPENSES		294,754			234,875			2,666,706

LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES)		(294,754	)		(234,875	)		(2,666,706	)

OTHER INCOME/(EXPENSE)
Interest income		-			8,560			39,521
Interest expense		(2,072	)		-			(3,682	)

TOTAL OTHER INCOME (EXPENSE)		(2,072	)		8,560			35,839

NET LOSS	$	(296,826	)	$	(226,315	)	$	(2,630,867	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.00	)	$	(0.00	)


WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING		148,342,000			148,342,000

The accompanying notes are an integral part to these financial statements

CARBON SCIENCES, INC.

(A Development Stage Company)

STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

									Deficit
									Accumulated
					Additional		Stock		during the
	Common stock				Paid-in		Subscriptions		Development
	Shares		Amount		Capital		Payable		Stage			Total

Balance at December 31, 2008		148,342,000		148,342		2,155,533		62,000		(2,334,041	)		31,834

Stock subscription payable (unaudited)		-		-		-		213,650		-			213,650

Net Loss for the three months ended March 31, 2009 (unaudited)		-		-		-		-		(296,826	)		(296,826	)

Balance at March 31, 2009 (unaudited)		148,342,000	$	148,342	$	2,155,533	$	275,650	$	(2,630,867	)	$	(51,342	)

The accompanying notes are an integral part to these financial statements

CARBON SCIENCES, INC.

(A Development Stage Company)

STATEMENT OF CASH FLOWS

(Unaudited)

							From Inception on
							August 25,2006
	Three Months Ended						through
	3/31/2009			3/31/2008			March 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(296,826	)	$	(226,315	)	$	(2,630,867	)
Adjustment to reconcile net loss to net cash
used in operating activities
Depreciation expense		5,678			4,212			33,980
Stock issuance for services		-			-			75,000
(Increase) Decrease in:
Other receivable		2,400			(12,000	)		-
Prepaid expenses		(25,552	)		39,643			(28,272	)
Increase (Decrease) in:
Accounts payable		5,204			(2,676	)		40,010
Accrued expenses		(8,145	)		(1,148	)		35,407

NET CASH USED IN OPERATING ACTIVITIES		(317,241	)		(198,284	)		(2,474,742	)

CASH FLOWS PROVIDED/(USED) IN INVESTING ACTIVITIES:
Investment in certificates of deposit		-			191,441			-
Patent expenditures		-			-			(8,773	)
Purchase of equipment		-			-			(129,309	)

NET CASH PROVIDED/(USED) IN INVESTING ACTIVITIES		-			191,441			(138,082	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from officer		40,000			-			113,000
Loan from investor		90,000			-			300,000
Repayment of advances and loans		(22,000	)		-			(255,000	)
Proceeds from subscriptions payable		213,650			-			275,650
Proceeds from issuance of common stock		-			-			2,228,875

NET CASH PROVIDED BY FINANCING ACTIVITIES		321,650			-			2,662,525

NET INCREASE/(DECREASE) IN CASH		4,409			(6,843	)		49,701

CASH, BEGINNING OF PERIOD		45,292			9,539			-

CASH, END OF PERIOD	$	49,701		$	2,696		$	49,701

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	2,072		$	-		$	1,611
Taxes paid	$	800		$	-		$	800

The accompanying notes are an integral part to these financial statements

CARBON SCIENCES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS-UNAUDITED

MARCH 31, 2009

1. Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. For further information refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2008.

Going Concern

The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has obtained funds from its shareholders since its inception , and believes this funding will continue, and is also actively seeking new investors. Management believes the existing shareholders and the prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core of business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Carbon Sciences, Inc. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Development Stage Activities and Operations

The Company is in its initial stages of formation and has insignificant revenues. FASB #7 defines a development stage activity as one in which all efforts are devoted substantially to establishing a new business and even if planned principal operations have commenced, revenues are insignificant.

Revenue Recognition

The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. To date, the Company has had no revenues and is in the development stage.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

CARBON SCIENCES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS-UNAUDITED

MARCH 31, 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss per Share Calculations

The Company adopted Statement of Financial Standards (“SFAS”) No. 128 for the calculation of “Loss per Share”. SFAS No. 128 dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the period ended March 31, 2009 as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

3.	CAPITAL STOCK

During the three months ended March 31, 2009, the Company received $213,650 for subscriptions payable to purchase shares of common stock through a private placement at a price of $0.10 per share. During the three months ended March 31, 2009, the Company issued no shares of common stock.

4.	INCOME TAXES

The Company files income tax returns in the U.S. Federal jurisdiction, and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2005.

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

Included in the balance at March 31, 2009, are no tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

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

5.	SUBSEQUENT EVENTS

During April 2009, the Company received $202,250 for stock subscriptions payable to purchase shares of common stock at a price of $0.10 per share.

On April 5, 2009, the Company and Dr. Naveed Aslam, the Company’s Chief Technology Officer entered into a stock option agreement, whereby Dr. Aslam purchased the option to acquire 5,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share. Dr. Aslam was appointed as Chief Technology Officer on January 5, 2009.

On April 5, 2009, the Company and Mr. Byron Elton, the Company’s President entered into a stock option agreement, whereby Mr. Elton purchased the option to acquire 15,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share. Mr. Elton was appointed President and Chief Operating Officer on January 5, 2009.

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

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

·	discuss our future expectations;

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

·	state other "forward-looking" information.

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

OVERVIEW

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

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

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

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

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

Corporate Overview

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

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

Revenue Recognition

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

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

Use of Estimates

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

Fair Value of Financial Instruments

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

Recently Issued Accounting Pronouncements

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

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

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

Selling and Marketing Expenses

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

General and Administrative Expenses

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

Research and Development

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

Net Loss

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

Liquidity and Capital Resources

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

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

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

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

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

PLAN OF OPERATION AND FINANCING NEEDS

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

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

Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

n/a

ITEM 4T. CONTROLS AND PROCEDURES

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

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

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

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

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

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 6. EXHIBITS

Exhibit No.		Description

3.1		Articles of Incorporation of Carbon Sciences, Inc. filed with the Nevada Secretary of State on August 25, 2007. (Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on July 27, 2007)

3.2		Articles of Amendment of Articles of Incorporation of Carbon Sciences, Inc. filed with the Nevada Secretary of State on April 9, 2007 (Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on July 27, 2007)

3.3		Bylaws of Carbon Sciences, Inc. (Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on July 27, 2007)

10.1		Form of Subscription Agreement dated as of September 18, 2006 (Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on July 27, 2007)

10.2		Form of Subscription Agreement dated as of October 2, 2006(Incorporated by reference to the Company’s Registration Statement 10.2on Form SB-2 filed on July 27, 2007)

10.3		Form of Subscription Agreement dated as of March 1, 2007(Incorporated by reference to the Company’s Registration Statement 10.3on Form SB-2 filed on July 27, 2007)

10.4		Form of Subscription Agreement dated as of April 16, 2007(Incorporated by reference to the Company’s Registration Statement 10.4on Form SB-2 filed on July 27, 2007)

14.1		Code of Ethics (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 14.1filed on March 26, 2008)

31.1*		Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to Sarbanes-Oxley Section 302

32.1*		Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350

*Filed herewith

SIGNATURES

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

		CARBON SCIENCES, INC.

	By:	/s/ Derek W. McLeish
		Chief Executive Officer (Principal Executive Officer ) and Acting Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)