Digital Locations, Inc. - Quarter Report: 2014 March (Form 10-Q)
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, 2014
¨ TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER: 000-54817
CARBON SCIENCES, INC.
(Name of registrant in its charter)
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Nevada
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20-5451302
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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5511C Ekwill Street, Santa Barbara, California 93111
(Address of principal executive offices) (Zip Code)
Issuer’s telephone Number: (805) 456-7000
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 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 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.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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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 15, 2014 was 129,946,348.
1
INDEX
ITEM 1. FINANCIAL STATEMENTS
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CARBON SCIENCES, INC.
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(A Development Stage Company)
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Condensed Balance Sheets
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March 31,
2014
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December 31,
2013
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ASSETS
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(Unaudited)
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|||||||
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CURRENT ASSETS:
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||||||||
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Cash
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$ | 11,740 | $ | 11,382 | ||||
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Prepaid expenses
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24,504 | 3,758 | ||||||
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Total current assets
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36,244 | 15,140 | ||||||
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PROPERTY AND EQUIPMENT, NET
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903 | 1,182 | ||||||
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OTHER ASSETS - Patents
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1,784 | 1,784 | ||||||
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Total assets
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$ | 38,931 | $ | 18,106 | ||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
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CURRENT LIABILITIES:
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||||||||
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Accounts payable
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$ | 253,513 | $ | 217,418 | ||||
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Accrued expenses and other current liabilities
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61,383 | 11,137 | ||||||
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Accrued interest, notes payable
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76,558 | 64,340 | ||||||
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Derivative liability
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1,514,877 | 2,811,962 | ||||||
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Convertible notes payable, net of beneficial conversion feature
of $0 and $8,849, respectively
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191,500 | 182,651 | ||||||
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Convertible notes payable, net of discount of $201,532 and
$226,445, respectively
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502,495 | 492,904 | ||||||
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Total current liabilities
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2,600,326 | 3,780,412 | ||||||
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STOCKHOLDERS’ DEFICIT:
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Preferred stock, $0.001 par value; 20,000,000 shares authorized,
no shares issued and outstanding
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- | - | ||||||
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Common stock, $0.001 par value; 1,000,000,000 shares
authorized, 115,323,354 and 72,134,930 shares issued and
outstanding
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115,325 | 72,135 | ||||||
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Additional paid-in capital
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10,900,003 | 10,614,891 | ||||||
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Deficit accumulated during the development stage
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(13,576,723 | ) | (14,449,332 | ) | ||||
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Total stockholders’ deficit
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(2,561,395 | ) | (3,762,306 | ) | ||||
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Total liabilities and stockholders’ deficit
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$ | 38,931 | $ | 18,106 | ||||
See notes to condensed financial statements
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(A Development Stage Company)
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Condensed Statements of Operations
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(Unaudited)
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Three Months Ended
March 31,
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From Inception on August 25, 2006 through March 31,
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2014
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2013
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2014
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REVENUE
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$ | - | $ | - | $ | - | ||||||
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OPERATING EXPENSES:
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General and administrative
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171,750 | 155,619 | 8,990,034 | |||||||||
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Research and development
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- | 2,439 | 1,245,808 | |||||||||
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Depreciation and amortization
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279 | 864 | 112,053 | |||||||||
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Total operating expenses
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172,029 | 158,922 | 10,347,895 | |||||||||
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LOSS FROM OPERATIONS
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(172,029 | ) | (158,922 | ) | (10,347,895 | ) | ||||||
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OTHER INCOME (EXPENSE):
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Interest income
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- | - | 39,521 | |||||||||
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Rental income
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6,000 | 2,250 | 20,250 | |||||||||
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Loss on sale of asset
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- | - | (69,033 | ) | ||||||||
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Loss on foreign exchange
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- | - | (2,327 | ) | ||||||||
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Impairment of intangible assets
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- | - | (88,147 | ) | ||||||||
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Gain (loss) on settlement of debt
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14,716 | - | (11,184 | ) | ||||||||
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Gain on forgiveness of debt
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- | - | 122,000 | |||||||||
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Incentive fees
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- | - | (1,079,800 | ) | ||||||||
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Gain (loss) on change in derivative liability
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1,159,363 | 8,550 | (1,181,589 | ) | ||||||||
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Penalties
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- | - | (382 | ) | ||||||||
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Interest expense
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(135,441 | ) | (164,776 | ) | (978,137 | ) | ||||||
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Total other income (expense)
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1,044,638 | (153,976 | ) | (3,228,828 | ) | |||||||
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INCOME (LOSS) BEFORE INCOME TAXES
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872,609 | (312,898 | ) | (13,576,723 | ) | |||||||
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PROVISION FOR INCOME TAXES
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- | - | - | |||||||||
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NET INCOME (LOSS)
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$ | 872,609 | $ | (312,898 | ) | $ | (13,576,723 | ) | ||||
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NET INCOME (LOSS) PER SHARE,
BASIC AND DILUTED
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$ | 0.03 | $ | (0.03 | ) | |||||||
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WEIGHTED AVERAGE SHARES
OUTSTANDING, BASIC AND
DILUTED
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94,529,019 | 11,576,680 | ||||||||||
See notes to condensed financial statements
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(A Development Stage Company)
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Condensed Statements of Cash Flows
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(Unaudited)
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Three Months Ended
March 31,
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From Inception on August 25, 2006 through March 31,
2014
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2014
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2013
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income (loss)
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$ | 872,609 | $ | (312,898 | ) | $ | (13,576,723 | ) | ||||
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Adjustments to reconcile net income (loss) to net cash
used in operating activities:
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Depreciation and amortization
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279 | 864 | 112,053 | |||||||||
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Stock compensation cost
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10,335 | 70,930 | 2,251,665 | |||||||||
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Common stock issued for services
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- | - | 417,038 | |||||||||
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Common stock issued for incentive fees
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- | - | 1,079,800 | |||||||||
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Loss on sale of assets
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- | - | 69,033 | |||||||||
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Impairment of intangible assets
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- | - | 88,147 | |||||||||
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(Gain) loss on settlement of debt
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(14,716 | ) | - | 11,184 | ||||||||
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Gain on forgiveness of debt
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- | - | (122,000 | ) | ||||||||
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Notes payable issued for services
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- | - | 66,150 | |||||||||
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Amortization of debt discount and beneficial
conversion feature recorded to interest expense
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115,435 | 146,988 | 855,172 | |||||||||
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(Gain) loss on change in derivative liability
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(1,159,363 | ) | (8,550 | ) | 1,181,589 | |||||||
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Changes in assets and liabilities:
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Increase in prepaid expenses
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(20,746 | ) | (8,369 | ) | (24,504 | ) | ||||||
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Increase in:
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Accounts payable
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36,095 | 32,883 | 460,483 | |||||||||
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Accrued expenses and other current liabilities
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67,430 | 20,008 | 412,006 | |||||||||
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NET CASH USED IN OPERATING ACTIVITIES
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(92,642 | ) | (58,144 | ) | (6,718,907 | ) | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Patent expenditures
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- | (200 | ) | (89,931 | ) | |||||||
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Purchase of property and equipment
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- | - | (206,489 | ) | ||||||||
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Proceeds from the sale of assets
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- | - | 24,500 | |||||||||
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NET CASH USED IN INVESTING ACTIVITIES
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- | (200 | ) | (271,920 | ) | |||||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from notes payable
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- | - | 636,000 | |||||||||
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Proceeds from convertible notes payable
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93,000 | 45,000 | 727,880 | |||||||||
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Advances from officer
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- | - | 113,000 | |||||||||
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Net proceeds from issuance of common stock
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- | - | 5,908,687 | |||||||||
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Repayment of advances and notes payable
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- | - | (383,000 | ) | ||||||||
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NET CASH PROVIDED BY FINANCING ACTIVITIES
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93,000 | 45,000 | 7,002,567 | |||||||||
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NET INCREASE (DECREASE) IN CASH
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358 | (13,344 | ) | 11,740 | ||||||||
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CASH, BEGINNING OF THE PERIOD
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11,382 | 14,257 | - | |||||||||
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CASH, END OF THE PERIOD
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$ | 11,740 | $ | 913 | $ | 11,740 | ||||||
See notes to condensed financial statements
(A Development Stage Company)
Notes to Condensed Financial Statements
Three Months Ended March 31, 2014
(Unaudited)
1. BASIS OF PRESENTATION AND GOING CONCERN
Basis of Presentation
The accompanying unaudited condensed financial statements of Carbon Sciences, Inc. (the “Company”) 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 months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information refer to the financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2013.
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 any 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, raising additional capital. 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 the Company 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. A development stage activity is 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 operating 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.
Loss per Share Calculations
The Company adopted the accounting pronouncement for loss per share, which dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing income or loss available to common shareholders by the weighted-average number of common shares outstanding during the reporting period. 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 three months ended March 31, 2014 and 2013.
Stock-Based Compensation
Share based payments applies to transactions in which an entity exchanges its equity instruments for goods or services, and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. We follow a fair value approach using an option-pricing model, such as the Black Scholes option valuation model, at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting period of the stock option.
Fair Value of Financial Instruments
Disclosures about fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2014 and December 31, 2013, the amounts reported for cash, accrued interest and other expenses, and notes payable approximate the fair value because of their short maturities.
We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
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·
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Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
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·
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Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
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·
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Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
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We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at March 31, 2014 and December 31, 2013:
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Total
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Level 1
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Level 2
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Level 3
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March 31, 2014:
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Derivative liability
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$ | 1,514,877 | $ | - | $ | - | $ | 1,514,877 | ||||||||
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Convertible notes payable
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502,495 | - | - | 502,495 | ||||||||||||
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Total liabilities measured at fair value
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$ | 2,017,372 | $ | - | $ | - | $ | 2,017,372 | ||||||||
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December 31, 2013:
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Derivative liability
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$ | 2,811,962 | $ | - | $ | - | $ | 2,811,962 | ||||||||
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Convertible notes payable
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492,904 | - | - | 492,904 | ||||||||||||
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Total liabilities measured at fair value
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$ | 3,304,866 | $ | - | $ | - | $ | 3,304,866 | ||||||||
Recently Issued Accounting Pronouncements
Management reviewed new accounting pronouncements issued during the three months ended March 31, 2014 and through the date of filing this report, and believes no pronouncements are applicable to or would have a material impact on the financial statements of the Company.
Reclassifications
Certain amounts in the condensed consolidated financial statements for the three months ended March 31, 2013 have been reclassified to conform to the presentation for the three months ended March 31, 2014.
3. CAPITAL STOCK
At March 31, 2014, the Company’s authorized stock consisted of 1,000,000,000 shares of common stock, par value $0.001 per share. The Company is also authorized to issue 20,000,000 shares of preferred stock, par value $0.001 per share. The rights, preferences and privileges of the holders of the preferred stock will be determined by the Board of Directors prior to issuance of such shares.
During the three months ended March 31, 2014, the Company issued a total of 43,188,424 shares of common stock at fair value in conversion of $111,822 convertible promissory notes, plus accrued interest payable of $4,966. The Company reduced the derivative liability by $230,722 and debt discount by $14,827, and recognized a gain of $14,716 on conversion of the notes.
4. STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK AWARDS
Stock Options
As of March 31, 2014, the Board of Directors of the Company granted non-qualified stock options for a total of 14,100,000 shares of common stock to its employees, officers and consultants. Stock-based compensation cost is measured at the grant date based on the value of the award granted using the Black-Scholes option pricing model, and recognized over the period in which the award vests, which is generally 25 months. Stock-based compensation expense included in general and administrative expense was $10,335 and $70,930 for the three months ended March 31, 2014 and 2013, respectively.
As of March 31, 2014, unrecognized stock-based compensation expense was approximately $54,000.
A summary of the Company’s stock option awards as of March 31, 2014, and changes during the three months then ended is as follows:
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Shares
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Weighted
Average
Exercise Price
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Weighted Average
Remaining
Contract Term
(Years)
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Outstanding at December 31, 2013
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14,100,000 | $ | 0.019 | |||||||
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Granted
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- | $ | - | |||||||
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Exercised
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- | $ | - | |||||||
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Forfeited or expired
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- | $ | - | |||||||
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Outstanding at March 31, 2014
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14,100,000 | $ | 0.019 | 6.48 | ||||||
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Exercisable at March 31, 2014
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3,459,000 | $ | 0.06 | 6.44 | ||||||
Warrants
As of March 31, 2014 and December 31, 2013, the Company had 460,000 common stock purchase warrants outstanding, with an exercise price of $0.50 per share and expiring on various dates in 2017 and 2018.
Restricted Stock Awards
On September 12, 2013 and amended on October 24, 2013, two consultants were each granted restricted stock awards for 15,000,000 shares of the Company’s common stock. The shares vest upon reaching certain defined milestones related to the Company’s development and construction of a gas-to-liquid plant. Total compensation accrued and included in accrued expenses and other liabilities at March 31, 2014 was $49,623 resulting from a total of 6,000,000 shares vested in the three months ended March 31, 2014. The accrued stock compensation is calculated using the market price of the Company’s common stock on the date of vesting. The shares were issued to the consultants subsequent to March 31, 2014.
5. CONVERTIBLE NOTES PAYABLE
Institutional Lender
We entered into three securities purchase agreements with an institutional lender on July 8, 2013, September 16, 2013, and January 6, 2014 for the issuance of three 8% convertible promissory notes in the principal amount of $42,500, $32,500 and $63,000, respectively. The notes are convertible into shares of our common stock at a price equal to a variable conversion price of 58% multiplied by a defined market price, representing a discount of 42%. The market price was defined as the average of the lowest three trading prices for our common stock during a ten trading day period ending on the latest complete trading day prior to the conversion date.
During the three months ended March 31, 2014, the July 8, 2013 note was fully converted into shares of our common stock, extinguishing a total of $42,500 in principal and $1,700 in accrued interest. During the three months ended March 31, 2014, amortization of debt discount was recorded in the amount of $15,399.
During the three months ended March 31, 2014, the September 16, 2013 note was partially converted into shares of our common stock, extinguishing a total of $16,400 in principal and resulting in a principal balance of $16,100 at March 31, 2014. During the three months ended March 31, 2014, amortization of debt discount was recorded in the amount of $15,348, resulting in a remaining discount of $4,625 at March 31, 2014.
The January 6, 2014 note had a principal balance of $63,000 at March 31, 2014. We recorded a debt discount of $63,000 related to the conversion feature of the January 6, 2014 note, along with a derivative liability at inception. During the three months ended March 31, 2014, amortization of the debt discount was recorded in the amount of $19,244, resulting in a remaining debt discount of $43,756 at March 31, 2014.
Securities Purchase Agreement - $299,212
Effective October 24, 2013, the remaining principal balance of certain convertible promissory notes totaling $291,443 and accrued interest of $7,769 were combined in a new 10% convertible promissory note, which matures on October 24, 2014 and which had an aggregate principal balance of $282,462 at December 31, 2013. The note is convertible into shares of our common stock at a conversion price equal to (a) the lesser of $0.006 per share or (b) 50% of the lowest trade price recorded on any trade date after the effective date, or (c) the lowest effective price per share granted to any person after the effective date. During the three months ended March 31, 2014, a total of $27,800 principal and $3,266 accrued interest were converted into shares of our common stock, resulting in a principal balance of $254,662 payable at March 31, 2014.
Securities Purchase Agreements - Services of $244,452
On December 31, 2012, we entered into convertible promissory notes with three individuals in exchange for services rendered in the aggregate amount of $244,452, including $185,852 with the Chairman of our Board of Directors and our former Chief Executive Officer. We entered into securities purchase agreements for the sale of 5% convertible promissory notes in the principal amount of $244,452, which are convertible into shares of our common stock at a conversion price equal to the lesser of $0.20 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The notes mature two years from their effective dates, or December 31, 2014, and totaled $244,452 at March 31, 2014. We recorded a debt discount of $237,742 related to the conversion feature of the notes, along with a derivative liability at inception. During the three months ended March 31, 2014, total amortization of debt discount was recorded in the amount of $29,341, resulting in a remaining debt discount of $91,617 at March 31, 2014.
Securities Purchase Agreement - $100,000
During 2013, we received total proceeds of $40,000 pursuant to a securities purchase agreement for the sale of 10% convertible promissory notes in the aggregate principal amount of $100,000. The notes are convertible into shares of our common stock at a price equal to a variable conversion price of the lesser of $0.09 per share or fifty percent (50%) of the lowest trade price recorded after the effective date. The notes were to mature one year from their effective date. We recorded a debt discount of $40,000 related to the beneficial conversion feature of the notes. The notes had an aggregate balance of $40,000 at March 31, 2014. During the three months ended March 31, 2014, the balance of the debt discount of $8,849 was amortized to interest expense.
Securities Purchase Agreement - $335,000
On February 27, 2013, we received proceeds of $25,000 pursuant to a securities purchase agreement for the sale of 10% convertible promissory notes in aggregate principal amount of $335,000 with a 10% Original Issue Discount (OID) of $35,000. The note had an original issue discount of $4,313 for total principal owed of $29,313, which balance was payable at March 31, 2014. We recorded a debt discount of $25,403 related to the conversion feature of the note and the original issue discount, along with a derivative liability at inception. During the three months ended March 31, 2014, amortization of debt discount was recorded in the amount of $7,228, resulting in a remaining discount of $20,398 at March 31, 2014. We were in default on the note at March 31, 2014, and are in discussions with the lender to extend the maturity date of the note.
On December 10, 2013, we received proceeds of $25,000 pursuant to the securities purchase agreement, with an original issue discount of $4,312 and the transfer of $2,137 principal and $4,957 accrued interest for total principal owed of $36,406. We recorded a debt discount of $29,312 related to the conversion feature of the note and the original issue discount, along with a derivative liability at inception. The note had a balance of $25,122 at December 31, 2013. During the three months ended March 31, 2014, the note was fully converted into shares of our common stock, extinguishing a total of $25,122 in principal and $1,250 in accrued interest. During the three months ended March 31, 2014, amortization of debt discount was recorded in the amount of $2,137.
On February 20, 2014, we received proceeds of $30,000 pursuant to the securities purchase agreement, with an original issue discount of $3,500 for total principal owed of $33,500, which balance was payable at March 31, 2014. We recorded a debt discount of $33,500 related to the conversion feature of the note and the original issue discount, along with a derivative liability at inception. During the three months ended March 31, 2014, amortization of debt discount was recorded in the amount of $3,132, resulting in a remaining discount of $30,368 at March 31, 2014.
If the notes issued under the securities purchase agreement are repaid before 90 days, the interest rate will be zero percent (0%), otherwise a one-time interest rate of five percent (5%) will be applied to the principal sums outstanding. The notes are convertible into shares of common stock of the Company at a price equal to the lesser of $0.72 or 70% of the lowest trading price in the 25 trading days prior to the conversion. The notes mature one year from the effective date of each advance.
Securities Purchase Agreement – Accounts Payable of $29,500
On March 14, 2013, we entered into a convertible promissory note in exchange for accounts payable in the amount of $29,500. We entered into securities purchase agreements for the sale of a 5% convertible promissory note in the principal amount of $29,500, which is convertible into shares of our common stock at a conversion price equal to the lesser of $0.15 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The note matures two years from its effective date, or March 14, 2015, and had a balance payable of $29,500 at March 31, 2014.
Securities Purchase Agreement - $97,000
On May 29, 2013, we exchanged $97,000 in demand promissory notes for convertible promissory notes pursuant to a securities purchase agreement for the sale of a 10% convertible promissory note in the aggregate principal amount of $97,000. The notes are convertible into shares of our common stock at a price equal to a conversion price of the lesser of $0.028 per share or fifty percent (50%) of the lowest trade price recorded after the effective date. The note matured six months from the effective date, and had a balance payable of $97,000 at March 31, 2014. We were in default on the note at March 31, 2014, and are in discussions with the lender to extend the maturity date of the note.
Securities Purchase Agreement – Services of $25,000
On June 4, 2013, we entered into a convertible promissory note with a member of our Board of Directors in exchange for services rendered in the amount of $25,000. We entered into securities purchase agreements for the sale of a 5% convertible promissory note in the principal amount of $25,000, which is convertible into shares of common stock of the Company at a conversion price equal to the lesser of $0.035 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The note matures three years from its effective date, or June 4, 2016, and had a balance payable of $25,000 at March 31, 2014.
Securities Purchase Agreement - $5,000 Exchanged Note
On September 6, 2013, we exchanged a $5,000 promissory note for a convertible promissory note pursuant to a securities purchase agreement for the sale of a 10% convertible promissory note in the aggregate principal amount of $5,000. The note is convertible into shares of our common stock at a price equal to a conversion price of the lesser of $0.0042 per share or fifty percent (50%) of the lowest trade price recorded after the effective date. The note matures on June 30, 2014, and had a balance of $5,000 at March 31, 2014. During the three months ended March 31, 2014, amortization of debt discount was recorded in the amount of $836, resulting in a remaining discount of $623 at March 31, 2014.
Securities Purchase Agreement - $250,000
On October 8, 2012, we entered into to a securities purchase agreement for the sale of 10% convertible promissory notes in aggregate principal amount of $250,000. The notes are convertible into shares of common stock of the Company at a price equal to the lesser of $0.006 or 50% of the lowest trade price subsequent to the effective date of the note and prior to the conversion. The notes mature six months from the effective date of each advance.
The lender previously advanced a total of $11,000 in August and September 2013 that was transferred to this agreement. We recorded a debt discount of $11,000 along with a derivative liability upon transfer. The note had a balance of $11,000 at March 31, 2014. During the three months ended March 31, 2014, amortization of debt discount was recorded in the amount of $5,440, resulting in a remaining discount of $423 at March 31, 2014. We were in default on the note at March 31, 2014, and are in discussions with the lender to extend the maturity date of the note.
On October 21, 2013, we received proceeds of $22,000 pursuant to the securities purchase agreement. We recorded a debt discount of $22,000 along with a derivative liability at inception. The note had a balance of $22,000 at March 31, 2014. During the three months ended March 31, 2013, amortization of debt discount was recorded in the amount of $10,879, resulting in a remaining discount of $2,538 at March 31, 2014. We were in default on the note at March 31, 2014, and are in discussions with the lender to extend the maturity date of the note.
On November 22, 2013, we received proceeds of $25,000 pursuant to the securities purchase agreement. We recorded a debt discount of $25,000 along with a derivative liability at inception. The note had a balance of $25,000 at March 31, 2014. During the three months ended March 31, 2014, amortization of debt discount was recorded in the amount of $12,431, resulting in a remaining discount of $7,182 at March 31, 2014.
For purpose of estimating the fair market value of the derivative liability, we used the Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative liability at March 31, 2014 are as follows:
|
|
|
|
|
|
Stock price on the valuation date
|
|
$0.0051
|
|
|
Conversion price for the debt
|
|
$0.00155 - $0.00620
|
|
|
Dividend yield
|
|
0.00
|
%
|
|
Years to maturity
|
|
0.18 – 0.89
|
|
|
Risk free rate
|
|
0.13% - 0.04
|
%
|
|
Expected volatility
|
|
124.70% - 455.41
|
%
|
The value of the derivative liability balance at March 31, 2014 was $1,514,877.
The total gain on settlement of debt related to the conversion of notes payable into shares of our common stock was $14,716 for the three months ended March 31, 2014.
6. SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION
During the three months ended March 31, 2014 and 2013, the Company paid no amounts for income taxes.
During the three months ended March 31, 2014 and 2013, the Company paid interest of $124 and $1,535, respectively.
During the three months ended March 31, 2014, the Company had the following non-cash investing and financing activities:
The Company issued a total of 43,188,424 shares of common stock in conversion of $111,822 in convertible notes payable, plus $4,966 of accrued interest payable, increasing common stock by $43,190, increasing additional paid-in capital by $274,777, decreasing debt discount by $14,827 and decreasing derivative liability by $230,722.
The Company increased debt discount and derivative liability by $93,000 for the issuance of new convertible debt.
During the three months ended March 31, 2013, the Company had no non-cash investing and financing activities.
7. RELATED PARTY TRANSACTIONS
See Note 5 for discussion of convertible notes payable to related parties, including many lenders who are also shareholders of the Company.
On December 12, 2012, we entered into a convertible note with the Chairman of our Board of Directors and our former Chief Executive Officer in exchange for services valued at $185,852. The principal balance of this related party note was $185,852 as of March 31, 2014 and December 31, 2013, with accrued interest payable of $11,584 and $9,293 as of March 31, 2014 and December 31, 2013, respectively.
On June 4, 2013, we entered into a convertible note with a member of our Board of Directors in exchange for services valued at $25,000. As of March 31, 2014 and December 31, 2013, the principal balance of this related party note was $25,000, with accrued interest payable of $1,024 and $719 as of March 31, 2014 and December 31, 2013, respectively.
8. SUBSEQUENT EVENTS
Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:
On April 10, 2014, the Company issued 5,481,818 shares of its common stock to the institutional lender in conversion of debt principal of $12,060 of a convertible promissory note dated September 16, 2013 and discussed in Note 5.
On April 16, 2014, the Company issued 3,141,176 shares of its common stock to the institutional lender in conversion of debt principal of $4,040 of a convertible promissory note dated September 16, 2013 and discussed in Note 5, and accrued interest payable of $1,300.
On April 29, 2014, the Board of Directors of the Company approved the issuance of 3,000,000 shares of the Company’s common stock each to two consultants pursuant to the vesting of the shares under the restricted stock awards discussed in Note 4.
Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below, and elsewhere in this report, are not related to historical results, and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements frequently are accompanied by such words such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements contained herein after the date of this report. Subsequent written and oral forward looking statements attributable to us or to persons acting in our behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth in our annual report on Form 10-K filed with the SEC on March 31, 2014, and in other reports filed by us with the SEC
You should read the following description of our financial condition and results of operations in conjunction with the financial statements and accompanying notes included in this report.
OVERVIEW
Carbon Sciences, Inc. (“Carbon Sciences”) or the (“Company”) is in the early stages of developing a complete small-scale natural gas-to-liquids (“GTL”) fuel production plant (the “miniGTL plant” or the “Plant”). We anticipate the miniGTL plant will be based on integrating and optimizing existing GTL technology components and processes into a modular diesel or gasoline production facility. We believe developing the Plant will require bringing together natural gas resource holders, engineering firms, and technology firms. Based on our internal economic analysis and conversations with prospective partners, we believe that a miniGTL plant producing approximately 1,000 barrels per day of diesel or gasoline may be economically viable in the United States, given the low price and abundance of natural gas. We anticipate that a modular Plant would be mobile and could be moved from one gas field to another, amortizing the capital cost of the plant over several small gas fields, which are more plentiful than large gas fields.
We have also been developing a proprietary GTL catalyst technology. The development work on this catalyst is based on a patented catalyst, for which we have an exclusive license from the University of Saskatchewan, Canada. The patented catalyst is a laboratory scale catalyst with over 2,000 hours of uninterrupted run time with high efficiency in converting natural gas and CO2 to syngas. Our research and development efforts have been based on developing a commercial form of this catalyst for use in industrial scale natural gas reforming processes. Our development activities have been primarily performed by outside catalyst development firms. Because the commercialization of an industrial grade natural gas reforming catalyst is a lengthy process that requires many iterative long-term and expensive testing programs, we have suspended our development efforts and are seeking a strategic partner for further funding and to help accelerate the commercial development of our catalyst. Without additional funding specifically devoted to this effort, we will not continue to develop our catalyst and may lose our exclusive license from the University of Saskatchewan, Canada.
We have not yet generated revenues. We currently have negative working capital and received an opinion from our independent auditors on our financial statements that expressed substantial doubt about our ability to continue as a 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 ability of the Company to continue as a going concern is dependent upon, among other things, raising additional capital. Since our inception through March 31, 2014, the Company has obtained funds primarily from the issuance of common stock and debt. Management believes this funding will continue, and is continually seeking new investors. Management believes the existing shareholders and lenders and prospective new investors will provide the additional cash needed to meet our obligations as they become due, and will allow the development of our core of business. However, there can be no assurance that such financing will be available upon terms that are acceptable to us, if at all.
Critical Accounting Policies
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 or GAAP. 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.
Use of Estimates
In accordance with GAAP, 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
Disclosures about fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2014 and December 31, 2013, the amounts reported for cash, accrued interest, accrued expenses and other current liabilities, and notes payable approximate fair value because of their short maturities.
We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
-
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
-
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
-
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at March 31, 2014 and December 31, 2013:
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
|
March 31, 2014:
|
||||||||||||||||
|
Derivative liability
|
$ | 1,514,877 | $ | - | $ | - | $ | 1,514,877 | ||||||||
|
Convertible notes payable
|
502,495 | - | - | 502,495 | ||||||||||||
|
Total liabilities measured at fair value
|
$ | 2,017,372 | $ | - | $ | - | $ | 2,017,372 | ||||||||
|
December 31, 2013:
|
||||||||||||||||
|
Derivative liability
|
$ | 2,811,962 | $ | - | $ | - | $ | 2,811,962 | ||||||||
|
Convertible notes payable
|
492,904 | - | - | 492,904 | ||||||||||||
|
Total liabilities measured at fair value
|
$ | 3,304,866 | $ | - | $ | - | $ | 3,304,866 | ||||||||
Income Taxes
We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Stock-Based Compensation
Stock-based compensation is measured at the grant date based on the value of the award granted using the Black-Scholes option pricing model, and recognized over the period in which the award vests. For stock awards no longer expected to vest, any previously recognized stock compensation expense is reversed in the period of termination. The stock-based compensation expense is included in general and administrative expenses.
Recently Issued Accounting Pronouncements
No new accounting pronouncements were issued during the quarter ended March 31, 2014 and through the date of filing this report that we believe are applicable or would have a material impact on our financial statements.
RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2014 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2013
General and Administrative Expenses
General and administrative expenses increased by $16,131 to $171,750 in the three months ended March 31, 2014 from $155,619 in the three months ended March 31, 2013. The increase in general and administrative expenses in the current period is due primarily to the stock compensation accrued to two consultants, partially offset by a decrease in stock option compensation expense, salaries, and related expenses.
Research and Development
Research and development expenses decreased by $2,439 to $0 in the three months ended March 31, 2014 from $2,439 in the three months ended March 31, 2013. At this time, we are not undertaking any research and development projects and, accordingly, we have eliminated our outside consulting, lab fees, and testing supplies in the current year.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased by $585 to $279 in three months ended March 31, 2014 from $864 in the three months ended March 31, 2013. Our investment in property and equipment currently is not material to our operations, and substantially all of our property and equipment is fully depreciated at March 31, 2014.
Other Income (Expense)
Total other income was $1,044,638 in the three months ended March 31, 2014 compared to other expense of $153,976 in the three months ended March 31, 2013. The increase in the current year is primarily the result of the gain on change in derivative liability of $1,159,363 related to our convertible debt and decreased interest expense due to debt conversions and decreased amortization to interest expense of debt discount and beneficial conversion features for the convertible debt. We also recognized a gain on settlement of debt of $14,716 in the three months ended March 31, 2014 resulting from the conversion of debt to equity. We had no such gain in the three months ended March 31, 2013.
Net Loss
As a result, we reported net income for the three months ended March 31, 2014 of $872,609, compared to a net loss of $312,898 for the three months ended March 31, 2013.
Liquidity and Capital Resources
As of March 31, 2014, we had a working capital deficit of $2,564,082, compared to a working capital deficit of $3,765,272 as of December 31, 2013. The decrease in the working capital deficit was due primarily to the decrease in our non-cash derivative liability. Our cash balance at March 31, 2014 was $11,740.
During the three months ended March 31, 2014, we used net cash of $92,642 in operating activities as a result of our net income of $872,609, non-cash expenses totaling $126,049, and increases in accounts payable of $36,095 and accrued expenses and other current liabilities of $67,430, reduced by gain on settlement of debt of $14,716, gain on change of derivative liability of $1,159,363, and increase in prepaid expenses of $20,746.
By comparison, during the three months ended March 31, 2013, we used net cash of $58,144 in operating activities as a result of our net loss of $312,898, gain on change in derivative liability of $8,550 and increase in prepaid expenses of $8,369, partially offset by non-cash expenses totaling $218,782, and increases in accounts payable of $32,883 and accrued expenses and other current liabilities of $20,008.
We had no net cash provided by or used in investing activities in the three months ended March 31, 2014. Net cash used in investing activities, comprised of patent expenditures, was $200 in the three months ended March 31, 2013.
Net cash provided by financing activities during the three months ended March 31, 2014 and 2013 was $93,000 and $45,000, respectively, comprised of proceeds from convertible notes payable. Our capital needs have primarily been met from the proceeds of equity financings and investor loans, as we are currently in the development stage and have no revenues.
We do not have any material commitments for capital expenditures during the next twelve months. Although most recently, proceeds received from the issuance of debt are sufficient to fund our current operating expenses, we will need to raise additional funds in the future to continue our operations and emerge from the development stage. Therefore, our future operations are dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.
We believe that we have assets to ensure that we can continue to operate without liquidation over the next twelve months, due to our current cash, and our experience in the past in being able to raise money from our investor base. Therefore, we believe we have the ability to continue our operations for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of our operations.
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 any 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 is dependent upon, among other things, raising additional capital. Since our inception through March 31, 2014, the Company has obtained funds primarily from the issuance of common stock and debt. Management believes this funding will continue, and is continually seeking new investors. Management believes the existing shareholders and lenders and 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. However, we cannot assure that we will be successful in these endeavors.
Not applicable.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer that it files under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure. The Company’s chief executive officer and chief financial officer is responsible for establishing and maintaining disclosure controls and procedures for the Company.
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: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, (as defined in Rule 13a-15(f) under the Exchange Act). The Company’s 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 for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or the degree of compliance with the policies or procedures may deteriorate. After evaluating the Company’s internal controls over financial reporting, the Company’s chief executive officer and chief financial officer concluded that the internal controls over financial reporting are effective as of March 31, 2014.
Changes in Internal Control Over Financial Reporting
There was no change to our internal controls or in other factors that could affect these controls during the three month period ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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.
There are no material changes from the risk factors previously disclosed in our annual report on Form 10-K filed March 31, 2014.
During the three months ended March 31, 2014, the Company did not issued any unregistered shares of its common stock.
As further discussed in Note 5 to our condensed financial statements, we are currently in default on $159,313 of principal on our convertible notes payable. We are currently in discussions with the lenders and anticipate we will successfully negotiate extensions of the maturity dates of the notes.
Not Applicable.
None
|
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).
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|
|
|
|
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).
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|
|
|
3.3
|
Certificate of Amendment to Articles of Incorporation, filed with the Nevada Secretary of State on May 9, 2011 (Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 16, 2011).
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|
|
|
|
3.4
|
Certificate of Amendment to Articles of Incorporation, filed with the Nevada Secretary of State on August 1, 2011 (Incorporated by reference to the Company’s Current Report on Form 8-K filed on August 4, 2011).
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|
3.5
|
Bylaws of Carbon Sciences, Inc. (Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on July 27, 2007).
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|
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4.3
|
Form of Warrant issued in connection with Stock Purchase Agreement entered into between the Company and the Purchasers, signatory thereto. (Incorporated by reference to the Company’s Registration Statement on S-1 filed on November 7, 2011)
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|
|
|
|
10.1
|
Lease agreement with Ekwill Street, L.P. (as amended). (Incorporated by reference to the Company’s Registration Statement on S-1 filed on November 7, 2011)
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|
|
|
|
10.2
|
Exclusive License Agreement between Carbon Sciences, Inc. and the University of Saskatchewan dated December 23, 2010. (Incorporated by reference to the Company’s Registration Statement on S-1 filed on November 7, 2011)
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|
|
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10.3
|
Consulting Agreement dated as of March 30, 2011 between Carbon Sciences, Inc. and Emerging Fuels, Technology, Inc. (Incorporated by reference to the Company’s Registration Statement on S-1 filed on November 7, 2011)
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|
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10.4
|
Form of Stock Purchase Agreement entered into between the Company and the Purchasers, signatory thereto. (Incorporated by reference to the Company’s Registration Statement on S-1 filed on November 7, 2011)
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10.5
|
Stock Option Agreement between Carbon Sciences, Inc. and Byron Elton. (Incorporated by reference to the Company’s Registration Statement on S-1 filed on November 7, 2011)
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|
|
10.6
|
Carbon Sciences, Inc. 2011 Equity Incentive Plan. (Incorporated by reference to the Company’s Registration Statement on S-1 filed on November 7, 2011)
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|
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|
10.7
|
Consulting Agreement between Carbon Sciences, Inc. and Howard Fong, dated December 8, 2011. (Incorporated by reference to the Company’s Registration Statement on S-1 filed on January 9, 2012)
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|
10.8
|
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)
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10.9
|
Form of Subscription Agreement dated as of October 2, 2006(Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on July 27, 2007)
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10.10
|
Form of Subscription Agreement dated as of March 1, 2007(Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on July 27, 2007)
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10.11
|
Form of Subscription Agreement dated as of April 16, 2007(Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on July 27, 2007)
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10.12
|
Consulting Agreement between Carbon Sciences, Inc. and William Beifuss, dated May 31, 2013 (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 filed on March 31, 2014)
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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 filed on March 26, 2008).
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31.1*
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
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31.2*
|
Certification of the Acting Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1*
|
Certification of the Chief Executive Officer furnished pursuant to Section 1350 of Chapter 63 of 18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2*
|
Certification of the acting Chief Financial Officer furnished pursuant to Section 1350 of Chapter 63 of 18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
EX-101.INS
|
XBRL INSTANCE DOCUMENT
|
|
EX-101.SCH
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
|
|
EX-101.CAL
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
|
|
EX-101.DEF
|
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
|
|
|
|
|
EX-101.LAB
|
XBRL TAXONOMY EXTENSION LABELS LINKBASE
|
|
|
|
|
EX-101.PRE
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
|
*Filed herewith
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 Santa Barbara, State of California, on May 15, 2014.
|
CARBON SCIENCES, INC.
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|||
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By:
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/s/ William Beifuss
|
||
|
Chief Executive Officer (Principal Executive Officer ) and Acting Chief Financial Officer
(Principal Financial/Accounting Officer)
|
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