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EX-31 - EX-31.1 SECTION 302 CERTIFICATION - CARBON 612 Corpcarbon61210qa033110ex311.htm
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EX-32 - EX-32.2 SECTION 906 CERTIFICATION - CARBON 612 Corpcarbon61210qa033110ex322.htm
EX-32 - EX-32.1 SECTION 906 CERTIFICATION - CARBON 612 Corpcarbon61210qa033110ex321.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q/A

(Amendment No. 1)


(Mark One)


 X .    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2010

OR


     .    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from:                     to                    


Commission File Number: 000-53882


CARBON 612 CORPORATION

(Exact name of Registrant as Specified in Its Charter)


DELAWARE

 

26-3674846

(State or Other Jurisdiction of Incorporation or

 

(I.R.S. Employer Identification No.)

Organization)

 

 

 

 

 

200 Old Country Road, Suite 610

 

 

Mineola, New York

 

11501-4241

(Address of Principal Executive Offices)

 

(Zip code)


(516) 282-7652

(Registrant’s Telephone Number, Including Area Code)

 

 

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed 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      .

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes      . No      .

 

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


Large accelerated filer

      .

Accelerated filer

      .

Non-accelerated filer

      . (Do not check if a smaller reporting company)

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      . No  X .

 

As of September 24, 2010, 45,750,000 shares of the issuer’s common stock, $0.001 par value per share, were outstanding.



1



Table of Contents

 

 

 

 

Page

PART I FINANCIAL INFORMATION

4

 

 

Item 1. Financial Statements

4

 

 

Condensed Unaudited Balance Sheets as at March 31, 2010 and December 31, 2009 (restated)

4

 

 

Condensed Unaudited Statements of Operations for the three months ended March 31, 2010 and 2009 and for the period from September 10, 2008 (inception) to March 31, 2010 (restated)

5

 

 

Condensed Unaudited Statements of Cash Flows for the three months ended March 31, 2010 and 2009 and for the period from September 10, 2008 (inception) to March 31, 2010 (restated)

6

 

 

Notes to Unaudited Condensed Financial Statements

7

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

16

 

 

Item 4T. Controls and Procedures

16

 

 

PART II OTHER INFORMATION

16

 

 

Item 6. Exhibits

16

 

 

Signatures

17




2




Explanatory Note


Our Form 10-Q as originally filed has been amended to reflect the allocation of personnel, rent and other office expenses to us from our parent company, Clear Skies Solar, Inc., since inception that reflect the costs incurred by our parent company to support our operations.  




3




PART I — FINANCIAL INFORMATION

Item 1. Financial Statements


CARBON 612 CORPORATION

(a corporation in the development stage)

Condensed Balance Sheets (Restated)


 

 

March 31,

 

December 31,

 

 

2010

 

2009

 

 

(unaudited)

 

(see Note 1)

Assets:

 

 

 

 

Cash

$

95,715

$

111,605

 

 

 

 

 

Total current assets

 

95,715

 

111,605

 

 

 

 

 

Patents

 

50,519

 

50,519

 

 

 

 

 

Total Assets

$

146,234

$

162,124

 

 

 

 

 

Liabilities:

 

 

 

 

Accounts Payable

$

30,361

$

27,907

Due to Parent

 

143,932

 

121,952

Total current liabilities

 

174,293

 

149,859

 

 

 

 

 

Derivative liability for warrants

 

60,000

 

60,000

 

 

 

 

 

Total liabilities

 

234,293

 

209,859

 

 

 

 

 

Stockholders' Deficiency:

 

 

 

 

 

 

 

 

 

Preferred stock, authorized 10,000,000 shares,

 

 

 

 

  $.001 par value, none issued or outstanding

 

-

 

-

 

 

 

 

 

Common stock, authorized 100,000,000 shares

 

 

 

 

  $.001 par value, 45,750,000

 

 

 

 

  shares issued and outstanding as of March 31,

 

 

 

 

  2010 and December 31, 2009

 

45,750

 

45,750

 

 

 

 

 

Additional paid-in capital

 

28,842

 

28,842

 

 

 

 

 

Deficit accumulated during the development stage

 

(162,651)

 

(122,327)

 

 

 

 

 

Total stockholders' deficiency

 

(88,059)

 

(47,735)

 

 

 

 

 

Total Liabilities and Stockholders' Deficiency

$

146,234

$

162,124


See Accompanying Notes to Unaudited Condensed Financial Statements



4




CARBON 612 CORPORATION

(a corporation in the development stage)

Unaudited Condensed Statements of Operations


 

 

For the three

months ended

March 31, 2010

 

For the three

months ended

March 31, 2009

(Restated)

 

For the period

from September

10, 2008

(inception)

to March 31,

2010 (Restated)

 

 

 

 

 

 

 

Revenue

$

-

$

-

$

-

 

 

 

 

 

 

 

General and administrative expenses

 

40,324

 

6,273

 

162,651

 

 

 

 

 

 

 

Net loss

$

(40,324)

$

(6,273)

$

(162,651)

 

 

 

 

 

 

 

Loss per common share, basic and diluted

$

0.00

$

0.00

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

36,141,781

 

30,000,000

 

 


See Accompanying Notes to Unaudited Condensed Financial Statements



5




CARBON 612 CORPORATION

(a corporation in the development stage)

Unaudited Condensed Statements of Cash Flows


 

 

For the

three

months

ended

March 31,

2010

 

For the

three

months

ended

March 31,

2009

(Restated)

 

For the period

from

September

10, 2008

(inception)

to March 31,

2010

(Restated)

Cash flow from operating activities

 

 

 

 

 

 

Net loss

$

(40,324)

$

(6,273)

$

(162,651)

 

 

 

 

 

 

 

Adjustment to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Due to Parent

 

21,980

 

6,273

 

143,932

Accounts payable

 

2,454

 

 

 

(5,576)

 

 

 

 

 

 

 

Net cash used in operating activities

 

(15,890)

 

-

 

(24,295)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of offering costs of $30,000

 

-

 

10

 

120,000

 

 

 

 

 

 

 

Net cash provided by financing activities

 

-

 

10

 

120,000

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

(15,890)

 

10

 

95,705

 

 

 

 

 

 

 

Cash, beginning of period

 

111,605

 

-

 

10

 

 

 

 

 

 

 

Cash, end of period

$

95,715

$

10

$

95,715

 

 

 

 

 

 

 

Supplemental disclosure of noncash financing and investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for legal services in connection with the November 2009 private placement

$

7,500

 

 

$

7,500

 

 

 

 

 

 

 

Warrants issued in connection with the November 2009 private placement

$

60,000

 

 

$

60,000


See Accompanying Notes to Unaudited Condensed Financial Statements



6




NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS


1. Basis of presentation, current status and nature of operations


The accompanying unaudited condensed restated financial statements as of March 31, 2010 and for the three month periods ended March 31, 2010 and 2009, and for the period from September 10, 2008 (inception) to March 31, 2010, have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, these restated interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company, these unaudited condensed restated financial statements include all adjustments necessary to present fairly the information set forth therein. All such adjustments are of a normal recurring nature. Results for interim periods are not necessarily indicative of results to be expected for a full year. The condensed restated balance sheet information as of December 31, 2009 was derived from the audited financial statements and notes thereto, together with management’s discussion and analysis or plan of operations included in the Company’s registration statement (as amended) (the “Registration Statement”) on Form 10 initially filed under the Securities Exchange Act of 1934 on February 3, 2010, with the Securities and Exchange Commission. The restated interim financial statements contained herein should be read in conjunction with the Registration Statement.


In preparing financial statements in conformity with GAAP, the Company is required to make 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 and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates. The Company bases its estimates on historical data and experience, when available, and on various other assumptions that are believed to be reasonable under the circumstances, the combined results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.


As of March 31, 2010, the Company has not earned any revenue and its sole activity has been the further development of the XTRAX® unit leading towards its commercialization which is expected to occur later in 2011. It is not our intention to manufacture the XTRAX® units but rather to subcontract the manufacturing and assembly. Since inception, the Company has incurred losses and negative cash flows from operations and at March 31, 2010, the Company had an accumulated deficit of approximately $162,700. At March 31, 2010, we had approximately $96,000 in cash. Based on our current plans and assumptions, which include our expectations relating to the future sale of our equity and debt securities and entering into contracts for the installation of XTRAX® units and the resulting cash flows and revenues, we believe that we will have adequate resources to fund our operations in 2010. However, there can be no assurance that we will be successful in entering into such contracts or arranging financing on terms satisfactory to us, in which case there would be significant doubt as to our ability to continue as a going concern. Notwithstanding our November 2009 sale of common stock and warrants for gross proceeds of $150,000, we will need to raise additional funds to commercialize the XTRAX® product.


It was determined by the SEC, during its review of the Registration Statement on Form 10 that we had filed, that our financial statements as of and for each of the years ended December 31, 2008 and 2009 contained an error in that we did not reflect the costs incurred by our parent company Clear Skies Solar, Inc. (“CSS”) on our behalf. Accordingly, these financial statements have been restated to correct this error. The result of the restatement was to increase our general and administrative expenses for the years ended December 31, 2008 and 2009 by $93,135 and $28,817, respectively, reducing net income by those amounts resulting in a basic and diluted loss per common share of zero and zero, respectively, compared to zero and zero, respectively. Further, the loss from September 10, 2008 (inception) to December 31, 2008 and 2009 have increased by $93,135 and $121,952, respectively, with a resulting increase in the accumulated deficit of the Company to $93,135 and $159,827, as of December 31, 2008 and 2009, respectively. A further impact of the restatement is to increase our liability to CSS to a total of $93,135 and $121,952 as of December 31, 2008 and 2009, respectively, from zero and zero, respectively.


The following reflects the changes in our statements of operations due to the restatement required to correct the error for the three months ended March 31, 2010 and 2009, the period from September 10, 2008 (inception) to December 31, 2008 and the period from September 10, 2008 (inception) to December 31, 2009:




7





CARBON 612 CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a corporation in the development stage)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited Condensed Restated Statements of Operations

 

 

 

 

 

 

 

Originally

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

 

 

 

Restated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for the

 

 

 

for the

 

 

Originally

 

 

 

 

 

Originally

 

 

 

 

 

period from

 

 

 

period from

 

 

Reported

 

 

 

Restated

 

Reported

 

 

 

Restated

 

September 10,

 

 

 

September 10,

 

 

for the three

 

 

 

for the three

 

for the three

 

 

 

for the three

 

2008

 

 

 

2008

 

 

months ended

 

 

 

months ended

 

months ended

 

 

 

months ended

 

(inception) to

 

 

 

(inception) to

 

 

March 31, 2010

 

Adjustments

 

March 31, 2010

 

March 31, 2009

 

Adjustments

 

March 31, 2009

 

 March 31, 2010

 

Adjustments

 

 March 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

-

 

 

$

-

$

-

 

 

$

-

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

     40,324

 

 

 

   40,324

 

-

$

 (6,273)

 

  (6,273)

 

  (40,699)

$

 (121,952)

 

 (162,651)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

  (40,324)

 

 

$

  (40,324)

$

-

$

(6,273)

$

  (6,273)

$

   (40,699)

$

  (121,952)

$

  (162,651)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share, basic and diluted

$

-

 

 

$

-

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

45,750,000

 

  (9,608,219)

 

 36,141,781

 

     28,086,986

 

1,913,014

 

  30,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


See Accompanying Notes to Unaudited Condensed Financial Statements.



8




CARBON 612 CORPORATION

(a corporation in the development stage)

Unaudited Condensed Restated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originally Reported

 

 

 

Restated

 

As of

 

 

 

Restated

 

 

As of March 31,

2010

 

 

 

As of March 31,

2010

 

December 31,

2009

 

 

 

As of December 31,

2009

 

 

(unaudited)

 

Adjustments

 

(unaudited)

 

(see Note 1)

 

Adjustments

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

95,715

 

 

$

95,715

$

111,605

 

 

$

111,605

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

95,715

 

 

 

95,715

 

111,605

 

 

 

111,605

 

 

 

 

 

 

 

 

 

 

 

 

 

Patents

 

50,519

 

 

 

50,519

 

50,519

 

 

 

50,519

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

146,234

 

 

$

146,234

$

162,124

 

 

$

162,124

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Payable

$

30,361

 

 

$

30,361

$

27,907

 

 

$

27,907

Due to Clear Skies

 

21,980

$

121,952

 

143,932

 

-

 

121,952

 

121,952

Total current liabilities

 

52,341

 

121,952

 

174,293

 

27,907

 

121,952

 

149,859

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability for warrants

 

60,000

 

 

 

60,000

 

60,000

 

 

 

60,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

112,341

 

121,952

 

234,293

 

87,907

 

121,952

 

209,859

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Deficiency)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, authorized 10,000,000 shares,

 

 

 

 

 

 

 

 

 

 

 

 

   $.001 par value, none issued or outstanding

 

-

 

 

 

-

 

-

 

 

 

 

Common stock, authorized 100,000,000 shares

 

 

 

 

 

 

 

 

 

 

 

 

   $.001 par value, 45,750,000 and 30,000,000

 

 

 

 

 

 

 

 

 

 

 

 

   shares issued and outstanding as of March 31,

 

 

 

 

 

 

 

 

 

 

 

 

   2010 and December 31, 2009, respectively

 

45,750

 

 

 

45,750

 

45,750

 

 

 

45,750

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional paid-in Capital

 

28,842

 

 

 

28,842

 

28,842

 

 

 

28,842

Deficit accumulated

 

 

 

 

 

 

 

 

 

 

 

 

  during the development stage

 

(40,699)

 

(121,952)

 

(162,651)

 

(375)

 

(121,952)

 

(122,327)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity (deficiency)

 

33,893

 

(121,952)

 

(88,059)

 

74,217

 

(121,952)

 

(47,735)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and

 

 

 

 

 

 

 

 

 

 

 

 

  Stockholders' Equity (Deficiency)

$

146,234

$

-

$

146,234

$

162,124

$

-

$

162,124


See Accompanying Notes to Unaudited Condensed Financial Statements.



9





Carbon 612 Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a corporation in the development stage)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited Condensed Restated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

Originally

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

 

 

 

Restated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for the

 

 

 

for the

 

 

Originally

 

 

 

 

 

Originally

 

 

 

 

 

period  from

 

 

 

Period  from

 

 

Reported

 

 

 

Restated

 

Reported

 

 

 

Restated

 

September 10,

 

 

 

September 10,

 

 

for the three

 

 

 

for the three

 

for the three

 

 

 

for the three

 

2008

 

 

 

2008

 

 

months ended

 

 

 

months ended

 

months ended

 

 

 

months ended

 

(inception) to

 

 

 

(inception) to

 

 

March 31, 2010

 

Adjustments

 

March 31, 2010

 

March 31, 2009

 

Adjustments

 

March 31, 2009

 

March 31, 2010

 

Adjustments

 

March 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Net loss

$

(40,324)

$

-

$

(40,324)

$

-

$

(6,273)

$

(6,273)

$

(40,699)

$

(121,952)

$

(162,651)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due to parent company

 

21,980

 

 

 

21,980

 

 

 

 

 

6,273

 

21,980

 

121,952

 

143,932

Accounts payable

 

2,454

 

 

 

2,454

 

 

 

6,273

 

 

 

(5,576)

 

 

 

(5,576)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

(15,890)

 

 

 

(15,890)

 

 

 

-

 

-

 

(24,295)

 

-

 

(24,295)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of offering   costs of $30,000

 

-

 

 

 

-

 

10

 

 

 

10

 

120,000

 

 

 

120,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

-

 

 

 

-

 

10

 

 

 

10

 

120,000

 

 

 

120,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

(15,890)

 

 

 

(15,890)

 

10

 

 

 

10

 

95,705

 

 

 

95,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

111,605

 

 

 

111,605

 

 

 

 

 

 

 

10

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, end of period

$

95,715

 

 

$

95,715

$

10

 

 

$

10

$

95,715

 

 

$

95,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for legal services in connection with the November 2009 private placement

$

7,500

 

 

$

7,500

 

 

 

 

 

 

$

7,500

 

 

$

7,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants issued in connection with the November 2009 private placement

$

60,000

 

 

$

60,000

 

 

 

 

 

 

$

60,000

 

 

$

60,000



10





Background


Carbon 612 Corporation (“Carbon 612”, the “Company”, “we”, “us” or “our”) is a Delaware corporation formed on September 10, 2008. We are a development stage company which plans to sell the XTRAX® remote monitoring system for measuring the production of solar and other renewable energy systems and for transmission of the data via the cellular network, and potentially via microwave transmission network or satellite. We are a subsidiary of Clear Skies Solar, Inc. (“Clear Skies” or “CSS”), which owns approximately 66% of our outstanding common stock..


The development of XTRAX® started in December 2005 when Clear Skies Group, Inc. (which was subsequently acquired by Clear Skies Solar, Inc.) hired Mr. Robert Dockweiler, a electronics and software engineer, to begin development of the product based on the concept developed by Ezra Green, the then CEO of Clear Skies Group, Inc and now CEO of CSS. From December 2005 until November 2009, the product was in the development stage under the guidance of Mr. Dockweiler and Mr. Green. Due to CSS’ limited capital resources, and the differences between its primary operations (installation of solar energy systems for commercial customers) and the business envisioned for the XTRAX® product (monitoring the performance of primarily smaller solar energy systems already installed on individual residences), CSS determined that, after it had largely completed development of the product, which occurred by November 2009, XTRAX® was ready for final independent testing and that funding for commercialization of XTRAX® could be more easily obtained if XTRAX® was in a separate corporate entity. CSS therefore transferred to us the XTRAX® patent and all related intellectual property and assets, as well as the related liabilities.


XTRAX® is our patented system for remote real-time monitoring of the energy production of solar and other renewable energy systems and for providing fault notification. The system consists of a central database server and remote energy meters. The server routinely accesses the remote meters to recover the energy reading of the solar or other alternative energy systems. The meter installed at the alternative energy system site constantly monitors the system to provide energy metering and real-time system failure detection. In case of system failure, the meter will automatically contact the server to report the type of failure. XTRAX ® can also be used to sub-monitor portions of larger scale commercial or utility sized systems to increase efficiency and reporting of performance by monitoring "strings" or "lines" individually. XTRAX ® can also be used for third party verification of other production monitoring devices.


The design philosophy behind XTRAX ® is to avoid using relatively expensive personal computers for simple monitoring tasks. The XTRAX ® hardware monitor uses a minimalist approach by integrating a microcontroller, an energy measurement device, a cellular card and miscellaneous interface components to provide a small and low cost hardware platform. This platform is capable of being utilized for a variety of measurements, including but not limited to, electrical energy production, temperature, volume and flow. It can also provide alerts if the system under measurement malfunctions. The XTRAX ® hardware monitor utilizes a database application for the retrieval and reporting of data to owners, customers, and aggregators. Data is regularly reported to the server via the cellular network. We also intend to make the necessary changes to the units such that communications may be via microwave or satellite technology. The XTRAX ® system as a whole provides automated billing and reporting plus the ability for users to retrieve reports from a dedicated website.


The XTRAX® can currently perform all of the functions described above; however, we have not yet begun marketing and sales of the product to potential customers because, prior to such marketing and sales, the following needs to occur:


·

The XTRAX® unit needs to be listed by Underwriters Laboratory, which tests the product for safety. This is known as the UL listing. We have submitted samples and information to UL, and responded to their questions, but until November 2009, we did not have the necessary funding to provide UL the number of units they require for further testing before they can grant a UL listing. We have already made certain changes requested by UL and we believe we will obtain the UL listing.


·

After UL listing is obtained, the product needs to be approved by the Federal Communications Commission (“FCC”), because there are some emissions from the unit. Similarly to the UL listing process, the FCC approval process involves submitting samples and information, testing by the FCC, responding to FCC questions, and possibly making changes to the product if necessary to obtain the approval. We believe that, after obtaining UL listing, the FCC approval will be forthcoming as we believe XTRAX® meets the FCC requirements.


·

Following the UL listing and FCC approval, we will need to get technical approval from the cellular network carriers, which test the product for possible interference with other products. Similarly to the UL and FCC approval process, the cellular network approval process involves submitting samples and information, testing by the carriers, responding to the carriers’ questions, and possibly making changes to the product if necessary to obtain the approval. We believe that the product will be approved by the carriers.

 

We can begin to offer the XTRAX® product to the market, and seek to generate revenues, only after we have obtained all three of these approvals. We currently expect to begin offering XTRAX® units to the market in 2011.



11



 

2. The private placement


Pursuant to (i) a Corporate Assignment, dated November 2, 2009 (the “Corporate Assignment”), (ii) a Trademark Assignment, also dated November 2, 2009 the (“Trademark Assignment”), and (iii) an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations, dated November 13, 2009 (the “Transfer Agreement”), each with Clear Skies, which was then our sole stockholder, (a) Clear Skies assigned to Carbon 612 all of the assets relating to its XTRAX® wireless data monitoring system for renewable energy systems and (b) Carbon 612 assumed certain liabilities relating to such assets. The Company did not pay any consideration for such assignment, other than the assumption of the related liabilities.


On November 13, 2009, Carbon 612 entered into a Securities Purchase Agreement with a group of investors (the “Purchase Agreement”) that provided for, among other things, the sale by Carbon 612 to the investors of (i) an aggregate of 15,000,000 shares (the “Shares”) of its common stock, par value $0.001 (“Common Stock”) at $.01 per share and (ii) warrants to purchase up to an aggregate of an additional 15,000,000 shares of its Common Stock (the “Warrants”) at $.10 per share. Carbon 612 received gross proceeds in the aggregate amount of $150,000 (before expenses of $37,500) from the sale of the Shares and the Warrants. Immediately after the closing and as of March 31, 2010, Clear Skies owns approximately 66% of Carbon 612’s outstanding shares of Common Stock.


3. Summary of significant accounting policies


Revenue: Revenue will be recognized when an XTRAX® unit is sold and delivered, or installed under a contract with a third party, the energy production data has been collected and we have transmitted it to the buyer and where there is reasonable assurance of payment to us. If we license the technology we will record license revenue as it is earned under the license agreement if there is reasonable assurance of the licensee making payment to us.


Cost Recognition: Costs include all costs paid to third parties for the manufacture of the XTRAX® unit and the costs of shipment to the customer and installation of the unit. The Company will carry inventories as it needs to have sufficient units on hand in advance of anticipated orders due to possible long lead times at vendors. We will not ourselves manufacture the XTRAX® units.


Research and Development: Research and development costs are charged to expense as incurred.


Common Stock Issuance: Due to our limited cash resources we have used our common stock to raise capital by way of the sale of common stock and warrants and the issuance of common stock to service providers of various types.


Income Taxes: The Company complies with GAAP related to accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.


The Company also complies with the provisions of GAAP related to accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions.


The Company’s estimates regarding its valuation allowances are based on the fact that the Company has not generated any income in the past. These estimates may change in the future depending on the Company’s results of operations and any future earnings the Company may be able to produce. Such a change may likely happen as the Company projects that it will be able to realize future earnings from operations upon the realization of their business plans.


Loss Per Share: The Company complies with GAAP related to calculation of loss per share, which has a dual presentation of basic and diluted income/loss per share for all periods presented. Basic income/loss per share excludes dilution and is computed by dividing income/loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted income/loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then share in the income/loss of the Company. The difference between the number of shares used to compute basic income/loss per share and diluted income/loss per share relates to additional shares to be issued upon the assumed exercise of stock options and warrants, net of shares hypothetically repurchased at the average market price with the proceeds of exercise. As the Company reported a net loss for the periods ended March 31, 2010 and 2009, the effects of the shares issuable upon exercise of outstanding warrants have not been considered in the diluted net loss per common share since these dilutive securities would reduce the loss per common share and become anti-dilutive.



12




Accounting for Derivative Instruments: The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments imbedded in other financial instruments or contracts. The Company also considers criteria for determining whether freestanding contracts that are settled in a company’s own stock, including common stock warrants, should be designated as either an equity instrument, an asset or as a liability under ASC 815.


The Company also considers whether an equity-linked financial instrument (or embedded feature) issued by an entity is indexed to the entity’s stock, and therefore, qualifying for an exception to derivative accounting. The Company evaluated the anti-dilution provision embedded in its warrants based on the criteria of ASC Topic 815 to determine whether the anti-dilution provision would be required to be bifurcated from the warrants and accounted for separately as derivative liabilities.


The Company has concluded that the anti-dilution provisions in the warrants issued in November 13, 2009, should be accounted for as derivatives and reported as liabilities at fair value in accordance with ASC 815 as of December 31, 2009. Accordingly, the Company booked a liability in the amount of $60,000 as a derivative liability at December 31, 2009. The Company believes that the estimate of fair value from issuance to March 31, 2010 has remained the same as the Company has had no other stock offerings or no significant operations during the period. Once the Company is able to put into place its business plans and commence revenue producing activities, the fair value of this financial instrument may change. Any fair value adjustments of this liability will be recognized in earnings.


Recent Accounting Pronouncements


In September 2009, the FASB ratified the consensus approach reached at the September 9, 2009 Emerging Issues Task Force (EITF) meeting on two EITF issues related to revenue recognition as it applies to certain revenue arrangements that include multiple deliverable elements and revenue recognition as it relates to software.


Management does not believe that this or any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements or the Company’s future results of operations.


4. Common stock issued and agreed to be issued; Related party transactions


On November 13, 2009, we entered into a Securities Purchase Agreement with a group of investors (the “Purchase Agreement”) that provided for, among other things, the sale by Carbon 612 to the investors of (i) an aggregate of 15,000,000 shares (the “Shares”) of its common stock, par value $0.001 (“Common Stock”) at $.01 per share and (ii) warrants to purchase up to an aggregate of an additional 15,000,000 shares of its Common Stock (the “Warrants”) at $.10 per share. Carbon 612 received gross proceeds in the aggregate amount of $150,000 (before expenses of $37,500) from the sale of the Shares and the Warrants. Immediately after the closing and as of March 31, 2010, Clear Skies owns approximately 66% of Carbon 612’s outstanding shares of Common Stock. Arthur Goldberg, an officer of Clear Skies and our Vice President, Secretary and Treasurer, purchased 1,500,000 Shares and 1,500,000 Warrants under the Purchase Agreement, for an aggregate purchase price of $15,000.


We occupy space within the Clear Skies offices under a month to month agreement and pay Clear Skies $2,500 monthly for use of the space and ancillary office and support services, including use of the telecommunications and computer systems and all accounting services, and services of the executive officers shared by both companies on an as needed basis. We also share two other employees with Clear Skies and will reimburse Clear Skies for a proportionate share of the actual expenses of these two employees based on the time these employees devote to us. Such expenses totaled $21,980 for the three months ended March 31, 2010 and zero for the period ended March 31, 2009 from inception.


Note 5. Income Taxes

 

For the three months ended March 31, 2010 there was no income tax benefit recorded.


Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of the assets and liabilities for financial reporting purposes and the amounts reported for income tax purposes. Significant components of the Company's net deferred income tax assets and liabilities as of March 31, 2010 are as follows:


Net operating loss carryforward

$

8,953

Valuation allowance

 

(8,953)

 

 

 

Net deferred tax asset

$

-




13



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


This discussion should be read in conjunction with our unaudited condensed financial statements included in this Quarterly Report on Form 10-Q/A and the notes thereto, as well as the other sections of this Quarterly Report and our registration statement as amended (the “Registration Statement”) initially filed with the Securities and Exchange Commission on February 3, 2010 under the Securities Exchange Act of 1934 on Form 10, including the “Certain Risks and Uncertainties” and “Description of Business” sections thereof. This discussion contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Quarterly Report and the Registration Statement. Our actual results may differ materially.


Forward Looking Statements

 

Certain statements in this Quarterly Report on Form 10-Q/A constitute "forward-looking statements". The words or phrases "can be," may," "could," "would," "expects,""believes," "seeks," "estimates," "projects" and similar words and phrases are intended to identify such forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties, including those described in the section "Risk Factors" included in our Registration Statement, and we caution you that any forward-looking information provided by or on behalf of us is not a guarantee of future performance. Our actual results could differ materially from those anticipated by such forward-looking statements due to a number of factors, some of which are beyond our control. All such forward-looking statements are current only as of the date on which such statements were made. Except as required by law we do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

 

Overview


The development of XTRAX® started in December 2005 when Clear Skies Group, Inc. (which was subsequently acquired by Clear Skies Solar, Inc.) hired Mr. Robert Dockweiler, a electronics and software engineer, to begin development of the product based on the concept developed by Ezra Green, the then CEO of Clear Skies Group, Inc and now CEO of CSS. From December 2005 until November 2009 the product was in the development stage under the guidance of Mr. Dockweiler and Mr. Green. Due to CSS’ limited capital resources, and the differences between its primary operations (installation of solar energy systems for commercial customers) and the business envisioned for the XTRAX® product (monitoring the performance of primarily smaller solar energy systems already installed on individual residences), CSS determined that, after it had largely completed development of the product, which occurred by November 2009, XTRAX® was ready for final independent testing and that funding for commercialization of XTRAX® could be more easily obtained if XTRAX® was in a separate corporate entity. CSS therefore transferred to us the XTRAX® patent and all related intellectual property and assets, as well as the related liabilities.


XTRAX® is our patented system for remote real-time monitoring of the energy production of solar and other renewable energy systems and for providing fault notification. The system consists of a central database server and remote energy meters. The server routinely accesses the remote meters to recover the energy reading of the solar or other alternative energy systems. The meter installed at the alternative energy system site constantly monitors the system to provide energy metering and real-time system failure detection. In case of system failure the meter will automatically contact the server to report the type of failure. XTRAX ® can also be used to sub-monitor portions of larger scale commercial or utility sized systems to increase efficiency and reporting of performance by monitoring "strings" or "lines" individually. XTRAX ® can also be used for third party verification of other production monitoring devices.


The design philosophy behind XTRAX ® is to avoid using relatively expensive personal computers for simple monitoring tasks. The XTRAX ® hardware monitor uses a minimalist approach by integrating a microcontroller, an energy measurement device, a cellular card and miscellaneous interface components to provide a small and low cost hardware platform. This platform is capable of being utilized for a variety of measurements, including but not limited to, electrical energy production, temperature, volume and flow. It can also provide alerts if the system under measurement malfunctions. The XTRAX ® hardware monitor utilizes a database application for the retrieval and reporting of data to owners, customers, and aggregators. Data is regularly reported to the server via the cellular network. We also intend to make the necessary changes to the unit such that communications may be via microwave or satellite technology. The XTRAX ® system as a whole provides automated billing and reporting plus the ability for users to retrieve reports from a dedicated website.


The XTRAX® can currently perform all of the functions described above; however, we have not yet begun marketing and sales of the product to potential customers because, prior to such marketing and sales, the following needs to occur:


·

The XTRAX® unit needs to be listed by Underwriters Laboratory, which tests the product for safety. This is known as the UL listing. We have submitted samples and information to UL, and responded to their questions, but until November 2009 we did not have the necessary funding to provide UL the number of units they require for further testing before they can grant a UL listing. We have already made certain changes requested by UL and we believe we will obtain the UL listing.



14




·

After UL listing is obtained, the product needs to be approved by the Federal Communications Commission (“FCC”), because there are some emissions from the unit. Similarly to the UL listing process, the FCC approval process involves submitting samples and information, testing by the FCC, responding to FCC questions, and possibly making changes to the product if necessary to obtain the approval. We believe that, after obtaining UL listing, the FCC approval will be forthcoming as we believe XTRAX® meets the FCC requirements.


·

Following the UL listing and FCC approval, we will need to get technical approval from the cellular network carriers, which test the product for possible interference with other products. Similarly to the UL and FCC approval process, the cellular network approval process involves submitting samples and information, testing by the carriers, responding to the carriers’ questions, and possibly making changes to the product if necessary to obtain the approval. We believe that the product will be approved by the carriers.


We can begin to offer the XTRAX® product to the market, and seek to generate revenues, only after we have obtained all three of these approvals. We currently expect to begin offering XTRAX® units to the market in 2011.


Since we began operations we have incurred net losses. As of March 31, 2010, we had an accumulated deficit of $162,651 and we expect to incur additional losses in the foreseeable future. We have not earned any revenues since inception. Since our inception we have financed our operations solely through sales of equity securities. See Note 5.


Based on our current plans and assumptions, which include our expectations relating to the future sale of our equity and debt securities and entering into contracts for the installation of XTRAX® systems and the resulting cash flows and revenues, we believe that we will have adequate resources to fund our operations in 2010. However, there can be no assurances that we will be successful in entering into such contracts or arranging financing on terms satisfactory to us, in which case there would be significant doubt as to our ability to continue as a going concern. As of March 31, 2010, our available cash balance was under approximately $96,000. Notwithstanding our recent sale of our common stock and warrants for gross proceeds of $150,000 we will need to raise additional funds to continue efforts to commercialize and then market XTRAX® units.


Generally, we anticipate that our operating costs and expenses will increase in the future to support the commercialization and marketing of XTRAX® units. Increased costs will be attributable to increased personnel, principally sales and support staff for marketing and expenditures to promote our services.


Results of Operations: Comparison of Three Month Periods Ended March 31, 2010 and 2009


We had no revenue in either three month period ended March 31, 2010 or 2009, nor since inception. While we had no selling expenses in either of these periods our general and administrative expenses were $40,324 for the three months ended March 31, 2010 compared to $6,273 in the three months ended March 31, 2009. This increase is largely accounted for by salaries of $22,000, accounting fees of $7,500 and rent of $7,500.


Liquidity and Capital Resources - Going Concern


At March 31, 2010, we had an accumulated deficit of $162,651 and we expect to incur additional losses in the foreseeable future. While we have funded our operations since inception solely through private placements of equity, there can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are satisfactory to us.


At March 31, 2010, we had approximately $96,000 in cash. Based on our current plans and assumptions, which include our expectations relating to the future sale of our equity and debt securities and entering into contracts for the installation of XTRAX® systems and the resulting cash flows and revenues, we believe that we will have adequate resources to fund our operations in 2010. However, there can be no assurances that we will be successful in entering into such contracts or arranging financing on terms satisfactory to us, in which case there would be significant doubt as to our ability to continue as a going concern. Notwithstanding our recent sale of common stock and warrants for gross proceeds of $150,000 we will need to raise additional funds to continue efforts to commercialize and then market XTRAX® units.


Certain Risks and Uncertainties


The Registration Statement filed on Form 10/A with the Securities and Exchange Commission in May 2010, includes a detailed discussion of our risk factors under the heading “Certain Risks and Uncertainties.” The information presented in this 10-Q/A should be read in conjunction with the risk factors and information disclosed in such Registration Statement.


Off-Balance Sheet Arrangements


We do not have any off-balance sheet arrangements.



15



Item 3. Quantitative and Qualitative Disclosures About Market Risk.


Due to our status as a smaller reporting company, this Item is not applicable.

 

Item 4T. Controls and Procedures.


Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q/A.


Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not effective, as of March 31, 2010, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.


Changes in Internal Control over Financial Reporting


There were no changes in our internal control over financial reporting during the quarter ended March 31, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. 


PART II


OTHER INFORMATION


Item 6. Exhibits. .


The following exhibits are filed as part of, or incorporated by reference into, this Report:

 

 

 

 

Exhibit No.

 

Description

 

 

 

10.1

 

Services Agreement, dated January 1, 2010, between the Company and Clear Skies Solar, Inc. (filed as exhibit to Form 10/A filed with the SEC on May 12, 2010 and incorporated herein by reference)

31.1*

 

Section 302 Certification of Principal Executive Officer

31.2*

 

Section 302 Certification of Principal Financial Officer

32.1*

 

Section 906 Certification of Principal Executive Officer

32.2*

 

Section 906 Certification of Principal Financial Officer


*  Filed herewith



16




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 

 

 

 

 

CARBON 612 CORPORATION

 

 

Date: September 28, 2010 

By:

/s/ Ezra J. Green

 

 

Name:

Ezra J. Green 

 

 

Title:

Chairman & Chief Executive Officer

(Principal Executive Officer) 

 

 

Date: September 28, 2010 

By:

/s/ Arthur L. Goldberg

 

 

Name:

Arthur L. Goldberg 

 

 

Title:

Chief Financial Officer

(Principal Financial and Accounting Officer)




EXHIBIT INDEX

 

 

 

 

Exhibit No.

 

Description

 

 

 

10.1

 

Services Agreement, dated January 1, 2010, between the Company and Clear Skies Solar, Inc. (filed as exhibit to Form 10/A filed with the SEC on May 12, 2010 and incorporated herein by reference)

31.1*

 

Section 302 Certification of Principal Executive Officer

31.2*

 

Section 302 Certification of Principal Financial Officer

32.1*

 

Section 906 Certification of Principal Executive Officer

32.2*

 

Section 906 Certification of Principal Financial Officer


*  Filed herewith



17