**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

 

**FORM 10-Q**

 

**(MarkOne)**

 

**x**                                 **QUARTERLY REPORT UNDERSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended March 31, 2008**

 

**o**                                    **TRANSITION REPORT UNDERSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the transition period from           to          **

 

**Commission file number 333-141690**

 

**KABEEXPLORATION INC.******(Name registrant as specified in its charter)

 

| **NEVADA**                                                      | ** ** | **39-2052145**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State  or other jurisdiction of incorporation or organization) |       | (I.R.S.  Employer Identification No.) |
|                                                            |       |                                  |
| **5050 Avenida Encinas, Suite 270,  Carlsbad, CA**         | ** ** | **92008**                             |
| (Address of principal executive offices)                        |       | (Zip Code)                            |

 
|   | Registrant’s  telephone number, including area code: | ** ** | **(760)  931-1048** |
|--------|-----------------------------------------------------------|------------|---------------------|

 

Check whether the issuer (1) filedall reports required to be filed by Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. Yes x  No o

 

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

 

| Large  accelerated filer o                     |   | Accelerated  filer o         |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated  filer o                       |   | Smaller  reporting company x |
| (Do  not check if a smaller reporting company) |   |                              |

 

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

 

Number of shares of theregistrant’s common stock outstanding as of May 12, 2008:  3,687,500shares of Common Stock

 

 

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**TABLE OFCONTENTS**

 
| **Part I**  | ** **                                                                                 | **3**  |
|------------------|--------------------------------------------------------------------------------------------|--------|
|             |                                                                                       |   |
| Item 1.          | Financial Statements                                                                       | 3      |
|             |                                                                                       |   |
| Item  2.         | Management’s  Discussion and Analysis of Financial Condition and Results of Operation | 10     |
|             |                                                                                       |   |
| Item  3.         | Quantitative  and Qualitative Disclosures About Market Risk                                | 13     |
|             |                                                                                       |   |
| Item 4T.         | Controls and  Procedures                                                                   | 13     |
|             |                                                                                       |   |
| **Part II** |                                                                                       | 14     |
|             |                                                                                       |   |
| Item 1.          | Legal Proceedings                                                                          | 14     |
|             |                                                                                       |   |
| Item 1A.         | Risk Factors                                                                               | 14     |
|             |                                                                                       |   |
| Item 2.          | Unregistered Sales of Equity Securities  and Use of Proceeds                               | 14     |
|             |                                                                                       |   |
| Item 3.          | Defaults Upon Senior Securities                                                            | 14     |
|             |                                                                                       |   |
| Item 4.          | Submission of Matters to a Vote of  Security Holders                                       | 14     |
|             |                                                                                       |   |
| Item5.           | Other Information                                                                          | 14     |
|             |                                                                                       |   |
| Item 6.          | Exhibits                                                                                   | 14     |
|             |                                                                                       |   |
|             | Signatures                                                                                 | 15     |

 

2

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**PART I**

 

**Item 1.**       ** Financial Statements.**

 

KABE EXPLORATION, INC.

(A Development Stage Company)

Balance Sheet

 
| ** **                                                                                             | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                             | ** ** | **2008**           | ** ** | **2007**              | ** ** |
| ** **                                                                                             | ** ** | **(Unaudited)**    | ** ** | ** **            | ** ** |
| ** **                                                                                             | ** ** | ** **         | ** ** | ** **            | ** ** |
| ASSETS                                                                                                 |       |               |       |                  |       |
| Current Assets                                                                                         |       |               |       |                  |       |
| Cash                                                                                                   |       | $                  | —     |                  | $          | 7,271 |   |
|                                                                                                   |       |               |       |                  |       |
| Total Current Assets                                                                                   |       | —             |       | 7,271                 |       |
|                                                                                                   |       |               |       |                  |       |
| Non Current Assets                                                                                     |       |               |       |                  |       |
| Mining Leases                                                                                          |       | —             |       | 5,000                 |       |
|                                                                                                   |       |               |       |                  |       |
| Total Non Current Assets                                                                               |       | —             |       | 5,000                 |       |
|                                                                                                   |       |               |       |                  |       |
| Total Assets                                                                                           |       | $                  | —     |                  | $          | 12,271 |   |
|                                                                                                   |       |               |       |                  |       |
| LIABILITIES AND SHAREHOLDERS’ DEFICIT                                                             |       |               |       |                  |       |
| Current Liabilities                                                                                    |       |               |       | —                |       |
| Accounts Payable                                                                                       |       | 10,000             |       | —                |       |
| Chapman Industries Loan                                                                                |       | 2,046              |       | —                |       |
|                                                                                                   |       |               |       |                  |       |
| Total Liabilities                                                                                      |       | 12,046             |       | —                |       |
|                                                                                                   |       |               |       |                  |       |
| Shareholders’ Equity (Deficit)                                                                    |       |               |       |                  |       |
| Common Stock, $0.001 par value; authorized  75,000,000 shares; issued and outstanding 3,387,500 shares |       | 3,388              |       | 3,388                 |       |
| Additional Paid-In Capital                                                                             |       | 46,862             |       | 46,862                |       |
| Deficit accumulated during the development  stage                                                      |       | (62,296            | )          | (37,979               | )          |
|                                                                                                   |       |               |       |                  |       |
| Total Shareholders’ Equity                                                                        |       | $                  | (12,046    | )                     | 12,271     |   |
|                                                                                                   |       |               |       |                  |       |
| Total Liabilities and Shareholders’ Equity                                                        |       | $                  | —     |                  | $          | 12,271 |   |

 

The accompanying notes are an integral partof these financial statements

 

3

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KABEEXPLORATION, INC.

(ADevelopment Stage Company)

Statementof Operations

(Unaudited)

 
| ** **                               | ** ** | ** **                  | ** ** | ** **                  | ** ** | **For the period**          | ** ** |
|------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** **                               | ** ** | **For the**            | ** ** | **For the**            | ** ** | **of Inception**       | ** ** |
| ** **                               | ** ** | **three months**       | ** ** | **three months**       | ** ** | **from Jan. 1,**  | ** ** |
| ** **                               | ** ** | **ended**                   | ** ** | **ended**                   | ** ** | **2006, through**      | ** ** |
| ** **                               | ** ** | **Mar. 31, 2008** | ** ** | **Mar. 31, 2007** | ** ** | **Mar. 31, 2008** | ** ** |
|                                     |       |                        |       |                        |       |                        |       |   |   |   |
| Revenue                                  |       | $                           | —     |                        | $          | —                      |       | $ | — |   |
|                                     |       |                        |       |                        |       |                        |       |
| Cost of Sales                            |       | —                      |       | —                      |       | —                      |       |
|                                     |       |                        |       |                        |       |                        |       |
| Operating Income                         |       | —                      |       | —                      |       | —                      |       |
|                                     |       |                        |       |                        |       |                        |       |
| General and Administrative Expenses:     |       |                        |       |                        |       |                        |       |
| Mineral Lease Fees                       |       | —                      |       | 6,713                       |       | 6,713                       |       |
| Professional Fees                        |       | 19,239                      |       | 6,500                       |       | 48,284                      |       |
| Other Administrative Expenses            |       | 78                          |       | 173                         |       | 2,299                       |       |
| Loss on abandonment of Mineral Leases    |       | 5,000                       |       |                        |       | 5,000                       |       |
| Total General and Adminstrative Expenses |       |                        |       |                        |       |                        |       |
|                                     |       | 24,317                      |       | 13,386                      |       | 62,296                      |       |
|                                     |       |                        |       |                        |       |                        |       |
| Net Loss                                 |       | $                           | (24,317    | )                           | $          | (13,386                     | )          | $ | (62,296 | ) |
|                                     |       |                        |       |                        |       |                        |       |
| Loss Per Common Share:                   |       |                        |       |                        |       |                        |       |
| Basic and Diluted                        |       | $                           | (0.007     | )                           | $          | (0.004                      | )          |   |   |
|                                     |       |                        |       |                        |       |                        |       |
| Weighted Average Shares Outstanding      |       |                        |       |                        |       |                        |       |
| Basic and Diluted:                       |       | 3,387,500                   |       | 3,387,500                   |       |                        |       |

 

The accompanying notes are an integral partof these financial statements

 

4

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KABEEXPLORATION, INC.

(ADevelopment Stage Company)

Statementof Cash Flows

(Unaudited)

 
| ** **                                                                  | ** ** | ** **                  | ** ** | ** **                  | ** ** | **For the Period** | ** ** |
|-----------------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|------------------------------|------------|
| ** **                                                                  | ** ** | **For the**            | ** ** | **For the**            | ** ** | **of Inception**        | ** ** |
| ** **                                                                  | ** ** | **three months**       | ** ** | **three months**       | ** ** | **from Jan. 1,**   | ** ** |
| ** **                                                                  | ** ** | **ended**                   | ** ** | **ended**                   | ** ** | **2006, through**       | ** ** |
| ** **                                                                  | ** ** | **Mar. 31, 2008** | ** ** | **Mar. 31, 2007** | ** ** | **Mar. 31, 2008**  | ** ** |
| ** **                                                                  | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** **                   | ** ** |
| Cash flows from operating activities:                                       |       |                        |       |                        |       |                         |       |
| Net loss                                                                    |       | $                           | (24,317    | )                           | $          | (13,386                      | )          | $ | (62,296 | ) |
| Adjustments to reconcile netloss to net cash  used byoperating  activities: |       |                        |       |                        |       |                         |       |
| Change in operating assets andliabilities:                                  |       |                        |       |                        |       |                         |       |
| Increase (decrease) in accountsaccounts payable  andaccrued  liabilities    |       | 10,000                      |       | —                      |       | 10,000                       |       |
| Net cash (used by) operatingactivities                                      |       | (14,317                     | )          | —                      |       | (52,296                      | )          |
|                                                                        |       |                        |       |                        |       |                         |       |
| Cash flows from investing activitiesPurchase of mining  leases              |       | —                      |       | —                      |       | —                       |       |
| Abandonment of mining leases                                                |       | 5,000                       |       | —                      |       | —                       |       |
| Net cash (used by)investing  activities                                     |       | 5,000                       |       |                        |       | —                       |       |
|                                                                        |       |                        |       |                        |       |                         |       |
| Cash flows from financing activities:                                       |       |                        |       |                        |       |                         |       |
| Common stock issued for cash                                                |       | —                      |       | —                      |       | 50,250                       |       |
| Loans                                                                       |       | 2,046                       |       | —                      |       | 2,046                        |       |
| Net cash (used) providedby financing  activities                            |       | 2,046                       |       | —                      |       | 52,296                       |       |
|                                                                        |       |                        |       |                        |       |                         |       |
| Net increase (decrease) in cash                                             |       | (7,271                      | )          | (13,386                     | )          | —                       |       |
|                                                                        |       |                        |       |                        |       |                         |       |
| Cash, beginning of the period                                               |       | 7,271                       |       | 45,024                      |       | —                       |       |
|                                                                        |       |                        |       |                        |       |                         |       |
| Cash, end of the period                                                     |       | $                           | —     |                        | $          | 31,638                       |       | $ | — |   |
|                                                                        |       |                        |       |                        |       |                         |       |
| Supplemental cash flow disclosure:                                          |       |                        |       |                        |       |                         |       |
| Interest paid                                                               |       | $                           | —     |                        | $          | —                       |       | $ | — |   |
| Taxes paids                                                                 |       | $                           | —     |                        | $          | —                       |       | $ | — |   |

 

The accompanying notes are an integral partof these financial statements

 

5

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KABEEXPLORATION, INC.

(ADevelopment Stage Company)

Statementof Shareholders’ Equity

(Unaudited)

 
| ** **                                     | ** ** | ** **            | ** ** | ** **     | ** ** | ** **          | ** ** | **Deficit**            | ** ** | ** **    | ** ** |
|------------------------------------------------|------------|-----------------------|------------|----------------|------------|---------------------|------------|------------------------|------------|---------------|------------|
| ** **                                     | ** ** | ** **            | ** ** | ** **     | ** ** | ** **          | ** ** | **Accumulated**        | ** ** | **Total**     | ** ** |
| ** **                                     | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **during the** | ** ** | **Shareholders’** | ** ** |
| ** **                                     | ** ** | **Number of**    | ** ** | ** **     | ** ** | **Paid-In**         | ** ** | **Development**        | ** ** | **Equity**    | ** ** |
| ** **                                     | ** ** | **Shares**            | ** ** | **Amount**     | ** ** | **Capital**         | ** ** | **Stage**              | ** ** | **(Deficit)** | ** ** |
|                                           |       |                  |       |           |       |                |       |                   |       |          |       |
| Inception, January 1, 2006                     |       | —                |       | $              | —     |                | $          | —                 |       | $             | —     |   | $ | — |   |
| Common stock issued for cash, Jan. 16, 2006    |       | 1,500,000             |       | 1,500          |       | 13500               |       |                   |       | 15,000        |       |
| Common stock issued for cash, Aug.23, 2006     |       | 250,000               |       | 250            |       | 2250                |       |                   |       | 2,500         |       |
| Common stock issued for cash, Sep. 21, 2006    |       | 575,000               |       | 575            |       | 10925               |       |                   |       | 11,500        |       |
| Common stock issued for cash, Oct. 31, 2006    |       | 800,000               |       | 800            |       | 15200               |       |                   |       | 16,000        |       |
| Common stock issued for cash, Nov.30, 2006     |       | 262,500               |       | 263            |       | 4987                |       |                   |       | 5,250         |       |
| Net loss for the year ended December 31,  2006 |       |                  |       |           |       |                |       | (226                   | )          | (226          | )          |
|                                           |       |                  |       |           |       |                |       |                   |       |          |       |
| Balance, December 31, 2006                     |       | 3,387,500             |       | 3,388          |       | 46,862              |       | (226                   | )          | 50,024        |       |
|                                           |       |                  |       |           |       |                |       |                   |       |          |       |
| Net loss for the year ended December 31,  2007 |       |                  |       |           |       |                |       | (37,753                | )          | (37,753       | )          |
|                                           |       |                  |       |           |       |                |       |                   |       |          |       |
| Balance, December 31, 2007                     |       | 3,387,500             |       | 3,388          |       | 46,862              |       | (37,979                | )          | 12,271        |       |
|                                           |       |                  |       |           |       |                |       |                   |       |          |       |
| Net loss for the 3 mo. ended March 31, 2008    |       |                  |       |           |       |                |       | (24,317                | )          | (24,317       | )          |
|                                           |       |                  |       |           |       |                |       |                   |       |          |       |
|                                           |       | 3,387,500             |       | $              | 3,388      |                | $          | 46,862                 |       | $             | (62,296    | ) | $ | (12,046 | ) |

 

The accompanying notes are an integral partof these financial statements

 

6

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**Kabe Exploration, Inc.**

**(A Developmental Stage Company)**

**Notes to Financial Statements**

**March 31, 2008**

 

**1.    Organization**

 

KabeExploration, Inc. (the “Company”) was incorporated under the laws of theState of Nevada December 16, 2005. The company was originally formed for mineral exploration in the UnitedStates.  The Company abandoned itsMineral Leases in 2008 and is seeking new business opportunities.

 

**2.    Summary of Significant Accounting Policies**

 

Basisof Presentation

 

Thefinancial statements of the Company have been prepared using the accrual basisof accounting in accordance with generally accepted accounting principles inthe United States.  Because a precisedetermination of many assets and liabilities is dependent upon future events,the preparation of financial statements for a period necessarily involves theuse of estimates which have been made using careful judgment.

 

Useof Estimates

 

Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makecertain estimates and assumptions that affect the reported amounts of assetsand liabilities at the date of the financial statements, and reported amountsof revenue and expenses during the reporting period.  Actual results could differ materially fromthose estimates. Significant estimates made by management are, among others,realizability of long-lived assets, deferred taxes and stock option valuation.

 

Thefinancial statements have, in management’s opinion, been properly preparedwithin the reasonable limits of materiality and within the framework of thesignificant accounting.

 

7

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IncomeTaxes

 

TheCompany utilizes SFAS No. 109, “Accounting for Income Taxes,” whichrequires the recognition of deferred tax assets and liabilities for theexpected future tax consequences of events that have been included in thefinancial statements or tax returns. Under this method, deferred tax assets and liabilities are determinedbased on the difference between the tax basis of assets and liabilities andtheir financial reporting amounts based on enacted tax laws and statutory taxrates applicable to the periods in which the differences are expected to affecttaxable income.  Valuation allowances areestablished, when necessary, to reduce deferred tax assets to the amountexpected to be realized. The Company generated a deferred tax credit throughnet operating loss carryforward. However, a valuation allowance of 100% has been established, as therealization of the deferred tax credits is not reasonably certain, based ongoing concern considerations outlined as follows.

 

GoingConcern

 

The Company’s financial statements are prepared using accountingprinciples generally accepted in the United States of America applicable to agoing concern, which contemplates the realization of assets and liquidation ofliabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficientto cover its operating costs and to allow it to continue as a goingconcern.   The ability of the Company tocontinue as a going concern is dependent on the Company obtaining adequatecapital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequatecapital, it could be forced to cease development of operations.

 

Theability of the Company to continue as a going concern is dependent upon itsability to successfully accomplish its plans to exploit or lease its miningclaim described in the initial paragraph, or engage a working interest partner,in order to   eventually secure othersources of financing and attain profitable operations.  The accompanying financial statements do notinclude any adjustments relating to the recoverability and classification ofrecorded asset amounts or the amount and classifications or liabilities orother adjustments that might be necessary should the Company be unable tocontinue as a going concern.

 

Development-Stage Company

 

The Company is considered adevelopment-stage company, with limited operating revenues during the periodspresented, as defined by Statement of Financial Accounting Standards (“SFAS”) No. 7.  SFAS.  No. 7requires companies to report their operations, shareholders deficit and cashflows since inception through the date that revenues are generated frommanagement’s intended operations, among other things.  Management has defined inception as January 1,2006. Since inception, the Company has incurred an operating loss of $62,296.The Company’s working capital has been generated through the sales of commonstock.

 

Basicand Diluted Net Loss Per Share

 

Netloss per share is calculated in accordance with SFAS 128, Earnings Per Sharefor the period presented.  Basic net lossper share is based upon the weighted average number of common sharesoutstanding.  Diluted net loss per shareis based on the assumption that all dilative convertible shares and stockoptions were converted or exercised. Dilution is computed by applying the treasury stock method.  Under this method, options and warrants areassumed exercised at the beginning of the period (or at the time of issuance,if later), and as if funds obtained thereby we used to purchase common stock atthe average market price during the period.

 

TheCompany has no potentially dilutive securities outstanding as of March 31,2008.

 

**The following is areconciliation of the numerator and denominator of the basic and dilutedearnings per share computations for the three months ended March 31, 2008and 2007:**

 

8

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| ** **                                                       | ** ** | **2008**  | ** ** | **2007**  | ** ** |
|------------------------------------------------------------------|------------|-----------|------------|-----------|------------|
| Numerator:                                                       |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Basic and diluted net loss per share:                            |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Net Loss                                                         |       | $         | (24,317    | )         | $          | (13,386 | ) |
|                                                             |       |      |       |      |       |
| Denominator                                                      |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Basic and diluted weighted average number  of shares outstanding |       | 3,387,500 |       | 3,387,500 |       |
|                                                             |       |      |       |      |       |
| Basic and Diluted Net Loss Per Share                             |       | $         | (0.007     | )         | $          | (0.004 | ) |

 

**3.    Capital Structure**

 

Duringthe period from inception through December 31, 2007, the Company enteredinto the following equity transactions:

 
| January 16,  2006:  |   | Sold  1,500,000 shares of common stock at $.01 per sharefor $15,000.       |
|--------------------------|--------|----------------------------------------------------------------------------|
|                     |   |                                                                       |
| August 23,  2006:   |   | Sold 250,000 shares of common stock at $.01 per  share for $5,000.         |
|                     |   |                                                                       |
| September 1,  2006: |   | Sold 575,000 shares of common stock at $0.02 per  share, realizing $11,500 |
|                     |   |                                                                       |
| October 31,  2006:  |   | Sold 800,000 shares of common stock at $0.02 per  share, realizing 16,000  |
|                     |   |                                                                       |
| November 30,  2006: |   | Sold 262,500 shares of common stock at $0.02 per  share, realizing $5,250  |

 

Asof March 31, 2008 the Company has authorized 75,000,000 of $0.001 parcommon stock, of which 3,387,500 shares were issued and outstanding.

 

**4.    Commitments**

 

OnMarch 1, 2006 the Company entered into a lease agreement with the owner ofa mining claim situated in Storey County, Nevada in terrain noted for gold andsilver mining.  The agreement required aroyalty of 3 1⁄2 % of net smelter returns, as defined in the agreement, paidquarterly, and lease payments.  One leasepayment of $5,000 was made in 2007.  Thelease was abandoned on January 28, 2008 and the capitalized lease paymentwritten off.

 

**5.    Litigation**

 

Thereare no significant legal proceedings against the Company with respect tomatters arising in the ordinary course of business.

 

9

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**6.****                  ****Change in Control**

 

OnFebruary 14, 2008, Anthony Claydon, President, Chief Financial Officer andSecretary of the Company and Rory Moss, Director of the Company, sold anaggregate of 1,750,000 shares of the Company’s common stock to Erik Ulsteen for$50,000, paid in cash.   Mr. Claydonresigned  his offices and Mr. Ulsteenwas appointed President, Chief Financial Officer and Secretary of the Company.

 

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

 

*Except asotherwise required by the context, all references in this prospectus to “we”, “us”,“our”, or “Company” refer to the operations of Kabe Exploration Inc., a Nevadacorporation.*

 

**Forward-LookingStatements and Associated Risks**

 

*ThePrivate Securities Litigation Reform Act of 1995 provides a “safe harbor” forcertain forward-looking statements. Some of the statements contained in thisannual report of the Company discuss future expectations, containprojections of our operations or financial condition or state otherforward-looking information. Some statements contained in this annual report onForm 10-KSB that are not historical facts (including without limitationstatements to the effect that we “believe,” “expect,” “anticipate,” “plan,” “intend,”“foresee,” or other similar expressions) and are forward-looking statements.These forward-looking statements are based on our current expectations andbeliefs concerning future developments and their potential effects on us. Therecan be no assurance that future developments affecting us will be thoseanticipated by us. All comments concerning our expectations for future revenueand operating results are based on our forecasts of our plan of operation and donot include the potential impact of any future acquisitions or operations.These forward-looking statements involve significant risks and uncertainties(some of which are beyond our control) and assumptions. Should one or more ofthese risks or uncertainties materialize, or should any of our assumptionsprove incorrect, actual results may vary in material respects from thoseprojected in the forward-looking statements.*

 

**Overview**

 

We are a “shell company”defined in Rule 405 under the Securities Act of 1933 and Rule 12b-2under the Securities Exchange Act of 1934, since we have only conducted nominaloperations and have only nominal assets.

 

During 2007, we were anexploration stage company engaged in the acquisition and exploration of mineralproperties. We entered into a lease agreement with George J. Eliopuloseffective March 31, 2006, granting us the exclusive right to explore,develop, and mine the property for gold, silver, copper and other valuableminerals.  The property consisted of one unpatented mining claim locatedin section 12, Township 16 North, Range 20 East, Mt. Diablo Baseline &Meridian, Storey County, Nevada, USA, owned by Mr. Eliopulos.

 

On December 18, 2007,ErikUlsteen entered intoan agreement with Antony Claydon, our former President and a director and RoryMoss, a director, to purchase 1,500,000and 250,000 shares of common stock, respectively, for an aggregate purchaseprice of $50,000. Thetransaction closed on February 14, 2008 at which time, Mr. Claydonresigned as President, Chief Financial Officer and Secretary and Mr. Ulsteen was appointed President,Chief Financial Officer, Secretary and director.  On January 28,2008, we terminated our lease agreement with Mr. Eliopulos.

 

The following factors raisesubstantial doubt regarding the ability of our business to continue as a goingconcern: (i) the losses we have incurred since our inception; (ii) ourfailure to generate revenues since our inception; and (iiI) our dependence onthe sale of our equity securities and on the receipt of capital from outsidesources to continue our operations. Our auditors have issued a going concernopinion regarding our business. The financial statements do not include anyadjustments that might result from the uncertainty about our ability to continuein business. As such we may have to cease operations and you could lose yourinvestment.

 

10

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**Plan ofOperation**

 

We have redirected our focustowards identifying and pursuing options regarding the development of a newbusiness plan and direction. We are exploring various business opportunitiesthat have the potential to generate positive revenue, profits and cash flow inorder to financially accommodate the costs of being a publicly held company.

 

Wewill not restrict our search for any specific kind of businesses, and we mayacquire a business which is in its preliminary or development stage, which isalready in operation, or in essentially any stage of its business life. It isimpossible to predict the status of any business in which we may becomeengaged, in that such business may need to seek additional capital, may desireto have its shares publicly traded, or may seek other perceived advantageswhich we may offer.

 

Inimplementing a structure for a particular business acquisition, we may become aparty to a merger, consolidation, reorganization, joint venture, or licensingagreement with another corporation or entity.

 

Itis anticipated that any securities issued in any such business combinationwould be issued in reliance upon exemption from registration under applicablefederal and state securities laws.  Insome circumstances, however, as a negotiated element of its transaction, we mayagree to register all or a part of such securities immediately after thetransaction is consummated or at specified times thereafter.  If such registration occurs, it will beundertaken by the surviving entity after we have entered into an agreement fora business combination or have consummated a business combination.  The issuance of additional securities andtheir potential sale into any trading market which may develop in oursecurities may depress the market value of our securities in the future if sucha market develops, of which there is no assurance.

 

Wewill participate in a business combination only after the negotiation andexecution of appropriate agreements. Negotiations with a target company will likely focus on the percentageof our company which the target company shareholders would acquire in exchangefor their shareholdings.  Although theterms of such agreements cannot be predicted, generally such agreements willrequire certain representations and warranties of the parties thereto, willspecify certain events of default, will detail the terms of closing and theconditions which must be satisfied by the parties prior to and after suchclosing and will include miscellaneous other terms.  Any merger or acquisition effected by us canbe expected to have a significant dilutive effect on the percentage of sharesheld by our shareholders at such time.

 

We are currently engaged indiscussions with Emission & Power Solutions, Inc., a Californiacorporation (“EPS”), regarding the possibility of a reverse triangular merger(the “Merger”) involving the two companies. At this stage, no definitive mergeragreement has been entered into, and neither party is currently bound toproceed with the merger.

 

We expect that we willrequire additional funding in connection with our efforts towards identifyingand pursuing options regarding the development of a new business plan anddirection.  We anticipate that suchfunding will be in the form of equity financing from the sale of our commonstock or loans from our principal stockholder.  However we cannot provideinvestors with any assurance that we will be able to obtain sufficient fundingto fund our operations or any work related to the development of a new businessplan.   We do not have any arrangements in place for any futurefinancing.

 

**Results ofOperations**

 

*ThreeMonths Ended March 31, 2008 Compared to Three Months Ended March 31,2007*

 

**Revenues**

 

We have generated nooperating revenues from operations from our inception.

 

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**Costs andExpenses**

 

From our inception through March 31, 2008, we have incurredcumulative losses of $62,296.

 

**Liquidity and Capital Resources**

 

As of March 31, 2008,we had no working capital  as compared to$7,271 as of December 31, 2007. Our cash position was $0 as of March 31,2008 compared to $7,271 as of December 31, 2007.  We have financed our company principallythrough the private placement of our common stock.  As of March 31, 2008, we have no longterm debt.

 

On April 15, 2008, wesold 300,000 shares of common stock for aggregate proceeds of $12,000 toaccredited investors.

 

**Summary of Significant Accounting Policies**

 

Basisof Presentation

 

Ourfinancial statements have been prepared using the accrual basis of accountingin accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependentupon future events, the preparation of financial statements for a periodnecessarily involves the use of estimates which have been made using carefuljudgment.

 

Useof Estimates

 

Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makecertain estimates and assumptions that affect the reported amounts of assetsand liabilities at the date of the financial statements, and reported amountsof revenue and expenses during the reporting period.  Actual results coulddiffer materially from those estimates. Significant estimates made bymanagement are, among others, realizability of long-lived assets, deferredtaxes and stock option valuation.

 

Thefinancial statements have, in management’s opinion, been properly preparedwithin the reasonable limits of materiality and within the framework of thesignificant accounting.

 

IncomeTaxes

 

Weutilize SFAS No. 109, “Accounting for Income Taxes,” which requires therecognition of deferred tax assets and liabilities for the expected future taxconsequences of events that have been included in the financial statements ortax returns.  Under this method, deferred tax assets and liabilities aredetermined based on the difference between the tax basis of assets andliabilities and their financial reporting amounts based on enacted tax laws andstatutory tax rates applicable to the periods in which the differences areexpected to affect taxable income.  Valuation allowances are established,when necessary, to reduce deferred tax assets to the amount expected to berealized. We generated a deferred tax credit through net operating losscarryforward.  However, a valuation allowance of 100% has beenestablished, as the realization of the deferred tax credits is not reasonablycertain, based on going concern considerations outlined as follows.

 

GoingConcern

 

Ourfinancial statements are prepared using accounting principles generallyaccepted in the United States of America applicable to a going concern, whichcontemplates the realization of assets and liquidation of liabilities in thenormal course of business.  We have not yet established an ongoing sourceof revenues sufficient to cover our operating costs and to allow us to continueas a going concern.   Our ability to continue as a going concern isdependent on us obtaining adequate capital to fund operating losses until webecome profitable.  If we are unable to

 

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obtainadequate capital, we could be forced to cease operations.

 

Ourability to continue as a going concern is dependent upon our ability tosuccessfully accomplish our plan to develop a new business plan, or mergercandidate in order to eventually secure other sources of financing andattain profitable operations.  The accompanying financial statements donot include any adjustments relating to the recoverability and classificationof recorded asset amounts or the amount and classifications or liabilities orother adjustments that might be necessary should we be unable to continue as agoing concern.

 

Development-StageCompany

 

Weare considered a development-stage company, with limited operating revenuesduring the periods presented, as defined by Statement of Financial AccountingStandards (“SFAS”) No. 7.  SFAS.  No. 7 requires companiesto report their operations, shareholders deficit and cash flows since inceptionthrough the date that revenues are generated from management’s intendedoperations, among other things.  Management has defined inception as January 1,2006. Since inception until March 31, 2008, we have incurred an operatingloss of  $(62,296).  Our working capital has been generatedthrough sales of common stock.

 

Basicand Diluted Net Loss Per Share

 

Netloss per share is calculated in accordance with SFAS 128, Earnings Per Sharefor the period presented.  Basic net loss per share is based upon theweighted average number of common shares outstanding.  Diluted net lossper share is based on the assumption that all dilative convertible shares andstock options were converted or exercised.  Dilution is computed byapplying the treasury stock method.  Under this method, options and warrantsare assumed exercised at the beginning of the period (or at the time ofissuance, if later), and as if funds obtained thereby we used to purchasecommon stock at the average market price during the period.

 

Wehad no potentially dilutive securities outstanding as of March 31, 2008.

 

Off-Balance Sheet Arrangements

 

Wehave no significant off-balance sheet arrangements that have or are reasonablylikely to have a current or future effect on our financial condition, changesin financial condition, revenues or expenses, results of operations, liquidity,capital expenditures or capital resources that is material to our stockholders.

 

**Item 3.**   **Quantitative andQualitative Disclosures About Market Risk.**

 

N/A

 

**Item 4(T)   Controls and Procedures.**

 

*Evaluation of Disclosure Controls and Procedures*. Under the supervision and with  the  participation  of  our  management,  including  our President,  Chief Financial Officer  and  Secretary,  we  evaluated  the  effectiveness  of the design and operation  of our  disclosure  controls  and  procedures  (as  defined  in  Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the  period  covered  by this  report.  Based  upon that evaluation,  our  President,  Chief Financial Officer and Secretary  concluded  that our disclosure  controls and  procedures as of the end of the period covered by this report were effective such that the  information  required to be disclosed by us in reports  filed under the  Securities  Exchange  Act of 1934 is (i)  recorded, processed,  summarized  and reported  within the time  periods  specified in the SEC’s rules and forms and (ii)  accumulated and  communicated to our management to allow timely decisions  regarding  disclosure.  A controls  system  cannot  provide  absolute assurance,  however,  that the objectives of the controls system are met,

 

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and no evaluation of controls can provide  absolute  assurance  that all control issues and  instances  of  fraud,   if  any,  within  a  company  have  been  detected.

 

*Changes in  Internal  Control  Over  Financial  Reporting.*  During the most recent quarter ended March 31, 2008, there has been no change in our internal control over  financial  reporting  (as defined in Rule  13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected,  or is reasonably likely to materially affect, our internal control over financial reporting.

 

**PART II**

 

**Item 1.                 LegalProceedings.**

 

Weare not a party to any pending legal proceeding, nor is our property thesubject of a pending legal proceeding, that is not in the ordinary course ofbusiness or otherwise material to the financial condition of our business.

 

| **Item 1A.** | ** ** | **Risk  Factors.**                                                |
|--------------|------------|-------------------------------------------------------------------|
|         |       |                                                              |
| N/A          |       |                                                              |
|         |       |                                                              |
| **Item 2.**  | ** ** | **Unregistered  Sales of Equity Securities and Use of Proceeds.** |
|         |       |                                                              |
| None.        |       |                                                              |
|         |       |                                                              |
| **Item 3.**  | ** ** | **Defaults  Upon Senior Securities.**                             |
|         |       |                                                              |
| N/A          |       |                                                              |
|         |       |                                                              |
| **Item 4.**  | ** ** | **Submission  of Matters to a Vote of Security Holders.**         |
|         |       |                                                              |
| None.        |       |                                                              |
|         |       |                                                              |
| **Item 5.**  | ** ** | **Other  Information.**                                           |
|         |       |                                                              |
| None.        |       |                                                              |
|         |       |                                                              |
| **Item 6.**  | ** ** | **Exhibits.**                                                     |

 
| **Exhibit No.** | ** ** | **Title of Document**                                                                                                                               |
|----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                          |
| 31.1                 |       | Certification of Chief  Executive Officer Pursuant to Rule 13a-14(a) of the Securities  Exchange Act of 1934                                        |
|                 |       |                                                                                                                                                          |
| 32.1                 |       | Certification of Chief  Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

 

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**SIGNATURES**

 

In accordance with Section 13or 15(d) of the Exchange Act, the registrant caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.

 
|   | **KABE  EXPLORATION, INC.** |
|--------|-----------------------------|
|   |                        |   |
|   | By:                         | /s/ Erik  Ulsteen |   |
|   |                        | Erik Ulsteen |
|   |                        | President, Chief Financial  Officer,  Secretary |
|   |                        |   |
|   | Date:                       | May 13, 2008 |

 

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