Table ofContents

 

 

 

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-Q**

 

**(Mark One)**

** **

**x****      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934**

** **

**For thequarterly period ended September 30, 2009**

** **

**o****         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934**

 

**For thetransition period from                      to                      **

 

**Commissionfile number 333-141690**

 

**KABEEXPLORATION INC.**

(Nameregistrant as specified in its charter)

 

| **NEVADA**(State or other  jurisdiction of incorporation or organization) | ** ** | **39-2052145**(I.R.S.  Employer Identification No.) |
|---------------------------------------------------------------------------|------------|-----------------------------------------------------|

 

| **5050 Avenida Encinas, Suite 270, Carlsbad, CA**(Address of principal executive offices) | ** ** | **92008**(Zip Code) |
|------------------------------------------------------------------------------------------------|------------|---------------------|

 

Registrant’s telephonenumber, including area code:  **(760)931-1048**

 

Check whether the issuer (1) filed all reportsrequired to be filed by Section 13 or 15(d) of the Exchange Actduring the past 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant hassubmitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405of Regulation S-T during the preceding 12 months (or for such shorter periodthat the registrant was required to submit and post such files).  Yes oNo  o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definition of “*large accelerated filer*”, “*acceleratedfiler*” and “*smaller reporting company*”in Rule 12b-2 of the Exchange Act. (Check one):

 

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

 

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

 

Number of shares of the registrant’s common stockoutstanding as of November 10, 2009: 38,597,250 shares of CommonStock

 

 

 

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**TABLE OFCONTENTS**

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

 

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** **

**PART I**

 

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

 

KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Operations and Comprehensive Loss

(Unaudited)

 
| ** **                              | ** ** | ** **                                         | ** ** | ** **                                       | ** ** | ** **                                        | ** ** | ** ** | ** ** | **For the Period** | ** ** |
|-----------------------------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|---------------------------------------------------|------------|------------|------------|--------------------|------------|
| ** **                              | ** ** | ** **                                         | ** ** | ** **                                       | ** ** | ** **                                        | ** ** | ** ** | ** ** | **of Inception**   | ** ** |
| ** **                              | ** ** | **For the three months ended  September 30,** | ** ** | **For the nine months ended  September 30** | ** ** | **from Jan. 1, 2006  through Sep. 30,** | ** ** |
| ** **                              | ** ** | **2009**                                           | ** ** | **2008**                                         | ** ** | **2009**                                          | ** ** | **2008**   | ** ** | **2009**           | ** ** |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Revenue                                 |       | $                                                  | —     |                                             | $          | —                                            |       | $          | —     |               | $          | — |   | $ | — |   |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Cost of Sales                           |       | —                                             |       | —                                           |       | —                                            |       | —     |       | —             |       |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Operating Income                        |       | —                                             |       | —                                           |       | —                                            |       | —     |       | —             |       |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| General and Administrative Expenses:    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Mineral Lease Fees                      |       |                                               |       |                                             |       |                                              |       | —     |       | 6,713              |       |
| Professional Fees                       |       | 2,150                                              |       |                                             |       | 4,450                                             |       | 41,178     |       | 76,723             |       |
| Consulting                              |       |                                               |       |                                             |       | 45,000                                            |       |       |       | 45,000             |       |
| Other Administrative Expenses           |       | 378                                                |       |                                             |       | 1,075                                             |       | 5,069      |       | 6,015              |       |
| Loss on abandonment of                  |       |                                               |       |                                             |       |                                              |       |       |       | —             |       |
| Mineral Leases                          |       | —                                             |       | —                                           |       | —                                            |       | —     |       | 5,000              |       |
| Total General andAdminstrative Expenses |       | 2,528                                              |       | —                                           |       | 50,525                                            |       | 46,247     |       | 139,451            |       |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Other Income                            |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Interest Income                         |       | —                                             |       | 7                                                |       | —                                            |       | 7          |       | 22                 |       |
| Interest Expense                        |       | —                                             |       | —                                           |       | —                                            |       | —     |       | (13                | )          |
|                                    |       | —                                             |       | 7                                                |       | —                                            |       | 7          |       | 9                  |       |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Net Loss                                |       | $                                                  | (2,528     | )                                                | $          | 7                                                 |       | $          | (50,525    | )                  | $          | (46,240 | ) | $ | (139,442 | ) |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Currency translation adjustment         |       | —                                             |       | —                                           |       | (50                                               | )          | —     |       | (50                | )          |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Comprehensive income (loss)             |       | (2,528                                             | )          | 7                                                |       | (50,575                                           | )          | (46,240    | )          | (139,492           | )          |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Income/Loss Per Common Share:           |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Basic and Diluted                       |       | $                                                  | (0.000     | )                                                | $          | 0.000                                             |       | $          | (0.001     | )                  | $          | (0.001 | ) |   |   |
|                                    |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Weighted Average SharesOutstanding      |       |                                               |       |                                             |       |                                              |       |       |       |               |       |
| Basic and Diluted:                      |       | 37,325,000                                         |       | 33,875,000                                       |       | 37,155,220                                        |       | 35,714,420 |       |               |       |

 

The accompanying notes are an integral part of these financialstatements

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Cash Flows

(Unaudited)

 
| ** **                                                                   | ** ** | ** **                                         | ** ** | ** **                                        | ** ** | ** **                                        | ** ** | ** ** | ** ** | **For the Period** | ** ** |
|------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------|------------|---------------------------------------------------|------------|------------|------------|--------------------|------------|
| ** **                                                                   | ** ** | ** **                                         | ** ** | ** **                                        | ** ** | ** **                                        | ** ** | ** ** | ** ** | **of Inception**   | ** ** |
| ** **                                                                   | ** ** | **For the three months ended  September 30,** | ** ** | **For the nine months ended  September 30,** | ** ** | **from Jan. 1, 2006  through Sep. 30,** | ** ** |
| ** **                                                                   | ** ** | **2009**                                           | ** ** | **2008**                                          | ** ** | **2009**                                          | ** ** | **2008**   | ** ** | **2009**           | ** ** |
|                                                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Cash flows from operating activities:                                        |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Net loss                                                                     |       | $                                                  | (2,528     | )                                                 | $          | 7                                                 |       | $          | (50,525    | )                  | $          | (46,240 | ) | $ | (139,442 | ) |
| Adjustments to reconcile net loss to net cash used  by operating activities: |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Common stock issued for services                                             |       | —                                             |       | —                                            |       | 45,000                                            |       | —     |       | 45,000             |       |
| Change in operating assets and liabilities:                                  |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Accounts Payable                                                             |       | —                                             |       | —                                            |       | —                                            |       | 16,509     |       | 16,509             |       |
| Net cash (used by) operating activities                                      |       | (2,528                                             | )          | 7                                                 |       | (5,525                                            | )          | (29,731    | )          | (77,933            | )          |
|                                                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Cash flows from investing activities                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Abandonment of mining leases                                                 |       | —                                             |       | —                                            |       | —                                            |       | 5,000      |       | —             |       |
| Net cash (used by) investing activities                                      |       | —                                             |       | —                                            |       | —                                            |       | 5,000      |       | —             |       |
|                                                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Cash flows from financing activities:                                        |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Common stock issued for cash                                                 |       | —                                             |       | —                                            |       | —                                            |       | 12,000     |       | 62,250             |       |
| Contribution of Capital                                                      |       |                                               |       |                                              |       | 1,750                                             |       |       |       | 1,750              |       |
| Proceeds (repayment) of loans                                                |       | 2,650                                              |       | (4,000                                            | )          | 3,850                                             |       | 6,046      |       | 14,008             |       |
| Bank Overdraft                                                               |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Net cash (used) provided by financiang activities                            |       | 2,650                                              |       | (4,000                                            | )          | 5,600                                             |       | 18,046     |       | 78,008             |       |
|                                                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Effect of exchange rates on cash                                             |       | —                                             |       | —                                            |       | (50                                               | )          | —     |       | (50                | )          |
|                                                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Net increase (decrease) in cash                                              |       | 122                                                |       | (3,993                                            | )          | 25                                                |       | (6,685     | )          | 25                 |       |
|                                                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Cash, beginning of the period                                                |       | (97                                                | )          | 4,579                                             |       | —                                            |       | 7,271      |       | —             |       |
|                                                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Cash, end of the period                                                      |       | $                                                  | 25         |                                              | $          | 586                                               |       | $          | 25         |               | $          | 586 |   | $ | 25 |   |
|                                                                         |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Supplemental cash flow disclosure:                                           |       |                                               |       |                                              |       |                                              |       |       |       |               |       |
| Interest paid                                                                |       | $                                                  | —     |                                              | $          | —                                            |       | $          | —     |               | $          | — |   | $ | 13 |   |
| Taxes paid                                                                   |       | $                                                  | —     |                                              | $          | —                                            |       | $          | —     |               | $          | — |   | $ | — |   |

 

The accompanying notes are an integreal part of these financialstatements

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficiency

(Unaudited)

 
| ** **                                                         | ** ** | ** **       | ** ** | ** **     | ** ** | ** **  | ** ** | ** **        | ** ** | **Deficit**            | ** ** | ** **    | ** ** |
|--------------------------------------------------------------------|------------|------------------|------------|----------------|------------|-------------|------------|-------------------|------------|------------------------|------------|---------------|------------|
| ** **                                                         | ** ** | ** **       | ** ** | ** **     | ** ** | ** **  | ** ** | **Accumulated**   | ** ** | **Accumulated**        | ** ** | **Total**     | ** ** |
| ** **                                                         | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **Other**   | ** ** | **during the**    | ** ** | **Shareholders’** | ** ** |
| ** **                                                         | ** ** | **Number of**    | ** ** | ** **     | ** ** | **Paid-In** | ** ** | **Comprehensive** | ** ** | **Development**        | ** ** | **Equity**    | ** ** |
| ** **                                                         | ** ** | **Shares**       | ** ** | **Amount**     | ** ** | **Capital** | ** ** | **Income**        | ** ** | **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          | )          |
|                                                               |       |             |       |           |       |        |       |              |       |                   |       |          |       |
| Balances, 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       | )          |
|                                                               |       |             |       |           |       |        |       |              |       |                   |       |          |       |
| Balances, December 31, 2007                                   |       | 3,387,500        |       | $              | 3,388      |        | $          | 46,862            |       |                   |       | $             | (37,979    | ) | $ | 12,271 |   |
| Common stock issued for cash, Apr. 15, 2008at $0.04 per share |       | 300,000          |       | 300            |       | 11,700      |       |              |       |                   |       | 12,000        |       |
| Net loss for the year ended Dec. 31, 2008                     |       |             |       |           |       |        |       |              |       | (50,938                | )          | (50,938       | )          |
|                                                               |       |             |       |           |       |        |       |              |       |                   |       |          |       |
| Balances, December 31, 2008                                   |       | 3,687,500        |       | $              | 3,688      |        | $          | 58,562            |       |                   |       | $             | (88,917    | ) | $ | (26,667 | ) |
|                                                               |       |             |       |           |       |        |       |              |       |                   |       |          |       |
| 10-for-1 stock split Janury 13, 2009                               |       | 33,187,500       |       | 33,187         |       | (33,187     | )          |              |       |                   |       | —        |       |
| Balances after stock split                                         |       | 36,875,000       |       | $              | 36,875     |        | $          | 25,375            |       |                   |       | $             | (88,917    | ) | $ | (26,667 | ) |
| Common stock issued for services Apr 13, 2009@ $0.01 per share     |       | 450,000          |       | 450            |       | 44,550      |       |              |       |                   |       | 45,000        |       |
| Additional Paid-in Capital January 2009                       |       |             |       |           |       | 1,750       |       |              |       |                   |       | 1,750         |       |
| Net loss for the nine months.ended September 30,  2009        |       |             |       |           |       |        |       |              |       | (50,525                | )          | (50,525       | )          |
| Currency translation adjustment                                    |       |             |       |           |       |        |       | (50               | )          |                   |       | (50           | )          |
|                                                               |       |             |       |           |       |        |       |              |       |                   |       |          |       |
| Balances, September 30, 2009                                  |       | 37,325,000       |       | $              | 37,325     |        | $          | 71,675            |       | $                      | (50        | )             | $          | (139,442 | ) | $ | (30,492 | ) |

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Balance Sheet

 
| ** **                                                                                                                                                                              | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                              | ** ** | **2009**               | ** ** | **2008**              | ** ** |
| ** **                                                                                                                                                                              | ** ** | **(Unaudited)**        | ** ** | ** **            | ** ** |
|                                                                                                                                                                                    |       |                   |       |                  |       |
| ASSETS                                                                                                                                                                                  |       |                   |       |                  |       |
| Current Assets                                                                                                                                                                          |       |                   |       |                  |       |
| Cash                                                                                                                                                                                    |       | $                      | 25         |                  | $          | — |   |
|                                                                                                                                                                                    |       |                   |       |                  |       |
| LIABILITIES AND SHAREHOLDERS’ DEFICIENCY                                                                                                                                           |       |                   |       |                  |       |
| Current Liabilities                                                                                                                                                                     |       |                   |       |                  |       |
| Accounts Payable                                                                                                                                                                        |       | $                      | 16,509     |                  | $          | 16,509 |   |
| Chapman Industries Loan                                                                                                                                                                 |       | 6,046                  |       | 5,546                 |       |
| Loan Payable - EPS                                                                                                                                                                      |       | 7,962                  |       | 4,612                 |       |
|                                                                                                                                                                                    |       |                   |       |                  |       |
|                                                                                                                                                                                    |       | 30,517                 |       | 26,667                |       |
|                                                                                                                                                                                    |       |                   |       |                  |       |
| Stockholders’ Deficiancy                                                                                                                                                           |       |                   |       |                  |       |
| Common Stock, $0.001 par value; authorized  75,000,000 shares 37,325,000 issued and outstanding at September 30,  2009 36,875,000 issued and outstanding at December 31, 2008 |       | 37,325                 |       | 3,688                 |       |
| Additional Paid-In Capital                                                                                                                                                              |       | 71,675                 |       | 58,562                |       |
| Accumulated other comprehensive loss                                                                                                                                                    |       | (50                    | )          | —                |       |
| Deficit accumulated during the development stage                                                                                                                                        |       | (139,442               | )          | (88,917               | )          |
|                                                                                                                                                                                    |       |                   |       |                  |       |
| Total Stockholders’ Deficiancy                                                                                                                                                     |       | (30,492                | )          | (26,667               | )          |
|                                                                                                                                                                                    |       |                   |       |                  |       |
| Total Liabilities and Stockholders’ Deficiancy                                                                                                                                     |       | $                      | 25         |                  | $          | — |   |

 

The accompanying notes are an integral part of these financialstatements

 

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** ****Kabe Exploration, Inc.**

**(A Developmental Stage Company)**

**Notes to Financial Statements**

**September 30, 2009**

 

**1.****                 ****Basisof Presentation and Nature of Operations**

** **

The unaudited interimfinancial statements as of and for the nine months ended September 30,2009 reflect all adjustments which, in the opinion of management, are necessaryto fairly state the Company’s financial position and the results of itsoperations for the periods presented.

 

These unaudited interimfinancial statements should be read in conjunction with the Company’s financialstatements and notes thereto included in the Company’s December 31, 2008report. The Company assumes that the users of the interim financial informationherein have read, or have access to, the audited financial statements for thepreceding period, and that the adequacy of additional disclosure needed for afair presentation may be determined in that context. The results of operationsfor the nine month period ended September 30, 2009 are not necessarilyindicative of results for the entire year ending December 31, 2009.

 

**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.****                  ****Summaryof Significant Accounting Policies**

 

Useof Estimates

 

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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 and deferred taxes.

 

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 revenuessufficient to 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 seek out new business opportunitiesdescribed in the initial paragraph, or engage a working interest partner, inorder to eventually secure other sources of financing and attain profitableoperations.  The accompanying financialstatements do not include any adjustments relating to the recoverability andclassification of recorded asset amounts or the amount and classifications orliabilities or other adjustments that might be necessary should the Company beunable to continue as a going concern.

 

Development-StageCompany

 

The Company is considered adevelopment-stage company, with limited operating revenues during the periodspresented, as defined by Statement of Financial Accounting Standards 

 

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(“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 until September 30, 2009, the Company has incurredan operating loss of $139,442. The Company’s working capital has been generatedthrough the sales of common stock and contributed capital.  Management has provided financial data since January 1,2006, “Inception” in the financial statements, as a means to provide readers ofthe Company’s financial information to make informed investment decisions.

 

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 September 30,2009.

** **

**Thefollowing is a reconciliation of the numerator and denominator of the basic anddiluted earnings per share computations for the nine months ended September 30,2009 and 2008.**

** **
| ** **                                                       | ** ** | **2009**   | ** ** | **2008**   | ** ** |
|------------------------------------------------------------------|------------|------------|------------|------------|------------|
| Numerator:                                                       |       |       |       |       |       |
|                                                             |       |       |       |       |       |
| Basic and diluted net loss per share:                            |       |       |       |       |       |
|                                                             |       |       |       |       |       |
| Comprehensive Net Loss                                           |       | $          | (50,575    | )          | $          | (46,247 | ) |
|                                                             |       |       |       |       |       |
| Denominator                                                      |       |       |       |       |       |
|                                                             |       |       |       |       |       |
| Basic and diluted weighted average number of  shares outstanding |       | 37,155,220 |       | 35,177,750 |       |
|                                                             |       |       |       |       |       |
| Basic and Diluted Net Loss Per Share                             |       | $          | (0.001     | )          | $          | (0.001 | ) |

 

**3.****                  ****CapitalStructure**

 

Duringthe period from inception through September 30, 2009 the Company enteredinto the following equity transactions:

 

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| January 16,  2006:  |   | Sold  1,500,000 shares of common stock at $.01 per share for $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    |
|                     |   |                                                                         |
| April 15,  2008     |   | Sold  300,000 shares of common stock at $0.04 per share, Realizing $12,000.  |
|                     |   |                                                                         |
| January,  2009           |   | Additional  Paid-in Capital in cash $1,750.                                  |
|                     |   |                                                                         |
| April 13,  2009     |   | 10-for-1  common stock forward stock split                                   |
|                     |   |                                                                         |
| April 13,  2009     |   | Issued  450,000 shares of common stock for services at $ 0.01 per share |

 

Asof September 30, 2009 the Company has authorized 75,000,000 of $0.001 parcommon stock, of which 37,325,000 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. One lease payment of $5,000 was made in 2007.  The lease was abandoned on January 28,2008 and the capitalized lease payment written off.

 

**5.****                 ****Contigencies,Litigation**

 

Therewere no loss contingencies or legal proceedings against the Company withrespect to matters arising in the ordinary course of business. Neither theCompany nor any of its officers or directors is involved in any otherlitigation either as plaintiffs or defendants, and have no knowledge of anythreatened or pending litigation against them or any of the officers ordirectors.

 

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**6.****                     ****Changein 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. Ulsteen was appointed President, ChiefFinancial Officer and Secretary of the Company.

 

**7.****                     ****SubsequentEvent**

 

OnOctober 22, 2009 the Company issued 1,272,250 shares of common stock.

 

**Item 2.**            **Management’s Discussionand Analysis of Financial 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-Q 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 anddo not 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 

 

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mining claim located insection 12, Township 16 North, Range 20 East, Mt. Diablo Baseline &Meridian, Storey County, Nevada, USA, owned by Mr. Eliopulos.

 

On December 18, 2007,Erik Ulsteen entered into an agreement with Antony Claydon, our formerPresident and a director and Rory Moss, a director, to purchase 1,500,000 and250,000 shares of common stock, respectively, for an aggregate purchase priceof $50,000. The transaction closed on February 14, 2008 at which time, Mr. Claydonresigned as President, Chief Financial Officer and Secretary and Mr. Ulsteenwas appointed President, Chief Financial Officer, Secretary and director.  On January 28, 2008, we terminated ourlease agreement with Mr. Eliopulos.

 

On October 14, 2008, weentered into an Agreement and Plan of Merger with Emission & PowerSolutions, Inc. (“EPS”) pursuant to which EPS will merge into a newlyformed wholly-owned subsidiary.  Pursuantto the agreement, EPS shareholders will receive 1 share of our common stock inexchange for 5 shares of EPS common stock. Closing of the merger is subject to, among other things, stockholderapproval of the EPS shareholders.

 

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 tocontinue in business. As such we may have to cease operations and you couldlose your investment.

 

**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.

 

As stated above, on October 14, 2008, we entered into an Agreementand Plan of Merger with EPS pursuant to which EPS will merge into a newlyformed wholly-owned subsidiary.  EPSlicenses, acquires, develops, deploys, and transfers technologies dedicated toimproving fuel economy while reducing environmentally harmful exhaustemissions.  Using advanced fuel treatmentdevices, EPS has incorporated a proprietary multi phase process utilizingengineered flow patterns in order to restructure fuel hydrocarbons,increasing the fuel efficiency and producing a cleaner burn during thecombustion cycle of an engine.

 

It is anticipated that any securities issued in the EPS merger will beissued in reliance upon exemption from registration under applicable federaland state securities laws.   The issuanceof additional securities and their potential sale into any trading market whichmay develop in our securities may depress the market value of our securities inthe future if such a market develops, of which there is no assurance.

 

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Closing of the merger is subject to, among other things, stockholderapproval of the EPS shareholders.  Therecan be no assurance that EPS shareholders will approve the merger or that themerger will close.  In the event that themerger does not close, we will continue to identify and pursue various businessopportunities that have the potential to generate positive revenue, profits andcash flow.

 

We expect that we will require additional funding in connection withthe closing of the merger and 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 September 30, 2009 Compared to Three Months Ended September 30,2008*

 

**Revenues**

 

We have generated nooperating revenues from operations from our inception.

 

**Costs andExpenses**

 

From our inception through September 30,2009, we have incurred cumulative losses of $139,442.  Professional fees increased to $2,150 for thethree months ended September 30, 2009 from 0 for the three months ended September 30,2008.

 

*NineMonths Ended September 30, 2009 Compared to Nine Months Ended September 30,2008*

 

**Revenues**

 

We have generated no operatingrevenues from operations from our inception.

 

**Costs andExpenses**

 

Professional fees decreased from $41,178 forthe nine months ended September 30, 2008 to $4,450 for the nine monthsended September 30, 2009 primarily as a result of cutbacks in our businessin order to conserve cash.  We alsoincurred $45,000 in consulting fees for the nine months ended September 30,2009 compared to 0 at September 30, 2008.

 

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**Liquidity and Capital Resources**

 

As of September 30,2009, we had a working capital deficit of $30,492 as compared to a workingcapital deficit of $26,667 as of December 31, 2008. Our cash position was$25 as of September 30, 2009 compared to $0 as of December 31,2008.  We have financed our companyprincipally through the private placement of our common stock.  As of September 30, 2009, we have nolong term debt.

 

**Summary ofSignificant Accounting Policies**

 

Basisof Presentation

 

Ourfinancial statements have been prepared using the accrual basis of accountingin accordance with generally accepted accounting principles in the UnitedStates.  Because a precise determination of many assets and liabilities isdependent upon future events, the preparation of financial statements for aperiod necessarily involves the use of estimates which have been made usingcareful 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 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.

 

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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 obtain adequate capital, we couldbe 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 September 30, 2009, we have incurred anoperating loss of $139,442.  Our workingcapital has been generated through sales of common stock.  Management hasprovided financial data since January 1, 2006, “Inception” in thefinancial statements, as a means to provide readers of our financialinformation to make informed investment decisions.

 

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 andwarrants are assumed exercised at the beginning of the period (or at the timeof issuance, 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 September 30,2009.

 

Off-BalanceSheet Arrangements

 

We have no significantoff-balance sheet arrangements that have or are reasonably likely to have acurrent or future effect on our financial condition, changes in financialcondition, revenues or 

 

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expenses, results ofoperations, liquidity, capital expenditures or capital resources that ismaterial to our stockholders.

 

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

 

N/A

 

**Item 4(T)       Controlsand 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, 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 September 30, 2009, 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.**

 

We are not a party to anypending legal proceeding, nor is our property the subject of a pending legalproceeding, that is not in the ordinary course of business or otherwisematerial to the financial condition of our business.

 

**Item 1A.         RiskFactors.**

 

N/A

 

**Item 2.            UnregisteredSales of Equity Securities and Use of Proceeds.**

 

InOctober, 2009, we issued 1,016,250 shares to our law firm for legal servicesand an aggregate 256,000 shares to our directors for directors fees.  Such shares were issued inreliance on Section 4(2) of the Securities Act of 1933 fortransactions by us not involving a public offering.

 

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**Item 3.            DefaultsUpon Senior Securities.**

 

N/A

 

**Item 4.**            **Submission of Mattersto a Vote of Security Holders.**

 

None.

 

**Item 5.            OtherInformation.**

 

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 |

 

**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:                       | November 12, 2009 |

 

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