Table of Contents

 

 

 

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-Q**

 

**(Mark One)**

 

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

 

**For thequarterly period ended March 31, 2009**

 

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

 

**For thetransition period from               to                **

 

**Commissionfile number 333-141690**

 

**KABEEXPLORATION INC.**

(Nameregistrant 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 markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12months (or for such shorter period that the registrant was required to submitand post such files).  Yes  o  No  o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinition of “*large accelerated filer*”, “*accelerated filer*” 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                     |   | Smaller  reporting company x |
| (do  not check if 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 20, 2009:  37,475,000shares of Common Stock

 

 

 

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Table of Contents

 

**TABLE OFCONTENTS**

 
| **Part I**  | ** **                                                                                 | 3      |
|------------------|--------------------------------------------------------------------------------------------|--------|
|             |                                                                                       |   |
| Item 1.          | Financial  Statements                                                                      | 3      |
|             |                                                                                       |   |
| Item 2.          | Management’s  Discussion and Analysis of Financial Condition and Results of Operation | 11     |
|             |                                                                                       |   |
| Item 3.          | Quantitative  and Qualitative Disclosures About Market Risk                                | 15     |
|             |                                                                                       |   |
| Item 4T.         | Controls and  Procedures                                                                   | 15     |
|             |                                                                                       |   |
| **Part II** |                                                                                       | 16     |
|             |                                                                                       |   |
| Item 1.          | Legal Proceedings.                                                                         | 16     |
|             |                                                                                       |   |
| Item 1A.         | Risk Factors.                                                                              | 16     |
|             |                                                                                       |   |
| Item 2.          | Unregistered  Sales of Equity Securities and Use of Proceeds.                              | 16     |
|             |                                                                                       |   |
| Item 3.          | Defaults  Upon Senior Securities.                                                          | 16     |
|             |                                                                                       |   |
| Item 4.          | Submission  of Matters to a Vote of Security Holders.                                      | 16     |
|             |                                                                                       |   |
| Item5.           | Other Information.                                                                         | 16     |
|             |                                                                                       |   |
| Item  6.         | Exhibits.                                                                                  | 16     |
|             |                                                                                       |   |
|             | Signatures                                                                                 | 17     |

 

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Table of Contents

 

**PART I**

 

**Item 1.            FinancialStatements.**

 

KABE EXPLORATION, INC.

(A Development Stage Company)

Balance Sheet

 
| ** **                                                                                                                                                                        | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                        | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| ** **                                                                                                                                                                        | ** ** | **(Unaudited)**    | ** ** | ** **            | ** ** |
|                                                                                                                                                                              |       |               |       |                  |       |
| ASSETS                                                                                                                                                                            |       |               |       |                  |       |
| Current Assets                                                                                                                                                                    |       |               |       |                  |       |
|                                                                                                                                                                              |       | $                  | —     |                  | $          | — |   |
|                                                                                                                                                                              |       |               |       |                  |       |
| Total Assets                                                                                                                                                                      |       | $                  | —     |                  | $          | — |   |
|                                                                                                                                                                              |       |               |       |                  |       |
| LIABILITIES AND SHAREHOLDERS’ DEFICIENCY                                                                                                                                     |       |               |       |                  |       |
| Current Liabilities                                                                                                                                                               |       |               |       |                  |       |
| Bank Overdraft                                                                                                                                                                    |       | 83                 |       | —                |       |
| Accounts Payable                                                                                                                                                                  |       | $                  | 16,509     |                  | $          | 16,509 |   |
| Chapman Industries Loan                                                                                                                                                           |       | 5,546              |       | 5,546                 |       |
| Loan Payable - EPS                                                                                                                                                                |       | 3,912              |       | 4,612                 |       |
|                                                                                                                                                                              |       |               |       |                  |       |
|                                                                                                                                                                              |       | 26,050             |       | 26,667                |       |
|                                                                                                                                                                              |       |               |       |                  |       |
| Stockholders’ Deficiancy                                                                                                                                                     |       |               |       |                  |       |
| Common Stock, $0.001 par value; authorized 75,000,000 shares 3,687,500  issued and outstanding at March 31, 2009 3,687,500 issued and outstanding  at December 31, 2008 |       | 3,688              |       | 3,688                 |       |
| Additional Paid-In Capital                                                                                                                                                        |       | 60,312             |       | 58,562                |       |
| Accumulated other comprehensive loss                                                                                                                                              |       | (50                | )          | —                |       |
| Deficit accumulated during the development stage                                                                                                                                  |       | (90,000            | )          | (88,917               | )          |
|                                                                                                                                                                              |       |               |       |                  |       |
| Total Stockholders’ Deficiancy                                                                                                                                               |       | (26,050            | )          | (26,667               | )          |
|                                                                                                                                                                              |       |               |       |                  |       |
| Total Liabilities and Stockholders’ Deficiancy                                                                                                                               |       | $                  | —     |                  | $          | — |   |

 

Theaccompnying notes are an integral part of these financial statements

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Operations and Comprehensive Loss

(Unaudited)

 
| ** **                               | ** ** | ** **         | ** ** | ** **         | ** ** | **For the Period**    | ** ** |
|------------------------------------------|------------|--------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                               | ** ** | **For the three**  | ** ** | **For the three**  | ** ** | **of Inception**      | ** ** |
| ** **                               | ** ** | **months ended**   | ** ** | **months ended**   | ** ** | **Jan. 1, 2006** | ** ** |
| ** **                               | ** ** | **March 31,** | ** ** | **March 31,** | ** ** | **March 31,**    | ** ** |
| ** **                               | ** ** | **2009**           | ** ** | **2008**           | ** ** | **2009**              | ** ** |
|                                     |       |               |       |               |       |                  |       |
| Revenue                                  |       | $                  | —     |               | $          | —                |       | $ | — |   |
|                                     |       |               |       |               |       |                  |       |
| Cost of Sales                            |       | —             |       | —             |       | —                |       |
|                                     |       |               |       |               |       |                  |       |
| Operating Income                         |       | —             |       | —             |       | —                |       |
|                                     |       |               |       |               |       |                  |       |
| General and Administrative Expenses:     |       |               |       |               |       |                  |       |
| Mineral Lease Fees                       |       |               |       |               |       | 6,713                 |       |
| Professional Fees                        |       | 400                |       | 19,239             |       | 72,673                |       |
| Other Administrative Expenses            |       | 683                |       | 78                 |       | 5,623                 |       |
| Loss on abandonment of Mineral Leases    |       |               |       | 5,000              |       | 5,000                 |       |
| Total General and Adminstrative Expenses |       | 1,083              |       | 24,317             |       | 90,009                |       |
|                                     |       |               |       |               |       |                  |       |
| Other Income                             |       |               |       |               |       |                  |       |
| Interest Income                          |       | —             |       | —             |       | 22                    |       |
| Interest Expense                         |       |               |       |               |       | (13                   | )          |
|                                     |       | —             |       | —             |       | 9                     |       |
|                                     |       |               |       |               |       |                  |       |
| Net Loss                                 |       | $                  | (1,083     | )                  | $          | (24,317               | )          | $ | (90,000 | ) |
|                                     |       |               |       |               |       |                  |       |
| Currency translation adjustment          |       | (50                | )          | —             |       | (50                   | )          |
|                                     |       |               |       |               |       |                  |       |
| Comprehensive income (loss)              |       | (1,133             | )          | (24,317            | )          | (90,050               | )          |
|                                     |       |               |       |               |       |                  |       |
| Income/Loss Per Common Share:            |       |               |       |               |       |                  |       |
| Basic and Diluted                        |       | $                  | (0.000     | )                  | $          | (0.007                | )          |   |   |
|                                     |       |               |       |               |       |                  |       |
| Weighted Average  Shares                 |       |               |       |               |       |                  |       |
| Outstanding                              |       |               |       |               |       |                  |       |
| Basic and  Diluted:                      |       | 3,687,500          |       | 3,387,500          |       |                  |       |

 

Theaccompnying notes are an integral part of these financial statements

 

 

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Cash Flows

(Unaudited)

 
| ** **                                                                   | ** ** | ** **         | ** ** | ** **         | ** ** | **For the Period**     | ** ** |
|------------------------------------------------------------------------------|------------|--------------------|------------|--------------------|------------|------------------------|------------|
| ** **                                                                   | ** ** | **For the three**  | ** ** | **For the three**  | ** ** | **of Inception**       | ** ** |
| ** **                                                                   | ** ** | **months ended**   | ** ** | **months ended**   | ** ** | **from Jan. 1,**  | ** ** |
| ** **                                                                   | ** ** | **March 31,** | ** ** | **March 31,** | ** ** | **2006, through**      | ** ** |
| ** **                                                                   | ** ** | **2009**           | ** ** | **2009**           | ** ** | **Mar. 31, 2009** | ** ** |
|                                                                         |       |               |       |               |       |                   |       |
| Cash flows from operating activities:                                        |       |               |       |               |       |                   |       |
| Net loss                                                                     |       | $                  | (1,083     | )                  | $          | (24,317                | )          | $ | (90,000 | ) |
| Adjustments to reconcile net loss to net cash used by operating  activities: |       |               |       |               |       |                   |       |
| Change in operating assets and liabilities:                                  |       |               |       |               |       |                   |       |
| Accounts Payable                                                             |       | —             |       | 10,000             |       | 16,509                 |       |
| Net cash (used by) operating activities                                      |       | (1,083             | )          | (14,317            | )          | (73,491                | )          |
|                                                                         |       |               |       |               |       |                   |       |
| 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                                                 |       | —             |       | —             |       | 62,250                 |       |
| Paid-in Capital                                                              |       | 1,750              |       | —             |       | 1,750                  |       |
| Proceeds (repayment) of loans                                                |       | (700               | )          | 2,046              |       | 9,458                  |       |
| Bank Overdraft                                                               |       | 83                 |       | —             |       | 83                     |       |
| Net cash (used) provided by financiang activities                            |       | 1,133              |       | 2,046              |       | 73,541                 |       |
|                                                                         |       |               |       |               |       |                   |       |
| Effect of exchange rates on cash                                             |       | (50                | )          | —             |       | (50                    | )          |
|                                                                         |       |               |       |               |       |                   |       |
| Net increase (decrease) in cash                                              |       | —             |       | (7,271             | )          | —                 |       |
|                                                                         |       |               |       |               |       |                   |       |
| Cash, beginning of the period                                                |       | —             |       | 7,271              |       | —                 |       |
|                                                                         |       |               |       |               |       |                   |       |
| Cash, end of the period                                                      |       | $                  | —     |               | $          | —                 |       | $ | — |   |
|                                                                         |       |               |       |               |       |                   |       |
| Supplemental cash flow disclosure:                                           |       |               |       |               |       |                   |       |
| Interest paid                                                                |       | $                  | —     |               | $          | —                 |       | $ | 13 |   |
| Taxes paid                                                                   |       | $                  | —     |               | $          | —                 |       | $ | — |   |

 

Theaccompnying notes are an integral part of these financial statements

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficiancy

(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, 2008 at $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 | ) |
|                                                                |       |             |       |           |       |        |       |              |       |                   |       |          |       |
| Additional Paid-in Capital January 2009                        |       |             |       |           |       | 1,750       |       |              |       |                   |       | 1,750         |       |
| Net loss for the 3 months.ended March 31, 2009                 |       |             |       |           |       |        |       |              |       | (1,083                 | )          | (1,083        | )          |
| Currency translation adjustment                                     |       |             |       |           |       |        |       | (50               | )          |                   |       | (50           | )          |
|                                                                |       |             |       |           |       |        |       |              |       |                   |       |          |       |
| Balances, March 31, 2009                                       |       | 3,687,500        |       | $              | 3,688      |        | $          | 60,312            |       | $                      | (50        | )             | $          | (90,000 | ) | $ | (26,050 | ) |

 

Theaccompnying notes are an integral part of these financial statements

 

 

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**KabeExploration, Inc.**

**(ADevelopmental Stage Company)**

**Notes toFinancial Statements**

**March 31,2009**

 

**1.      Organization**

 

Kabe Exploration, Inc.(the “Company”) was incorporated under the laws of the State of Nevada December 16,2005.  The company was originally formedfor mineral exploration in the United States. The Company abandoned its Mineral Leases in 2008 and is seeking newbusiness opportunities.

 

**2.      Summary of Significant Accounting Policies**

 

Basis of 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 precise determinationof many assets and liabilities is dependent upon future events, the preparationof financial statements for a period necessarily involves the use of estimateswhich have been made using careful judgment.

 

Use of Estimates

 

The preparation of financialstatements in conformity with accounting principles generally accepted in theUnited States of America requires management to make certain estimates andassumptions that affect the reported amounts of assets and liabilities at thedate of the financial statements, and reported amounts of revenue and expensesduring the reporting period.  Actualresults could differ materially from those estimates. Significant estimatesmade by management 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.

 

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Income Taxes

 

The Company utilizes SFASNo. 109, “Accounting for Income Taxes,” which requires the recognition ofdeferred tax assets and liabilities for the expected future tax consequences ofevents that have been included in the financial statements or tax returns.  Under this method, deferred tax assets andliabilities are determined based on the difference between the tax basis ofassets and liabilities and their financial reporting amounts based on enactedtax laws and statutory tax rates applicable to theperiods in which the differences are expected toaffect taxable income.  Valuationallowances are established, when necessary, to reduce deferred tax assets tothe amount expected to be realized. The Company generated a deferred tax creditthrough net 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 businessopportunities described in the initial paragraph, or engage a working interestpartner, in order to eventually secure other sources of financing and attainprofitable operations.  The accompanyingfinancial statements do not include 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-StageCompany

 

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 $90,000.The Company’s working capital has been generated through the sales of commonstock and contributed capital. Management has provided financial data since January 1, 2006, 

 

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“Inception” in the financialstatements, as a means to provide readers of the Company’s financialinformation to make informed investment decisions.

 

Basic and Diluted NetLoss Per Share

 

Net loss per share iscalculated in accordance with SFAS 128, Earnings Per Share for the periodpresented.  Basic net loss per share isbased upon the weighted average number of common shares outstanding.  Diluted net loss per share is based on theassumption that all dilative convertible shares and stock options were convertedor exercised.  Dilution is computed byapplying the treasury stock method. Under this method, options and warrants are assumed exercised at thebeginning of the period (or at the time of issuance, if later), and as if fundsobtained thereby we used to purchase common stock at the average market priceduring the period.

 

The Company has nopotentially dilutive securities outstanding as of March 31, 2009.

 

**Thefollowing is a reconciliation of the numerator and denominator of the basic anddiluted earnings per share computations for the three months ended March 31, 2009 and 2008.**

** **
| ** **                                                      | ** ** | **2009**  | ** ** | **2008**  | ** ** |
|-----------------------------------------------------------------|------------|-----------|------------|-----------|------------|
| Numerator:                                                      |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Basic and diluted net loss per share:                           |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Net Loss                                                        |       | $         | (1,133     | )         | $          | (24,317 | ) |
|                                                            |       |      |       |      |       |
| Denominator                                                     |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Basic and diluted weighted average number of shares outstanding |       | 3,687,500 |       | 3,387,500 |       |
|                                                            |       |      |       |      |       |
| Basic and Diluted Net Loss Per Share                            |       | $         | (0.000     | )         | $          | (0.007 | ) |

 

**3.      Capital Structure**

 

During the period frominception through June 30, 2008, the Company entered into the followingequity transactions:

 
| January 16, 2006: |   | Sold 1,500,000 shares  of common stock at $.01 per sharefor $15,000. |
|------------------------|--------|----------------------------------------------------------------------|

 

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| 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.                                |

 

As of March 31, 2009the Company has authorized 75,000,000 of $0.001 par common stock, of which3,687,500 shares were issued and outstanding.

 

**4.      Commitments**

 

On March 1, 2006 theCompany entered into a lease agreement with the owner of a mining claimsituated in Storey County, Nevada in terrain noted for gold and silvermining.  The agreement required a royaltyof 3 1⁄2 % of net smelter returns, as defined in the agreement, paid quarterly, andlease payments.  One lease payment of$5,000 was made in 2007.  The lease wasabandoned on January 28, 2008 and the capitalized lease payment writtenoff.

 

**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.

 

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

 

On February 14,2008, Anthony Claydon, President, Chief Financial Officer and Secretary of theCompany and Rory Moss, Director of the Company, sold an aggregate of 1,750,000shares of the Company’s common stock to Erik Ulsteen for $50,000, paid incash.   Mr. Claydon resigned his officesand Mr. Ulsteen was appointed President, Chief Financial Officer andSecretary of the Company.

 

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**Item 2.**            **Management’s Discussion and Analysis of FinancialCondition 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 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,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 

 

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subsidiary.  Pursuant to the agreement, EPS shareholderswill receive 1 share of our common stock in exchange for 5 shares of EPS commonstock.  Closing of the merger is subjectto, among other things, stockholder approval 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.

 

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.

 

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**Results ofOperations**

 

*ThreeMonths Ended March 31, 2009 Compared to Three Months Ended March 31,2008*

 

**Revenues**

 

Wehave generated no operating revenues from operations from our inception.

 

**Costs and Expenses**

 

From our inception through March 31,2009, we have incurred cumulative losses of $90,050.  Professional fees decreased from $19,239 forthe three months ended March 31, 2009 to $400 for the three months ended March 31,2008 primarily as a result of cutbacks in our business in order to conservecash.

 

**Liquidity and Capital Resources**

 

As of March 31, 2009, wehad a working capital deficit of $26,050 as compared to a working capitaldeficit of $26,667 as of December 31, 2008. Our cash position was $0 as ofMarch 31, 2009 compared to $0 as of December 31, 2008.  We have financed our company principallythrough the private placement of our common stock.  As of March 31, 2009, we have no longterm 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.

 

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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 been established,as the realization of the deferred tax credits is not reasonably certain, basedon 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 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 March 31, 2009, we have incurred an operatingloss of $90,050.  Our working capital hasbeen generated through sales of common stock.  Management has providedfinancial data since January 1, 2006, “Inception” in the financialstatements, as a means to provide readers of our financial information to makeinformed investment decisions.

 

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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 March 31, 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 expenses, results of operations, liquidity, capitalexpenditures or capital resources that is material to our stockholders.

 

**Item 3.**            **Quantitative and Qualitative Disclosures About MarketRisk.**

 

N/A

 

**Item 4(T)      Controls andProcedures.**

 

*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 March 31, 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.

 

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**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.**

 

None.

 

**Item 3.            DefaultsUpon Senior Securities.**

 

N/A

 

**Item 4.**            **Submission of Matters to 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 |

 

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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 20, 2009 |   |

 

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