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** **

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

 

**FORM 10-Q**

 

**(Mark One)**

 
| **x** | ** ** | **QUARTERLY REPORT UNDER  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|------------|--------------------------------------------------------------------------------------------------|

 

**For thequarterly period ended June 20, 2008**

 
| **o** | ** ** | **TRANSITION REPORT UNDER SECTION 13  OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|------------|-----------------------------------------------------------------------------------------|

 

**For thetransition period from                      to                  **

 

**Commissionfile number 333-141690**

 

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

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

 

Registrant’stelephone number, 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 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 August 7, 2008:  3,687,500 shares of Common Stock

 

 

 

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**TABLE OF CONTENTS**

 
| **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)

Balance Sheet

 
| ** **                                                                                                                               | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                               | ** ** | **2008**          | ** ** | **2007**              | ** ** |
| ** **                                                                                                                               | ** ** | **(Unaudited)**   | ** ** | ** **            | ** ** |
|                                                                                                                                     |       |              |       |                  |       |
| ASSETS                                                                                                                                   |       |              |       |                  |       |
| Current Assets                                                                                                                           |       |              |       |                  |       |
| Cash                                                                                                                                     |       | $                 | 4,579      |                  | $          | 7,271 |   |
|                                                                                                                                     |       |              |       |                  |       |
| Total Current Assets                                                                                                                     |       | 4,579             |       | 7,271                 |       |
|                                                                                                                                     |       |              |       |                  |       |
| Non Current Assets                                                                                                                       |       |              |       |                  |       |
| Mining Leases                                                                                                                            |       | —            |       | 5,000                 |       |
|                                                                                                                                     |       |              |       |                  |       |
| Total Non Current Assets                                                                                                                 |       | —            |       | 5,000                 |       |
|                                                                                                                                     |       |              |       |                  |       |
| Total Assets                                                                                                                             |       | $                 | 4,579      |                  | $          | 12,271 |   |
|                                                                                                                                     |       |              |       |                  |       |
| LIABILITIES AND SHAREHOLDERS’ DEFICIT                                                                                               |       |              |       |                  |       |
| Current Liabilities                                                                                                                      |       |              |       |                  |       |
| Accounts Payable                                                                                                                         |       | $                 | 16,509     |                  | $          | — |   |
| Chapman Industries Loan                                                                                                                  |       | 10,046            |       | —                |       |
|                                                                                                                                     |       |              |       |                  |       |
| Total Liabilities                                                                                                                        |       | 26,555            |       | —                |       |
|                                                                                                                                     |       |              |       |                  |       |
| Shareholders’ Equity (Deficit)                                                                                                      |       |              |       |                  |       |
| Common Stock, $0.001 par value; authorized 75,000,000 shares; issued  and outstanding 3,687,500 shares and 3,387,500 shares respectively |       | 3,688             |       | 3,388                 |       |
| Additional Paid-In Capital                                                                                                               |       | 58,562            |       | 46,862                |       |
| Deficit accumulated during the development stage                                                                                         |       | (84,226           | )          | (37,979               | )          |
|                                                                                                                                     |       |              |       |                  |       |
| Total Shareholders’ Equity                                                                                                          |       | (21,976           | )          | 12,271                |       |
|                                                                                                                                     |       |              |       |                  |       |
| Total Liabilities and Shareholders’ Equity                                                                                          |       | $                 | 4,579      |                  | $          | 12,271 |   |

 

The accompanyingnotes are an integral part of these financial statements

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Operations

(Unaudited)

 
| ** **                           | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** **                | ** ** | ** **                | ** ** | **For the Period** | ** ** |
|--------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|---------------------------|------------|---------------------------|------------|------------------------------|------------|
| ** **                           | ** ** | **For the three** | ** ** | **For the three** | ** ** | **For the six** | ** ** | **For the six** | ** ** | **of Inception**        | ** ** |
| ** **                           | ** ** | **months ended**       | ** ** | **months ended**       | ** ** | **months ended**     | ** ** | **months ended**     | ** ** | **Jan. 1, 2006**   | ** ** |
| ** **                           | ** ** | **June 30,**           | ** ** | **June 30,**           | ** ** | **June 30,**         | ** ** | **June 30,**         | ** ** | **to June 30,**    | ** ** |
| ** **                           | ** ** | **2008**                    | ** ** | **2007**                    | ** ** | **2008**                  | ** ** | **2007**                  | ** ** | **2008**                     | ** ** |
|                                 |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Revenue                              |       | $                           | —     |                        | $          | —                    |       | $                         | —     |                         | $          | — |   | $ | — |   |
|                                 |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Cost of Sales                        |       |                        |       |                        |       | —                    |       | —                    |       | —                       |       |
|                                 |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Operating Income                     |       | —                      |       | —                      |       | —                    |       | —                    |       | —                       |       |
|                                 |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| General and Administrative Expenses: |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Mineral Lease Fees                   |       |                        |       |                        |       |                      |       | 6,713                     |       | 6,713                        |       |
| Professional Fees                    |       | 21,939                      |       | 16,828                      |       | 41,178                    |       | 23,328                    |       | 70,223                       |       |
| Other Administrative Expenses        |       | (9                          | )          | 22                          |       | 5,069                     |       | 195                       |       | 2,290                        |       |
| Loss on abandonment of               |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Mineral Leases                       |       | —                      |       | —                      |       | —                    |       | —                    |       | 5,000                        |       |
| Total General and                    |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Adminstrative Expenses               |       | 21,930                      |       | 16,850                      |       | 46,247                    |       | 30,236                    |       | 84,226                       |       |
|                                 |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Net Loss                             |       | $                           | (21,930    | )                           | $          | (16,850                   | )          | $                         | (46,247    | )                            | $          | (30,236 | ) | $ | (84,226 | ) |
|                                 |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Loss Per Common Share:               |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Basic and Diluted                    |       | $                           | 0.006      |                        | $          | 0.005                     |       | $                         | (0.013     | )                            | $          | (0.009 | ) |   |   |
|                                 |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Weighted Average Shares              |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Outstanding                          |       |                        |       |                        |       |                      |       |                      |       |                         |       |
| Basic and Diluted:                   |       | 3,387,500                   |       | 3,387,500                   |       | 3,512,775                 |       | 3,387,500                 |       |                         |       |

 

The accompanyingnotes 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** | ** ** | **For six**      | ** ** | **For six**      | ** ** | **of Inception**        | ** ** |
| ** **                                                                   | ** ** | **months ended**       | ** ** | **months ended**       | ** ** | **months ended** | ** ** | **months ended** | ** ** | **from Jan. 1,**   | ** ** |
| ** **                                                                   | ** ** | **June 30,**           | ** ** | **June 30,**           | ** ** | **June 30,**     | ** ** | **June 30,**     | ** ** | **2006, through**       | ** ** |
| ** **                                                                   | ** ** | **2008**                    | ** ** | **2007**                    | ** ** | **2008**              | ** ** | **2007**              | ** ** | **Mar. 31, 2008**  | ** ** |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Cash flows from operating activities:                                        |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Net loss                                                                     |       | $                           | (21,930    | )                           | $          | (16,850               | )          | $                     | (46,247    | )                            | $          | (30,236 | ) | $ | (84,226 | ) |
| Adjustments to reconcile net loss to net cash used by operating  activities: |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Change in operating assets and liabilities:                                  |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Increase (decrease) in accounts accounts payable and accrued  liabilities    |       | 6,509                       |       | —                      |       | 16,509                |       | —                |       | 16,509                       |       |
| Net cash (used by) operating activities                                      |       | (15,421                     | )          | (16,850                     | )          | (29,738               | )          | (30,236               | )          | (67,717                      | )          |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| 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                      |       | —                      |       | 12,000                |       | —                |       | 62,250                       |       |
| Proceeds of loans                                                            |       | 8,000                       |       | —                      |       | 10,046                |       | —                |       | 10,046                       |       |
| Net cash (used) provided by financiang activities                            |       | 20,000                      |       | —                      |       | 22,046                |       | —                |       | 72,296                       |       |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Net increase (decrease) in cash                                              |       | 4,579                       |       | (16,850                     | )          | (2,692                | )          | (30,236               | )          | 4,579                        |       |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Cash, beginning of the period                                                |       | —                      |       | 31,638                      |       | 7,271                 |       | 45,024                |       | —                       |       |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Cash, end of the period                                                      |       | $                           | 4,579      |                        | $          | 14,788                |       | $                     | 4,579      |                         | $          | 14,788 |   | $ | 4,579 |   |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Supplemental cash flow disclosure:                                           |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Interest paid                                                                |       | $                           | —     |                        | $          | —                |       | $                     | —     |                         | $          | — |   | $ | — |   |
| Taxes paid                                                                   |       | $                           | —     |                        | $          | —                |       | $                     | —     |                         | $          | — |   | $ | — |   |

 

The accompanyingnotes are an integral part of these financial statements

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Shareholders’ Equity

(Unaudited)

 
| ** **                                                          | ** ** | ** **            | ** ** | ** **     | ** ** | ** **          | ** ** | **Deficit**            | ** ** | ** **    | ** ** |
|---------------------------------------------------------------------|------------|-----------------------|------------|----------------|------------|---------------------|------------|------------------------|------------|---------------|------------|
| ** **                                                          | ** ** | ** **            | ** ** | ** **     | ** ** | ** **          | ** ** | **Accumulated**        | ** ** | **Total**     | ** ** |
| ** **                                                          | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **during the** | ** ** | **Shareholders’** | ** ** |
| ** **                                                          | ** ** | **Number of**    | ** ** | ** **     | ** ** | **Paid-In**         | ** ** | **Development**        | ** ** | **Equity**    | ** ** |
| ** **                                                          | ** ** | **Shares**            | ** ** | **Amount**     | ** ** | **Capital**         | ** ** | **Stage**              | ** ** | **(Deficit)** | ** ** |
|                                                                |       |                  |       |           |       |                |       |                   |       |          |       |
| Inception, January 1, 2006                                     |       | —                |       | $              | —     |                | $          | —                 |       | $             | —     |   | $ | — |   |
| Common stock issued for cash, Jan. 16, 2006                    |       | 1,500,000             |       | 1,500          |       | 13500               |       |                   |       | 15,000        |       |
| Common stock issued for cash, Aug.23, 2006                          |       | 250,000               |       | 250            |       | 2250                |       |                   |       | 2,500         |       |
| Common stock issued for cash, Sep. 21, 2006                    |       | 575,000               |       | 575            |       | 10925               |       |                   |       | 11,500        |       |
| Common stock issued for cash, Oct. 31, 2006                    |       | 800,000               |       | 800            |       | 15200               |       |                   |       | 16,000        |       |
| Common stock issued for cash, Nov.30, 2006                          |       | 262,500               |       | 263            |       | 4987                |       |                   |       | 5,250         |       |
| Net loss for the year ended December 31, 2006                  |       |                  |       |           |       |                |       | (226                   | )          | (226          | )          |
|                                                                |       |                  |       |           |       |                |       |                   |       |          |       |
| Balance, December 31, 2006                                     |       | 3,387,500             |       | 3,388          |       | 46,862              |       | (226                   | )          | 50,024        |       |
|                                                                |       |                  |       |           |       |                |       |                   |       |          |       |
| Net loss for the year ended December 31, 2007                  |       |                  |       |           |       |                |       | (37,753                | )          | (37,753       | )          |
|                                                                |       |                  |       |           |       |                |       |                   |       |          |       |
| Balance, December 31, 2007                                     |       | 3,387,500             |       | 3,388          |       | 46,862              |       | (37,979                | )          | 12,271        |       |
| Common stock issued for cash, Apr. 15, 2008 at $0.04 per share |       | 300,000               |       | 300            |       | 11,700              |       |                   |       | 12,000        |       |
| Net loss for the 6 mo. ended June 30, 2008                     |       |                  |       |           |       |                |       | (46,247                | )          | (46,247       | )          |
|                                                                |       |                  |       |           |       |                |       |                   |       |          |       |
|                                                                |       | 3,687,500             |       | $              | 3,688      |                | $          | 58,562                 |       | $             | (84,226    | ) | $ | (21,976 | ) |

 

The accompanying notes are an integral part of these financialstatements

 

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**1. Organization**

 

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

 

**2. Summary of SignificantAccounting 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 determination of many assets andliabilities is dependent upon future events, the preparation of financialstatements for a period necessarily involves the use of estimates which havebeen made using careful judgment.

 

Use of Estimates

 

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make certainestimates and assumptions that affect the reported amounts of assets andliabilities at the date of the financial statements, and reported amounts ofrevenue and expenses during the reporting period. Actual results could differmaterially from those estimates. Significant estimates made by management are,among others, realizability of long-lived assets, deferred taxes and stockoption 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 the periods in which thedifferences are expected to affect taxable income.  Valuation allowances are established, when necessary,to reduce deferred tax assets to the amount expected to be realized. TheCompany generated a deferred tax credit through net operating losscarryforward.  However, a valuationallowance of 100% has been established, as the realization of the deferred taxcredits is not reasonably certain, based on going concern considerationsoutlined 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 develop a new business plan, ormerger candidate in order to eventually secure other sources of financing andattain profitable operations.  Theaccompanying financial statements 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 (“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 $84,226.The Company’s working capital has been generated through the sales of commonstock.  Management has provided financialdata since January 1, 2006, “Inception” in the financial statements, as ameans to provide readers of the Company’s financial information to makeinformed investment decisions.

 

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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 wereconverted or exercised.  Dilution iscomputed by applying 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 no potentiallydilutive securities outstanding as of June 30, 2008.

 

**Thefollowing is a reconciliation of the numerator and denominator of the basic anddiluted earnings per share computations for the six months ended June 30,2008 and 2007:**

** **
| ** **                                                      | ** ** | **2008**   | ** ** | **2007**   | ** ** |
|-----------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| Numerator:                                                      |       |       |       |       |       |
|                                                            |       |       |       |       |       |
| Basic and diluted net loss per share:                           |       |       |       |       |       |
|                                                            |       |       |       |       |       |
| Net Loss                                                        |       | $          | (46,247    | )          | $          | (30,236 | ) |
|                                                            |       |       |       |       |       |
| Denominator                                                     |       |       |       |       |       |
|                                                            |       |       |       |       |       |
| Basic and diluted weighted average number of shares outstanding |       | 3,512,775  |       | 3,387,500  |       |
|                                                            |       |       |       |       |       |
| Basic and Diluted Net Loss Per Share                            |       | $          | (0.013     | )          | $          | (0.009 | ) |

 

CurrentLiabilities

 

InMay 2008, the Company borrowed $10,046 from Chapman Industries, Inc. The loanhas no repayment terms and can be repaid at any time.

 

**3.     CapitalStructure**

 

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 share for $15,000. |
|------------------------|--------|-----------------------------------------------------------------------|
|                   |   |                                                                  |
| August 23, 2006:  |   | Sold 250,000 shares of  common stock at $.01 per share for $5,000.    |

 

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| 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. |

 

As of June 30, 2008the 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,and lease 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 hisoffices and Mr. Ulsteen was appointed President, Chief Financial Officerand Secretary of the Company.

 

**7.       Related Party Transactions**

**          **

Chapman Industries, Inc., a corporation owned by Erik Ulsteen, theCompany’s President and Chief Financial Officer loaned the Company $10,046 inMay 2008.

 

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**Item 2.**      ** Management’s Discussion andAnalysis 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 this annualreport of the Company discuss future expectations, contain projections ofour operations or financial condition or state other forward-lookinginformation. Some statements contained in this annual report on Form 10-Qthat are not historical facts (including without limitation statements to theeffect that we “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,”or other similar expressions) and are forward-looking statements. Theseforward-looking statements are based on our current expectations and beliefsconcerning future developments and their potential effects on us. There can beno assurance that future developments affecting us will be those anticipated byus. All comments concerning our expectations for future revenue and operating resultsare based on our forecasts of our plan of operation and do not include thepotential impact of any future acquisitions or operations. Theseforward-looking statements involve significant risks and uncertainties (some ofwhich are beyond our control) and assumptions. Should one or more of theserisks or uncertainties materialize, or should any of our assumptions proveincorrect, actual results may vary in material respects from those projected inthe 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.

 

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 any

 

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adjustments that mightresult from the uncertainty about our ability to continue in business. As suchwe may have to cease operations and you could lose 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.

 

We will not restrict our search for any specific kind of businesses,and we may acquire a business which is in its preliminary or development stage,which is already in operation, or in essentially any stage of its businesslife. It is impossible to predict the status of any business in which we maybecome engaged, in that such business may need to seek additional capital, maydesire to have its shares publicly traded, or may seek other perceivedadvantages which we may offer.

 

In implementing a structure for a particular business acquisition, wemay become a party to a merger, consolidation, reorganization, joint venture,or licensing agreement with another corporation or entity.

 

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

 

We will participate in a business combination only after thenegotiation and execution of appropriate agreements.  Negotiations with a target company will likelyfocus on the percentage of our company which the target company shareholderswould acquire in exchange for their shareholdings.  Although the terms of such agreements cannotbe predicted, generally such agreements will require certain representationsand warranties of the parties thereto, will specify certain events of default,will detail the terms of closing and the conditions which must be satisfied bythe parties prior to and after such closing and will include miscellaneousother terms.  Any merger or acquisitioneffected by us can be expected to have a significant dilutive effect on thepercentage of shares held by our shareholders at such time.

 

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

 

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

 

**Results ofOperations**

 

*ThreeMonths Ended June 30, 2008 Compared to Three Months Ended June 30,2007*

 

**Revenues**

 

Wehave generated no operating revenues from operations from our inception.

 

**Costs and Expenses**

 

From our inception through June 30, 2008,we have incurred cumulative losses of $84,226. Professional fees increased from $16,828 for the three months ended June 30,2007 to $21,939 for the three months ended June 30, 2008 primarily as aresult of the change in control of the company.

 

*SixMonths Ended June 30, 2008 Compared to Six Months Ended June 20, 2007*

 

**Revenues**

 

Wehave generated no operating revenues from operations from our inception.

 

**Costs and Expenses**

 

From our inception through June 30,2008, we have incurred cumulative losses of $84,226.  Professional fees increased from $23,238 forthe six months ended June 30, 2007 to $41,178 for the six months ended June 30,2008 primarily as a result of the change of control of the company.

 

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**Liquidity and Capital Resources**

 

As of June 30, 2008, wehad a working capital deficit of $21,976 as compared to working capital of$7,271 as of December 31, 2007. Our cash position was $4,579 as of June 30,2008 compared to $7,271 as of December 31, 2007.  We have financed our company principallythrough the private placement of our common stock.  As of June 30, 2008, we have no longterm debt.

 

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

 

**Summary of Significant Accounting Policies**

 

Basisof Presentation

 

Ourfinancial statements have been prepared using the accrual basis of accountingin accordance with generally accepted accounting principles in the 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 tocontinue as a going concern is dependent on us obtaining adequate capital tofund operating losses until we become profitable.  If we are unable toobtain adequate capital, we could be forced to cease operations.

 

Ourability to continue as a going concern is dependent upon our ability tosuccessfully accomplish our plan to develop a new business plan, or mergercandidate in order to eventually secure other sources of financing and attainprofitable operations.  The accompanying financial statements do notinclude any adjustments relating to the recoverability and classification ofrecorded asset amounts or the amount and classifications or liabilities orother adjustments that might be necessary should 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 June 30, 2008, we have incurred an operatingloss of $84,226.  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.

 

Basicand Diluted Net Loss Per Share

 

Netloss per share is calculated in accordance with SFAS 128, Earnings Per Share forthe period presented.  Basic net loss per share is based upon the weightedaverage number of common shares outstanding.  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 thetreasury 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.

 

Wehad no potentially dilutive securities outstanding as of June 30, 2008.

 

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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 QualitativeDisclosures About Market Risk.**

 

N/A

 

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

 

*Evaluation of Disclosure Controls and Procedures*. Under the supervision and with the participation of our management, including our President, Chief Financial Officer and Secretary, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report.  Based upon that evaluation, our President, Chief Financial Officer and Secretary concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i)  recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii)  accumulated and communicated to our management to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, 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 June 30, 2008, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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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:                       | August 8, 2008 |

 

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