Tableof Contents

 

 

 

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**(MarkOne)**

 

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

 

**For the quarterly period ended September 30, 2008**

 

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

 

**For the transition period from                      to**

 

**Commission file number 333-141690**

 

**KABEEXPLORATION INC.**

(Name registrant as specified in its charter)

 

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

 

Registrant’stelephone 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 is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definition of “largeaccelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2of 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 markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes x  No o

 

Number of shares of the registrant’scommon stock outstanding as of November 17, 2008:  3,687,500 sharesof Common Stock

 

 

 

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**TABLE OFCONTENTS**

 
| **Part I**  |                                                                                       |   | 3      |
|------------------|--------------------------------------------------------------------------------------------|--------|--------|
|             |                                                                                       |   |   |
| Item 1.          | Financial Statements                                                                       |   | 3      |
|             |                                                                                       |   |   |
| Item 2.          | Management’s  Discussion and Analysis of Financial Condition and Results of Operation |   | 11     |
|             |                                                                                       |   |   |
| Item 3.          | Quantitative  and Qualitative Disclosures About Market Risk                                |   | 15     |
|             |                                                                                       |   |   |
| Item 4T.         | Controls and  Procedures                                                                   |   | 16     |
|             |                                                                                       |   |   |
| **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                                                                          |   | 17     |
|             |                                                                                       |   |   |
| Item 6.          | Exhibits.                                                                                  |   | 17     |
|             |                                                                                       |   |   |
|             | Signatures                                                                                 |   | 17     |

 

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**PART I**

 

**Item 1.     FinancialStatements.**

 

KABEEXPLORATION, INC.

(ADevelopment Stage Company)

BalanceSheet

 

 
| ** **                                                                                                                                | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                | ** ** | **2008**               | ** ** | **2007**              | ** ** |
| ** **                                                                                                                                | ** ** | **(Unaudited)**        | ** ** | ** **            | ** ** |
|                                                                                                                                      |       |                   |       |                  |       |
| ASSETS                                                                                                                                    |       |                   |       |                  |       |
| Current Assets                                                                                                                            |       |                   |       |                  |       |
| Cash                                                                                                                                      |       | $                      | 586        |                  | $          | 7,271 |   |
|                                                                                                                                      |       |                   |       |                  |       |
| Total Current Assets                                                                                                                      |       | 586                    |       | 7,271                 |       |
|                                                                                                                                      |       |                   |       |                  |       |
| Non Current Assets                                                                                                                        |       |                   |       |                  |       |
| Mining Leases                                                                                                                             |       | —                 |       | 5,000                 |       |
|                                                                                                                                      |       |                   |       |                  |       |
| Total Non Current Assets                                                                                                                  |       | —                 |       | 5,000                 |       |
|                                                                                                                                      |       |                   |       |                  |       |
| Total Assets                                                                                                                              |       | $                      | 586        |                  | $          | 12,271 |   |
|                                                                                                                                      |       |                   |       |                  |       |
| LIABILITIES AND SHAREHOLDERS’ DEFICIT                                                                                                |       |                   |       |                  |       |
| Current Liabilities                                                                                                                       |       |                   |       |                  |       |
| Accounts Payable                                                                                                                          |       | $                      | 16,509     |                  | $          | — |   |
| Chapman Industries Loan                                                                                                                   |       | 6,046                  |       | —                |       |
|                                                                                                                                      |       |                   |       |                  |       |
| Total Liabilities                                                                                                                         |       | 22,555                 |       | —                |       |
|                                                                                                                                      |       |                   |       |                  |       |
| 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                                                                                         |       | (84,219                | )          | (37,979               | )          |
|                                                                                                                                      |       |                   |       |                  |       |
| Total Shareholders’ Equity                                                                                                           |       | (21,969                | )          | 12,271                |       |
|                                                                                                                                      |       |                   |       |                  |       |
| Total Liabilities and Shareholders’ Equity                                                                                           |       | $                      | 586        |                  | $          | 12,271 |   |

 

The accompnying notes are an integral part ofthese financial statements

 

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KABEEXPLORATION, INC.

(ADevelopment Stage Company)

Statementof Operations

(Unaudited)

 
| ** **                               | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** **                 | ** ** | ** **                | ** ** | **For the Period** | ** ** |
|------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|----------------------------|------------|---------------------------|------------|------------------------------|------------|
| ** **                               | ** ** | **For the three** | ** ** | **For the three** | ** ** | **For the nine** | ** ** | **For the six** | ** ** | **of Inception**        | ** ** |
| ** **                               | ** ** | **months ended**       | ** ** | **months ended**       | ** ** | **months ended**      | ** ** | **months ended**     | ** ** | **Jan. 1, 2006**   | ** ** |
| ** **                               | ** ** | **Sep. 30,**           | ** ** | **Sep. 30,**           | ** ** | **Sep. 30,**          | ** ** | **Sep. 30,**         | ** ** | **Sep. 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                        |       |                        |       | 5,336                       |       | 41,178                     |       | 28,664                    |       | 70,223                       |       |
| Other Administrative Expenses            |       |                        |       | 78                          |       | 5,069                      |       | 273                       |       | 2,290                        |       |
| Loss on abandonment of Mineral Leases    |       | —                      |       | —                      |       |                       |       | —                    |       | 5,000                        |       |
| Total General and Adminstrative Expenses |       | —                      |       | 5,414                       |       | 46,247                     |       | 35,650                    |       | 84,226                       |       |
|                                     |       |                        |       |                        |       |                       |       |                      |       |                         |       |
| Other Inocme                             |       |                        |       |                        |       |                       |       |                      |       |                         |       |
| Interest Income                          |       | 7                           |       | —                      |       | 7                          |       | —                    |       | 7                            |       |
|                                     |       |                        |       |                        |       |                       |       |                      |       |                         |       |
| Net Income (Loss)                        |       | $                           | 7          |                        | $          | (5,414                     | )          | $                         | (46,240    | )                            | $          | (35,650 | ) | $ | (84,219 | ) |
|                                     |       |                        |       |                        |       |                       |       |                      |       |                         |       |
| Income/Loss Per Common Share:            |       |                        |       |                        |       |                       |       |                      |       |                         |       |
| Basic and Diluted                        |       | $                           | —     |                        | $          | 0.002                      |       | $                         | (0.013     | )                            | $          | (0.011 | ) |   |   |
|                                     |       |                        |       |                        |       |                       |       |                      |       |                         |       |
| Weighted Average Shares Outstanding      |       |                        |       |                        |       |                       |       |                      |       |                         |       |
| Basic and Diluted:                       |       | 3,687,500                   |       | 3,387,500                   |       | 3,571,442                  |       | 3,387,500                 |       |                         |       |

 

The accompnying notes are an integral part ofthese financial statements

 

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KABEEXPLORATION, INC.

(ADevelopment Stage Company)

Statementof 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,**   | ** ** |
| ** **                                                                   | ** ** | **Sep. 30,**           | ** ** | **Sep. 30,**           | ** ** | **Sep. 30,**     | ** ** | **Sep. 30,**     | ** ** | **2006, through**       | ** ** |
| ** **                                                                   | ** ** | **2008**                    | ** ** | **2007**                    | ** ** | **2008**              | ** ** | **2007**              | ** ** | **Sep. 30, 2008**  | ** ** |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Cash flows from operating activities:                                        |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Net loss                                                                     |       | $                           | 7          |                        | $          | (5,414                | )          | $                     | (46,240    | )                            | $          | (35,650 | ) | $ | (84,219 | ) |
| 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    |       | —                      |       | 500                         |       | 16,509                |       | 500                   |       | 16,509                       |       |
| Net cash (used by) operating activities                                      |       | 7                           |       | (4,914                      | )          | (29,731               | )          | (35,150               | )          | (67,710                      | )          |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Cash flows from investing activities Abandonment  of mining leases           |       | —                      |       | —                      |       | 5,000                 |       | —                |       | —                       |       |
| Net cash (used by) investing activities                                      |       | —                      |       | —                      |       | 5,000                 |       | —                |       | —                       |       |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Cash flows from financing activities:                                        |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Common stock issued for cash                                                 |       |                        |       | —                      |       | 12,000                |       | —                |       | 62,250                       |       |
| Proceeds (repayment) of loans                                                |       | (4,000                      | )          | —                      |       | 6,046                 |       | —                |       | 6,046                        |       |
| Net cash (used) provided by financiang  activities                           |       | (4,000                      | )          | —                      |       | 18,046                |       | —                |       | 68,296                       |       |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Net increase (decrease) in cash                                              |       | (3,993                      | )          | (4,914                      | )          | (6,685                | )          | (35,150               | )          | 586                          |       |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Cash, beginning of the period                                                |       | 4,579                       |       | 14,788                      |       | 7,271                 |       | 45024                 |       | —                       |       |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Cash, end of the period                                                      |       | $                           | 586        |                        | $          | 9,874                 |       | $                     | 586        |                         | $          | 9,874 |   | $ | 586 |   |
|                                                                         |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Supplemental cash flow disclosure:                                           |       |                        |       |                        |       |                  |       |                  |       |                         |       |
| Interest paid                                                                |       | $                           | —     |                        | $          | —                |       | $                     | —     |                         | $          | — |   | $ | — |   |
| Taxes paid                                                                   |       | $                           | —     |                        | $          | —                |       | $                     | —     |                         | $          | — |   | $ | — |   |

 

The accompnying notes are an integral part ofthese financial statements

 

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KABEEXPLORATION, INC.

(ADevelopment Stage Company)

Statementof Shareholders’ Equity

(Unaudited)

 
| ** **                                                           | ** ** | ** **            | ** ** | ** **     | ** ** | ** **          | ** ** | **Deficit**            | ** ** | ** **    | ** ** |
|----------------------------------------------------------------------|------------|-----------------------|------------|----------------|------------|---------------------|------------|------------------------|------------|---------------|------------|
| ** **                                                           | ** ** | ** **            | ** ** | ** **     | ** ** | ** **          | ** ** | **Accumulated**        | ** ** | **Total**     | ** ** |
| ** **                                                           | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **during the** | ** ** | **Shareholders’** | ** ** |
| ** **                                                           | ** ** | **Number of**    | ** ** | ** **     | ** ** | **Paid-In**         | ** ** | **Development**        | ** ** | **Equity**    | ** ** |
| ** **                                                           | ** ** | **Shares**            | ** ** | **Amount**     | ** ** | **Capital**         | ** ** | **Stage**              | ** ** | **(Deficit)** | ** ** |
|                                                                 |       |                  |       |           |       |                |       |                   |       |          |       |
| Inception, January 1, 2006                                      |       | —                |       | $              | —     |                | $          | —                 |       | $             | —     |   | $ | — |   |
| Common stock issued for cash, Jan. 16,  2006                    |       | 1,500,000             |       | 1,500          |       | 13500               |       |                   |       | 15,000        |       |
| Common stock issued for cash, Aug.23, 2006                           |       | 250,000               |       | 250            |       | 2250                |       |                   |       | 2,500         |       |
| Common stock issued for cash, Sep. 21,  2006                    |       | 575,000               |       | 575            |       | 10925               |       |                   |       | 11,500        |       |
| Common stock issued for cash, Oct. 31,  2006                    |       | 800,000               |       | 800            |       | 15200               |       |                   |       | 16,000        |       |
| Common stock issued for cash, Nov.30, 2006                           |       | 262,500               |       | 263            |       | 4987                |       |                   |       | 5,250         |       |
| Net loss for the year ended  December 31, 2006                  |       |                  |       |           |       |                |       | (226                   | )          | (226          | )          |
|                                                                 |       |                  |       |           |       |                |       |                   |       |          |       |
| Balance, December 31, 2006                                      |       | 3,387,500             |       | 3,388          |       | 46,862              |       | (226                   | )          | 50,024        |       |
|                                                                 |       |                  |       |           |       |                |       |                   |       |          |       |
| Net loss for the year ended  December 31, 2007                  |       |                  |       |           |       |                |       | (37,753                | )          | (37,753       | )          |
|                                                                 |       |                  |       |           |       |                |       |                   |       |          |       |
| Balance, December 31, 2007                                      |       | 3,387,500             |       | 3,388          |       | 46,862              |       | (37,979                | )          | 12,271        |       |
| Common stock issued for cash, Apr. 15,  2008 at $0.04 per share |       | 300,000               |       | 300            |       | 11,700              |       |                   |       | 12,000        |       |
| Net loss for the 9 mo. ended Sep.30, 2008                            |       |                  |       |           |       |                |       | (46,240                | )          | (46,240       | )          |
|                                                                 |       |                  |       |           |       |                |       |                   |       |          |       |
| Balance, September 30, 2006                                     |       | 3,687,500             |       | $              | 3,688      |                | $          | 58,562                 |       | $             | (84,219    | ) | $ | (21,969 | ) |

 

The accompnying notes are an integral part ofthese financial statements

 

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**KabeExploration, Inc.**

**(ADevelopmental Stage Company)**

**Notes toFinancial Statements**

**September30, 2008**

 

**1.****                  Organization**

 

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

 

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

 

Basis of Presentation

 

The financial statements of the Company have been prepared using theaccrual basis of accounting in accordance with generally accepted accountingprinciples in the United States.  Becausea precise determination of many assets and liabilities is dependent upon futureevents, the preparation of financial statements for a period necessarilyinvolves the use of estimates which have been made using careful judgment.

 

Use of Estimates

 

The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States of America requiresmanagement to make certain estimates and assumptions that affect the reportedamounts of assets and liabilities at the date of the financial statements, andreported amounts of revenue and expenses during the reporting period.  Actual results could differ materially fromthose estimates. Significant estimates made by management are, among others,realizability of long-lived assets, deferred taxes and stock option valuation.

 

The financial statements have, in management’s opinion, been properlyprepared within the reasonable limits of materiality and within the frameworkof the significant accounting.

 

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IncomeTaxes

 

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

 

Going Concern

 

The Company’s financial statements areprepared using accounting principles generally accepted in the United States ofAmerica applicable to a going concern, which contemplates the realization ofassets and liquidation of liabilities in the normal course of business.  The Company has not yet established anongoing source of revenues sufficient to cover its operating costs and to allowit to continue as a going concern.   Theability of the Company to continue as a going concern is dependent on theCompany obtaining adequate capital to fund operating losses until it becomesprofitable.  If the Company is unable toobtain adequate capital, it could be forced to cease development of operations.

 

The ability of the Company to continue as a going concern is dependentupon its ability to successfully accomplish its plans to exploit or lease itsmining claim described in the initial paragraph, or engage a working interestpartner, in order to   eventually secureother sources of financing and attain profitable operations.  The accompanying financial statements do notinclude 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 considereda development-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 $84,219.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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Basicand Diluted Net Loss Per Share

 

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

 

TheCompany has no potentially dilutive securities outstanding as of September 30,2008.

 

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

** **
| ** **                                                       | ** ** | **2008**  | ** ** | **2007**  | ** ** |
|------------------------------------------------------------------|------------|-----------|------------|-----------|------------|
| Numerator:                                                       |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Basic and diluted net loss per share:                            |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Net Loss                                                         |       | $         | (46,240    | )         | $          | (35,650 | ) |
|                                                             |       |      |       |      |       |
| Denominator                                                      |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Basic and diluted weighted average number  of shares outstanding |       | 3,571,442 |       | 3,387,500 |       |
|                                                             |       |      |       |      |       |
| Basic and Diluted Net Loss Per Share                             |       | $         | (0.013     | )         | $          | (0.011 | ) |

 

**3.****                 ****Capital Structure**

 

Duringthe period from inception through September 30, 2008, the Company enteredinto the following equity 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. |

 

Asof September 30, 2008 the Company has authorized 75,000,000 of $0.001 parcommon stock, of which 3,687,500 shares were issued and outstanding.

 

**4.****                 ****Commitments**

 

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

 

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

 

There were no loss contingencies or legal proceedings against theCompany with respect to matters arising in the ordinary course of business.Neither the Company nor any of its officers or directors is involved in anyother litigation either as plaintiffs or defendants, and have no knowledge ofany threatened or pending litigation against them or any of the officers ordirectors.

 

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

 

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

 

**7.****                     ****Subsequent Events**

 

On October 14,2008, the Company entered into an Agreement and Plan of Merger with Emission &Power Solutions, Inc. (“EPS”) pursuant to which EPS will merge into anewly formed wholly-owned subsidiary. Pursuant to the agreement, EPS shareholders will receive 1 share of ourcommon stock in exchange for 5 shares of EPS common stock.  Closing of the merger is subject to, amongother things, stockholder approval of the EPS shareholders.

 

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**Item2.**       ** Management’s Discussion and Analysis of Financial Condition andResults of Operations.**

 

*Except as otherwise required by the context, all references in thisprospectus to “we”, “us”, “our”, or “Company” refer to the operations of KabeExploration Inc., a Nevada corporation.*

 

**Forward-LookingStatements and Associated Risks**

 

*The Private Securities Litigation Reform Act of 1995 provides a “safeharbor” for certain forward-looking statements. Some of the statementscontained in this annual report of the Company discuss futureexpectations, contain projections of our operations or financial condition orstate other forward-looking information. Some statements contained in thisannual report on Form 10-Q that are not historical facts (includingwithout limitation statements to the effect that we “believe,” “expect,” “anticipate,”“plan,” “intend,” “foresee,” or other similar expressions) and areforward-looking statements. These forward-looking statements are based on ourcurrent expectations and beliefs concerning future developments and theirpotential effects on us. There can be no assurance that future developmentsaffecting us will be those anticipated by us. All comments concerning ourexpectations for future revenue and operating results are based on ourforecasts of our plan of operation and do not include the potential impact ofany future acquisitions or operations. These forward-looking statements involvesignificant risks and uncertainties (some of which are beyond our control) andassumptions. Should one or more of these risks or uncertainties materialize, orshould any of our assumptions prove incorrect, actual results may vary inmaterial respects from those projected in the forward-looking statements.*

 

**Overview**

 

We are a “shellcompany” 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 an exploration stage company engaged in the acquisition and explorationof mineral properties. We entered into a lease agreement with George J.Eliopulos effective March 31, 2006, granting us the exclusive right toexplore, develop, and mine the property for gold, silver, copper and othervaluable minerals.  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. Ulsteen was appointed President,Chief Financial Officer, Secretary and director.  On January 28, 2008, we terminated ourlease agreement with Mr. Eliopulos.

 

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On October 14,2008, we entered into an Agreement and Plan of Merger with Emission &Power Solutions, Inc. (“EPS”) pursuant to which EPS will merge into anewly formed wholly-owned subsidiary. Pursuant to the agreement, EPS shareholders will receive 1 share of ourcommon stock in exchange for 5 shares of EPS common stock.  Closing of the merger is subject to, amongother things, stockholder approval of the EPS shareholders.

 

The followingfactors raise substantial doubt regarding the ability of our business tocontinue as a going concern: (i) the losses we have incurred since ourinception; (ii) our failure to generate revenues since our inception; and(iiI) our dependence on the sale of our equity securities and on the receipt ofcapital from outside sources to continue our operations. Our auditors haveissued a going concern opinion regarding our business. The financial statementsdo not include any adjustments that might result from the uncertainty about ourability to continue in business. As such we may have to cease operations andyou could lose your investment.

 

**Planof Operation**

 

We haveredirected our focus towards identifying and pursuing options regarding thedevelopment of a new business plan and direction. We are exploring variousbusiness opportunities that have the potential to generate positive revenue,profits and cash flow in order to financially accommodate the costs of being apublicly held company.

 

As stated above, on October 14, 2008, weentered into an Agreement and Plan of Merger with EPS pursuant to which EPSwill merge into a newly formed wholly-owned subsidiary.  EPS licenses, acquires, develops, deploys,and transfers technologies dedicated to improving fuel economy while reducingenvironmentally harmful exhaust emissions. Using advanced fuel treatment devices, EPS has incorporated aproprietary multi phase process utilizing engineered flow patterns inorder to restructure fuel hydrocarbons, increasing the fuel efficiency andproducing a cleaner burn during the combustion cycle of an engine.

 

It is anticipated that any securities issuedin the EPS merger will be issued in reliance upon exemption from registrationunder applicable federal and state securities laws.   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.

 

Closing of the merger is subject to, amongother things, stockholder approval of the EPS shareholders.  There can be no assurance that EPSshareholders will approve the merger or that the merger will close.  In the event that the merger does not close,we will continue to identify and pursue various business opportunities thathave the potential to generate positive revenue, profits and cash flow.

 

We expect that we will require additionalfunding in connection with the closing of the merger and development of a newbusiness plan and direction.  Weanticipate that such funding will be in the form of equity financing from thesale of our common stock or loans from our principal stockholder.  Howeverwe cannot provide investors with any assurance that we will be able to 

 

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obtain sufficient funding to fund ouroperations or any work related to the development of a new businessplan.   We do not have any arrangements in place for any futurefinancing.

 

**Resultsof Operations**

 

*Three Months Ended September 30, 2008 Compared to Three MonthsEnded September 30, 2007*

 

**Revenues**

 

We havegenerated no operating revenues from operations from our inception.

 

**Costsand Expenses**

 

From our inception through September 30,2008, we have incurred cumulative losses of $84,219.  Professional fees decreased from $5,336 forthe three months ended September 30, 2007 to $0 for the three months endedSeptember 30, 2008 primarily as a result of cutbacks in our business inorder to conserve cash.

 

*Nine Months Ended September 30, 2008 Compared to Nine Months EndedSeptember 30, 2007*

 

**Revenues**

 

We havegenerated no operating revenues from operations from our inception.

 

**Costsand Expenses**

 

From our inception through September 30,2008, we have incurred cumulative losses of $84,219.  Professional fees increased from $28,664 forthe nine months ended September 30, 2007 to $41,178 for the nine monthsended September 30, 2008 primarily as a result of the change in control ofthe company.

 

**Liquidityand Capital Resources**

 

As of September 30,2008, we had a working capital deficit of $21,969 as compared to workingcapital of $7,271 as of December 31, 2007. Our cash position was $586 asof September 30, 2008 compared to $7,271 as of December 31,2007.  We have financed our companyprincipally through the private placement of our common stock.  As of September 30, 2008, we have nolong term debt.

 

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On April 15,2008, we sold 300,000 shares of common stock for aggregate proceeds of $12,000to accredited investors.

 

**Summary of Significant Accounting Policies**

 

Basis of Presentation

 

Our financial statements have been prepared using the accrual basis ofaccounting in accordance with generally accepted accounting principles in theUnited 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 of financial statements in conformity with accountingprinciples generally accepted in the United States of America requiresmanagement to make certain estimates and assumptions that affect the reportedamounts of assets and liabilities at the date of the financial statements, andreported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significantestimates made by management are, among others, realizability of long-livedassets, deferred taxes and stock option valuation.

 

The financial statements have, in management’s opinion, been properlyprepared within the reasonable limits of materiality and within the frameworkof the significant accounting.

 

Income Taxes

 

We utilize SFAS No. 109, “Accounting for Income Taxes,” whichrequires the recognition of deferred tax assets and liabilities for theexpected future tax consequences of events that have been included in thefinancial statements or tax returns.  Under this method, deferred taxassets and liabilities are determined based on the difference between the taxbasis of assets and liabilities and their financial reporting amounts based onenacted tax laws and statutory tax rates applicable to the periods in which thedifferences are expected to affect taxable income.  Valuation allowancesare established, when necessary, to reduce deferred tax assets to the amountexpected to be realized. We generated a deferred tax credit through netoperating loss carryforward.  However, a valuation allowance of 100% hasbeen established, as the realization of the deferred tax credits is notreasonably certain, based on going concern considerations outlined as follows.

 

Going Concern

 

Our financial statements are prepared using accounting principlesgenerally accepted in the United States of America applicable to a goingconcern, which contemplates the realization of assets and liquidation ofliabilities in the normal course of business.  We have not yet establishedan ongoing source of revenues sufficient to cover our operating costs and toallow us to continue as a going concern.   Our ability to continue asa going concern is dependent on us obtaining 

 

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adequate capital to fund operating losses until we becomeprofitable.  If we are unable to obtain adequate capital, we could beforced to cease operations.

 

Our ability to continue as a going concern is dependent upon our abilityto successfully 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-Stage Company

 

We are considered a development-stage company, with limited operatingrevenues during the periods presented, as defined by Statement of FinancialAccounting Standards (“SFAS”) No. 7.  SFAS.  No. 7 requirescompanies to report their operations, shareholders deficit and cash flows sinceinception through the date that revenues are generated from management’sintended operations, among other things.  Management has defined inceptionas January 1, 2006. Since inception until September 30, 2008, we haveincurred an operating loss of $84,219. Our working capital has been generated through sales of commonstock.  Management has provided financial data since January 1, 2006,“Inception” in the financial statements, as a means to provide readers of ourfinancial information to make informed investment decisions.

 

Basic and Diluted Net Loss Per Share

 

Net loss per share is calculated in accordance with SFAS 128, EarningsPer Share for the period presented.  Basic net loss per share is basedupon the weighted average number of common shares outstanding.  Dilutednet loss per share is based on the assumption that all dilative convertibleshares and stock options were converted or exercised.  Dilution iscomputed by applying the treasury stock method.  Under this method,options and warrants are assumed exercised at the beginning of the period (orat the time of issuance, if later), and as if funds obtained thereby we used topurchase common stock at the average market price during the period.

 

We had no potentially dilutive securities outstanding as of September 30,2008.

 

Off-Balance Sheet Arrangements

 

We have nosignificant off-balance sheet arrangements that have or are reasonably likelyto have a current or future effect on our financial condition, changes infinancial condition, revenues or expenses, results of operations, liquidity,capital expenditures or capital resources that is material to our stockholders.

 

**Item3.**       ** Quantitative and Qualitative Disclosures About Market Risk.**

 

N/A

 

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**Item4(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 September 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.

 

**PART II**

 

**Item1.       Legal Proceedings.**

 

We are not aparty to any pending legal proceeding, nor is our property the subject of apending legal proceeding, that is not in the ordinary course of business orotherwise material to the financial condition of our business.

 

**Item1A.    Risk Factors.**

 

N/A

 

**Item2.       Unregistered Sales of EquitySecurities and Use of Proceeds.**

 

None.

 

**Item3.       Defaults Upon Senior Securities.**

 

N/A

 

**Item4.       Submission of Matters to a Vote of SecurityHolders.**

 

None.

 

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**Item5.      Other Information.**

 

None.

 

**Item6.      Exhibits.**

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

 

**SIGNATURES**

 

In accordancewith Section 13 or 15(d) of the Exchange Act, the registrant causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 
|   | **KABE EXPLORATION, INC.**                      |
|--------|-------------------------------------------------|
|   |                                            |   |
|   | By:                                             | /s/ Erik  Ulsteen |   |
|   | Erik Ulsteen                                    |
|   | President,  Chief Financial Officer,  Secretary |
|   |                                            |
|   | Date:                                           | November 17,  2008 |

 

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