Table ofContents

 

 

 

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-K**

 

**(Mark One)**

 

| **x**                                                 | ** ** | **ANNUAL  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**     |
|-------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|
|                                                  |       |                                                                                               |
| **For  the fiscal year ended December 31, 2009** |
|                                                  |       |                                                                                               |
| **o**                                                 | ** ** | **TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934** |

 

**For thetransition period from              to              **

 

**Commissionfile number**

 

**KABE EXPLORATIONINC.**

(Nameregistrant as specified in its charter)

 

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

 

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

 

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

 

Securities registered under Section 12(b) ofthe Exchange Act:

 

| **Title of each class** | ** ** | **Name of each exchange on which registered** |
|----------------------------------------|------------|-----------------------------------------------------------------------------|
| **None**                               | ** ** | **None**                                                                    |

 

Securities registered under Section 12(g) ofthe Exchange Act:

 

**CommonStock, par value $.001**

(Title of class)

 

Indicate by check mark is the issuer is a well-knownseasoned issuer, as defined in Rule 405 of the Securities Act   Yeso No x

 

Indicate by check if theissuer is not required to file reports pursuant to Section 13 or 15(d) ofthe Exchange Act.  Yes o No x

 

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

 

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

 

Indicate by check mark if no disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is notcontained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company.  See thedefinitions of “large accelerated filer”, “accelerated filer”, and “smallerreporting company” in Rule 12b-2 of the Exchange Act.

 

| Large accelerated filer  o |   | Accelerated filer o          |
|----------------------------|--------|------------------------------|
|                       |   |                         |
| Non-accelerated filer o    |   | 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

 

The aggregate market value of the registrant’s commonstock held by non-affiliates of the registrant, computed by reference to priceat which the common equity was sold, or the average bid and asked price of suchcommon stock as of June 30, 2009, was $0.

 

State issuer’s revenues for its most recent fiscalyear: $0

 

As of March 31, 2010, the issuer had 38,647,250outstanding shares of Common Stock.

 

**DOCUMENTS INCORPORATED BY REFERENCE: NONE**

 

 

 

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**TABLE OF CONTENTS**

 
| **Part I**   | ** **                                                                                         | ** ** |
|-------------------|----------------------------------------------------------------------------------------------------|------------|
|              |                                                                                               |       |
| Item  1.          | Description  of Business.                                                                          | 4          |
|              |                                                                                               |       |
| Item  2.          | Description  of Property.                                                                          | 5          |
|              |                                                                                               |       |
| Item 3.           | Legal  Proceedings.                                                                                | 5          |
|              |                                                                                               |       |
| Item 4.           | Reserved.                                                                                          | 5          |
|              |                                                                                               |       |
| **Part II**  |                                                                                               | 5          |
|              |                                                                                               |       |
| Item  5.          | Market  for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity  Securities. | 5          |
|              |                                                                                               |       |
| Item  7.          | Management’s  Discussion and Analysis of Financial Condition and Results of Operations.       | 6          |
|              |                                                                                               |       |
| Item 8.           | Financial  Statements.                                                                             | 9          |
|              |                                                                                               |       |
| Item 9.           | Changes in and  Disagreements With Accountants on Accounting and Financial Disclosure.             | 20         |
|              |                                                                                               |       |
| Item 9A(T).       | Controls and  Procedures.                                                                          | 20         |
|              |                                                                                               |       |
| Item 9B.          | Other Information.                                                                                 | 22         |
|              |                                                                                               |       |
| **Part III** |                                                                                               |       |
|              |                                                                                               |       |
| Item 10.          | Directors,  Executive Officers and Corporate Governance.                                           | 21         |
|              |                                                                                               |       |
| Item 11.          | Executive  Compensation.                                                                           | 22         |
|              |                                                                                               |       |
| Item 12.          | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters.  | 23         |
|              |                                                                                               |       |
| Item 13.          | Certain  Relationships and Related Transactions, and Director Independence                         | 24         |
|              |                                                                                               |       |
| Item 14.          | Principal  Accountant Fees and Services.                                                           | 24         |
|              |                                                                                               |       |
| Item  15.         | Exhibits  and Financial Statement Schedules.                                                       | 25         |
|              |                                                                                               |       |
|              | Signatures                                                                                         | 26         |

 

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*Except as otherwise required by thecontext, all references in this prospectus to “we”, “us”, “our”, or “Company”refer to the operations of Kabe Exploration Inc., a Nevada corporation.*

 

**Forward-Looking Statements**

 

*The Private Securities LitigationReform Act of 1995 provides a “safe harbor” for certain forward-lookingstatements. Some of the statements contained in this annual report of theCompany discuss future expectations, contain projections of our operationsor financial condition or state other forward-looking information. Somestatements contained in this annual report on Form 10-K that are nothistorical facts (including without limitation statements to the effect that we“believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” or othersimilar expressions) and are forward-looking statements. These forward-lookingstatements are based on our current expectations and beliefs concerning futuredevelopments and their potential effects on us. There can be no assurance thatfuture developments affecting us will be those anticipated by us. All commentsconcerning our expectations for future revenue and operating results are basedon our forecasts of our plan of operation and do not include the potentialimpact of any future acquisitions or operations. These forward-lookingstatements involve significant risks and uncertainties (some of which arebeyond our control) and assumptions. Should one or more of these risks oruncertainties materialize, or should any of our assumptions prove incorrect,actual results may vary in material respects from those projected in theforward-looking statements.  All shareamounts in this Form 10-K have been adjusted to account for a 10:1 forwardsplit of the authorized and issued common stock effected on December 12,2008.*

 

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**PART I**

 

**Item 1.**        **Description of Business.**

 

**General**

 

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

 

During 2007, we were an exploration stage companyengaged in the acquisition and exploration of mineral properties. We enteredinto a lease agreement with George J. Eliopulos effective March 31, 2006,granting us the exclusive right to explore, develop, and mine the property forgold, silver, copper and other valuable minerals.  The property consistedof one unpatented mining claim located in section 12, Township 16 North, Range20 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 former President and a director and Rory Moss, a director, to purchase 1,500,000 and 250,000 shares of common stock, respectively, for an aggregate purchase price of $50,000. The transaction closed on February 14, 2008 at which time, Mr. Claydon resigned as President, Chief Financial  Officer and Secretary and Mr. Ulsteen was appointed President, Chief Financial Officer, Secretary and director.  On January 28, 2008, we terminated our lease agreement with Mr. Eliopulos.

 

We have redirected our focus towards identifying and pursuing options regarding the development of a new business plan and direction. We are exploring various business opportunities that have the potential to generate positive revenue, profits and cash flow in order to financially accommodate the costs of being a publicly held company.  We will not restrict our search to any specific business, industry, or geographical location and it may participate in a business venture of virtually any kind or nature.  Management anticipates that it will be able to participate in only one potential business venture because we have nominal assets and limited financial resources.

 

We were incorporated as a Nevada corporation on December 15,2005.  Our principal executive office islocated at 5050 Avenida Encinas, Suite 270, Carlsbad, California 92008.

 

The following factors raise substantial doubtregarding the ability of our business to continue as a going concern: (i) thelosses we have incurred since our inception; (ii) our failure to generaterevenues since our inception; and (iii) our dependence on the sale of ourequity securities and on the receipt of capital from outside sources tocontinue our operations. Our auditors have issued a going concern opinionregarding our business. The financial statements do not include any adjustmentsthat might result from the uncertainty about our ability to continue inbusiness. As such we may have to cease operations and you could lose yourinvestment.

 

**Patent and Trademarks**

 

We currently do not own any patents, trademarks orlicenses of any kind.

 

**Government Regulations**

 

There are no government approvals necessary to conductour current business.

 

**Employees**

 

We have no employees as of the date of this annualreport other than Mr. Ulsteen.

 

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**Item 2.**        **Description of Property.**

 

We entered into a lease agreement withGeorge J. Eliopulos effective March 31, 2006, granting us the exclusiveright to explore, develop, and mine the property for gold, silver, copper andother valuable minerals.  The property consisted of one unpatented miningclaim located in section 12, Township 16 North, Range 20 East, Mt. DiabloBaseline & Meridian, Storey County, Nevada, USA, owned by Mr. Eliopulos.  In September 2006 Mr. Eliopulosadded five additional claims to our property and mineral lease.  On January 28, 2008, we terminated ourlease agreement with Mr. Eliopulos.

 

**Item 3.**        **Legal Proceedings.**

 

There are no significant legal proceedings against uswith respect to matters arising in the ordinary course of business.

 

**Item 4.**        **Reserved.**

 

**PART II**

 

**Item 5.**        **Market for Common Equity, Related Stockholder Mattersand Issuer Purchases of Equity Securities.**

 

**Market Information**

 

Since June 4, 2007, our common stock has beenquoted on the Over-the-Counter Bulletin Board under the symbol “KABX,” howeverit has only been traded since February 13, 2009.  The following table shows the reported highand low closing prices per share for our common stock as reported on theOver-the-Counter Bulletin Board since February 13, 2009.

 
| ** **                                   | ** ** | **High** | ** ** | **Low** | ** ** |
|----------------------------------------------|------------|----------|------------|---------|------------|
| Year  ended December 31, 2009           |       |     |       |    |       |
| First  quarter                               |       | $        | 0.51       |    | $          | 0.275 |   |
| Second  quarter                              |       | $        | 0.51       |    | $          | 0.055 |   |
| Third  quarter                               |       | $        | 0.40       |    | $          | 0.07 |   |
| Fourth  quarter                              |       | $        | 0.13       |    | $          | 0.07 |   |
|                                         |       |     |       |    |       |
| Year  ending December 31, 2010          |       |     |       |    |       |
| First  quarter (through March 30, 2010) |       | $        | 0.25       |    | $          | 0.07 |   |

 

**Holders**

 

As of March 30, 2010 in accordance with ourtransfer agent records, we had 23 stockholders of record.

 

**Dividends**

 

There are no restrictions in our articles ofincorporation or bylaws that prevent us from declaring dividends. We have notdeclared any dividends and we do not plan to declare any dividends in theforeseeable future..

 

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**RecentSales of Unregistered Securities**

 

We issued 1,500,000 sharesof common stock on January 16, 2006 to Antony Claydon our president, chieffinancial officer and director. Mr Claydon acquired these shares at a price of$0.01 per share.  We received $15,000 from this offering.  Theseshares were issued pursuant to Section 4(2) of the Securities Act of1933 and are restricted shares as defined in the Securities Act.

 

We issued 250,000 shares ofcommon stock on August 23, 2006 to Rory Moss a director of the Company. MrMoss acquired these shares at a price of $0.01 per share.  

 

**Item 7.**        **Management’s Discussion and Analysis of FinancialCondition and Results of Operations.**

 

The following plan of operation provides informationwhich management believes is relevant to an assessment and understanding of ourresults of operations and financial condition. The discussion should be readalong with our financial statements and notes thereto. The following discussionand analysis contains forward-looking statements, which involve risks anduncertainties. Our actual results may differ significantly from the results,expectations and plans discussed in these forward-looking statements.

 

**Overview**

 

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

 

During 2007, we were an exploration stage companyengaged in the acquisition and exploration of mineral properties. We enteredinto a lease agreement with George J. Eliopulos effective March 31, 2006,granting us the exclusive right to explore, develop, and mine the property for gold,silver, copper and other valuable minerals.  The property consisted of oneunpatented mining claim located in section 12, Township 16 North, Range 20East, Mt. Diablo Baseline & Meridian, Storey County, Nevada, USA,owned by Mr. Eliopulos.

 

On December 18, 2007, ErikUlsteen entered into an agreement withAntony Claydon, our former President and a director and Rory Moss, a director, topurchase 1,500,000and 250,000 shares of common stock, respectively, for an aggregate purchaseprice of $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 our leaseagreement with Mr. Eliopulos.

 

The following factors raise substantial doubtregarding the ability of our business to continue as a going concern: (i) thelosses we have incurred since our inception; (ii) our failure to generaterevenues since our inception; and (iii) our dependence on the sale of ourequity securities and on the receipt of capital from outside sources tocontinue our operations. Our auditors have issued a going concern opinionregarding our business. The financial statements do not include any adjustmentsthat might result from the uncertainty about our ability to continue inbusiness. As such we may have to cease operations and you could lose yourinvestment.

 

**Plan of Operation**

 

We have redirected our focus towards identifying andpursuing options regarding the development of a new business plan anddirection. We are exploring various business opportunities that have thepotential to generate positive revenue, profits and cash flow in order tofinancially accommodate the costs of being a publicly held company.

 

We will notrestrict our search for any specific kind of businesses, and we may acquire abusiness which is in its preliminary or development stage, which is already inoperation, or in essentially any stage of its business life. It is impossibleto predict the status of any business in which we may become engaged, in thatsuch business may need to seek additional capital, may desire to have itsshares publicly traded, or may seek other perceived advantages which we mayoffer.

 

In implementing astructure for a particular business acquisition, we may become a party to amerger, consolidation, reorganization, joint venture, or licensing agreementwith another corporation or entity.

 

It is anticipatedthat any securities issued in any such business combination would be issued inreliance upon exemption from registration under applicable federal and statesecurities laws.  In some circumstances,however, as a negotiated element of its transaction, we may agree to registerall or a part of such securities immediately after the transaction isconsummated or at specified times thereafter. If such registration occurs, it will be undertaken by the survivingentity after we have entered into an agreement for a business combination orhas consummated a business 

 

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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 willparticipate in a business combination only after the negotiation and executionof appropriate agreements.  Negotiationswith a target company will likely focus on the percentage of our company whichthe target company shareholders would acquire in exchange for theirshareholdings.  Although the terms ofsuch agreements cannot be predicted, generally such agreements will requirecertain representations and warranties of the parties thereto, will specifycertain events of default, will detail the terms of closing and the conditionswhich must be satisfied by the parties prior to and after such closing and willinclude miscellaneous other terms.  Anymerger or acquisition effected by us can be expected to have a significantdilutive effect on the percentage of shares held by our shareholders at suchtime.

 

We expect that we will require additional funding inconnection with our efforts towards identifying and pursuing options regardingthe development of a new business plan and direction.  We anticipate that such funding will be inthe form of equity financing from the sale of our common stock or loans fromour principal stockholder.  However we cannot provide investors with anyassurance that we will be able to obtain sufficient funding to fund ouroperations or any work related to the development of a new business plan.  We do not have any arrangements in place for any future financing.

 

On November 21, 2008, our board approved a forward split of our authorized common stock on a 10:1 basis whereby our authorized common stock increased to 750,000,000 shares from 75,000,000 shares.  The board also approved a forward split of our issued and outstanding common stock on a 10:1 basis in the form of a stock dividend which was payable on December 12, 2008.

 

**Summaryof Significant Accounting Policies**

 

Basis of Presentation

 

Our financial statementshave been prepared using the accrual basis of accounting in accordance withgenerally accepted accounting principles in the United States.  Because aprecise 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 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 coulddiffer materially from those estimates. Significant estimates made bymanagement are, among others, realizability of long-lived assets, deferredtaxes and stock option valuation.

 

The financial statementshave, in management’s opinion, been properly prepared within the reasonablelimits of materiality and within the framework of the significant accounting.

 

Income Taxes

 

We utilize SFAS No. 109,“Accounting for Income Taxes,” which requires the recognition of deferred taxassets and liabilities for the expected future tax consequences of events thathave been included in the financial statements or tax returns.  Under thismethod, deferred tax assets and liabilities are determined based on thedifference between the tax basis of assets and liabilities and their financialreporting amounts based on enacted tax laws and statutory tax rates applicableto the periods in which the differences are expected to affect taxableincome.  Valuation allowances are established, when necessary, to reducedeferred tax assets to the amount expected to be realized. We

 

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generated a deferred taxcredit through net operating loss carryforward.  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.

 

Going Concern

 

Our financial statementsare prepared using accounting principles generally accepted in the UnitedStates of America applicable to a going concern, which contemplates therealization of assets and liquidation of liabilities in the normal course ofbusiness.  We have not yet established an ongoing source of revenuessufficient to cover our operating costs and to allow us to continue as a goingconcern.   Our ability to continue as a going concern is dependent onus obtaining 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 continueas a going concern is dependent upon our ability to successfully accomplish ourplan to develop a new business plan, or merger candidate in orderto  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-Stage Company

 

We are considered adevelopment-stage company, with limited operating revenues during the periodspresented, as defined by Statement of Financial Accounting Standards (“SFAS”) No. 7. SFAS.  No. 7 requires companies to report their operations,shareholders deficit and cash flows since inception through the date thatrevenues are generated from management’s intended operations, among otherthings.  Management has defined inception as January 1, 2006. Sinceinception, we have incurred an operating loss of $272,259.  Our working capital has been generatedthrough sales of common stock.  Management has provided financial datasince January 1, 2006, “Inception” in the financial statements, as a meansto provide readers of our financial information to make informed investmentdecisions.

 

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 is based upon the weighted averagenumber of common shares outstanding.  Diluted net loss per share is basedon the assumption that all dilative convertible shares and stock options wereconverted or exercised.  Dilution is computed by applying the treasurystock method.  Under this method, options and warrants are assumedexercised at the beginning of the period (or at the time of issuance, iflater), and as if funds obtained thereby we used to purchase common stock atthe average market price during the period.

 

We had no potentiallydilutive securities outstanding as of December 31, 2009.

 

**Off-Balance Sheet Arrangements**

We have no significant off-balance sheet arrangementsthat have or are reasonably likely to have a current or future effect on ourfinancial condition, changes in financial condition, revenues or expenses,results of operations, liquidity, capital expenditures or capital resources thatis material to our stockholders.

 

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**Item 8.**        **Financial Statements.**

 

**KABE EXPLORATION INC.**

**(A DEVELOPMENT STAGE COMPANY)**

 

**TABEL OF CONTENTS**

 
| PAGE   |   | 10     |   | REPORT OF  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                                                                           |
|--------|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |   |                                                                                                                                               |
| PAGE   |   | 11     |   | BALANCE  SHEET AS OF DECEMBER 31, 2009 AND 2008                                                                                                    |
|   |   |   |   |                                                                                                                                               |
| PAGE   |   | 12     |   | STATEMENT  OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND FOR THE  PERIOD FROM JANUARY 1, 2006 (INCEPTION) TO DECEMBER 31, 2009. |
|   |   |   |   |                                                                                                                                               |
| PAGE   |   | 13     |   | STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY (DEFICIT)  FOR THE PERIOD FROM JANUARY 1, 2006 (INCEPTION) TO DECEMBER 31, 2009.                 |
|   |   |   |   |                                                                                                                                               |
| PAGE   |   | 14     |   | STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER  31, 2009 AND 2008 AND FOR THE PERIOD JANUARY 1, 2006 (INCEPTION) TO DECEMBER  31, 2009.      |
|   |   |   |   |                                                                                                                                               |
| PAGES  |   | 15-20  |   | NOTES  TO FINANCIAL STATEMENTS.                                                                                                                    |

 

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**REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM**

 

To:  The Board of Directors and Shareholders

KabeExploration, Inc.

Carlsbad,California

 

Ihave audited the accompanying balance sheet of Kabe Exploration, Inc. asof December 31, 2009 and 2008 and the related statements of operations andcash flows for the year then ended, and for the period from inception, (January 1,2006), to December 31,2009.  Thesefinancial statements are the responsibility of the Company’s management.  My responsibility is to express an opinion onthese financial statements based on my audit.

 

Iconducted my audits in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement.  An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements.  An audit alsoincludes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statementpresentation.  I believe that my auditprovides a reasonable basis for my opinion.

 

Inmy opinion the financial statements referred to above present fairly, in allmaterial respects, the financial position of Kabe Exploration, Inc. as of December 31,2009 and 2008 and the results of its operations and its cash flows for the yearthen ended, and for the period from inception, (January 1, 2006), to December 31,2009 in conformity with United States generally accepted accounting principles.

 

Theaccompanying financial statements have been prepared assuming that the Companywill continue as a going concern.  Asdiscussed in Note 2 to the financial statements, the Company has not yetcommenced operations and has no revenue. This raises substantive doubt about the Company’s ability to continue asa going concern.  Management’s plans inregard to these matters are also described in Note 2.  The financial statements do not include anyadjustments that might result from the outcome of this uncertainty.

 

TheCompany has determined that it is not required to have, nor was I engaged toperform, an audit of the effectiveness of its documented internal controls overfinancial reporting.

 
| /s/  John Kinross-Kennedy    |   |
|------------------------------|--------|
|                         |   |
| John  Kinross-Kennedy        |   |
| Certified  Public Accountant |   |
| Irvine,  California          |   |
|                         |   |
| March 29,  2010         |   |

 

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** **

**KABE EXPLORATION, INC.**

(A Development Stage Company)

Balance Sheet

as at December 31,

 
| ** **                                                                              | ** ** | **2009** | ** ** | **2008** | ** ** |
|-----------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
|                                                                                    |       |     |       |     |       |
| ASSETS                                                                                  |       |     |       |     |       |
| Current Assets                                                                          |       |     |       |     |       |
| Cash                                                                                    |       | $        | 28         |     | $          | — |   |
|                                                                                    |       |     |       |     |       |
| Total Current Assets                                                                    |       | $        | 28         |     | —     |   |
|                                                                                    |       |     |       |     |       |
| Non Current Assets                                                                      |       |     |       |     |       |
| Mining Leases                                                                           |       | —   |       | —   |       |
|                                                                                    |       |     |       |     |       |
| Total Non Current Assets                                                                |       | —   |       | —   |       |
|                                                                                    |       |     |       |     |       |
| Total Assets                                                                            |       | $        | 28         |     | $          | — |   |
|                                                                                    |       |     |       |     |       |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT                                              |       |     |       |     |       |
| Current Liabilities                                                                     |       |     |       |     |       |
| Accounts Payable                                                                        |       | $        | 16,509     |     | $          | 16,509 |   |
| Chapman Industries Loan                                                                 |       | 6,066    |       | 5,546    |       |
| Loan Payable - EPS                                                                      |       | 8,487    |       | 4,612    |       |
|                                                                                    |       |     |       |     |       |
| Total Liabilities                                                                       |       | 31,062   |       | 26,667   |       |
|                                                                                    |       |     |       |     |       |
| Stockholders’ Equity (Deficit)                                                     |       |     |       |     |       |
| Common Stock, $0.001 par value; authorized  75,000,000 shares;  issued and outstanding: |       |     |       |     |       |
| 38,647,250 as at December 31, 2009                                                 |       |     |       |     |       |
| 36,875,000 shares as at December 31, 2008                                          |       | 38,647   |       | 36,875   |       |
| Additional Paid-In Capital                                                              |       | 202,578  |       | 25,375   |       |
| Deficit accumulated during the development stage                                        |       | (272,259 | )          | (88,917  | )          |
|                                                                                    |       |     |       |     |       |
| Total Shareholders’ Equity                                                         |       | (31,034  | )          | (26,667  | )          |
|                                                                                    |       |     |       |     |       |
| Total Liabilities and Shareholders’ Equity                                         |       | $        | 28         |     | $          | — |   |

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Operations

 
| ** **                               | ** ** | ** **        | ** ** | ** **        | ** ** | **For the Period**         | ** ** |
|------------------------------------------|------------|-------------------|------------|-------------------|------------|----------------------------|------------|
| ** **                               | ** ** | **For the year**  | ** ** | **For the year**  | ** ** | **of Inception**           | ** ** |
| ** **                               | ** ** | **ended**         | ** ** | **ended**         | ** ** | **from Jan. 1, 2006** | ** ** |
| ** **                               | ** ** | **Dec. 31,** | ** ** | **Dec. 31,** | ** ** | **through Dec. 31,**  | ** ** |
| ** **                               | ** ** | **2009**          | ** ** | **2008**          | ** ** | **2009**                   | ** ** |
|                                     |       |              |       |              |       |                       |       |
| Revenue                                  |       | $                 | —     |              | $          | —                     |       | $ | — |   |
|                                     |       |              |       |              |       |                       |       |
| Cost of Sales                            |       | —            |       | —            |       | —                     |       |
|                                     |       |              |       |              |       |                       |       |
| Operating Income                         |       | —            |       | —            |       | —                     |       |
|                                     |       |              |       |              |       |                       |       |
| General and Administrative Expenses:     |       |              |       |              |       |                       |       |
| Mineral Lease Fees                       |       | —            |       | —            |       | 6,713                      |       |
| Professional Fees                        |       | 106,600           |       | 43,228            |       | 178,873                    |       |
| Consultant Fees                          |       | 50,000            |       | —            |       | 50,000                     |       |
| Other Administrative Expenses            |       | 26,742            |       | 2,710             |       | 31,682                     |       |
| Loss on abandonment of Mineral Leases    |       | —            |       | 5,000             |       | 5,000                      |       |
| Total General and Adminstrative Expenses |       | 183,342           |       | 50,938            |       | 272,268                    |       |
|                                     |       |              |       |              |       |                       |       |
| Other Inocme                             |       |              |       |              |       |                       |       |
| Interest Income                          |       | —            |       | 13                |       | 22                         |       |
| Interest Expense                         |       | —            |       | (13               | )          | (13                        | )          |
|                                     |       | —            |       | —            |       | 9                          |       |
|                                     |       |              |       |              |       |                       |       |
| Net Income (Loss)                        |       | $                 | (183,342   | )                 | $          | (50,938                    | )          | $ | (272,259 | ) |
|                                     |       |              |       |              |       |                       |       |
| Income/Loss Per Common Share:            |       |              |       |              |       |                       |       |
| Basic and Diluted                        |       | $                 | (0.049     | )                 | $          | (0.014                     | )          |   |   |
|                                     |       |              |       |              |       |                       |       |
| Weighted Average Shares Outstanding      |       |              |       |              |       |                       |       |
| Basic and Diluted:                       |       | 3,719,444         |       | 3,600,615         |       |                       |       |

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Shareholders’Equity

For the period from inception,  January 1,2006, to December 31, 2009

 
| ** **                                                               | ** ** | ** **       | ** ** | ** **     | ** ** | ** **     | ** ** | **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          | )          |
| Balances, December 31, 2006                                         |       | 3,387,500        |       | $              | 3,388      |           | $          | 46,862                 |       | $             | (226       | ) | $ | 50,024 |   |
| Net loss for the year ended December 31, 2007                       |       |             |       |           |       |           |       | (37,753                | )          | (37,753       | )          |
| Balances, December 31, 2007                                         |       | 3,387,500        |       | $              | 3,388      |           | $          | 46,862                 |       | $             | (37,979    | ) | $ | 12,271 |   |
| Common stock issued for cash, Apr. 15, 2008 at  $0.04 per share     |       | 300,000          |       | 300            |       | 11,700         |       |                   |       | 12,000        |       |
| Net loss for the year ended Dec. 31, 2008                           |       |             |       |           |       |           |       | (50,938                | )          | (50,938       | )          |
| Balances, December 31, 2008                                         |       | 3,687,500        |       | $              | 3,688      |           | $          | 58,562                 |       | $             | (88,917    | ) | $ | (26,667 | ) |
|                                                                     |       |             |       |           |       |           |       |                   |       |          |       |
| Balances restated for 10-for-1 forward stock split,  April 13, 2009 |       | 36,875,000       |       | $              | 36,875     |           | $          | 25,375                 |       | $             | (88,917    | ) | $ | (26,667 | ) |
| Additional Paid-in Capital January 2009                             |       |             |       |           |       | 1,750          |       |                   |       | 1,750         |       |
| Common stock issued for services Apr. 13, 2009,  @ $0.10 per share  |       | 450,000          |       | 450            |       | 44,550         |       |                   |       | 45,000        |       |
| Common stock issued for services Apr. 13, 2009,  @ $0.10 per share  |       | 256,000          |       | 256            |       | 25,344         |       |                   |       | 25,600        |       |
| Common stock issued for services Apr. 13, 2009,  @ $0.10 per share  |       | 50,000           |       | 50             |       | 4,950          |       |                   |       | 5,000         |       |
| Common stock issued for services Apr. 13, 2009,  @ $0.10 per share  |       | 1,016,250        |       | 1,016          |       | 100,609        |       |                   |       | 101,625       |       |
| Net loss for the year ended Dec. 31, 2009                           |       |             |       |           |       |           |       | $                      | (183,342   | )             | $          | (183,342 | ) |
|                                                                     |       |             |       |           |       |           |       |                   |       |          |       |
| Balances, December 31, 2009                                         |       | $                | 38,647,250 |           | $          | 38,647         |       | $                      | 202,578    |          | $          | (272,259 | ) | $ | (31,034 | ) |
|                                                                          |            |                  |            |                |            |                |            |                        |            |               |            |  |  |  |  |  |

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Cash Flows

 
| ** **                                                                   | ** ** | ** **        | ** ** | ** **        | ** ** | **For the Period**         | ** ** |
|------------------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|----------------------------|------------|
| ** **                                                                   | ** ** | **For the year**  | ** ** | **For the year**  | ** ** | **of Inception**           | ** ** |
| ** **                                                                   | ** ** | **ended**         | ** ** | **ended**         | ** ** | **from Jan. 1, 2006** | ** ** |
| ** **                                                                   | ** ** | **Dec. 31,** | ** ** | **Dec. 31,** | ** ** | **through Dec. 31,**  | ** ** |
| ** **                                                                   | ** ** | **2009**          | ** ** | **2008**          | ** ** | **2009**                   | ** ** |
|                                                                         |       |              |       |              |       |                       |       |
| Cash flows from operating activities:                                        |       |              |       |              |       |                       |       |
| Net loss                                                                     |       | $                 | (183,342   | )                 | $          | (50,938                    | )          | $ | (272,259 | ) |
| Adjustments to reconcile net loss to net cash used  by operating activities: |       |              |       |              |       |                       |       |
| Stock issued for services                                                    |       | 177,225           |       |              |       | 177,225                    |       |
| Change in operating assets and liabilities:                                  |       |              |       |              |       |                       |       |
| Accounts Payable                                                             |       | —            |       | 16,509            |       | 16,509                     |       |
| Net cash (used by) operating activities                                      |       | (6,117            | )          | (34,429           | )          | (78,525                    | )          |
|                                                                         |       |              |       |              |       |                       |       |
| 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                                                |       | 4,395             |       | 10,158            |       | 14,553                     |       |
| Contibution of capital                                                       |       | 1,750             |       |              |       | 1,750                      |       |
| Net cash (used) provided by financing activities                             |       | 6,145             |       | 22,158            |       | 78,553                     |       |
|                                                                         |       |              |       |              |       |                       |       |
| Net increase (decrease) in cash                                              |       | 28                |       | (7,271            | )          | 28                         |       |
|                                                                         |       |              |       |              |       |                       |       |
| Cash, beginning of the period                                                |       | —            |       | 7,271             |       | —                     |       |
|                                                                         |       |              |       |              |       |                       |       |
| Cash, end of the period                                                      |       | $                 | 28         |              | $          | —                     |       | $ | 28 |   |
|                                                                         |       |              |       |              |       |                       |       |
| Supplemental cash flow disclosure:                                           |       |              |       |              |       |                       |       |
| Interest paid                                                                |       | $                 | —     |              | $          | 13                         |       | $ | 13 |   |
| Taxes paid                                                                   |       | $                 | —     |              | $          | —                     |       | $ | — |   |

 

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**Kabe Exploration, Inc.**

**(A Developmental Stage Company)**

**Notes to Financial Statements**

**December 31 2009**

 

**1.      Organization**

 

KabeExploration, Inc. (the “Company”) was incorporated under the laws of theState of Nevada December 16, 2005. The company was originally formed formineral exploration in the United States. The Company abandoned its MineralLeases in 2008 and is seeking new business opportunities.

 

**2.      Summary of SignificantAccounting Policies**

 

Basisof Presentation

 

Thefinancial statements of the Company have been prepared using the accrual basisof accounting in accordance with generally accepted accounting principles inthe United States. Because a 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.

 

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

 

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 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 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% hasbeen established, as the realization of the deferred tax credits is notreasonably certain, based on going concern considerations outlined as follows.

 

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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 yetestablished an ongoing source of revenues sufficient to cover its operatingcosts and to allow it to continue as a going concern. The Company incurred anet loss of $183.342 in the year ended December 31, 2009 and has acumulative net loss of $272,259 since inception. 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 isunable to obtain adequate capital, it could be forced to cease development ofoperations.

 

Theability of the Company to continue as a going concern is dependent upon itsability to successfully accomplish its plans to exploit or lease its miningclaim described in the initial paragraph, or engage a working interest partner,in order to  eventually secure othersources of financing and attain profitable operations. The accompanying financialstatements do not include any adjustments relating to the recoverability andclassification of recorded asset amounts or the amount and classifications orliabilities or other adjustments that might be necessary should the Company beunable to continue as a going concern.

 

Development-StageCompany

 

The Company is considered adevelopment-stage company, with limited operating revenues during the periodspresented, as defined by Statement of Financial Accounting Standards (“SFAS”) No. 7.SFAS. No. 7 requires companies to report their operations, shareholdersdeficit and cash flows since inception through the date that revenues aregenerated from management’s intended operations, among other things. Managementhas defined inception as January 1, 2006. Since inception, the Company hasincurred an operating loss of $272,259. The Company’s working capital has beengenerated through the sales of common stock. 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.

 

RecentAccounting Pronouncements

 

InMay, 2009, the FASB issued SFAS No. 165, Subsequent Events, whichestablished general accounting standards and disclosure for subsequent events. Inaccordance with SFAS No. 165, the Company has evaluated subsequent eventsthrough the date the financial statements were filed.

 

InJune, 2009, the FASB issued SFAS No. 168 — The FASB Accounting Standards Codificationand the Hierarchy of Generally Accepted Accounting Principles — a replacementof FASB Statement No. 162. SFAS 168 establishes the FASB Accounting StandardsCodification as the single source of authoritative US generally accepted accountingprinciples recognized by the FASB to be applied to nongovernmental entities. SFAS168 is effective for financial statements issued for interim and annual periodsending after September 15, 2009.  The adoption of SFAS 168 will not have an impacton the Company’s financial position, results of operations or cash flows.

 

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FairValue of Financial Instruments

 

TheFinancial Accounting Standards Board issued Statement of Financial AccountingStandards (“SFAS”) No. 107, “Disclosures About Fair Value of FinancialInstruments.” SFAS No. 107 requires disclosure of fair value informationabout financial instruments when it is practicable to estimate that value. Thecarrying amounts of the Company’s financial instruments as of December 31,2009 approximate their respective fair values because of the short-term natureof these instruments. Such instruments consist of cash, accounts payable and accruedexpenses, and loans payable.

 

Basicand Diluted Net Loss Per Share

 

Netloss per share is calculated in accordance with SFAS 128, Earnings Per Sharefor the period presented. Basic net loss per share is based upon the weightedaverage number of common shares outstanding. Diluted net loss per share isbased on the assumption that all dilative convertible shares and stock optionswere converted or exercised. Dilution is computed by applying the treasurystock method. Under this method, options and warrants are assumed exercised atthe beginning of the period (or at the time of issuance, if later), and as iffunds obtained thereby we used to purchase common stock at the average marketprice during the period.

 

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

 

**Thefollowing is a reconciliation of the numerator and denominator of the basic anddiluted earnings per share computations for the year ended December 31,2009 and 2008:**

** **
| ** **                                                      | ** ** | **2009**  | ** ** | **2008**  | ** ** |
|-----------------------------------------------------------------|------------|-----------|------------|-----------|------------|
| Numerator:                                                      |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Basic and diluted net loss per share:                           |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Net Loss                                                        |       | $         | (51,117    | )         | $          | (50,938 | ) |
|                                                            |       |      |       |      |       |
| Denominator                                                     |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Basic and diluted weighted averagenumber of  shares outstanding |       | 3,719,444 |       | 3,600,615 |       |
|                                                            |       |      |       |      |       |
| Basic and Diluted Net Loss Per Share                            |       | $         | (0.014     | )         | $          | (0.014 | ) |

 

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

 

Duringthe period from inception through June 30, 2008, the Company entered intothe following equity transactions:

 

January 16, 2006:         Sold1,500,000 shares of common stock at $.01 per share for $15,000.

 

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| August 23,  2006:   |   | Sold  250,000 shares of common stock at $.01 per share for $5,000.                                              |
|--------------------------|--------|-----------------------------------------------------------------------------------------------------------------|
|                     |   |                                                                                                            |
| September 1,  2006: |   | Sold  575,000 shares of common stock at $0.02 per share, realizing $11,500                                      |
|                     |   |                                                                                                            |
| October 31,  2006:  |   | Sold  800,000 shares of common stock at $0.02 per share, realizing 16,000                                       |
|                     |   |                                                                                                            |
| November 30,  2006: |   | Sold  262,500 shares of common stock at $0.02 per share, realizing $5,250                                       |
|                     |   |                                                                                                            |
| April 15,  2008     |   | Sold  300,000 shares of common stock at $0.04 per share, Realizing $12,000.                                     |
|                     |   |                                                                                                            |
| April 13,  2009     |   | The  Board approved a ten-for-one reverse stock split.                                                          |
|                     |   |                                                                                                            |
| April 13,  2009     |   | Issued  450,000 shares of common stock at $0.10 per share for services. An expense of  $45,000 was recorded.    |
|                     |   |                                                                                                            |
| April 13,  2009     |   | Issued  256,000 shares of common stock at $0.10 per share for services. An expense of  $26,500 was recorded.    |
|                     |   |                                                                                                            |
| April 13,  2009     |   | Issued  50,000 shares of common stock at $0.10 per share for services. An expense of  $5,000 was recorded.      |
|                     |   |                                                                                                            |
| April 13,  2009     |   | Issued  1,016,250 shares of common stock at $0.10 per share for services. An expense  of $101,625 was recorded. |

 

Prioryear statements have been restated to reflect the ten-for-one reverse stocksplit of April 13, 2009.

 

Asof December 31, 2009 the Company has authorized 75,000,000 of $0.001 parcommon stock, of which 38,647,250 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 a royalty of 3 1⁄2 % of net smelterreturns, as defined in the agreement, paid quarterly, and lease payments. Onelease payment of $5,000 was made in 2007. The lease was abandoned on January 28,2008 and the capitalized lease payment written off.

 

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

 

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

 

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**6.****                  ****Changein Control**

 

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

 

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**Item9.**          **ChangesIn and Disagreements with Accountants on Accounting and Financial Disclosure.**

 

None.

 

**Item 9A(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.

 

*Management’s Annual Report on Internal Control over Financial Reporting*. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

 

Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, our management used the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that, as of December 31, 2009, our internal control over financial reporting was effective.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit the company to provide only management’s report in this annual report.

 

*Changes in Internal Control Over Financial Reporting.* During the most recent quarter ended December 31, 2009, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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**PART III**

 

**Item 10.           Directors, Executive Officers andCorporate Governance.**

 

The following table sets forth the name and age of ourexecutive officers and directors as of March 30, 2010:

 
| **Name**               | ** ** | **Age** | ** ** | **Position**                                                |
|------------------------|------------|---------|------------|-------------------------------------------------------------|
|                   |       |    |       |                                                        |
| Erik Ulsteen           |       | 43      |       | President, Chief Financial Officer, Secretary and  Director |
| Stale Werner Nielsen   |       | 43      |       | Director                                                    |
| Bjorn Rene Singdahlsen |       | 39      |       | Director                                                    |

 

*Erik Ulsteen.*****Mr. Ulsteen was appointed ourPresident, Chief Financial Officer, Secretary and Director on February 14,2008. Since 2004, Mr. Ulsteen has been Chief Executive Officer andChairman of Emission & Power Solutions, Inc. (formerly Fuel FX International, Inc.).From 2002 until 2004, Mr. Ulsteen was President of Fuel FX International, Inc.Mr. Ulsteen’s broad management experience qualifies him to serve on ourboard.

 

*StaleWerner Nielsen.* Mr. Nielsen was appointed a Director on March 20,2008. Since 2003, Mr. Nielsen has been a Managing Director of HoyerIndustries AS which markets and distributes Evian water and Dannon yogurtproducts in Norway and Sweden. From 2000 to 2003, Mr. Nielsen was aManaging Director of Margarinfabrikken Norge AS. Mr. Nielsen’s backgroundas a Managing Director and key member of management of large multi-nationalcompanies qualifies him to serve on our board.

 

*BjornRene Singdahlsen*.**Mr. Singdahlsenwas appointed a Director on March 20, 2008. Since 2002 Mr. Singdahlsen has been RegionalDistrict Manager at Valora Holding AG, a trading and services companyheadquartered in Switzerland. Mr. Singdahlsen’s expertise as a DistrictManager and experience qualifies him to serve on our board.

 

**Termof Office******

Our directors areappointed for a one-year term to hold office until the next annual generalmeeting of our shareholders or until removed from office in accordance with ourbylaws. Our officers are appointed by our board of directors and hold officeuntil removed by the board.

 

**Committeesof the Board of Directors******

We presently do not havean audit committee, compensation committee or nominating committee. Our boardof directors does not believe that it is necessary to have such committeesbecause it believes that the functions of such committees can be adequatelyperformed by the board of directors.

 

Our company does not haveany defined policy or procedural requirements for shareholders to submitrecommendations or nominations for directors. The board of directors believesthat, given the stage of our development, a specific nominating policy would bepremature and of little assistance until our business operations develop to amore advanced level. Our company does not currently have any specific orminimum criteria for the election of nominees to the board of directors and wedo not have any specific process or procedure for evaluating such nominees. Theboard of directors will assess all candidates, whether submitted by managementor shareholders, and make recommendations for election or appointment.

 

A shareholder who wishesto communicate with our board of directors may do so by directing a writtenrequest addressed to our president, Erik Ulsteen, at the address appearing onthe first page of this annual report.

 

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**Board Leadership Structure and Role in RiskOversight.**

We currently do not havea Chairman of the Board. Our President, Erik Ulsteen, calls meetings of theboard. Currently our operations are limited and we believe that our currentleadership structure allows the board to have better control of the directionof management, while still retaining independent oversight.

 

The board’s role in ourrisk oversight process includes receiving regular reports from members ofmanagement on areas of material risk to us, including operational, financial,legal and regulatory, and strategic risks. The full board receives thesereports from management to enable it to understand our risk identification,risk management and risk mitigation strategies.

 

**Family Relationships**

No family relationships exist among our directors orexecutive officers.

 

**Involvement in Certain LegalProceedings**

To our knowledge, during the past five years, none ofour directors, executive officers, promoters, control persons, or nominees hasbeen:

 

·                          the subject of any bankruptcy petitionfiled by or against any business of which such person was a general partner orexecutive officer either at the time of the bankruptcy or within two yearsprior to that time;

 

·                          convicted in a criminal proceeding or issubject to a pending criminal proceeding (excluding traffic violations andother minor offenses);

 

·                          subject to any order, judgment, ordecree, not subsequently reversed, suspended or vacated, of any court ofcompetent jurisdiction, permanently or temporarily enjoining, barring,suspending or otherwise limiting his involvement in any type of business,securities or banking activities; or

 

·                          found by a court of competentjurisdiction (in a civil action), the Commission or the Commodity FuturesTrading Commission to have violated a federal or state securities orcommodities law.

 

**Code of Ethics**

 

We have adopted a formal Code of Business Conduct andEthics applicable to all Board members, executive officers and employees. OurCode of Business Conduct and Ethics has been filed as Exhibit 14 to thisReport and is also available upon request at no charge by contacting ErikUlsteen, President at our offices located at 5050 Avenida Encinas, Suite 270,Carlsbad, CA 92008. Our telephone number is (760) 931-1048.

 

**Compliance with Section 16(a) ofthe Exchange Act**

 

Section 16(a) of the Securities Exchange Actof 1934 requires our officers and directors, and persons who own more than 10percent of a registered class of our equity securities, to file reports ofownership and changes in ownership with the SEC.

 

To our knowledge, based solely on a review of thecopies of such reports furnished to us, all reports under Section 16(a) requiredto be filed by our officers and directors and greater than ten percentbeneficial owners were timely filed as of the date of this filing.

 

**Item 11.           Executive Compensation.**

 

**Compensation of Executive Officers**

 

Since inception, we have never paid to our executiveofficers, any salary or consulting fees.

 

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**Outstanding Equity Awards atFiscal Year-End**

 

None of our executive officers had any equity awardsat December 31, 2009.

 

**Employment Agreements**

We have no written employment agreement with ourexecutive officer at this time.

 

**Director Compensation**

 
| **Name**               | ** ** | **Stock  Awards(1)** | ** ** | **Total** | ** ** |
|------------------------|------------|----------------------|------------|-----------|------------|
|                   |       |                 |       |      |       |
| Erik Ulsteen           |       | $                    | 5,000      |      | $          | 5,000 |   |
| Stale Werner Nielsen   |       | $                    | 5,000      |      | $          | 5,000 |   |
| Bjorn Rene Singdahlsen |       | $                    | 5,000      |      | $          | 5,000 |   |

 

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(1)          Amounts represent the aggregate grant date fair valuefor fiscal year 2009 of stock awards granted in 2009 under ASC Topic 718.

 

**Changeof Control**

 

There is no compensatoryplan or arrangement with respect to any executive officer which results or willresult from the resignation, retirement or any other termination of employmentwith us, or from a change in our control.

 

**Item 12.****                           ****Security Ownership ofCertain Beneficial Owners and Management and Related Stockholder Matters.**

 

The following table sets forth certain informationregarding the ownership of our capital stock, as of March 30, 2010, for: (i) eachdirector; (ii) each person who is known to us to be the beneficial ownerof more than 5% of our outstanding common stock; (iii) each of our namedexecutive officers; and (iv) all of our current executive officers anddirectors of as a group. Except as otherwise indicated in the footnotes, allinformation with respect to share ownership and voting and investment power hasbeen furnished to us by the persons listed. Except as otherwise indicated inthe footnotes, each person listed has sole voting power with respect to theshares shown as beneficially owned.

 
| **Name and Address of Beneficial********Owner** | ** ** | **Amount and Nature of  Beneficial********Ownership** | ** ** | **Percent of Class  (2)** | ** ** |
|---------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|-------------------------------------|------------|
|                                                                |       |                                                                 |       |                                |       |
| **Erik Ulsteen**                                                    |       | 17,646,000                                                           |       | 45.7                                | %          |
| **Stale Werner Nielsen**                                            |       | 130,000                                                              |       | *                                   |       |
| **Bjorn Rene Singdahlsen**                                          |       | 130,000                                                              |       | *                                   |       |
| **All officers and directors as a group (3 persons)**               |       | 17,906,000                                                           |       | 46.4                                | %          |

 

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(1)                                  Except as otherwise indicated, theaddress of each beneficial owner is c/o Kabe Exploration Inc., 5050 AvenidasEncinas, Suite 270, Carlsbad, CA 92008.

 

(2)                                  Applicable percentage ownership is basedon 38,647,250 shares of common stock outstanding as of March 30, 2010,together with securities exercisable or convertible into shares of common stockwithin 60 days of March 30, 2010 for each stockholder. Beneficialownership is determined in accordance with the rules of the Securities andExchange Commission and generally includes voting or investment power withrespect to securities. Shares of common stock that are currently exercisable orexercisable within 60 days of March

 

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30, 2010 are deemed to be beneficially owned by theperson holding such securities for the purpose of computing the percentage ofownership of such person, but are not treated as outstanding for the purpose ofcomputing the percentage ownership of any other person.

 

**Item 13.           Certain Relationships and RelatedTransactions, and Director Independence.**

 

We issued 15,000,000 total shares of common stock toAntony Claydon, our former President and former director for totalconsideration of $15,000 effective January 16, 2006. The shares wereissued pursuant to Section 4(2) of the Securities Act of 1933 and arerestricted shares as defined in the Securities Act.

 

We issued 25,000,000 total shares of common stock toRory Moss, our former director for total consideration of $2,500 effective August 23,2006. The shares were issued pursuant to Section 4(2) of theSecurities Act of 1933 and are restricted shares as defined in the SecuritiesAct.

 

On December 18,2007, Antony Claydon, our former President, Chief Financial Officer andSecretary and Rory Moss, our former director entered into an Agreement for thePurchase of Common Stock with Erik Ulsteen, pursuant to which Messrs. Claydonand Moss sold an aggregate of 17,500,000 shares of our common stock to Mr. Ulsteen.The purchase price for the sale was $50,000, which was paid in cash. Mr. Ulsteenacquired approximately 51.7% of our total outstanding number of shares ofcommon stock and the 17,500,000 shares represent Mr. Ulsteen’s entirebeneficial holdings in our company. On February 14, 2008, Mr. Claydonresigned as our President, Chief Financial Officer and Secretary and Mr. Ulsteenwas appointed President, Chief Financial Officer and Secretary of our companyas well as a director.

 

**Item 14.           Principal Accountant Fees andServices.**

 

**Audit Fees**

 

For our fiscal year ended December 31, 2009, wewere billed approximately $2,300 for professional services rendered for theaudit and reviews of our financial statements. For our fiscal year ended December 31,2008, we were billed approximately $2,200 for professional services renderedfor the audit and reviews of our financial statements.

 

**Other Audit Related Fees**

 

For our fiscal years ended December 31, 2009 and2008, we were not billed for professional services rendered to other auditrelated fees.

 

**Tax Fees**

 

For our fiscal years ended December 31, 2009 and2008, we were not billed for professional services rendered for tax compliance,tax advice, and tax planning.

 

**All Other Fees**

 

We did not incur any other fees related to servicesrendered by our principal accountant for the fiscal years ended December 31,2009 and 2008.

 

Our Board of Directors has adopted a procedure forpre-approval of all fees charged by our independent auditors. Under theprocedure, the Board approves the engagement letter with respect to audit, taxand review services. Other fees are subject to pre-approval by the Board, or,in the period between meetings, by a designated member of Board. Any suchapproval by the designated member is disclosed to the entire Board at the nextmeeting. The audit and tax fees paid to the auditors with respect to fiscalyear 2009 were pre-approved by the entire Board of Directors.

 

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**Item15.         Exhibits and FinancialStatement Schedules.**

 
| **Exhibit No.** | ** ** | **Title of Document**                                                                                                                                         |
|----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                          |
| 3.1                  |       | Articles of Incorporation (Incorporated by reference  to exhibit 3.1 on Form 10-SB filed on March 30, 2007).                                        |
|                 |       |                                                                                                                                                          |
| 3.2                  |       | Bylaws (Incorporated by reference to exhibit 3.2 on  Form 10-SB filed March 30, 2007).                                                              |
|                 |       |                                                                                                                                                          |
| 14                   |       | Code of Ethics (Incorporated by reference to exhibit  14 on Form 10-KSB filed March 28, 2008).                                                      |
|                 |       |                                                                                                                                                          |
| 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 13 or 15(d) ofthe Exchange Act, the registrant caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.

 
| ** ** | **KABE EXPLORATION, INC.**                   |
|------------|----------------------------------------------|
|       |                                         |
|       | By:                                          | /s/ Erik Ulsteen |   |
|       | Erik Ulsteen                                 |
|       | President, Chief Financial Officer,Secretary |
|       |                                         |
|       | Date:                                        | March 31, 2010 |

 

In accordance with the Exchange Act, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.

 
| **Name**                   | ** ** | **Title**                                                   | ** ** | **Date**            |
|----------------------------|------------|-------------------------------------------------------------|------------|---------------------|
|                       |       |                                                        |       |                |
| /s/ Erik Ulsteen           |       | President, Chief Financial Officer, Secretary and  Director |       | March 31, 2010 |
| Erik Ulsteen               |       |                                                        |       |                |
|                       |       |                                                        |       |                |
| /s/ Stale Werner Nielsen   |       | Director                                                    |       | March 31, 2010 |
| Stale Werner Nielsen       |       |                                                        |       |                |
|                       |       |                                                        |       |                |
| /s/ Bjorn Rene Singdahlsen |       | Director                                                    |       | March 31, 2010 |
| Bjorn Rene Singdahlsen     |       |                                                        |       |                |

 

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