Table of Contents

 

 

 

**UNITEDSTATES**

**SECURITIESAND 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 thefiscal year ended December 31, 2008**

 

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

 

**For thetransition period from                      to                      **

 

**Commissionfile number**

 

**KABEEXPLORATION INC.**

(Nameregistrant as specified in its charter)

 

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

 

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

 

| Registrant’s telephone  number, including area code: | ** ** | **(760)  931-1048** |
|-----------------------------------------------------------|------------|---------------------|

 

Securities registeredunder Section 12(b) of the Exchange Act:

 

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

 

Securities registeredunder Section 12(g) of the 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

Yes o   No x

 

Indicate by check if the issuer is not required tofile reports pursuant to Section 13 or 15(d) of the Exchange Act. Yeso  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 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, 2008, was $0.

 

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

 

As of April 15, 2009, the issuer had 37,475,000outstanding 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.           | Submission  of Matters to a Vote of Security Holders.                                              | 5      |
|              |                                                                                               |   |
| **Part II**  |                                                                                               | 5      |
|              |                                                                                               |   |
| Item 5.           | Market for  Common Equity, Related Stockholder Matters and Issuer Purchases of Equity  Securities. | 5      |
|              |                                                                                               |   |
| Item 6.           | Management’s  Discussion and Analysis of Financial Condition and Results of Operations.       | 6      |
|              |                                                                                               |   |
| Item 7.           | Financial Statements.                                                                              | 9      |
|              |                                                                                               |   |
| Item 8.           | Changes in  and Disagreements With Accountants on Accounting and Financial Disclosure.             | 22     |
|              |                                                                                               |   |
| Item 8A(T).       | Controls and  Procedures.                                                                          | 22     |
|              |                                                                                               |   |
| Item 8B.          | Other Information.                                                                                 |   |
|              |                                                                                               |   |
| **Part III** |                                                                                               |   |
|              |                                                                                               |   |
| Item 9.           | Directors,  Executive Officers and Corporate Governance.                                           | 23     |
|              |                                                                                               |   |
| Item 10.          | Executive  Compensation.                                                                           | 24     |
|              |                                                                                               |   |
| Item 11.          | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters.  | 25     |
|              |                                                                                               |   |
| Item 12.          | Certain  Relationships and Related Transactions.                                                   | 25     |
|              |                                                                                               |   |
| Item 13.          | Exhibits.                                                                                          | 26     |
|              |                                                                                               |   |
| Item 14.          | Principal  Accountant Fees and Services.                                                           | 26     |
|              |                                                                                               |   |
|              | Signatures                                                                                         | 27     |

 

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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 andAssociated Risks**

 

*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 potential impactof any future acquisitions or operations. These forward-looking statementsinvolve significant risks and uncertainties (some of which are beyond ourcontrol) and assumptions. Should one or more of these risks or uncertaintiesmaterialize, or should any of our assumptions prove incorrect, actual resultsmay vary in material respects from those projected in the forward-lookingstatements.  All share amounts in this Form 10-Khave been adjusted to account for a 10:1 forward split of the authorized andissued 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 are currently engaged in discussions with Emission & Power Solutions, Inc., a California corporation, regarding the possibility of a reverse triangular merger (the “Merger”) involving the two companies. On October 14, 2008, we entered into an Agreement and Plan of Merger (the “Agreement”) by and among us, Emission & Power Solutions, Inc. (“EPS”) and EPS Acquisition, Inc. (“EPS Acquisition”) pursuant to which EPS will merge into EPS Acquisition, our wholly-owned subsidiary.  Pursuant to the Agreement, EPS shareholders will receive 1 share of our company in exchange for every 5 EPS shares owned.  Closing of the merger is subject to, among other things, stockholder approval of the EPS shareholders.

 

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.

 

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.

 

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**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.

 

**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. Diablo Baseline &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.**       ** Submission of Matters to a Vote of SecurityHolders.**

 

None .

 

**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,” howeveras of December 31, 2008, it has never traded.  We can provide no assurance that a publicmarket for the shares will ever develop.

 

**Holders**

 

As of April 14, 2009 in accordance with ourtransfer agent records, we had 27 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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**Item 6.**       ** Management’s Discussion and Analysis ofFinancial Condition 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 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, 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 are currently engaged in discussions with Emission & Power Solutions, Inc., a California corporation, regarding the possibility of a reverse triangular merger (the “Merger”) involving the two companies. On October 14, 2008, we entered into an Agreement and Plan of Merger (the “Agreement”) by and among us, Emission & Power Solutions, Inc. (“EPS”) and EPS Acquisition, Inc. (“EPS Acquisition”) pursuant to which EPS will merge into EPS Acquisition, our wholly-owned subsidiary.  Pursuant to the Agreement, EPS shareholders will receive 1 share of our company in exchange for every 5 EPS shares owned.  Closing of the merger is subject to, among other things, stockholder approval of the EPS shareholders.

 

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 any assurancethat we will be able to obtain sufficient funding to fund our operations or anywork related to the development of a new business plan.   We do nothave 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.

 

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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 generated adeferred tax credit through net operating loss carryforward.  However, avaluation allowance of 100% has been established, as the realization of thedeferred tax credits is not reasonably certain, based on going concernconsiderations outlined 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 $37,979.  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 average numberof common shares outstanding.  Diluted net loss per share is based on theassumption 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, 2008.

 

**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 resourcesthat is material to our stockholders.

 

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**Item 7.**       ** FinancialStatements.**

 

**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, 2008 AND 2007                                                                                                    |
|   |   |   |   |                                                                                                                                               |
| PAGE   |   | 13     |   | STATEMENT OF  OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 AND FOR THE PERIOD  FROM JANUARY 1, 2006 (INCEPTION) TO DECEMBER 31, 2008. |
|   |   |   |   |                                                                                                                                               |
| PAGE   |   | 15     |   | STATEMENT OF CHANGES IN  SHAREHOLDER’S EQUITY (DEFICIT) FOR THE PERIOD FROM JANUARY 1, 2006  (INCEPTION) TO DECEMBER 31, 2008.                |
|   |   |   |   |                                                                                                                                               |
| PAGE   |   | 16     |   | STATEMENT OF CASH  FLOWS FOR THE YEARS ENDED DECEMBER 31 2008 AND 2007 AND FOR THE PERIOD  JANUARY 1, 2006 (INCEPTION) TO DECEMBER 31, 2008.       |
|   |   |   |   |                                                                                                                                               |
| PAGES  |   | 18-21  |   | NOTES TO FINANCIAL  STATEMENTS.                                                                                                                    |

 

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**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

To:  The Board of Directors andShareholders

Kabe Exploration, Inc.

Carlsbad, California

 

I have audited the accompanying balance sheet of Kabe Exploration, Inc.as of December 31, 2008 and 2007 and the related statements of operationsand cash flows for the year then ended. These financial statements are the responsibility of the Company’smanagement.  My responsibility is toexpress an opinion on these financial statements based on my audit.

 

I conducted my audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States).  Those standards require that I plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements.  An audit also includes assessing theaccounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation.  I believe that my audit provides a reasonablebasis for my opinion.

 

In my opinion the financial statements referred to above presentfairly, in all material respects, the financial position of Kabe Exploration, Inc.as of December 31, 2008 and 2007 and the results of its operations and itscash flows for the year then ended in conformity with United States generallyaccepted accounting principles.

 

The accompanying financial statements have been prepared assuming thatthe Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has notyet commenced 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.

 

The Company has determined that it is not required to have, nor was Iengaged to perform, an audit of the effectiveness of its documented internalcontrols over financial reporting.

 

 

John Kinross-Kennedy

Certified Public Accountant

Irvine, California

April 14, 2009

 

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**KABE EXPLORATION, INC.**

**(A Development Stage Company)**

**Balance Sheet**

 
| ** **                                                                                             | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                             | ** ** | **2007**              | ** ** |
|                                                                                                   |       |                  |       |
| ASSETS                                                                                                 |       |                  |       |
| Current Assets                                                                                         |       |                  |       |
| Cash                                                                                                   |       | $                     | 7,271      |   |
|                                                                                                   |       |                  |       |
| Total Current Assets                                                                                   |       | 7,271                 |       |
|                                                                                                   |       |                  |       |
| Non Current Assets                                                                                     |       |                  |       |
| Mining Leases                                                                                          |       | 5,000                 |       |
|                                                                                                   |       |                  |       |
| Total Non Current Assets                                                                               |       | 5,000                 |       |
|                                                                                                   |       |                  |       |
| Total Assets                                                                                           |       | $                     | 12,271     |   |
|                                                                                                   |       |                  |       |
| LIABILITIES AND SHAREHOLDERS’ DEFICIT                                                             |       |                  |       |
| Current Liabilities                                                                                    |       | —                |       |
| Total Liabilities                                                                                      |       | $                     | —     |   |
|                                                                                                   |       |                  |       |
| Shareholders’ Equity (Deficit)                                                                    |       |                  |       |
| Common Stock, $0.001 par value; authorized  75,000,000 shares; issued and outstanding 3,387,500 shares |       | $                     | 3,388      |   |
| Additional Paid-In Capital                                                                             |       | 46,862                |       |
| Deficit accumulated during the development stage                                                       |       | (37,979               |       |
|                                                                                                   |       |                  |       |
| Total Shareholders’ Equity                                                                        |       | $                     | 12,271     |   |
|                                                                                                   |       |                  |       |
| Total Liabilities and Shareholders’ Equity                                                        |       | $                     | 12,271     |   |

 

The accompanying notes are an integral part of these financialstatements

 

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**KABE EXPLORATION, INC.**

**Balance Sheet**

**As of December 31, 2008**

 
| ** **                          | ** ** | **Dec 31,** | ** ** |
|-------------------------------------|------------|-------------|------------|
| ** **                          | ** ** | **08**      | ** ** |
| ASSETS                              |       | 0.00        |       |
| LIABILITIES & EQUITY       |       |        | ** ** |
| Liabilities                         |       |        | ** ** |
| Current Liabilities                 |       |        | ** ** |
| Other Current Liabilities           |       |        | ** ** |
| Accounts Payable                    |       | 16,509.00   |       |
| Chapman Industries Loan             |       | 5,546.00    | ** ** |
| Loan Payable- EPS                   |       | 4,612.48    |       |
| Total Other Current Liabilities     |       | 26,667.48   |       |
| Total Current Liabilities           |       | 26,667.48   |       |
| Total Liabilities                   |       | 26,667.48   |       |
| Equity                              |       |        | ** ** |
| Additional Paid-In Capital          |       | 58,562.00   |       |
| Common Stock                        |       | 3,688.00    |       |
| Retained Earnings                   |       | -37,979.11  |       |
| Net Income                          |       | -50,938.37  |       |
| Total Equity                        |       | -26,667.48  |       |
| TOTAL LIABILITIES & EQUITY |       | 0.00        | ** ** |

 

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**KABEEXPLORATION, INC.**

**(ADevelopment Stage Company)**

**Statement of Operations**

 
| ** **                           | ** ** | **For the  year ended  Dec. 31, 2007** | ** ** |
|--------------------------------------|------------|---------------------------------------------|------------|
| Revenue                              |       | $                                           | —     |   |
|                                 |       |                                        |       |
| Cost of Sales                        |       | —                                      |       |
|                                 |       |                                        |       |
| Operating Income                     |       |                                        |       |
|                                 |       |                                        |       |
| General and Administrative Expenses: |       |                                        |       |
| Mineral Lease Fees                   |       | 6,713                                       |       |
| Professional Fees                    |       | 29,045                                      |       |
| Other Administrative Expenses        |       | 1,995                                       |       |
| Total General and                    |       |                                        |       |
| Adminstrative Expenses               |       |                                        |       |
|                                 |       | 37,753                                      |       |
|                                 |       |                                        |       |
| Net Loss                             |       | $                                           | (37,753    | ) |
|                                 |       |                                        |       |
| Loss Per Common Share:               |       |                                        |       |
| Basic and Diluted                    |       | $                                           | (0.011     | ) |
|                                 |       |                                        |       |
| Weighted Average Shares              |       |                                        |       |
| Outstanding                          |       |                                        |       |
| Basic and Diluted:                   |       | $                                           | 3,387,500  |   |

 

The accompanying notes are an integral part of these financialstatements

 

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**KABE EXPLORATION, INC.**

**Profit & Loss**

**January through December 2008**

 

| ** **                             | ** ** | **Jan - Dec 08** | ** ** |
|----------------------------------------|------------|---------------------------------|------------|
| **Ordinary Income/Expense**       | ** ** | ** **                      | ** ** |
| **Expense**                            | ** ** | ** **                      | ** ** |
| **Bank Service Charges**     |       | 61.00                           |       |
| **Miscellaneous**                      |       | 5,000.00                        |       |
| **Office Supplies**               |       | 87.69                           |       |
| **Professional Fees**             | ** ** | ** **                      | ** ** |
| **Accounting Fees**               |       | 3,345.00                        |       |
| **Audit Fees**                    |       | 2,010.00                        |       |
| **Filing Fees**                   |       | 2,863.00                        |       |
| **Legal Fees**                    |       | 18,146.20                       |       |
| **Professional Fees- Other** |       | 16,863.50                       |       |
| ** **                             |       |                            |       |
| **Total Professional Fees**  |       | 43,227.70                       |       |
| ** **                             |       |                            |       |
| **Stock Transfer Fee**       |       | 2,562.48                        |       |
| ** **                             |       |                            |       |
| **Total Expense**                 |       | 50,938.87                       |       |
| ** **                             |       |                            |       |
| **Net Ordinary Income**      |       | -50,938.87                      |       |
| ** **                             |       |                            |       |
| **Other Income/Expense**          | ** ** | ** **                      | ** ** |
| **Other Income**                  | ** ** | ** **                      | ** ** |
| **Interest Income**               |       | 13.50                           |       |
| ** **                             |       |                            |       |
| **Total Other Income**       |       | 13.50                           |       |
| ** **                             |       |                            |       |
| **Other Expense**                 | ** ** | ** **                      | ** ** |
| **Interest Expense**              |       | 13.00                           |       |
| ** **                             |       |                            |       |
| **Total Other Expense**      |       | 13.00                           |       |
| ** **                             |       |                            |       |
| **Net Other Income**         |       | 0.50                            |       |
| ** **                             |       |                            |       |
| **Net Income**                    | ** ** | **-50,938.37**                  | ** ** |

 

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**KABE EXPLORATION, INC.**

**(A Development Stage Company)**

**Statement of Shareholders’ Equity**

**Unaudited**

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

 

The accompanying notes are an integral part of these financialstatements

 

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**KABE EXPLORATION, INC.**

**(A Development StageCompany)**

**Statement of Cash Flows**

 
| ** **                                                                   | ** ** | **For the**            | ** ** |
|------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                   | ** ** | **year ended**         | ** ** |
| ** **                                                                   | ** ** | **Dec. 31, 2007** | ** ** |
|                                                                         |       |                   |       |
| Cash flows from operating activities:                                        |       |                   |       |
| Net loss                                                                     |       | $                      | (37,753    | ) |
| Adjustments to reconcile net loss to net cash used by operating  activities: |       |                   |       |
| Change in operating assets and liabilities:                                  |       |                   |       |
| Increase (decrease) in accounts accounts payable and accrued  liabilities    |       |                   |       |
| Net cash (used by) operating activities                                      |       | (37,753                | )          |
|                                                                         |       |                   |       |
| Cash flows from investing activities                                         |       |                   |       |
| Purchase of mining leases                                                    |       | —                 |       |
| Net cash (used by) investing activities                                      |       | —                 |       |
| Cash flows from financing activities:                                        |       |                   |       |
| Common stock issued for cash                                                 |       | —                 |       |
|                                                                         |       |                   |       |
| Net cash (used) provided by financiang activities                            |       | —                 |       |
|                                                                         |       |                   |       |
| Net increase (decrease) in cash                                              |       | (37,753                | )          |
|                                                                         |       |                   |       |
| Cash, beginning of the period                                                |       | 45,024                 |       |
|                                                                         |       |                   |       |
| Cash, end of the period                                                      |       | $                      | 7,271      |   |
|                                                                         |       |                   |       |
| Supplemental cash flow disclosure:                                           |       |                   |       |
| Interest paid                                                                |       |                   |       |
| Taxes paid                                                                   |       |                   |       |

 

Theaccompanying notes are an integral part of these financial statements

 

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**KABE EXPLORATION, INC.**

**Statement of Cash Flows**

**January through December 2008**

 
| ** **                                                                                                                | ** ** | **Jan - Dec 08** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| **OPERATING ACTIVITIES**                                                                                             | ** ** | ** **            | ** ** |
| **Net Income**                                                                                                       |       | -50,938.37            |       |
| **Adjustments to reconcile Net Income  to net cash provided by operations:** | ** ** | ** **            | ** ** |
| **Accounts Payable**                                                                                                 |       | 16,509.00             |       |
| **Chapman Industries Loan**                                                                                     |       | 5,546.00              |       |
| **Loan Payable- EPS**                                                                                                |       | 4,612.48              |       |
| ** **                                                                                                                |       |                  |       |
| **Net cash provided by Operating Activities**                                                    |       | -24,270.89            |       |
| ** **                                                                                                                | ** ** | ** **            | ** ** |
| **INVESTING ACTIVITIES**                                                                                             | ** ** | ** **            | ** ** |
| **Mining Lease**                                                                                                     |       | 5,000.00              |       |
| ** **                                                                                                                |       |                  |       |
| **Net cash provided by Investing Activities**                                                    |       | 5,000.00              |       |
| ** **                                                                                                                | ** ** | ** **            | ** ** |
| **FINANCING ACTIVITIES**                                                                                             | ** ** | ** **            | ** ** |
| **Additional Paid-In Capital**                                                                                  |       | 11,700.20             |       |
| **Common Stock**                                                                                                     |       | 300.00                |       |
| **Retained Earnings**                                                                                                |       | -0.30                 |       |
| ** **                                                                                                                |       |                  |       |
| **Net cash provided by Financing Activities**                                                    |       | 11,999.90             |       |
| ** **                                                                                                                |       |                  |       |
| **Net cash increase for period**                                                                      |       | -7,270.99             |       |
| ** **                                                                                                                |       |                  |       |
| **Cash at beginning of period**                                                                       |       | 7,270.99              |       |
| ** **                                                                                                                | ** ** | ** **            | ** ** |
| **Cash at end of period**                                                                             | ** ** | **0.00**              | ** ** |

 

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**Kabe Exploration, Inc.**

**(A Developmental Stage Company)**

**Notes to Financial Statements**

**December 31 2008**

 

**1.     Organization**

 

KabeExploration, Inc. (the “Company”) was incorporated under the laws of the Stateof Nevada December 16, 2005.  The companywas originally formed for mineral exploration in the United States.  The Company abandoned its Mineral Leases in2008 and is seeking new business opportunities.

 

**2.     Summary of SignificantAccounting Policies**

 

Basis of Presentation

 

Thefinancial statements of the Company have been prepared using the accrual basisof accounting in accordance with generally accepted accounting principles inthe United States.  Because a precisedetermination of many assets and liabilities is dependent upon future events,the preparation of financial statements for a period necessarily involves theuse of estimates which have been made using careful judgment.

 

Use of 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 could differ materially fromthose estimates. Significant estimates made by management are, among others,realizability of long-lived assets, deferred taxes 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.

 

Income Taxes

 

TheCompany utilizes SFAS No. 109, “Accounting for Income Taxes,” which requiresthe recognition of deferred tax assets and liabilities for the expected futuretax consequences of events that have been included in the financial statementsor tax returns.  Under this method, deferredtax assets and liabilities are determined based

 

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onthe difference between the tax basis of assets and liabilities and theirfinancial reporting amounts based on enacted tax laws and statutory tax ratesapplicable to the periods in which the differences are expected to affecttaxable income.  Valuation allowances areestablished, when necessary, to reduce deferred tax assets to the amountexpected to be realized. The Company generated a deferred tax credit throughnet operating loss carryforward. However, a valuation allowance of 100% has been established, as the realizationof the deferred tax credits is not reasonably certain, based on going concernconsiderations outlined as follows.

 

Going Concern

 

TheCompany’s financial statements are prepared using accounting principlesgenerally accepted in the United States of America applicable to a going concern,which contemplates the realization of assets and liquidation of liabilities inthe normal course of business.  TheCompany has not yet established an ongoing source of revenues sufficient tocover its operating costs and to allow it to continue as a going concern.   The ability of the Company to continue as agoing concern is dependent on the Company obtaining adequate capital to fundoperating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forcedto cease development of operations.

 

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 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 the Company be unable tocontinue as a going concern.

 

Development-Stage Company

 

TheCompany is considered a development-stage company, with limited operatingrevenues during the periods presented, as defined by Statement of FinancialAccounting Standards (“SFAS”) No. 7. SFAS.  No. 7 requires companies toreport their operations, shareholders deficit and cash flows since inceptionthrough the date that revenues are generated from management’s intendedoperations, among other things. Management has defined inception as January 1, 2006. Since inception,the Company has incurred an operating loss of $88,917. The Company’s workingcapital has been generated through the sales of common stock.  Management has provided financial data sinceJanuary 1, 2006, “Inception” in the financial statements, as a means to providereaders of the Company’s financial information to make informed investmentdecisions.

 

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Basic and Diluted Net Loss Per Share

 

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

 

TheCompany has no potentially dilutive securities outstanding as of 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, 2008and 2007:

 
| ** **                                                      | ** ** | **2008**  | ** ** | **2007**  | ** ** |
|-----------------------------------------------------------------|------------|-----------|------------|-----------|------------|
| Numerator:                                                      |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Basic and diluted net loss per share:                           |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Net Loss                                                        |       | $         | (50,939    | )         | $          | (35,650 | ) |
|                                                            |       |      |       |      |       |
| Denominator                                                     |       |      |       |      |       |
|                                                            |       |      |       |      |       |
| Basic and diluted weighted average number of shares outstanding |       | 3,537,500 |       | 3,387,500 |       |
|                                                            |       |      |       |      |       |
| Basic and Diluted Net Loss Per Share                            |       | $         | (0.014     | )         | $          | (0.011 | ) |

 

**3.     Capital Structure**

 

Duringthe period from inception through June 30, 2008, the Company entered into thefollowing equity transactions:

 
| January  16, 2006: |   | Sold  1,500,000 shares of common stock at $.01 per share for $15,000. |
|--------------------|--------|-----------------------------------------------------------------------|
|               |   |                                                                  |
| August  23, 2006:  |   | Sold  250,000 shares of common stock at $.01 per share for $5,000.    |

 

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| September  1, 2006: |   | Sold  575,000 shares of common stock at $0.02 per share, realizing $11,500  |
|---------------------|--------|-----------------------------------------------------------------------------|
|                |   |                                                                        |
| ,October  31, 2006: |   | Sold  800,000 shares of common stock at $0.02 per share, realizing 16,000   |
|                |   |                                                                        |
| November  30, 2006: |   | Sold  262,500 shares of common stock at $0.02 per share, realizing $5,250   |
|                |   |                                                                        |
| April  15, 2008     |   | Sold  300,000 shares of common stock at $0.04 per share, Realizing $12,000. |

 

Asof December 31, 2008 the Company has authorized 75,000,000 of $0.001 par commonstock, of which 3,687,500 shares were issued and outstanding. 

 

**4.     Commitments**

 

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

 

**5.     Contigencies, Litigation**

 

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

 

**6.     Change in Control**

 

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 wasappointed President, Chief Financial Officer and Secretary of the Company.

 

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**Item 8.**       ** Changes In and Disagreements with Accountants onAccounting and Financial Disclosure.**

 

None.

 

**Item8A(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, 2008.  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, 2008, 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, 2008, there has been no change in our internal control over  financial  reporting  (as defined in Rule  13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected,  or is reasonably likely to materially affect, our internal control over financial reporting.

 

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**PART III**

 

**Item 9.**       ** Directors, Executive Officers and CorporateGovernance.**

 

The following table sets forth the name and age of ourexecutive officers and directors as of April 14, 2009:

 
| **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 our President, ChiefFinancial Officer, Secretary and Director on February 14, 2008. Since 2004, Mr. Ulsteen has been Chief Executive Officer and Chairman ofEmission & Power Solutions, Inc. (formerly Fuel FX International, Inc.). From 2002 until 2004, Mr. Ulsteen was President of Fuel FX International, Inc.

 

*StaleWerner Nielsen.* Mr. Nielsen was appointed a Director on March 20, 2008.  Since 2003, Mr. Nielsen has been aManaging Director of Hoyer Industries AS which markets and distributes Evianwater and Dannon yogurt products in Norway and Sweden.  From 2000 to 2003,Mr. Nielsen was a Managing Director of Margarinfabrikken Norge AS.

 

*BjornRene Singdahlsen*.**  Mr. Singdahlsen was appointed a Directoron March 20, 2008.  Since 2002 Mr. Singdahlsen has beenRegional District Manager at Valora Holding AG, a trading and services companyheadquartered in Switzerland.

 

**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.

 

**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:

 

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| · |   | the subject of any bankruptcy petition filed by or  against any business of which such person was a general partner or executive  officer either at the time of the bankruptcy or within two years prior to  that time;                                                                               |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                  |
| · |   | convicted in a criminal proceeding or is subject to  a pending criminal proceeding (excluding traffic violations and other minor  offenses);                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                  |
| · |   | subject to any order, judgment, or decree, not  subsequently reversed, suspended or vacated, of any court of competent  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 competent jurisdiction (in a  civil action), the Commission or the Commodity Futures Trading Commission to  have violated a federal or state securities or commodities law.                                                                                                       |

 

**Code of Ethics**

 

We have adopted a formal Code of Business Conduct andEthics applicable to all Board members, executive officers and employees.  Our Code of Business Conduct and Ethics hasbeen filed as Exhibit 14 to this Report and is also available upon requestat no charge by contacting Erik Ulsteen, President at our offices located at5050 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 10.**       ** Executive Compensation.**

 

**Compensation of Executive Officers**

 

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

 

**Option/SAR Grants in Last Fiscal Year**

We did not grant any stock options to our executiveofficers or directors from inception through December 31, 2008.

 

**Employment Agreements**

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

 

**Compensation of Directors**

 

For the fiscal year ended December 31, 2008, wedid not compensate our directors for their services, except for the issuance of50,000 shares of common stock to each of our directors on  December 5, 2008.

 

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**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 11.**       ** Security Ownership of Certain Beneficial Ownersand Management and Related Stockholder Matters.**

 

The following table sets forth certain informationregarding the ownership of our capital stock, as of April 14, 2009, 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**                                              |       | 17,550,000                                                     |       | 46.8                                | %          |
| **Stale Werner Nielsen**                                      |       | 50,000                                                         |       | *                                   |       |
| **Bjorn Rene Singdahlsen**                                    |       | 50,000                                                         |       | *                                   |       |
| **All officers and directors as a group (3  persons)**        |       | 17,650,000                                                     |       | 47.1                                | %          |

 

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| (1)    |   | Except as otherwise  indicated, the address of each beneficial owner is c/o Kabe Exploration Inc.,  5050 Avenidas Encinas, Suite 270, Carlsbad, CA 92008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (2)    |   | Applicable percentage  ownership is based on 37,475,000 shares of common stock outstanding as of  April 14, 2009, together with securities exercisable or convertible into  shares of common stock within 60 days of April 14, 2009 for each  stockholder.  Beneficial ownership is determined in accordance with the  rules of the Securities and Exchange Commission and generally includes  voting or investment power with respect to securities.  Shares of common  stock that are currently exercisable or exercisable within 60 days of  April 14, 2009 are deemed to be beneficially owned by the person holding  such securities for the purpose of computing the percentage of ownership of  such person, but are not treated as outstanding for the purpose of computing  the percentage ownership of any other person. |

 

**Item 12.**       ** Certain Relationships and Related Transactions.**

 

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 toSection 4(2) of the Securities Act of 1933 and are restricted sharesas defined in the Securities Act.

 

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 of common stock and the 17,500,000shares represent Mr. Ulsteen’s entire beneficial holdings in ourcompany.  On February 14, 2008, Mr. Claydonresigned as our President, Chief Financial  

 

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Officer and Secretary andMr. Ulsteen was appointed President, Chief Financial Officer and Secretaryof our company as well as a director.

 

**Item 13.**       ** Exhibits.**

 
| **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 |

 

**Item 14.**       ** Principal Accounting Fees and Services.**

 

**Audit Fees**

 

For our fiscal year ended December 31, 2008, wewere billed approximately $2,200 for professional services rendered for theaudit and reviews of our financial statements. For our fiscal year ended December 31,2007, 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, 2008 and2007, we were not billed for professional services rendered to other auditrelated fees.

 

**Tax Fees**

 

For our fiscal years ended December 31, 2008 and2007, 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 31,2008 and 2007.

 

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 2008 were pre-approved by the entire Board of Directors.

 

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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:                      | April 15, 2009 |

 

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 |       | April 15, 2009 |
| Erik Ulsteen               |       |                                                        |       |                |
|                       |       |                                                        |       |                |
| /s/ Stale Werner Nielsen   |       | Director                                                    |       | April 15, 2009 |
| Stale Werner Nielsen       |       |                                                        |       |                |
|                       |       |                                                        |       |                |
| /s/ Bjorn Rene Singdahlsen |       | Director                                                    |       | April 15, 2009 |
| Bjorn Rene Singdahlsen     |       |                                                        |       |                |

 

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