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

 

**FORM 10-KSB**

 

**(MarkOne)**

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

 

**For the fiscal year ended December 31, 2007**

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

 

**For the transition period from                      to**

 

**Commission file number**

 

**KABEEXPLORATION INC.**

(Name registrant as specified in its charter)

 

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

 

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

 

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

 

| Securities  registered under Section 12(b) of the Exchange Act: |
|---------------------------------------------------------------------------|

 

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

 

| Securities  registered under Section 12(g) of the Exchange Act: |
|---------------------------------------------------------------------------|
|                                                                      |
| **Common Stock, par value $.001**                                         |
| (Title  of class)                                                         |

 

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

 

Check if there is nodisclosure of delinquent filers in response to Item 405 of Regulation S-Bcontained in this form, and no disclosure will be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB or anyamendment to this Form 10-KSB.  x

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  Yes x No o

 

Indicate by checkmark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer or asmaller reporting company. See the definitions of “large accelerated filer,”“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of theAct. (Check one):

| Large accelerated filer o |   | Accelerated filer o |   | Non-accelerated filer o  (Do not check if a smaller reporting company) |   | Smaller reporting company x |
|--------------------------------|--------|--------------------------|--------|-----------------------------------------------------------------------------|--------|----------------------------------|

 

State issuer’s revenues forits most recent fiscal year. $0

 

Aggregate market value ofthe Common Stock held by non-affiliates of the Company as of December 31,2007: $0.

 

Number of shares of theregistrant’s common stock outstanding as of March 24, 2008: 3,387,500 shares of Common Stock

 

 

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**TABLE OFCONTENTS**

 
| **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 and  Related Stockholder Matters.                                                                   | 5          |
|              |                                                                                                                         |       |
| Item 6.           | Management’s  Discussion and Analysis or Plan of Operations.                                                            | 6          |
|              |                                                                                                                         |       |
| Item 7.           | Financial Statements.                                                                                                        | 9          |
|              |                                                                                                                         |       |
| Item 8.           | Changes in and  Disagreements With Accountants on Accounting and Financial Disclosure.                                       | 19         |
|              |                                                                                                                         |       |
| Item 8A(T).       | Controls and  Procedures.                                                                                                    | 19         |
|              |                                                                                                                         |       |
| Item 8B.          | Other Information.                                                                                                           |       |
|              |                                                                                                                         |       |
| **Part III** |                                                                                                                         |       |
|              |                                                                                                                         |       |
| Item 9.           | Directors,  Executive Officers, Promoters and Control Persons; Compliance with  Section 16(a) of the Exchange Act. | 20         |
|              |                                                                                                                         |       |
| Item 10.          | Executive  Compensation.                                                                                                     | 21         |
|              |                                                                                                                         |       |
| Item 11.          | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters.                            | 22         |
|              |                                                                                                                         |       |
| Item 12.          | Certain  Relationships and Related Transactions.                                                                             | 22         |
|              |                                                                                                                         |       |
| Item 13.          | Exhibits.                                                                                                                    | 23         |
|              |                                                                                                                         |       |
| Item 14.          | Principal  Accountant Fees and Services.                                                                                     | 23         |
|              |                                                                                                                         |       |
|              | Signatures                                                                                                                   | 24         |

 

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*Except asotherwise required by the context, all references in this prospectus to “we”, “us”,“our”, or “Company” refer to the operations of Kabe Exploration Inc., a Nevadacorporation.*

 

**Forward-LookingStatements and Associated Risks**

 

*ThePrivate Securities Litigation Reform Act of 1995 provides a “safe harbor” forcertain forward-looking statements. Some of the statements contained in thisannual report of the Company discuss future expectations, containprojections of our operations or financial condition or state otherforward-looking information. Some statements contained in this annual report onForm 10-KSB that are not historical facts (including without limitationstatements to the effect that we “believe,” “expect,” “anticipate,” “plan,” “intend,”“foresee,” or other similar expressions) and are forward-looking statements.These forward-looking statements are based on our current expectations andbeliefs concerning future developments and their potential effects on us. Therecan be no assurance that future developments affecting us will be thoseanticipated by us. All comments concerning our expectations for future revenueand operating results are based on our forecasts of our plan of operation anddo not include the potential impact of any future acquisitions or operations.These forward-looking statements involve significant risks and uncertainties(some of which are beyond our control) and assumptions. Should one or more ofthese risks or uncertainties materialize, or should any of our assumptionsprove incorrect, actual results may vary in material respects from thoseprojected in the forward-looking statements.*

 

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**PART I**

 

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

 

**General**

 

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

 

During 2007, we were anexploration stage company engaged in the acquisition and exploration of mineralproperties. We entered into a lease agreement with George J. Eliopuloseffective March 31, 2006, granting us the exclusive right to explore,develop, and mine the property for gold, silver, copper and other valuableminerals.  The property consisted of one unpatented mining claim locatedin section 12, Township 16 North, Range 20 East, Mt. Diablo Baseline &Meridian, Storey County, Nevada, USA, owned by Mr. Eliopulos.   In September 2006 Mr. Eliopulosadded five additional claims to our property and mineral lease. The propertynow consists of six mining claims and is hereon referred to as the CheckupProperty.

 

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. At this stage, no definitive merger agreement has been entered into, and neither party is currently bound to proceed with the merger.

 

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

 

The following factors raisesubstantial doubt regarding the ability of our business to continue as a goingconcern: (i) the losses we have incurred since our inception; (ii) ourfailure to generate revenues since our inception; and (iiI) our dependence onthe sale of our equity securities and on the receipt of capital from outsidesources to continue our operations. Our auditors have issued a going concernopinion regarding our business. The financial statements do not include anyadjustments that might result from the uncertainty about our ability tocontinue in business. As such we may have to cease operations and you couldlose your investment.

 

**Patent andTrademarks**

 

We currently do not own anypatents, trademarks or licenses of any kind.

 

**GovernmentRegulations**

 

There are no governmentapprovals necessary to conduct our current business.

 

4

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**Employees**

 

We have no employees as ofthe date of this annual report other than Mr. Ulsteen.

 

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

 

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.  In September 2006Mr. Eliopulos added five additional claims to our property and minerallease.  On January 28, 2008, weterminated our lease agreement with Mr. Eliopulos.

 

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

 

There are no significantlegal proceedings against us with respect to matters arising in the ordinarycourse of business.

 

**Item 4.****                         ****Submission of Matters to aVote of Security Holders.**

 

None .

 

**PART II**

 

**Item 5.****                           ****Market for Common Equity,Related Stockholder Matters and Small Business Issuer Purchases of EquitySecurities.**

 

**MarketInformation**

 

Since June 4, 2007, ourcommon stock has been quoted on the Over-the-Counter Bulletin Board under thesymbol “KABX,” however, it has never traded. We can provide no assurance that our shares will ever be traded on theOver-the-Counter Bulletin Board electronic quotation service or, if traded,that a public market will develop.

 

**Holders**

 

As of March 24, 2008 inaccordance with our transfer agent records, we had 31 stockholders of record.

 

**Dividends**

 

There are no restrictions inour articles of incorporation or bylaws that prevent us from declaringdividends. We have not declared any dividends and we do not plan to declare anydividends in the foreseeable future..

 

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**Item 6.        Management’sDiscussion and Analysis or Plan 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. Ulsteenwas 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 (“EPS”), regarding thepossibility of a reverse triangular merger (the “Merger”) involving the twocompanies. At this stage, no definitive merger agreement has been entered into,and neither party is currently bound to proceed with the merger.

 

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

 

**Summaryof Significant Accounting Policies**

 

Basis of Presentation

 

Our financial statementshave been prepared using the accrual basis of accounting in accordance withgenerally accepted accounting principles in the United States.  Because aprecise determination of many assets and liabilities is dependent upon futureevents, the preparation of financial statements for a period necessarilyinvolves the use of estimates which have been made using careful judgment.

 

Use of Estimates

 

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make certainestimates and assumptions that affect the reported amounts of assets andliabilities at the date of the financial statements, and reported amounts ofrevenue and expenses during the reporting period.  Actual results coulddiffer materially from those estimates. Significant estimates made bymanagement are, among others, realizability of long-lived assets, deferredtaxes and stock option valuation.

 

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

 

Income Taxes

 

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

 

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generated a deferred taxcredit through net operating loss carryforward.  However, a valuationallowance of 100% has been established, as the realization of the deferred taxcredits is not reasonably certain, based on going concern considerationsoutlined as follows.

 

Going Concern

 

Our financial statementsare prepared using accounting principles generally accepted in the UnitedStates of America applicable to a going concern, which contemplates therealization of assets and liquidation of liabilities in the normal course ofbusiness.  We have not yet established an ongoing source of revenuessufficient to cover our operating costs and to allow us to continue as a goingconcern.   Our ability to continue as a going concern is dependent onus obtaining adequate capital to fund operating losses until we becomeprofitable.  If we are unable to obtain adequate capital, we could beforced to cease operations.

 

Our ability to continueas a going concern is dependent upon our ability to successfully accomplish ourplan to develop a new business plan, or merger candidate in order to eventuallysecure other sources of financing and attain profitable operations.  Theaccompanying financial statements do not include any adjustments relating tothe recoverability and classification of recorded asset amounts or the amountand classifications or liabilities or other adjustments that might be necessaryshould we be unable to continue as a going 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 averagenumber of common shares outstanding.  Diluted net loss per share is basedon the assumption that all dilative convertible shares and stock options wereconverted or exercised.  Dilution is computed by applying the treasurystock method.  Under this method, options and warrants are assumedexercised at the beginning of the period (or at the time of issuance, iflater), and as if funds obtained thereby we used to purchase common stock atthe average market price during the period.

 

We had no potentially dilutivesecurities outstanding as of December 31, 2007.

 

**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.****                                  ****Financial Statements.**

 

**KABE EXPLORATION INC.**

**(A DEVELOPMENT STAGE COMPANY)**

 

**TABEL OF CONTENTS**

 
| PAGE   | 10     | REPORT  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                                                                           |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                               |
| PAGE   | 11     | BALANCE  SHEET AS OF DECEMBER 31, 2007 AND 2006                                                                                                    |
|   |   |                                                                                                                                               |
| PAGE   | 12     | STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER  31, 2007 AND 2006 AND FOR THE PERIOD FROM JANUARY 1, 2006 (INCEPTION) TO  DECEMBER 31, 2007. |
|   |   |                                                                                                                                               |
| PAGE   | 13     | STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY (DEFICIT)  FOR THE PERIOD FROM JANUARY 1, 2006 (INCEPTION) TO DECEMBER 31, 2007.                 |
|   |   |                                                                                                                                               |
| PAGE   | 14     | STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER  31 2007 AND 2006 AND FOR THE PERIOD JANUARY 1, 2006 (INCEPTION) TO DECEMBER  31, 2007.       |
|   |   |                                                                                                                                               |
| PAGES  | 15-18  | NOTES  TO FINANCIAL STATEMENTS.                                                                                                                    |

 

9

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**REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM**

 

To:  The Board ofDirectors and Shareholders

KabeExploration, Inc.

Carlsbad,California

 

Ihave audited the accompanying balance sheet of Kabe Exploration, Inc. asof December 31, 2007 and 2006 and the related statements of operations andcash 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.

 

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

 

Inmy opinion the financial statements referred to above present fairly, in allmaterial respects, the financial position of Kabe Exploration, Inc. as of December 31,2007 and 2006 and the results of its operations and its cash flows for the yearthen ended in conformity with United States generally accepted accountingprinciples.

 

Theaccompanying financial statements have been prepared assuming that the Companywill continue as a going concern.  As discussedin Note 2 to the financial statements, the Company has not yet commencedoperations and has no revenue.  Thisraises substantive doubt about the Company’s ability to continue as a goingconcern.  Management’s plans in regard tothese matters are also described in Note 2. The financial statements do not include any adjustments that mightresult from the outcome of this uncertainty.

 

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

 

 

JohnKinross-Kennedy

CertifiedPublic Accountant

Irvine,California

March 22,  2008

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Balance Sheet

 
| ** **                                                                                             | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                                             | ** ** | **2007**              | ** ** | **2006**              | ** ** |
|                                                                                                   |       |                  |       |                  |       |
| ASSETS                                                                                                 |       |                  |       |                  |       |
| Current Assets                                                                                         |       |                  |       |                  |       |
| Cash                                                                                                   |       | $                     | 7,271      |                  | $          | 45,024 |   |
|                                                                                                   |       |                  |       |                  |       |
| Total Current Assets                                                                                   |       | 7,271                 |       | 45,024                |       |
|                                                                                                   |       |                  |       |                  |       |
| Non Current Assets                                                                                     |       |                  |       |                  |       |
| Mining Leases                                                                                          |       | 5,000                 |       | 5,000                 |       |
|                                                                                                   |       |                  |       |                  |       |
| Total Non Current Assets                                                                               |       | 5,000                 |       | 5,000                 |       |
|                                                                                                   |       |                  |       |                  |       |
| Total Assets                                                                                           |       | $                     | 12,271     |                  | $          | 50,024 |   |
|                                                                                                   |       |                  |       |                  |       |
| 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      |                  | $          | 3,388 |   |
| Additional Paid-In Capital                                                                             |       | 46,862                |       | 46,862                |       |
| Deficit accumulated during the development  stage                                                      |       | (37,979               | )          | (226                  | )          |
|                                                                                                   |       |                  |       |                  |       |
| Total Shareholders’ Equity                                                                        |       | $                     | 12,271     |                  | $          | 50,024 |   |
|                                                                                                   |       |                  |       |                  |       |
| Total Liabilities and Shareholders’ Equity                                                        |       | $                     | 12,271     |                  | $          | 50,024 |   |

 

The accompanying notes are an integral partof these financial statements

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Operations

 

| ** **

** **                   | ** ** | ** **                  | ** ** | ** **                  | ** ** | **For the Period** | ** ** |
|------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|------------------------------|------------|
| ** **                               | ** ** | ** **                  | ** ** | ** **                  | ** ** | **of Inception**        | ** ** |
| ** **                               | ** ** | **For the**            | ** ** | **For the**            | ** ** | **from Jan. 1,**   | ** ** |
| ** **                               | ** ** | **year ended**         | ** ** | **year ended**         | ** ** | **2006, through**       | ** ** |
| ** **                               | ** ** | **Dec. 31, 2007** | ** ** | **Dec. 31, 2006** | ** ** | **Dec. 31, 2007**  | ** ** |
|                                     |       |                        |       |                        |       |                         |       |
| Revenue                                  |       | $                           | —     |                        | $          | —                       |       | $ | — |   |
|                                     |       |                        |       |                        |       |                         |       |
| Cost of Sales                            |       | —                      |       | —                      |       | —                       |       |
|                                     |       |                        |       |                        |       |                         |       |
| Operating Income                         |       |                        |       |                        |       |                         |       |
|                                     |       |                        |       |                        |       |                         |       |
| General and Administrative Expenses:     |       |                        |       |                        |       |                         |       |
| Mineral Lease Fees                       |       | 6,713                       |       | —                      |       | 6,713                        |       |
| Professional Fees                        |       | 29,045                      |       | —                      |       | 29,045                       |       |
| Other Administrative Expenses            |       | 1,995                       |       | 226                         |       | 2,221                        |       |
| Total General and Adminstrative Expenses |       | 37,753                      |       | 226                         |       | 37,979                       |       |
|                                     |       |                        |       |                        |       |                         |       |
| Net Loss                                 |       | $                           | (37,753    | )                           | $          | (226                         | )          | $ | (37,979 | ) |
|                                     |       |                        |       |                        |       |                         |       |
| Loss Per Common Share:                   |       |                        |       |                        |       |                         |       |
| Basic and Diluted                        |       | $                           | (0.011     | )                           | $          | (0.000                       | )          |   |   |
|                                     |       |                        |       |                        |       |                         |       |
| Weighted Average Shares                  |       |                        |       |                        |       |                         |       |
| Outstanding                              |       |                        |       |                        |       |                         |       |
| Basic and Diluted:                       |       | $                           | 3,387,500  |                        | $          | 1,837,466                    |       |   |   |

 

The accompanying notes are an integral partof these financial statements

 

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Shareholders’Equity

Unaudited

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

 

The accompanying notes are an integral partof these financial statements

 

13

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KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Cash Flows

 

| ** **                                                                   | ** ** | ** **                  | ** ** | ** **                  | ** ** | **For the Period** | ** ** |
|------------------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|------------------------------|------------|
| ** **                                                                   | ** ** | ** **                  | ** ** | ** **                  | ** ** | **of Inception**        | ** ** |
| ** **                                                                   | ** ** | **For the**            | ** ** | **For the**            | ** ** | **from Jan. 1,**   | ** ** |
| ** **                                                                   | ** ** | **year ended**         | ** ** | **year ended**         | ** ** | **2006, through**       | ** ** |
| ** **                                                                   | ** ** | **Dec. 31, 2007** | ** ** | **Dec. 31, 2006** | ** ** | **Dec. 31, 2007**  | ** ** |
|                                                                         |       |                        |       |                        |       |                         |       |
| Cash flows from operating activities:                                        |       |                        |       |                        |       |                         |       |
| Net loss                                                                     |       | $                           | (37,753    | )                           | $          | (226                         | )          | $ | (37,979 | ) |
| 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                     | )          | (226                        | )          | (37,979                      | )          |
|                                                                         |       |                        |       |                        |       |                         |       |
| Cash flows from investing activities                                         |       |                        |       |                        |       |                         |       |
| Purchase of mining leases                                                    |       | —                      |       | (5,000                      | )          | (5,000                       | )          |
| Net cash (used by) investing activities                                      |       | —                      |       | (5,000                      | )          | (5,000                       | )          |
| Cash flows from financing activities:                                        |       |                        |       |                        |       |                         |       |
| Common stock issued for cash                                                 |       | —                      |       | 50,250                      |       | 50,250                       |       |
|                                                                         |       |                        |       |                        |       |                         |       |
| Net cash (used) provided by financiang  activities                           |       | —                      |       | 50,250                      |       | 50,250                       |       |
|                                                                         |       |                        |       |                        |       |                         |       |
| Net increase (decrease) in cash                                              |       | (37,753                     | )          | 45,024                      |       | 7,271                        |       |
|                                                                         |       |                        |       |                        |       |                         |       |
| Cash, beginning of the period                                                |       | 45,024                      |       | —                      |       | —                       |       |
|                                                                         |       |                        |       |                        |       |                         |       |
| Cash, end of the period                                                      |       | $                           | 7,271      |                        | $          | 45,024                       |       | $ | 7,271 |   |
|                                                                         |       |                        |       |                        |       |                         |       |
| Supplemental cash flow disclosure:                                           |       |                        |       |                        |       |                         |       |
| Interest paid                                                                |       |                        |       |                        |       | $                            | —     |   |
| Taxes paid                                                                   |       |                        |       |                        |       | $                            | —     |   |

 

The accompanying notes are an integral partof these financial statements

 

14

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**Kabe Exploration, Inc.**

**(A Developmental Stage Company)**

**Notes to Financial Statements**

**December 31, 2007**

 

**1.****     ****Organization**

 

KabeExploration, Inc. (the “Company”) was incorporated under the laws of theState of Nevada December 16, 2005. The company was formed for mineral exploration in the United States.  The Company entered into a Mineral LeaseAgreement March 1, 2006 for a mining claim in Storey County, Nevada.

 

**2.****     ****Summary of Significant Accounting Policies**

 

Basis of Presentation

 

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

 

Use of Estimates

 

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.

 

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

 

Income Taxes

 

TheCompany utilizes SFAS No. 109, “Accounting for Income Taxes,” whichrequires the recognition of deferred tax assets and liabilities for theexpected future tax consequences of events that have been included in thefinancial statements or tax returns. Under this method, deferred tax assets and liabilities are determinedbased on the difference between the tax basis of assets and liabilities andtheir financial reporting amounts based on enacted tax laws and statutory taxrates applicable to the

 

15

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periodsin which the differences are expected to affect taxable income.  Valuation allowances are established, whennecessary, to reduce deferred tax assets to the amount expected to be realized.The Company generated a deferred tax credit through net operating losscarryforward.  However, a valuationallowance of 100% has been established, as the realization of the deferred taxcredits is not reasonably certain, based on going concern considerationsoutlined as follows.

 

Going Concern

 

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

 

The ability of the Company to continue as a going concern is dependentupon its ability to successfully accomplish its plans to exploit or lease itsmining claim described in the initial paragraph, or engage a working interestpartner, in order to eventually secure other sources of financing and attainprofitable operations.  The accompanyingfinancial statements do not include any adjustments relating to therecoverability and classification of recorded asset amounts or the amount andclassifications or liabilities or other adjustments that might be necessaryshould the Company be unable to continue as a going concern.

 

Development-Stage Company

 

The Company is considereda development-stage company, with limited operating revenues during the periodspresented, as defined by Statement of Financial Accounting Standards (“SFAS”) No. 7.  SFAS.  No. 7requires companies to report their operations, shareholders deficit and cashflows since inception through the date that revenues are generated frommanagement’s intended operations, among other things.  Management has defined inception as January 1,2006. Since inception, the Company has incurred an operating loss of $37,979.The Company’s working capital has been generated through the sales of commonstock.  Management has provided financialdata since January 1, 2006, “Inception” in the financial statements, as ameans to provide readers of the Company’s financial information to makeinformed investment decisions.

 

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

 

16

----

 

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 31,2007.

 

**Thefollowing is a reconciliation of the numerator and denominator of the basic anddiluted earnings per share computations for the years ended December 31,2007 and 2006:**

** **
| ** **                                                       | ** ** | **2007**  | ** ** | **2006**  | ** ** |
|------------------------------------------------------------------|------------|-----------|------------|-----------|------------|
| Numerator:                                                       |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Basic and diluted net loss per share:                            |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Net Loss                                                         |       | $         | (37,753    | )         | $          | (226 | ) |
|                                                             |       |      |       |      |       |
| Denominator                                                      |       |      |       |      |       |
|                                                             |       |      |       |      |       |
| Basic and diluted weighted average number  of shares outstanding |       | 3,387,500 |       | 1,837,466 |       |
|                                                             |       |      |       |      |       |
| Basic and Diluted Net Loss Per Share                             |       | $         | (0.011     | )         | $          | (0.00 | ) |

 

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

 

Duringthe period from inception through December 31, 2007, the Company enteredinto the following equity transactions:

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

 

17

----

 

As of December 31, 2007 the Company has authorized 75,000,000 of$0.001 par common stock, of which 3,387,500 shares were issued and outstanding.

 

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

 

OnMarch 1, 2006 the Company entered into a lease agreement with the owner ofa mining claim situated in Storey County, Nevada in terrain noted for gold andsilver mining.  The agreement requires aroyalty of 3 1⁄2 % of net smelter returns, as defined in the agreement, paidquarterly, and lease payments according to the following schedule:

 
| On or before the anniversary of the execution of the lease: |
|-------------------------------------------------------------|
|                                                        |
| ** **                                                  | ** ** | **Due** | ** ** | ** ** | ** ** | ** ** |
| 1st year                                                    |   | March 1,  2007 |   | $ | 5,000 |   |
| 2nd year                                                    |   | March 1,  2008 |   | $ | 25,000 |   |
| 3rd year                                                    |   | March 1,  2008 |   | $ | 25,000 |   |
| 4th year                                                    |   | March 1,  2008 |   | $ | 25,000 |   |
| 5th                                                         |   | March 1,  2008 |   | $ | 75,000 |   |
| Thereafter                                                  |   | March 1,  annually |   | $ | 100,000 (inflation adjusted | ) |

 

Theagreement is for a period of twenty years (“initial term”) and renews for anadditional twenty-year term.  The royaltyis 3 1⁄2 %.  A $5 million buydown of theroyalty to 2 1⁄2 % is available in the 60 day period after the completion of abankable feasibility study or ore production. The buydown would leave a perpetual 1% royalty. The agreement requiresthe Company to pay Federal, State and County maintenance payments, tax paymentsand filing fees, and to provide various quarterly and annual reports.

 

**5.****                  ****Litigation**

 

Thereare no significant legal proceedings against the Company with respect tomatters arising in the ordinary course of business.

 

**6.****                  ****Subsequent Events**

 

OnJanuary 28, 2008 the Mineral Lease Agreement between George J. Eliopulosand the Company related to the Storey County, Nevada mining claims was terminated.

 

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

 

18

----

 

**  Item8.**      ** Changes In and Disagreementswith Accountants on Accounting and Financial Disclosure.**

 

None.

 

**Item 8A(T).**       ** Controls and Procedures.**

 

*Evaluationof Disclosure Controls and Procedures*. Under thesupervision and with the participation of our management, including ourPresident, Chief Financial Officer and Secretary, we evaluated theeffectiveness 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 Actof 1934 (the "Exchange Act")) as of the end of the period covered bythis report.  Based upon that evaluation,our President, Chief Financial Officer and Secretary concluded that ourdisclosure controls and procedures as of the end of the period covered by thisreport were effective such that the information required to be disclosed by usin reports filed under the Securities Exchange Act of 1934 is (i) recorded,processed, summarized and reported within the time periods specified in theSEC's rules and forms and (ii) accumulated and communicated to our managementto allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that theobjectives of the controls system are met, and no evaluation of controls canprovide 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, 2007.  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, 2007, 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 InternalControl Over Financial Reporting. *Duringthe most recent quarter ended December 31, 2007, there has been no change inour internal control over financial reporting (as defined in Rule 13a-15(f) and15d-15(f) under the Exchange Act) ) that has materially affected, or isreasonably likely to materially affect, our internal control over financialreporting.

 

19

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**PART III**

 

**Item 9.**       ** Directors, Executive Officers, Promoters,Control Persons and Corporate Governance; Compliance with Section 16(a) ofthe Exchange Act.**

 

The following table setsforth the name and age of our executive officers and directors as of March 24,2008:

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

 

*ErikUlsteen.***   **Mr. Ulsteenwas appointed our President, Chief Financial Officer, Secretary and Director onFebruary 14, 2008.  Since 2004, Mr. Ulsteen has been ChiefExecutive Officer and Chairman of Emission & Power Solutions, Inc.(formerly Fuel FX International, Inc.).  From 2002 until 2004, Mr. Ulsteenwas President of Fuel FX International, Inc.

 

*Stale Werner Nielsen.   *Mr. Nielsen was appointed a Director on March 20,2008.  Since 2003, Mr. Nielsen hasbeen a Managing Director of Hoyer Industries AS which markets and distributes consumergoods in Norway and Sweden.  From 2000 to 2003, Mr. Nielsen was aManaging Director of Margarinfabrikken Norge AS.

 

*Bjorn Rene Singdahlsen*.*   *Mr. Singdahlsen wasappointed a Director on March 20, 2008. Since 2002 Mr. Singdahlsenhas been Regional District Manager at Valora Holding AG, a trading and servicescompany headquartered in Switzerland.

 

**Term of Office******

** **

Ourdirectors are appointed for a one-year term to hold office until the nextannual general meeting of our shareholders or until removed from office inaccordance with our bylaws. Our officers are appointed by our board ofdirectors and hold office until removed by the board.

 

**Committees of the Board of Directors******

 

Wepresently do not have an audit committee, compensation committee or nominatingcommittee. Our board of directors does not believe that it is necessary to havesuch committees because it believes that the functions of such committees canbe adequately performed by the board of directors.

 

Ourcompany does not have any defined policy or procedural requirements forshareholders to submit recommendations or nominations for directors. The boardof directors believes that, given the stage of our development, a specificnominating policy would be premature and of little assistance until ourbusiness operations develop to a more advanced level. Our company does notcurrently have any specific or minimum criteria for the election of nominees tothe board of directors and we do not have any specific process or procedure forevaluating such nominees. The board of directors will assess all candidates,whether submitted by management or shareholders, and make recommendations forelection or appointment.

 

Ashareholder who wishes to communicate with our board of directors may do so bydirecting a written request addressed to our president, Erik Ulsteen, at theaddress appearing on the first page of this annual report.

 

**FamilyRelationships**

 

No family relationshipsexist among our directors or executive officers.

 

20

----

 

**Involvementin Certain Legal Proceedings**

 

To our knowledge, during thepast five years, none of our directors, executive officers, promoters, controlpersons, or nominees has been:

 
| **·** |   | 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 ofEthics**

 

We have adopted a formal Codeof Business Conduct and Ethics applicable to all Board members, executiveofficers and employees.  Our Code ofBusiness Conduct and Ethics has been filed as Exhibit 14 to this Reportand is also available upon request at no charge by contacting Erik Ulsteen,President at our offices located at 5050 Avenida Encinas, Suite 270,Carlsbad, CA 92008.  Our telephone numberis (760) 931-1048.

 

**Compliancewith Section 16(a) of the Exchange Act**

 

Section 16(a) ofthe Securities Exchange Act of 1934 requires our officers and directors, andpersons who own more than 10 percent of a registered class of our equitysecurities, to file reports of ownership and changes in ownership with the SEC.

 

To our knowledge, basedsolely on a review of the copies of such reports furnished to us, all reportsunder Section 16(a) required to be filed by our officers anddirectors and greater than ten percent beneficial owners were timely filed asof the date of this filing.

 

**Item 10.**       ** Executive Compensation.**

 

**Compensationof Executive Officers**

 

Since inception, we havenever paid to our executive officers, any salary or consulting fee.

 

**Option/SARGrants in Last Fiscal Year**

** **

We did not grant any stockoptions to our executive officers or directors from inception through December 31,2007.

 

**EmploymentAgreements**

 

We have no writtenemployment agreement with our executive officer at this time.

 

**Compensationof Directors**

 

For the fiscal year ended December 31,2007, we did not compensate our directors for their services.

 

21

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**Change of Control**

 

Thereis no compensatory plan or arrangement with respect to any executive officerwhich results or will result from the resignation, retirement or any othertermination of employment with us, or from a change in our control.

 

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

 

The following table setsforth certain information regarding the ownership of our capital stock, as of March24, 2008, for: (i) each director; (ii) each person who is known to usto be the beneficial owner of more than 5% of our outstanding common stock; (iii) eachof our named executive officers; and (iv) all of our current executiveofficers and directors of as a group. Except as otherwise indicated in thefootnotes, all information with respect to share ownership and voting andinvestment power has been furnished to us by the persons listed. Except asotherwise indicated in the footnotes, each person listed has sole voting powerwith respect to the shares shown as beneficially owned.

 
| **Name and Address of Beneficial  Owner** | ** ** | **Amount and Nature of  Beneficial  Ownership** | ** ** | **Percent of Class  (2)** | ** ** |
|---------------------------------------------------------------|------------|----------------------------------------------------------------|------------|-------------------------------------|------------|
|                                                          |       |                                                           |       |                                |       |
| **Erik Ulsteen**                                              |       | 1,750,000                                                      |       | 51.7                                | %          |
| **Stale Werner Nielsen**                                      |       | 0                                                              |       |                                |       |
| **Bjorn Rene Singdahlsen**                                    |       | 0                                                              |       |                                |       |
| **All officers and directors as a group (3  persons)**        |       | 1,750,000                                                      |       |                                |       |

 

----

(1)          Except as otherwise indicated, the address ofeach beneficial owner is c/o Kabe Exploration Inc., 5050 Avenidas Encinas, Suite 270,Carlsbad, CA 92008.

 

(2)          Applicable percentage ownership is based on3,387,500 shares of common stock outstanding as of March 24, 2008,together with securities exercisable or convertible into shares of common stockwithin 60 days of March 24, 2008 for each stockholder.  Beneficialownership is determined in accordance with the rules of the Securities andExchange Commission and generally includes voting or investment power withrespect to securities.  Shares of common stock that are currentlyexercisable or exercisable within 60 days of March 24, 2008 are deemed tobe beneficially owned by the person holding such securities for the purpose ofcomputing the percentage of ownership of such person, but are not treated asoutstanding for the purpose of computing the percentage ownership of any otherperson.

 

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

 

We issued 1,500,000 totalshares of common stock to Antony Claydon, our former President and formerdirector for total consideration of $15,000 effective January 16, 2006.The shares were issued pursuant to Section 4(2) of the Securities Actof 1933 and are restricted shares as defined in the Securities Act.

 

We issued 250,000 totalshares of common stock to Rory Moss, our former director for totalconsideration of $2,500 effective August 23, 2006.  The shares were issued pursuant to Section 4(2) ofthe Securities Act of 1933 and are restricted shares as defined in theSecurities Act.

 

OnDecember 18, 2007, Antony Claydon, our former President, Chief FinancialOfficer and Secretary and Rory Moss, our former director entered into anAgreement for the Purchase of Common Stock with Erik Ulsteen, pursuant to whichMessrs. Claydon and Moss sold an aggregate of 1,750,000 shares of ourcommon stock to Mr. Ulsteen.  The purchase price for the sale was$50,000, which was paid in cash.  Mr. Ulsteen acquired approximately51.7% of our total outstanding number of shares of common stock and the1,750,000 shares represent Mr. Ulsteen’s entire

 

22

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beneficial holdings in ourcompany.  On February 14, 2008, Mr. Claydonresigned as our President, Chief Financial Officer and Secretary and Mr. Ulsteenwas appointed President, Chief Financial Officer and Secretary of our companyas well as a director.

 
| **Item 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                                                                                                                                                |
|                 |       |                                                                                                                                                          |
| 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, 2007, we were billedapproximately $2,200 for professional services rendered for the audit andreviews of our financial statements. For our fiscal year ended December 31,2006, we were billed approximately $1,500 for professional services renderedfor the audit and reviews of our financial statements.

 

**Other Audit Related Fees**

 

For our fiscal years ended December 31, 2007 and 2006, we were notbilled for professional services rendered to other audit related fees.

 

**Tax Fees**

 

For our fiscal years ended December 31, 2007 and 2006, we were notbilled for professional services rendered for tax compliance, tax advice, andtax planning.

 

**All Other Fees**

 

We did not incur any other fees related to services rendered by ourprincipal accountant for the fiscal years ended December 31, 2007 and2006.

 

Our Board of Directors has adopted a procedure for pre-approval of allfees charged by our independent auditors. Under the procedure, the Boardapproves the engagement letter with respect to audit, tax and review services.Other fees are subject to pre-approval by the Board, or, in the period betweenmeetings, by a designated member of Board. Any such approval by the designatedmember is disclosed to the entire Board at the next meeting. The audit and taxfees paid to the auditors with respect to fiscal year 2007 were pre-approved bythe entire Board of Directors.

 

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**SIGNATURES**

 

In accordance with Section 13or 15(d) of the Exchange Act, the registrant caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.

 
|   | **KABE EXPLORATION, INC.** |
|--------|----------------------------|
|   |                       |
|   | By:                        | / s/ Erik Ulsteen |   |
|   |                       | Erik Ulsteen |
|   |                       | President, Chief Financial  Officer,Secretary |
|   |                       |   |
|   | Date:                      | March 28, 2008 |
|        |                            |  |  |  |

 

In accordance with theExchange Act, this report has been signed below by the following persons onbehalf of the registrant and in the capacities and on the dates indicated.

 
| **Name**                   | ** ** | **Title**                                          | ** ** | **Date**            |
|----------------------------|------------|----------------------------------------------------|------------|---------------------|
|                       |       |                                               |       |                |
|                       |       | President, Chief Financial  Officer, Secretary and |       | March 28, 2008 |
| /s/ Erik  Ulsteen          |       | Director                                           |       |                |
| Erik Ulsteen               |       |                                               |       |                |
|                       |       |                                               |       |                |
| /s/ Stale  Werner Nielsen  |       | Director                                           |       | March 28, 2008 |
| Stale Werner Nielsen       |       |                                               |       |                |
|                       |       |                                               |       |                |
| /s/ Bjorn Rene Singdahlsen |       | Director                                           |       | March 28, 2008 |
| Bjorn Rene Singdahlsen     |       |                                               |       |                |

 

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