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| KABX.OB > SEC Filings for KABX.OB > Form 10-Q on 14-Aug-2009 | All Recent SEC Filings |
14-Aug-2009
Quarterly Report
Except as otherwise required by the context, 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 and Associated Risks
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Some of the statements contained in this annual report of the Company discuss future expectations, contain projections of our operations or financial
condition or state other forward-looking information. Some statements contained in this annual report on Form 10-Q that are not historical facts (including without limitation statements 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 and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those anticipated by us. All comments concerning our expectations for future revenue and operating results are based on our forecasts of our plan of operation and do 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 of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements.
Overview
We are a "shell company" defined in Rule 405 under the Securities Act of 1933 and Rule 12b-2 under the Securities Exchange Act of 1934, since we have only conducted nominal operations and have only nominal assets.
During 2007, we were an exploration stage company engaged in the acquisition and exploration of mineral properties. We entered into a lease agreement with George J. Eliopulos effective March 31, 2006, granting us the exclusive right to explore, develop, and mine the property for gold, silver, copper and other valuable minerals. The property consisted of one unpatented mining claim located in section 12, Township 16 North, Range 20 East, Mt. Diablo Baseline & Meridian, Storey County, Nevada, USA, owned by Mr. Eliopulos.
On December 18, 2007, Erik Ulsteen entered into an agreement with Antony Claydon, our 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.
On October 14, 2008, we entered into an Agreement and Plan of Merger with Emission & Power Solutions, Inc. ("EPS") pursuant to which EPS will merge into a newly formed wholly-owned subsidiary. Pursuant to the agreement, EPS shareholders will receive 1 share of our common stock in exchange for 5 shares of EPS common stock. Closing of the merger is subject to, among other things, stockholder approval of the EPS shareholders.
The following factors raise substantial doubt regarding the ability of our
business to continue as a going concern: (i) the losses we have incurred since
our inception; (ii) our failure to generate revenues since our inception; and
(iiI) our dependence on the sale of our equity securities and on the receipt of
capital from outside sources to continue our operations. Our auditors have
issued a going concern opinion regarding our business. The financial statements
do not include any
adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
Plan of Operation
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.
As stated above, on October 14, 2008, we entered into an Agreement and Plan of Merger with EPS pursuant to which EPS will merge into a newly formed wholly-owned subsidiary. EPS licenses, acquires, develops, deploys, and transfers technologies dedicated to improving fuel economy while reducing environmentally harmful exhaust emissions. Using advanced fuel treatment devices, EPS has incorporated a proprietary multi phase process utilizing engineered flow patterns in order to restructure fuel hydrocarbons, increasing the fuel efficiency and producing a cleaner burn during the combustion cycle of an engine.
It is anticipated that any securities issued in the EPS merger will be issued in reliance upon exemption from registration under applicable federal and state securities laws. The issuance of additional securities and their potential sale into any trading market which may develop in our securities may depress the market value of our securities in the future if such a market develops, of which there is no assurance.
Closing of the merger is subject to, among other things, stockholder approval of the EPS shareholders. There can be no assurance that EPS shareholders will approve the merger or that the merger will close. In the event that the merger does not close, we will continue to identify and pursue various business opportunities that have the potential to generate positive revenue, profits and cash flow.
We expect that we will require additional funding in connection with the closing of the merger and development of a new business plan and direction. We anticipate that such funding will be in the form of equity financing from the sale of our common stock or loans from our principal stockholder. However we cannot provide investors with any assurance that we will be able to obtain sufficient funding to fund our operations or any work related to the development of a new business plan. We do not have any arrangements in place for any future financing.
Results of Operations
Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
Revenues
We have generated no operating revenues from operations from our inception.
Costs and Expenses
From our inception through June 30, 2009, we have incurred cumulative losses of $136,914. Professional fees decreased from $21,939 for the three months ended June 30, 2008 to $1,900 for the three months ended June 30, 2009 primarily as a result of cutbacks in our business in order to conserve cash.
Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
Revenues
We have generated no operating revenues from operations from our inception.
Costs and Expenses
Professional fees decreased from $41,178 for the three months ended June 30, 2008 to $2,300 for the three months ended June 30, 2009 primarily as a result of cutbacks in our business in order to conserve cash.
Liquidity and Capital Resources
As of June 30, 2009, we had a working capital deficit of $27,964 as compared to a working capital deficit of $26,667 as of December 31, 2008. Our cash position was $0 as of June 30, 2009 compared to $0 as of December 31, 2008. We have financed our company principally through the private placement of our common stock. As of June 30, 2009, we have no long term debt.
Summary of Significant Accounting Policies
Basis of Presentation
Our financial statements have been prepared using the accrual basis of accounting in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those 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 properly prepared within the reasonable limits 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 tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. We generated a deferred tax credit through net operating loss carryforward. However, a valuation allowance of 100% has been established, as the realization of the deferred tax credits is not reasonably certain, based on going concern considerations outlined as follows.
Going Concern
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have not yet established an ongoing source of revenues sufficient to cover our operating costs and to allow us to continue as a going concern. Our ability to continue as a going concern is dependent on us obtaining adequate capital to fund operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to cease operations.
Our ability to continue as a going concern is dependent upon our ability to successfully accomplish our plan to develop a new business plan, or merger candidate in order to eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classifications or liabilities or other adjustments that might be necessary should we be unable to continue as a going concern.
Development-Stage Company
We are considered a development-stage company, with limited operating revenues during the periods presented, 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 that revenues are generated from management's intended operations, among other things. Management has defined inception as January 1, 2006. Since
inception until June 30, 2009, we have incurred an operating loss of $91,914. Our working capital has been generated through sales of common stock. Management has provided financial data since January 1, 2006, "Inception" in the financial statements, as a means to provide readers of our financial information to make informed investment decisions.
Basic and Diluted Net Loss Per Share
Net loss per share is calculated in accordance with SFAS 128, Earnings Per Share for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilative convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed 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 at the average market price during the period.
We had no potentially dilutive securities outstanding as of June 30, 2009.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.
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