XOTC:KABX Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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Table of Contents

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2012

 

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 333-141690

 

KABE EXPLORATION INC.

(Name registrant as specified in its charter)

 

NEVADA
(State or other jurisdiction of incorporation or organization)

 

39-2052145
(I.R.S. Employer Identification No.)

 

5050 Avenida Encinas, Suite 360, Carlsbad, CA

 

92008

(Address of principal executive offices)

 

(Zip Code)

 

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

 

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

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  o

 

Accelerated filer  o

 

 

 

Non-accelerated filer  o
(do not check if smaller reporting company)

 

Smaller reporting company  x

 

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

 

Number of shares of the registrant’s common stock outstanding as of August 14, 2012: 39,203,250 shares of Common Stock

 

 

 




Table of Contents

 

PART I

 

Item 1.                                   Financial Statements.

 

KABE EXPLORATION, INC.

(A Development Stage Company)

Balance Sheet

as at

 

 

 

June 30,

 

December 31,

 

 

 

2012

 

2011

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash

 

$

254

 

$

349

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts Payable

 

$

9,364

 

$

18,288

 

Chapman Industries Loan

 

58,113

 

7,776

 

Loan Payable - EPS Inc.

 

 

29,856

 

 

 

 

 

 

 

Total Liabilities

 

67,477

 

55,920

 

 

 

 

 

 

 

Stockholders’ Equity (Deficit)

 

 

 

 

 

Common Stock, $0.001 par value; authorized 75,000,000 shares; issued and outstanding:

 

 

 

 

 

39,203,250 as at June 30, 2012 and December 31, 2011

 

39,203

 

39,203

 

Additional Paid-In Capital

 

243,722

 

243,722

 

Deficit accumulated during the development stage

 

(350,148

)

(338,496

)

 

 

 

 

 

 

Total Shareholders’ Equity

 

(67,223

)

(55,571

)

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

$

254

 

$

349

 

 

The accompanying notes are an integral part of these financial statements

 

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Table of Contents

 

KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Operations

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the Period

 

 

 

 

 

 

 

 

 

 

 

of Inception

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

from Jan.1, 2006

 

 

 

June 30,

 

June 30,

 

through June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and Administrative Expenses:

 

 

 

 

 

 

 

 

 

 

 

Mineral Lease Fees

 

 

 

 

 

6,713

 

Professional Fees

 

3,005

 

3,275

 

3,230

 

4,250

 

197,468

 

Consultant Fees

 

 

 

 

 

 

 

 

 

92,700

 

Other Administrative Expenses

 

1,398

 

48

 

6,175

 

910

 

44,250

 

Loss on abandonment of Mineral Leases

 

 

 

 

 

 

 

 

 

5,000

 

Total General and Adminstrative Expenses

 

4,403

 

3,323

 

9,405

 

5,160

 

346,131

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

(4,403

)

(3,323

)

(9,405

)

(5,160

)

(346,131

)

 

 

 

 

 

 

 

 

 

 

 

 

Other Income

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

 

 

 

22

 

Interest Expense

 

(1,162

)

(438

)

(2,247

)

(875

)

(4,039

)

 

 

(1,162

)

(438

)

(2,247

)

(875

)

(4,017

)

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

(5,565

)

$

(3,761

)

$

(11,652

)

$

(6,035

)

$

(350,148

)

 

 

 

 

 

 

 

 

 

 

 

 

Income/Loss Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.00

)

$

(0.00

)

$

(0.00

)

$

(0.00

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted:

 

38,661,150

 

38,647,250

 

38,675,050

 

38,647,250

 

 

 

 

The accompanying notes are an integral part of these financial statements

 

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Table of Contents

 

KABE EXPLORATION, INC.

(A Development Stage Company)

Statement of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

For the Period

 

 

 

 

 

 

 

of Inception

 

 

 

For The Six Months Ended

 

from Jan. 1, 2006

 

 

 

June 30,

 

through June 30,

 

 

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(11,652

)

$

(6,035

)

$

(350,148

)

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

 

 

 

Stock issued for services

 

 

 

218,925

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts Payable

 

(8,925

)

875

 

5,890

 

Net cash (used by) operating activities

 

(20,577

)

(5,160

)

(125,333

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Common stock issued for cash

 

 

 

 

 

62,250

 

Proceeds (repayment) of loans

 

20,481

 

5,064

 

61,586

 

Contibution of capital

 

 

 

 

 

1,750

 

Net cash (used) provided by financing activities

 

20,481

 

5,064

 

125,586

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

(96

)

(96

)

253

 

 

 

 

 

 

 

 

 

Cash, beginning of the period

 

349

 

126

 

 

 

 

 

 

 

 

 

 

Cash, end of the period

 

$

253

 

$

30

 

$

253

 

 

 

 

 

 

 

 

 

Supplemental cash flow disclosure:

 

 

 

 

 

 

 

Interest paid

 

$

(4,026

)

$

 

$

(2,877

)

Taxes paid

 

$

 

$

 

$

 

 

The accompanying notes are an integreal part of these financial statements

 

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Table of Contents

 

Kabe Exploration, Inc.

(A Development Stage Company)

Notes to Financial Statements

 

June 30, 2012

(Unaudited)

 

1.                   Basis of Presentation and Nature of Operations

 

The interim financial statements as of and for the six months ended June 30, 2012 reflect all adjustments which, in the opinion of management are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented.

 

These interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s December 31, 2011 report on form 10-K. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the six months period ended June 30, 2012 are not necessarily indicative of results for the entire year ending December 31, 2012.

 

2.                   Organization, Nature of Business

 

Kabe Exploration, Inc. (the “Company”) was incorporated under the laws of the State of Nevada December 16, 2005.  The company chose December 31 as its fiscal year end. The company was originally formed for mineral exploration in the United States.  The Company abandoned its Mineral Leases in 2008.

 

Current Business of the Company

 

On May 5, 2010 The Company effected a Share Exchange Agreement with the shareholders of Centiuum Holdings, Inc., a Delaware public company, whereby the Company was to exchange ten Million (10,000,000) newly issued Company shares for all of the outstanding shares of Centiuum Holdings, Inc., 1,000 shares, dependent upon certain investments by Centiuum into the Company.   On October 29, 2010, the Company, with Centiuum Holdings, Inc. and shareholders of Centiuum, entered into an Agreement of Termination and Release with respect to this agreement.

 

The Company is seeking new business opportunities.

 

4



Table of Contents

 

3.                   Summary of Significant Accounting Policies

 

Basis of Presentation

 

The financial statements of the Company 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, reliability of long-lived assets, deferred taxes and stock option valuation.

 

Cash and equivalents

 

Cash and equivalents include investments with initial maturities of three months or less.

 

Fair Value of Financial Instruments

 

The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures” for financial assets and liabilities. FASB ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements.  FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.  FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The carrying amounts of the Company’s financial liabilities as at March 31, 2012 were measured against the three levels of inputs required by the standard to measure fair value:

 

Chapman Industries Loan

 

$

58,113

 

Level 2 based on promissory notes

 

 

Income Taxes

 

The Company utilizes FASB ACS 740, “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.  A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

The Company generated a deferred tax credit through net operating loss carryforward.  However, a valuation allowance of 100% has been established.  The Company has generated a net operating loss of approximately $350,148, which may be used until 2026 to offset taxable income.

 

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Table of Contents

 

Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

 

Going Concern

 

The Company’s 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.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  The Company incurred a net loss of ($11,652) in the six months ended June 30, 2012 and has a cumulative net loss of ($350,148) since inception. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plans to exploit or lease mining claims, or engage a working interest partner, 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 the Company be unable to continue as a going concern.

 

Development-Stage Company

 

The Company is considered a development-stage company, with limited operating revenues during the periods presented, as defined by Financial Accounting Standards Board FASB Accounting Standards Codification ASC 915.  ASC 915 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, the Company has incurred an operating loss of ($350,148). The Company’s working capital has been generated through the 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 the Company’s financial information to make informed investment decisions.

 

Basic and Diluted Net Loss Per Share

 

Net loss per share is calculated in accordance with FASB ASC 260, 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.

 

The Company had no potentially dilutive securities outstanding as of June 30, 2012 and 2011.

 

The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the six months ended June 30, 2012 and 2011:

 

6



Table of Contents

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per share:

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$

(11,652

)

$

(6,035

)

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average number of shares outstanding

 

38,675,050

 

38,647,250

 

 

 

 

 

 

 

Basic and Diluted Net Loss Per Share

 

$

(0.00

)

$

(0.00

)

 

Recent Accounting Pronouncements

 

In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The amendments in this update generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRS. The amendments in this update are to be applied prospectively. The amendments are effective for interim and annual periods beginning after December 15, 2011. Early application is not permitted. The Company does not expect this guidance to have a significant impact on its consolidated financial position, results of operations or cash flows.

 

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income.” This update was amended in December 2011 by ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” This update defers only those changes in update 2011-05 that relate to the presentation of reclassification adjustments. All other requirements in update 2011-05 are not affected by this update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. ASU No. 2011-05 and 2011-12 are effective for fiscal years (including interim periods) beginning after December 15, 2011. The Company does not expect this guidance to have a significant impact on its consolidated financial position, results of operations or cash flows.

 

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities.” The amendments in this update require enhanced disclosures around financial instruments and derivative instruments that are either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either ASC 210-20-45 or ASC 815-10-45. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The amendments are effective during interim and annual periods beginning on or after January 1, 2013. The Company does not expect this guidance to have any impact on its consolidated financial position, results of operations or cash flows.

 

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Table of Contents

 

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it.  The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

 

4.                   Loans Payable

 

Chapman Industries Loan

 

 

 

June 30,

 

 

 

2012

 

2011

 

Loan

 

$

58,113

 

$

0

 

Accrued Interest

 

$

4,635

 

$

0

 

 

In January, 2012 Chapman Industries absorbed into its loan the loan of EPS Inc.    Chapman Industries also assumed the accounts payable of the Company on the same date. The loan interest was raised to 8% from 6% in January 2012.  The loan is payable on demand, has no terms of repayment and has no maturity date. Chapman Industries is an entity controlled by the President of the Company and is considered a related party.

 

Loan Payable — EPS Inc.

 

 

 

June 30,

 

 

 

2012

 

2011

 

Loan

 

$

0

 

$

23,059

 

Accrued Interest

 

$

0

 

0

 

 

In January, 2012 Chapman Industries absorbed into its loan the loan of EPS Inc.  The loan carried interest at 6%,was payable on demand, had no terms of repayment and had no maturity date.  EPS Inc. is an entity controlled by the President of the Company and is considered a related party.

 

5.                   Capital Structure

 

As of June 30, 2012 the Company has authorized 75,000,000 of $ 0.001 par common stock, of which 39,203,250 shares were issued and outstanding.

 

6.                   Contingencies, Litigation

 

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

 

7.                   Subsequent Events

 

Events subsequent to June 30, 2012 have been evaluated through August 13, 2012, the date these statements were available to be issued, to determine whether they should be disclosed to keep the financial statements from being misleading.  Management found no subsequent events to be disclosed.

 

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Table of Contents

 

Item 2.                                   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

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.

 

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Table of Contents

 

On May 5, 2010, we entered into a Share Exchange Agreement with Centiuum Holdings Inc. and its stockholders whereby Centiuum’s stockholders will exchange all of their shares of common stock of Centiuum for 10,000,000 newly issued shares of our common stock.  In addition, our principal stockholder, Erik Ulsteen has agreed to deposit 10,000,000 shares of our common stock owned by him (the “Escrow Shares”) into escrow upon closing of the exchange.  At any time within 120 days after closing of the exchange, the Escrow Shares will be released to Centiuum upon a cash investment of a minimum of $500,000 invested in Kabe or Kabe enters into executed contracts aggregating a minimum of $500,000 in cash flow to Kabe.  The closing of the transactions are subject to customary closing conditions including due diligence.  Centiuum Holdings is a provider of consulting services, environmental engineering, clean development mechanism and project management services worldwide.  On October 29, 2010, we entered into an Agreement of Termination and Release with Centiuum and the shareholders of Centiuum with respect to the Share Exchange Agreement dated as of May 5, 2010

 

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.

 

Results of Operations

 

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

 

Revenues

 

We have generated no operating revenues from operations from our inception.

 

Costs and Expenses

 

From our inception through June 30, 2012, we have incurred cumulative losses of $350,148.  Professional fees decreased to $3,005 for the three months ended June 30, 2012 from $3,275 for the three months ended June 30, 2011.  Other Administrative expenses increased to $1,398 for the three months ended June 30, 2012 from $48 for the three months ended June 30, 2011.

 

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

 

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Table of Contents

 

Revenues

 

We have generated no operating revenues from operations from our inception.

 

Costs and Expenses

 

Professional fees decreased to $3,230 for the six months ended June 30, 2012 from $4,250 for the six months ended June 30, 2011.  Other Administrative expenses increased to $6,175 for the six months ended June 30, 2012 from $910 for the six months ended June 30, 2011.

 

Liquidity and Capital Resources

 

As of June 30, 2012, we had a working capital deficit of $67,223 as compared to a working capital deficit of $55,571 as of December 31, 2011.  Our cash position was $254 as of June 30, 2012 compared to $349 as of December 31, 2011.  We have financed our company principally through the private placement of our common stock.  As of June 30, 2012, 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

 

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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 March 31, 2012, we have incurred an operating loss of $344,583.  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

 

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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, 2012.

 

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.

 

Item 4         Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our President, Chief Financial Officer and Secretary, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report.  Based upon that evaluation, our President, Chief Financial Officer and Secretary concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i)  recorded, processed,  summarized and reported within the time periods specified in the SEC’s rules and forms and (ii)  accumulated and communicated to our management to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance,  however,  that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any,  within a company have been detected.

 

Changes in Internal Control Over Financial Reporting.  During the most recent quarter ended June 30, 2012, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II

 

Item 1.        Legal Proceedings.

 

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business.

 

Item 6.        Exhibits.

 

Exhibit No.

 

Title of Document

 

 

 

31.1

 

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

 

 

 

32.1

 

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101

Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2012, filed on August 14, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) the Statements of Operations, (ii) the Balance Sheets, (iii) the Statements of Cash Flows (iv) the Statement of Shareholders’ Equity and (v) the Notes to Financial Statements tagged as blocks of text.

 

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SIGNATURES

 

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

 

 

KABE EXPLORATION, INC.

 

 

 

By:

/s/ Erik Ulsteen

 

 

Erik Ulsteen

 

 

President, Chief Financial Officer,
Secretary

 

 

 

 

Date:

August 14, 2012

 


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XOTC:KABX Quarterly Report 10-Q Filing - 6/30/2012
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