MOBILE STAR CORP - FORM 10-Q

Attached files

file	filename
EX-31.2 - MOBILE STAR CORP	v191526_ex31-2.htm
EX-31.1 - MOBILE STAR CORP	v191526_ex31-1.htm
EX-32.1 - MOBILE STAR CORP	v191526_ex32-1.htm
EX-32.2 - MOBILE STAR CORP	v191526_ex32-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended June 30, 2010

¨ 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- 152952

THE MOBILE STAR CORP.

(Exact name of registrant as specified in its charter)

Delaware		98-0565411
(State of incorporation)		(I.R.S. Employer Identification No.)

c/o Danny Elbaz

53 Hanoter Street

Even Yehuda, Israel 40500

(Address of principal executive offices)

972 - (544) 655-341

(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

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 ¨

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

(Do not check if a smaller reporting company)

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

As of July 29, 2010, 80,000,000 shares of common stock, par value $0.0001 per share, were issued and outstanding.

TABLE OF CONTENTS

	Page
PART I
Item 1. Financial Statements	F-1
Item 2. Management’s Discussion and Analysis or Plan of Operation	3
Item 3 Quantitative and Qualitative Disclosures About Market Risk	6
Item 4 Controls and Procedures	7

PART II
Item 1. Legal Proceedings	7
Item IA. Risk Factors	7
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	7
Item 3. Defaults Upon Senior Securities	7
Item 4. Submission of Matters to a Vote of Security Holders	8
Item 5. Other Information	8
Item 6. Exhibits	8

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

THE MOBILE STAR CORP.

(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS

JUNE 30, 2010

Financial Statements-

Balance Sheets as of June 30, 2010 and December 31, 2009		F-2

Statements of Operations for the Three Months and Six Month Ended June 30, 2010 and 2009 and Cumulative from Inception		F-3

Statement of Changes in Stockholders’ Equity (Deficit) for the Period from Inception Through June 30, 2010		F-4

Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009 and Cumulative from Inception		F-5

Notes to Financial Statements		F-6

F-1

THE MOBILE STAR CORP.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

AS OF JUNE 30, 2010 AND DECEMBER 31, 2009

	As of			As of
	June 30,			December 31,
	2010			2009
	(Unaudited)			(Audited)
ASSETS

Current Assets:
Cash and cash equivalents	$	334		$	15,663

Total current assets		334			15,663

Other Assets:
Patent pending		7,300			7,300
Assignment of invention rights		5,000			5,000

Total other assets		12,300			12,300

Total Assets	$	12,634		$	27,963

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

Current Liabilities:
Accounts payable and accrued liabilities	$	30,973		$	32,000
Loans from related parties - Directors and stockholders		37,690			3,000

Total current liabilities		68,663			35,000

Total liabilities		68,663			35,000

Commitments and Contingencies

Stockholders' Equity (Deficit):
Common stock, par value $.0001 per share, 200,000,000 shares authorized; 80,000,000 shares and 70,000,000 shares issued and outstanding		8,000			7,000
Additional paid-in capital		182,800			158,800
(Deficit) accumulated during the development stage		(246,829	)		(172,837	)

Total stockholders' equity (deficit)		(56,029	)		(7,037	)

Total Liabilities and Stockholders' Equity (Deficit)	$	12,634		$	27,963

The accompanying notes to financial statements

are an integral part of these statements.

F-2

THE MOBILE STAR CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2010

AND 2009 AND CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)

THROUGH JUNE 30, 2010

(Unaudited)

	Three Months Ended						Six Months Ended						Cumulative
	June 30,						June 30,						From
	2010			2009			2010			2009			Inception

Revenues	$	-		$	-		$	-		$	-		$	-

Expenses:
Research and development		-			16,300			16,554			16,300			89,955
Professional fees		13,666			6,700			19,336			22,227			86,968
Consulting fees		25,000			-			28,000			1,500			50,147
Investor relations		-			-			3,060			-			4,640
Legal - incorporation		-			-			-			-			2,350
Other		1,095			312			7,336			580			14,507

Total general and administrative expenses		39,761			23,312			74,285			40,607			248,568

(Loss) from Operations		(39,761	)		(23,312	)		(74,285	)		(40,607	)		(248,568	)

Other Income (Expense)		-			2,407			293			(1,015	)		1,739

Provision for Income Taxes		-			-			-			-			-

Net (Loss)	$	(39,761	)	$	(20,905	)	$	(73,992	)	$	(41,622	)	$	(246,829	)

(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted Average Number of Common Shares
Outstanding - Basic and Diluted		73,956,044			63,846,154			71,988,950			59,944,751

The accompanying notes to financial statements are

an integral part of these statements.

F-3

THE MOBILE STAR CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD FROM INCEPTION (SEPTEMBER 25, 2007)

THROUGH JUNE 30, 2010

(Unaudited)

								(Deficit)
								Accumulated
					Additional			During the
	Common stock				Paid-in			Development
	Shares		Amount		Capital			Stage			Totals

Balance - January 1, 2008		-	$	-	$	-		$	-		$	-

Common stock issued for cash		56,000,000		5,600		(4,800	)		-			800

Assignment of invention rights		-		-		5,000			-			5,000

Net (loss) for the year		-		-		-			(18,019	)		(18,019	)

Balance - December 31, 2008		56,000,000		5,600		200			(18,019	)		(12,219	)

Common stock issued for cash		14,000,000		1,400		158,600			-			160,000

Net (loss) for the period		-		-		-			(154,818	)		(154,818	)

Balance - December 31, 2009		70,000,000	$	7,000	$	158,800		$	(172,837	)	$	(7,037	)

Common stock issued for services		10,000,000		1,000		24,000			-			25,000

Net (loss) for the period		-		-		-			(73,992	)		(73,992	)

Balance - June 30, 2010		80,000,000	$	8,000	$	182,800		$	(246,829	)	$	(56,029	)

The accompanying notes to financial statements are

an integral part of this statement.

F-4

THE MOBILE STAR CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009,

AND CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)

THROUGH JUNE 30, 2010

(Unaudited)

	Six Months Ended						Cumulative
	June 30,						From
	2010			2009			Inception

Operating Activities:
Net (loss)	$	(73,992	)	$	(41,622	)	$	(246,829	)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Common stock issued for services		25,000			-			25,000
Changes in net assets and liabilities-
Accounts payable and accrued liabilities		(1,027	)		705			30,973

Net Cash Used in Operating Activities		(50,019	)		(40,917	)		(190,856	)

Investing Activities:
Purchase of patent pending		-			-			(7,300	)

Net Cash Used in Investing Activities		-			-			(7,300	)

Financing Activities:
Proceeds from common stock issued		-			180,000			160,800
Loans from shareholders		34,690			(14,300	)		37,690

Net Cash Provided by Financing Activities		34,690			165,700			198,490

Net (Decrease) Increase in Cash		(15,329	)		124,783			334

Cash - Beginning of Period		15,663			376			-

Cash - End of Period	$	334		$	125,159		$	334

The accompanying notes to financial statements are

an integral part of these statements.

F-5

THE MOBILE STAR CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2010

(1) Summary of Significant Accounting Policies

Basis of Presentation and Organization

The Mobile Star Corp. (“The Mobile Star” or the “Company”) is a Delaware corporation in the development stage and has not commenced operations. The Company was incorporated under the laws of the State of Delaware on September 25, 2007 and began activity in January 2008. The business plan of the Company is to develop a commercial application of a self operated computerized karaoke recording booth. The Company also intends to obtain approval of its patent application, and manufacture and market the product and/or seek third party entities interested in licensing the rights to manufacture and market the device. The accompanying financial statements of The Mobile Star were prepared from the accounts of the Company under the accrual basis of accounting.

Unaudited Interim Financial Statements

The interim financial statements of the Company as of June 30, 2010, and for the periods then ended, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2010, and the results of its operations and its cash flows for the periods ended June 30, 2010, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2010. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company’s audited financial statements as of December 31, 2009, filed with the SEC, for additional information, including significant accounting policies.

Cash and Cash Equivalents

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Revenue Recognition

The Company is in the development stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the period ended June 30, 2010.

Income Taxes

Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

F-6

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Fair Value of Financial Instruments

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of June 30, 2010, the carrying value of accrued liabilities, and loans from directors and stockholders approximated fair value due to the short-term nature and maturity of these instruments.

Patent and Intellectual Property

The Company capitalizes the costs associated with obtaining a Patent or other intellectual property associated with its intended business plan. Such costs are amortized over the estimated useful lives of the related assets.

Deferred Offering Costs

The Company defers the direct incremental costs of raising capital as other assets until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable. For the period ended June 30, 2010, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.

Common Stock Registration Expenses

The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are expensed as incurred.

Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of June 30, 2010, and expenses for the period ended June 30, 2010, and cumulative from inception. Actual results could differ from those estimates made by management.

F-7

Recent Accounting Pronouncements

In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), codified in FASB ASC 820-10-65, which provides additional guidance for estimating fair value in accordance with ASC 820-10 when the volume and level of activity for an asset or liability have significantly decreased. ASC 820-10-65 also includes guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of ASC 820-10-65 did not have an impact on the Company's results of operations or financial condition.

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165") codified in FASB ASC 855-10-05, which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FASB ASC 855-10-05 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. FASB ASC 855-10-05 is effective for interim and annual periods ending after June 15, 2009. FASB ASC 855-10-05 requires that public entities evaluate subsequent events through the date that the financial statements are issued.

In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140" ("SFAS 166"), codified as FASB ASC 860, which requires entities to provide more information regarding sales of securitized financial assets and similar transactions, particularly if the entity has continuing exposure to the risks related to transferred financial assets. FASB ASC 860 eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets and requires additional disclosures. FASB ASC 860 is effective for fiscal years beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an impact on the Company's financial condition, results of operations or cash flows.

In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)" ("SFAS 167"), codified as FASB ASC 810-10, which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. FASB ASC 810-10 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity's purpose and design and a company's ability to direct the activities of the entity that most significantly impact the entity's economic performance. FASB ASC 810-10 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. FASB ASC 810-10 also requires additional disclosures about a company's involvement in variable interest entities and any significant changes in risk exposure due to that involvement. FASB ASC 810-10 is effective for fiscal years beginning after November 15, 2009. The adoption of FASB ASC 810-10 did not have an impact on the Company's financial condition, results of operations or cash flows.

In June 2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles, which establishes the FASB Accounting Standards Codification as the sole source of authoritative generally accepted accounting principles. Pursuant to the provisions of FASB ASC 105, we have updated references to GAAP in our financial statements. The adoption of FASB ASC 105 did not impact the Company's financial position or results of operations.

(2) Development Stage Activities and Going Concern

The Company is currently in the development stage, and has no operations. The business plan of the Company is to develop a commercial application of a self operated computerized karaoke recording booth. The Company also intends to obtain approval of its patent application, and manufacture and market the product and/or seek third party entities interested in licensing the rights to manufacture and market the device.

In January 2008, the Company entered into a Assignment Agreement whereby the Company acquired all of the rights, title and interest in the invention known as the “Self operated computerized karaoke recording booth” for consideration of royalties ranging from 1% to 5% based on the net income of the Company for 30 years from the date of the Company's incorporation. On February 20, 2008 the Company filed PCT and U.S. patent applications for the invention.

F-8

The Company has commenced a capital formation activity to submit a Registration Statement on Form S-1 to the Securities and Exchange Commission (“SEC”) to register and sell in a self-directed offering 14,000,000 (post forward stock split) shares of newly issued common stock at an offering price of $0.10 for proceeds of up to $200,000. The Registration Statement on Form S-1 was filed with the SEC on August 12, 2008 and declared effective on September 8, 2008. The Company has issued 14,000,000 (post forward stock split) shares of common stock pursuant to the Registration Statement on Form S-1, and received proceeds of $200,000.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of June 30, 2010, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

(3) Patent Pending

(4) Loans from Related Parties - Directors and Stockholders

As of June 30, 2010, loans from related parties amounted to $37,690, and represented working capital advances from officers who are also stockholders of the Company. The loans are unsecured, non-interest bearing, and due on demand.

(5) Common Stock

On February 4, 2008, the Company issued 56,000,000 (post forward stock split) shares of its common stock to founders of the Company, some of whom are directors and officers, for proceeds of $800.

The Company has commenced a capital formation activity to submit a Registration Statement on Form S-1 to the SEC to register and sell in a self-directed offering 14,000,000 (post forward stock split) shares of newly issued common stock at an offering price of $0.10 per share for proceeds of up to $200,000. The Registration Statement on Form S-1 was filed with the SEC on August 12, 2008 and declared effective on September 8, 2008. The Company has issued 14,000,000 (post forward stock split) shares of common stock pursuant to the Registration Statement on Form S-1, and received proceeds of $200,000. The Company incurred $40,000 of deferred offering costs related to this capital formation activity.

On June 26, 2009, the Company implemented a 7 for 1 forward stock split on its issued and outstanding shares of common stock to the holders of record as of June 24, 2009. As a result of the split, each holder of record on the record date automatically received four additional shares of the Company’s common stock. After the split, the number of shares of common stock issued and outstanding were 70,000,000 shares. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward stock split.

On May 26, 2010, the Company issued 10,000,000 shares of its common stock to a Director for services valued at $25,000.

F-9

(6) Income Taxes

The provision (benefit) for income taxes for the periods ended June 30, 2010 and December 31, 2009 was as follows (assuming a 23% effective tax rate):

	2010			2009

Current Tax Provision:
Federal-
Taxable income	$	-		$	-
Total current tax provision	$	-		$	-

Deferred Tax Provision:
Federal-
Loss carryforwards	$	17,018		$	9,573
Change in valuation allowance		(17,018	)		(9,573	)
Total deferred tax provision	$	-		$	-

The Company had deferred income tax assets as of June 30, 2010 and December 31, 2009 as follows:

	2010			2009

Loss carryforwards	$	56,771		$	39,753
Less - Valuation allowance		(56,771	)		(39,753	)
Total net deferred tax assets	$	-		$	-

The Company provided a valuation allowance equal to the deferred income tax assets for the periods ended June 30, 2010 and December 31, 2009, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

As of June 30, 2010, the Company had approximately $246,829 in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and expire in the year 2030.

(7) Related Party Transactions

As described in Note 4, as of June 30, 2010, the Company owed $37,690 to directors, officers, and principal stockholders of the Company for working capital loans.

On February 4, 2008, the Company issued 19,040,000 (post forward stock split) shares of common stock to directors of the Company, for $272.

As described in Note 5, on May 26, 2010, the Company issued 10,000,000 shares of its common stock to a Director for services valued at $25,000.

From inception through June 30, 2010, the Company paid consulting fees in the amount of $39,153 to a director and officer of the Company.

(8) Commitments

On June 15, 2008, the Company entered into a Transfer Agent and Registrar Agreement with Nevada Agency and Trust Company ("NATCO"). Under the Agreement, the Company agreed to pay to NATCO an annual fee of $1,500 for the first year and $1,800 for every year thereafter. NATCO will act as the Company’s transfer agent and registrar.

F-10

As described in Note 3, in January 2008, the Company entered into a Assignment Agreement whereby the Company acquired all of the rights, title and interest in the invention known as the “Self operated computerized karaoke recording booth” for consideration of royalties ranging from 1% to 5% based on the net income of the Company for 30 years from the date of the Company's incorporation.

(9) Concentration of Credit Risk

The Company’s cash and cash equivalents are invested in a major bank in Israel and are not insured. Management believes that the financial institution that holds the Company’s investments is financially sound and accordingly, minimal credit risk exists with respect to these investments.

(10) Subsequent Event

Subsequent to the balance sheet date, the Company entered into a Securities Purchase Agreement dated July 7, 2010 providing for the issuance of an 8% convertible promissory note in the principle amount of $30,000. The promissory note is initially convertible to 54,545,455 shares.

F-11

Item 2. Management’s Discussion and Analysis or Plan of Operations.

As used in this Form 10-Q, references to the “Mobile Star,” Company,” “we,” “our” or “us” refer to The Mobile Star Corp. Unless the context otherwise indicates.

Forward-Looking Statements

The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

For a description of such risks and uncertainties refer to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission on August 12, 2008. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Corporate Background

We were incorporated in Delaware on September 25, 2007 and are a development stage company. We began operations on January 1, 2008. Our Principal executive offices are located at c/o Danny Elbaz, 53 Hanoter Street, Even Yehuda, Israel and our telephone number at that address is 972 - (544) 655-341. Our registered office in Delaware is located at 113 Barksdale Professional Center, Newark, DE 19711, and our registered agent is Delaware Intercorp. Our fiscal year end is December 31.

Our Business

We began operations on January 1, 2008 and on January 16, 2008, Eli Malki assigned all his rights, title and interest in and to a self operated computerized karaoke recording Booth (the ‘Technology”) to Mobile Star, including the right to develop and market the Technology, in exchange for a percentage of revenues (royalties) on future sales.

On February 20, 2008 the Company filed a patent application for the Technology (Patent Application Number: 60/902,076) with the United States Patent Office. The Technology is a coin-operated karaoke machine that combines a digital media proprietary software platform, a US-wide broadband network, and a pay-per-use device. To date, to our knowledge, no such product exists in the market.

The Technology comprises a closed booth, divided into two parts: an acoustically isolated space wherein the singer sings, and the recording and processing hardware including a computer and a computerized disc dispenser. The Technology improves and upgrades the sound of the user allowing for better result. Four different instruments process the user's voice: amplifier, compressor, reverb, and equalizer. The amplifier amplifies the voice to the appropriate volume compared to the background music. The compressor restricts singing volume to a preset maximum. The reverb imitates the acoustics of a hall. The equalizer allows frequency changes to loud and super loud frequencies for dramatic sound improvement.

An animated three dimensional character acts as the virtual recording technician that guides the user from the beginning of the process until the end, thereby improving user satisfaction and enjoyment. The digital recording is saved directly to a file on the hard disc, and the service includes burning a compact disc (CD) while the program mergers between the singing and the music.

The associated software controls the machine activities, including recording, playback, burning, robotic arm movements, presenting the interface vocally and visually, and choosing the songs and their categories. All songs, backgrounds, and words are coded in files saved on the hard disc, which allows a choice of hundreds and potentially even thousands of songs. The digitalized process records only the user's voice digitally after processing with four instruments and software algorithms digitally merge the voice with the background music.

The Technology comprises of the following:

(a)

a DVD, a flash memory device, a device connectable to automated means for recording audio via a physical cable;

(b)

a device connectable to automated means for recording audio via a communication link with the user multimedia file;

(c)

a door, ventilation means, a computer, screen, video camera and microphone;

(d)

optional lighting and an automatic money box;

(e)

a database of multimedia files, earphones, a recording means for recording audio and multimedia on a computer usable media, and a processing unit, and may comprise labeling and packing means for labeling and packing said computer usable media;

(f)

a graphical user interface (GUI), an audio processing application, a multimedia processing application, a control application.

A singer enters an automated recording booth to record a multimedia file comprising an audio performance of the singer in combination with a multimedia recording from a database. The result is a computer-usable media with the singer’s multimedia file.

The recording booth comprises a door, means of ventilation, a computer and screen, a video camera, and a microphone. There is a means for lighting and an automatic money box to collect the payment.

The recording booth further comprises a database of multimedia files from which the singer selects the songs, and earphones through which the singer hears the music and his voice integrated together. A recording device records the audio and the selected multimedia on a computer usable media. The processing unit burns the media. The media is then labeled and packaged.

The processing unit comprises a graphical user interface (GUI), an audio processing application, a multimedia processing application, and a control application.

Employees

Other than our current Directors and officers, Danny Elbaz and Eran Gronich, we have no other full time or part-time employees..The Company has 2 outside consultants.

Transfer Agent

We have engaged Nevada Agency and Trust as our stock transfer agent. Nevada Agency and Trust is located at 50 West Liberty Street, Reno, Nevada 89501. Their telephone number is (775) 322-0626 and their fax number is (775) 322-5623. The transfer agent is responsible for all record-keeping and administrative functions in connection with our issued and outstanding common stock.

Plan of Operation

We were incorporated in Delaware on September 25, 2007 and we are a development stage company. We intend to engage in the manufacturing and distribution of the Technology. We have not generated any revenues to date and our operations have been limited to organizational, start-up, and capital formation activities.

We have engaged a US manufacturer to develop a fully operational prototype of the Technology and the prototype is working as a pilot in NY .The Company is currently in negotiations with a US coin operating developer and manufacturer for the manufacturing and distribution of the Company’s product.

General Working Capital

We have raised as of today $200,000 in gross proceeds pursuant to the effective Registration Statement on Form S-1, filed with the Securities and Exchange Commission on August 12, 2008 (file no. 333-152952). We do not have any current intentions, negotiations, or arrangements to merge or sell the Company.

We are not aware of any material trend, event or capital commitment, which would potentially adversely affect liquidity. In the event such a trend develops, we believe that we will have sufficient funds available to satisfy working capital needs through lines of credit and the funds expected from equity sales.

Liquidity and Capital Resources

Our balance sheet as of June 30 2010 reflects cash in the amount of $334. Cash and cash equivalents from inception to date have been sufficient to provide the operating capital necessary to operate to date. The operating expenses and net loss for the six months ended June 30 31 2010 and June 30 2009 amounted to $73,992 and $ 41,622 respectively . This increase is mainly attributable to additional consulting fees incurred in 2010 by the issuance of equity compensation for the expansion of the business operations.

We do not have sufficient resources to effectuate our business plan in full . We expect to incur a minimum of $100,000 in expenses during the next twelve months of operations. Accordingly, we will have to raise the funds to pay for these expenses. We might do so through a private offering . We potentially will have to issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

Going Concern Consideration

Our auditors have issued an opinion on our annual financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our principal executive officer and principal financial and accounting officers have reviewed the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13(a)-15(e) and 15(d)-15(e)) within the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our principal executive officer and principal financial and accounting officers.

Changes in Internal Controls over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 1A. Risk Factors

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company issued 10,000,000 shares of common stock as equity compensation for consulting fees in the second quarter of 2010 and recorded $25,000 of equity compensation expense accordingly.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Use of Proceeds

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

There was no matter submitted to a vote of security holders during the three months ended June 30 2010.

Item 5. Other Information.

None

Item 6. Exhibits

31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith)

31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith)

32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley (filed herewith)

32.2	Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley (filed herewith)

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.

Date: July 29, 2010	THE MOBILE STAR CORP.

	By:	/s/ Danny Elbaz
	Name: Danny Elbaz Title: President and Director (Principal Executive Officer)

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

Date July 29, 2010	By:	/s/ Danny Elbaz
	Name: Danny Elbaz Title: President and Director (Principal Executive Officer)

Date: July 29, 2010	By:	/s/ Eran Gronich
	Name: Eran Gronich Title: Secretary and Director (Principal Internal Accounting Officer)

MOBILE STAR CORP - FORM 10-Q - July 29, 2010

Attached files

MOBILE STAR CORP Reports