MOBILE STAR CORP - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - MOBILE STAR CORP	Financial_Report.xls
EX-32.2 - CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER PURSUANT TO SECTION - MOBILE STAR CORP	v229351_ex32-2.htm
EX-32.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SAR - MOBILE STAR CORP	v229351_ex32-1.htm
EX-31.1 - CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT - MOBILE STAR CORP	v229351_ex31-1.htm
EX-31.2 - CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT - MOBILE STAR CORP	v229351_ex31-2.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 , 2011

¨ 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 June 30 ,2011 ,121,223,864 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, 2011

Financial Statements-

Balance Sheets as of June 30, 2011 and December 31, 2010	F-2

Statements of Operations for the Three Months Ended and Six Month Ended June 30, 2011 and 2010 and Cumulative from Inception	F-3

Statement of Changes in Stockholders’ Equity (Deficit) for the Period from Inception Through June 30, 2011	F-4

Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010 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, 2011 AND DECEMBER 31, 2010

ASSETS
	As of			As of
	June 30,			December 31,
	2011			2010
	(Unaudited)			(Audited)
Current Assets:
Cash and cash equivalents	$	2,529		$	18,513

Total current assets		2,529			18,513

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	$	14,829		$	30,813

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

Current Liabilities:
Accounts payable and accrued liabilities	$	16,477		$	31,248
Loans from related parties - Directors and stockholders		2,426			51,426
Convertible note payable, net of discount		45,425			34,327

Total current liabilities		64,328			117,001

Total liabilities		64,328			117,001

Commitments and Contingencies

Stockholders' Equity (Deficit):
Common stock, par value $.0001 per share, 200,000,000 shares
authorized; 121,223,864 and 80,000,000 shares
issued and outstanding		12,123			8,000
Additional paid-in capital		381,929			229,436
(Deficit) accumulated during the development stage		(443,551	)		(323,624	)

Total stockholders' equity (deficit)		(49,499	)		(86,188	)

Total Liabilities and Stockholders' Equity (Deficit)	$	14,829		$	30,813

The accompanying notes to financial statements

are an integral part of this balance sheet.

F-2

THE MOBILE STAR CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2011

AND CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)

THROUGH JUNE 30, 2011

(Unaudited)

	Three Months Ended						Six Months Ended						Cumulative
	June 30,						June 30,						From
	2011			2010			2011			2010			Inception

Revenues	$	6,381		$	-		$	6,381		$	-		$	6,381

Expenses:
Research and development		26,030			-			39,313			16,554			137,092
Professional fees		10,452			13,666			24,185			19,336			151,800
Consulting fees		-			25,000			6,383			28,000			56,530
Investor relations		-			-			3,500			3,060			9,911
Legal - incorporation		-			-			-			-			2,350
Other		5,089			1,095			12,520			7,336			27,850

Total general and administrative expenses		41,571			39,761			85,901			74,285			385,533

(Loss) from Operations		(35,190	)		(39,761	)		(79,520	)		(74,285	)		(379,152	)

Other Income (Expense)		(14,717	)		-			(40,407	)		293			(64,399	)

Provision for Income Taxes		-			-			-			-			-

Net (Loss)	$	(49,907	)	$	(39,761	)	$	(119,927	)	$	(73,992	)	$	(443,551	)

(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		110,809,879			73,956,044			98,586,548			71,988,950

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, 2011

(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 as compensation		10,000,000		1,000		24,000			-			25,000
Convertible note discount		-		-		24,545						24,545
Convertible note discount		-		-		22,091						22,091
Net (loss) for the period		-		-		-			(150,787	)		(150,787	)
Balance - December 31, 2010		80,000,000	$	8,000	$	229,436		$	(323,624	)	$	(86,188	)
Common stock issued to extinguish debt		12,000,000		1,200		47,800			-			49,000
Common stock issued upon conversion of convertible debt		29,223,864		2,923		49,466						52,389
Convertible note discount		-		-		55,227						55,227
Net (loss) for the period		-		-		-			(119,927	)		(119,927	)
Balance - June 30, 2011		121,223,864	$	12,123	$	381,929		$	(443,551	)	$	(49,499	)

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, 2011 AND 2010,

AND CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)

THROUGH JUNE 30, 2011

(Unaudited)

	Six Months Ended						Cumulative
	June 30,						From
	2011			2010			Inception

Operating Activities:
Net (loss)	$	(119,927	)	$	(73,992	)	$	(443,551	)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Common stock issued for services and interest		3,389			25,000			28,389
Amortization of beneficial conversion feature		47,825			-			71,788
Changes in net assets and liabilities-
Accounts payable and accrued liabilities		(14,771	)		(1,027	)		16,477

Net Cash Used in Operating Activities		(83,484	)		(50,019	)		(326,897	)

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

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

Financing Activities:
Proceeds from common stock issued		-			-			160,800
Proceeds from convertible note payable		67,500			-			124,500
Loans from shareholders		-			34,690			51,426

Net Cash Provided by Financing Activities		67,500			34,690			336,726

Net (Decrease) Increase in Cash		(15,984	)		(15,329	)		2,529

Cash - Beginning of Period		18,513			15,663			-

Cash - End of Period	$	2,529		$	334		$	2,529

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-

Supplemental schedule of non-cash investing and financing activities:
Assignment of invention rights acquired through additional paid-in capital	$	-		$	-		$	5,000
Stock issued to settle shareholder loans	$	49,000		$	-		$	49,000
Stock issued to settle convertible debts and interest	$	52,389		$	-		$	52,389

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, 2011

(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, 2011, 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, 2011, and the results of its operations and its cash flows for the periods ended June 30, 2011, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2011. 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, 2010, 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. Common stock equivalents were not included in the computation of diluted earnings per share in the statement of operations due to the fact that the Company reported a net loss and to do so would be anti-dilutive for the periods presented.

F-6

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.

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, 2011, 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, 2011, 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, 2011, and expenses for the period ended June 30, 2011, and cumulative from inception. Actual results could differ from those estimates made by management.

F-7

Recent Accounting Pronouncements

In April 2010, the FASB issued ASU No. 2010-17, Revenue Recognition—Milestone Method (ASU 2010-017). ASU 2010-017 provides guidance in applying the milestone method of revenue recognition to research or development arrangements. This guidance concludes that the milestone method is a valid application of the proportional performance model when applied to research or development arrangements. Accordingly, an entity can make an accounting policy election to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The adoption of this accounting standard had no impact on the Company's financial position or results of operations.

In February 2010, the FASB issued amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and the Company adopted these new requirements upon issuance of this guidance.

In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements (ASU No. 2010-06). ASU No. 2010-06 requires: (1) fair value disclosures of assets and liabilities by class; (2) disclosures about significant transfers in and out of Levels 1 and 2 on the fair value hierarchy, in addition to Level 3; (3) purchases, sales, issuances, and settlements be disclosed on gross basis on the reconciliation of beginning and ending balances of Level 3 assets and liabilities; and (4) disclosures about valuation methods and inputs used to measure the fair value of Level 2 assets and liabilities. ASU No. 2010-06 becomes effective for the first financial reporting period beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements of Level 3 assets and liabilities which will be effective for fiscal years beginning after December 15, 2010. The adoption of this accounting standard had no impact on the Company's financial position or results of operations.

In October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements: a consensus of the FASB Emerging Issues Task Force (ASU 2009-13). ASU 2009-13 establishes a selling-price hierarchy for determining the selling price of each element within a multiple-deliverable arrangement. Specifically, the selling price assigned to each deliverable is to be based on vendor-specific objective evidence (VSOE) if available, third-party evidence, if VSOE is unavailable, and estimated selling prices if neither VSOE or third-party evidence is available. In addition, ASU 2009-13 eliminates the residual method of allocating arrangement consideration and instead requires allocation using the relative selling price method. ASU 2009-13 will be effective prospectively for multiple-deliverable revenue arrangements entered into, or materially modified, in fiscal years beginning on or after June 15, 2010The adoption of this accounting standard had no impact on the Company's financial position or results of operations.

In August 2009, the FASB issued ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value (ASU 2009-05). ASU 2009-05 provides guidance in measuring the fair value of a liability when a quoted price in an active market does not exist for an identical liability or when a liability is subject to restrictions on its transfer. ASU 2009-15 was effective for the Company beginning with the quarter ended December 31, 2009. The adoption of this accounting standard had no impact on 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 limited 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.

F-8

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.

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 limited revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of June 30, 2011, 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, 2011, loans from related parties amounted to $2,426, 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) Convertible Notes Payable

On July 7, 2010 the Company signed a $30,000 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on April 8, 2011. The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principal balance into the Company’s common stock at a price equal to 55% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period. As of June 30, 2011 this note was converted to shares.

On September 20, 2010 the Company signed a $27,000 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on June 23, 2011. The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principal balance into the Company’s common stock at a price equal to 55% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period. As of June 30, 2011 $19,000 of this note was converted to shares.

On January 6, 2011, the Company signed a $35,000 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on October 10, 2011. The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principal balance into the Company’s common stock at a price equal to 55% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period.

F-9

On April 11, 2011, the Company signed a $32,500 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on January 18, 2012. The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principal balance into the Company’s common stock at a price equal to 55% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period.

In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms and determined that a beneficial conversion feature (BCF) exists. The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The BCF has been recorded as a discount to the notes payable and to Additional Paid-in Capital.

For the period ended June 30, 2011 the Company has recognized $3,484 in interest expense related to the notes and has amortized $47,825 of the beneficial conversion features which has been recorded as interest expense.

(6) 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 based on the current market price of the stock minus a discount for the restricted trading.

On February 25, 2011, the Company issued 12,000,000 shares of its common stock to Directors for repayment of loans of $49,000 based on the current market price of the stock minus a discount for the restricted trading.

On March 15, 2011, the Company issued 8,848,675 shares of its common stock upon conversion of convertible debt of $21,500.

From April 1, 2011 to June 30, 2011, the Company issued 20,375,189 shares of its common stock upon conversion of convertible debt of $27,500 and $3,389 of interest.

F-10

(7) Income Taxes

The provision (benefit) for income taxes for the periods ended June 30, 2011 and 2010 was as follows (assuming a 23% effective tax rate):

	2011			2010

Current Tax Provision:
Federal-
Taxable income	$	-		$	-

Total current tax provision	$	-		$	-

Deferred Tax Provision:
Federal-
Loss carryforwards	$	27,583		$	17,018
Nondeductible interest expense		11,000			-
Change in valuation allowance		(38,583	)		(17,018	)

Total deferred tax provision	$	-		$	-

The Company had deferred income tax assets as of June 30, 2011 and December 31, 2010 as follows:

	2011			2010

Loss carryforwards	$	85,505		$	68,922
Less - Valuation allowance		(85,505	)		(68,922	)

Total net deferred tax assets	$	-		$	-

The Company provided a valuation allowance equal to the deferred income tax assets for the periods ended June 30, 2011 and December 31, 2010, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

As of June 30, 2011, the Company had approximately $372,000 in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and expire in the year 2031.

The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company did not recognize any interest or penalties for unrecognized tax benefits.

The Company has filed income tax returns in the United States. All tax years are closed by expiration of the statute of limitations.

(8) Related Party Transactions

As described in Note 3, as of December 31, 2010, the Company owed $2,426 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.

For the period ended June 30, 2011, the Company paid fees in the amount of $19,466 to a director and officer of the Company.

F-11

(9) 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.

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.

(10) 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.

F-12

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, the Company has 3 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 generated limited 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.

During the six months ended June 30 2011 the Company sold its first machine to a customer in North America

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 June 30 , 2011 reflects cash in the amount of $2,529. 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 2011 and June 30 , 2010 amounted to $79,520 , $74,285 and $119,927 and $73,992, respectively .

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 or thru additional debt or equity financing . 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 other then the funding thru the convertible notes issued to date .

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.

On February 25, 2011, the Company issued 12,000,000 shares of its common stock for repayment of loans of $49,000 based on the current market price of the stock minus a discount for the restricted trading.

On March 15, 2011, the Company issued 8,848,675 shares of its common stock upon conversion of convertible debt of $21,500.

From April 1, 2011 to June 30, 2011, the Company issued 20,375,189 shares of its common stock upon conversion of convertible debt of $27,500 and $3,389 of interest.

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 matters submitted to a vote of security holders during the three months ended March 31 2011.

Item 5. Other Information.

On July 7, 2011, Danny Elbaz and Eran Gronich and SB Systems, (the “Sellers”) sold an aggregate of 29,040,000 shares of Common Stock to Judah Steinberger for a total of $29,513 pursuant to an Agreement for the Purchase of Common Stock (the Agreement”). The shares represent approximately 24% of the total outstanding securities of the Company. The shares were sold without registration under Section 5 of the Securities Act of 1933 in reliance on the exemption from registration contained in Section 4(2) of the Securities Act.

In connection with the Changes in Control of Registrant, Danny Elbaz resigned, effective July 30, 2011, as CEO and Director and Eran Gronich as Secretary, Internal Accounting Officer and Director of the Company also effective July 30 2011

Effective as of July 30, 2011, the following individuals were elected to the Board of Directors of the Company:

Name	Age	Position
Judah Steinberger	36	CEO, Director
Ruth Katz	22	Secretary, Director, Internal accounting Officer

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 25 2011	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 25 2011	By:	/s/ Danny Elbaz
	Name: Danny Elbaz
	Title: President and Director
	(Principal Executive Officer)

Date: July 25 2011	By:	/s/ Eran Gronich
	Name: Eran Gronich
	Title: Secretary and Director
	(Principal Internal Accounting and financial Officer)

Attached files

MOBILE STAR CORP Reports

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