U.S. SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549


FORM
10-K


ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For
the fiscal year ended December 31, 2008


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


(Registrant’s
telephone number, including area code)





Securities
registered pursuant to Section 12(b) of the Exchange Act:


None





Securities
registered pursuant to Section 12(g) of the Exchange Act:


Common
Stock, $0.0001 par value








Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o     No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes o     No x





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 xNo o





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.   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
definitions 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 oNon-accelerated
      filer o
                  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 Act).


Yes xNo o





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently computed second fiscal
quarter. $800.00 based upon $0.0001 per share which was the last price at which
the common equity purchased by non-affiliates was last sold, since there is no
public bid or ask price.





The
number of shares of the issuer’s common stock issued and outstanding as of
February 25, 2009 was 8,000,000 shares.





Documents
Incorporated By Reference:  None









TABLE
OF CONTENTS








PagePART
      IItem
      1
                            Business
                            
                            
                            3Item
      1A
                            Risk
      Factors
                            
                            
                            6Item
      1B
                            Unresolved
      Staff Comments
                            
                            
                            6Item
      2
                            Properties
                            
                            
                            6Item
      3
                            Legal
      Proceedings
                            
                            
                            6Item
      4
                            Submission
      of Matters to a Vote of Security Holders
                            
                            
                            7PART
      IIItem
      5
                            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                            
                            
                            7Item
      6
                            Selected
      Financial Data
                            
                            
                            8Item
      7
                            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                            
                            
                            8Item
      7A
                            Quantitative
      and Qualitative Disclosures About Market Risk.
                            
                            
                            9Item
      8
                            Financial
      Statements.
                            
                            
                            9Item
      9
                            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
                            
                            
                            9Item
      9A(T)
                            Controls
      and Procedures
                            
                            
                            10Item
      9B
                            Other
      Information
                            
                            
                            10PART
      IIIItem
      10
                            Directors,
      Executive Officers and Corporate Governance
                            
                            
                            10Item
      11
                            Executive
      Compensation
                            
                            
                            12Item
      12
                            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                            
                            
                            12Item
      13
                            Certain
      Relationships and Related Transactions, and Director
      Independence
                            
                            
                            13Item
      14
                            Principal
      Accountant Fees and Services
                            
                            
                            14PART
      IVItem
      15
                            Exhibits,
      Financial Statement Schedules
                            
                            
                            14SIGNATURES
                            
                            
                            
                            15




2




PART
I





Item
      1.
            Business.





As used
in this Annual Report on Form 10-K (this “Report”), references to the “Company,”
the “Registrant,” “we,” “our” or “us” refer to The Mobile Star Corp., unless the
context otherwise indicates.





Forward-Looking
Statements





This
Report contains forward-looking statements.  For this purpose, any
statements contained in this Report that are not statements of historical fact
may be deemed to be forward-looking statements.  Forward-looking
information includes statements relating to future actions, prospective
products, future performance or results of current or anticipated products,
sales and marketing efforts, costs and expenses, interest rates, outcome of
contingencies, financial condition, results of operations, liquidity, business
strategies, cost savings, objectives of management, and other
matters.  You can identify forward-looking statements by those that
are not historical in nature, particularly those that use terminology such as
“may,” “will,” “should,” “expects,” “anticipates,” “contemplates,”
“estimates,”  “believes,” “plans,” “projected,” “predicts,”
“potential,” or “continue” or the negative of these similar
terms.  The Private Securities Litigation Reform Act of 1995 provides
a “safe harbor” for forward-looking information to encourage companies to
provide prospective information about themselves without fear of litigation so
long as that information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those projected in the
information.





These
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that we cannot predict. In evaluating these
forward-looking statements, you should consider various factors, including the
following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently and
operate profitable operations, (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations, (d) whether we
are able to successfully fulfill our primary requirements for cash, which are
explained below under “Liquidity and Capital Resources”.  We assume no
obligation to update forward-looking statements, except as otherwise required
under the applicable federal securities laws.





Corporate
Background





We were incorporated in Delaware on September 25,
2007 and are a development stage company. We began operations only on January 1,
2008. On January 16, 2008, Eli Malki assigned all his technology and invention
rights including to develop and market a “Self Operated Computerized Karaoke
Recording Booth” to The Mobile Star Corp. in exchange for a percentage of
revenues ( royalties ) on future sales. This transfer agreement included all
technology rights to the “Self Operated Computerized Karaoke Recording Booth”.
On February 20, 2008 the Company. filed a patent application for the “Self
Operated Computerized Karaoke Recording Booth” (Patent Application Number:
60/902,076) with the United States Patent Office. The technology describes 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
Mobile Star Corp. invention 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
system 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.




3




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 Self
Operated Computerized Karaoke Recording Booth 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.




Third-Party
Manufacturers




We will
rely on third parties to develop a prototype and to work with us to manufacture
the product. If our manufacturing and distribution agreements are not
satisfactory, we may not be able to develop or commercialize our device as
planned. In addition, we may not be able to contract with third parties to
manufacture our device in an economical manner. Furthermore, third-party
manufacturers may not adequately perform their obligations, which may impair our
competitive position. If a manufacturer fails to perform, we could experience
significant time delays or we may be unable to commercialize or continue to
market our electromagnetic percussion system.




Intellectual
Property




4




On
January 16, 2008, we signed a Technology and Rights Transfer Agreement with Eli
Malki, the original owners of the technology, licensing all rights, title and
interest in, the self operated, computerized Karaoke booth. On February 20,
2008, we filed the patent application with the United States Patent and
Trademark Office.




Competition




To date,
to our knowledge, no such product exists in the market. A person who wants to
record himself or herself singing to music must approach a professional
recording studio in order to have a personal disc produced. The cost is
extremely high. Although there are semi-professional studios, the cost is still
prohibitive and these studios are scarce and hard to find.





Patent
and Trademark License & Franchise Restrictions Contractual Obligations &
Concessions




As
described above, we have entered into an exclusive licensing agreement for the
technology on which our self operated computerized karaoke recording booth is
based. In addition, as described above, we have entered into a Technology
Transfer and Sale Agreement whereby we acquired full rights to all title,
interests etc. related to the technology. Finally, we have filed a patent
application (Patent Application Number: 60902076) to protect our
rights.





In
addition, we are developing a website related to our product, which we intend to
use to promote, advertise, and potentially market our invention, once the
prototype and development stages are complete. We intend to full protect our
invention and development stages with copyright and trade secrecy
laws.





Existing
or Probable Government Regulations




We may be
subject to the provisions of the Federal Consumer Product Safety Act and the
Federal Hazardous Substances Act, among other laws. These acts empower the CPSC
to protect the public against unreasonable risks of injury associated with
consumer products. The CPSC has the authority to exclude from the market
articles that are found to be hazardous and can require a manufacturer to repair
or repurchase such devices under certain circumstances. Any such determination
by the CPSC is subject to court review. Violations of these acts may also result
in civil and criminal penalties. Similar laws exist in some states and cities in
the U.S. and in many jurisdictions throughout the world.




Employees




Other
than our current Directors and officers, Danny Elbaz and Eran Gronich, we have
no other full time or part-time employees. If and when we develop the prototype
for our electromagnetic percussion system, and are able to begin manufacturing
and marketing, we may need additional employees for such operations. We do not
foresee any significant changes in the number of employees or consultants we
will have over the next twelve months.




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.




Research
and Development




We have
not incurred costs to date and are not currently conducting any research and
development activities. We do, however, have plans to undertake research and
development activities during our first year of operation. If we are able to
raise funds in this offering, we will retain one or more third parties to
conduct research and development concerning our electromagnetic percussion
system and to develop a prototype model. We have not yet entered into any
agreements, negotiations, or discussions with any third parties with respect to
such research and development activities. We do not intend to do so until we
commence this offering. For a detailed description see "Plan of
Operation."




5




Item
      1A.
            Risk
      Factors





An
investment in our common stock involves a high degree of risk. You should
carefully consider the following factors and other information in this
prospectus before deciding to invest in our company. If any of the following
risks actually occur, our business, financial condition, results of operations
and prospects for growth would likely suffer. As a result, you could lose all or
part of your investment.








risk
factors relating to our company








In addition to the risk factors
described in our registration statement on Form S1, as filed with the
Securities and Exchange
Commission, and although smaller reporting companies are not required to provide
disclosure pursuant to this Item, your attention is directed to the following
risk factor that relates to our business.




We do not have sufficient cash to
fundour operating expenses
for the next twelve months, and plan to seek funding through the sale of our
common stock. Without significant improvement in the capital markets, we may not
be able to sell our common stock and funding may not be available for
continued operations.





There is not enough cash on hand to fund
our administrative and other operating expenses or our proposed research and
development program for the next twelve months. In addition, we will require
substantial new capital following the development of a strategic marketing plan
for bringing our product to global markets in order to actually market, arrange
for the manufacturing of, and sell our product. Because we do not expect to have
any cash flow from operations within the next twelve months, we will need to raise additional
capital, which may be in the form of loans from current stockholders and/or from
public and private equity offerings. Our ability to access capital will depend
on our success in implementing our business plan. It willalso depend upon the status of the
capital markets at the time such capital is sought. Without significant
improvement in the capital markets, sufficient capital may not be available and
the implementation of our business plan could be delayed. If we are
unable to raise additional funds in the
future, we may have to cease all substantive operations. In such event it would
not be likely that investors would obtain a profitable return on their
investment or a return of their investment at all














Item
      1B.
            Unresolved
      Staff Comments





Not
applicable.





Item
      2.
            Properties





Our
Principal executive offices are located at c/o Danny Elbaz, 53 Hanoter Street,
Even Yehuda, Israel. This location is the home of our President and Director and
we have been allowed to operate out of such location at no cost to the Company.
We believe that this space is adequate for our current and immediately
foreseeable operating needs. We do not have any policies regarding investments
in real estate, securities, or other forms of property.





Item
      3.
            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.




6




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




During
the period ending December 31, 2008, there has not been any matter which was
submitted to a vote of the Company’s shareholders through the solicitation of
proxies or otherwise.





PART
II





Item
      5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.





Market
Information





Our
common stock is not traded on any exchange or on the Over-The-Counter market. We
intend to have a market maker file an application with FINRA for our common
stock to be eligible for trading on the Over-The-Counter Bulletin Board or a
similar electronic inter-dealer quotation system.





Holders





As of
February 25, 2009, there were 8,000,000 common shares issued and
outstanding, which were held by 7 stockholders of record.





Dividends





We have
never declared or paid any cash dividends on our common stock nor do we
anticipate paying any in the foreseeable future. Furthermore, we expect to
retain any future earnings to finance our operations and expansion. The payment
of cash dividends in the future will be at the discretion of our Board of
Directors and will depend upon our earnings levels, capital requirements, any
restrictive loan covenants and other factors the Board considers
relevant.





Equity
Compensation Plans





We do not
have any equity compensation plans.





Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities





On February 10, 2008, we issued a total
of 8,000,000 shares of our common stock to seven individuals, including to our
Principal Executive Officer and Treasurer, Principal Accounting Officer. The
purchase price for such shares was equal to their par value, $0.0001 per share,
amounting in the aggregate for all 8,000,000 shares to $800. None of these
transactions involved any underwriters, underwriting discounts or commissions or
any public offering, and we believe these issuances were exempt under Regulation
S of the Securities Act. No advertising or general solicitation was employed in
offering the securities. The offering and sale were made in an offshore
transaction and only to the following individuals who are all non-U.S. citizens,
all in accordance with the requirements of Regulation S of the Securities
Act.





Name and Address of
                      Beneficial Owner
                    
                    Number of Shares of Common Stock Beneficially
                      OwnedDanny
      Elbaz
                    
                    
                    1,600,000Eran
      Gronich
                    
                    
                    1,120,000Asher
      Zwebner
                    
                    
                    1,600,000Lavi
      Krasney
                    
                    
                    1,600,000Benjamin
      Resheff
                    
                    
                    1,600,000Others
                    
                    
                    480,000




7




This
transaction was conducted in reliance upon an exemption from registration
provided under Section 4(2) of the Securities Act of 1933, as
amended.





Purchases
of Equity Securities by the Small Business Issuer and Affiliated
Purchasers





We have
not repurchased any shares of our common stock during the fiscal year ended
December 31, 2008.





Item
      6.
            Selected
      Financial Data.





Not
applicable.





Item
      7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.





Certain
statements contained in this prospectus, including statements regarding the
anticipated development and expansion of our business, our intent, belief or
current expectations, primarily with respect to the future operating performance
of The Mobile Star Corp.  And the services we expect to offer and
other statements contained herein regarding matters that are not historical
facts, are “forward-looking” statements.  Future filings with the
Securities and Exchange Commission, future press releases and future oral or
written statements made by us or with our approval, which are not statements of
historical fact, may contain forward-looking statements, because such statements
include risks and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements.





All
forward-looking statements speak only as of the date on which they are made. We
undertake no obligation to update such statements to reflect events that occur
or circumstances that exist after the date on which they are made.­­­­­­­­




Plan
of Operation





We are a development stage company that has
bought the technology and filed a patent application for a self operated
computerized Karaoke recording booth. The system includes:




(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.




8




Although
we have not yet engaged a manufacturer to develop a fully operational prototype
of the self operated computerized Karaoke recording booth, based on our
preliminary discussions with certain manufacturing vendors, we believe that it
will take approximately three to four months to construct a basic valid
prototype of our product. If and when we have a viable prototype, depending on
the availability of funds, we estimate that we would need approximately an
additional four to six months to bring this product to market. Our objective is
to manufacture the product ourselves through third party sub-contractors and
market the product as an off-the-shelf device, and/or to license the
manufacturing rights to product and related technology to third party
manufacturers who would then assume responsibility for marketing and
sales.







Our
auditors have issued an opinion on our 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. Even if we raise the maximum amount of money in this offering, we do
not know how long the money will last, however, we do believe it will last at
least twelve months.





Liquidity
and Capital Resources





Our
balance sheet as of December 31, 2008 reflects cash in the amount of $376. Cash
and cash equivalents from inception to date have been sufficient to provide the
operating capital necessary to operate to date. Our operating expenses and net
loss for the year ending December 31, was $18,019





We do not
have sufficient resources to effectuate our business plan. We expect to incur a
minimum of $100,000 in expenses during the next twelve months of operations. We
estimate that this will be comprised mostly of development and operating
expenses as follows; $20,000 towards development of a working prototype, $5,000
towards marketing materials and website. Additionally, $­­­75,000
will be needed for general overhead expenses such as for reimbursed expenses,
corporate legal and accounting fees, office overhead and general working
capital. Accordingly, we will have to raise the funds to pay for these expenses.
We might do so through a private offering after our shares are quoted on the
Over the Counter Bulletin Board. 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
independent auditors included an explanatory paragraph in their report on the
accompanying financial statements regarding concerns about our ability to
continue as a going concern.  Our financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our independent auditors.





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements.





Item
      7A.
            Quantitative
      and Qualitative Disclosures About Market
Risk.





Not
applicable.





Item
      8.
            Financial
      Statements.





See
Item 15





Item
      9.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure.





None.




9




Item9A(T).
            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 SEC. Our Chief Executive
Officer and Chief Financial Officer have reviewed the effectiveness of our
“disclosure controls and procedures” (as defined in the Securities Exchange Act
of 1934 Rules 13a-14(c) and 15d-14(c)) during the period covered by this report
and have concluded that the disclosure controls and procedures are effective to
ensure that material information relating to us 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 Chief
Executive Officer and Chief Financial Officer.





Internal
Controls Over Financial Reporting





During
the quarter ended December 31, 2008, there was no change in internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect our internal control over financial reporting.


Our
management, including the chief executive officer and chief financial officer,
do not expect that its disclosure controls or internal controls will prevent all
error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. In addition, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake.





Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management’s override of the control. The
design of any systems of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions. Over time, control may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of these inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.
Individual persons perform multiple tasks which normally would be allocated to
separate persons and therefore extra diligence must be exercised during the
period these tasks are combined. It is also recognized we have not designated an
audit committee and no member of the board of directors has been designated or
qualifies as a financial expert. The Company should address these concerns at
the earliest possible opportunity.





Item
      9B.
            Other
      Information.





None.


PART
III





Item
      10.
            Directors,
      Executive Officers and Corporate
Governance.





Directors
and Executive Officers





The
following table sets forth certain information regarding the members of our
board of directors and our executive officers:




The
following table sets forth certain information regarding the members of our
Board of Directors and our executive officers as of December 31,
2008.





Name
                  
                  Age
                  
                  Positions
      and Offices HeldDanny
      Elbaz
                  
                  
                  55
                  
                  President
      and DirectorEran
      Gronich
                  
                  
                  35
                  
                  Secretary
      and Director




10




Our
Directors hold office until the next annual meeting of our stockholders or until
their successors are duly elected and qualified. Set forth below is a summary
description of the principal occupation and business experience of each of our
Directors and executive officers for at least the last five years.




Danny Elbaz has been our
President and Director since the Company’s inception in September 25, 2007 and
began as of January 1, 2008 to oversee daily operation when the company began
actual operations. He is a seasoned entrepreneur, a proven leader, and team
player. With more than 20 years in the Hi-Tech industry Danny has experience in
management, international sales, and marketing. He is among founders of NMC.
Currently Mr. Elbaz is serving as a CEO and Executive Partner for two High-Tech
companies, tracing new patents and technologies. Prior to that, in 1995 he
founded Harmonic Data Systems Ltd., where he led the strategy to position the
company. His time at Digital (DEC) Israel, 1989 through 1995, and Cosmic, Ltd.,
1980 through 1988, honed his management skills while he developed his successful
marketing and sales techniques.





Eran Gronich has served as our
Secretary and Director since September 25, 2007. Currently he is the CEO of
Alefo Interactive Ltd., creator of an online, web-based application that allows
people to create personal homepages easily and efficiently without the need for
any programming knowledge or web development expertise. Previously, in 2004 he
founded IdeaPlus and was Director of Business Development. From 2001 until 2003
Mr. Gronich managed the North American sales for DayaGem. In 2000 he founded
PyroPro and stayed on as the CEO. Mr. Gronich holds an MBA in Finance and
Investing and a BA in Marketing.





There are
no familial relationships among any of our directors or
officers.  None of our directors or officers is a director in any
other U.S. reporting companies.  None of our directors or officers has
been affiliated with any company that has filed for bankruptcy within the last
five years.  The Company is not aware of any proceedings to which any
of the Company’s officers or directors, or any associate of any such officer or
director, is a party adverse to the Company or any of the Company’s subsidiaries
or has a material interest adverse to it or any of its
subsidiaries.





Each
director of the Company serves for a term of one year or until the successor is
elected at the Company's annual shareholders' meeting and is qualified, subject
to removal by the Company's shareholders.  Each officer serves, at the
pleasure of the board of directors, for a term of one year and until the
successor is elected at the annual meeting of the board of directors and is
qualified.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Securities Exchange Act of 1934 requires officers and directors of
the Company and persons who own more than ten percent of a registered class of
the Company's equity securities to file reports of ownership and changes in
their ownership with the Securities and Exchange Commission, and forward copies
of such filings to the Company. We believe, based solely on our review of the
copies of such forms, that during the fiscal year ended December 31, 2008, all
reporting persons complied with all applicable Section 16(a) filing
requirements.





Auditors




Alan
Weinberg, CPA an independent registered public accounting firm, is our
auditor.




We do not
currently have a Code of Ethics applicable to our principal executive, financial
and accounting officers. We do not have a “financial expert” on the board or an
audit committee or nominating committee.




Potential
Conflicts of Interest




Since we
do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our directors. The Board of Directors has not established an audit
committee and does not have an audit committee financial expert, nor has the
Board established a nominating committee. The Board is of the opinion that such
committees are not necessary since the Company has only two directors, and to
date, such directors have been performing the functions of such committees.
Thus, there is a potential conflict of interest in that our directors and
officers have the authority to determine issues concerning management
compensation, nominations, and audit issues that may affect management
decisions. We are not aware of any other conflicts of interest with any of our
executive officers or directors.




11




Involvement
in Certain Legal Proceedings





There are
no legal proceedings that have occurred within the past five years concerning
our directors, or control persons which involved a criminal conviction, a
criminal proceeding, an administrative or civil proceeding limiting one's
participation in the securities or banking industries, or a finding of
securities or commodities law violations.





Item
      11.
            Executive
      Compensation.





Summary
Compensation





Since our
incorporation on September 25, 2007, we have not paid any compensation to our
directors or officers in consideration for their services rendered to our
Company in their capacity as such.  We have no employment agreements
with any of our directors or executive officers.  We have no pension,
health, annuity, bonus, insurance, stock options, profit sharing or similar
benefit plans.





Since our
incorporation on September 25, 2007, no stock options or stock appreciation
rights were granted to any of our directors or executive officers.  We
have no long-term equity incentive plans.





Outstanding
Equity Awards





None of
our directors or executive officers holds unexercised options, stock that has
not vested, or equity incentive plan awards.





Compensation
of Directors





Since our
incorporation on September 25, 2007, no compensation has been paid to any of our
directors in consideration for their services rendered in their capacity as
directors.





Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.





The
following table lists, as of February 25, 2009, the number of shares of common
stock of our Company that are beneficially owned by (i) each person or entity
known to our Company to be the beneficial owner of more than 5% of the
outstanding common stock; (ii) each officer and director of our Company; and
(iii) all officers and directors as a group. Information relating to beneficial
ownership of common stock by our principal shareholders and management is based
upon information furnished by each person using “beneficial ownership” concepts
under the rules of the Securities and Exchange Commission. Under these rules, a
person is deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or direct the voting of
the security, or investment power, which includes the power to vote or direct
the voting of the security. The person is also deemed to be a beneficial owner
of any security of which that person has a right to acquire beneficial ownership
within 60 days. Under the Securities and Exchange Commission rules, more than
one person may be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to which he or
she may not have any pecuniary beneficial interest. Except as noted below, each
person has sole voting and investment power.




12


The
percentages below are calculated based on 8,000,000 shares of our common stock
issued and outstanding as of February 25, 2009. We do not have any outstanding
options, warrants or other securities exercisable for or convertible into shares
of our common stock. Unless otherwise indicated, the address of each person
listed is c/o ____________________________.








Name and Address of
                  Beneficial Owner
                
                Number of Shares of Common
                  Stock Beneficially
                  Owned or Right to
                  Direct Vote (1)
                
                Percent of Common
                  Stock Beneficially
                  Owned or Right
                  to Direct Vote (1)Danny
      Elbaz
                
                
                1,600,000
                
                
                20
                %Eran
      Gronich
                
                
                1,120,000
                
                
                14
                %Asher
      Zwebner
                
                
                1,600,000
                
                
                20
                %Lavi
      Krasney
                
                
                1,600,000
                
                
                20
                %Benjamin
      Resheff
                
                
                1,600,000
                
                
                20
                %Others
      ( 2 individuals owning less than 5% each )
                
                
                480,000
                
                
                6
                %All
      stockholders, and / or Directors and / or
                  executive
      officers as a group
                  (seven
      persons)
                
                
                8,000,000
                
                
                100
                %







Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence.





Other
than the transactions discussed below, we have not entered into any transaction
nor are there any proposed transactions in which our Director, executive
officer, stockholders or any member of the immediate family of the foregoing had
or is to have a direct or indirect material interest.





On
February 10, 2008, we subscribed 1,600,000 shares of our common stock to Mr.
Danny Elbaz, our President and Director, for a payment of $160. As of August 12
2008 this amount has been paid in cash. We believe this issuance was deemed to
be exempt under Regulation S of the Securities Act. No advertising or general
solicitation was employed in offering the securities. The offering and sale were
made only to a non-U.S. citizen, and transfer was restricted by us in accordance
with the requirements of the Securities Act of 1933.





On
February 10, 2008, we subscribed 1,120,000 shares of our common stock to Mr.
Eran Gronich, our Secretary and Director, for a payment of $112. As of August 12
2008 this amount has been paid in cash. We believe this issuance was deemed to
be exempt under Regulation S of the Securities Act. No advertising or general
solicitation was employed in offering the securities. The offering and sale were
made only to a non-U.S. citizen, and transfer was restricted by us in accordance
with the requirements of the Securities Act of 1933.








Director
Independence





We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
We do not believe that any of our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of the American Stock
Exchange.




13




Item
      14.
            Principal
      Accounting Fees and Services.





Our
principal independent accountant is Alan Weinberg, CPA. Their pre-approved fees
billed to the Company are set forth below:





Fiscal
      Year EndedDecember 31, 2008Audit
      Fees
                      
                      $
                      21,000Tax
      Fess
                      
                      $
                      1,000






As of
December 31, 2008, the Company did not have a formal documented pre-approval
policy for the fees of the principal accountant. The Company does not have
an audit committee. The percentage of hours expended on the principal
accountant's engagement to audit our financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was 0%.








PART
IV





Item
      15.
            Exhibits.
      Financial Statement Schedules.





Exhibit                       Description








3.1
                  
                  Articles
      of Incorporation of the Company3.2
                  
                  By-Laws
      of the Company3.3
                  
                  Form
      of Common Stock Certificate of the Company10.1
                  
                  Invention
      Technology Assignment10.2
                  
                  US
      Patent Application31.1
                  
                  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 and Principal Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley (filed herewith)32.2
                  
                  Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley (filed
  herewith)





14




THE MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
  INDEX
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008
  Report
      of Registered Independent Auditors
                        
                        
                        F-2Financial
      Statements-Balance
      Sheet as of December 31, 2008
                        
                        
                        F-3Statements
      of Operations for the Year EndedDecember
      31, 2008, and Cumulative from Inception
                        
                        
                        F-4Statement
      of Stockholders’ (Deficit) for the Period from InceptionThrough
      December 31, 2008
                        
                        
                        F-5Statements
      of Cash Flows for the Year Ended December 31, 2008,and
      Cumulative from Inception
                        
                        
                        F-6Notes
      to Financial Statements December 31, 2008
                        
                        
                        F-7
 
  F-1
  REPORT
OF REGISTERED INDEPENDENT AUDITORS
 
 
 To the
Board of Directors and Stockholders
 of  The
Mobile Star Corp.:
 
 We have
audited the accompanying balance sheet of  The Mobile Star Corp. (a
Delaware corporation in the development stage) as of December 31, 2008, and the
related statements of operations, stockholders’ (deficit), and cash flows for
year ended December 31, 2008, and from inception (September 25, 2007) through
December 31, 2008. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of  The Mobile Star Corp. as
of December 31, 2008, and the results of its operations and its cash flows for
the period ended December 31, 2008, and from inception (September 25, 2007)
through December 31, 2008, in conformity with accounting principles generally
accepted in the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company is in the development stage, and has not established any
source of revenue to cover its operating costs. As such, it has incurred an
operating loss since inception. Further, as of December 31, 2008, the cash
resources of the Company were insufficient to meet its planned business
objectives. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plan regarding these
matters is also described in Note 2 to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
 
 Respectfully
submitted,
 
 /s/ Alan
Weinberg CPA
 
 Weinberg
& Associates LLC
 Baltimore,
Maryland
 January
22, 2009
  F-2
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 BALANCE
SHEET (NOTE 2)
 AS
OF DECEMBER 31, 2008
  ASSETSCurrent
    Assets:Cash
                                                    
                                                    $
                                                    376Total current
      assets
                                                    
                                                    
                                                    376Other
    Assets:Patent
    pending
                                                    
                                                    
                                                    7,300Assignment of invention
      rights
                                                    
                                                    
                                                    5,000Deferred offering
      costs
                                                    
                                                    
                                                    20,000Total other
      assets
                                                    
                                                    
                                                    32,300Total
Assets
                                                    
                                                    $
                                                    32,676LIABILITIES AND STOCKHOLDERS'
      (DEFICIT)Current
      Liabilities:Accounts payable and accrued
      liabilities
                                                    
                                                    $
                                                    30,595Loans from related parties -
      Directors and stockholders
                                                    
                                                    
                                                    14,300Total current
      liabilities
                                                    
                                                    
                                                    44,895Total
      liabilities
                                                    
                                                    
                                                    44,895Commitments and
      ContingenciesStockholders'
      (Deficit):Common stock, par value $.0001 per
      share, 200,000,000 sharesauthorized; 8,000,000 shares
      issued and outstanding
                                                    
                                                    
                                                    800Additional paid-in
      capital
                                                    
                                                    
                                                    5,000(Deficit) accumulated during the
      development stage
                                                    
                                                    
                                                    (18,019
                                                    )Total
      stockholders' (deficit)
                                                    
                                                    
                                                    (12,219
                                                    )Total Liabilities and
      Stockholders' (Deficit)
                                                    
                                                    $
                                                    32,676
  The
accompanying notes to financial statements
 are an
integral part of this balance sheet.
  F-3
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENTS
OF OPERATIONS (NOTE 2)
 FOR
THE YEAR ENDED DECEMBER 31, 2008,
 AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
 THROUGH
DECEMBER 31, 2008
  Year Ended
                                          
                                          
                                          CumulativeDecember
31,
                                          
                                          
                                          From2008
                                          
                                          
                                          InceptionRevenues
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -Expenses:General and
      administrative-Professional
      fees
                                          
                                          
                                          12,924
                                          
                                          
                                          
                                          12,924Consulting
    fees
                                          
                                          
                                          2,545
                                          
                                          
                                          
                                          2,545Legal -
      incorporation
                                          
                                          
                                          2,350
                                          
                                          
                                          
                                          2,350Other
                                          
                                          
                                          200
                                          
                                          
                                          
                                          200Total general and administrative
      expenses
                                          
                                          
                                          18,019
                                          
                                          
                                          
                                          18,019(Loss) from
      Operations
                                          
                                          
                                          (18,019
                                          )
                                          
                                          
                                          (18,019
                                          )Other Income
      (Expense)
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Provision for income
      taxes
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Net (Loss)
                                          
                                          $
                                          (18,019
                                          )
                                          
                                          $
                                          (18,019
                                          )(Loss) Per Common
      Share:(Loss) per common share - Basic
      and Diluted
                                          
                                          $
                                          (0.00
                                          )Weighted Average Number of Common
      SharesOutstanding - Basic and
      Diluted
                                          
                                          
                                          7,254,795
  The
accompanying notes to financial statements are
 an
integral part of these statements.
  F-4
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENT
OF STOCKHOLDERS' (DEFICIT) (NOTE 2)
 FOR
THE PERIOD FROM INCEPTION (SEPTEMBER 25, 2007)
 THROUGH
DECEMBER 31, 2008
 
 (Deficit)AccumulatedAdditional
                                          
                                          
                                          During theCommon
stock
                                          
                                          
                                          Paid-in
                                          
                                          
                                          DevelopmentShares
                                          
                                          
                                          Amount
                                          
                                          
                                          Capital
                                          
                                          
                                          Stage
                                          
                                          
                                          TotalsBalance - January 1,
      2008
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -Common stock issued for
      cash
                                          
                                          
                                          8,000,000
                                          
                                          
                                          
                                          800
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          800Assignment of invention
      rights
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          5,000
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          5,000Net (loss) for the
      year
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (18,019
                                          )
                                          
                                          
                                          (18,019
                                          )Balance - December 31,
      2008
                                          
                                          
                                          8,000,000
                                          
                                          
                                          $
                                          800
                                          
                                          
                                          $
                                          5,000
                                          
                                          
                                          $
                                          (18,019
                                          )
                                          
                                          $
                                          (12,219
                                          )
 
 The
accompanying notes to financial statements are
 an
integral part of this statement.
   F-5
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENTS
OF CASH FLOWS (NOTE 2)
 FOR
THE YEAR ENDED DECEMBER 31, 2008,
 AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
 THROUGH
DECEMBER 31, 2008
  Year Ended
                                                        
                                                        
                                                        CumulativeDecember
31,
                                                        
                                                        
                                                        From2008
                                                        
                                                        
                                                        InceptionOperating
      Activities:Net (loss)
                                                        
                                                        $
                                                        (18,019
                                                        )
                                                        
                                                        $
                                                        (18,019
                                                        )Adjustments to reconcile net
      (loss) to net cash(used in) operating
      activities:Changes in net
      liabilities-Accounts payable and accrued
      liabilites
                                                        
                                                        
                                                        10,595
                                                        
                                                        
                                                        
                                                        10,595Net Cash Used in Operating
      Activities
                                                        
                                                        
                                                        (7,424
                                                        )
                                                        
                                                        
                                                        (7,424
                                                        )Investing
      Activities:Purchase of patent
      pending
                                                        
                                                        
                                                        (7,300
                                                        )
                                                        
                                                        
                                                        (7,300
                                                        )Net Cash Used in Investing
      Activities
                                                        
                                                        
                                                        (7,300
                                                        )
                                                        
                                                        
                                                        (7,300
                                                        )Financing
      Activities:Proceeds from common stock
      issued
                                                        
                                                        
                                                        800
                                                        
                                                        
                                                        
                                                        800Loans from
      shareholders
                                                        
                                                        
                                                        14,300
                                                        
                                                        
                                                        
                                                        14,300Net Cash Provided by Financing
      Activities
                                                        
                                                        
                                                        15,100
                                                        
                                                        
                                                        
                                                        15,100Net (Decrease) Increase in
      Cash
                                                        
                                                        
                                                        376
                                                        
                                                        
                                                        
                                                        376Cash - Beginning of
      Period
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Cash - End of
      Period
                                                        
                                                        $
                                                        376
                                                        
                                                        
                                                        $
                                                        376Supplemental Disclosure of Cash
      Flow Information:Cash paid during the period
      for:Interest
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -Income
taxes
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -Supplemental schedule of noncash
      investing and financing activities:Accrual of deferred offering
      costs
                                                        
                                                        $
                                                        20,000
                                                        
                                                        
                                                        $
                                                        20,000Assignment of invention rights
      acquired through additional paid-in capital
                                                        
                                                        $
                                                        5,000
                                                        
                                                        
                                                        $
                                                        5,000
  The
accompanying notes to financial statements are
 an
integral part of these statements.
  F-6
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008
  (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.
 
 The
Company has commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the Securities and Exchange Commissions (“SEC”) to
register and sell in a self-directed offering 2,000,000 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.
 
 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 December 31, 2008.
 
 
 Income
Taxes
 
 The
Company accounts for income taxes pursuant to SFAS No. 109, Accounting for Income Taxes
(“SFAS 109”). Under SFAS 109, 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.
  F-7
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 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 December 31, 2008, 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 as other assets the direct incremental costs of raising capital
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 December 31, 2008, 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 December 31, 2008, and expenses for the period ended December
31, 2008, and cumulative from inception. Actual results could differ from those
estimates made by management.
  Fiscal
Year End
 
 The
Company has adopted a fiscal year end of December 31.
  F-8
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008
  Recent Accounting
Pronouncements
  In June
2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position No. EITF No. 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF
No. 03-6-1”). According to FSP EITF No. 03-6-1, unvested share-based
payment awards that contain nonforfeitable rights to dividends or dividend
equivalents are considered participating securities under SFAS No. 128. As
such, they should be included in the computation of basic earnings per share
(“EPS”) using the two-class method. FSP EITF No. 03-6-1 is effective for
financial statements issued for fiscal years beginning after December 15,
2008, as well as interim periods within those years. Once effective, all
prior-period EPS data presented must be adjusted retrospectively. The Company
does not expect FSP EITF No. 03-6-1 to have a material impact on the
Company’s financial position or results of operations.
 
 In March
2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”, an amendment of FASB Statement No. 133
(“SFAS No. 161”). SFAS No. 161 applies to all derivative
instruments and nonderivative instruments that are designated and qualify as
hedging instruments and related hedged items accounted for under
SFAS No. 133. SFAS No. 161 requires entities to provide greater
transparency through additional disclosures about (a) how and why an entity
uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect an entity’s financial position, results of operations, and cash
flows. SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008. The
Company does not expect SFAS No. 161 to have a material impact on the
Company’s financial position or results of operations.
 
 In
December 2007, the FASB issued Statement No. 141 (revised), “Business
Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R)
significantly changes the accounting for business combinations and establishes
principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed
and any noncontrolling interest in the acquiree and recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase.
SFAS No. 141(R) applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008.
 
 In
December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests
in Consolidated Financial Statements” - an amendment of ARB No. 51
(“SFAS No. 160”). SFAS No. 160 changes the accounting for
noncontrolling (minority) interests in consolidated financial statements
including the requirements to classify noncontrolling interests as a component
of consolidated shareholders’ equity, the elimination of “minority interest”
accounting in results of operations and changes in the accounting for both
increases and decreases in a parent’s controlling ownership interest.
SFAS No. 160 is effective for fiscal years beginning after
December 15, 2008, and early adoption is prohibited. The Company does not
expect SFAS No. 160 to have a material impact on the Company’s
financial position or results of operations.
 
 In
February 2007, the FASB issued Statement No. 159 “The Fair Value Option for
Financial Assets and Financial Liabilities” including an amendment of FASB
Statement No. 115 (“SFAS No. 159”), which allows an entity the
irrevocable option to elect fair value for the initial and subsequent
measurement for certain financial assets and liabilities under an
instrument-by-instrument election. If the fair value option is elected for an
instrument, subsequent changes in fair value for that instrument will be
recognized in earnings. SFAS No. 159 also establishes additional
disclosure requirements and is effective for fiscal years beginning after
November 15, 2007, with early adoption permitted provided that the entity
also adopts Statement No. 157, “Fair Value Measurements”
(“SFAS No. 157”). SFAS No. 159 is not expected to have a
material impact on its results of operations or financial position.
 
 In
September 2006, the FASB issued SFAS No. 157 which defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
SFAS No. 157 applies under other accounting pronouncements that
require or permit fair value measurements. SFAS No. 157 is effective
for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. In February 2008, the FASB issued FASB Staff Position
No. SFAS No. 157-2, Effective Date of FASB Statement No. 157,
which provides a one-year deferral of the effective date of
SFAS No. 157 for non-financial assets and non-financial liabilities,
except those that are recognized or disclosed in the financial statements at
fair value on a recurring basis (at least annually). The adoption of
SFAS No. 157 for financial assets and financial liabilities is not
expected to have a material impact on the Company’s results of operations or
financial position.
  F-9
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 (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.
  The
Company has also 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 2,000,000 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
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 December 31, 2008,
the cash resources of the Company were insufficient to meet its current business
plan, and the Company had negative working capital. 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
 
 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.
 
 (4)  Loans from Related Parties -
Directors and Stockholders
 
 As of
December 31, 2008, loans from related parties - Directors and stockholders
amounted to $14,300, 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.
  F-10
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 (5)  Common Stock
 
 On February 4, 2008, the Company issued
8,000,000 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 2,000,000 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 incurred $20,000 of deferred offering costs related to this capital
formation activity.
 
 (6)  Income Taxes
 
 The
provision (benefit) for income taxes for the period ended December 31, 2008, was
as follows (assuming a 23% effective tax rate):




2008Current Tax
      Provision:Federal-Taxable
    income
                                
                                $
                                -Total current tax
      provision
                                
                                $
                                -Deferred Tax
      Provision:Federal-Loss
      carryforwards
                                
                                $
                                4,144Change in valuation
      allowance
                                
                                
                                (4,144
                                )Total deferred tax
      provision
                                
                                $
                                -





The Company had deferred income tax
assets as of December 31, 2008, as follows:
  2008Loss
      carryforwards
                              
                              $
                              4,144Less - Valuation
      allowance
                              
                              
                              (4,144
                              )Total net deferred tax
      assets
                              
                              $
                              -
  The
Company provided a valuation allowance equal to the deferred income tax assets
for the period ended December 31, 2008, because it is not presently known
whether future taxable income will be sufficient to utilize the loss
carryforwards.
 
 As of
December 31, 2008, the Company had approximately $18,019 in tax loss
carryforwards that can be utilized in future periods to reduce taxable income,
and expire in the year 2028.
 
 (7)  Related Party
Transactions
 
 As
described in Note 4, as of December 31, 2008, the Company owed $14,300 to
Directors, officers, and principal stockholders of the Company for working
capital loans.
 
 As
described in Note 5, on February 4, 2008, the Company issued 2,720,000 shares of
common stock to directors of the Company, for $272.
  F-11
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 (8)  Commitments
 
 As
described in Note 5, as of December 31, 2008, the Company commenced a capital
formation activity to submit a Registration Statement on Form S-1 to the SEC. In
connection with this capital formation activity, the Company is committed to pay
legal and accounting fees amounting to approximately $20,000.
 
 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 amounting to $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.
 
 F-12






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.







THE
      MOBILE STAR CORP.Date:
      February 25, 2009
                By:
                /s/ Danny ElbazName:
                Danny
      ElbazTitle:
                President
      and Director (PrincipalExecutive
      Officer)


By:
                    /s/ Eran GronichName:
                    Eran
      GronichTitle:
                    Secretary
      and Director (PrincipalFinancial,
      and Accounting 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:
      February 25, 2009
                        By:
                        /s/ Danny ElbazName:
                        Danny
      ElbazTitle:
                        President
      and Director (PrincipalExecutive
      Officer)
 Date: February25, 2009
                              By:
                              /s/ Eran GronichName:
                              Eran
      GronichTitle:
                              Secretary
      and Director (PrincipalFinancial,
      and Accounting Officer)


15