UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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





For the
quarter ended September 30, 2009





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





For the
transition period from _____ to _____





Commission
file number: 333- 152952





THE
MOBILE STAR CORP.


(Exact
name of registrant as specified in its charter)





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





c/o Danny
Elbaz


53
Hanoter Street


Even Yehuda, Israel
40500


(Address
of principal executive offices)





972 - (544)
655-341


(Issuer's
telephone number)







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





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





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





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


(Do not
check if a smaller reporting company)





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




As
of  October 27 , 2009, 70,000,000  shares of
common stock, par value $0.0001 per share, were issued and
outstanding.













TABLE
OF CONTENTS





PagePART
      IItem
      1. Financial Statements
                      F-1Item
      2. Management’s Discussion and Analysis or Plan of
    Operation
                      3Item
      3 Quantitative and Qualitative Disclosures About Market
    Risk
                      6Item
      4 Controls and Procedures
                      7PART
      IIItem
      1. Legal Proceedings
                      7Item
      IA. Risk Factors
                      7Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                      7Item
      3. Defaults Upon Senior Securities
                      7Item
      4. Submission of Matters to a Vote of Security Holders
                      8Item
      5. Other Information
                      8Item
      6. Exhibits
                      8




2





PART
I


FINANCIAL
INFORMATION





Item
1. Financial Statements.





THE
MOBILE STAR CORP.


(A
DEVELOPMENT STAGE COMPANY)




INDEX
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2009




Financial
      Statements-Balance
      Sheets as of September 30, 2009 and December 31, 2008
                        F-2Statements of Operations for the
      Three Months and Nine Months Ended
                          September 30, 2009, and
      Cumulative from Inception
                        F-3Statement of Changes in
      Stockholders’ Equity (Deficit) for the Period from
      Inception
                          Through September 30,
      2009
                        F-4Statements of Cash Flows for the
      Nine Months Ended September 30, 2009,
                          and Cumulative from
      Inception
                        F-5Notes
      to Financial Statements September 30, 2009
                        F-6




F-1


THE
MOBILE STAR CORP.


(A
DEVELOPMENT STAGE COMPANY)


BALANCE
SHEETS


AS
OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008




ASSETS





As of
                  
                  
                  As ofSeptember 30,
                  
                  
                  December 31,2009
                  
                  
                  2008(Unaudited)
                  
                  
                  (Audited)Current
      Assets:Cash
      and cash equivalents
                  
                  $
                  57,108
                  
                  
                  $
                  376Total
      current assets
                  
                  
                  57,108
                  
                  
                  
                  376Other
      Assets:Patent
      pending
                  
                  
                  7,300
                  
                  
                  
                  7,300Assignment
      of invention rights
                  
                  
                  5,000
                  
                  
                  
                  5,000Deferred
      offering costs
                  
                  
                  -
                  
                  
                  
                  20,000Total
      other assets
                  
                  
                  12,300
                  
                  
                  
                  32,300Total
      Assets
                  
                  $
                  69,408
                  
                  
                  $
                  32,676LIABILITIES AND STOCKHOLDERS'
      (DEFICIT)Current
      Liabilities:Accounts
      payable and accrued liabilities
                  
                  $
                  26,000
                  
                  
                  $
                  30,595Loans
      from related parties - Directors and stockholders
                  
                  
                  -
                  
                  
                  
                  14,300Total
      current liabilities
                  
                  
                  26,000
                  
                  
                  
                  44,895Total
      liabilities
                  
                  
                  26,000
                  
                  
                  
                  44,895Commitments
      and ContingenciesStockholders'
      Equity (Deficit):Common
      stock, par value $.0001 per share, 200,000,000 shares authorized;
      70,000,000 and 56,000,000 shares issued and outstanding,
      respectively
                  
                  
                  7,000
                  
                  
                  
                  5,600Additional
      paid-in capital
                  
                  
                  158,800
                  
                  
                  
                  200(Deficit)
      accumulated during the development stage
                  
                  
                  (122,392
                  )
                  
                  
                  (18,019
                  )Total
      stockholders' equity (deficit)
                  
                  
                  43,408
                  
                  
                  
                  (12,219
                  )Total
      Liabilities and Stockholders' Equity (Deficit)
                  
                  $
                  69,408
                  
                  
                  $
                  32,676




The
accompanying notes to financial statements


are an
integral part of this balance sheet.




F-2




THE
MOBILE STAR CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF OPERATIONS


FOR
THE THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 2009,


AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)


THROUGH
SEPTEMBER 30, 2009


(Unaudited)




Three Months Ended
                
                
                Nine Months Ended
                
                
                CumulativeSeptember 30,
                
                
                September 30,
                
                
                From2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                InceptionRevenues
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Expenses:General
      and administrative-Professional
      fees
                
                
                21,194
                
                
                
                4,889
                
                
                
                43,421
                
                
                
                7,174
                
                
                
                56,345Consulting
      fees
                
                
                9,673
                
                
                
                -
                
                
                
                11,173
                
                
                
                -
                
                
                
                13,718Research
      and development
                
                
                31,063
                
                
                
                -
                
                
                
                47,363
                
                
                
                -
                
                
                
                47,363Investor
      relations
                
                
                540
                
                
                
                -
                
                
                
                540
                
                
                
                -
                
                
                
                540Legal
      - incorporation
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,350
                
                
                
                2,350Other
                
                
                2,324
                
                
                
                200
                
                
                
                2,904
                
                
                
                200
                
                
                
                3,104Total
      general and administrative expenses
                
                
                64,794
                
                
                
                5,089
                
                
                
                105,401
                
                
                
                9,724
                
                
                
                123,420(Loss)
      from Operations
                
                
                (64,794
                )
                
                
                (5,089
                )
                
                
                (105,401
                )
                
                
                (9,724
                )
                
                
                (123,420
                )Other
      Income (Expense)
                
                
                2,043
                
                
                
                -
                
                
                
                1,028
                
                
                
                -
                
                
                
                1,028Provision
      for Income Taxes
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      (Loss)
                
                $
                (62,751
                )
                
                $
                (5,089
                )
                
                $
                (104,373
                )
                
                $
                (9,724
                )
                
                $
                (122,392
                )(Loss)
      Per Common Share:(Loss)
      per common share - Basic and Diluted
                
                $
                (0.00
                )
                
                $
                (0.00
                )
                
                $
                (0.00
                )
                
                $
                (0.00
                )Weighted
      Average Number of Common Shares Outstanding - Basic and
      Diluted
                
                
                70,000,000
                
                
                
                56,000,000
                
                
                
                63,333,333
                
                
                
                49,051,093




The
accompanying notes to financial statements are


an
integral part of these statements.


F-3




THE
MOBILE STAR CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)


FOR
THE PERIOD FROM INCEPTION (SEPTEMBER 25, 2007)


THROUGH
SEPTEMBER 30, 2009


(Unaudited)




(Deficit)AccumulatedAdditional
                        
                        
                        During theCommon stock
                        
                        
                        Paid-in
                        
                        
                        DevelopmentShares
                        
                        
                        Amount
                        
                        
                        Capital
                        
                        
                        Stage
                        
                        
                        TotalsBalance
      - January 1, 2008
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Common
      stock issued for cash
                        
                        
                        56,000,000
                        
                        
                        
                        5,600
                        
                        
                        
                        (4,800
                        )
                        
                        
                        -
                        
                        
                        
                        800Assignment
      of invention rights
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        5,000
                        
                        
                        
                        -
                        
                        
                        
                        5,000Net
      (loss) for the year
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (18,019
                        )
                        
                        
                        (18,019
                        )Balance
      - December 31, 2008
                        
                        
                        56,000,000
                        
                        
                        
                        5,600
                        
                        
                        
                        200
                        
                        
                        
                        (18,019
                        )
                        
                        
                        (12,219
                        )Common
      stock issued for cash
                        
                        
                        14,000,000
                        
                        
                        
                        1,400
                        
                        
                        
                        158,600
                        
                        
                        
                        -
                        
                        
                        
                        160,000Net
      (loss) for the period
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (104,373
                        )
                        
                        
                        (104,373
                        )Balance
      - September 30, 2009
                        
                        
                        70,000,000
                        
                        
                        $
                        7,000
                        
                        
                        $
                        158,800
                        
                        
                        $
                        (122,392
                        )
                        
                        $
                        43,408




The
accompanying notes to financial statements are


an
integral part of this statement.


F-4




THE
MOBILE STAR CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF CASH FLOWS


FOR
THE SIX MONTHS ENDED SEPTEMBER 30, 2009,


AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)


THROUGH
SEPTEMBER 30, 2009


(Unaudited)




Nine Months Ended
                
                
                CumulativeSeptember 30,
                
                
                From2009
                
                
                2008
                
                
                InceptionOperating
      Activities:Net
      (loss)
                
                $
                (104,373
                )
                
                $
                (9,724
                )
                
                $
                (122,392
                )Adjustments
      to reconcile net (loss) to net cash (used in) operating
      activities:Changes
      in net assets and liabilities-Accounts
      payable and accrued liabilities
                
                
                (4,595
                )
                
                
                3,000
                
                
                
                26,000Net
      Cash Used in Operating Activities
                
                
                (108,968
                )
                
                
                (6,724
                )
                
                
                (96,392
                )Investing
      Activities:Purchase
      of patent pending
                
                
                -
                
                
                
                -
                
                
                
                (7,300
                )Net
      Cash Used in Investing Activities
                
                
                -
                
                
                
                -
                
                
                
                (7,300
                )Financing
      Activities:Proceeds
      from common stock issued
                
                
                180,000
                
                
                
                800
                
                
                
                160,800Loans
      from shareholders
                
                
                (14,300
                )
                
                
                7,000
                
                
                
                -Net
      Cash Provided by Financing Activities
                
                
                165,700
                
                
                
                7,800
                
                
                
                160,800Net
      (Decrease) Increase in Cash
                
                
                56,732
                
                
                
                1,076
                
                
                
                57,108Cash
      - Beginning of Period
                
                
                376
                
                
                
                -
                
                
                
                -Cash
      - End of Period
                
                $
                57,108
                
                
                $
                1,076
                
                
                $
                57,108Supplemental
      Disclosure of Cash Flow Information:Cash
      paid during the period for:Interest
                
                $
                -
                
                
                $
                -
                
                
                $
                -Income
      taxes
                
                $
                -
                
                
                $
                -
                
                
                $
                -Supplemental schedule of non-cash investing and financing
      activities:Assignment
      of invention rights acquired through additional paid-in
      capital
                
                $
                -
                
                
                $
                -
                
                
                $
                5,000




The
accompanying notes to financial statements are


an
integral part of these statements.


F-5


THE
MOBILE STAR CORP.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2009




(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 Commission (“SEC”) to
register and sell in a self-directed offering 14,000,000 (post forward stock
split) shares of newly issued common stock at an offering price of $0.10 for
proceeds of up to $200,000. The Registration Statement on Form S-1 was filed
with the SEC on August 12, 2008 and declared effective on September 8, 2008. As
of September 30, 2009, the Company has issued 14,000,000 (post forward stock
split) shares of common stock pursuant to the Registration Statement on Form S-1
and received proceeds of $200,000.





Unaudited
Interim Financial Statements





The
interim financial statements of the Company as of September 30, 2009, and for
the periods ended, and cumulative from inception, are unaudited. However, in the
opinion of management, the interim financial statements include all adjustments,
consisting of only normal recurring adjustments, necessary to present fairly the
Company’s financial position as of September 30, 2009, and the results of its
operations and its cash flows for the periods ended September 30, 2009, and
cumulative from inception. These results are not necessarily indicative of the
results expected for the calendar year ending December 31, 2009. The
accompanying financial statements and notes thereto do not reflect all
disclosures required under accounting principles generally accepted in the
United States. Refer to the Company’s audited financial statements as of
December 31, 2008, filed with the SEC, for additional information, including
significant accounting policies.





Cash and Cash
Equivalents





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




Revenue
Recognition





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


F-6




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 September 30, 2009.




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.





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 September 30, 2009, the carrying value of accrued liabilities,
and loans from directors and stockholders approximated fair value due to the
short-term nature and maturity of these instruments.




Patent
and Intellectual Property





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




Deferred
Offering Costs





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


F-7





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 September 30, 2009, 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 September 30, 2009, and expenses for the period ended
September 30, 2009, and cumulative from inception. Actual results could differ
from those estimates made by management.




Recent Accounting
Pronouncements




In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS
157-4”).  FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are not
orderly. Additionally, entities are required to disclose in interim and
annual periods the inputs and valuation techniques used to measure fair
value.  This FSP is effective for interim and annual periods ending
after June 15, 2009.  The Company does not expect that the adoption of
FSP FAS 157-4 will have a material impact on its financial condition or results
of operations.





In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS
157-3”), which clarifies application of SFAS 157 in a market that is not
active.  FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued.  The
adoption of FSP FAS 157-3 had no impact on the Company’s results of operations,
financial condition or cash flows.





In
December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities.”  This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise’s
involvement with variable interest entities, including qualifying
special-purpose entities.  This FSP is effective beginning with the
first reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged.  The Company adopted this FSP
effective January 1, 2009.  The adoption of the FSP had no impact
on the Company’s results of operations, financial condition or cash
flows.





In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”).  FSP
FAS 132(R)-1 requires additional fair value disclosures about employers’ pension
and postretirement benefit plan assets consistent with guidance contained in
SFAS 157.  Specifically, employers will be required to disclose
information about how investment allocation decisions are made, the fair value
of each major category of plan assets
and information about the inputs and valuation techniques used to develop the
fair value measurements
of plan assets. This FSP is effective for fiscal years ending after
December 15, 2009.  The Company does not expect that the adoption
of FSP FAS 132(R)-1 will have a material impact on its financial condition or
results of operations.





F-8




In
September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, “Accounting for
Transfers and Servicing of Financial  Assets and  Extinguishments of
Liabilities,” and  FASB  Interpretation 46 (revised December 2003),
“Consolidation of  Variable  Interest Entities − an
interpretation of ARB  No. 51,” as well as other
modifications.  While the proposed revised pronouncements have not
been finalized and the proposals are subject to further public comment, the
Company anticipates the changes will not have a significant impact on the
Company’s financial statements.  The changes would be effective March
1, 2010, on a prospective basis.





In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in FASB Statement of Financial Accounting
Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. The Company is not
required to adopt FSP EITF 03-6-1; nor does the Company believe that FSP EITF
03-6-1 would have material effect on its financial positionand results of
operations if adopted.





In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts-and interpretation of FASB Statement No.
60”.  SFAS No. 163 clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement of
premium revenue and claims liabilities. This statement also requires expanded
disclosures about financial guarantee insurance contracts. SFAS No. 163 is
effective for fiscal years beginning on or after December 15, 2008, and interim
periods within those years. SFAS No. 163 has no effect on the Company’s
financial position, statements of operations, or cash flows at this
time.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  SFAS No. 162 sets forth the level of
authority to a given accounting pronouncement or document by category. Where
there might be conflicting guidance between two categories, the more
authoritative category will prevail. SFAS No. 162 will become effective 60 days
after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA
Professional Standards. SFAS No. 162 has no effect on the Company’s financial
position, statements of operations, or cash flows at this time.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and
Hedging Activities—an amendment of FASB Statement No. 133.  This
standard requires companies to provide enhanced disclosures about (a) how and
why an entity uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash flows.
This Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. SFAS No. 161 has no effect on the Company’s financial position,
statements of operations, or cash flows at this time.





In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding
the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in
developing an estimate of expected term of "plain vanilla" share options in
accordance with SFAS No. 123 (R), Share-Based Payment.  In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. It is not believed that this will
have an impact on the Company’s financial position, results of operations or
cash flows.


F-9




In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51.  This
statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). It is not
believed that this will have an impact on the Company’s financial position,
results of operations or cash flows.





In
December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations.  This Statement replaces FASB Statement No. 141,
Business Combinations, but retains the fundamental requirements in
Statement 141.  This Statement establishes principles and
requirements for how the acquirer: (a) recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree; (b) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase;
and (c) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. This statement 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. An entity may not
apply it before that date. The effective date of this statement is the same as
that of the related FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements.  It is not believed that this will
have an impact on the Company’s financial position, results of operations or
cash flows.





(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 commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the Securities and Exchange Commission (“SEC”) to
register and sell in a self-directed offering 14,000,000 (post forward stock
split) shares of newly issued common stock at an offering price of $0.10 for
proceeds of up to $200,000. The Registration Statement on Form S-1 was filed
with the SEC on August 12, 2008 and declared effective on September 8, 2008. As
of September 30, 2009, the Company has issued 14,000,000 (post forward stock
split) shares of common stock pursuant to the Registration Statement on Form
S-1, and received proceeds of $200,000.


F-10





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 September 30, 2009,
the cash resources of the Company were insufficient to meet its current business
plan. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.





(3)  Patent Pending





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 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. These loans were paid back to the
related parties as of September 30, 2009.





(5)  Common Stock





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




The
Company has commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the SEC to register and sell in a self-directed
offering 14,000,000 (post forward stock split) shares of newly issued common
stock at an offering price of $0.10 per share for proceeds of up to $200,000.
The Registration Statement on Form S-1 was filed with the SEC on August 12, 2008
and declared effective on September 8, 2008. As of September 30, 2009, the
Company has issued 14,000,000 (post forward stock split) shares of common stock
pursuant to the Registration Statement on Form S-1, and received proceeds of
$200,000. The Company incurred $40,000 of deferred offering costs related to
this capital formation activity.





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


F-11




(6)  Income Taxes





The
provision (benefit) for income taxes for the periods ended September 30, 2009
and 2008 was as follows (assuming a 23% effective tax rate):


2009
                            
                            
                            2008Current
      Tax Provision:Federal-Taxable
      income
                            
                            $
                            -
                            
                            
                            $
                            -Total
      current tax provision
                            
                            $
                            -
                            
                            
                            $
                            -Deferred
      Tax Provision:Federal-Loss
      carryforwards
                            
                            $
                            24,006
                            
                            
                            $
                            2,237Change
      in valuation allowance
                            
                            
                            (24,006
                            )
                            
                            
                            (2,237
                            )Total
      deferred tax provision
                            
                            $
                            -
                            
                            
                            $
                            -





The Company had deferred income tax
assets as of September 30, 2009 and December 31, 2008 as
follows:


2009
                          
                          
                          2008Loss
      carryforwards
                          
                          $
                          28,150
                          
                          
                          $
                          4,144Less
      - Valuation allowance
                          
                          
                          (28,150
                          )
                          
                          
                          (4,144
                          )Total
      net deferred tax assets
                          
                          $
                          -
                          
                          
                          $
                          -





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





As of
September 30, 2009, the Company had approximately $122,392 in tax loss
carryforwards that can be utilized in future periods to reduce taxable income,
and expire in the year 2029.





(7)  Related Party
Transactions





As
described in Note 4, as of September 30, 2009, there are no loans owed by the
Company to directors, officers, and principal stockholders of the Company for
working capital loans.





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





As of
September 30, 2009, the Company paid consulting fees in the amount of $7,817 to
a director and officer of the Company.





(8)  Commitments





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


F-12





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





(9)  Concentration of Credit
Risk




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


F-13


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





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





Forward-Looking
Statements





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





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





Corporate
Background





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





Our
Business





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





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


3


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




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




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





The
Technology comprises of the following:





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





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





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





(d)
            optional
      lighting and an automatic money
box;





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





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





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




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




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


4


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





Employees




Other
than our current Directors and officers, Danny Elbaz and Eran Gronich, we have
no other full time or part-time employees..




Transfer
Agent




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





Plan
of Operation





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





We
have  engaged a US  manufacturer to develop a fully
operational prototype of the Technology and the Company is planning a test pilot
of the product before the end of the year 2009. We estimate it would then take
an additional four to six months to bring this product to market. Our objective
is to  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.





General
Working Capital





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


5


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





Liquidity
and Capital Resources





Our
balance sheet as of September 30, 2009 reflects cash in the amount of $57,108.
Cash and cash equivalents from inception to date have been sufficient to provide
the operating capital necessary to operate to date. The operating expenses and
net loss for the nine months ended September 30 2009 amounted to
$104,373.





We do not
have sufficient resources to effectuate our business plan in full . We expect to
incur a minimum of $150,000  in expenses during the next twelve months
of operations.  Accordingly, we will have to raise the funds to pay
for these expenses. We might do so through a private offering . We potentially
will have to issue debt or equity or enter into a strategic arrangement with a
third party. There can be no assurance that additional capital will be available
to us. We currently have no agreements, arrangements or understandings with any
person to obtain funds through bank loans, lines of credit or any other
sources.





Going
Concern Consideration





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





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements.





Item 3.
                   
Quantitative and Qualitative
Disclosures About Market Risk.





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


6


Item
4. Controls and Procedures.





Disclosure
Controls and Procedures




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




Changes
in Internal Controls over Financial Reporting





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





PART
II


OTHER
INFORMATION





Item
1. Legal Proceedings.





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





Item
1A.            Risk
Factors





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




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





Unregistered
Sales of Equity Securities





None.





Purchases
of equity securities by the issuer and affiliated purchasers





None.





Use
of Proceeds





None





Item
3.  Defaults Upon Senior Securities.





None.


7


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





There was
no matter submitted to a vote of security holders during the nine months ended
September 30, 2009.





Item
5. Other Information.





None




Item
6. Exhibits





31.1
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act (filed
      herewith)31.2
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act (filed
      herewith)32.1
            Certification
      of Principal Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley (filed herewith)32.2
            Certification
      of Principal Financial and Accounting Officer pursuant to Section 906 of
      the Sarbanes-Oxley (filed herewith)




8


SIGNATURES





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





Date:
      October  27 , 2009
                THE
      MOBILE STAR CORP.By:
                /s/
      Danny ElbazName:
      Danny Elbaz
                  Title:
      President and Director
                  (Principal
      Executive Officer)





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





Date
      October 27  , 2009
                By:
                /s/
      Danny ElbazName:
      Danny Elbaz
                  Title:
      President and Director
                  (Principal
      Executive Officer)





Date:
      October 27, 2009
                By:
                /s/ Eran
      GronichName:
      Eran Gronich
                  Title: Secretary
      and Director
                  (Principal  Internal
      Accounting Officer)




9