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 March 31, 2010





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





For the
transition period from _____ to _____





Commission
file number: 333- 152952





THE
MOBILE STAR CORP.


(Exact
name of registrant as specified in its charter)





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





c/o Danny
Elbaz


53
Hanoter Street


Even Yehuda, Israel 40500


(Address
of principal executive offices)





972 - (544) 655-341


(Issuer's
telephone number)







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





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes    
xNo      ̈





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  May 11, 2010, 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
 MARCH
31, 2010
  Financial
      Statements-
                        
                        F-1Balance
      Sheets as of March 31, 2010
                        
                        
                        F-2Statements of
      Operations for the Three Months Ended March
      31, 2010 and 2009 and Cumulative from
      Inception
                        
                        
                        F-3Statement of Changes
      in Stockholders’ Equity (Deficit) for the Period from Inception Through
      March 31, 2010
                        
                        
                        F-4Statements of Cash
      Flows for the Three Months Ended March 31, 2010 and 2009 and
      Cumulative from Inception
                        
                        
                        F-5Notes
      to Financial Statements
                        
                        
                        F-6
 
 F-1
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 BALANCE
SHEETS
 AS
OF MARCH 31, 2010 AND DECEMBER 31, 2009
  ASSETSAs
      of
                                                                
                                                                
                                                                As
      ofMarch
      31,
                                                                
                                                                
                                                                December
      31,2010
                                                                
                                                                
                                                                2009(Unaudited)
                                                                
                                                                
                                                                (Audited)Current
      Assets:Cash
      and cash equivalents
                                                                
                                                                $
                                                                102
                                                                
                                                                
                                                                $
                                                                15,663Total
      current assets
                                                                
                                                                
                                                                102
                                                                
                                                                
                                                                
                                                                15,663Other
      Assets:Patent
      pending
                                                                
                                                                
                                                                7,300
                                                                
                                                                
                                                                
                                                                7,300Assignment
      of invention rights
                                                                
                                                                
                                                                5,000
                                                                
                                                                
                                                                
                                                                5,000Total
      other assets
                                                                
                                                                
                                                                12,300
                                                                
                                                                
                                                                
                                                                12,300Total
      Assets
                                                                
                                                                $
                                                                12,402
                                                                
                                                                
                                                                $
                                                                27,963LIABILITIES AND STOCKHOLDERS'
      (DEFICIT)Current
      Liabilities:Accounts
      payable and accrued liabilities
                                                                
                                                                $
                                                                22,000
                                                                
                                                                
                                                                $
                                                                32,000Loans
      from related parties - Directors and stockholders
                                                                
                                                                
                                                                31,670
                                                                
                                                                
                                                                
                                                                3,000Total
      current liabilities
                                                                
                                                                
                                                                53,670
                                                                
                                                                
                                                                
                                                                35,000Total
      liabilities
                                                                
                                                                
                                                                53,670
                                                                
                                                                
                                                                
                                                                35,000Commitments
      and ContingenciesStockholders'
      Equity (Deficit):Common
      stock, par value $.0001 per share, 200,000,000 sharesauthorized;
      70,000,000 shares issued and outstanding
                                                                
                                                                
                                                                7,000
                                                                
                                                                
                                                                
                                                                7,000Additional
      paid-in capital
                                                                
                                                                
                                                                158,800
                                                                
                                                                
                                                                
                                                                158,800(Deficit)
      accumulated during the development stage
                                                                
                                                                
                                                                (207,068
                                                                )
                                                                
                                                                
                                                                (172,837
                                                                )Total
      stockholders' equity (deficit)
                                                                
                                                                
                                                                (41,268
                                                                )
                                                                
                                                                
                                                                (7,037
                                                                )Total
      Liabilities and Stockholders' Equity (Deficit)
                                                                
                                                                $
                                                                12,402
                                                                
                                                                
                                                                $
                                                                27,963
    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 ENDED MARCH 31, 2010 AND 2009,
 AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
 THROUGH
MARCH 31, 2010
 (Unaudited)
  Three
      Months Ended
                                          
                                          
                                          CumulativeMarch
      31,
                                          
                                          
                                          From2010
                                          
                                          
                                          2009
                                          
                                          
                                          InceptionRevenues
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -Expenses:Research
      and development
                                          
                                          
                                          16,554
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          89,955Professional
      fees
                                          
                                          
                                          5,670
                                          
                                          
                                          
                                          15,527
                                          
                                          
                                          
                                          73,302Consulting
      fees
                                          
                                          
                                          3,000
                                          
                                          
                                          
                                          1,500
                                          
                                          
                                          
                                          25,148Investor
      relations
                                          
                                          
                                          3,060
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          4,640Legal
      - incorporation
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          2,350Other
                                          
                                          
                                          6,241
                                          
                                          
                                          
                                          268
                                          
                                          
                                          
                                          13,412Total
      general and administrative expenses
                                          
                                          
                                          34,524
                                          
                                          
                                          
                                          17,295
                                          
                                          
                                          
                                          208,807(Loss)
      from Operations
                                          
                                          
                                          (34,524
                                          )
                                          
                                          
                                          (17,295
                                          )
                                          
                                          
                                          (208,807
                                          )Other
      Income (Expense)
                                          
                                          
                                          293
                                          
                                          
                                          
                                          (3,422
                                          )
                                          
                                          
                                          1,739Provision
      for Income Taxes
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Net
      (Loss)
                                          
                                          $
                                          (34,231
                                          )
                                          
                                          $
                                          (20,717
                                          )
                                          
                                          $
                                          (207,068
                                          )(Loss)
      Per Common Share:(Loss)
      per common share - Basic and Diluted
                                          
                                          $
                                          (0.00
                                          )
                                          
                                          $
                                          (0.00
                                          )Weighted
      Average Number of Common SharesOutstanding
      - Basic and Diluted
                                          
                                          
                                          70,000,000
                                          
                                          
                                          
                                          56,000,000
   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
MARCH 31, 2010
 (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
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (154,818
                                    )
                                    
                                    
                                    (154,818
                                    )Balance
      - December 31, 2009
                                    
                                    
                                    70,000,000
                                    
                                    
                                    $
                                    7,000
                                    
                                    
                                    $
                                    158,800
                                    
                                    
                                    $
                                    (172,837
                                    )
                                    
                                    $
                                    (7,037
                                    )Net
      (loss) for the period
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (34,231
                                    )
                                    
                                    
                                    (34,231
                                    )Balance
      - March 31, 2010
                                    
                                    
                                    70,000,000
                                    
                                    
                                    $
                                    7,000
                                    
                                    
                                    $
                                    158,800
                                    
                                    
                                    $
                                    (207,068
                                    )
                                    
                                    $
                                    (41,268
                                    )
 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 THREE MONTHS ENDED MARCH 31, 2010 AND 2009,
 AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
 THROUGH
MARCH 31, 2010
 (Unaudited)
  Three
      Months Ended
                                                                  
                                                                  
                                                                  CumulativeMarch
      31,
                                                                  
                                                                  
                                                                  From2010
                                                                  
                                                                  
                                                                  2009
                                                                  
                                                                  
                                                                  InceptionOperating
      Activities:Net
      (loss)
                                                                  
                                                                  $
                                                                  (34,231
                                                                  )
                                                                  
                                                                  $
                                                                  (20,717
                                                                  )
                                                                  
                                                                  $
                                                                  (207,068
                                                                  )Adjustments
      to reconcile net (loss) to net cash(used
      in) operating activities:Changes
      in net assets and liabilities-Accounts
      payable and accrued liabilities
                                                                  
                                                                  
                                                                  (10,000
                                                                  )
                                                                  
                                                                  
                                                                  (11,595
                                                                  )
                                                                  
                                                                  
                                                                  22,000Net
      Cash Used in Operating Activities
                                                                  
                                                                  
                                                                  (44,231
                                                                  )
                                                                  
                                                                  
                                                                  (32,312
                                                                  )
                                                                  
                                                                  
                                                                  (185,068
                                                                  )Investing
      Activities:Purchase
      of patent pending
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  (7,300
                                                                  )Net
      Cash Used in Investing Activities
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  (7,300
                                                                  )Financing
      Activities:Proceeds
      from common stock issued
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  80,000
                                                                  
                                                                  
                                                                  
                                                                  160,800Loans
      from shareholders
                                                                  
                                                                  
                                                                  28,670
                                                                  
                                                                  
                                                                  
                                                                  (10,000
                                                                  )
                                                                  
                                                                  
                                                                  31,670Net
      Cash Provided by Financing Activities
                                                                  
                                                                  
                                                                  28,670
                                                                  
                                                                  
                                                                  
                                                                  70,000
                                                                  
                                                                  
                                                                  
                                                                  192,470Net
      (Decrease) Increase in Cash
                                                                  
                                                                  
                                                                  (15,561
                                                                  )
                                                                  
                                                                  
                                                                  37,688
                                                                  
                                                                  
                                                                  
                                                                  102Cash
      - Beginning of Period
                                                                  
                                                                  
                                                                  15,663
                                                                  
                                                                  
                                                                  
                                                                  376
                                                                  
                                                                  
                                                                  
                                                                  -Cash
      - End of Period
                                                                  
                                                                  $
                                                                  102
                                                                  
                                                                  
                                                                  $
                                                                  38,064
                                                                  
                                                                  
                                                                  $
                                                                  102Supplemental
      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
 MARCH
31, 2010
  (1)  Summary of Significant Accounting
Policies
 
 Basis
of Presentation and Organization
 
 The
Mobile Star Corp. (“The Mobile Star” or the “Company”) is a Delaware corporation in the
development stage and has not commenced operations. The Company was incorporated
under the laws of the State of Delaware on September 25, 2007 and began activity
in January 2008. The business plan of the Company is to develop a commercial
application of a self operated computerized karaoke recording booth. The Company
also intends to obtain approval of its patent application, and manufacture and
market the product and/or seek third party entities interested in licensing the
rights to manufacture and market the device. The accompanying financial
statements of The Mobile Star were prepared from the accounts of the Company
under the accrual basis of accounting.
 
 Unaudited
Interim Financial Statements
 
 The
interim financial statements of the Company as of March 31, 2010, and for the
periods then ended, and cumulative from inception, are unaudited. However, in
the opinion of management, the interim financial statements include all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company’s financial position as of March 31, 2010, and the
results of its operations and its cash flows for the periods ended March 31,
2010, and cumulative from inception. These results are not necessarily
indicative of the results expected for the calendar year ending December 31,
2010. The accompanying financial statements and notes thereto do not reflect all
disclosures required under accounting principles generally accepted in the
United States. Refer to the Company’s audited financial statements as of
December 31, 2009, filed with the SEC, for additional information, including
significant accounting policies.
 
 Cash and Cash
Equivalents
 
 For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
  Revenue
Recognition
 
 The
Company is in the development stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
 
 Loss
per Common Share
 
 Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. There were no dilutive financial instruments issued or outstanding for
the period ended March 31, 2010.
 
 Income
Taxes
 
 Deferred
tax assets and liabilities are determined based on temporary differences between
the bases of certain assets and liabilities for income tax and financial
reporting purposes. The deferred tax assets and liabilities are classified
according to the financial statement classification of the assets and
liabilities generating the differences.
  F-6
  The
Company maintains a valuation allowance with respect to deferred tax assets. The
Company establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company’s
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the federal tax
laws.
 
 Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax asset.
Any change in the valuation allowance will be included in income in the year of
the change in estimate.
 
 Fair
Value of Financial Instruments
 
 The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange. As of March 31, 2010, the carrying value of accrued liabilities, and
loans from directors and stockholders approximated fair value due to the
short-term nature and maturity of these instruments.
  Patent
and Intellectual Property
 
 The
Company capitalizes the costs associated with obtaining a Patent or other
intellectual property associated with its intended business plan. Such costs are
amortized over the estimated useful lives of the related assets.
  Deferred
Offering Costs
 
 The
Company defers the direct incremental costs of raising capital as other assets
until such time as the offering is completed. At the time of the completion of
the offering, the costs are charged against the capital raised. Should the
offering be terminated, deferred offering costs are charged to operations during
the period in which the offering is terminated.
  Impairment
of Long-Lived Assets
 
 The
Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives when events or circumstances lead management to
believe that the carrying value of an asset may not be recoverable. For the
period ended March 31, 2010, no events or circumstances occurred for which an
evaluation of the recoverability of long-lived assets was required.
  Common
Stock Registration Expenses
 
 The
Company considers incremental costs and expenses related to the registration of
equity securities with the SEC, whether by contractual arrangement as of a
certain date or by demand, to be unrelated to original issuance transactions. As
such, subsequent registration costs and expenses are expensed as
incurred.
 
 Estimates
 
 The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of March 31, 2010, and expenses for the period ended March 31,
2010, and cumulative from inception. Actual results could differ from those
estimates made by management.
  F-7
  Recent Accounting
Pronouncements
  In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), codified
in FASB ASC 820-10-65, which provides additional guidance for estimating fair
value in accordance with ASC 820-10 when the volume and level of activity for an
asset or liability have significantly decreased. ASC 820-10-65 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. The adoption of ASC 820-10-65 did not have an impact on the Company's
results of operations or financial condition.
  In May
2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165") codified in
FASB ASC 855-10-05, which provides guidance to establish general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. FASB
ASC 855-10-05 also requires entities to disclose the date through which
subsequent events were evaluated as well as the rationale for why that date was
selected. FASB ASC 855-10-05 is effective for interim and annual periods ending
after June 15, 2009. FASB ASC 855-10-05 requires that public entities evaluate
subsequent events through the date that the financial statements are
issued.
  In June
2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial
Assets - an amendment of FASB Statement No. 140" ("SFAS 166"), codified as FASB
ASC 860, which requires entities to provide more information regarding sales of
securitized financial assets and similar transactions, particularly if the
entity has continuing exposure to the risks related to transferred financial
assets. FASB ASC 860 eliminates the concept of a "qualifying special-purpose
entity," changes the requirements for derecognizing financial assets and
requires additional disclosures. FASB ASC 860 is effective for fiscal years
beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an
impact on the Company's financial condition, results of operations or cash
flows.
  In June
2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No.
46(R)" ("SFAS 167"), codified as FASB ASC 810-10, which modifies how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. FASB ASC
810-10 clarifies that the determination of whether a company is required to
consolidate an entity is based on, among other things, an entity's purpose and
design and a company's ability to direct the activities of the entity that most
significantly impact the entity's economic performance. FASB ASC 810-10 requires
an ongoing reassessment of whether a company is the primary beneficiary of a
variable interest entity. FASB ASC 810-10 also requires additional disclosures
about a company's involvement in variable interest entities and any significant
changes in risk exposure due to that involvement. FASB ASC 810-10 is effective
for fiscal years beginning after November 15, 2009. The adoption of FASB ASC
810-10 did not have an impact on the Company's financial condition, results of
operations or cash flows.
  In June
2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles,
which establishes the FASB Accounting Standards Codification as the sole source
of authoritative generally accepted accounting principles. Pursuant to the
provisions of FASB ASC 105, we have updated references to GAAP in our financial
statements. The adoption of FASB ASC 105 did not impact the Company's financial
position or results of operations.
  (2)  Development Stage Activities and
Going Concern
 
 The
Company is currently in the development stage, and has no operations. The
business plan of the Company is to develop a commercial application of a self
operated computerized karaoke recording booth. The Company also intends to
obtain approval of its patent application, and manufacture and market the
product and/or seek third party entities interested in licensing the rights to
manufacture and market the device.
 
 In
January 2008, the Company entered into a Assignment Agreement whereby the
Company acquired all of the rights, title and interest in the invention known as
the “Self operated computerized karaoke recording booth” for consideration of
royalties ranging from 1% to 5% based on the net income of the Company for 30
years from the date of the Company's incorporation. On February 20, 2008 the
Company filed PCT and U.S. patent applications for the invention.
  F-8
  The
Company has commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the Securities and Exchange Commission (“SEC”) to
register and sell in a self-directed offering 14,000,000 (post forward stock
split) shares of newly issued common stock at an offering price of $0.10 for
proceeds of up to $200,000. The Registration Statement on Form S-1 was filed
with the SEC on August 12, 2008 and declared effective on September 8, 2008. The
Company has issued 14,000,000 (post forward stock split) shares of common stock
pursuant to the Registration Statement on Form S-1, and received proceeds of
$200,000.
 
 The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has not
established any source of revenue to cover its operating costs, and as such, has
incurred an operating loss since inception. Further, as of March 31, 2010, the
cash resources of the Company were insufficient to meet its current business
plan. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
 
 (3)  Patent Pending
 
 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
March 31, 2010, loans from related parties amounted to $31,670, and represented
working capital advances from officers who are also stockholders of the Company.
The loans are unsecured, non-interest bearing, and due on demand.
 
 (5)  Common Stock
 
 On February 4, 2008, the Company issued
56,000,000 (post forward stock split) shares of its common stock to founders of
the Company, some of whom are directors and officers, for proceeds of $800.
  The
Company has commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the SEC to register and sell in a self-directed
offering 14,000,000 (post forward stock split) shares of newly issued common
stock at an offering price of $0.10 per share for proceeds of up to $200,000.
The Registration Statement on Form S-1 was filed with the SEC on August 12, 2008
and declared effective on September 8, 2008. The Company has issued 14,000,000
(post forward stock split) shares of common stock pursuant to the Registration
Statement on Form S-1, and received proceeds of $200,000. The Company incurred
$40,000 of deferred offering costs related to this capital formation
activity.
 
 On June
26, 2009, the Company implemented a 7 for 1 forward stock split on its
issued and outstanding shares of common stock to the holders of record as of
June 24, 2009. As a result of the split, each holder of record on the record
date automatically received six 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-9
  (6)  Income Taxes
 
 The
provision (benefit) for income taxes for the periods ended March 31, 2010 and
2009 was as follows (assuming a 23% effective tax rate):
  2010
                              
                              
                              2009Current
      Tax Provision:Federal-Taxable
      income
                              
                              $
                              -
                              
                              
                              $
                              -Total
      current tax provision
                              
                              $
                              -
                              
                              
                              $
                              -Deferred
      Tax Provision:Federal-Loss
      carryforwards
                              
                              $
                              7,873
                              
                              
                              $
                              4,765Change
      in valuation allowance
                              
                              
                              (7,873
                              )
                              
                              
                              (4,765
                              )Total
      deferred tax provision
                              
                              $
                              -
                              
                              
                              $
                              -
  The Company had deferred income tax
assets as of March 31, 2010 and December 31, 2009 as
follows:
  2010
                            
                            
                            2009Loss
      carryforwards
                            
                            $
                            47,626
                            
                            
                            $
                            39,753Less
      - Valuation allowance
                            
                            
                            (47,626
                            )
                            
                            
                            (39,753
                            )Total
      net deferred tax assets
                            
                            $
                            -
                            
                            
                            $
                            -
  The
Company provided a valuation allowance equal to the deferred income tax assets
for the periods ended March 31, 2010 and December 31, 2009, because it is not
presently known whether future taxable income will be sufficient to utilize the
loss carryforwards.
 
 As of
March 31, 2010, the Company had approximately $207,068 in tax loss carryforwards
that can be utilized in future periods to reduce taxable income, and expire in
the year 2030.
 
 (7)  Related Party
Transactions
 
 As
described in Note 4, as of March 31, 2010, the Company owed $31,670 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.
 
 From
inception through March 31, 2010, the Company paid consulting fees in the amount
of $14,153 to a director and officer of the Company.
 
 (8)  Commitments
 
 On June
15, 2008, the Company entered into a Transfer Agent and Registrar Agreement with
Nevada Agency and Trust Company ("NATCO"). Under the Agreement, the Company
agreed to pay to NATCO an annual fee of $1,500 for the first year and $1,800 for
every year thereafter. NATCO will act as the Company’s transfer agent and
registrar.
 
 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-10


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..The Company has 2 outside consultants.




Transfer
Agent




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





Plan
of Operation





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





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




General
Working Capital





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


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 March 31 2010
reflects cash in the amount of $102. 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 three months ended March 31
2010 amounted to $34,231.





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





Going
Concern Consideration





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





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements.





Item
3.                   
Quantitative and Qualitative
Disclosures About Market Risk.





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


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 three months ended March 31
2010.





Item
5. Other Information.





None




Item
6. Exhibits





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




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: May 11,
      2010
                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 May 11,
      2010
                By:
                /s/
      Danny ElbazName:
      Danny Elbaz
                  Title:
      President and Director
                  (Principal
      Executive Officer)





Date: May 11,
      2010
                By:
                /s/ Eran
      GronichName:
      Eran Gronich
                  Title: Secretary
      and Director
                  (Principal  Internal
      Accounting Officer)




9