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, 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 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 x  No  ̈





As of May
4 , 2009, 8,000,000 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, 2009
  Financial
      Statements-Balance
      Sheets as of March 31, 2009 and December 31, 2008
                      F-2Statements
      of Operations for the Three Months EndedMarch
      31, 2009, and Cumulative from Inception
                      F-3Statement
      of Stockholders’ (Deficit) for the Period from InceptionThrough
      March 31, 2009
                      F-4Statements
      of Cash Flows for the Three Months Ended March 31, 2009,and
      Cumulative from Inception
                      F-5Notes
      to Financial Statements March 31, 2009
                      F-6
  F-1
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 BALANCE
SHEETS (NOTE 2)
 AS
OF MARCH 31, 2009 AND DECEMBER 31, 2008
 
 As of
                                                                                  
                                                                                  
                                                                                  As ofMarch 31,
                                                                                  
                                                                                  
                                                                                  December 31,2009
                                                                                  
                                                                                  
                                                                                  2008(Unaudited)
                                                                                  
                                                                                  
                                                                                  (Audited)ASSETSCurrent
      Assets:Cash
                                                                                  
                                                                                  $
                                                                                  38,064
                                                                                  
                                                                                  
                                                                                  $
                                                                                  376Total
      current assets
                                                                                  
                                                                                  
                                                                                  38,064
                                                                                  
                                                                                  
                                                                                  
                                                                                  376Other
      Assets:Patent
      pending
                                                                                  
                                                                                  
                                                                                  7,300
                                                                                  
                                                                                  
                                                                                  
                                                                                  7,300Assignment
      of invention rights
                                                                                  
                                                                                  
                                                                                  5,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  5,000Deferred
      offering costs
                                                                                  
                                                                                  
                                                                                  20,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  20,000Total
      other assets
                                                                                  
                                                                                  
                                                                                  32,300
                                                                                  
                                                                                  
                                                                                  
                                                                                  32,300Total
      Assets
                                                                                  
                                                                                  $
                                                                                  70,364
                                                                                  
                                                                                  
                                                                                  $
                                                                                  32,676LIABILITIES AND STOCKHOLDERS'
      (DEFICIT)Current
      Liabilities:Accounts
      payable and accrued liabilities
                                                                                  
                                                                                  $
                                                                                  19,000
                                                                                  
                                                                                  
                                                                                  $
                                                                                  30,595Loans
      from related parties - Directors and stockholders
                                                                                  
                                                                                  
                                                                                  4,300
                                                                                  
                                                                                  
                                                                                  
                                                                                  14,300Total
      current liabilities
                                                                                  
                                                                                  
                                                                                  23,300
                                                                                  
                                                                                  
                                                                                  
                                                                                  44,895Total
      liabilities
                                                                                  
                                                                                  
                                                                                  23,300
                                                                                  
                                                                                  
                                                                                  
                                                                                  44,895Commitments
      and ContingenciesStockholders'
      Equity (Deficit):Common
      stock, par value $.0001 per share, 200,000,000 sharesauthorized;
      8,000,000 shares issued and outstanding
                                                                                  
                                                                                  
                                                                                  800
                                                                                  
                                                                                  
                                                                                  
                                                                                  800Additional
      paid-in capital
                                                                                  
                                                                                  
                                                                                  5,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  5,000Stock
      subscriptions paid
                                                                                  
                                                                                  
                                                                                  80,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  -(Deficit)
      accumulated during the development stage
                                                                                  
                                                                                  
                                                                                  (38,736
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (18,019
                                                                                  )Total
      stockholders' equity (deficit)
                                                                                  
                                                                                  
                                                                                  47,064
                                                                                  
                                                                                  
                                                                                  
                                                                                  (12,219
                                                                                  )Total
      Liabilities and Stockholders' Equity (Deficit)
                                                                                  
                                                                                  $
                                                                                  70,364
                                                                                  
                                                                                  
                                                                                  $
                                                                                  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 (NOTE 2)
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009,
 AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
 THROUGH
MARCH 31, 2009
 (Unaudited)
 
 Three MonthsEnded
                      
                      
                      CumulativeMarch 31,
                      
                      
                      From2009
                      
                      
                      InceptionRevenues
                      
                      $
                      -
                      
                      
                      $
                      -Expenses:General
      and administrative-Professional
      fees
                      
                      
                      15,527
                      
                      
                      
                      28,451Consulting
      fees
                      
                      
                      1,500
                      
                      
                      
                      4,045Legal
      - incorporation
                      
                      
                      -
                      
                      
                      
                      2,350Other
                      
                      
                      268
                      
                      
                      
                      468Total
      general and administrative expenses
                      
                      
                      17,295
                      
                      
                      
                      35,314(Loss)
      from Operations
                      
                      
                      (17,295
                      )
                      
                      
                      (35,314
                      )Other
      Income (Expense)
                      
                      
                      (3,422
                      )
                      
                      
                      (3,422
                      )Provision
      for Income Taxes
                      
                      
                      -
                      
                      
                      
                      -Net
      (Loss)
                      
                      $
                      (20,717
                      )
                      
                      $
                      (38,736
                      )(Loss)
      Per Common Share:(Loss)
      per common share - Basic and Diluted
                      
                      $
                      (0.00
                      )Weighted
      Average Number of Common SharesOutstanding
      - Basic and Diluted
                      
                      
                      8,000,000
 
 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 STOCKHOLDERS' (DEFICIT) (NOTE 2)
 FOR
THE PERIOD FROM INCEPTION (SEPTEMBER 25, 2007)
 THROUGH
MARCH 31, 2009
 (Unaudited)
 
 (Deficit)AccumulatedAdditional
                      
                      
                      Stock
                      
                      
                      During theCommon stock
                      
                      
                      Paid-in
                      
                      
                      Subscriptions
                      
                      
                      DevelopmentShares
                      
                      
                      Amount
                      
                      
                      Capital
                      
                      
                      Paid
                      
                      
                      Stage
                      
                      
                      TotalsBalance
      - January 1, 2008
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Common
      stock issued for cash
                      
                      
                      8,000,000
                      
                      
                      
                      800
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      800Assignment
      of invention rights
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      5,000
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      5,000Net
      (loss) for the year
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (18,019
                      )
                      
                      
                      (18,019
                      )Balance
      - December 31, 2008
                      
                      
                      8,000,000
                      
                      
                      
                      800
                      
                      
                      
                      5,000
                      
                      
                      
                      -
                      
                      
                      
                      (18,019
                      )
                      
                      
                      (12,219
                      )Stock
      subscriptions paid
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      80,000
                      
                      
                      
                      -
                      
                      
                      
                      80,000Net
      (loss) for the period
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (20,717
                      )
                      
                      
                      (20,717
                      )Balance
      - March 31, 2009
                      
                      
                      8,000,000
                      
                      
                      $
                      800
                      
                      
                      $
                      5,000
                      
                      
                      $
                      80,000
                      
                      
                      $
                      (38,736
                      )
                      
                      $
                      47,064
 
 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 (NOTE 2)
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009,
 AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
 THROUGH
MARCH 31, 2009
 (Unaudited)
 Three MonthsEnded
                    
                    
                    CumulativeMarch 31,
                    
                    
                    From2009
                    
                    
                    InceptionOperating
      Activities:Net
      (loss)
                    
                    $
                    (20,717
                    )
                    
                    $
                    (38,736
                    )Adjustments
      to reconcile net (loss) to net cash(used
      in) operating activities:Changes
      in net assets and liabilities-Accounts
      payable and accrued liabilites
                    
                    
                    (11,595
                    )
                    
                    
                    (1,000
                    )Net
      Cash Used in Operating Activities
                    
                    
                    (32,312
                    )
                    
                    
                    (39,736
                    )Investing
      Activities:Purchase
      of patent pending
                    
                    
                    -
                    
                    
                    
                    (7,300
                    )Net
      Cash Used in Investing Activities
                    
                    
                    -
                    
                    
                    
                    (7,300
                    )Financing
      Activities:Proceeds
      from common stock issued
                    
                    
                    -
                    
                    
                    
                    800Stock
      subscriptions paid
                    
                    
                    80,000
                    
                    
                    
                    80,000Loans
      from shareholders
                    
                    
                    (10,000
                    )
                    
                    
                    4,300Net
      Cash Provided by Financing Activities
                    
                    
                    70,000
                    
                    
                    
                    85,100Net
      (Decrease) Increase in Cash
                    
                    
                    37,688
                    
                    
                    
                    38,064Cash
      - Beginning of Period
                    
                    
                    376
                    
                    
                    
                    -Cash
      - End of Period
                    
                    $
                    38,064
                    
                    
                    $
                    38,064Supplemental
      Disclosure of Cash Flow Information:Cash
      paid during the period for:Interest
                    
                    $
                    -
                    
                    
                    $
                    -Income
      taxes
                    
                    $
                    -
                    
                    
                    $
                    -Supplemental schedule of non-cash investing and financing
      activities:Accrual
      of deferred offering costs
                    
                    $
                    -
                    
                    
                    $
                    20,000Assignment
      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, 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 2,000,000 shares of newly issued
common stock at an offering price of $0.10 for proceeds of up to $200,000. The
Registration Statement on Form S-1 was filed with the SEC on August 12, 2008 and
declared effective on September 8, 2008. The Company extended this public
offering for an additional 90 days.
 
 Unaudited
Interim Financial Statements
 
 The
interim financial statements of the Company as of March 31, 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 March 31, 2009, and the results of its
operations and its cash flows for the periods ended March 31, 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
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009
 
 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, 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 March 31, 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
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009
 
 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, 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 March 31, 2009, and expenses for the period ended March 31,
2009, and cumulative from inception. Actual results could differ from those
estimates made by management.
  Recent Accounting
Pronouncements
  In June
2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position No. EITF No. 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF
No. 03-6-1”). According to FSP EITF No. 03-6-1, unvested share-based
payment awards that contain nonforfeitable rights to dividends or dividend
equivalents are considered participating securities under SFAS No. 128. As
such, they should be included in the computation of basic earnings per share
(“EPS”) using the two-class method. FSP EITF No. 03-6-1 is effective for
financial statements issued for fiscal years beginning after December 15,
2008, as well as interim periods within those years. Once effective, all
prior-period EPS data presented must be adjusted retrospectively. The Company
does not expect FSP EITF No. 03-6-1 to have a material impact on the
Company’s financial position or results of operations.
 
 In March
2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”, an amendment of FASB Statement No. 133
(“SFAS No. 161”). SFAS No. 161 applies to all derivative
instruments and nonderivative instruments that are designated and qualify as
hedging instruments and related hedged items accounted for under
SFAS No. 133. SFAS No. 161 requires entities to provide greater
transparency through additional disclosures about (a) how and why an entity
uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect an entity’s financial position, results of operations, and cash
flows. SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008. The
Company does not expect SFAS No. 161 to have a material impact on the
Company’s financial position or results of operations.
  F-8
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009
 
 In
December 2007, the FASB issued Statement No. 141 (revised), “Business
Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R)
significantly changes the accounting for business combinations and establishes
principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed
and any noncontrolling interest in the acquiree and recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase.
SFAS No. 141(R) applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008.
 
 In
December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests
in Consolidated Financial Statements” - an amendment of ARB No. 51
(“SFAS No. 160”). SFAS No. 160 changes the accounting for
noncontrolling (minority) interests in consolidated financial statements
including the requirements to classify noncontrolling interests as a component
of consolidated shareholders’ equity, the elimination of “minority interest”
accounting in results of operations and changes in the accounting for both
increases and decreases in a parent’s controlling ownership interest.
SFAS No. 160 is effective for fiscal years beginning after
December 15, 2008, and early adoption is prohibited. The Company does not
expect SFAS No. 160 to have a material impact on the Company’s
financial position or results of operations.
 
 In
February 2007, the FASB issued Statement No. 159 “The Fair Value Option for
Financial Assets and Financial Liabilities” including an amendment of FASB
Statement No. 115 (“SFAS No. 159”), which allows an entity the
irrevocable option to elect fair value for the initial and subsequent
measurement for certain financial assets and liabilities under an
instrument-by-instrument election. If the fair value option is elected for an
instrument, subsequent changes in fair value for that instrument will be
recognized in earnings. SFAS No. 159 also establishes additional
disclosure requirements and is effective for fiscal years beginning after
November 15, 2007, with early adoption permitted provided that the entity
also adopts Statement No. 157, “Fair Value Measurements”
(“SFAS No. 157”). SFAS No. 159 is not expected to have a
material impact on the Company's results of operations or financial
position.
 
 In
September 2006, the FASB issued SFAS No. 157 which defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
SFAS No. 157 applies under other accounting pronouncements that
require or permit fair value measurements. SFAS No. 157 is effective
for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. In February 2008, the FASB issued FASB Staff Position
No. SFAS No. 157-2, Effective Date of FASB Statement No. 157,
which provides a one-year deferral of the effective date of
SFAS No. 157 for non-financial assets and non-financial liabilities,
except those that are recognized or disclosed in the financial statements at
fair value on a recurring basis (at least annually). The adoption of
SFAS No. 157 for financial assets and financial liabilities is not
expected to have a material impact on the Company’s results of operations or
financial position.
 
 (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
  F-9
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009
 
 In
January 2008, the Company entered into a Assignment Agreement whereby the
Company acquired all of the rights, title and interest in the invention known as
the “Self operated computerized karaoke recording booth” for consideration of
royalties ranging from 1% to 5% based on the net income of the Company for 30
years from the date of the Company's incorporation. On February 20, 2008 the
Company filed PCT and U.S. patent applications for the invention.
  The
Company has also commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the SEC to register and sell in a self-directed
offering 2,000,000 shares of newly issued common stock at an offering price of
$0.10 per share for proceeds of up to $200,000. The Registration Statement on
Form S-1 was filed with the SEC on August 12, 2008 and declared effective on
September 8, 2008. The Company extended this public offering for an additional
90 days.
 
 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, 2009, the
cash resources of the Company were insufficient to meet its current business
plan, and the Company had negative working capital. These and other factors
raise substantial doubt about the Company’s ability to continue as a going
concern. The accompanying financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
 
 (3)  Patent Pending
 
 In
January 2008, the Company entered into a Assignment Agreement whereby the
Company acquired all of the rights, title and interest in the invention known as
the “Self operated computerized karaoke recording booth” for consideration of
royalties ranging from 1% to 5% based on the net income of the Company for 30
years from the date of the Company's incorporation. On February 20, 2008 the
Company filed PCT and U.S. patent applications for the invention.
 
 (4)  Loans from Related Parties -
Directors and Stockholders
 
 As of
March 31, 2009, loans from related parties - directors and stockholders amounted
to $4,300, 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.
 
 (5)  Common Stock
 
 On February 4, 2008, the Company issued
8,000,000 shares of its common stock to founders of the Company, some of whom
are directors and officers, for proceeds of $800.
  The
Company has commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the SEC to register and sell in a self-directed
offering 2,000,000 shares of newly issued common stock at an offering price of
$0.10 per share for proceeds of up to $200,000. The Registration Statement on
Form S-1 was filed with the SEC on August 12, 2008 and declared effective on
September 8, 2008.
 The
Company incurred $20,000 of deferred offering costs related to this capital
formation activity.
  F-10
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009
 
 (6)  Income Taxes
 
 The
provision (benefit) for income taxes for the periods ended March 31, 2009 was as
follows (assuming a 23% effective tax rate):
 2009Current
      Tax Provision:Federal-Taxable
      income
                      
                      $
                      -Total
      current tax provision
                      
                      $
                      -Deferred
      Tax Provision:Federal-Loss
      carryforwards
                      
                      $
                      4,765Change
      in valuation allowance
                      
                      
                      (4,765
                      )Total
      deferred tax provision
                      
                      $
                      -
 
 The Company had deferred income tax
assets as of March 31, 2009 as follows:
 
 2009Loss
      carryforwards
                      
                      $
                      8,909Less
      - Valuation allowance
                      
                      
                      (8,909
                      )Total
      net deferred tax assets
                      
                      $
                      -
 
 The
Company provided a valuation allowance equal to the deferred income tax assets
for the period ended March 31, 2009, because it is not presently known whether
future taxable income will be sufficient to utilize the loss
carryforwards.
 
 As of
March 31, 2009, the Company had approximately $38,736 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 March 31, 2009, the Company owed $4,300 to directors,
officers, and principal stockholders of the Company for working capital
loans.
 
 On
February 4, 2008, the Company issued 2,720,000 shares of common stock to
directors of the Company, for $272.
 
 As of
March 31, 2009, the Company paid consulting fees in the amount of $2,200 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-11
  THE
MOBILE STAR CORP.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009
 
 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-12




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





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





Forward-Looking
Statements





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





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





Corporate
Background





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





Our
Business





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





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




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. If and when we develop the prototype
for Technology, and are able to begin manufacturing and marketing, we may need
additional employees for such operations. We do not foresee any significant
changes in the number of employees or consultants we will have over the next
twelve months.




Transfer
Agent




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





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.





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





General Working
Capital




We may be
wrong in our estimates of funds required in order to proceed with developing a
prototype and executing our general business plan described herein. Should we
need additional funds, we would attempt to raise these funds through additional
private placements or by borrowing money. We do not have any arrangements with
potential investors or lenders to provide such funds and there is no assurance
that such additional financing will be available when required in order to
proceed with the business plan or that our ability to respond to competition or
changes in the market place or to exploit opportunities will not be limited by
lack of available capital financing. If we are unsuccessful in securing the
additional capital needed to continue operations within the time required, we
may not be in a position to continue operations.




We have
raised as of today $80,000 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). As disclosed above, we have no revenues and, as such, if
we do not raise at least $100,000 from our offering we will not have sufficient
funds to develop a prototype. If we are unable to raise funds, we may attempt to
sell the Company or file for bankruptcy. 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, 2009 reflects cash in the amount of $38,064, 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 2009 amounted to $20,717.





We do not
have sufficient resources to effectuate our business plan. We expect to incur a
minimum of $100,000 in expenses during the next twelve months of operations. We
estimate that this will be comprised mostly of development and operating
expenses as follows; $20,000 towards development of a working prototype, $5,000
towards marketing materials and website. Additionally, $75,000 will be needed
for general overhead expenses such as for reimbursed expenses, corporate legal
and accounting fees, office overhead and general working capital. Accordingly,
we will have to raise the funds to pay for these expenses. We might do so
through a private offering after our shares are quoted on the Over the Counter
Bulletin Board. We potentially will have to issue debt or equity or enter into a
strategic arrangement with a third party. There can be no assurance that
additional capital will be available to us. We currently have no agreements,
arrangements or understandings with any person to obtain funds through bank
loans, lines of credit or any other sources.





Going
Concern Consideration





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





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, 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:
      May 4, 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
      May 4 , 2009
              By:
              /s/ Danny ElbazName:
      Danny Elbaz
                Title:
      President and Director
                (Principal
      Executive Officer)





Date:
      May 4, 2009
              By:
              /s/ Eran GronichName:
      Eran Gronich
                Title: Secretary
      and Director
                (Principal
      Financial and Accounting
Officer)




9