item 14 exhibits financial statement schedules exhibit description exhibit 31 articles incorporation company filed exhibit 31 registration statement form s1 filed securities exchange commission august 12 2008 32 bylaws company filed exhibit 32 registration statement form s1 filed securities exchange commission august 12 2008 33 form common stock certificate company filed exhibit 33 registration statement form s1 filed securities exchange commission august 12 2008 101 invention technology assignment filed exhibit 101 registration statement form s1 filed securities exchange commission august 12 2008 311 certification principal executive officer pursuant exchange act rule 13a14a15d14a adopted pursuant section 302 sarbanesoxley act 2002 312 certification principal accounting officer pursuant exchange act rule 13a14a15d14a adopted pursuant section 302 sarbanesoxley act 2002 321 certification principal executive officer pursuant section 302a sarbanesoxley act 2002filed herewith 322 certification principal accounting officer pursuant section 302a sarbanesoxley act 2002filed herewith signatures accordance section 13 15d exchange act registrant caused report signed behalf undersigned thereunto duly authorized accordance exchange act report signed following persons behalf registrant capacities dates indicated item 14 principal accounting fees services principal independent accountant alan weinberg cpa preapproved fees billed company set forth december 31 2008 company formal documented preapproval policy fees principal accountant company audit committee percentage hours expended principal accountants engagement audit financial statements recent fiscal year attributed work performed persons principal accountants fulltime permanent employees 0 part iv item 15 item 14principal accounting fees services principal independent accountant weinberg baer llc cpa preapproved fees billed company set forth december 31 2011 company formal documented preapproval policy fees principal accountant company audit committee percentage hours expended principal accountants engagement audit financial statements recent fiscal year attributed work performed persons principal accountants fulltime permanent employees 0 part iv item 14exhibits financial statement schedules exhibit description exhibit 31 articles incorporation company filed exhibit 31 registration statement form s1 filed securities exchange commission august 12 2008 32 bylaws company filed exhibit 32 registration statement form s1 filed securities exchange commission august 12 2008 33 form common stock certificate company filed exhibit 33 registration statement form s1 filed securities exchange commission august 12 2008 101 invention technology assignment filed exhibit 101 registration statement form s1 filed securities exchange commission august 12 2008 311 certification principal executive officer pursuant exchange act rule 13a14a15d14a adopted pursuant section 302 sarbanesoxley act 2002 312 certification principal accounting officer pursuant exchange act rule 13a14a15d14a adopted pursuant section 302 sarbanesoxley act 2002 321 certification principal executive officer pursuant section 302a sarbanesoxley act 2002filed herewith 322 certification principal accounting officer pursuant section 302a sarbanesoxley act 2002filed herewith signatures accordance section 13 15d exchange act registrant caused report signed behalf undersigned thereunto duly authorized mobile star corp date march 12 2011 george ivakhnik name george ivakhnik title chief executive officer director george ivakhnik name george ivakhnik title chief executive officer director accordance exchange act report signed following persons behalf registrant capacities dates indicated item 14 exhibits financial statement schedules exhibit description exhibit 31 articles incorporation company filed exhibit 31 registration statement form s1 filed securities exchange commission august 12 2008 32 bylaws company filed exhibit 32 registration statement form s1 filed securities exchange commission august 12 2008 33 form common stock certificate company filed exhibit 33 registration statement form s1 filed securities exchange commission august 12 2008 101 invention technology assignment filed exhibit 101 registration statement form s1 filed securities exchange commission august 12 2008 311 certification principal executive officer pursuant exchange act rule 13a14a15d14a adopted pursuant section 302 sarbanesoxley act 2002 312 certification principal financial officer pursuant exchange act rule 13a14a15d14a adopted pursuant section 302 sarbanesoxley act 2002 321 certification principal executive officer pursuant section 302a sarbanesoxley act 2002filed herewith 322 certification principal financial officer pursuant section 302a sarbanesoxley act 2002filed herewith signatures accordance section 13 15d exchange act registrant caused report signed behalf undersigned thereunto duly authorized accordance exchange act report signed following persons behalf registrant capacities dates indicated item 7 financial statements supplementary data mobile star corp development stage company december 31 2010 report registered independent auditors board directors stockholders mobile star corp audited accompanying balance sheets mobile star corp delaware corporation development stage december 31 2010 2009 related statements operations stockholders’ equity deficit cash flows years ended december 31 2010 2009 inception september 25 2007 december 31 2010 financial statements responsibility company’s management responsibility express opinion financial statements based audit conducted audit accordance standards public company accounting oversight board united states america standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement company required engaged perform audit internal control financial reporting audit included consideration internal control financial reporting basis designing audit procedures appropriate circumstances purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audit provides reasonable basis opinion financial statements referred present fairly material respects financial position mobile star corp december 31 2010 2009 results operations cash flows years ended december 31 2010 2009 inception september 25 2007 december 31 2010 conformity accounting principles generally accepted united states america accompanying financial statements prepared assuming company continue going concern discussed note 2 financial statements company development stage established source revenue cover operating costs incurred operating loss since inception december 31 2010 cash resources company insufficient meet planned business objectives factors raise substantial doubt company’s ability continue going concern management’s plan regarding matters also described note 2 financial statements financial statements include adjustments might result outcome uncertainty respectfully submitted weinberg baer llc weinberg baer llc baltimore maryland february 23 2011 mobile star corp development stage company balance sheets december 31 2010 december 31 2009 accompanying notes financial statements integral part statements mobile star corp development stage company statements operations years ended december 31 2010 2009 cumulative inception september 25 2007 december 31 2010 accompanying notes financial statements integral part statements mobile star corp development stage company statement changes stockholders equity deficit period inception september 25 2007 december 31 2010 accompanying notes financial statements integral part statement mobile star corp development stage company statements cash flows years ended december 31 2010 2009 cumulative inception september 25 2007 december 31 2010 accompanying notes financial statements integral part statements mobile star corp development stage company notes financial statements december 31 2010 1 summary significant accounting policies basis presentation organization mobile star corp “the mobile star” “company” delaware corporation development stage commenced operations company incorporated laws state delaware september 25 2007 began activity january 2008 business plan company develop commercial application self operated computerized karaoke recording booth company also intends obtain approval patent application manufacture market product andor seek third party entities interested licensing rights manufacture market device accompanying financial statements mobile star prepared accounts company accrual basis accounting cash equivalents purposes reporting within statement cash flows company considers cash hand cash accounts subject withdrawal restrictions penalties highly liquid debt instruments purchased maturity three months less cash equivalents revenue recognition company development stage yet realize revenues operations company commenced operations recognize revenues delivery goods completion services occurred provided persuasive evidence agreement acceptance approved customers fee fixed determinable based completion stated terms conditions collection related receivable probable loss per common share basic loss per share computed dividing net loss attributable common stockholders weighted average number shares common stock outstanding period fully diluted loss per share computed similar basic loss per share except denominator increased include number additional common shares would outstanding potential common shares issued additional common shares dilutive common stock equivalents included computation diluted earnings per share statement operations due fact company reported net loss would antidilutive periods presented income taxes deferred tax assets liabilities determined based temporary differences bases certain assets liabilities income tax financial reporting purposes deferred tax assets liabilities classified according financial statement classification assets liabilities generating differences company maintains valuation allowance respect deferred tax assets company establishes valuation allowance based upon potential likelihood realizing deferred tax asset taking consideration company’s financial position results operations current period future realization deferred tax benefit depends existence sufficient taxable income within carryforward period federal tax laws changes circumstances company generating taxable income could cause change judgment realizability related deferred tax asset change valuation allowance included income year change estimate fair value financial instruments company estimates fair value financial instruments using available market information valuation methods considerable judgment required estimating fair value accordingly estimates fair value may indicative amounts company could realize current market exchange december 31 2010 carrying value accrued liabilities loans directors stockholders approximated fair value due shortterm nature maturity instruments patent intellectual property company capitalizes costs associated obtaining patent intellectual property associated intended business plan costs amortized estimated useful lives related assets deferred offering costs company defers direct incremental costs raising capital assets time offering completed time completion offering costs charged capital raised offering terminated deferred offering costs charged operations period offering terminated impairment longlived assets company evaluates recoverability longlived assets related estimated remaining lives events circumstances lead management believe carrying value asset may recoverable period ended december 31 2010 events circumstances occurred evaluation recoverability longlived assets required common stock registration expenses company considers incremental costs expenses related registration equity securities sec whether contractual arrangement certain date demand unrelated original issuance transactions subsequent registration costs expenses expensed incurred estimates financial statements prepared basis accounting principles generally accepted united states preparation financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect reported amounts assets liabilities december 31 expenses period ended december 31 2010 cumulative inception actual results could differ estimates made management recent accounting pronouncements april 2010 fasb issued asu 201017 revenue recognitionmilestone method asu 2010017 asu 2010017 provides guidance applying milestone method revenue recognition research development arrangements guidance concludes milestone method valid application proportional performance model applied research development arrangements accordingly entity make accounting policy election recognize payment contingent upon achievement substantive milestone entirety period milestone achieved guidance effective fiscal years interim periods within years beginning june 15 2010 adoption accounting standard impact companys financial position results operations february 2010 fasb issued amended guidance subsequent events amended guidance sec filers longer required disclose date subsequent events evaluated originally issued revised financial statements guidance effective immediately company adopted new requirements upon issuance guidance january 2010 fasb issued accounting standards update asu 201006 fair value measurements disclosures topic 820improving disclosures fair value measurements asu 201006 asu 201006 requires 1 fair value disclosures assets liabilities class 2 disclosures significant transfers levels 1 2 fair value hierarchy addition level 3 purchases sales issuances settlements disclosed gross basis reconciliation beginning ending balances level 3 assets liabilities 4 disclosures valuation methods inputs used measure fair value level 2 assets liabilities asu 201006 becomes effective first financial reporting period beginning december 15 2009 except disclosures purchases sales issuances settlements level 3 assets liabilities effective fiscal years beginning december 15 2010 adoption accounting standard impact companys financial position results operations october 2009 fasb issued asu 200913 revenue recognition topic 605multipledeliverable revenue arrangements consensus fasb emerging issues task force asu 200913 asu 200913 establishes sellingprice hierarchy determining selling price element within multipledeliverable arrangement specifically selling price assigned deliverable based vendorspecific objective evidence vsoe available thirdparty evidence vsoe unavailable estimated selling prices neither vsoe thirdparty evidence available addition asu 200913 eliminates residual method allocating arrangement consideration instead requires allocation using relative selling price method asu 200913 effective prospectively multipledeliverable revenue arrangements entered materially modified fiscal years beginning june 15 2010the adoption accounting standard impact companys financial position results operations august 2009 fasb issued asu 200905 fair value measurements disclosures topic 820measuring liabilities fair value asu 200905 asu 200905 provides guidance measuring fair value liability quoted price active market exist identical liability subject restrictions transfer asu 200915 effective company beginning quarter ended december 31 2009 adoption accounting standard impact companys financial position results operations 3 patent pending january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation february 20 2008 company filed pct us patent applications invention 4 loans related parties directors stockholders december 31 2010 loans related parties amounted 51426 represented working capital advances officers also stockholders company loans unsecured noninterest bearing due demand 5 convertible notes payable july 7 2010 company signed 30000 convertible promissory note third party note bears interest 8 per annum due april 8 2011 note conversion rights allow holder note time convert part remaining principal balance company’s common stock price equal 55 average lowest three trading prices common stock recent ten day period september 20 2010 company signed 27000 convertible promissory note third party note bears interest 8 per annum due june 23 2011 note conversion rights allow holder note time convert part remaining principal balance company’s common stock price equal 55 average lowest three trading prices common stock recent ten day period accordance asc 470 company analyzed beneficial nature conversion terms determined beneficial conversion feature bcf exists company calculated value bcf using intrinsic method stipulated asc 470 based stock price day commitment discount agreed notes number convertible shares bcf valued 46636 bcf recorded discount notes payable additional paidin capital december 31 2010 company recognized 1768 interest expense related notes amortized 23963 beneficial conversion features recorded interest expense 6 common stock february 4 2008 company issued 56000000 post forward stock split shares common stock founders company directors officers proceeds 800 company commenced capital formation activity submit registration statement form s1 sec register sell selfdirected offering 14000000 post forward stock split shares newly issued common stock offering price 010 per share proceeds 200000 registration statement form s1 filed sec august 12 2008 declared effective september 8 2008 company issued 14000000 post forward stock split shares common stock pursuant registration statement form s1 received proceeds 200000 company incurred 40000 deferred offering costs related capital formation activity june 26 2009 company implemented 7 1 forward stock split issued outstanding shares common stock holders record june 24 2009 result split holder record date automatically received four additional shares company’s common stock split number shares common stock issued outstanding 70000000 shares accompanying financial statements related notes thereto adjusted accordingly reflect forward stock split may 26 2010 company issued 10000000 shares common stock director services valued 25000 based current market price stock minus discount restricted trading 7 income taxes provision benefit income taxes periods ended december 31 2010 2009 follows assuming 23 effective tax rate company deferred income tax assets december 31 2010 2009 follows company provided valuation allowance equal deferred income tax assets periods ended december 31 2010 2009 presently known whether future taxable income sufficient utilize loss carryforwards december 31 2010 company approximately 300000 tax loss carryforwards utilized future periods reduce taxable income expire year 2030 company identify material uncertain tax positions returns filed company recognize interest penalties unrecognized tax benefits years ended december 31 2010 2009 company filed income tax returns united states tax years closed expiration statute limitations years ended december 31 2010 2009 open examination 8 related party transactions described note 4 december 31 2010 company owed 51426 directors officers principal stockholders company working capital loans february 4 2008 company issued 19040000 post forward stock split shares common stock directors company 272 described note 6 may 26 2010 company issued 10000000 shares common stock director services valued 25000 inception december 31 2010 company paid consulting fees amount 39737 director officer company 8 commitments june 15 2008 company entered transfer agent registrar agreement nevada agency trust company natco agreement company agreed pay natco annual fee 1500 first year 1800 every year thereafter natco act company’s transfer agent registrar described note 3 january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation 9 concentration credit risk company’s cash equivalents invested major bank israel insured management believes financial institution holds company’s investments financially sound accordingly minimal credit risk exists respect investments 10 reclassifications certain amounts reclassified presentation prior period statement operations conform presentation current period 11 subsequent events january 6 2011 company signed 35000 convertible promissory note third party note bears interest 8 per annum due october 10 2011 note conversion rights allow holder note time convert part remaining principal balance company’s common stock price equal 55 average lowest three trading prices common stock recent ten day period item 8 item 7 management’s discussion analysis financial condition results operations certain statements contained prospectus including statements regarding anticipated development expansion business intent belief current expectations primarily respect future operating performance mobile star corp services expect offer statements contained herein regarding matters historical facts “forwardlooking” statements future filings securities exchange commission future press releases future oral written statements made us approval statements historical fact may contain forwardlooking statements include risks uncertainties actual results may differ materially expressed implied forwardlooking statements forwardlooking statements speak date made undertake obligation update statements reflect events occur circumstances exist date made­­­­­­­­ plan operation development stage company bought technology filed patent application self operated computerized karaoke recording booth system includes dvd flash memory device connectable automated means recording audio via physical cable b device connectable automated means recording audio via communication link user multimedia file c door ventilation means computer screen video camera microphone optional lighting automatic money box e database multimedia files earphones recording means recording audio multimedia computer usable media processing unit may comprise labeling packing means labeling packing said computer usable media f graphical user interface gui audio processing application multimedia processing application control application although yet engaged manufacturer develop fully operational prototype self operated computerized karaoke recording booth based preliminary discussions certain manufacturing vendors believe take approximately three four months construct basic valid prototype product viable prototype depending availability funds estimate would need approximately additional four six months bring product market objective manufacture product third party subcontractors market product offtheshelf device andor license manufacturing rights product related technology third party manufacturers would assume responsibility marketing sales auditors issued opinion financial statements includes statement describing going concern status means substantial doubt continue ongoing business next twelve months unless obtain additional capital pay bills meet financial obligations generated revenues anticipated begin marketing product accordingly must raise capital sources actual sale product must raise capital implement project stay business even raise maximum amount money offering know long money last however believe last least twelve months liquidity capital resources balance sheet december 31 2008 reflects cash amount 376 cash equivalents inception date sufficient provide operating capital necessary operate date operating expenses net loss year ending december 31 18019 sufficient resources effectuate business plan expect incur minimum 100000 expenses next twelve months operations estimate comprised mostly development operating expenses follows 20000 towards development working prototype 5000 towards marketing materials website additionally ­­­75000 needed general overhead expenses reimbursed expenses corporate legal accounting fees office overhead general working capital accordingly raise funds pay expenses might private offering shares quoted counter bulletin board potentially issue debt equity enter strategic arrangement third party assurance additional capital available us currently agreements arrangements understandings person obtain funds bank loans lines credit sources going concern consideration independent auditors included explanatory paragraph report accompanying financial statements regarding concerns ability continue going concern financial statements contain additional note disclosures describing circumstances lead disclosure independent auditors offbalance sheet arrangements offbalance sheet arrangements item 7a item 7 quantitative qualitative disclosures market risk smaller reporting company required provide information required item 8 item 7 financial statements supplementary data mobile star corp development stage company december 31 2009 report registered independent auditors board directors stockholders mobile star corp audited accompanying balance sheets mobile star corp delaware corporation development stage december 31 2009 2008 related statements operations stockholders’ equity deficit cash flows years ended december 31 2009 2008 inception september 25 2007 december 31 2009 financial statements responsibility company’s management responsibility express opinion financial statements based audit conducted audit accordance standards public company accounting oversight board united states america standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement company required engaged perform audit internal control financial reporting audit included consideration internal control financial reporting basis designing audit procedures appropriate circumstances purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audit provides reasonable basis opinion financial statements referred present fairly material respects financial position mobile star corp december 31 2009 2008 results operations cash flows years ended december 31 2009 2008 inception september 25 2007 december 31 2009 conformity accounting principles generally accepted united states america accompanying financial statements prepared assuming company continue going concern discussed note 2 financial statements company development stage established source revenue cover operating costs incurred operating loss since inception december 31 2009 cash resources company insufficient meet planned business objectives factors raise substantial doubt company’s ability continue going concern management’s plan regarding matters also described note 2 financial statements financial statements include adjustments might result outcome uncertainty respectfully submitted alan weinberg cpa alan weinberg cpa baltimore maryland february 14 2010 mobile star corp development stage company balance sheets december 31 2009 2008 accompanying notes financial statements integral part balance sheet mobile star corp development stage company statements operations years ended december 31 2009 2008 cumulative inception september 25 2007 december 31 2009 accompanying notes financial statements integral part statements mobile star corp development stage company statement changes stockholders equity deficit period inception september 25 2007 december 31 2009 accompanying notes financial statements integral part statement mobile star corp development stage company statements cash flows years ended december 31 2009 2008 cumulative inception september 25 2007 december 31 2009 accompanying notes financial statements integral part statements mobile star corp development stage company notes financial statements december 31 2009 1 summary significant accounting policies basis presentation organization mobile star corp “the mobile star” “company” delaware corporation development stage commenced operations company incorporated laws state delaware september 25 2007 began activity january 2008 business plan company develop commercial application self operated computerized karaoke recording booth company also intends obtain approval patent application manufacture market product andor seek third party entities interested licensing rights manufacture market device accompanying financial statements mobile star prepared accounts company accrual basis accounting cash equivalents purposes reporting within statement cash flows company considers cash hand cash accounts subject withdrawal restrictions penalties highly liquid debt instruments purchased maturity three months less cash equivalents revenue recognition company development stage yet realize revenues operations company commenced operations recognize revenues delivery goods completion services occurred provided persuasive evidence agreement acceptance approved customers fee fixed determinable based completion stated terms conditions collection related receivable probable loss per common share basic loss per share computed dividing net loss attributable common stockholders weighted average number shares common stock outstanding period fully diluted loss per share computed similar basic loss per share except denominator increased include number additional common shares would outstanding potential common shares issued additional common shares dilutive financial instruments issued outstanding period ended december 31 2009 income taxes deferred tax assets liabilities determined based temporary differences bases certain assets liabilities income tax financial reporting purposes deferred tax assets liabilities classified according financial statement classification assets liabilities generating differences company maintains valuation allowance respect deferred tax assets company establishes valuation allowance based upon potential likelihood realizing deferred tax asset taking consideration company’s financial position results operations current period future realization deferred tax benefit depends existence sufficient taxable income within carryforward period federal tax laws changes circumstances company generating taxable income could cause change judgment realizability related deferred tax asset change valuation allowance included income year change estimate fair value financial instruments company estimates fair value financial instruments using available market information valuation methods considerable judgment required estimating fair value accordingly estimates fair value may indicative amounts company could realize current market exchange december 31 2009 carrying value accrued liabilities loans directors stockholders approximated fair value due shortterm nature maturity instruments patent intellectual property company capitalizes costs associated obtaining patent intellectual property associated intended business plan costs amortized estimated useful lives related assets deferred offering costs company defers direct incremental costs raising capital assets time offering completed time completion offering costs charged capital raised offering terminated deferred offering costs charged operations period offering terminated impairment longlived assets company evaluates recoverability longlived assets related estimated remaining lives events circumstances lead management believe carrying value asset may recoverable period ended december 31 2009 events circumstances occurred evaluation recoverability longlived assets required common stock registration expenses company considers incremental costs expenses related registration equity securities sec whether contractual arrangement certain date demand unrelated original issuance transactions subsequent registration costs expenses expensed incurred estimates financial statements prepared basis accounting principles generally accepted united states preparation financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect reported amounts assets liabilities december 31 2009 expenses period ended december 31 2009 cumulative inception actual results could differ estimates made management recent accounting pronouncements april 2009 fasb issued fsp fas 1574 “determining fair value volume level activity asset liability significantly decreased identifying transactions orderly” “fsp fas 1574” codified fasb asc 8201065 provides additional guidance estimating fair value accordance asc 82010 volume level activity asset liability significantly decreased asc 8201065 also includes guidance identifying circumstances indicate transaction orderly adoption asc 8201065 impact companys results operations financial condition may 2009 fasb issued sfas 165 subsequent events sfas 165 codified fasb asc 8551005 provides guidance establish general standards accounting disclosures events occur balance sheet date financial statements issued available issued fasb asc 8551005 also requires entities disclose date subsequent events evaluated well rationale date selected fasb asc 8551005 effective interim annual periods ending june 15 2009 fasb asc 8551005 requires public entities evaluate subsequent events date financial statements issued june 2009 fasb issued sfas 166 accounting transfers financial assets amendment fasb statement 140 sfas 166 codified fasb asc 860 requires entities provide information regarding sales securitized financial assets similar transactions particularly entity continuing exposure risks related transferred financial assets fasb asc 860 eliminates concept qualifying specialpurpose entity changes requirements derecognizing financial assets requires additional disclosures fasb asc 860 effective fiscal years beginning november 15 2009 adoption fasb asc 860 impact companys financial condition results operations cash flows june 2009 fasb issued sfas 167 amendments fasb interpretation 46r sfas 167 codified fasb asc 81010 modifies company determines entity insufficiently capitalized controlled voting similar rights consolidated fasb asc 81010 clarifies determination whether company required consolidate entity based among things entitys purpose design companys ability direct activities entity significantly impact entitys economic performance fasb asc 81010 requires ongoing reassessment whether company primary beneficiary variable interest entity fasb asc 81010 also requires additional disclosures companys involvement variable interest entities significant changes risk exposure due involvement fasb asc 81010 effective fiscal years beginning november 15 2009 adoption fasb asc 81010 impact companys financial condition results operations cash flows june 2009 fasb issued fasb asc 105 generally accepted accounting principles establishes fasb accounting standards codification sole source authoritative generally accepted accounting principles pursuant provisions fasb asc 105 updated references gaap financial statements adoption fasb asc 105 impact companys financial position results operations 2 development stage activities going concern company currently development stage operations business plan company develop commercial application self operated computerized karaoke recording booth company also intends obtain approval patent application manufacture market product andor seek third party entities interested licensing rights manufacture market device january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation february 20 2008 company filed pct us patent applications invention company commenced capital formation activity submit registration statement form s1 securities exchange commission “sec” register sell selfdirected offering 14000000 post forward stock split shares newly issued common stock offering price 010 proceeds 200000 registration statement form s1 filed sec august 12 2008 declared effective september 8 2008 company issued 14000000 post forward stock split shares common stock pursuant registration statement form s1 received proceeds 200000 accompanying financial statements prepared conformity accounting principles generally accepted united states america contemplate continuation company going concern company established source revenue cover operating costs incurred operating loss since inception december 31 2009 cash resources company insufficient meet current business plan factors raise substantial doubt company’s ability continue going concern accompanying financial statements include adjustments reflect possible future effects recoverability classification assets amounts classification liabilities may result possible inability company continue going concern 3 patent pending january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation february 20 2008 company filed pct us patent applications invention 4 loans related parties directors stockholders december 31 2009 loans related parties amounted 3000 represented working capital advances officers also stockholders company loans unsecured noninterest bearing due demand 5 common stock february 4 2008 company issued 56000000 post forward stock split shares common stock founders company directors officers proceeds 800 company commenced capital formation activity submit registration statement form s1 sec register sell selfdirected offering 14000000 post forward stock split shares newly issued common stock offering price 010 per share proceeds 200000 registration statement form s1 filed sec august 12 2008 declared effective september 8 2008 company issued 14000000 post forward stock split shares common stock pursuant registration statement form s1 received proceeds 200000 company incurred 40000 deferred offering costs related capital formation activity june 26 2009 company implemented 7 1 forward stock split issued outstanding shares common stock holders record june 24 2009 result split holder record date automatically received four additional shares company’s common stock split number shares common stock issued outstanding 70000000 shares accompanying financial statements related notes thereto adjusted accordingly reflect forward stock split 6 income taxes provision benefit income taxes periods ended december 31 2009 2008 follows assuming 23 effective tax rate company deferred income tax assets december 31 2009 december 31 2008 follows company provided valuation allowance equal deferred income tax assets period ended december 31 2009 presently known whether future taxable income sufficient utilize loss carryforwards december 31 2009 company approximately 172837 tax loss carryforwards utilized future periods reduce taxable income expire year 2029 federal income tax returns company subject examination irs generally three years filed 7 related party transactions described note 4 december 31 2009 company owed 3000 directors officers principal stockholders company working capital loans february 4 2008 company issued 19040000 post forward stock split shares common stock directors company 272 inception december 31 2009 company paid consulting fees amount 11153 director officer company 8 commitments june 15 2008 company entered transfer agent registrar agreement nevada agency trust company natco agreement company agreed pay natco annual fee 1500 first year 1800 every year thereafter natco act company’s transfer agent registrar described note 3 january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation 9 concentration credit risk company’s cash equivalents invested major bank israel insured management believes financial institution holds company’s investments financially sound accordingly minimal credit risk exists respect investments 10 subsequent events company evaluated events occurring balance sheet date february 14 2010 date financial statements issued significant events item 8 item 7a quantitative qualitative disclosures market risk applicable item 8 item 8 changes disagreements accountants accounting financial disclosure none item 8at controls procedures evaluation disclosure controls procedures required maintain disclosure controls procedures term defined rule 13a15e securities exchange act 1934 designed ensure information required disclosed exchange act reports recorded processed summarized reported within time periods specified sec rules forms information accumulated communicated management including ceo internal accounting officer allow timely decisions regarding required disclosure december 31 2009 conducted evaluation supervision participation ceo internal accounting officer effectiveness design operation disclosure controls procedures based evaluation ceo internal accounting officer concluded disclosure controls procedures effective management expect disclosure controls internal controls prevent errors fraud control system matter well conceived operated provide reasonable absolute assurance objectives control system met design control system must reflect fact resource constraints benefits controls must considered relative costs inherent limitations control systems evaluation controls provide absolute assurance control issues instances fraud within company detected inherent limitations include realities judgments decisionmaking faulty breakdowns occur simple error mistake additionally controls circumvented individual acts persons collusion two people management board override control design system controls also based part upon certain assumptions likelihood future events assurance design succeed achieving stated goals potential future conditions time controls may become inadequate changes conditions degree compliance policies procedures may deteriorate inherent limitations costeffective control system misstatements due error fraud may occur detected managements report internal control financial reporting management responsible establishing maintaining adequate internal control financial reporting internal control financial reporting defined rule 13a15f 15d15f promulgated securities exchange act 1934 process designed supervision companys ceo internal accounting officer effected companys board directors management personnel provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance accounting principles generally accepted united states america includes policies procedures pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance accounting principles generally accepted united states america receipts expenditures company made accordance authorizations management directors company provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition companys assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate internal control systems matter well designed inherent limitations therefore even systems determined effective provide reasonable assurance respect financial statement preparation presentation inherent limitations internal control risk material misstatements may prevented detected timely basis internal control financial reporting however inherent limitations known features financial reporting process therefore possible design process safeguards reduce though eliminate risk december 31 2010 management assessed effectiveness internal control financial reporting based criteria effective internal control financial reporting established internal controlintegrated framework issued committee sponsoring organizations treadway commission “coso” sec guidance conducting assessments based evaluation concluded period covered report internal controls procedures effective attestation report registered public accounting firm annual report include attestation report companys registered public accounting firm regarding internal control financial reporting managements report subject attestation companys registered public accounting firm pursuant temporary rules securities exchange commission permit company provide managements report annual report changes internal control financial reporting year ended december 31 2010 change internal control financial reporting materially affected reasonably likely materially affect internal control financial reporting item 8b information none part iii item 9 item 8 financial statements see item 15 item 9 item 8 financial statements supplementary data mobile star corp development stage company december 31 2011 report registered independent auditors board directors stockholders mobile star corp audited accompanying balance sheets mobile star corp delaware corporation development stage december 31 2011 2010 related statements operations stockholders’ equity deficit cash flows years ended december 31 2011 2010 inception september 25 2007 december 31 2011 financial statements responsibility company’s management responsibility express opinion financial statements based audit conducted audit accordance standards public company accounting oversight board united states america standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement company required engaged perform audit internal control financial reporting audit included consideration internal control financial reporting basis designing audit procedures appropriate circumstances purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audit provides reasonable basis opinion financial statements referred present fairly material respects financial position mobile star corp december 31 2011 2010 results operations cash flows years ended december 31 2011 2010 inception september 25 2007 december 31 2011 conformity accounting principles generally accepted united states america accompanying financial statements prepared assuming company continue going concern discussed note 2 financial statements company development stage established source revenue cover operating costs incurred operating loss since inception december 31 2011 cash resources company insufficient meet planned business objectives factors raise substantial doubt company’s ability continue going concern management’s plan regarding matters also described note 2 financial statements financial statements include adjustments might result outcome uncertainty respectfully submitted weinberg baer llc weinberg baer llc baltimore maryland february 20 2012 mobile star corp development stage company balance sheets december 31 2011 2010 accompanying notes financial statements integral part balance sheet mobile star corp development stage company statements operations years ended december 31 2011and cumulative inception september 25 2007 december 31 2011 accompanying notes financial statements integral part statements mobile star corp development stage company statement changes stockholders equity deficit period inception september 25 2007 december 31 2011 accompanying notes financial statements integral part statement mobile star corp development stage company statements cash flows years ended december 31 2011 2010 cumulative inception september 25 2007 december 31 2011 accompanying notes financial statements integral part statements mobile star corp development stage company notes financial statements december 31 2011 1 summary significant accounting policies basis presentation organization mobile star corp “the mobile star” “company” delaware corporation development stage commenced operations company incorporated laws state delaware september 25 2007 began activity january 2008 business plan company develop commercial application self operated computerized karaoke recording booth company also intends obtain approval patent application manufacture market product andor seek third party entities interested licensing rights manufacture market device accompanying financial statements mobile star prepared accounts company accrual basis accounting cash equivalents purposes reporting within statement cash flows company considers cash hand cash accounts subject withdrawal restrictions penalties highly liquid debt instruments purchased maturity three months less cash equivalents revenue recognition company development stage company commenced operations recognize revenues delivery goods completion services occurred provided persuasive evidence agreement acceptance approved customers fee fixed determinable based completion stated terms conditions collection related receivable probable loss per common share basic loss per share computed dividing net loss attributable common stockholders weighted average number shares common stock outstanding period fully diluted loss per share computed similar basic loss per share except denominator increased include number additional common shares would outstanding potential common shares issued additional common shares dilutive common stock equivalents included computation diluted earnings per share statement operations due fact company reported net loss would antidilutive periods presented income taxes deferred tax assets liabilities determined based temporary differences bases certain assets liabilities income tax financial reporting purposes deferred tax assets liabilities classified according financial statement classification assets liabilities generating differences company maintains valuation allowance respect deferred tax assets company establishes valuation allowance based upon potential likelihood realizing deferred tax asset taking consideration company’s financial position results operations current period future realization deferred tax benefit depends existence sufficient taxable income within carryforward period federal tax laws changes circumstances company generating taxable income could cause change judgment realizability related deferred tax asset change valuation allowance included income year change estimate fair value financial instruments company estimates fair value financial instruments using available market information valuation methods considerable judgment required estimating fair value accordingly estimates fair value may indicative amounts company could realize current market exchange december 31 2011 carrying value accrued liabilities loans directors stockholders approximated fair value due shortterm nature maturity instruments patent intellectual property company capitalizes costs associated obtaining patent intellectual property associated intended business plan costs amortized estimated useful lives related assets deferred offering costs company defers direct incremental costs raising capital assets time offering completed time completion offering costs charged capital raised offering terminated deferred offering costs charged operations period offering terminated impairment longlived assets company evaluates recoverability longlived assets related estimated remaining lives events circumstances lead management believe carrying value asset may recoverable period ended december 31 2011 events circumstances occurred evaluation recoverability longlived assets required common stock registration expenses company considers incremental costs expenses related registration equity securities sec whether contractual arrangement certain date demand unrelated original issuance transactions subsequent registration costs expenses expensed incurred estimates financial statements prepared basis accounting principles generally accepted united states preparation financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect reported amounts assets liabilities expenses actual results could differ estimates made management recent accounting pronouncements may 2011 fasb issued asu 201104 fair value measurement topic 820 amendments achieve common fair value measurement disclosure requirements us gaap international financial reporting standards ifrss asu 201104 guidance amends certain accounting disclosure requirements related fair value measurements ensure fair value meaning us gaap ifrs respective fair value measurement disclosure requirements asu 201104 effective public entities interim annual periods beginning december 15 2011 early adoption permitted company believe adoption asu 201104 material impact companys results operation financial condition june 2011 fasb issued asu 201105 comprehensive income asc topic 220 presentation comprehensive income asu 201105 amends current comprehensive income guidance accounting update eliminates option present components comprehensive income part statement shareholders equity instead comprehensive income must reported either single continuous statement comprehensive income contains two sections net income comprehensive income two separate consecutive statements asu 201105 effective public companies interim annual periods beginning dec 15 2011 early adoption permitted company believe adoption asu 201105 material impact companys results operation financial condition various updates recently issued represented technical corrections accounting literature application specific industries none updates expected material impact companys financial position results operations cash flows 2 development stage activities going concern company currently development stage limited operations business plan company develop commercial application self operated computerized karaoke recording booth company also intends obtain approval patent application manufacture market product andor seek third party entities interested licensing rights manufacture market device january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation february 20 2008 company filed pct us patent applications invention company commenced capital formation activity submit registration statement form s1 securities exchange commission “sec” register sell selfdirected offering 14000000 post forward stock split shares newly issued common stock offering price 010 proceeds 200000 registration statement form s1 filed sec august 12 2008 declared effective september 8 2008 company issued 14000000 post forward stock split shares common stock pursuant registration statement form s1 received proceeds 200000 accompanying financial statements prepared conformity accounting principles generally accepted united states america contemplate continuation company going concern company limited revenue cover operating costs incurred operating loss since inception december 31 2011 cash resources company insufficient meet current business plan factors raise substantial doubt company’s ability continue going concern accompanying financial statements include adjustments reflect possible future effects recoverability classification assets amounts classification liabilities may result possible inability company continue going concern 3 patent pending january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation february 20 2008 company filed pct us patent applications invention 4 loans related parties directors stockholders december 31 2011 loans related parties amounted 5034 represented working capital advances officers also stockholders company loans unsecured noninterest bearing due demand 5 convertible notes payable july 7 2010 company signed 30000 convertible promissory note third party note bears interest 8 per annum due april 8 2011 note conversion rights allow holder note convert 180 days part remaining principal balance company’s common stock price equal 55 average lowest three trading prices common stock recent ten day period june 30 2011 note converted shares september 20 2010 company signed 27000 convertible promissory note third party note bears interest 8 per annum due june 23 2011 note conversion rights allow holder note convert 180 days part remaining principal balance company’s common stock price equal 55 average lowest three trading prices common stock recent ten day period september 30 2011 note converted shares january 6 2011 company signed 35000 convertible promissory note third party note bears interest 8 per annum due october 10 2011 note conversion rights allow holder note convert 180 days part remaining principal balance company’s common stock price equal 55 average lowest three trading prices common stock recent ten day period september 30 2011 note reduced 14800 upon conversion shares april 11 2011 company signed 32500 convertible promissory note third party note bears interest 8 per annum due january 18 2012 note conversion rights allow holder note convert 180 days part remaining principal balance company’s common stock price equal 55 average lowest three trading prices common stock recent ten day period accordance asc 470 company analyzed beneficial nature conversion terms determined beneficial conversion feature bcf exists company calculated value bcf using intrinsic method stipulated asc 470 bcf recorded discount notes payable additional paidin capital december 31 2011 balance convertible notes payable 52700 net unamortized discounts 1738 year ended december 31 2011 company recognized 5940 interest expense related notes amortized 76162 beneficial conversion features recorded interest expense 6 common stock february 4 2008 company issued 56000000 post forward stock split shares common stock founders company directors officers proceeds 800 company commenced capital formation activity submit registration statement form s1 sec register sell selfdirected offering 14000000 post forward stock split shares newly issued common stock offering price 010 per share proceeds 200000 registration statement form s1 filed sec august 12 2008 declared effective september 8 2008 company issued 14000000 post forward stock split shares common stock pursuant registration statement form s1 received proceeds 200000 company incurred 40000 deferred offering costs related capital formation activity june 26 2009 company implemented 7 1 forward stock split issued outstanding shares common stock holders record june 24 2009 result split holder record date automatically received six additional shares company’s common stock split number shares common stock issued outstanding 70000000 shares accompanying financial statements related notes thereto adjusted accordingly reflect forward stock split may 26 2010 company issued 10000000 shares common stock director services valued 25000 based current market price stock minus discount restricted trading february 25 2011 company issued 12000000 shares common stock directors repayment loans 49000 based current market price stock minus discount restricted trading august 26 2011 company issued 180000000 shares common stock directors services valued 108000 based current market price stock minus discount restricted trading september 8 2011 company issued 30000000 shares common stock services valued 25500 based current market price stock minus discount restricted trading january 1 2011 december 31 2011 company issued 74159974 shares common stock valued 77237 retire convertible debt accrued interest 5437 october 7 2011 company filed certificate amendment certificate incorporation state delaware increase amount authorized common stock 1000000000 shares 7 income taxes provision benefit income taxes periods ended december 31 2011 2010 follows assuming 23 effective tax rate company deferred income tax assets december 31 2011 2010 follows company provided valuation allowance equal deferred income tax assets periods ended december 31 2011 december 31 2010 presently known whether future taxable income sufficient utilize loss carryforwards december 31 2011 company approximately 529000 tax loss carryforwards utilized future periods reduce taxable income expire year 2031 company identify material uncertain tax positions company recognize interest penalties unrecognized tax benefits company filed income tax returns united states tax years closed expiration statute limitations 8 related party transactions described note 3 december 31 2011 company owed 5034 directors officers principal stockholders company working capital loans february 4 2008 company issued 19040000 post forward stock split shares common stock directors company 272 described note 5 may 26 2010 company issued 10000000 shares common stock director services valued 25000 february 25 2011 company issued 12000000 shares common stock directors repayment loans 49000 based current market price stock minus discount restricted trading august 26 2011 company issued 180000000 shares common stock directors services valued 108000 based current market price stock minus discount restricted trading 9 commitments june 15 2008 company entered transfer agent registrar agreement nevada agency trust company natco agreement company agreed pay natco annual fee 1500 first year 1800 every year thereafter natco act company’s transfer agent registrar described note 3 january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation 10 concentration credit risk company’s cash equivalents invested major bank israel insured management believes financial institution holds company’s investments financially sound accordingly minimal credit risk exists respect investments item 9 item 8 changes disagreements accountants accounting financial disclosure none item 8at controls procedures supervision participation management including chief executive officer chief financial officer evaluated effectiveness disclosure controls procedures defined rules 13a15e 15d15e exchange act december 31 2009 based upon evaluation chief executive officer chief financial officer concluded disclosure controls procedures effective december 31 2009 change internal control financial reporting defined rules 13a15f 15d15f exchange act period ended december 31 2009 materially affected reasonably likely materially affect internal control financial reporting managements annual report internal control financial reporting management responsible establishing maintaining adequate internal control financial reporting internal control financial reporting defined rule 13a15f 15d15f exchange act process designed supervision company’s principal executive principal financial officers effected company’s board directors management personnel provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles includes policies procedures · pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company · provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company · provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements attestation report registered public accounting firm annual report include attestation report companys registered public accounting firm regarding internal control financial reporting managements report subject attestation companys registered public accounting firm pursuant temporary rules securities exchange commission permit company provide managements report annual report changes internal control financial reporting year ended december 31 2009 change internal control financial reporting materially affected reasonably likely materially affect internal control financial reporting item 8b information none part iii item 9 item 15 exhibits financial statement schedules exhibit description mobile star corp development stage company december 31 2008 report registered independent auditors board directors stockholders mobile star corp audited accompanying balance sheet mobile star corp delaware corporation development stage december 31 2008 related statements operations stockholders’ deficit cash flows year ended december 31 2008 inception september 25 2007 december 31 2008 financial statements responsibility company’s management responsibility express opinion financial statements based audit conducted audit accordance standards public company accounting oversight board united states america standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement company required engaged perform audit internal control financial reporting audit included consideration internal control financial reporting basis designing audit procedures appropriate circumstances purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audit provides reasonable basis opinion financial statements referred present fairly material respects financial position mobile star corp december 31 2008 results operations cash flows period ended december 31 2008 inception september 25 2007 december 31 2008 conformity accounting principles generally accepted united states america accompanying financial statements prepared assuming company continue going concern discussed note 2 financial statements company development stage established source revenue cover operating costs incurred operating loss since inception december 31 2008 cash resources company insufficient meet planned business objectives factors raise substantial doubt company’s ability continue going concern management’s plan regarding matters also described note 2 financial statements financial statements include adjustments might result outcome uncertainty respectfully submitted alan weinberg cpa weinberg associates llc baltimore maryland january 22 2009 mobile star corp development stage company balance sheet note 2 december 31 2008 accompanying notes financial statements integral part balance sheet mobile star corp development stage company statements operations note 2 year ended december 31 2008 cumulative inception september 25 2007 december 31 2008 accompanying notes financial statements integral part statements mobile star corp development stage company statement stockholders deficit note 2 period inception september 25 2007 december 31 2008 accompanying notes financial statements integral part statement mobile star corp development stage company statements cash flows note 2 year ended december 31 2008 cumulative inception september 25 2007 december 31 2008 accompanying notes financial statements integral part statements mobile star corp development stage company notes financial statements december 31 2008 1 summary significant accounting policies basis presentation organization mobile star corp “the mobile star” “company” delaware corporation development stage commenced operations company incorporated laws state delaware september 25 2007 began activity january 2008 business plan company develop commercial application self operated computerized karaoke recording booth company also intends obtain approval patent application manufacture market product andor seek third party entities interested licensing rights manufacture market device accompanying financial statements mobile star prepared accounts company accrual basis accounting company commenced capital formation activity submit registration statement form s1 securities exchange commissions “sec” register sell selfdirected offering 2000000 shares newly issued common stock offering price 010 proceeds 200000 registration statement form s1 filed sec august 12 2008 declared effective september 8 2008 cash equivalents purposes reporting within statement cash flows company considers cash hand cash accounts subject withdrawal restrictions penalties highly liquid debt instruments purchased maturity three months less cash equivalents revenue recognition company development stage yet realize revenues operations company commenced operations recognize revenues delivery goods completion services occurred provided persuasive evidence agreement acceptance approved customers fee fixed determinable based completion stated terms conditions collection related receivable probable loss per common share basic loss per share computed dividing net loss attributable common stockholders weighted average number shares common stock outstanding period fully diluted loss per share computed similar basic loss per share except denominator increased include number additional common shares would outstanding potential common shares issued additional common shares dilutive financial instruments issued outstanding period ended december 31 2008 income taxes company accounts income taxes pursuant sfas 109 accounting income taxes “sfas 109” sfas 109 deferred tax assets liabilities determined based temporary differences bases certain assets liabilities income tax financial reporting purposes deferred tax assets liabilities classified according financial statement classification assets liabilities generating differences company maintains valuation allowance respect deferred tax assets company establishes valuation allowance based upon potential likelihood realizing deferred tax asset taking consideration company’s financial position results operations current period future realization deferred tax benefit depends existence sufficient taxable income within carryforward period federal tax laws mobile star corp development stage company notes financial statements december 31 2008 changes circumstances company generating taxable income could cause change judgment realizability related deferred tax asset change valuation allowance included income year change estimate fair value financial instruments company estimates fair value financial instruments using available market information valuation methods considerable judgment required estimating fair value accordingly estimates fair value may indicative amounts company could realize current market exchange december 31 2008 carrying value accrued liabilities loans directors stockholders approximated fair value due shortterm nature maturity instruments patent intellectual property company capitalizes costs associated obtaining patent intellectual property associated intended business plan costs amortized estimated useful lives related assets deferred offering costs company defers assets direct incremental costs raising capital time offering completed time completion offering costs charged capital raised offering terminated deferred offering costs charged operations period offering terminated impairment longlived assets company evaluates recoverability longlived assets related estimated remaining lives events circumstances lead management believe carrying value asset may recoverable period ended december 31 2008 events circumstances occurred evaluation recoverability longlived assets required common stock registration expenses company considers incremental costs expenses related registration equity securities sec whether contractual arrangement certain date demand unrelated original issuance transactions subsequent registration costs expenses expensed incurred estimates financial statements prepared basis accounting principles generally accepted united states preparation financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect reported amounts assets liabilities december 31 2008 expenses period ended december 31 2008 cumulative inception actual results could differ estimates made management fiscal year end company adopted fiscal year end december 31 mobile star corp development stage company notes financial statements december 31 2008 recent accounting pronouncements june 2008 financial accounting standards board “fasb” issued fasb staff position eitf 0361 “determining whether instruments granted sharebased payment transactions participating securities” “fsp eitf 0361” according fsp eitf 0361 unvested sharebased payment awards contain nonforfeitable rights dividends dividend equivalents considered participating securities sfas 128 included computation basic earnings per share “eps” using twoclass method fsp eitf 0361 effective financial statements issued fiscal years beginning december 15 2008 well interim periods within years effective priorperiod eps data presented must adjusted retrospectively company expect fsp eitf 0361 material impact company’s financial position results operations march 2008 fasb issued statement 161 “disclosures derivative instruments hedging activities” amendment fasb statement 133 “sfas 161” sfas 161 applies derivative instruments nonderivative instruments designated qualify hedging instruments related hedged items accounted sfas 133 sfas 161 requires entities provide greater transparency additional disclosures entity uses derivative instruments b derivative instruments related hedged items accounted sfas 133 related interpretations c derivative instruments related hedged items affect entity’s financial position results operations cash flows sfas 161 effective financial statements issued fiscal years interim periods beginning november 15 2008 company expect sfas 161 material impact company’s financial position results operations december 2007 fasb issued statement 141 revised “business combinations” “sfas 141r” sfas 141r significantly changes accounting business combinations establishes principles requirements acquirer recognizes measures financial statements identifiable assets acquired liabilities assumed noncontrolling interest acquiree recognizes measures goodwill acquired business combination gain bargain purchase sfas 141r applies prospectively business combinations acquisition date beginning first annual reporting period beginning december 15 2008 december 2007 fasb issued statement 160 “noncontrolling interests consolidated financial statements” amendment arb 51 “sfas 160” sfas 160 changes accounting noncontrolling minority interests consolidated financial statements including requirements classify noncontrolling interests component consolidated shareholders’ equity elimination “minority interest” accounting results operations changes accounting increases decreases parent’s controlling ownership interest sfas 160 effective fiscal years beginning december 15 2008 early adoption prohibited company expect sfas 160 material impact company’s financial position results operations february 2007 fasb issued statement 159 “the fair value option financial assets financial liabilities” including amendment fasb statement 115 “sfas 159” allows entity irrevocable option elect fair value initial subsequent measurement certain financial assets liabilities instrumentbyinstrument election fair value option elected instrument subsequent changes fair value instrument recognized earnings sfas 159 also establishes additional disclosure requirements effective fiscal years beginning november 15 2007 early adoption permitted provided entity also adopts statement 157 “fair value measurements” “sfas 157” sfas 159 expected material impact results operations financial position september 2006 fasb issued sfas 157 defines fair value establishes framework measuring fair value generally accepted accounting principles expands disclosures fair value measurements sfas 157 applies accounting pronouncements require permit fair value measurements sfas 157 effective fiscal years beginning november 15 2007 interim periods within fiscal years february 2008 fasb issued fasb staff position sfas 1572 effective date fasb statement 157 provides oneyear deferral effective date sfas 157 nonfinancial assets nonfinancial liabilities except recognized disclosed financial statements fair value recurring basis least annually adoption sfas 157 financial assets financial liabilities expected material impact company’s results operations financial position mobile star corp development stage company notes financial statements december 31 2008 2 development stage activities going concern company currently development stage operations business plan company develop commercial application self operated computerized karaoke recording booth company also intends obtain approval patent application manufacture market product andor seek third party entities interested licensing rights manufacture market device january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation february 20 2008 company filed pct us patent applications invention company also commenced capital formation activity submit registration statement form s1 sec register sell selfdirected offering 2000000 shares newly issued common stock offering price 010 per share proceeds 200000 registration statement form s1 filed sec august 12 2008 declared effective september 8 2008 accompanying financial statements prepared conformity accounting principles generally accepted united states america contemplate continuation company going concern company established source revenue cover operating costs incurred operating loss since inception december 31 2008 cash resources company insufficient meet current business plan company negative working capital factors raise substantial doubt company’s ability continue going concern accompanying financial statements include adjustments reflect possible future effects recoverability classification assets amounts classification liabilities may result possible inability company continue going concern 3 patent pending january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation february 20 2008 company filed pct us patent applications invention 4 loans related parties directors stockholders december 31 2008 loans related parties directors stockholders amounted 14300 represented working capital advances officers also stockholders company loans unsecured noninterest bearing due demand mobile star corp development stage company notes financial statements december 31 2008 5 common stock february 4 2008 company issued 8000000 shares common stock founders company directors officers proceeds 800 company commenced capital formation activity submit registration statement form s1 sec register sell selfdirected offering 2000000 shares newly issued common stock offering price 010 per share proceeds 200000 registration statement form s1 filed sec august 12 2008 declared effective september 8 2008 company incurred 20000 deferred offering costs related capital formation activity 6 income taxes provision benefit income taxes period ended december 31 2008 follows assuming 23 effective tax rate company deferred income tax assets december 31 2008 follows company provided valuation allowance equal deferred income tax assets period ended december 31 2008 presently known whether future taxable income sufficient utilize loss carryforwards december 31 2008 company approximately 18019 tax loss carryforwards utilized future periods reduce taxable income expire year 2028 7 related party transactions described note 4 december 31 2008 company owed 14300 directors officers principal stockholders company working capital loans described note 5 february 4 2008 company issued 2720000 shares common stock directors company 272 mobile star corp development stage company notes financial statements december 31 2008 8 commitments described note 5 december 31 2008 company commenced capital formation activity submit registration statement form s1 sec connection capital formation activity company committed pay legal accounting fees amounting approximately 20000 june 15 2008 company entered transfer agent registrar agreement nevada agency trust company natco agreement company agreed pay natco annual fee amounting 1500 first year 1800 every year thereafter natco act company’s transfer agent registrar described note 3 january 2008 company entered assignment agreement whereby company acquired rights title interest invention known “self operated computerized karaoke recording booth” consideration royalties ranging 1 5 based net income company 30 years date companys incorporation signatures accordance section 13 15d exchange act registrant caused report signed behalf undersigned thereunto duly authorized accordance exchange act report signed following persons behalf registrant capacities dates indicated