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 quarterly period ended September
30, 2012
[_]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
OF 1934
For the transition period from ______
to _______
Commission file number: 333-152952
MOBILE STAR CORP.
(Exact name of registrant as specified
in its charter)
Delaware
|
98-0565411
|
(state or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer I.D. No.)
|
c/o George Ivakhnik 433 N. Camden Dr., Fourth Floor Beverly Hills, CA 90210
|
(Address of principal executive offices)
|
310-279-5282
(Issuer's telephone number)
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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.
[X]
Yes
[_]
No
Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
[_]
Yes
[_]
No (Not required)
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
the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company"
in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer [_]
|
Accelerated Filer [_]
|
Non-Accelerated Filer [_]
|
Smaller Reporting Company [X]
|
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 September 30, 2012, there were
22,161,278
shares of the registrant’s $0.0001 par value common stock issued and outstanding.
MOBILE STARE CORP.
TABLE OF CONTENTS
|
|
|
|
PAGE
|
PART I
|
|
FINANCIAL INFORMATION
|
|
|
ITEM 1.
|
|
FINANCIAL STATEMENTS
|
|
3
|
ITEM 2.
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
14
|
ITEM 3.
|
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
|
|
16
|
ITEM 4.
|
|
CONTROLS AND PROCEDURES
|
|
16
|
PART II
|
|
OTHER INFORMATION
|
|
|
|
|
|
|
|
ITEM 1
|
|
LEGAL PROCEEDINGS
|
|
16
|
ITEM 1A.
|
|
RISK FACTORS
|
|
17
|
ITEM 2.
|
|
UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS
|
|
17
|
ITEM 3.
|
|
DEFAULTS UPON SENIOR SECURITIES
|
|
17
|
ITEM 4.
|
|
[REMOVED AND RESERVED]
|
|
17
|
ITEM 5.
|
|
OTHER INFORMATION
|
|
17
|
ITEM 6.
|
|
EXHIBITS
|
|
18
|
Special Note Regarding
Forward-Looking Statements
Information
included in this Form 10-Q contains forward-looking statements that may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of
Mobile Star Corp.
(the “Company”), to be materially different from future results, performance or achievements expressed or implied by
any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,”
“expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project”
or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are
based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking
statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking
statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly
any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
*
Please note that throughout this Quarterly Report, and
unless otherwise noted, the words "we," "our," "us," the "Company," or "MBST"
refers to Mobile Star Corp.
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
Financial Statements
|
|
|
|
Balance Sheets as of September 30, 2012 and December 31, 2011
|
F-2
|
|
|
Statements of Operations for the Three Months and Nine Months Ended
|
|
September 30, 2012, and 2011 and Cumulative from Inception
|
F-3
|
|
|
Statements of Cash Flows for the Nine Months Ended September 30, 2012 and
|
|
2011 And Cumulative from Inception
|
F-4
|
|
|
Statement of Changes in Stockholders’ Equity for the Period from Inception
|
|
Through September 30, 2012
|
F-5
|
|
|
Notes to Financial Statements
|
F-6
|
MOBILE STAR CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF SEPTEMBER 30, 2012 AND DECEMBER
31, 2011
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
|
|
|
September
30,
|
|
December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
2082
|
|
$
285
|
|
Prepaid expenses
|
|
|
|
|
42,500
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
44,582
|
|
285
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
Deposits on investments
|
|
|
|
|
23,000
|
|
-
|
|
Patent pending
|
|
|
|
|
7,300
|
|
7,300
|
|
Assignment of invention rights
|
|
|
|
5,000
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
|
|
35,300
|
|
12,300
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
$
79,882
|
|
$
12,585
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$ 37,210
|
|
$ 33,058
|
|
Loans from related parties - Directors and stockholders
|
25,134
|
|
5,034
|
|
Convertible notes payable, net of discount
|
|
|
293,200
|
|
50,962
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
355,544
|
|
89,054
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
355,544
|
|
89,054
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit):
|
|
|
|
|
|
|
|
Series B preferred convertible stock, par value $.001
per share,
|
|
|
|
|
10,000 shares authorized; 145
and 0 shares
|
|
|
|
|
|
|
issued and outstanding, respectively
|
|
|
|
-
|
|
-
|
|
Additional paid-in capital -
Preferred stock subscribed
|
76,410
|
|
-
|
|
Common stock, par value $.0001 per share, 1,000,000,000
shares
|
|
|
|
|
authorized; 22,161,278 and
752,320 shares
|
|
|
|
|
|
issued and outstanding, respectively
|
|
|
2,216
|
|
75
|
*
|
Additional paid-in capital
|
|
|
|
1,059,634
|
|
552,325
|
*
|
Stock subscriptions receivable
|
|
|
|
(40,000)
|
|
-
|
|
(Deficit) accumulated during the development stage
|
(1,373,922)
|
|
(628,869)
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(275,662)
|
|
(76,469)
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders'
Equity (Deficit)
|
$
79,882
|
|
$
12,585
|
|
|
|
|
|
|
|
|
|
|
|
*Restated to reflect reverse
stock split
|
|
|
|
|
|
The
accompanying notes to financial statements are an integral part of these statements.
F-2
THE
MOBILE STAR CORP.
(A DEVELOPMENT
STAGE COMPANY)
STATEMENTS
OF OPERATIONS
FOR
THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
THROUGH
SEPTEMBER 30, 2012
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Nine
Mont
hs Ended
|
|
Cumulative
|
|
|
|
September 30,
|
|
Septe
mber
30,
|
|
From
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Inception
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
-
|
|
-
|
$
|
-
|
$
|
6,381
|
$
|
6,381
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
-
|
|
-
|
|
-
|
|
39,313
|
|
137,092
|
Professional fees
|
|
33,200
|
|
10,807
|
|
82,300
|
|
34,992
|
|
254,998
|
Consulting fees
|
|
71,554
|
|
-
|
|
477,804
|
|
6,383
|
|
534,617
|
Management fees
|
|
-
|
|
15,375
|
|
-
|
|
15,375
|
|
133,500
|
Investor relations
|
|
-
|
|
-
|
|
-
|
|
3,500
|
|
9,911
|
Legal - incorporation
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,350
|
Director fees
|
|
-
|
|
-
|
|
170,000
|
|
-
|
|
170,000
|
Travel
|
|
|
2,300
|
|
-
|
|
2,300
|
|
11,787
|
|
27,050
|
Other
|
|
|
758
|
|
2
|
|
759
|
|
736
|
|
3,576
|
|
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative expenses
|
|
107,812
|
|
26,184
|
|
733,163
|
|
112,086
|
|
1,273,094
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from Operations
|
|
(107,812)
|
|
(26,184)
|
|
(733,163)
|
|
(105,705)
|
|
(1,266,713)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction gains
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,161
|
Foreign currency transaction losses
|
|
-
|
|
(151)
|
|
-
|
|
(249)
|
|
(3,646)
|
Interest expense
|
|
(6,032)
|
|
(19,768)
|
|
(11,890)
|
|
(71,077)
|
|
(119,723)
|
Other income (expense)
|
|
-
|
|
-
|
|
-
|
|
11,000
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
|
$
|
(113,844)
|
$
|
(46,103)
|
$
|
(745,053)
|
$
|
(166,031)
|
$
|
(1,373,921)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Per Common Share:
|
|
|
|
|
|
|
|
|
|
|
(Loss) per common share - Basic and Diluted
|
$
|
(0.01)
|
$
|
(0.11)
|
$
|
(0.07)
|
$
|
(0.60)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Common Shares
|
|
|
|
|
|
|
|
|
|
|
Outstanding - Basic and Diluted
|
|
22,161,278
|
|
428,840
|
|
10,220,880
|
|
275,244
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Restated to reflect reverse stock split
|
|
|
|
|
|
|
|
|
The
accompanying notes to financial statements are an integral part of these statements.
F-3
MOBILE
STAR CORP.
(A DEVELOPMENT
STAGE COMPANY)
CONDENSED
STATEMENT OF CASH FLOWS
FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011,
AND CUMULATIVE
FROM INCEPTION (SEPTEMBER 25, 2007)
THROUGH
SEPTEMBER 30, 2012
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
Cumulative
|
|
|
September 30,
|
|
From
|
|
|
2012
|
|
2011
|
|
Inception
|
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(745,053
|
)
|
|
$
|
(166,031
|
)
|
|
$
|
(1,373,921
|
)
|
Adjustments to reconcile net (loss) to net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
|
241,250
|
|
|
|
133,500
|
|
|
|
399,750
|
|
Amortization of beneficial conversion feature
|
|
|
1,738
|
|
|
|
66,232
|
|
|
|
101,863
|
|
Changes in net assets and liabilities-
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(42,500
|
)
|
|
|
(118,125
|
)
|
|
|
(42,500
|
)
|
Accounts payable and accrued liabilities
|
|
|
4,152
|
|
|
|
(1,348
|
)
|
|
|
42,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities
|
|
|
(540,413
|
)
|
|
|
(85,772
|
)
|
|
|
(872,162
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits on investments
|
|
|
(23,000)
|
|
|
|
---
|
|
|
|
(23,000
|
)
|
Purchase of patent pending
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
(23,000)
|
|
|
|
—
|
|
|
|
(30,300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from common stock issued
|
|
|
210,000
|
|
|
|
—
|
|
|
|
370,800
|
|
Proceeds from preferred stock
|
|
|
85,110
|
|
|
|
---
|
|
|
|
85,110
|
|
Proceeds from convertible note payable
|
|
|
250,000
|
|
|
|
67,500
|
|
|
|
374,500
|
|
Payments of shareholder loans
|
|
|
|
|
|
|
—
|
|
|
|
(14,300
|
)
|
Proceeds from shareholder loans
|
|
|
20,100
|
|
|
|
17
|
|
|
|
88,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
565,210
|
|
|
|
67,517
|
|
|
|
904,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash
|
|
|
1,797
|
|
|
|
(18,255
|
)
|
|
|
2,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - Beginning of Period
|
|
|
285
|
|
|
|
18,513
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - End of Period
|
|
$
|
2082
|
|
|
$
|
258
|
|
|
$
|
2082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Assignment of invention rights acquired through additional paid-in capital
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,000
|
|
Stock issued to settle shareholder loans
|
|
$
|
—
|
|
|
$
|
49,000
|
|
|
$
|
49,000
|
|
Stock issued to settle convertible debts and interest
|
|
$
|
9,500
|
|
|
$
|
69,437
|
|
|
$
|
86,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes to financial statements are an integral part of these statements.
F-4
MOBILE
STAR CORP.
(A DEVELOPMENT
STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE
PERIOD FROM INCEPTION (SEPTEMBER 25, 2007)
THROUGH
SEPTEMBER 30, 2012
(Unaudited)
|
|
|
|
|
|
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Series B
|
Additional
|
Stock
|
During the
|
|
|
|
|
Common stock
|
Preferred stock
|
Paid-in
|
Subscriptions
|
Development
|
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Receivable
|
Stage
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - January 1, 2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Common stock issued for cash
|
112,000
|
11
|
-
|
-
|
789
|
-
|
-
|
800
|
Assignment of invention rights
|
-
|
-
|
-
|
-
|
5,000
|
-
|
-
|
5,000
|
Net (loss) for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
(18,019)
|
(18,019)
|
Balance - December 31, 2008
|
112,000
|
11
|
-
|
-
|
5,789
|
-
|
(18,019)
|
(12,219)
|
Common stock issued for cash
|
28,000
|
3
|
-
|
-
|
159,997
|
-
|
-
|
160,000
|
Net (loss) for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(154,818)
|
(154,818)
|
Balance - December 31, 2009
|
140,000
|
14
|
-
|
-
|
165,786
|
-
|
(172,837)
|
(7,037)
|
Common stock issued as compensation
|
20,000
|
2
|
-
|
-
|
24,998
|
-
|
-
|
25,000
|
Convertible note discount
|
-
|
-
|
-
|
-
|
24,545
|
-
|
|
24,545
|
Convertible note discount
|
-
|
-
|
-
|
-
|
22,091
|
-
|
|
22,091
|
Net (loss) for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(150,787)
|
(150,787)
|
Balance - December 31, 2010
|
160,000
|
16
|
-
|
-
|
237,420
|
-
|
(323,624)
|
(86,188)
|
Common stock issued to extinguish debt
|
24,000
|
2
|
-
|
-
|
48,998
|
-
|
-
|
49,000
|
Common stock issued upon conversion of convertible debt
|
148,320
|
15
|
-
|
-
|
77,222
|
-
|
-
|
77,237
|
Convertible note discount
|
-
|
-
|
-
|
-
|
55,227
|
-
|
-
|
55,227
|
Common stock issued as compensation
|
60,000
|
6
|
-
|
-
|
25,494
|
-
|
-
|
25,500
|
Common stock issued as compensation
|
360,000
|
36
|
-
|
-
|
107,964
|
-
|
-
|
108,000
|
Net (loss) for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(305,245)
|
(305,245)
|
Balance - December 31, 2011
|
752,320
|
$ 75
|
-
|
-
|
$ 552,325
|
$ -
|
$(628,869)
|
$(76,469)
|
Common stock issued as compensation
|
500,000
|
50
|
-
|
-
|
177,450
|
-
|
-
|
177,500
|
Common stock issued upon conversion of convertible debt
|
66,555
|
7
|
-
|
-
|
8,593
|
-
|
-
|
8,600
|
Common stock issued upon conversion of convertible debt
|
61,228
|
6
|
-
|
-
|
894
|
-
|
-
|
900
|
Common stock issued as compensation
|
1,875,000
|
188
|
-
|
-
|
27,938
|
-
|
-
|
28,126
|
Common stock issued as compensation
|
1,875,000
|
188
|
-
|
-
|
27,937
|
-
|
-
|
28,125
|
Common stock issued for cash
|
16,531,175
|
1,653
|
-
|
-
|
248,347
|
(40,000)
|
-
|
210,000
|
Common stock issued as compensation
|
500,000
|
50
|
-
|
-
|
7,450
|
-
|
-
|
7,500
|
Preferred convertible stock issued for cash
|
-
|
-
|
145
|
-
|
8,700
|
-
|
-
|
8,700
|
Additional Paid-in Capital Preferred Stock Subscribed
|
-
|
-
|
-
|
76,410
|
-
|
-
|
-
|
76,410
|
Net (loss) for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(631,208)
|
(745,053)
|
Balance - September 30, 2012
|
22,161,278
|
2,216
|
-
|
76,410
|
1,059,634
|
(40,000)
|
(1,260,077)
|
(275,662)
|
The
accompanying notes to financial statements are an integral part of these statements.
F-5
MOBILE
STAR CORP.
(A DEVELOPMENT
STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2012
Note
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 by the accounts of the Company under the accrual basis of accounting.
Unaudited
Interim Financial Statements
The interim financial
statements of the Company as of September 30, 2012, and for the periods then ended, and cumulative from inception, are unaudited.
However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the Company’s financial position as of September 30, 2012, and the results of its
operations and its cash flows for the periods ended September 30, 2012, and cumulative from inception. These results are not necessarily
indicative of the results expected for the calendar year ending December 31, 2012,. 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, 2011, 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. 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 receivables
is probable.
Loss
per Common Share
Basic loss
per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares
of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except
that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive. Common stock equivalents were not included in
the computation of diluted earnings per share in the statement of operations due to the fact that the Company reported a net loss
and to do so would be anti-dilutive for the periods presented.
Income
Taxes
Deferred
tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for
income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial
statement classification of the assets and liabilities generating the differences.
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 carry forward period under the federal tax laws.
Changes
in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the
related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Fair
Value of Financial Instruments
The Company
estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment
is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company
could realize in a current market exchange. As of September 30, 2012, the carrying value of accounts payable, accrued liabilities,
and loans from directors and stockholders approximated fair value due to the short-term nature and maturity of these instruments.
Patent
and Intellectual Property
The Company
capitalizes the costs associated with obtaining a Patent or other intellectual property associated with its intended business
plan. Such costs are amortized over the estimated useful lives of the related assets.
Deferred
Offering Costs
The Company
defers the direct incremental costs of raising capital as other assets until such time as the offering is completed. At the time
of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred
offering costs are charged to operations during the period in which the offering is terminated.
Impairment
of Long-Lived Assets
The Company
evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead
management to believe that the carrying value of an asset may not be recoverable. For the period ended September 30, 2012, 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, liabilities and expenses. Actual results could differ from those estimates made by management.
Recent
Accounting Pronouncements
In May 2011,
the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRSs")." Under ASU 2011-04,
the guidance amends certain accounting and disclosure requirements related to fair value measurements to ensure that fair value
has the same meaning in U.S. GAAP and in IFRS and that their respective fair value measurement and disclosure requirements are
the same. ASU 2011-04 is effective for public entities during interim and annual periods beginning after December 15, 2011. Early
adoption is not permitted. The Company does not believe that the adoption of ASU 2011-04 will have a material impact on the Company's
results of operation and financial condition.
In June
2011, the FASB issued ASU No. 2011-05, "Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income,"
("ASU 2011-05") which amends current comprehensive income guidance. This accounting update eliminates the option to
present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, comprehensive
income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income
and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 will be effective for public companies
during the interim and annual periods beginning after Dec. 15, 2011 with early adoption permitted. The Company does not believe
that the adoption of ASU 2011-05 will have a material impact on the Company's results of operation and financial condition.
There were
various other updates recently issued, most of which represented technical corrections to the accounting literature or application
to specific industries. None of the updates are expected to a have a material impact on the Company's financial position,
results of operations or cash flows.
Note
2-
Development Stage Activities and Going Concern
The Company
is currently in the development stage, and has limited operations. The business plan of the Company is to develop a commercial
application of a self-operated computerized karaoke recording booth. The Company also intends to obtain approval of its patent
application, and manufacture and market the product and/or seek third party entities interested in licensing the rights to manufacture
and market the device.
In January
2008, the Company entered into a Assignment Agreement whereby the Company acquired all of the rights, title and interest in the
invention known as the “Self operated computerized karaoke recording booth” for consideration of royalties ranging
from 1% to 5% based on the net income of the Company for 30 years from the date of the Company's incorporation. On February 20,
2008, the Company filed PCT and U.S. patent applications for the invention.
The Company 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 28,000 (post reverse stock split) shares of newly issued common stock for proceeds
of up to $200,000. The Registration Statement on Form S-1 was filed with the SEC on August 12, 2008 and declared effective on
September 8, 2008. The Company has issued 28,000 (post reverse stock split) shares of common stock pursuant to the Registration
Statement on Form S-1, and received proceeds of $200,000.
The accompanying
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern. The Company has limited revenue to cover its operating costs,
and as such, has incurred an operating loss since inception. Further, as of September 30, 2012, the cash resources of the Company
were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result
from the possible inability of the Company to continue as a going concern.
Note
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.
Note
4-
Loans from Related Parties - Directors and Stockholders
As
of September 30, 2012, loans from related parties amounted to $25,134, 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.
On
May 23, 2012, the Company signed a $200,000 convertible promissory note with a related party. The note bears interest at
8% per annum and is due on May 23, 2013. The note has conversion rights that allow the holder of the note to convert after
180 days all or any part of the remaining principal balance into the Company’s common stock at the current trading price.
Note
5-
Convertible Notes Payable
On January
6, 2011, the Company signed a $35,000 convertible promissory note with a third party. The note bears interest at 8% per
annum and was due on October 10, 2011. The note has conversion rights that allow the holder of the note to convert after
180 days all or any part of the remaining principal balance into the Company’s common stock at a price equal to 55% of the
average of the lowest three trading prices for the Common Stock during the most recent ten day period. As of September 30, 2012
this note was reduced by $24,300 upon conversion to shares.
On April
11, 2011, the Company signed a $32,500 convertible promissory note with a third party. The note bears interest at 8% per
annum and was due on January 18, 2012. The note has conversion rights that allow the holder of the note to convert after
180 days all or any part of the remaining principal balance into the Company’s common stock at a price equal to 55% of the
average of the lowest three trading prices for the Common Stock during the most recent ten day period.
On May 23,
2012, the Company signed a $50,000 convertible promissory note with a third party. The note bears interest at 8% per annum
and was due on May 23, 2013. The note has conversion rights that allow the holder of the note to convert after 180 days
all or any part of the remaining principal balance into the Company’s common stock at the current trading price.
On May 23,
2012, the Company signed a $200,000 convertible promissory note with a related party. The note bears interest at 8% per
annum and was due on May 23, 2013. The note has conversion rights that allow the holder of the note to convert after 180
days all or any part of the remaining principal balance into the Company’s common stock at the current trading price.
In accordance
with ASC 470, the Company has analyzed the beneficial nature of the conversion terms and determined that a beneficial conversion
feature (BCF) exists. The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The
BCF has been recorded as a discount to the notes payable and to Additional Paid-in Capital.
As of September
30, 2012, the balance of convertible notes payable is $293,200.
For the
nine months ended September 30, 2012, the Company recognized $10,152 in interest expense related to the notes and has amortized
$1,738 of the beneficial conversion features which has been recorded as interest expense.
Note
6-
Preferred and
Common Stock
On February 4, 2008, the Company
issued 112,000 (post reverse stock split) shares of its common stock to founders of the Company, some of whom were 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
28,000 (post reverse stock split) shares of newly issued common stock for proceeds of up to $200,000. The Registration Statement
on Form S-1 was filed with the SEC on August 12, 2008 and declared effective on September 8, 2008. The Company has issued 28,000
(post reverse stock split) shares of common stock pursuant to the Registration Statement on Form S-1, and received proceeds of
$200,000. The Company incurred $40,000 of deferred offering costs related to this capital formation activity.
On June 26, 2009, the Company
implemented a 7 for 1 forward stock split on its issued and outstanding shares of common stock to the holders of record as
of June 24, 2009. As a result of the split, each holder of record on the record date automatically received six additional shares
of the Company’s common stock. After the split, the number of shares of common stock issued and outstanding were 70,000,000
shares. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward
stock split.
On May 26, 2010, the Company
issued 20,000 (post reverse stock split) shares of its common stock to a Director for services valued at $25,000 based on the
current market price of the stock minus a discount for the restricted trading.
On February 25, 2011, the Company
issued 24,000 (post reverse stock split) shares of its common stock to Directors for repayment of loans of $49,000 based on the
current market price of the stock minus a discount for the restricted trading.
On August 26, 2011, the Company
issued 360,000 (post reverse stock split) shares of its common stock to Directors for services valued at $108,000 based on the
current market price of the stock minus a discount for the restricted trading.
On September 8, 2011, the Company
issued 60,000 (post reverse stock split) shares of its common stock for services valued at $25,500 based on the current market
price of the stock minus a discount for the restricted trading.
From January 1, 2011 to December
31, 2011, the Company issued 148,320 (post reverse stock split) shares of its common stock valued at $77,237 to retire convertible
debt and accrued interest of $5,437.
On October 7, 2011, the Company
filed a certificate of amendment of certificate of incorporation with the state of Delaware to increase the amount of authorized
common stock to 1,000,000,000 shares.
On January 4, 2012, the Company
issued 100,000 (post reverse stock split) shares of its common stock to a consultant for services valued at $35,500.
On February 2, 2012, the Company
issued 400,000 (post reverse stock split) shares of its common stock to two directors for services valued at $142,000.
On March 2, 2012, the Company
implemented a 1 for 500 reverse stock split on its issued and outstanding shares of common stock to the holders of record.
After the reverse split, the number of shares of common stock issued and outstanding were 1,318,868 shares. The accompanying financial
statements and related notes thereto have been adjusted accordingly to reflect this reverse stock split.
On June
5, 2012, the Company issued 1,875,000 shares of its common stock to a consultant for services valued at $28,125.
On June
5, 2012, the Company issued 1,875,000 shares of its common stock to a consultant for services valued at $28,125.
On June 5, 2012, the Company
issued 16,531,175 to an investor for $250,000.
On June 21, 2012, the Company
issued 500,000 shares of its common stock to a consultant for services valued at $7,500.
From January
1, 2012 to June 30, 2012, the Company issued 127,783 shares of its common stock valued at $9,500 to retire convertible debt and
accrued interest.
During the three months ended
September 30, 2012, the Company issued 145 shares of its Series B preferred convertible stock for proceeds of $8,700 and received
paid subscriptions of $76,410 for additional preferred shares.
Note
7-
Income Taxes
The provision
(benefit) for income taxes for the period ended September 30, 2012 and 2011 was as follows (assuming a 23% effective tax rate):
|
|
2012
|
|
2011
|
|
|
|
|
|
Current Tax Provision:
|
|
|
|
|
Federal-
|
|
|
|
|
Taxable
income
|
|
$-
|
|
$-
|
|
|
|
|
|
Total
current tax provision
|
|
$-
|
|
$-
|
|
|
|
|
|
|
|
|
|
Deferred Tax Provision:
|
|
|
|
|
|
|
|
|
Federal-
|
|
|
|
|
|
|
|
|
Loss carryforwards
|
|
$
|
171,362
|
|
|
$
|
38,187
|
|
Nondeductible interest expense
|
|
|
(400
|
)
|
|
|
(15,233
|
)
|
Change in valuation
allowance
|
|
|
(170,962
|
)
|
|
|
(22,954
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax
provision
|
|
$
|
—
|
|
|
$
|
—
|
|
The Company
had deferred income tax assets as of September 30, 2012 and December 31, 2011 as follows:
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Loss carryforwards
|
|
$
|
292,574
|
|
|
$
|
121,611
|
|
Less - Valuation allowance
|
|
|
(292,574
|
)
|
|
|
(121,611
|
)
|
|
|
|
|
|
|
|
|
|
Total net deferred
tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
The Company
provided a valuation allowance equal to the deferred income tax assets for the periods ended September 30, 2012 and December 31,
2011, because it is not presently known whether future taxable income will be sufficient to utilize the loss carry-forwards.
As of September
30, 2012, the Company had approximately $1,272,000 in tax loss carryforwards that can be utilized in future periods to reduce
taxable income, and expire in the year 2032.
The Company
did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized
tax benefits.
The Company
has filed income tax returns in the United States. All tax years are closed by expiration of the statute of limitations.
Note
8-
Related Party Transactions
On February 4, 2008, the Company
issued 38,080 (post reverse stock split) shares of common stock to directors of the Company, for $272.
As described in Note 6, on
May 26, 2010, the Company issued 20,000 (post reverse stock split) shares of its common stock to a Director for services valued
at $25,000.
On February 25, 2011, the Company
issued 24,000 (post reverse stock split) shares of its common stock to Directors for repayment of loans of $49,000 based on the
current market price of the stock minus a discount for the restricted trading.
On August 26, 2011, the Company
issued 360,000 (post reverse stock split) shares of its common stock to Directors for services valued at $108,000 based on the
current market price of the stock minus a discount for the restricted trading.
On February 2, 2012, the Company
issued 400,000 (post reverse stock split) shares of its common stock to two directors for services valued at $142,000.
During the nine months ended
September 30, 2012 the Company paid fees to related parties amounting to $647,804.
Note
9- Commitments
On June
15, 2008, the Company entered into a Transfer Agent and Registrar Agreement with Nevada Agency and Trust Company ("NATCO").
Under the Agreement, the Company agreed to pay to NATCO an annual fee of $1,500 for the first year and $1,800 for every year thereafter.
NATCO will act as the Company’s transfer agent and registrar.
As described
in Note 2, 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.
Note
10-
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.
ITEM
2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Certain statements
contained in this Quarterly Report, including statements regarding the anticipated development and expansion of our business,
our intent, belief or current expectations, primarily with respect to the future operating performance of Mobile Star Corp and
the services we expect to offer and other statements contained herein regarding matters that are not historical facts, are “forward-looking”
statements. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements
made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements, because
such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such
forward-looking statements.
All forward-looking
statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events
that occur or circumstances that exist after the date on which they are made.
This Management’s
Discussion and Analysis or Plan of Operations (“MD&A”) section of this Report discusses our results of operations,
liquidity and financial condition, and certain factors that may affect our future results. You should read this MD&A in conjunction
with our audited financial statements and accompanying notes included in this Report. This plan of operation contains forward-looking
statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including, but not limited to, those presented under “Risk
Factors” or elsewhere in this Report.
Plan of
Operation
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 433 N Camden Dr Fourth Floor , Beverly Hills, CA 90210.
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.
We have engaged
a US manufacturer to develop a fully operational prototype of the Technology. The product has been developed and is running as
a test pilot in an amusement center in New York. We estimate it would take an additional three to six months to bring this product
to the market on a full scale basis. The product is to run parallel as a test pilot during the Company’s further efforts
to bring the product to the market on a full scale basis.
Liquidity
and Capital Resources
As of September
30, 2012, we had cash on hand of $2,082. Our cumulative net loss since inception is $1,373,921 which is comprised entirely of
general and administrative and research and development expenses.
On January 6,
2011, the Company signed a $35,000 convertible promissory note with a third party. The note bears interest at 8% per annum and
was due on October 10, 2011. The note has conversion rights that allow the holder of the note to convert after 180 days all or
any part of the remaining principal balance into the Company’s common stock at a price equal to 55% of the average of the
lowest three trading prices for the Common Stock during the most recent ten day period. As of September 30, 2011 this note was
reduced by $14,800 upon conversion of shares.
On April 11,
2011, the Company signed a $32,500 convertible promissory note with a third party. The note bears interest at 8% per annum and
was due on January 18, 2012. The note has conversion rights that allow the holder of the note to convert after 180 days all or
any part of the remaining principal balance into the Company’s common stock at a price equal to 55% of the average of the
lowest three trading prices for the Common Stock during the most recent ten day period.
The Company does
not believe that its cash resources will be sufficient to fund its expenses over the next 12 months. There can be no assurance
that additional capital will be available to the Company. The Company currently has no agreements, arrangements, or understandings
with any person to obtain funds through bank loans, lines of credit, or any other sources. Since the Company has no such arrangements
or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability
to remain a viable company.
Results
of Operations
For
the Three Month Period Ended September 30, 2012 versus September 30, 2011
Revenues
The
Company had revenues for the three month period ended September 30, 2012 of $0 and general and administrative costs of
$107,812
as compared to the three month period ended September 30, 2011, of revenues of $0 and general and administrative costs
of
$26,184
.
Operating
Expenses and Net Loss
.
The
Company’s net loss of $113,844 for the three month period ended September 30, 2012, was comprised of general and administrative
expenses of $107,812, consisting of Professional fees to a related party in the amount of $33,200, consulting fees in the amount
of
$71,554
, Travel Expenses in the amount of $2300, and $758 in other
expenses. The Company also had $6,032 in net interest expense. In comparison to the three month period ended September 30, 2011,
the Company’s net loss of $46,103 for the three month period ended September 30, 2011, was comprised of general and administrative
expenses of $26,184, consisting of Research and Development fees in the amount of $0, Professional fees to a related party in
the amount of $10,807, management fees of $15,375 and other Fees of
$2.00
.
The Company also had $151 in Foreign Currency transaction losses, $19,768 in interest expenses.
For
the Nine Month Period Ended September 30, 2012 versus September 30, 2011
Revenues
The
Company had revenues for the nine month period ended September 30, 2012, of $0 and general and administrative costs of
$733,163,
as compared to the nine month period ended September 30, 2011, of revenues of $6,381 and general and administrative costs
of
$112,086
.
Operating
Expenses and Net Loss
.
The
Company’s net loss of $
745,053
for the nine month period ended
September 30, 2012, was comprised of general and administrative expenses of $
733,163
,
consisting of Professional fees to a related party in the amount of $82,300, consulting fees in the amount of
$477,804,
Director Fees of
$170,000, travel expenses in the amount of $2,300
and $759 in other expenses
. The Company also had $11,890 in net interest expenses. In comparison to the nine month period
ended September 30, 2011, the Company’s net loss of $166,031 for the nine month period ended September 30, 2011, was comprised
of general and administrative expenses of $112,086, Research and Development fees in the amount of $39,313, Professional fees
to a related party in the amount of $34,992, consulting fees in the amount of $6,383, management fees in the amount of $15,375,
investor relations fees in the amount of $3,500, travel expenses in the amount of $11,787 and other fees in the amount of
$736
.
The Company also had $249 in Foreign Currency transaction losses, $71,077 in net interest expenses and other income in the amount
of $11,000.
Cumulative
From Inception
Revenues
The
Company had revenues since inception of $6,381 and general and administrative costs of
$1,273,094.
Operating
Expenses and Net Loss
.
The
Company’s net loss of $1,373,921 since inception was comprised of general and administrative expenses of $1,273,094, consisting
of research and development fees in the amount of $137,092, Professional fees to a related party in the amount of $254,998, consulting
fees in the amount of
$534,617, Management fees in the amount of $133,500,
Investor relations fees in the amount of $9,911, Legal incorporation fees in the amount of $2,350,
Director Fees in the
amount of
$170,000
, Travel fees in the amount of $27,050 and Other
fees in the amount of $3,576. The Company also had $5,161 in foreign currency transaction gains and $3,646 in Foreign currency
transaction losses, $119,723 in net interest expense and other income in the amount $11,000.
.
Liquidity
and Capital Resources
As of
September 30, 2012, the total liabilities were $355,544 compared to $89,054 for the period ended December 31, 2011, and the Company’s
assets were $79,882 compared to $12,585 for the period ended December 31, 2011.
Total assets were
comprised of $2,082 in cash as of September 30, 2012, as compared to $285 at December 31, 2011. Stockholders’ equity was
at a deficit of $275,662 as of September 30, 2012, compared to stockholders' equity deficit of $76,469 as of December 31, 2011.
Cash
Flows from Operating Activities
We have
not generated positive cash flows from operating activities. For the nine month period ended September 30, 2012, net cash flows
used in operating activities was $(540,413). Net cash flows used in operating activities was $(85,772) for the nine month period
ended September 30, 2011. Net cash flows used in operating activities was $(872,162) since inception.
Cash
Flows from Investing Activities
Since inception,
including the three and nine month period ended September 30, 2012, the Company used ($23,000) net cash in investing activities,
as compared to $(30,300) cumulative since inception.
Cash
Flows from Financing Activities
We have
financed our operations primarily from either advancements or the issuance of equity. For the nine month period ended September
30, 2012, net cash provided by financing activities was $565,210. For the nine month period ended September 30, 2011, net cash
provided by financing activities was $67,517. For the period from inception to September 30, 2012, net cash provided by financing
activities was $904,544.
Off-Balance
Sheet Arrangements
We have no significant
off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources
that are material to stockholders.
Contractual
Obligations
We are a smaller
reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information
under this item.
Future
Financings
We will continue
to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares
will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity
securities or arrange for debt or other financing to fund our operations and other activities.
ITEM
3. QUANTITATIVE AND QUALITATATIVE DISCLOSURES ABOUT MARKET RISK
We
are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide
the information under this item.
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Our
Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and
procedures" (as defined in the Securities Exchange Act of 1934, as amended (“Exchange Act”) Rules 13a-15(e) and
15d-15(e)) as of the end of the period covered by this quarterly report (the "Evaluation Date"), has concluded that
as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information
we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.
Based
on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were not effective as previously
disclosed on our Annual Report on Form 10-K
Changes
in Internal Control over Financial Reporting
There
have been no changes in our internal control over financial reporting identified in connection with the evaluation required by
paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our 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
We
are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide
the information under this item.
ITEM 2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During
the three months ended September 30, 2012, the Company issued 145 shares of its Series B preferred convertible stock for
proceeds of $8,700 and received paid subscriptions of $76,410 for additional preferred shares.
Subsequent to the
quarter, we did not issue any unregistered securities other than as previously disclosed.
ITEM 3. DEFAULTS UPON
SENIOR SECURITIES
NONE
ITEM 4. MINING SAFETY
DISCLOSURE
NOT
APPLICABLE
ITEM 5. OTHER INFORMATION
Quarterly
Events:
NONE
Subsequent
Events:
NONE
Item 6. Exhibits
3.1
|
|
Articles
of Incorporation (Filed as Exhibit 3.1 to Registration Statement on Form S1, filed with the Securities and Exchange Commission
on August 8, 2008)
|
3.2
|
|
Bylaws of the Company
(Filed as Exhibit 3.2 to Registration Statement on Form S1, filed with the Securities and Exchange Commission on August 8,
2008)
|
31.01
|
|
Certification of Principal
Executive Officer Pursuant to Rule 13a-14 (
Filed herewith)
|
31.02
|
|
Certification of Principal
Financial Officer Pursuant to Rule 13a-14
(Filed herewith)
|
32.01
|
|
CEO Certification Pursuant
to Section 906 of the Sarbanes-Oxley Act
(Filed herewith)
|
32.02
|
|
CFO Certification Pursuant
to Section 906 of the Sarbanes-Oxley Act
(Filed herewith)
|
101.INS*
|
|
XBRL Instance Document
(Filed herewith).
|
101.SCH*
|
|
XBRL Taxonomy Extension
Schema Document (Filed herewith).
|
101.CAL*
|
|
XBRL Taxonomy Extension
Calculation Linkbase Document (Filed herewith).
|
101.LAB*
|
|
XBRL Taxonomy Extension
Labels Linkbase Document (Filed herewith).
|
101.PRE*
|
|
XBRL Taxonomy Extension
Presentation Linkbase Document (Filed herewith).
|
101.DEF*
|
|
XBRL Taxonomy Extension
Definition Linkbase Document (Filed herewith).
|
*Pursuant
to Regulation S-T, this interactive
data file is deemed not filed or part of a registration statement
or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18
of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
SIGNATURES
In accordance with the requirements
of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Mobile
Star, Corp.
A Delaware
corporation
November 19, 2012
|
By:
|
/S/
George
Ivakhnik
|
|
|
George Ivakhnik
|
|
Its:
|
CEO, Treasurer&
|
|
|
Principal Accounting
and Financial Officer
Secretary and Director
|
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