THE MOBILE STAR CORP.
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
MARCH
31, 2010
Financial
Statements-
|
|
F-1
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|
|
|
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|
Balance
Sheets as of March 31, 2010
|
|
|
F-2
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|
|
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|
Statements of
Operations for the Three Months Ended
March
31, 2010 and 2009 and Cumulative from
Inception
|
|
|
F-3
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|
|
|
|
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|
Statement of Changes
in Stockholders’ Equity (Deficit) for the Period from Inception
Through
March 31, 2010
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|
|
F-4
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|
|
|
|
|
|
Statements of Cash
Flows for the Three Months Ended March 31, 2010 and 2009
and
Cumulative from Inception
|
|
|
F-5
|
|
|
|
|
|
|
Notes
to Financial Statements
|
|
|
F-6
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|
THE
MOBILE STAR CORP.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
AS
OF MARCH 31, 2010 AND DECEMBER 31, 2009
ASSETS
|
|
|
As
of
|
|
|
As
of
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
102
|
|
|
$
|
15,663
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
102
|
|
|
|
15,663
|
|
|
|
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
|
|
|
|
Patent
pending
|
|
|
7,300
|
|
|
|
7,300
|
|
Assignment
of invention rights
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
Total
other assets
|
|
|
12,300
|
|
|
|
12,300
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
12,402
|
|
|
$
|
27,963
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
(DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
22,000
|
|
|
$
|
32,000
|
|
Loans
from related parties - Directors and stockholders
|
|
|
31,670
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
53,670
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
53,670
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity (Deficit):
|
|
|
|
|
|
|
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|
Common
stock, par value $.0001 per share, 200,000,000 shares
|
|
|
|
|
|
authorized;
70,000,000 shares issued and outstanding
|
|
|
7,000
|
|
|
|
7,000
|
|
Additional
paid-in capital
|
|
|
158,800
|
|
|
|
158,800
|
|
(Deficit)
accumulated during the development stage
|
|
|
(207,068
|
)
|
|
|
(172,837
|
)
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity (deficit)
|
|
|
(41,268
|
)
|
|
|
(7,037
|
)
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity (Deficit)
|
|
$
|
12,402
|
|
|
$
|
27,963
|
|
The
accompanying notes to financial statements
are an
integral part of this balance sheet.
THE
MOBILE STAR CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009,
AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
THROUGH
MARCH 31, 2010
(Unaudited)
|
|
Three
Months Ended
|
|
|
Cumulative
|
|
|
|
March
31,
|
|
|
From
|
|
|
|
2010
|
|
|
2009
|
|
|
Inception
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
16,554
|
|
|
|
-
|
|
|
|
89,955
|
|
Professional
fees
|
|
|
5,670
|
|
|
|
15,527
|
|
|
|
73,302
|
|
Consulting
fees
|
|
|
3,000
|
|
|
|
1,500
|
|
|
|
25,148
|
|
Investor
relations
|
|
|
3,060
|
|
|
|
-
|
|
|
|
4,640
|
|
Legal
- incorporation
|
|
|
-
|
|
|
|
-
|
|
|
|
2,350
|
|
Other
|
|
|
6,241
|
|
|
|
268
|
|
|
|
13,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
general and administrative expenses
|
|
|
34,524
|
|
|
|
17,295
|
|
|
|
208,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
from Operations
|
|
|
(34,524
|
)
|
|
|
(17,295
|
)
|
|
|
(208,807
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
293
|
|
|
|
(3,422
|
)
|
|
|
1,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss)
|
|
$
|
(34,231
|
)
|
|
$
|
(20,717
|
)
|
|
$
|
(207,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
per common share - Basic and Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Common Shares
|
|
|
|
|
|
|
|
|
|
Outstanding
- Basic and Diluted
|
|
|
70,000,000
|
|
|
|
56,000,000
|
|
|
|
|
|
The
accompanying notes to financial statements are
an
integral part of these statements.
THE
MOBILE STAR CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR
THE PERIOD FROM INCEPTION (SEPTEMBER 25, 2007)
THROUGH
MARCH 31, 2010
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
the
|
|
|
|
|
|
|
Common
stock
|
|
|
Paid-in
|
|
|
Development
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- January 1, 2008
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash
|
|
|
56,000,000
|
|
|
|
5,600
|
|
|
|
(4,800
|
)
|
|
|
-
|
|
|
|
800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assignment
of invention rights
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,019
|
)
|
|
|
(18,019
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2008
|
|
|
56,000,000
|
|
|
|
5,600
|
|
|
|
200
|
|
|
|
(18,019
|
)
|
|
|
(12,219
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash
|
|
|
14,000,000
|
|
|
|
1,400
|
|
|
|
158,600
|
|
|
|
-
|
|
|
|
160,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(154,818
|
)
|
|
|
(154,818
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2009
|
|
|
70,000,000
|
|
|
$
|
7,000
|
|
|
$
|
158,800
|
|
|
$
|
(172,837
|
)
|
|
$
|
(7,037
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(34,231
|
)
|
|
|
(34,231
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- March 31, 2010
|
|
|
70,000,000
|
|
|
$
|
7,000
|
|
|
$
|
158,800
|
|
|
$
|
(207,068
|
)
|
|
$
|
(41,268
|
)
|
The
accompanying notes to financial statements are
an
integral part of this statement.
THE
MOBILE STAR CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009,
AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 25, 2007)
THROUGH
MARCH 31, 2010
(Unaudited)
|
|
Three
Months Ended
|
|
|
Cumulative
|
|
|
|
March
31,
|
|
|
From
|
|
|
|
2010
|
|
|
2009
|
|
|
Inception
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$
|
(34,231
|
)
|
|
$
|
(20,717
|
)
|
|
$
|
(207,068
|
)
|
Adjustments
to reconcile net (loss) to net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
(used
in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in net assets and liabilities-
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
(10,000
|
)
|
|
|
(11,595
|
)
|
|
|
22,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Operating Activities
|
|
|
(44,231
|
)
|
|
|
(32,312
|
)
|
|
|
(185,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of patent pending
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Investing Activities
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from common stock issued
|
|
|
-
|
|
|
|
80,000
|
|
|
|
160,800
|
|
Loans
from shareholders
|
|
|
28,670
|
|
|
|
(10,000
|
)
|
|
|
31,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
28,670
|
|
|
|
70,000
|
|
|
|
192,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Decrease) Increase in Cash
|
|
|
(15,561
|
)
|
|
|
37,688
|
|
|
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- Beginning of Period
|
|
|
15,663
|
|
|
|
376
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- End of Period
|
|
$
|
102
|
|
|
$
|
38,064
|
|
|
$
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
The
accompanying notes to financial statements are
an
integral part of these statements.
THE
MOBILE STAR CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
MARCH
31, 2010
(1)
Summary of Significant Accounting
Policies
Basis
of Presentation and Organization
The
Mobile Star Corp. (“The Mobile Star” or the “Compan
y”) is a Delaware corporation in the
development stage and has not commenced operations. The Company was incorporated
under the laws of the State of Delaware on September 25, 2007 and began activity
in January 2008. The business plan of the Company is to develop a commercial
application of a self operated computerized karaoke recording booth. The Company
also intends to obtain approval of its patent application, and manufacture and
market the product and/or seek third party entities interested in licensing the
rights to manufacture and market the device. The accompanying financial
statements of The Mobile Star were prepared from the accounts of the Company
under the accrual basis of accounting.
Unaudited
Interim Financial Statements
The
interim financial statements of the Company as of March 31, 2010, and for the
periods then ended, and cumulative from inception, are unaudited. However, in
the opinion of management, the interim financial statements include all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company’s financial position as of March 31, 2010, and the
results of its operations and its cash flows for the periods ended March 31,
2010, and cumulative from inception. These results are not necessarily
indicative of the results expected for the calendar year ending December 31,
2010. The accompanying financial statements and notes thereto do not reflect all
disclosures required under accounting principles generally accepted in the
United States. Refer to the Company’s audited financial statements as of
December 31, 2009, filed with the SEC, for additional information, including
significant accounting policies.
Cash and Cash
Equivalents
For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
Revenue
Recognition
The
Company is in the development stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
Loss
per Common Share
Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. There were no dilutive financial instruments issued or outstanding for
the period ended March 31, 2010.
Income
Taxes
Deferred
tax assets and liabilities are determined based on temporary differences between
the bases of certain assets and liabilities for income tax and financial
reporting purposes. The deferred tax assets and liabilities are classified
according to the financial statement classification of the assets and
liabilities generating the differences.
The
Company maintains a valuation allowance with respect to deferred tax assets. The
Company establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company’s
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the federal tax
laws.
Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax asset.
Any change in the valuation allowance will be included in income in the year of
the change in estimate.
Fair
Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange. As of March 31, 2010, the carrying value of accrued liabilities, and
loans from directors and stockholders approximated fair value due to the
short-term nature and maturity of these instruments.
Patent
and Intellectual Property
The
Company capitalizes the costs associated with obtaining a Patent or other
intellectual property associated with its intended business plan. Such costs are
amortized over the estimated useful lives of the related assets.
Deferred
Offering Costs
The
Company defers the direct incremental costs of raising capital as other assets
until such time as the offering is completed. At the time of the completion of
the offering, the costs are charged against the capital raised. Should the
offering be terminated, deferred offering costs are charged to operations during
the period in which the offering is terminated.
Impairment
of Long-Lived Assets
The
Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives when events or circumstances lead management to
believe that the carrying value of an asset may not be recoverable. For the
period ended March 31, 2010, no events or circumstances occurred for which an
evaluation of the recoverability of long-lived assets was required.
Common
Stock Registration Expenses
The
Company considers incremental costs and expenses related to the registration of
equity securities with the SEC, whether by contractual arrangement as of a
certain date or by demand, to be unrelated to original issuance transactions. As
such, subsequent registration costs and expenses are expensed as
incurred.
Estimates
The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of March 31, 2010, and expenses for the period ended March 31,
2010, and cumulative from inception. Actual results could differ from those
estimates made by management.
Recent Accounting
Pronouncements
In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), codified
in FASB ASC 820-10-65, which provides additional guidance for estimating fair
value in accordance with ASC 820-10 when the volume and level of activity for an
asset or liability have significantly decreased. ASC 820-10-65 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. The adoption of ASC 820-10-65 did not have an impact on the Company's
results of operations or financial condition.
In May
2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165") codified in
FASB ASC 855-10-05, which provides guidance to establish general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. FASB
ASC 855-10-05 also requires entities to disclose the date through which
subsequent events were evaluated as well as the rationale for why that date was
selected. FASB ASC 855-10-05 is effective for interim and annual periods ending
after June 15, 2009. FASB ASC 855-10-05 requires that public entities evaluate
subsequent events through the date that the financial statements are
issued.
In June
2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial
Assets - an amendment of FASB Statement No. 140" ("SFAS 166"), codified as FASB
ASC 860, which requires entities to provide more information regarding sales of
securitized financial assets and similar transactions, particularly if the
entity has continuing exposure to the risks related to transferred financial
assets. FASB ASC 860 eliminates the concept of a "qualifying special-purpose
entity," changes the requirements for derecognizing financial assets and
requires additional disclosures. FASB ASC 860 is effective for fiscal years
beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an
impact on the Company's financial condition, results of operations or cash
flows.
In June
2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No.
46(R)" ("SFAS 167"), codified as FASB ASC 810-10, which modifies how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. FASB ASC
810-10 clarifies that the determination of whether a company is required to
consolidate an entity is based on, among other things, an entity's purpose and
design and a company's ability to direct the activities of the entity that most
significantly impact the entity's economic performance. FASB ASC 810-10 requires
an ongoing reassessment of whether a company is the primary beneficiary of a
variable interest entity. FASB ASC 810-10 also requires additional disclosures
about a company's involvement in variable interest entities and any significant
changes in risk exposure due to that involvement. FASB ASC 810-10 is effective
for fiscal years beginning after November 15, 2009. The adoption of FASB ASC
810-10 did not have an impact on the Company's financial condition, results of
operations or cash flows.
In June
2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles,
which establishes the FASB Accounting Standards Codification as the sole source
of authoritative generally accepted accounting principles. Pursuant to the
provisions of FASB ASC 105, we have updated references to GAAP in our financial
statements. The adoption of FASB ASC 105 did not impact the Company's financial
position or results of operations.
(2)
Development Stage Activities and
Going Concern
The
Company is currently in the development stage, and has no operations. The
business plan of the Company is to develop a commercial application of a self
operated computerized karaoke recording booth. The Company also intends to
obtain approval of its patent application, and manufacture and market the
product and/or seek third party entities interested in licensing the rights to
manufacture and market the device.
In
January 2008, the Company entered into a Assignment Agreement whereby the
Company acquired all of the rights, title and interest in the invention known as
the “Self operated computerized karaoke recording booth” for consideration of
royalties ranging from 1% to 5% based on the net income of the Company for 30
years from the date of the Company's incorporation. On February 20, 2008 the
Company filed PCT and U.S. patent applications for the invention.
The
Company has commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the Securities and Exchange Commission (“SEC”) to
register and sell in a self-directed offering 14,000,000 (post forward stock
split) shares of newly issued common stock at an offering price of $0.10 for
proceeds of up to $200,000. The Registration Statement on Form S-1 was filed
with the SEC on August 12, 2008 and declared effective on September 8, 2008. The
Company has issued 14,000,000 (post forward stock split) shares of common stock
pursuant to the Registration Statement on Form S-1, and received proceeds of
$200,000.
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has not
established any source of revenue to cover its operating costs, and as such, has
incurred an operating loss since inception. Further, as of March 31, 2010, the
cash resources of the Company were insufficient to meet its current business
plan. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
(3)
Patent Pending
In
January 2008, the Company entered into a Assignment Agreement whereby the
Company acquired all of the rights, title and interest in the invention known as
the “Self operated computerized karaoke recording booth” for consideration of
royalties ranging from 1% to 5% based on the net income of the Company for 30
years from the date of the Company's incorporation. On February 20, 2008 the
Company filed PCT and U.S. patent applications for the invention.
(4)
Loans from Related Parties -
Directors and Stockholders
As of
March 31, 2010, loans from related parties amounted to $31,670, and represented
working capital advances from officers who are also stockholders of the Company.
The loans are unsecured, non-interest bearing, and due on demand.
(5)
Common Stock
On February 4, 2008, the Company issued
56,000,000 (post forward stock split) shares of its common stock to founders of
the Company, some of whom are directors and officers, for proc
eeds of $800.
The
Company has commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the SEC to register and sell in a self-directed
offering 14,000,000 (post forward stock split) shares of newly issued common
stock at an offering price of $0.10 per share for proceeds of up to $200,000.
The Registration Statement on Form S-1 was filed with the SEC on August 12, 2008
and declared effective on September 8, 2008. The Company has issued 14,000,000
(post forward stock split) shares of common stock pursuant to the Registration
Statement on Form S-1, and received proceeds of $200,000. The Company incurred
$40,000 of deferred offering costs related to this capital formation
activity.
On June
26, 2009, the Company implemented a 7 for 1 forward stock split on its
issued and outstanding shares of common stock to the holders of record as of
June 24, 2009. As a result of the split, each holder of record on the record
date automatically received six additional shares of the Company’s common stock.
After the split, the number of shares of common stock issued and outstanding
were 70,000,000 shares. The accompanying financial statements and related notes
thereto have been adjusted accordingly to reflect this forward stock
split.
(6)
Income Taxes
The
provision (benefit) for income taxes for the periods ended March 31, 2010 and
2009 was as follows (assuming a 23% effective tax rate):
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
Current
Tax Provision:
|
|
|
|
|
|
|
Federal-
|
|
|
|
|
|
|
Taxable
income
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
current tax provision
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred
Tax Provision:
|
|
|
|
|
|
|
|
|
Federal-
|
|
|
|
|
|
|
|
|
Loss
carryforwards
|
|
$
|
7,873
|
|
|
$
|
4,765
|
|
Change
in valuation allowance
|
|
|
(7,873
|
)
|
|
|
(4,765
|
)
|
|
|
|
|
|
|
|
|
|
Total
deferred tax provision
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company had deferred income tax
assets as of March 31, 2010 and December 31, 2009 as
follows:
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
Loss
carryforwards
|
|
$
|
47,626
|
|
|
$
|
39,753
|
|
Less
- Valuation allowance
|
|
|
(47,626
|
)
|
|
|
(39,753
|
)
|
|
|
|
|
|
|
|
|
|
Total
net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company provided a valuation allowance equal to the deferred income tax assets
for the periods ended March 31, 2010 and December 31, 2009, because it is not
presently known whether future taxable income will be sufficient to utilize the
loss carryforwards.
As of
March 31, 2010, the Company had approximately $207,068 in tax loss carryforwards
that can be utilized in future periods to reduce taxable income, and expire in
the year 2030.
(7)
Related Party
Transactions
As
described in Note 4, as of March 31, 2010, the Company owed $31,670 to
directors, officers, and principal stockholders of the Company for working
capital loans.
On
February 4, 2008, the Company issued 19,040,000 (post forward stock split)
shares of common stock to directors of the Company, for $272.
From
inception through March 31, 2010, the Company paid consulting fees in the amount
of $14,153 to a director and officer of the Company.
(8)
Commitments
On June
15, 2008, the Company entered into a Transfer Agent and Registrar Agreement with
Nevada Agency and Trust Company ("NATCO"). Under the Agreement, the Company
agreed to pay to NATCO an annual fee of $1,500 for the first year and $1,800 for
every year thereafter. NATCO will act as the Company’s transfer agent and
registrar.
As
described in Note 3, in January 2008, the Company entered into a Assignment
Agreement whereby the Company acquired all of the rights, title and interest in
the invention known as the “Self operated computerized karaoke recording booth”
for consideration of royalties ranging from 1% to 5% based on the net income of
the Company for 30 years from the date of the Company's
incorporation.
(9)
Concentration of Credit
Risk
The
Company’s cash and cash equivalents are invested in a major bank
in Israel and are not insured. Management believes that the financial
institution that holds the Company’s investments is financially sound and
accordingly, minimal credit risk exists with respect to these
investments.