Mobile Star Corp. (MBST-OTC: BB)

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October 9, 2009 Issue

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Taking The Fun Of Karaoke To Another Level - What Sets Mobile Star Corp.’s Karaoke System Apart From The Competition Is The Ability To Make A Professional Sounding Recording While You Sing And Then Print It Out On A CD, Email And/Or Upload The File To A Search Engine

Company Profile:

Mobile Star Corp. (OTC: BB-MBST) is currently completing development of an entertainment vending machine that provides a personal karaoke experience. The free-standing booth enables an individual to digitally record his or her voice singing to hundreds of songs. The unit then publishes a computerized disc featuring the singer's voice and the selected background music.

Executive Bios:
Danny Elbaz, Chief Executive Officer

Seasoned entrepreneur with 30 years of experience in management and international marketing.

Co-founded NMC (IP over Satellite) sold to Harmonic (Nasdaq: HLIT).
Partner in Idea Plus Ltd., specializing in commercialization of new technologies.

Asher Zwebner's, Chief Financial Officer

Asher Zwebner has served as our Chief Financial Officer since inception of the Co. Since July 17, 2008, Mr. Zwebner also has served as a director of PowerRaise Inc., a Nevada corporation that is engaged in the development of Internet telephony applications. Since January 1, 2007, Mr. Zwebner has served as the chief financial officer of SinoBiomed Inc., a Delaware corporation that is engaged in the Chinese biopharmaceutical industry, and from November 2004 until October 2006 Mr. Zwebner served as a director of SinoBiomed.

Mr. Zwebner is a certified public accountant in Israel and in the United States, and received a bachelor's degree in accounting and finance from Touro College in 1988.

Entertainment
Vending Machine
(MBST-OTC: BB)

Mobile Star Corp.
53 Hanoter Street
Even Yehuda 40500 Israel
Phone: 972 - (544) 655-341
 

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published - October 9, 2009

CEOCFO: Mr. Elbaz, what is the vision of the company?

Mr. Elbaz: The vision is having our unique karaoke machine as popular as possible, available to the public anywhere that has high traffic like theme parks, movie theaters, shopping malls, bars, entertainment areas. This will allow all of these types of areas to have the ability of studio-like quality recording for the public.

CEOCFO: What is the difference from how karaoke is typically done now?

Mr. Elbaz: The big difference with our karaoke machine is the automation and the possibility to produce a CD in high-quality. Today you can have karaoke at parties or karaoke at a bar. This just the karaoke where everybody hears you and you could if you wanted to, record it on your PC. However, it would be a poor quality recording and in public, you just wouldn’t record it. Live karaoke is great entertainment. What we make is a machine where anyone can sing and do the live karaoke and at the same time have a recording of high quality. Part of our invention and the property of the company is having a high-quality algorithm and system within the machine that enhances the quality of the recording. Together with that you have the possibility and part of the fun is to have a CD printed at the end of the recording, which you an take home or send to a radio station. It is quite high quality and not just a low quality computer recording. Professional quality is part of the product.

CEOCFO: Are you in the process of patenting this?

Mr. Zwebner: Yes absolutely! It is currently patent pending in the US, Israel, Europe and Canada.

CEOCFO: Has your concept been tried in the past?

Mr. Elbaz: After we started the patenting, we started the pilot here in Israel, which gave us fantastic results. This is part of what made us build the company around it. We had the pilot for over one year in very high populated areas with shopping malls and the responses were very enthusiastic.

CEOCFO: What is your plan for marketing?

Mr. Elbaz: The plan is to do a pilot in the United States in several different locations, in order to decide where would be the best locations of the priority of the deployment. Taking the experience from one country does not imply that the next country will have the same characteristics of users. Our plan now is to finish the machine from production and start several pilots at locations where we can see and test the response of the public and then move forward.

CEOCFO: What is your revenue model; is it licensing or selling the machines?
Mr. Elbaz: At the moment, we are not revealing this as our revenue model will be affected by the size of the locations in which it will be distributed. If we have to distribute in a movie theater chains, it would be different than if we were distributing it in a theme park. These are different channels of distribution and their type of usage.

CEOCFO: What about the manufacturing, should this take off and you need to ramp-up?
Mr. Elbaz: We have a manufacturer for our karaoke machines in North America. This manufacturer has experience with many years of mass production of booths and cabinets. So once we have the first and we are already bringing out the first machine as in our announcement, at this model we are able to increase the quantity very fast at high volumes that will be required. In a nutshell, the production that we have now for the first machine is a prototype in a location and a site and the know how to make it mass production in a short while.

CEOCFO: Mobile Star recently became a public company; why was this the right time and what is the financial picture like for the company?

Mr. Zwebner: The company completed its initial public offering in May (2008) and the received its OTC symbol and status shortly after and it is starting to trade. Recently in Israel, there was a write-up about us as a company that has filed additional patent applications and coming is additional coverage. Slowly, but surely, the story of the company is starting to get released to the public. For example, you have reached out to us. We are starting to get many letters from all kinds of companies that are starting to look at the company and its unique products and obviously they like what they see. In addition to singing the karaoke, part of the additional feature is that not only can it produce a CD, but at the same time, it would be able to forward the recording to a third party. For example, like American Idol; this could be a good complimentary product for them, which would save them money having to interview many contestants. There are many adoptions and features to the product other than just making a CD out of a machine. There is lots of potential and this is a very unique product and we are patent pending. We are not aware of a competitor that has a similar product and obviously, this is starting to catch the attention of the public.

CEOCFO: Development is expensive; what is the financial picture of Mobile Star today?

Mr. Zwebner: You can go into the filings on Edgar and you can see the June 30, 2009 financials. You will see the amount that was raised at our IPO and what has been spent on development. Like all R&D companies, we are always seeking financing to enhance development, from version one to version two and an even better version. We currently are in the process of seeking to raise equity. We hope the company will be able to win additional equity by the end of the year, especially now with our coverage of the market. However, we currently do have enough funds, so we are ok financially. Do we have enough funds for tomorrow to manufacture 100 machines? That is a different question, but we are on the right track.

CEOCFO: Why should potential investors  pick Mobile Star out of the crowd?

Mr. Elbaz: It is a company with a very unique product. It is different from the usual high-tech, internet platforms, technology or communication. It is something very unique. The entertainment industry catches the eye of everyone around the world. The revenue potential in the United States, if you have 1,000 machines all over America and 10, 20 or 50 people walking into the booth a day, you can imagine what kind of revenues you will be looking at on a daily basis, I am not even talking about weekly, monthly or annually. This is a daily revenue product, not something where you will wait for revenue for thirty days with outstanding receivables. This is a cash business.

Mr. Elbaz: Even during the pilot that we have run here in Israel, without exposing the machine too much since it it was in a local arcade, our machine was the top revenue-bringing machine out of all the other machines in this arcade. The revenue target will be defined in the pilot, but I can say that it will be below $10 for a recording, which if compared with a person managed recording studio, it is maybe ten times cheaper, and you add the possibility of having a recording with this type of quality. It will be below $10 for CD burning as well.

Mr. Zwebner: If you have 1,000 machines and 20 people coming in a day that is $200,000 a day. It takes 3 to 5 minutes to record. In addition, this does not include additional revenues from being able to forward the CD to publishers, YouTube possibly American Idol, girl friends, or boy friends or sending it as a gift or singing and sending a song for a family member in some other part of the world. You can just imagine what kind of numbers we will be looking at.

CEOCFO: What about maintenance of your karaoke machine?

Mr. Elbaz: The ability to manage the machine remotely is most important. This feature is available from the first machine that is coming out of production. We are able to remotely control each and every machine in the network. These are coin operated machines that are to be spread everywhere. Not only can we see online what is happening to the machine, but we can upgrade versions of software, and we can add or remove songs according to the popularity. We are anticipating the different areas will require different types of music like Latino, Rhythm and Blues, for different tastes of different audiences. So all of this can be done and this is part of the concept of our machines, to have a remote management of the whole network of machines.

CEOCFO: What should people reading about Mobile Star remember most?

Mr. Elbaz: People should remember that Mobile Star has a fantastic entertainment machine that has a big future and a big attraction to a very large audience with different profiles.

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The vision is having our unique karaoke machine as popular as possible, available to the public anywhere that has high traffic like theme parks, movie theaters, shopping malls, bars, entertainment areas. This will allow all of these types of areas to have the ability of studio-like quality recording for the public. - Danny Elbaz