SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





[x]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
fiscal year ended   December 31,
2009





[]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





Commission
File No. 000-52330





BY DESIGN,
INC.


(Exact
Name of Small Business Issuer as specified in its charter)








Nevada
            20-3305472(State
      or other jurisdiction
            (IRS
      Employer File Number)of
      incorporation)





2519
      East Kentucky Ave.Denver,
      CO
            80209(Address
      of principal executive offices)
            (zip
      code)








(303)
660-6964


(Registrant's
telephone number, including area code)





Securities
Registered Pursuant to Section 12(b) of the Act: None





Securities
Registered Pursuant to Section 12(g) of the Act:





Common Stock, $.0.001 per
share par value








Indicate
by check mark if registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes []   No [X].





Indicate
by check mark if registrant is not required to file reports pursuant to Section
13 or 15(d) of the Exchange Act.


Yes
[] No [X].





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. Yes: [X]    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 (Section 232.405 of
this chapter) during the preceding 12 months(or such shorter period that the
registrant was required to submit and post such files. Yes []  No [
]





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K is contained in this form and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K.
[X]





Indicate
by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer,” and “small reporting company” in Rule
12b-2 of the Exchange Act.


Large
      accelerated filer []
              Accelerated
      filer []Non-accelerated
      filer   [] (Do not check if a smaller reporting
      company)
              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 []   No
[X].





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter: approximately $79,000.











FORM
10-K





By
Design, Inc.





INDEX





PART
      I
            PageItem
      1. Business
            2Item
      1A. Risk Factors
            6Item
      2. Property
            12Item
      3. Legal Proceedings
            12Item
      4. Submission of Matters to a Vote of Security Holders
            12PART
      IIItem
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity Securities
            12Item
      6. Selected Financial Data
            15Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
            15Item
      7A. Quantitative and Qualitative Disclosures About Market
    Risk
            18Item
      8. Financial Statements and Supplementary Data
            18Item
      9. Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosures
            19Item
      9A(T). Controls and Procedures
            19Item
      9B. Other Information
            20PART
      IIIItem
      10. Directors, Executive Officers and Corporate Governance
            20Item
      11. Executive Compensation
            21Item
      12. Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
            21Item
      13. Certain Relationships and Related Transactions, and Director
      Independence
            22Item
      14. Principal Accountant Fees and Services
            22Item
      15. Exhibits Financial Statement Schedules
            23Financial
      Statements pages
            F-1
      to F-13Signatures
            24










-
2 -





For
purposes of this document, unless otherwise indicated or the context otherwise
requires, all references herein to “BYDE,” “By Design,” “we,” “us,” and “our,”
refer to By Design, Inc., a Nevada corporation and our wholly-owned
subsidiaries. Except as we might otherwise specifically indicate, all references
us include our subsidiaries.





Forward-Looking
Statements





The
following discussion contains forward-looking statements regarding us, our
business, prospects and results of operations that are subject to certain risks
and uncertainties posed by many factors and events that could cause our actual
business, prospects and results of operations to differ materially from those
that may be anticipated by such forward-looking statements. Factors that may
affect such forward-looking statements include, without limitation: our ability
to successfully develop new products and services for new markets; the impact of
competition on our revenues, changes in law or regulatory requirements that
adversely affect or preclude clients from using us for certain applications;
delays our introduction of new products or services; and our failure to keep
pace with our competitors.





When used
in this discussion, words such as "believes", "anticipates", "expects",
"intends" and similar expressions are intended to identify forward-looking
statements, but are not the exclusive means of identifying forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this report. We
undertake no obligation to revise any forward-looking statements in order to
reflect events or circumstances that may subsequently arise. Readers are urged
to carefully review and consider the various disclosures made by us in this
report and other reports filed with the Securities and Exchange Commission that
attempt to advise interested parties of the risks and factors that may affect
our business.








PART
I





Item
1. DESCRIPTION OF BUSINESS.





General





We are a
Nevada corporation. Our principal business address is 2519 East Kentucky Ave.,
Denver, Colorado 80209. Our telephone number is (303) 660-6964. We were
incorporated under the laws of the State of Nevada on February 23, 2005. We have
active operations. We market interior and exterior design consulting services to
real estate developers and builders for their real estate projects. The sale of
these consulting services includes our recommendations for the purchase of
accessories and architectural elements to be included or placed in the
residential and commercial spaces, as built or retrofitted. These consulting
services and associated products will be sold through By Design,
Inc.  We currently have no active projects in By Design,
Inc.





We have a
subsidiary known as Stone Select, LLC which markets hand-carved interior and
exterior natural stone ornamentation and architectural elements Stone Select,
LLC’s principal products consist of fireplace surrounds, kitchen range hoods,
flooring, base and case trim materials, exterior ornamentation, fountains,
planters, , and exterior window and door surrounds. At the present time, most of
the sales of Stone Select, LLC come from natural stone fireplace surrounds,
kitchen range hoods, and trim materials. At the present time, all of our
revenues are generated through our subsidiary, Stone Select, LLC. We currently
operate exclusively in the Denver, Colorado Metropolitan area. We market and
sell all of our products and services to commercial and residential builders and
interior designers. Our target market is a custom home in the three to twenty
million dollar price range. We have no website but Stone Select, LLC operates a
website at www.stoneselect,us.





We were
incorporated as a successor to an operation which began in 1996. The predecessor
company was a sole proprietorship owned by Ms. Deanie Underwood also known as
“By Design.” This company provided interior design and refurbishment work
similar to the present company and averaged two to three clients per year but
had no activity in the two years prior to be being acquired by us. It was
marginally profitable in most years it was operational. This company has been
absorbed into us and is no longer in existence. We acquired the assets of this
sole proprietorship in a tax-free exchange under the Internal Revenue Code in
February, 2005.





In July,
2005, we completed a registered offering of our common shares under the
provisions of the Colorado securities laws and under an exemption from the
federal securities laws. We sold a total of 197,802 common shares at a price of
$0.50 per share to a total of forty investors. We raised a total of $98,901 in
this offering.





-
3 -








We have
not been subject to any bankruptcy, receivership or similar
proceeding.





Organization





As
of December 31, 2009, we are comprised of one corporation with one
majority-owned subsidiary, Stone Select, LLC., and a wholly-owned subsidiary,
Stone Select Imports, Inc.  Unaffiliated third parties, Craig and
Susie Bush, collectively own 49% of Stone Select, LLC.  We have
ownership and voting control of 51% of Stone Select, LLC.  All of our
operations are conducted through Stone Select, LLC. Stone Select Imports, Inc.
currently has no operations, and we have no plans to conduct any operations in
the future.





Operations





Our
original focus is in the Denver, Colorado metropolitan area, but we plan to
expand throughout the State of Colorado. We focus in the broad area of interior
design for homes, including the wholesale and in retail sales of imported stone,
decorative iron, and carved wood furniture. Our activities include both working
with remodeling projects by contractors and new construction by real estate
developers. We can act as a fee-based consultant to our clients in their various
projects. We can market interior design consulting services to real estate
developers for their real estate projects. The sale of these consulting services
includes our recommendations for the purchase of accessories to be placed in the
spaces where we may assemble the interiors. These consulting services and
associated products will be sold through By Design, Inc. We plan to charge a
fixed hourly fee to be negotiated on a case-by-case basis. We would also mark up
the cost of any products which we would sell in connection with our interior
design consulting services. We currently have no active projects and generate no
revenue in By Design, Inc.





We have a
subsidiary known as Stone Select, LLC which markets hand-carved interior and
exterior natural stone ornamentation and architectural elements. Stone Select,
LLC’s principal products consist of fireplace surrounds, kitchen range hoods,
flooring, including base and case, and window and door surrounds. At the present
time, most of the sales of Stone Select, LLC come from fireplace surrounds and
kitchen range hoods and trim materials. At the present time, all of our revenues
are generated through our subsidiary, Stone Select, LLC. We currently operate
exclusively in the Denver, Colorado Metropolitan area. We market and sell all of
our products and services to commercial and residential builders and interior
designers. We sell our products between the manufacturer and customer and carry
limited inventories, for direct sale and as sample products for order. Our
target market is a custom home in the three to twelve million dollar price
range. We have no website, but Stone Select, LLC operates a website at www.stoneselect,us.





We market
and sell all of our products and services to commercial and residential builders
and interior designers. Our target market is a custom home in the three to
twenty million dollar price range.





We
currently work with four main clients: Trillium Homes; Landmark Homes; Bond
General Contractors; and Casey Jones, home contractor.  All are
private companies doing construction in the Denver, Colorado market. Each of
these four developers builds custom homes in the three to twenty million dollar
price range. In addition, to a lesser degree, we also work with Mesa Properties
and Alexander Homes, who are also private companies doing construction in the
Denver, Colorado market. We continuously look for referrals from builders and
architects who work in this target market. One of the architects with whom we
work is Mr. Craig Bush, who, with his wife, own 49% of Stone Select, LLC. We
have no website, but Stone Select, LLC operates a website at www.stoneselect,us.





We import
all of our products from China. We have one supplier in China. All of the
products are sold on a custom design basis. As a result, we do not carry a
substantial inventory of products.





At the
present time, we have no plans to raise any additional funds within the next
twelve months. Any working capital will be expected to be generated from
internal operations. In the event that we need additional capital, Ms. Underwood
has agreed to loan such funds as may be necessary through December 31, 2010 for
working capital purposes. However, we reserve the right to examine possible
additional sources of funds, including, but not limited to, equity or debt
offerings, borrowings, or joint ventures. Limited market surveys have never been
conducted to determine demand for our products and services. Therefore, there
can be no assurance that any of its objectives will be achieved.








-
4 -








In
addition we plan to expand through acquisition. We will not only look at our
present industry but will reserve the right to investigate and, if warranted,
merge with or acquire the assets or common stock of an entity actively engaged
in business which generates revenues. We will seek opportunities for long-term
growth potential as opposed to short-term earnings. As of the date hereof, we
have no business opportunities under investigation. None of our officers,
directors, or affiliates have engaged in any preliminary contact or discussions
with any representative of any other company regarding the possibility of an
acquisition or merger between us and such other company.





Markets





Our
marketing plan is focused completely on developing our customer base and
individual projects. We utilize the expertise of our officers to develop our
business. In addition, we continually identify commercial - light industrial
real estate space adequate for displaying stone, iron, and carved wood products
for use by the interior design and construction trades.





Each
Officer and Director utilizes his or her previous contacts in business to
develop potential opportunities.





Raw
Materials





We
do not use raw materials in our business. We acquire finished products from our
two suppliers. However, the use of and ability to acquire raw materials could be
a material factor in our operations if our suppliers cannot obtain sufficient
raw materials to provide us with finished products. However, we have found raw
materials to be readily available and not a material factor at the present
time.





Clients
and Competition





We
currently work with four main clients, who are custom builders: Trillium Homes;
Landmark Homes; Bond General Contractors; and Casey Jones, home contractor. All
are private companies doing construction in the Denver, Colorado market. Each of
these four developers builds custom homes in the three to twenty million dollar
price range. In addition, to a lesser degree, we also work with Mesa Properties
and Alexander Homes, who are also private companies doing construction in the
Denver, Colorado market.





With
respect to our four main clients, we rely upon them collectively for a majority
of our revenues. In 2009, sales to Stone Select, LLC.’s four largest customer
were approximately 55% of its total net sales, with the largest customer
accounting for approximately 20% of sales, and the others between 10% and 13%.
In 2008, sales to Stone Select, LLC.’s four largest customer were also
approximately 55% of its total net sales, with the largest customer accounting
for approximately 20% of sales, and the others between 10% and 13%. Each of
these four developers builds custom homes in the three to twelve million dollar
price range and are affected by market trends in that segment of the real estate
industry. We believe that we have a good relationship with each of them. Mr.
Craig Bush, who, with his wife, own 49% of Stone Select, LLC., provides
architectural services to our clients from time to time. However, their use of
our products remains dependent upon their ability to market homes. We also
receive referrals from contractors for remodeling and new
construction.





Backlog





At
December 31, 2009, we had no backlogs.





Employees





We have two
full-time employees, our President, Ms. Deanie Underwood, President and Mr.
Bradley Underwood, Secretary-Treasurer. None of our employees draws a salary. We
reimburse our employees for all necessary and customary business related
expenses.





We have
no plans or agreements which provide health care, insurance or compensation on
the event of termination of employment or change in our control.





We do not
pay our Directors separately for any Board meeting they attend.





-
5 -











Proprietary
Information





We
own no proprietary information.





Government
Regulation





Since we
are associated with the real estate industry, all of our projects have and will
require local governmental approval with respect to zoning and construction code
compliance. We will only require government approval on a project-by-project
basis and only when we have projects pending. The extent of the approval varies
with the project and the jurisdiction and cannot be quantified except as it
relates to specific projects.





We
believe the effect of complying with existing or probable governmental
regulations is a managed cost of our business operations but could be
significant. Each real estate project requires prior government approval.
However, the cost cannot be quantified except as it relates to specific
projects.





We
believe that the cost of compliance with federal, state and local environmental
laws will not be significant because we do not plan to choose projects which are
subject to significant environmental costs or regulations. In any case, we plan
to choose our projects to minimize the effects of governmental regulations. At
the present time, we are not awaiting any governmental approvals.





Research
and Development





We have
never spent any amount in research and development activities.





Environmental
Compliance





We
believe that we are not subject to any material costs for compliance with any
environmental laws.





How
to Obtain Our SEC Filings





We file
annual, quarterly, and special reports, proxy statements, and other information
with the Securities Exchange Commission (SEC). Reports, proxy statements and
other information filed with the SEC can be inspected and copied at the public
reference facilities of the SEC at 100 F Street N.E., Washington, DC 20549. Such
material may also be accessed electronically by means of the SEC's website at
www.sec.gov.





Our
investor relations department can be contacted at our principal executive office
located at our principal office, located at 2519 East Kentucky Ave., Denver,
Colorado 80209. Our telephone number is (303) 660-6964.





Item
1A. RISK FACTORS.





You
should carefully consider the risks and uncertainties described below and the
other information in this document before deciding to invest in shares of our
common stock.





The
occurrence of any of the following risks could materially and adversely affect
our business, financial condition and operating result. In this case, the
trading price of our common stock could decline and you might lose all or part
of your investment.








-
6 -





We
have had a history of losses.  Although we are profitable in our most
recent two fiscal years, our losses may continue in the future.  We
have a large working capital deficit and a negative stockholders equity, which
increased from the previous year. We may never sustain profitability on a
consistent basis. As a result, we could go out of business.





Our
revenues for the fiscal year ended December 31, 2009 were $283,881. We had a net
profit of $6,423 for this period. Our revenues for the fiscal year ended
December 31, 2008 were $610,992. We had a net profit of $61,217 for this
period. We have had a history of losses because we were unable to generate
sufficient revenues to be profitable. At December 31, 2009 we had a working
capital deficit and a negative stockholders equity of $334,206. At December 31,
2008 we had negative stockholders equity of $211,043. We have been profitable in
our most recent two fiscal years. We cannot guarantee that we will continue to
be a profitable company. We may never become profitable on a consistent basis,
and, as a result, we could go out of business.





Because
we have a large working capital deficit, our accountants have expressed doubts
about our ability to continue as a going concern.





For the
fiscal years ended December 31, 2009 and 2008, our accountants have expressed
doubt about our ability to continue as a going concern as a result of our
working capital deficit. Our ability to achieve and maintain profitability and
positive cash flow is dependent upon:





●
            our
      ability to locate clients who will purchase our products and use our
       services; and●
            our
      ability to generate significant
revenues.





Based
upon current plans, we may incur operating losses in future periods because we
may, from time to time, be incurring expenses but not generating sufficient
revenues. We expect approximately $135,000 in operating costs over the next
twelve months. We cannot guarantee that we will be successful in generating
sufficient revenues or other funds in the future to cover these operating costs.
Failure to generate sufficient revenues will cause us to go out of
business.





We are
only minimally capitalized. Because we are only minimally capitalized, we expect
to experience a lack of liquidity for the foreseeable future in our ongoing
operations. We will adjust our expenses as necessary to prevent cash flow or
liquidity problems. However, we expect we will need additional financing of some
type, which we do not now possess, to fully develop our operations. We expect to
rely principally upon our ability to raise additional financing, the success of
which cannot be guaranteed. We will look at both equity and debt financing,
including loans from our principal shareholder. However, at the present time, we
have no definitive plans for financing in place, other than the funds which have
previously been loaned to us by Ms. Underwood. In the event that we need
additional capital, Ms. Underwood has agreed to loan such funds as may be
necessary through December 31, 2010 for working capital purposes. To the extent
that we experience a substantial lack of liquidity, our development in
accordance with our proposed plan may be delayed or indefinitely postponed, our
operations could be impaired, we may never become profitable, fail as an
organization, and our investors could lose some or all of their
investment.





Our
limited operating history makes it difficult for us to evaluate our future
business prospects and make decisions based on those estimates of our future
performance. As a result, an investor could lose his entire
investment.





The
concept for our business was developed in 1996. However, we had no revenues from
2003 until 2006. Even though we have operated as a corporation since 2005, we
have a limited operating history. This factor makes it difficult to evaluate our
business on the basis of historical operations. As a consequence, our past
results may not be indicative of future results. Although this is true for any
business, it is particularly true for us because of our limited operating
history. Reliance on historical results may hinder our ability to anticipate and
timely adapt to increases or decreases in sales, revenues or expenses. For
example, if we overestimate our future sales for a particular period or periods
based on our historical growth rate, we may increase our overhead and other
operating expenses to a greater degree than we would have if we correctly
anticipated the lower sales level for that period and reduced our controllable
expenses accordingly. If we make poor budgetary decisions as a result of
unreliable historical data, we could continue to incur losses, which may result
in a decline in our stock price.








-
7 -





Our
operations are subject to our ability to successfully market our services and
products. We have no substantial history of being able to successfully market
our services and products. If we cannot successfully market our services and
products, we may never become profitable and an investor could lose his entire
investment.





Our
operations will depend, among other things, upon our ability to develop and to
market our services and products to the residential and commercial builders. We
market interior and exterior design consulting services to real estate
developers and builders for their real estate projects. The sale of these
consulting services includes our recommendations for the purchase of accessories
and architectural elements to be included or placed in the residential and
commercial spaces, as built or retrofitted. These consulting services and
associated products will be sold through By Design, Inc.  Our subsidiary,
known as Stone Select, LLC, markets hand-carved interior and exterior natural
stone ornamentation and architectural elements. Stone Select, LLC’s principal
products consist of fireplace surrounds, kitchen range hoods, flooring, base and
case trim materials, exterior ornamentation, fountains, planters, , and exterior
window and door surrounds. At the present time, most of the sales of Stone
Select, LLC come from natural stone fireplace surrounds, kitchen range hoods,
and trim materials. At the present time, most of the sales of Stone Select, LLC
come from fireplace surrounds, kitchen range hoods, and trim materials. If we
cannot find a combination of sufficient customers for our consulting services
and purchasers of the hand-carved interior and exterior natural stone
ornamentation and architectural elements sold through Stone Select, LLC, we may
have difficulty maintaining profitability. An investor could lose his entire
investment.





We
have limited experience as a public company.





We have
limited experience as a public company. We have limited experience in complying
with the various rules and regulations which are required of a public company.
As a result, we may not be able to operate successfully as a public company,
even if our operations are successful. We plan to comply with all of the various
rules and regulations which are required of a public company. However, if we
cannot operate successfully as a public company, your investment may be
materially adversely affected. Our inability to operate as a public company
could be the basis of your losing your entire investment in us.





There
are factors beyond our control which may adversely affect us. Any, all, or a
combination of general market conditions and changing consumer tastes could
cause an investor could lose his entire investment





Our
operations may also be affected by factors which are beyond our control,
principally general market conditions and changing consumer
tastes.  Any of these problems, or a combination thereof, could have
affect on our viability as an entity. We may not maintain profitability, fail as
an organization, and our investors could lose some or all of their
investment.





Intense
competition in our market could prevent us from developing revenue and prevent
us from achieving annual profitability. In either situation, we may not maintain
profitability, fail as an organization, and our investors could lose some or all
of their investment.





We are
organized to provide defined interior design services to our clients through By
Design, Inc. and sell stone products through our subsidiary, Stone Select, LLC.
The barriers to entry are not significant. All aspects of our business are
highly competitive. We face strong competitors in all areas of our business. Our
services and products could be rendered noncompetitive or obsolete. Any increase
in competition may cause us to lose market share or compel us to reduce prices
to remain competitive, which could result in reduced margins for our products.
Competitive pressures may not only impair our margins but may also impact our
revenues and our growth. Almost all of our competitors are larger than us and
have greater financial resources than we do.  Many of them have
substantially greater experience in interior design.   Increased
competition with these companies could curtail price increases or could require
price reductions or increased spending on marketing and sales, any of which
could adversely affect our results of operations. Competition from larger and
more established companies is a significant threat and is expected to
increase.








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8 -





We
currently have only one main supplier.  The loss it would have a negative
effect on our business.





We
currently purchase finished products from only one supplier. This supplier
provides us with essentially the same inventory which we sell through Stone
Select, LLC., which are hand-carved interior and exterior natural stone
ornamentation and architectural elements. These are fireplace surrounds, kitchen
range hoods, flooring, including base and case, and window surrounds. The loss
of our supplier would have a negative effect on our business because we would
not have sufficient inventory to sell. If we cannot replace the lost supplier,
we would see a severe decline in revenue from the sale of products. As a result,
we may never become profitable, fail as an organization, and our investors could
lose some or all of their investment.





Fluctuations
in the supply and prices of raw materials could negatively impact our
financial results.





Under
normal market conditions, these materials are generally available on the open
market. From time to time, however, the prices and availability of these raw
materials may fluctuate significantly, which could impair our ability to procure
necessary products, or increase the cost of our products. If material costs
increase, and we are unable to pass along, or are delayed in passing along,
those increases to our customers, we will experience reductions to our profit
margins and our ability to generate a profit will be reduced or eliminated
completely.





Many
of our customers are in cyclical industries, which may affect the demand for
our products.





Many of
our customers, especially for our commercial products, are in businesses and
industries that are cyclical in nature and sensitive to changes in general
economic conditions. As a result, the demand for our products by these customers
depends, in part, upon general economic conditions. Downward economic cycles
affecting the industries of our customers will reduce sales of our products. If
general economic conditions deteriorate, we may suffer reductions in our sales
and profitability. To date, we have not seen the slowdown in the housing market
affect us, but it could. A general slowdown in the housing market may affect
everyone, including us, which would reduce our ability to generate a
profit.





The
industry in which we operate are highly competitive. Our principal competitor is
larger and has greater financial resources than we do.





We
operate in a very competitive industry. Our principal competitor, Materials
Marketing, Inc., of Denver, Colorado, is larger and has greater financial
resources than we do. However, we potentially compete with a diverse group of
competitors ranging from internet businesses to traditional brick-and-mortar
companies, many of which have greater resources than we do. We believe that
barriers to entry in this business are not significant and start-up costs are
relatively low, so our competition may increase in the future. Our belief that
there are minimal barriers to entry is based on our observation that operations
such as ours do not require the ownership of warehouses, showrooms or factories
to operate, which we think is because (i) our direct ship business can be
operated with minimal warehousing needs and costs, which are significantly less
than traditional models, (ii) wholesale product orders can be placed after
receipt of client orders, in order to further reduce warehousing needs, (iii)
samples can be shown to clients at little or no cost, without the necessity of
showroom space for actual product, (iv) if a competitor wants showroom space, it
is typically available for lease at competitive rates in most United States
markets, and (v) all manufacturing can be done by third party suppliers, so
there is no need to own or lease a manufacturing facility. New competitors may
be able to launch new businesses similar to ours, and current competitors
may  replicate our business model, at a relatively low cost. If
competitors with significantly greater resources than ours decide to replicate
our business model, they may be able to quickly gain recognition and acceptance
of their business methods, products and services through marketing and
promotion. We may not have the resources to compete effectively with current or
future competitors. If we are unable to effectively compete, we will lose sales
to our competitors and our revenues will decline.





We
import all of our products from China. As a result, all of our current revenues
come from products imported from outside the United States.





We expect
imports from international markets to continue to represent a significant
portion of our products. Accordingly, our business is subject to risks related
to the differing legal, political, social and regulatory requirements and
economic conditions of many jurisdictions. Risks inherent in international
operations include the following:






-
9 -





●
            agreements
      may be difficult to enforce and receivables owed to us difficult to
      collect;●
            foreign
      customers may have longer payment cycles;●
            foreign
      countries may impose additional withholding taxes or otherwise tax our
      foreign income, or adopt other restrictions on foreign trade or
      investment, including currency exchange controls;●
            foreign
      operations may experience staffing difficulties and labor
      disputes;●
            transportation
      and other shipping costs may increase;●
            foreign
      governments may nationalize private enterprises;●
            unexpected
      adverse changes in export duties, quotas and tariffs and difficulties in
      obtaining export licenses;●
            intellectual
      property rights may be more difficult to enforce;●
            fluctuations
      in exchange rates may affect product demand and may adversely affect the
      profitability in U.S. dollars of products we import where payment for
      our products is made in the local currency;●
            general
      economic conditions in the countries in which we operate could have an
      adverse effect on operations in those countries;●
            our
      business and profitability in a particular country could be affected by
      political or economic repercussions on a domestic, country specific or
      global level from terrorist activities and the response to such
      activities;●
            unexpected
      adverse changes in foreign laws or regulatory requirements may occur;
      and●
            compliance
      with a variety of foreign laws and regulations may be
      burdensome.





We
have certain key customers.





Our
relationships with certain key residential building customers are important to
us and our subsidiary, Stone Select, LLC. Stone Select, LLC. has four major
customers. In 2008, sales to Stone Select, LLC.’s four largest customer were
approximately 55% of its total net sales, with the largest customer accounting
for approximately 20% of sales, and the others between 10% and 13%. In 2007,
sales to Stone Select, LLC.’s four largest customer were also approximately 55%
of its total net sales, with the largest customer accounting for approximately
20% of sales, and the others between 10% and 13%. Although Stone Select, LLC.
sells various types of products through various channels of distribution, we
believe that the loss of a substantial portion of Stone Select, LLC.’s sales to
residential builders could have a significant affect impact on our ability to be
profitable.





Our
success will be dependent upon our management’s efforts. We cannot sustain
profitability without the efforts of our management.





Our
success will be dependent upon the decision making of our directors and
executive officers. These individuals intend to commit as much time as necessary
to our business, but this commitment is no assurance of success. The loss of any
or all of these individuals, particularly Ms. Deanie Underwood, our President,
could have a material, adverse impact on our operations. We have no written
employment agreements with any officers and directors, including Ms. Underwood.
We have not obtained key man life insurance on the lives of any of our officers
or directors.





Our
stock price may be volatile, and you may not be able to resell your shares at or
above the public sale price.





There has
been, and continues to be, a limited public market for our common stock.
Although our common stock is quoted on the Over-the-Counter Bulletin Board, an
active trading market for our shares has not, and may never develop or be
sustained. If you purchase shares of common stock, you may not be able to resell
those shares at or above the initial price you paid. The market price of our
common stock may fluctuate significantly in response to numerous factors, some
of which are beyond our control, including the following:





-
10 -











*
            actual
      or anticipated fluctuations in our operating results;*
            changes
      in financial estimates by securities analysts or our failure to perform in
      line with such estimates;*
            changes
      in market valuations of other interior design oriented companies,
      particularly those that market services such as ours;*
            announcements
      by us or our competitors of significant innovations, acquisitions,
      strategic partnerships, joint ventures or capital
    commitments;*
            introduction
      of product enhancements that reduce the need for our products or
      services;*
            the
      loss of one or more key clients; and*
            departures
      of key personnel.





Of our
total outstanding shares as of March 25, 2010, a total of 9,000,000, or
approximately 98%, will be restricted from immediate resale but may be sold into
the market in the near future. This could cause the market price of our common
stock to drop significantly, even if our business is doing well.
 
 As
restrictions on resale end, the market price of our stock could drop
significantly if the holders of restricted shares sell them or are perceived by
the market as intending to sell them.
 
 Because our stock is traded on the
Over-the-Counter Bulletin Board, it has a limited public trading market.
As a result, it may be
difficult or impossible for you to liquidate your
investment.
 
 While our
common stock currently is listed for trading, we have had only a few trades. We
are quoted on the Over-the-Counter Bulletin Board under the trading symbol BYDE.
We cannot assure that such a market will improve in the future, even if our
securities are listed on the NASD Bulletin Board. The NASD Bulletin Board
requires that we be a reporting company under the Securities Exchange Act of
1934. However, we cannot guarantee that we will be accepted for listing on the
NASD Bulletin Board. Further, we cannot assure that an investor will be able to
liquidate his investment without considerable delay, if at all. If a more active
market does develop, the price may be highly volatile. Our limited operating
history, lack of profitability, negligible stock liquidity, potential extreme
price and volume fluctuations, and regulatory burdens may have a significant
impact on the market price of the common stock. It is also possible that the
relatively low price of our common stock may keep many brokerage firms from
engaging in transactions in our common stock.





Applicable
SEC rules governing the trading of “Penny Stocks” limit the liquidity of our
common stock, which may affect the trading price of our common
stock.





Our
common stock is currently quoted on the Over-the-Counter Bulletin
Board.  Since our common stock continues to trade well below $5.00 per
share, our common stock is considered a “penny stock” and is subject to SEC
rules and regulations that impose limitations upon the manner in which our
shares can be publicly traded.  These regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock and the associated risks.  Under
these regulations, certain brokers who recommend such securities to persons
other than established customers or certain accredited investors must make a
special written suitability determination for the purchaser and receive the
written purchaser’s agreement to a transaction prior to
purchase.  These regulations have the effect of limiting the trading
activity of our common stock and reducing the liquidity of an investment in our
common stock.





-
11 -





Buying
low-priced penny stocks is very risky and speculative.





The
shares being offered are defined as a penny stock under the Securities and
Exchange Act of 1934, and rules of the Commission. The Exchange Act and such
penny stock rules generally impose additional sales practice and disclosure
requirements on broker-dealers who sell our securities to persons other than
certain accredited investors who are, generally, institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or
annual income exceeding $200,000, or $300,000 jointly with spouse, or in
transactions not recommended by the broker-dealer. For transactions covered by
the penny stock rules, a broker-dealer must make a suitability determination for
each purchaser and receive the purchaser's written agreement prior to the sale.
In addition, the broker-dealer must make certain mandated disclosures in penny
stock transactions, including the actual sale or purchase price and actual bid
and offer quotations, the compensation to be received by the broker-dealer and
certain associated persons, and deliver certain disclosures required by the
Commission. Consequently, the penny stock rules may affect the ability of
broker-dealers to make a market in or trade our common stock and may also affect
your ability to resell any shares you may purchase in the public
markets.





We
do not expect to pay dividends on common stock.





We have
not paid any cash dividends with respect to our common stock, and it is unlikely
that we will pay any dividends on our common stock in the foreseeable future.
Earnings, if any, that we may realize will be retained in the business for
further development and expansion.





ITEM
2. DESCRIPTION OF PROPERTY.





We
rent office space at $1,500 per month under a verbal lease, and yard and
warehouse space at approximately $2,100 per month plus costs under a
non-cancellable lease with an unaffiliated third party, and no stated renewal
option expiring in March 2012. We own office equipment to furnish our offices.
We own a truck and a forklift which we use in our business. All of our
management activities are performed in Colorado.








ITEM
3. LEGAL PROCEEDINGS.





We are not a party to any material
legal proceedings, nor is our property the subject of any material legal
proceeding.








ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.





We held no shareholders meeting in the
fourth quarter of our fiscal year.











PART
II





ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.





Holders





As
of March 1, 2010, there were 83 record holders of our common stock and
there were 9,197,802 shares of our common stock outstanding.





Market
Information





Our shares of common stock are quoted on the Over-the-Counter Bulletin
Board under the trading symbol BYDE. The shares became trading on July 25, 2006
but there is no extensive history of trading. The bid and asked price has been $
0.25 and $1.10 during the entire time the shares have been quoted. The
quotations reflect interdealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.





-
12 -








Equity
Compensation Plan Information





We have no outstanding stock options or other equity compensation
plans.





The
Securities Enforcement and Penny Stock Reform Act of 1990





The Securities Enforcement and Penny Stock Reform Act of 1990
require additional disclosure and documentation related to the market for penny
stock and for trades in any stock defined as a penny stock. Unless we can
acquire substantial assets and trade at over $5.00 per share on the bid, it is
more likely than not that our securities, for some period of time, would be
defined under that Act as a "penny stock." As a result, those who trade in our
securities may be required to provide additional information related to their
fitness to trade our shares. These requirements present a substantial burden on
any person or brokerage firm who plans to trade our securities and would thereby
make it unlikely that any liquid trading market would ever result in our
securities while the provisions of this Act might be applicable to those
securities.





Any broker-dealer engaged by the purchaser for the purpose of
selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of
the Securities and Exchange Act. Rather than creating a need to comply with
those rules, some broker-dealers will refuse to attempt to sell penny
stock.





The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, to deliver a standardized risk disclosure
document prepared by the Commission, which:





·
            contains
      a description of the nature and level of risk in the market for penny
      stocks in both public offerings and secondary trading;·
            contains
      a description of the broker's or dealer's duties to the
      customer  and of the rights and remedies available to the
      customer with respect to a  violation to such duties or other
      requirements of the Securities Act of  1934, as
      amended;·
            contains
      a brief, clear, narrative description of a dealer market, including "bid"
      and "ask" prices for penny stocks and the significance of the spread
      between the bid and ask price;·
            contains
      a toll-free telephone number for inquiries on disciplinary
      actions;·
            defines
      significant terms in the disclosure document or in the conduct of trading
      penny stocks; and·
            contains
      such other information and is in such form (including language, type, size
      and format) as the Securities and Exchange Commission shall require by
      rule or regulation;





The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, to the customer:





·
            the
      bid and offer quotations for the penny stock;·
            the
      compensation of the broker-dealer and its salesperson in the
      transaction;·
            the
      number of shares to which such bid and ask prices apply, or other
      comparable information relating to the depth and liquidity of the market
      for such stock; and·
            monthly
      account statements showing the market value of each penny stock held in
      the customer's account.





In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable





-
13 -





investment
for the purchaser and receive the purchaser's written acknowledgment of the
receipt of a risk disclosure statement, a written agreement to transactions
involving penny stocks, and a signed and dated copy of a written suitability
statement. These disclosure requirements will have the effect of reducing the
trading activity in the secondary market for our stock because it will be
subject to these penny stock rules. Therefore, stockholders may have difficulty
selling their securities.





-
14 -








Stock
Transfer Agent





The
stock transfer agent for our securities is Corporate Stock Transfer of Denver,
Colorado.  Their address is 3200 Cherry Creek Drive South, Suite 430,
Denver, Colorado 80209. Their phone number is (303)282-4800.





Dividend
Policy





We
have not previously declared or paid any dividends on our common stock and do
not anticipate declaring any dividends in the foreseeable future. The payment of
dividends on our common stock is within the discretion of our board of
directors. We intend to retain any earnings for use in our operations and the
expansion of our business. Payment of dividends in the future will depend on our
future earnings, future capital needs and our operating and financial condition,
among other factors that our board of directors may deem relevant. We are not
under any contractual restriction as to our present or future ability to pay
dividends.








ITEM
6. SELECTED FINANCIAL DATA





A smaller
reporting company is not required to provide the information in this
Item.








ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





This
Management’s Discussion and Analysis contains forward-looking statements that
involve future events, our future performance and our expected future operations
and actions. In some cases, you can identify forward-looking statements by the
use of words such as “may”, “will”, “should”, “anticipate”, “believe”, “expect”,
“plan”, “future”, “intend”, “could”, “estimate”, “predict”, “hope”, “potential”,
“continue”, or the negative of these terms or other similar expressions. These
forward-looking statements are only our predictions and involve numerous
assumptions, risks and uncertainties. Our actual results or actions may differ
materially from these forward-looking statements for many reasons, including,
but not limited to, the matters discussed in this report under the caption “Risk
Factors”. We urge you not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus. We undertake no
obligation to publicly update any forward looking-statements, whether as a
result of new information, future events or otherwise.





The
following discussion of our financial condition and results of operations should
be read in conjunction with our financial statements and the related notes
included in this report.





The
following table provides selected financial data about us for the years ended
December 31, 2009 and 2008. For detailed financial information, see the
audited Financial Statements included in this document.





Balance
      Sheet Data: 12/31/09Cash
            
            $
            15,960Total
      assets
            
            $
            93,722Total
      liabilities
            
            $
            427,928Shareholders'
      equity
            
            $
            (334,206)





Operating Data: 12/31/09Revenue
            
            $
            283,881Operating
      Expenses
            
            $
            133,014Net
      Income
            
            $
            6,423








-
15 -








Balance
      Sheet Data: 12/31/08Cash
            
            $
            39,979Total
      assets
            
            $
            196,481Total
      liabilities
            
            $
            407,524Shareholders'
      equity
            
            $
            (211,043)





Operating Data: 12/31/08Revenue
            
            $
            610,992Operating
      Expenses
            
            $
            138,604Net
      Income
            
            $
            61,217





Results
of Operations





The concept for
our business was developed in 1996. However, we had no revenues from 2003 until
2006. Even though we have operated as a corporation since 2005, we have a
limited operating history. This factor makes it difficult to evaluate our
business on the basis of historical operations. As a consequence, our past
results may not be indicative of future results. Although this is true for any
business, it is particularly true for us because of our limited operating
history. Reliance on historical results may hinder our ability to anticipate and
timely adapt to increases or decreases in sales, revenues or expenses. In
addition, we have a history of losses. Furthermore, our losses may continue into
the future. We have never had a profitable fiscal year.





Our accountants have expressed
doubt about our ability to continue as a going concern as a result of our
continued net losses. Our ability to achieve and maintain profitability and
positive cash flow is dependent upon our ability to locate clients who will
purchase our products and use our services and our ability to generate
revenues.





The revenues for all of the
relevant periods in this discussion came from sales of products in our
subsidiary, Stone Select, LLC. We had no revenues from our interior design
consulting operated through By Design, Inc. We currently have no active projects
and generate no revenue in By Design, Inc. but continue to look for potential
projects.





For the twelve months ended
December 31, 2009, sales were $283,881. For the twelve months ended December 31,
2008, sales were $610,992. We were involved in fewer projects in 2008 compared
to 2008 and generated less revenue.





Our
revenues decreased from 2008 to 2009 primarily because of the general
decline in construction projects in the Denver area. We had no revenues from our
interior design consulting operated through By Design, Inc. We currently have no
active projects and generate no revenue in our By Design, Inc. but continue to
look for potential projects.  Our ability to attract new clients is
related to our marketing efforts, including the use of
referrals.





For the
twelve months ended December 31, 2009, cost of goods sold were $173,156, as
compared to $390,760 for the twelve months ended December 31, 2008. Costs of
goods sold include all direct costs incurred in selling products. In
addition, in 2009, we wrote off a substantial portion of our inventory, which is
shown as a separate line item. We do not separate sales of different product
lines into operating segments. Our cost of goods decreased in 2009 compared to
2008 principally because of fewer projects.





The
difference between sales and cost of goods sold is gross profit. Our gross
profit for the twelve months ended December 31, 2009, was $110,725, as compared
to gross profit for the twelve months ended December 31, 2008 of
$220,232.





-
16 -








Operating
expenses, which include depreciation and general and administrative expenses for
the twelve months ended December 31, 2009 were $133,014. Our operating expenses
for the twelve months ended December 31, 2008 were $138,604. The major
components of operating expenses include rent, marketing costs, professional
fees, which consist of legal and accounting costs, and telephone expenses.
In 2008, we had significantly lower general and administrative expenses than
previous years, which was a result of better cost controls for marketing and
professional fees. We maintained the trend in 2009. However, we took a
write-down of inventory in 2009 in the amount of $31,523. We sold the inventory
on a liquidation basis. We have no other material inventory write-offs which we
anticipate in the future.





Each at
December 31, 2009 and December 31, 2008, we had one payable due to Ms. Underwood
for $358,686 and $341,747, respectively, for working capital advances made to
us. This payable is due on demand, is an oral agreement and unsecured.  In
2007 we agreed to accrue interest on the advances at 6% per annum. Interest
expense under this agreement at December 31, 2008 and 2009 was $40,481 and
$61,176, respectively. We have no ability at the current time to repay related
party advances. In the event that we need additional capital, Ms. Underwood has
agreed to loan such funds as may be necessary through December 31, 2010 for
working capital purposes. We also recorded compensation expense of $500 per
month in 2008 for administrative and management services donated to us by
officers, and $250 per month for office space donated by an officer. Total
donated services expense for 2008 was $9,000.





As a
result of the foregoing, we had net income of $6,423 ($0.00 per share) for the
twelve months ended December 31, 2009 compared to a net income of $61,217 ($0.01
per share) for the twelve months ended December 31, 2008.





We
believe that the potential sales for 2010 does not look better than 2009 because
the current construction market. As a result, our potential sales could be
closer to our 2009 numbers than those of 2008. However, it is too early to
predict with certainty. We currently have a policy of acquiring inventory for
specific projects, as opposed to ordering the inventory and attempting to market
it.  Also, we feel that we have implemented better controls over our
operating expenses. Because we do not pay salaries, operating expenses are
expected to remain fairly constant with respect to sales except for costs
associated with marketing. Hence each additional sale and correspondingly the
gross profit of such sale have minimal offsetting operating expense. Thus,
additional sales should become a profit at a higher return on sales rates as a
result of not needing to expand our operational expenses at the same pace. We
plan to continue to focus our marketing on the Denver Metropolitan area through
referrals for 2010, so we do not believe that our marketing costs will increase
substantially through the second quarter of 2010.





To try to
operate at a break-even level based upon our current level of anticipated
business activity, we believe that we must generate approximately $300,000 in
revenue per year. However, if our forecasts are inaccurate, we will need to
raise additional funds. In the event that we need additional capital, Ms.
Underwood has agreed to loan such funds as may be necessary through December 31,
2010 for working capital purposes.





On the
other hand, we may choose to scale back our operations to operate at break-even
with a smaller level of business activity, while adjusting our overhead to meet
the revenue from current operations. In addition, we expect that we will need to
raise additional funds if we decide to pursue more rapid expansion, the
development of new or enhanced services and products, appropriate responses to
competitive pressures, or the acquisition of complementary businesses or
technologies, or if we must respond to unanticipated events that require us to
make additional investments. We cannot assure that additional financing will be
available when needed on favorable terms, or at all.





We expect
to incur operating losses in future periods because we will be incurring
expenses and not generating sufficient revenues. We expect approximately
$135,000 in operating costs over the next twelve months. We cannot guarantee
that we will be successful in generating sufficient revenues or other funds in
the future to cover these operating costs. Failure to generate sufficient
revenues or additional financing when needed could cause us to go out of
business.





Liquidity
and Capital Resources





As of
December 31, 2009, we had cash or cash equivalents of $15,690, compared to
$39,979 in cash or cash equivalents as of December 31, 2008.





-
17 -








Net cash
provided by operating activities was $100,567 for the twelve months ended
December 31, 2009, compared to net cash used for operating activities of $44,245
for the twelve months ended December 31, 2008.





Cash
flows used for investing activities were $-0- for the twelve months ended
December 31, 2009 compared to $-0- for the twelve months ended December 31,
2008.





Cash
flows used for financing activities were $124,586 for the twelve months ended
December 31, 2009 compared to cash flows provided by financing activities of
$32,700 for the twelve months ended December 31, 2008. These cash flows were all
related to borrowings from related parties.





We
believe that we have sufficient capital in the short term for our current level
of operations. This is because we believe that we can attract sufficient product
sales and services within our present organizational structure and resources to
become profitable in our operations. Additional resources would be needed to
expand into additional locations, which we have no plans to do at this time. We
do not anticipate needing to raise additional capital resources in the next
twelve months. In the event that we need additional capital, Ms. Underwood has
agreed to loan such funds as may be necessary through December 31, 2010 for
working capital purposes.





Our
principal source of liquidity will be our operations. We expect variation in
revenues to account for the difference between a profit and a loss. Also
business activity is closely tied to the economy of Denver and the U.S. economy.
Because we currently only sell stone products, a slow down in purchases of
construction materials have had a negative impact to our business in the latter
half of 2009. We have no idea to what extent this may affect us in 2010, but do
not expect construction activity to increase. In any case, we try to operate
with minimal overhead. Our primary activity will be to seek to develop clients
and, consequently, our sales. If we succeed in expanding our client base and
generating sufficient sales, we will become profitable. We cannot guarantee that
this will ever occur. Our plan is to build our company in any manner which will
be successful.





Off-Balance
Sheet Arrangements





We have no off-balance sheet arrangements with any party.





Recently
Issued Accounting Pronouncements





We do not
expect the adoption of any recently issued accounting pronouncements to have a
significant impact on our net results of operations, financial position, or cash
flows.





Seasonality





We do not
expect our sales to be impacted by seasonal demands for our products and
services.








ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.





A smaller
reporting company is not required to provide the information in this
Item.








ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





Our
consolidated financial statements of commencing on page F-1 are included with
this prospectus.  These financial statements have been prepared on the
basis of accounting principles generally accepted in the United States and are
expressed in US dollars.

















-
18 -


















BY
DESIGN, INC.





CONSOLIDATED
FINANCIAL STATEMENTS





December
31, 2008,


& December
31, 2009


(Audited)















F
- 1









TABLE
OF CONTENTS








PageREPORT
      OF INDEPENDENT REGISTEREDPUBLIC
      ACCOUNTING FIRM
            F-3CONSOLIDATED
      FINANCIAL STATEMENTSConsolidated
      balance sheets
            F-4Consolidated
      statements of operations
            F-5Consolidated
      statements of stockholders’ equity
            F-6Consolidated
      statements of cash flows
            F-7Notes
      to consolidated financial statements
            F-9











F
- 2




RONALD R.
CHADWICK, P.C.
 Certified
Public Accountant
 2851
South Parker Road, Suite 720
 Aurora,
Colorado  80014
 Telephone
(303)306-1967
 Fax
(303)306-1944
 Email:
rcpc35@hotmail.com
 
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Board of
Directors
 By
Design, Inc.
 Denver,
Colorado
 
 I have
audited the accompanying consolidated balance sheets of By Design, Inc. as of
December 31, 2008 and 2009, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
 
 I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  I believe that my audit provides a reasonable basis for
my opinion.
 
 In my
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of By Design, Inc.
as of December 31, 2008 and 2009, and the consolidated results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 6 to the
financial statements the Company has a working capital deficitthat
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to this matters is also described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
 
 Aurora,
      Colorado
              /s/
      Ronald R. Chadwick, P.C.February
      15, 2010
              RONALD
      R. CHADWICK, P.C.








F
- 3








BY
      DESIGN, INC.CONSOLIDATED
      BALANCE SHEETSDec.
      31, 2008
            
            
            Dec.
      31, 2009ASSETSCurrent
      assetsCash
            
            $
            39,979
            
            
            $
            15,960Accounts
      receivable
            
            
            49,153
            
            
            
            -Inventory
            
            
            41,109
            
            
            
            21,315Total current
      assets
            
            
            130,241
            
            
            
            37,275Fixed
      assets
            
            
            88,828
            
            
            
            88,828Less
      accumulated depreciation
            
            
            (26,688
            )
            
            
            (36,481
            )Other
      assets
            
            
            4,100
            
            
            
            4,10066,240
            
            
            
            56,447Total
      Assets
            
            $
            196,481
            
            
            $
            93,722LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
            
            $
            4,495
            
            
            $
            -Related party
      payables
            
            
            11,939
            
            
            
            -Related party
      advances
            
            
            341,747
            
            
            
            358,686Accrued interest
      payable
            
            
            40,481
            
            
            
            61,176Other
      liabilities
            
            
            8,862
            
            
            
            8,066Total current
      liabilties
            
            
            407,524
            
            
            
            427,928Total
      Liabilities
            
            
            407,524
            
            
            
            427,928Stockholders'
      EquityPreferred
      stock, $.01 par value;1,000,000
      shares authorized;No
      shares issued & outstanding
            
            
            -
            
            
            
            -Common
      stock, $.001 par value;50,000,000
      shares authorized;9,197,802
      shares issued&
      outstanding
            
            
            9,198
            
            
            
            9,198Additional
      paid in capital
            
            
            48,903
            
            
            
            (80,683
            )Accumulated
      deficit
            
            
            (269,144
            )
            
            
            (262,721
            )Total
      Stockholders' Equity
            
            
            (211,043
            )
            
            
            (334,206
            )Total
      Liabilities and Stockholders' Equity
            
            $
            196,481
            
            
            $
            93,722








The
accompanying notes are an integral part of the consolidated financial
statements.





F
- 4








BY
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONSYear
      Ended
            
            
            Year
      EndedDec.
      31, 2008
            
            
            Dec.
      31, 2009Sales
            
            $
            610,992
            
            
            $
            283,881Cost
      of goods sold
            
            
            390,760
            
            
            
            173,156Gross
      profit
            
            
            220,232
            
            
            
            110,725Operating
      expenses:Amortization
      & depreciation
            
            
            9,793
            
            
            
            9,793General
      and administrative
            
            
            128,811
            
            
            
            91,698Write
      offs - inventory
            
            
            
            
            
            
            31,523138,604
            
            
            
            133,014Other
      operating items:Collection
      of accounts previouslywritten
      off
            
            
            
            
            
            
            49,407-
            
            
            
            49,407Income
      (loss) from operations
            
            
            81,628
            
            
            
            27,118Other
      income (expense):Interest
      expense
            
            
            (20,411
            )
            
            
            (20,695
            )(20,411
            )
            
            
            (20,695
            )Income
      (loss) beforeprovision
      for income taxes
            
            
            61,217
            
            
            
            6,423Provision
      for income tax
            
            
            -
            
            
            
            -Net
      income (loss)
            
            $
            61,217
            
            
            $
            6,423Net
      income (loss) per share(Basic
      and fully diluted)
            
            $
            0.01
            
            
            $
            0.00Weighted
      average number ofcommon
      shares outstanding
            
            
            9,197,802
            
            
            
            9,197,802




The
accompanying notes are an integral part of the consolidated financial
statements.





F
- 5








BY
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITYCommon
      Stock
            
            
            
            
            
            
            
            
            Stock-Amount
            
            
            Paid
      in
            
            
            Accumulated
            
            
            holders'Shares
            
            
            ($.001
      Par)
            
            
            Capital
            
            
            Deficit
            
            
            EquityBalances
      at December 31, 2007
            
            
            9,197,802
            
            
            $
            9,198
            
            
            $
            88,903
            
            
            $
            (330,361
            )
            
            $
            (232,260
            )Distributions
            
            
            
            
            
            
            
            
            
            
            (40,000
            )
            
            
            
            
            
            
            (40,000
            )Net
      income (loss) for the year
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            61,217
            
            
            
            61,217Balances
      at December 31, 2008
            
            
            9,197,802
            
            
            $
            9,198
            
            
            $
            48,903
            
            
            $
            (269,144
            )
            
            $
            (211,043
            )Distributions
            
            
            
            
            
            
            
            
            
            
            (129,586
            )
            
            
            
            
            
            
            (129,586
            )Net
      income (loss) for the year
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6,423
            
            
            
            6,423Balances
      at December 31, 2009
            
            
            9,197,802
            
            
            $
            9,198
            
            
            $
            (80,683
            )
            
            $
            (262,721
            )
            
            $
            (334,206
            )




The
accompanying notes are an integral part of the consolidated financial
statements.








F
- 6





BY
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSYear
      Ended
            
            
            Year
      EndedDec.
      31, 2008
            
            
            Dec.
      31, 2009Cash
      Flows From Operating Activities:Net
      income (loss)
            
            $
            61,217
            
            
            $
            6,423Adjustments
      to reconcile net loss tonet
      cash provided by (used for)operating
      activities:Amortization
      & depreciation
            
            
            9,793
            
            
            
            9,793Accounts
      receivable
            
            
            (32,658
            )
            
            
            49,153Inventory
            
            
            
            
            
            
            (11,729
            )Accrued
      payables
            
            
            24,081
            
            
            
            15,404Write
      offs
            
            
            
            
            
            
            31,523Other
      liabilities
            
            
            (18,188
            )Net cash provided by (used
      for)operating
      activities
            
            
            44,245
            
            
            
            100,567Cash
      Flows From Investing Activities:Net
      cash provided by (used for)investing
      activities
            
            
            -
            
            
            
            -(Continued
      On Following Page)





The
accompanying notes are an integral part of the consolidated financial
statements.





F
- 7








BY
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS(Continued
      From Previous Page)Year
      Ended
            
            
            Year
      EndedDec.
      31, 2008
            
            
            Dec.
      31, 2009Cash
      Flows From Financing Activities:Related
      party advances - borrowings
            
            
            7,300
            
            
            
            5,000Paid
      in capital - distributions
            
            
            (40,000
            )
            
            
            (129,586
            )Net cash provided by (used
      for)financing
      activities
            
            
            (32,700
            )
            
            
            (124,586
            )Net
      Increase (Decrease) In Cash
            
            
            11,545
            
            
            
            (24,019
            )Cash
      At The Beginning Of The Period
            
            
            28,434
            
            
            
            39,979Cash
      At The End Of The Period
            
            $
            39,979
            
            
            $
            15,960Schedule Of Non-Cash Investing And Financing
      ActivitiesNoneSupplemental DisclosureCash
      paid for interest
            
            $
            -
            
            
            $
            -Cash
      paid for income taxes
            
            $
            -
            
            
            $
            -




The
accompanying notes are an integral part of the consolidated financial
statements.





F
- 8
  BY
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2009
  
 NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 By
Design, Inc. (the “Company”), was incorporated in the State of Nevada on
February 23, 2006. The Company was formed to market and supply home design
products to residential and commercial builders and developers. The Company may
also engage in any other business permitted by law, as designated by the Board
of Directors of the Company.
 
 Principles of
consolidation
 
 The
accompanying consolidated financial statements include the accounts of By
Design, Inc. and its 51% owned subsidiary. All intercompany accounts and
transactions have been eliminated in consolidation.
 
 Use of
Estimates
 
 The
preparation of consolidated financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
 
 Cash and cash
equivalents
 
 The
Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
 
 Accounts
receivable
 
 The
Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary. At December 31, 2008 and 2009 the Company had no balance in
its allowance for doubtful accounts.
 
 Property and
equipment
 
 Property
and equipment are recorded at cost and depreciated under the straight line
method over each item's estimated useful life.
 
 Minority
Interest
 
 The
Company’s subsidiary has minority members, representing ownership interests of
49% at December 31, 2008 and 2009.  Allocation of their proportionate
net losses beyond $100 would result in negative capital accounts. Accordingly,
their investment is shown as $0 at
 
  F
- 9
  BY
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2009
  
 NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES  (Continued):
 
 December
31, 2008 and 2009 and all losses subsequent to the minority members' capital
accounts reaching zero have been charged to the majority member. Gains have also
been credited to the majority member, until such time as the minority members'
capital accounts exceed zero.
 
 Inventories
 
 Inventories,
consisting of building materials, are stated at the lower of cost or market
(first-in, first-out method). Costs capitalized to inventory include the
purchase price, transportation costs, and any other expenditures incurred in
bringing the goods to the point of sale and putting them in saleable condition.
Costs of good sold include those expenditures capitalized to
inventory.
 
 Revenue
recognition
 
 Revenue
is recognized on an accrual basis as earned under contract terms. Specifically,
revenue from product sales is recognized subsequent to a customer ordering a
product at an agreed upon price, delivery has occurred, and collectability is
reasonably assured.
 
 Advertising
costs
 
 Advertising
costs are expensed as incurred. The Company recorded no advertising costs in
2008 and $4,000 in 2009.
 
 Income
tax
 
 The
Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred
taxes are provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences and operating loss carryforwards
and deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
 
  F
- 10
  BY
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2009
  
 NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
 
 Net income (loss) per
share
 
 The net
income (loss) per share is computed by dividing the net income (loss) by the
weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
 
 Financial
Instruments
 
 The
carrying value of the Company’s financial instruments, as reported in the
accompanying balance sheets, approximates fair value.
 
 Long-Lived
Assets
 
 In
accordance with ASC 350, the Company regularly reviews the carrying value of
intangible and other long-lived assets for the existence of facts or
circumstances, both internally and externally, that may suggest impairment. If
impairment testing indicates a lack of recoverability, an impairment loss is
recognized by the Company if the carrying amount of a long-lived asset exceeds
its fair value.
 
 Products and services,
geographic areas and major customers
 
 The
Company earns revenue from the sale of building materials, but does not separate
sales of different product lines into operating segments. All sales each year
were domestic and to external customers.
 
 
 NOTE
2. RELATED PARTY TRANSACTIONS
 
 The
Company at December 31, 2008 and 2009 had a payable due to a Company officer of
$341,747 and $358,686 for due on demand, unsecured, working capital advances
made to the Company. Prior to 2008 the advances were non-interest bearing. In
2008 the Company agreed to accrue interest on the advances at 6% per annum.
Interest expense under this agreement in 2008 and 2009 was $20,411 and $20,695
with accrued interest payable at December 31, 2008 and 2009 of $40,481 and
$61,176. The Company also recorded compensation expense of $500 per month in
2008 for administrative and management services donated to the Company by
officers, and $250 per month for office space donated by an officer. Total
donated services expense for 2008 was $9,000.
 
  F
- 11
  
 BY
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2009
  
 
 NOTE
3. INCOME TAXES
 
 Deferred
income taxes arise from the temporary differences between financial statement
and income tax recognition of net operating losses. These loss carryovers are
limited under the Internal Revenue Code should a significant change in ownership
occur.
 
 At
December 31, 2008 and 2009 the Company had net operating loss carryforwards of
approximately $107,000 and $131,000 which begin to expire in 2025. The deferred
tax asset of $42,000 and $51,000 created by the net operating losses has been
offset by a 100% valuation allowance. The change in the valuation allowance in
2008 and 2009 was $(7,081) and $9,257.
 
 
 NOTE
4. FIXED ASSETS
 
 Fixed
asset values recorded at cost are as follows:
  2008
              
              
              2009Furniture
      & fixtures
              
              $
              9,927
              
              
              $
              9,927Shop
      equipment
              
              
              6,420
              
              
              
              6,420Computer
      equipment
              
              
              4,928
              
              
              
              4,928Leasehold
      improvements
              
              
              67,553
              
              
              
              67,55388,828
              
              
              
              88,828Less
      accumulated depreciation
              
              
              (26,688
              )
              
              
              (36,481
              )Total
              
              $
              62,140
              
              
              $
              52,347
 Depreciation
expense in 2008 and 2009 was $9,793 each year.
 
 
 NOTE
5. LEASE COMMITMENT
 
 The
Company rents office space at $1,500 per month under a verbal lease, and yard
and warehouse space at approximately $2,100 per month plus costs under a
non-cancellable lease with no stated renewal option expiring in March 2012. Rent
expense under all leases for 2008 and 2009 was $47,473 and $53,462. Minimum
future rent expenses by year from December 31, 2009 forward under the leases
are: 2010 $25,536, 2011 $25,536, and 2012 $6,384 ($57,456 total).
  
  F
- 12
  
 BY
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2009
  
 
 NOTE
6. GOING CONCERN
 
 The
Company has a large working capital deficit. This condition raises substantial
doubt about the Company’s ability to continue as a going concern. The Company
may raise additional capital through the sale of its equity securities, through
offerings of debt securities, or through borrowings from financial institutions.
Management believes that actions presently being taken to obtain additional
funding provide the opportunity for the Company to continue as a going
concern.
 
  F
- 13





ITEM
9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.





We did
not have any disagreements on accounting and financial disclosures with our
present accounting firm during the reporting period.





ITEM
9A(T). CONTROLS AND PROCEDURES.





Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures





Under the
supervision and with the participation of our principal executive officer and
principal financial officer, we conducted an evaluation of our disclosure
controls and procedures, as such term is defined under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended (the Exchange
Act).   Accordingly, we concluded that our disclosure controls and
procedures as defined in Rule 13a-15(e) under the Exchange Act were effective to
ensure that information required to be disclosed in reports we file or submit
under the Exchange Act is recorded, processed, and summarized and reported
within the time periods specified in SEC rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Act is accumulated and communicated to the
issuer’s management, including its principal executive and principal financial
officers, or persons performing similar functions as appropriate to allow timely
decisions regarding required disclosure.   As a result of this evaluation,
we identified no material weaknesses in our internal control over financial
reporting as of December 31, 2009.  Accordingly, we concluded that our
disclosure controls and procedures were effective as of December 31,
2009.





Management’s
Annual Report on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) and 15d-(f) under
the Exchange Act. Our internal control over financial reporting are designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of consolidated financial statements for external purposes
in accordance with U. S. generally accepted accounting principles. Our internal
control over financial reporting includes those policies and procedures
that:





i.            pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;


ii.            provide
reasonable assurance that transactions are recorded as necessary to permit the
preparation of our  consolidated financial statements
in  accordance with U. S. generally accepted accounting principles,
and  that our receipts and expenditures are being made only in accordance
with  authorizations of our management and directors; and


iii.           provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect
on the consolidated financial statements.





Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2009. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.





Management
has concluded that our internal control over financial reporting was effective
as December 31, 2009.





Inherent
Limitations Over Internal Controls





Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations, including
the possibility of human error and circumvention by collusion or overriding of
controls. Accordingly, even an effective internal control system may not prevent
or detect material misstatements on a timely basis. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions or that the
degree of compliance with the policies or procedures may
deteriorate.








-
19 -








Changes
in Internal Control Over Financial Reporting





We have
made no change in our internal control over financial reporting during the last
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





Attestation
Report of the Registered Public Accounting Firm.





This
annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report in this annual report on Form
10-K.








ITEM
9B. OTHER INFORMATION.





Nothing
to report.








PART
III





ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE





Set forth below are the names of our
sole director and officer, all positions and offices held with us, the period
during which she has served as such, and the business experience during at least
the last five years:





Name
            
            Age
            
            Positions and Offices
  HeldDeanie
      J. Underwood
            
            54
            
            President,
      Chief Executive Officer, Secretary-Treasurer,
                Chief
      Financial Office and Director


Our Director will serve in such capacity until our next annual meeting of
shareholders and until her successors have been elected and qualified. The
officer serve at the discretion of our Director. There are no arrangements or
other understandings between any of our directors or officers or any other
person pursuant to which any officer or director was or is to be selected as an
officer or director. None of our Directors are independent but are a part of,
and are controlled by our management.





Ms. Underwood has been our President, Chief Executive and Financial Officer,
Treasurer and a Director since our inception.  She has been involved
in this business since 1996, through our unincorporated predecessor. This has
been her principal occupation during this period. She has been the
Corporate Secretary since March, 2009, after the resignation of Mr. Bradley C.
Underwood.





Committees
of the Board of Directors





There are
no committees of the Board of Directors.





Section 16(a)
Beneficial Ownership Reporting Compliance





Section 16(a)
of the Securities Exchange Act of 1934 (the “34 Act”) requires our officers and
directors and persons owning more than ten percent of the Common Stock, to file
initial reports of ownership and changes in ownership with the Securities and
Exchange Commission (“SEC”). Additionally, Item 405 of Regulation S-K
under the 34 Act requires us to identify in its Form 10-K and proxy statement
those individuals for whom one of the above referenced reports was not filed on
a timely basis during the most recent year or prior years. We have nothing to
report in this regard.








-
20 -





Code
of Ethics





Our Board
of directors has not adopted a code of ethics but plans to do so in the
future.





Options/SAR
Grants and Fiscal Year End Option Exercises and Values





We have
not had a stock option plan or other similar incentive compensation plan for
officers, directors and employees, and no stock options, restricted stock or SAR
grants were granted or were outstanding at any time.





Item
11. EXECUTIVE COMPENSATION





None of our officers or director
received or was entitled to receive remuneration in excess of $100,000 for the
fiscal years ended December 31, 2009, 2007 or 2006. Our officers and directors
do not receive any compensation for their services rendered to us, nor have they
received such compensation in the past.  As of the date of this
registration statement, we have no funds available to pay the officers and
directors.  Further, the officers and directors are not accruing any
compensation pursuant to any agreement with us. We have no plans to pay any
compensation to our officers or directors in the future.





None of
our officers and directors will receive any finder’s fee, either directly or
indirectly, as a result of their respective efforts to implement our business
plan outlined herein.





No
retirement, pension, profit sharing, stock option or insurance programs or other
similar programs have been adopted by us for the benefit of its
employees.








ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.





The following sets forth the number of
shares of our $.0.001 par value common stock beneficially owned by (i) each
person who, as of March 25, 2009, was known by us to own beneficially more
than five percent (5%) of its common stock; (ii) our individual Directors and
(iii) our Officers and Directors as a group. A total of 9,197,802 shares of
common stock were issued and outstanding as of March 1, 2010.





Name
      and Address
            Amount
      and Nature of
            Percent
      ofof
      Beneficial Owner
            Beneficial
      Ownership (1)(2)
            ClassDeanie
      J. Underwood(3)
            4,400,702
            48%2519
      East Kentucky Ave.Denver,
      Colorado 80209Bradley
      C. Underwood(3)
            4,400,702
            48%2519
      East Kentucky Ave.Denver,
      Colorado 80209All
      Officers and Directors as a Group
                (one
      person)
            4,400,702
            48%





________________





(1) All
ownership is beneficial and of record, unless indicated otherwise.





(2)
Beneficial owners listed above have sole voting and investment power with
respect to the shares shown. Deanie J. Underwood is the step-mother of Bradley
C. Underwood. However, each person disclaims ownership of the other’s
shares.





(3)  Includes
702 shares owned in the name of the Underwood Family Partners, LLC. for which
Deanie and Bradley Underwood are beneficiaries.








-
21 -








ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.





Formerly
we occupied office space on a rent-free basis from one of our former officers,
Mr. Bradley Underwood, which is also Mr. Underwood’s home.


In 2008,
our subsidiary, Stone Select, LLC, had a 1,200 square foot showroom and a 3,000
square foot warehouse. We rented the showroom from an unaffiliated third party
for $1,500 per month on a month-to-month lease. We rented the warehouse from an
unaffiliated third party for $2,700 per month on a two year lease which expired
April, 2009.





Currently,
we rent office space at $1,500 per month under a verbal lease, and yard and
warehouse space at approximately $2,100 per month plus costs under a
non-cancellable lease with an unaffiliated third party and no stated renewal
option expiring in March 2012.





Each at
December 31, 2009 and December 31, 2008, we had one payable due to Ms. Underwood
for $358,686 and $341,747, respectively, for working capital advances made to
us. This payable is due on demand, is an oral agreement and unsecured.  In
2007 we agreed to accrue interest on the advances at 6% per annum. Interest
expense under this agreement at December 31, 2008 and 2009 was $40,481 and
$61,176, respectively. We have no ability at the current time to repay related
party advances. In the event that we need additional capital, Ms. Underwood has
agreed to loan such funds as may be necessary through December 31, 2010 for
working capital purposes.





We also
recorded compensation expense of $500 per month in 2008 for administrative and
management services donated to us by officers, and $250 per month for office
space donated by an officer. Total donated services expense for 2008 was
$9,000.





Unaffiliated third parties, Craig and Susie Bush, collectively own 49% of Stone
Select, LLC. We have ownership and voting control of 51% of Stone Select,
LLC.








ITEM
14: PRINCIPAL ACCOUNTANT FEES AND SERVICES





Our
independent auditor, Ronald R. Chadwick, P.C., Certified Public Accountants,
billed an aggregate of $11,000 for the year ended December 31, 2009 and for
professional services rendered for the audit of the Company's annual financial
statements and review of the financial statements included in its quarterly
reports. The firm billed an aggregate of $10,150 for the year ended December 31,
2008 and for professional services rendered for the audit of the Company's
annual financial statements and review of the financial statements included in
its quarterly reports.





We do not
have an audit committee and as a result our entire board of directors performs
the duties of an audit committee. Our board of directors evaluates the scope and
cost of the engagement of an auditor before the auditor renders audit and
non-audit services.








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ITEM
15. EXHIBITS FINANCIAL STATEMENT SCHEDULES.





The
following financial information is filed as part of this report:





(a)        (1)
FINANCIAL STATEMENTS





(2)
SCHEDULES





(3)
EXHIBITS. The following exhibits required by Item 601 to be filed herewith are
incorporated by reference to previously filed documents:




Exhibit
              Number
            Description3.1.
            Articles
      of Incorporationof By
      Design, Inc.*3.2
            Bylaws
      of By Design, Inc.*4.1
            Stock
      Specimen *21.2
            List
      of Subsidiaries*31.1
            Certification
      of CEO/CFO pursuant to Sec. 30232.1
            Certification
      of CEO/CFO pursuant to Sec. 906





* Previously filed





(b)                 Reports
on Form 8-K. We filed no reports under cover of Form 8-K for the fourth fiscal
quarter of 2009.














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SIGNATURES





In
accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on March 8, 2010.








BY
      DESIGN, INC.By:
            /s/
      Deanie J. UnderwoodDeanie
      J. UnderwoodChief
      Executive Officer and President
              (principal
      executive officer and principal
              financial
      and accounting officer)











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