SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-QSB





QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
Quarterly period ended   June 30,
2008





Commission
File No. 000-53220





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)








Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 is a shell company (as defined in Rule
12b-2 of the Exchange Act)     Yes [
]    No [X]




As of
August 1, 2008, registrant had outstanding 9,197,802 shares of the registrant’s
common stock.  The aggregate market value of the voting stock held by
nonaffiliates is approximately $100,000. Our shares of common stock are
quoted on the Pink Sheets 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.




Transitional
Small Business Disclosure Format (check one):  Yes [
]    No [X]











FORM
10-QSB





By
Design, Inc.





TABLE OF
CONTENTS






PART
      I  FINANCIAL INFORMATION
            PageItem
      1. Financial Statements for the period ended June 30, 2008Consolidated
      Balance Sheet (Unaudited)
            4Consolidated
      Statements of Operations (Unaudited)
            5Consolidated
      Statements of Cash Flows (Unaudited)
            6Notes
      to Consolidated Financial Statements
            8Item
      2. Management’s Discussion and Analysis and Plan of
      Operation
            11Item
      3. Controls and Procedures
            21PART
      II  OTHER INFORMATIONItem
      1. Legal Proceedings
            21Item
      2. Changes in Securities
            21Item
      3. Defaults Upon Senior Securities
            21Item
      4. Submission of Matters to a Vote of Security
    Holders
            21Item
      5. Other Information
            21Item
      6. Exhibits and Reports on Form 8-K
            22Signatures
            22




-
2 -





PART
I  FINANCIAL INFORMATION





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.







ITEM
1.  FINANCIAL STATEMENTS















BY
DESIGN, INC.





CONSOLIDATED
FINANCIAL STATEMENTS


(Unaudited)





Quarter
Ended June 30, 2008











TABLE
OF CONTENTS









PageCONSOLIDATED
      FINANCIAL STATEMENTSConsolidated
      balance sheet
            4Consolidated
      statements of operation
            5Consolidated
      statements of cash flows
            6Notes
      to consolidated financial statements
            8







-
3 -







BY
      DESIGN, INC.CONSOLIDATED
      BALANCE SHEETSJune
      30, 2008Dec.
      31, 2007
            
            
            
            (Unaudited)ASSETSCurrent
      assetsCash
            
            $
            28,434
            
            
            $
            39,569Accounts
      receivable
            
            
            16,495
            
            
            
            153,081Inventory
            
            
            41,109
            
            
            
            41,109Total current
      assets
            
            86,038
            
            
            
            233,759Fixed
      assets
            
            
            88,828
            
            
            
            88,828Less
      accumulated depreciation
            
            (16,895
            )
            
            
            (21,791
            )Other
      assets
            
            
            4,100
            
            
            
            4,10076,033
            
            
            
            71,137Total
      Assets
            
            $
            162,071
            
            
            $
            304,896LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
            
            $
            825
            
            
            $
            -Related party
      payables
            
            
            11,939
            
            
            
            -Related party
      advances
            
            
            334,447
            
            
            
            353,686Accrued interest
      payable
            
            
            20,070
            
            
            
            30,244Other
      liabilities
            
            
            27,050
            
            
            
            79,370Total current
      liabilties
            
            394,331
            
            
            
            463,300Total
      Liabilities
            
            
            394,331
            
            
            
            463,300Stockholders'
      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
            
            88,903
            
            
            
            88,903Accumulated
      deficit
            
            
            (330,361)
            
            
            
            (256,505)Total
      Stockholders' Equity
            
            (232,260)
            
            
            
            (158,404)$
            162,071
            
            
            $
            304,896




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


-
4 -







BY
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONS(Unaudited)Three
      Months
            
            
            Three
      Months
            
            
            Six
      Months
            
            
            Six
      MonthsEnded
            
            
            Ended
            
            
            Ended
            
            
            EndedJune
      30, 2007
            
            
            June
      30, 2008
            
            
            June
      30, 2007
            
            
            June
      30, 2008Sales
            
            $
            126,489
            
            
            $
            102,697
            
            
            $
            259,332
            
            
            $
            305,043Cost
      of goods sold
            
            
            72,601
            
            
            
            75,321
            
            
            
            153,902
            
            
            
            142,499Gross
      profit
            
            
            53,888
            
            
            
            27,376
            
            
            
            105,430
            
            
            
            162,544Operating
      expenses:Amortization
      & depreciation
            
            
            2,714
            
            
            
            2,449
            
            
            
            4,720
            
            
            
            4,897General
      and administrative
            
            
            48,158
            
            
            
            40,037
            
            
            
            98,269
            
            
            
            73,617Write
      offs - inventory50,872
            
            
            
            42,486
            
            
            
            102,989
            
            
            
            78,514Income
      (loss) from operations
            
            
            3,016
            
            
            
            (15,110
            )
            
            
            2,441
            
            
            
            84,030Other
      income (expense):Interest
      income
            
            
            13
            
            
            
            
            
            
            
            16Interest
      expense
            
            
            (5,033
            )
            
            
            (5,122
            )
            
            
            (10,035
            )
            
            
            (10,174
            )Rebates(5,020
            )
            
            
            (5,122
            )
            
            
            (10,019
            )
            
            
            (10,174
            )Income
      (loss) beforeprovision
      for income taxes
            
            
            (2,004
            )
            
            
            (20,232
            )
            
            
            (7,578
            )
            
            
            73,856Provision
      for income tax
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
      income (loss)
            
            $
            (2,004
            )
            
            $
            (20,232
            )
            
            $
            (7,578
            )
            
            $
            73,856Net
      income (loss) per share(Basic
      and fully diluted)
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            0.01Weighted
      average number ofcommon
      shares outstanding
            
            
            9,197,802
            
            
            
            9,197,802
            
            
            
            9,197,802
            
            
            
            9,197,802




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


-
5 -







BY
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS(Unaudited)Six
      Months
            
            
            Six
      MonthsEnded
            
            
            EndedJune
      30, 2007
            
            
            June
      30, 2008Cash
      Flows From Operating Activities:Net
      income (loss)
            
            $
            (7,578
            )
            
            $
            73,856Adjustments
      to reconcile net loss tonet
      cash provided by (used for)operating
      activities:Amortization
      & depreciation
            
            
            4,720
            
            
            
            4,897Donated
      services
            
            
            4,500Accounts
      receivable
            
            
            (89,160
            )
            
            
            (136,586
            )Inventory
            
            
            40,250Accrued
      payables
            
            
            9,497
            
            
            
            9,513Write
      offsOther
      assetsOther
      liabilities
            
            
            
            
            
            
            52,155Net cash provided by (used
      for)operating
      activities
            
            
            (37,771
            )
            
            
            3,835Cash
      Flows From Investing Activities:Fixed
      assets
            
            
            (9,900
            )Net
      cash provided by (used for)investing
      activities
            
            
            (9,900
            )
            
            
            -(Continued
      On Following Page)





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


-
6 -


BY
DESIGN, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)




(Continued
From Previous Page)


Six
      Months
              
              
              Six
      MonthsEnded
              
              
              EndedJune
      30, 2007
              
              
              June
      30, 2008Cash
      Flows From Financing Activities:Related
      party advances - borrowings
              
              
              10,000
              
              
              
              7,300Net cash provided by (used
      for)financing
      activities
              
              
              10,000
              
              
              
              7,300Net
      Increase (Decrease) In Cash
              
              
              (37,671
              )
              
              
              11,135Cash
      At The Beginning Of The Period
              
              
              43,042
              
              
              
              28,434Cash
      At The End Of The Period
              
              $
              5,371
              
              
              $
              39,569Schedule 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.


-
7 -


BY
DESIGN, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)







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.




Basis of
Presentation





The
accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments which are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the interim periods have been made and are of a recurring nature unless
otherwise disclosed herein. The results of operations for such interim periods
are not necessarily indicative of operations for a full year.





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.




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.




Property and
equipment





Property
and equipment are recorded at cost and depreciated under straight line methods
over each item's estimated useful life.





Financial
Instruments




The
carrying value of the Company’s financial instruments, as reported in the
accompanying balance sheets, approximates fair value.




-
8 -





BY
DESIGN, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)







NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):





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 collectibility is
reasonably assured.




Use of
Estimates





The
preparation of 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 financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.





Income
tax





The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (“SFAS 109”). Under SFAS 109 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.





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.





-
9 -





BY
DESIGN, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)










NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):









Financial
Instruments




The
carrying value of the Company’s financial instruments, including cash and cash
equivalents and accrued payables, as reported in the accompanying balance sheet,
approximates fair value.




Long-Lived
Assets




In
accordance with Statement of Financial Accounting Standard 144 “Accounting for
the Impairment or Disposal of Long-Lived Assets”, 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.






-
10 -








ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION





The
following discussion of our financial condition and results of operations should
be read in conjunction with, and is qualified in its entirety by, the
consolidated financial statements and notes thereto included in, Item 1 in this
Quarterly Report on Form 10-QSB. This item contains forward-looking statements
that involve risks and uncertainties. Actual results may differ materially from
those indicated in such forward-looking statements.





Forward-Looking
Statements




This
Quarterly Report on Form 10-QSB and the documents incorporated herein by
reference contain forward-looking statements.  Such forward-looking
statements are based on current expectations, estimates, and projections about
our industry, management beliefs, and certain assumptions made by our
management.  Words such as “anticipates”, “expects”, “intends”,
“plans”, “believes”, “seeks”, “estimates”, variations of such words, and similar
expressions are intended to identify such forward-looking
statements.  These statements are not guarantees of future performance
and are subject to certain risks, uncertainties, and assumptions that are
difficult to predict; therefore, actual results may differ materially from those
expressed or forecasted in any such forward-looking
statements.  Unless required by law, we undertake no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events, or otherwise.  However, readers should
carefully review the risk factors set forth herein and in other reports and
documents that we file from time to time with the Securities and Exchange
Commission, particularly the Annual Reports on Form 10-KSB, Quarterly reports on
Form 10-QSB and any Current Reports on Form 8-K.




Risk
Factors




You
should carefully consider the risks and uncertainties described below; and all
of the other information included in this document. Any of the following risks
could materially adversely affect our business, financial condition or operating
results and could negatively impact the value of your investment.




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.





RISKS
ASSOCIATED WITH OUR COMPANY:





We
have had a history of losses and may not be able to develop consistent
profitability.




We had a
net loss of $20,232 on revenues of $102,697 for the three months ended June 30,
2008, compared to a net loss of $2,004 on revenues of $126,489 for the three
months ended June 30, 2007. We had a net profit of $73,856 on revenues of
$305,043 for the six months ended June 30, 2008, compared to a net loss of
$7,578 on revenues of $259,332 for the six months ended June 30, 2007. We
cannot assure you that we will generate profits in the future, even if our sales
increase dramatically. We will need to generate greater revenues and improved
margins to achieve and maintain profitability in the future. If our operating
losses continue on a long-term basis, we may experience a shortage of working
capital that could adversely affect our business or our ability to continue our
business, in which case our




Because
we had incurred continuing operating losses, our accountants have expressed
doubts about our ability to continue as a going concern.




For the
fiscal year ended December 31, 2006 and 2007, 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 sufficient
revenues.




-
11 -


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 $500,000 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, 2008 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.




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
never become profitable. An investor could lose his entire
investment.





-
12 -


We
have no experience as a public company.





We have
never operated as a public company. We have no 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 never become profitable, 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 never become
profitable, 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.




We
currently have only two suppliers.  The loss of either would have a
negative effect on our business.




We
currently purchase finished products from only two suppliers. Each of these
suppliers 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 either supplier would ave a negative effect on our business because we would
not have sufficient inventory to sell. If we cannot replace a 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.





-
13 -


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 competitors
is larger and have 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 and Mexico. 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:




•
            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;






-
14 -






•
            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 2007, sales to its four largest customers were approximately 55%
of its total net sales, with the largest customer accounting for approximately
20% of sales, and the others between approximately 10% and 13%. In 2006, sales
to its largest customer were approximately  26% of its total net
sales. Sales to its second largest customer accounted for approximately 14% of
sales. 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 in the Pink Sheets, 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:





*
            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 May 1, 2008, 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.





-
15 -


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
Pink Sheets, 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 Pink Sheets. 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 Pink Sheets.  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




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.




Overview
and History




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.


-
16 -








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.





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.





We have not been subject to any bankruptcy, receivership or similar proceeding.
We are a Nevada corporation. Our principal business address is 2519 East
Kentucky Ave., Denver, Colorado 80209. Our telephone number is (303)
660-6964.





Results
of Operations





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.




For the three months ended June 30, 2008, sales were $102,697. For the three
months ended June 30, 2007, sales were $126,489. For the six months ended June
30, 2008, sales were $305,043. For the six months ended June 30, 2007, sales
were $259,332. We had more projects and larger projects in 2008 compared to
2007, which accounted for our higher revenue. Our revenue in the most recent
three months was lower because of projects completed and additional projects not
yet billed.




While there were declining construction activities in the Denver area during the
first six months of 2008, our revenues increased from 2007 to 2008
primarily because we maintained the number of our existing projects and
developed two special projects, which should keep us occupied for the next few
months.





For the three months ended June 30, 2008, cost of goods sold were $75,321, as
compared to $72,601 for the three months ended June 30, 2007.    For
the six months ended June 30, 2008, cost of goods sold were $142,499, as
compared to $153,902  for the six months ended June 30, 2007. Costs of
goods sold include all direct costs incurred in selling products. We do not
separate sales of different product lines into operating segments. Our cost of
goods increased for the three months ended June 30, 2008 compared to for the
three months ended June 30, 2007 principally because of higher material costs
and freight charges but were lower for the six month periods for the same
reasons.


-
17 -




The difference between sales and cost of goods sold is gross profit. Our gross
profit for the three months ended June 30, 2008, was $27,376, as compared to
gross profit for the three months ended June 30, 2007 of $53,888. Our gross
profit for the six months ended June 30, 2008, was $162,544, as compared to
gross profit for the six months ended June 30, 2007 of $105,430. The lower
material and freight costs in the three months of 2008 compared to 2007 are
directly reflected in our lower gross profit, while the reverse was true for the
six month periods.





Operating expenses, which include depreciation and general and administrative
expenses for the three months ended June 30, 2008 were $42,486. Our operating
expenses for the three months ended June 30, 2007 were $50,872.  Operating
expenses for the six months ended June 30, 2008 were $78,514. Our operating
expenses for the six months ended June 30, 2007 were $102,989. The major
components of operating expenses include rent, marketing costs, professional
fees, which consist of legal and accounting costs, and telephone expenses.
For the three  and six months ended June 30, 2008, we had
significantly lower general and administrative expenses, which was a result of
better cost controls for marketing and professional fees.




At June 30, 2008, we had one payable due to Ms. Underwood in the amount of
$353,686 for working capital advances made to us. This payable is due on demand,
is an oral agreement and is unsecured.  In 2007 we agreed to accrue
interest on the advances at 6% per annum. 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, 2008 for working capital purposes.




As a result of the foregoing, we had a net loss of $20,232 ($0.00 per share) for
the three months ended June 30, 2008 compared to a net loss of $2,004($0.00 per
share) for the three months ended June 30, 2007. We had a net profit of $73,856
($0.01 per share) for the six months ended June 30, 2008 compared to a net loss
of $7,578 ($0.00 per share) for the six months ended June 30, 2007.





For the fiscal years ended 2007 and 2006, 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.





We believe that the potential sales for 2008 could look better than 2007 because
we have two projects which we have recently developed which could provide
substantial sales and which will occupy most of the year 2008.  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.




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 may continue to incur operating losses in future periods because we will be
incurring expenses and not generating sufficient revenues. We expect
approximately $500,000 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.




-
18 -


Liquidity
and Capital Resources




As of
June 30, 2008, we had cash or cash equivalents of $39,569, compared to $5,371 in
cash or cash equivalents as of June 30, 2007.





Net cash
provided by operating activities was $3,835 for the six months ended June 30,
2008 compared net cash used for operating activities of $37,771 for the six
months ended June 30, 2007. The major difference was our net income for the six
months ended June 30, 2008, compared to the six months ended June 30,
2007.





Cash
flows used for investing activities were $-0- for the six months ended June 30,
2008 and $9,900 (for the purchase of a fixed asset)for the six months ended June
30, 2007.





Cash
flows provided by financing activities were $7,300 for the six months ended June
30, 2008 compared to $10,000 for the six months ended June 30, 2007. These cash
flows were all related to borrowings from a related party.





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, 2008 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 could have a negative impact to our business. We were
profitable for the three months ended June 30, 2008. However, we have no idea to
what extent the economic situation may affect us for fiscal year 2008, although
we have started our fiscal year with two projects which could provide
substantial sales and which will occupy most of 2008. 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.





Plan
of Operation





Our
plan for the next twelve months immediately is to operate at a profit or at
break even. Our plan is to sell more of our products, especially our fireplace
surrounds, kitchen hoods, interior and exterior natural stone ornamentation and
architectural elements, to become profitable in our operations. In addition, we
plan to use our referral sources to develop interior design business for By
Design, Inc.




Currently, we are conducting business only through Stone Select, LLC and in only
one location in the Denver Metropolitan area. We have no plans to expand into
other locations or areas. We believe that the timing of the completion of the
milestones needed to become profitable can be achieved as we are presently
organized with sufficient business.





Other than the shares offered by last offering no other source of capital has
been identified or sought.


-
19 -





If we are not successful in our operations we will be faced with several
options:





1.
            Cease
      operations and go out of business;





2.
            Continue
      to seek alternative and acceptable sources of
  capital;





3.
            Bring
      in additional capital that may result in a change of control;
      or





4.
            Identify
      a candidate for acquisition that seeks access to the public marketplace
      and its financing sources





Currently,
we believe that we have sufficient capital or access to capital to implement our
proposed business operations or to sustain them for 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, 2008 for working capital
purposes.





If we can
sustain profitability, we could operate at our present level
indefinitely.





To date,
we have never had any discussions with any possible acquisition candidate nor
have we any intention of doing so.





Proposed
Milestones to Implement Business Operations




At the present time, we are operating from one location in the Denver
Metropolitan area. Our plan is to make our operation profitable by the end of
our fiscal year 2008. We estimate that we must generate approximately $500,000
in sales per year to be profitable.





We believe that we can be profitable or at break even at the end of the current
fiscal year, assuming sufficient sales. Based upon our current plans, we have
adjusted our operating expenses so that cash generated from operations and from
working capital financing is expected to be sufficient for the foreseeable
future to fund our operations at our currently forecasted levels. 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 $500,000 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,
2008 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 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 might
incur operating losses in future periods because we will be incurring expenses
and not generating sufficient revenues. We expect approximately $500,000 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




In the
event that we need additional capital, Ms. Underwood has agreed to loan such
funds as may be necessary through December 31, 2008 for working capital
purposes. Otherwise, no commitments to provide additional funds have been made
by management or current shareholders. There is no assurance that additional
funds will be made available to us on terms that will be acceptable, or at all,
if and when needed. We expect to continue to generate and increase sales, but
there can be no assurance we will generate sales sufficient to continue
operations or to expand.





We
also are planning to rely on the possibility of referrals from clients and will
strive to satisfy our clients. We believe that referrals will be an effective
form of advertising because of the quality of service that we bring to clients.
We believe that satisfied clients will bring more and repeat
clients.


-
20 -





In the next
12 months, we do not intend to spend any material funds on research and
development and do not intend to purchase any large equipment.





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
3.  CONTROLS AND PROCEDURES





As of the
end of the period covered by this report, based on an evaluation of our
disclosure controls and procedures (as defined in Rules 13a -15(e) and
15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief
Financial Officer has concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in our
Exchange Act reports is recorded, processed, summarized, and reported within the
applicable time periods specified by the SEC’s rules and forms.





There were
no changes in our internal controls over financial reporting that occurred
during our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.








PART
II.  OTHER INFORMATION





ITEM
1.  LEGAL PROCEEDINGS




There are no
legal proceedings, to which we are a party, which could have a material adverse
effect on our business, financial condition or operating results.





ITEM
2.  CHANGES IN SECURITIES





None





ITEM
3.  DEFAULTS UPON SENIOR SECURITIES





None





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





None




ITEM
5.  OTHER INFORMATION




None


-
21 -


ITEM
6.  EXHIBITS AND REPORTS ON FORM 8-K




Exhibit
      No.
            Description3.1
            Articles
      of Incorporation of By Design, Inc.*3.2
            Bylaws
      of By Design, Inc.*4.1
            Stock
      Specimen *21.1
            List
      of Subsidiaries*31.1
            Certification
      of CEO/CFO pursuant to Sec. 30232.1
            Certification
      of CEO/CFO pursuant to Sec. 906


* Previously filed





Reports on Form
8-K





We filed no
reports under cover of Form 8K for the fiscal quarter ended June 30,
2008.








SIGNATURES





Pursuant to
the requirements 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 August 18, 2008.





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




- 22
-