UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10–Q





x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
quarterly period endedSeptember 30, 2010





or




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
transition period from ____________ to ________________





Commission
file number 000-52089





INVIVO THERAPEUTICS HOLDINGS
      CORP.(Exact
      name of registrant as specified in its charter)Nevada
              
              36-4528166(State
      or other jurisdiction of incorporation
                or
      organization)
              
              (I.R.S.
      Employer Identification No.)100 Europa Drive, Suite 455, Chapel Hill, North
      Carolina 27517(Address
      of principal executive offices)(919) 933-2720(Registrant’s
      telephone number, including area code)Design Source, Inc.(Former
      name if changed since last
report)





Indicate
by check mark whether the issuer (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, and (2) has been subject to such filing requirements for
the past 90 days. Yesx
  No ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes ̈   No ̈





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
One):





Large
      accelerated filer ̈
              
              Accelerated
      filer ̈
              
              Non-accelerated
      filer ̈
              
              Smaller
      reporting companyx(Do
      not check if a smaller
                reporting
      company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yesx  No ̈





As of
October 18, 2010 there were 11,218,457 shares of the issuer’s common stock, par
value $0.00001, outstanding.





INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A
DESIGN SOURCE, INC.





FORM
10-Q


FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010


TABLE
OF CONTENTS





PAGEPART
      I - FINANCIAL INFORMATIONItem
      1.
                Financial
      Statements
                3Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                14Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                16Item
      4.
                Controls
      and Procedures
                16PART
      II - OTHER INFORMATIONItem
      1.
                Legal
      Proceedings
                16Item
      1A.
                Risk
      Factors
                16Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                16Item
      3.
                Defaults
      Upon Senior Securities
                16Item
      4.
                (Removed
      and Reserved)
                17Item
      5.
                Other
      Information
                17Item
      6.
                Exhibits
                17SIGNATURES
                19




2


PART
I – FINANCIAL INFORMATION




ITEM
1.             FINANCIAL
STATEMENTS





PAGEBalance
      Sheets as of September 30, 2010 (Unaudited) andMarch
      31, 2010 (Audited)
                            4Statements
      of Operations for the three and six months endedSeptember
      30, 2010 and 2009 (Unaudited) and for the period fromApril
      2, 2003 (Inception) through September 30, 2010 (Unaudited)
                            5Statements
      of Cash Flows for the six months ended September 30, 2010and
      2009 (Unaudited) and for the period from April 2, 2003(Inception)
      through September 30, 2010 (Unaudited)
                            6Notes
      to Financial Statements (Unaudited)
                            7




3





INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


BALANCE
SHEETS


September 30,
                
                
                March 31,2010
                
                
                2010(Unaudited)
                
                
                (Audited)ASSETSCURRENT
      ASSETSCash
                
                $
                18,237
                
                
                $
                -TOTAL
      ASSETS
                
                $
                18,237
                
                
                $
                -LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      payable
                
                $
                16,310
                
                
                $
                23,195Convertible
      debt (including accrued interest)
                
                
                89,221
                
                
                
                -TOTAL
      CURRENT LIABILITIES
                
                
                105,531
                
                
                
                23,195Convertible
      debt (including accrued interest)
                
                
                77,938
                
                
                
                85,912TOTAL
      LIABILITIES
                
                
                183,469
                
                
                
                109,107STOCKHOLDERS'
      DEFICITCommon
      stock, $0.00001 par value, 100,000,000 shares authorized, 11,218,457
      shares issued and outstanding
                
                
                113
                
                
                
                113Additional
      paid-in capital
                
                
                585,810
                
                
                
                585,810Accumulated
      deficit during development stage
                
                
                (751,155
                )
                
                
                (695,030
                )TOTAL
      STOCKHOLDERS' DEFICIT
                
                
                (165,232
                )
                
                
                (109,107
                )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                
                $
                18,237
                
                
                $
                -





The
accompanying notes are an integral part of these unaudited financial
statements.


4





INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


STATEMENTS
OF OPERATIONS





From Inception(April 2, 2003)Three Months Ended
                                      
                                      
                                      Six Months Ended
                                      
                                      
                                      throughSeptember 30,
                                      
                                      
                                      September 30,
                                      
                                      
                                      September 30,
                                      
                                      
                                      September 30,
                                      
                                      
                                      September 30,2010
                                      
                                      
                                      2009
                                      
                                      
                                      2010
                                      
                                      
                                      2009
                                      
                                      
                                      2010(Unaudited)
                                      
                                      
                                      (Unaudited)
                                      
                                      
                                      (Unaudited)
                                      
                                      
                                      (Unaudited)
                                      
                                      
                                      (Unaudited)REVENUES
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -EXPENSESGeneral
      and administrative
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      426
                                      
                                      
                                      
                                      64,739Professional
      fees
                                      
                                      
                                      23,668
                                      
                                      
                                      
                                      8,662
                                      
                                      
                                      
                                      49,830
                                      
                                      
                                      
                                      42,756
                                      
                                      
                                      
                                      316,994Taxes
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,036Management
      fees
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      29,155Stock
      based compensation
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      327,500Total
      Expenses
                                      
                                      
                                      23,668
                                      
                                      
                                      
                                      8,662
                                      
                                      
                                      
                                      49,830
                                      
                                      
                                      
                                      43,182
                                      
                                      
                                      
                                      739,424LOSS
      FROM OPERATIONS
                                      
                                      
                                      (23,668
                                      )
                                      
                                      
                                      (8,662
                                      )
                                      
                                      
                                      (49,830
                                      )
                                      
                                      
                                      (43,182
                                      )
                                      
                                      
                                      (739,424
                                      )OTHER
      INCOME (EXPENSE)Interest
      income
                                      
                                      
                                      7
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      12
                                      
                                      
                                      
                                      2
                                      
                                      
                                      
                                      2,140Interest
      expense
                                      
                                      
                                      (3,554
                                      )
                                      
                                      
                                      (1,663
                                      )
                                      
                                      
                                      (6,247
                                      )
                                      
                                      
                                      (2,621
                                      )
                                      
                                      
                                      (13,811
                                      )Total
      Other Income (Expense)
                                      
                                      
                                      (3,547
                                      )
                                      
                                      
                                      (1,663
                                      )
                                      
                                      
                                      (6,235
                                      )
                                      
                                      
                                      (2,619
                                      )
                                      
                                      
                                      (11,671
                                      )LOSS
      BEFORE TAXES
                                      
                                      
                                      (27,215
                                      )
                                      
                                      
                                      (10,325
                                      )
                                      
                                      
                                      (56,065
                                      )
                                      
                                      
                                      (45,801
                                      )
                                      
                                      
                                      (751,095
                                      )INCOME
      TAX EXPENSE
                                      
                                      
                                      (60
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (60
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (60
                                      )NET
      LOSS
                                      
                                      $
                                      (27,275
                                      )
                                      
                                      $
                                      (10,325
                                      )
                                      
                                      $
                                      (56,125
                                      )
                                      
                                      $
                                      (45,801
                                      )
                                      
                                      $
                                      (751,155
                                      )NET
      LOSS PER SHARE, BASIC AND DILUTED
                                      
                                      $
                                      (0.00
                                      )
                                      
                                      $
                                      (0.00
                                      )
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.00
                                      )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
    DILUTED
                                      
                                      
                                      11,218,457
                                      
                                      
                                      
                                      11,218,457
                                      
                                      
                                      
                                      11,218,457
                                      
                                      
                                      
                                      11,218,457




The
accompanying notes are an integral part of these unaudited financial
statements.


5


INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


STATEMENTS
OF CASH FLOWS





From Inception(April 2, 2003)Six Months Ended
                                
                                
                                throughSeptember 30,
                                
                                
                                September 30,
                                
                                
                                September 30,2010
                                
                                
                                2009
                                
                                
                                2010(Unaudited)
                                
                                
                                (Unaudited)
                                
                                
                                (Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                
                                $
                                (56,125
                                )
                                
                                $
                                (45,801
                                )
                                
                                $
                                (751,155
                                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Increase
      (decrease) in:Accounts
      payable
                                
                                
                                (6,885
                                )
                                
                                
                                (36,832
                                )
                                
                                
                                16,310Accrued
      interest
                                
                                
                                6,247
                                
                                
                                
                                2,621
                                
                                
                                
                                12,159Stock
      issued for compensation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                327,500Stock
      issued for reimbursement of expenses
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                25,923Net
      cash used in operating activities
                                
                                
                                (56,763
                                )
                                
                                
                                (80,012
                                )
                                
                                
                                (369,263
                                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from stockholder loans
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                21,560Repayment
      of stockholder loans
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (21,560
                                )Proceeds
      from convertible note
                                
                                
                                75,000
                                
                                
                                
                                80,000
                                
                                
                                
                                155,000Proceeds
      from issuance of common stock
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                232,500Net
      cash provided by financing activities
                                
                                
                                75,000
                                
                                
                                
                                80,000
                                
                                
                                
                                387,500NET
      INCREASE (DECREASE) IN CASH
                                
                                
                                18,237
                                
                                
                                
                                (12
                                )
                                
                                
                                18,237CASH,
      BEGINNING OF PERIOD
                                
                                
                                -
                                
                                
                                
                                12
                                
                                
                                
                                -CASH,
      END OF PERIOD
                                
                                $
                                18,237
                                
                                
                                $
                                -
                                
                                
                                $
                                18,237SUPPLEMENTAL
      CASH FLOW INFORMATION:Interest
      paid
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                1,653Income
      taxes paid
                                
                                $
                                60
                                
                                
                                $
                                -
                                
                                
                                $
                                60





The
accompanying notes are an integral part of these unaudited financial
statements.


6


INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


NOTES
TO THE FINANCIAL STATEMENTS


As
of and for the six months ended September 30, 2010


(Unaudited)


NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION





InVivo
Therapeutics Holdings Corp., formerly known as (“f/k/a”) Design Source, Inc.
(hereinafter “the Company”) was incorporated on April 2, 2003 under the laws of
the State of Nevada for the purpose of offering textiles to the commercial
designer market utilizing the internet. The Company’s headquarters is located in
Chapel Hill, North Carolina.  The Company is a development stage
enterprise.





The
Company’s year end is March 31.




The
foregoing unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, these financial statements do not include all of the disclosures
required by generally accepted accounting principles in the United States of
America for complete financial statements. These unaudited interim financial
statements should be read in conjunction with the audited financial statements
for the period ended March 31, 2010. In the opinion of management, the unaudited
interim financial statements furnished herein include all adjustments, all of
which are of a normal recurring nature, necessary for a fair statement of the
results for the interim period presented. Operating results for the six-month
period ending September 30, 2010 are not necessarily indicative of the results
that may be expected for the year ending March 31, 2011.




NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





This
summary of significant accounting policies is presented to assist in
understanding the accompanying financial statements. The financial statements
and notes are representations of the Company’s management, which is responsible
for their integrity and objectivity.  These accounting policies
conform to accounting principles generally accepted in the United States of
America and have been consistently applied in the preparation of the financial
statements.





Accounting
Method


The
Company’s financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.





Development Stage
Activities


The
Company has been in the development stage since its formation and has not
realized any revenue from operations.  The Company is a shell
corporation which has yet to engage in its intended business of offering
commercial upholstery, drapery, bedspread, panel and wall covering
fabrics.





Going
Concern


The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As reflected in the financial statements, the
Company incurred a net loss of $56,125 for the six months ended September 30,
2010.  In addition, the Company had an accumulated deficit of $751,155
at September 30, 2010.  Since its inception, the Company has not
generated any revenues and has minimal cash resources.





These
circumstances raise substantial doubt about the Company's ability to continue as
a going concern.  The consolidated financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.




7




INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


NOTES
TO THE FINANCIAL STATEMENTS


As
of and for the six months ended September 30, 2010


(Unaudited)


NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Management's
efforts have been directed towards the development and implementation of a plan
to generate sufficient revenues to cover all of its present and future costs and
expenses.  For the twelve-month subsequent period, the Company
anticipates that its minimum operating cash requirements to continue as a going
concern will be approximately $60,000.





The
Company has determined that it cannot continue with its business operations as
outlined in its original business plan because of a lack of financial resources;
therefore, although it may return to its intended business operations at a later
date, management has redirected their focus towards identifying and pursuing
options regarding the development of a new business plan and
direction.  The Company intends to explore various business
opportunities that have the potential to generate positive revenue, profits and
cash flow in order to financially accommodate the costs of being a publicly held
company.  However, the Company cannot assure that there will be any
other business opportunities available nor the nature of the business
opportunity, nor indication of the financial resources required of any possible
business opportunity.





The
Company has minimal operating costs and expenses at the present time due to its
limited business activities.  The Company, however, will be required
to raise additional capital over the next twelve months to meet its current
administrative expenses, and it may do so in connection with or in anticipation
of possible acquisition transactions. This financing may take the form of
additional sales of equity securities and/or loans from
directors.  There is no assurance that additional financing will be
available, if required, or on terms favorable to the Company.





The
Company is currently engaged in discussions with InVivo Therapeutics
Corporation, a Delaware corporation (“InVivo”), regarding a possible business
combination. InVivo is engaged in the development of technologies for the
treatment of spinal cord injuries. No assurance can be given it will proceed
with and complete the business combination.





The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.





The
accompanying financial statements have been prepared, in accordance with
accounting principles generally accepted in the United States (“U.S. GAAP”) and
pursuant to the rules and regulations of the Securities and Exchange Commission
(the “SEC”).





Cash and Cash
Equivalents


For
purposes of the statement of cash flows, the Company considers all short-term
debt with original maturities of three months or less to be cash
equivalents.





Fair Value of Financial
Instruments


The
Company's financial instruments may include cash, and accounts payable. All such
instruments are accounted for on a historical cost basis, which, due to the
short maturity of these financial instruments, approximates fair value at
September 30, 2010 and March 31, 2010.


8


INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


NOTES
TO THE FINANCIAL STATEMENTS


As
of and for the six months ended September 30, 2010


(Unaudited)


NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Use of
Estimates


The
process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.





Provision for
Taxes


Income
taxes are provided based upon the liability method of accounting. Under this
approach, deferred income taxes are recorded to reflect the tax consequences in
future years of differences between the tax basis of assets and liabilities and
their financial reporting amounts at each year-end. A valuation allowance is
recorded against the deferred tax asset if management does not believe the
Company has met the "more likely than not" standard to allow recognition of such
an asset.





Derivative
Liabilities


The
Company accounts for its embedded conversion features in its convertible
debentures in accordance FASB ASC 815-10 (Prior authoritative literature: SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities", which
requires a periodic valuation of their fair value and a corresponding
recognition of liabilities associated with such derivatives, and FASB ASC 815-40
Section 05, “Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company’s Own Stock. The recognition of derivative
liabilities related to the issuance of convertible debt is applied first to the
proceeds of such issuance as a debt discount, at the date of issuance, and the
excess of derivative liabilities over the proceeds is recognized as “Loss on
Valuation of Derivative” in other expense in the accompanying financial
statements. Any subsequent increase or decrease in the fair value of the
derivative liabilities is recognized as “Other expense” or “Other income”,
respectively.





Basic and Diluted Earnings
(Loss) Per Share


Basic
earnings per share is calculated on the weighted effect of all common shares
issued and outstanding, and is calculated by dividing net income available to
common stockholders by the weighted average shares outstanding during the
period. Diluted earnings per share, which is calculated by dividing net income
available to common stockholders by the weighted average number of common shares
used in the basic earnings per share calculation, plus the number of common
shares that would be issued assuming conversion of all potentially dilutive
securities outstanding, is not presented separately as it is
anti-dilutive.





Recently Issued Accounting
Pronouncements Affecting the Company


In
October 2009, the FASB issued guidance for amendments to FASB Emerging Issues
Task Force on EITF Issue No. 09-1 “Accounting for Own-Share Lending Arrangements
in Contemplation of a Convertible Debt Issuance or Other Financing” ( Subtopic
470-20 ) “Subtopic”. This accounting standards update establishes the accounting
and reporting guidance for arrangements under which own-share lending
arrangements issued in contemplation of convertible debt issuance. This
Statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2009. Earlier adoption is not
permitted. Management believes this Statement will have no impact on the
consolidated financial statements of the Company once adopted.


9


INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


NOTES
TO THE FINANCIAL STATEMENTS


As
of and for the six months ended September 30, 2010


(Unaudited)


NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





In
December 2009, the FASB issued guidance for Consolidations – Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities (
Topic 810 ). The amendments in this update are a result of incorporating the
provisions of SFAS No. 167, Amendments to FASB Interpretation No. 46(R). The
provisions of such Statement are effective for fiscal years, and interim periods
within those fiscal years, beginning on or after November 15, 2009. Earlier
adoption is not permitted. The presentation and disclosure requirements shall be
applied prospectively for all periods after the effective date. Management
believes this Statement will have no impact on the consolidated financial
statements of the Company once adopted.





In
January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and
Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements,
which enhances the usefulness of fair value measurements. The amended guidance
requires both the disaggregation of information in certain existing disclosures,
as well as the inclusion of more robust disclosures about valuation techniques
and inputs to recurring and nonrecurring fair value measurements. The amended
guidance is effective for interim and annual reporting periods beginning after
December 15, 2009, except for the disaggregation requirement for the
reconciliation disclosure of Level 3 measurements, which is effective for fiscal
years beginning after December 15, 2010 and for interim periods within those
years. The Company does not anticipate that this pronouncement will have a
material impact on its results of operations or financial position.





Effective
May 10, 2010, the Company adopted FASB ASC Topic No. 815 – 40, Derivatives and
Hedging - Contracts in Entity’s Own Stock (formerly Emerging Issues Task Force
Issue No. 07-5, Determining Whether an Instrument or Embedded Feature is Indexed
to an Entity’s Own Stock ). The adoption of FASB ASC Topic No. 815 –40’s
requirements can affect the accounting for warrants and many convertible
instruments with provisions that protect holders from a decline in the stock
price (or “down-round” provisions). As a result of the Company issuing a
convertible note on May 10, 2010, the Company adopted ASC Topic No. 815 – 40,
Derivatives and Hedging - Contracts in Entity’s Own Stock (formerly Emerging
Issues Task Force Issue No. 07-5, Determining Whether an Instrument or Embedded
Feature is Indexed to an Entity’s Own Stock ). See Note 4 for further
discussion.





In
February 2010, the FASB issued Accounting Standards Update (ASU) No.
2010-08—Technical Corrections to Various Topics. This update’s purpose is to
eliminate GAAP inconsistencies, update outdated provisions, and provide
needed clarifications. The adoption of ASU No. 2010-08 will not have a material
impact on the Company’s financial statements.





Management
does not believe that any other recently issued, but not yet effective,
accounting standards, if currently adopted, could have a material effect on the
accompanying financial statements.





NOTE
3 – EQUITY TRANSACTIONS





The
Company is authorized to issue 100,000,000 shares of $0.00001 par value common
stock.  All shares have equal voting rights, are non-assessable and
have one vote per share.  Voting rights are not cumulative and,
therefore, the holders of more than 50% of the common stock could, if they
choose to do so, elect all of the directors of the Company.




10




INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


NOTES
TO THE FINANCIAL STATEMENTS


As
of and for the six months ended September 30, 2010


(Unaudited)





NOTE
3 – EQUITY TRANSACTIONS (continued)





Upon
incorporation, the Company issued 435,000 shares of common stock at a price of
$0.05 per share as reimbursement of a cash advance in the amount of $1,000 and
expenses paid personally by a director totaling $20,750.





During
the period ending March 31, 2004, an additional 283,457 shares of common stock
were issued at $0.05 per share for reimbursement of expenses paid personally by
a director totaling $4,173 and for cash totaling $10,000.





During
the period ending March 31, 2006, an additional 3,320,000 shares of common stock
were issued at $0.05 per share for cash totaling $160,000 and subscription
receivable of $6,000.





During
the year ended March 31, 2007, 130,000 shares of common stock were issued at
$0.05 per share for cash totaling $6,500 to outside investors; 6,550,000 share
of common stock were issued to its officers for compensation at $0.05 per share
for $327,500 and $6,000 subscription receivable was received.





During
the year ended March 31, 2008, 500,000 shares of common stock were issued at
$0.10 per share for cash totaling $50,000 to Milestone Enhanced Fund
Ltd;





During
the years ended March 31, 2010 and 2009, the Company had issued no additional
shares of common stock.





During
the six months ended September 30, 2010, the Company had issued no additional
shares of common stock.





NOTE
4 – CONVERTIBLE DEBT AND DERIVATIVES





On May 8,
2009, the Company issued a convertible promissory note in the principal amount
of $80,000.  This note is payable on November 8, 2010 and bears an
interest rate of 8.25% per annum payable at the end of the term.  The
debt balance and accrued interest balance as of September 30, 2010 amounts to
$80,000 and $9,221, respectively.  The terms of conversion have not
been determined as of the date of the filing of the 10 Q for the period ended
September 30, 2010.





On May
10, 2010 the Company received funding amounting to $75,000 from an investor and
in connection therewith issued a 10%, $75,000 convertible note dated May 10,
2010 (the “Note”).  Subject to prepayment, interest and principal are
due on November 9, 2011, unless its term is mutually extended by both
parties.  At all times while the Note is outstanding, the Note is
convertible into shares of the Company’s common stock at the rate of $0.10 per
share, subject to adjustment for stock splits, business combinations, mergers,
reclassifications, sales of assets and similar transactions (the “Fixed
Conversion Price”). Further, if at any time while the Note is outstanding the
Company issues shares of our common stock at a price below the then Fixed
Conversion Price, the Fixed Conversion Price shall be reduced to such lower
issue price.




11


INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


NOTES
TO THE FINANCIAL STATEMENTS


As
of and for the six months ended September 30, 2010


(Unaudited)





NOTE
4 – CONVERTIBLE DEBT AND DERIVATIVES (continued)





The Note
contains ratchet provisions which adjust the conversion price of the Units if
the Company issues common stock at a price lower than the fixed conversion
prices in the 10% Convertible Note Payable.  As a result, the Company
adopted ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts
in Entity’s Own Stock (formerly Emerging Issues Task Force Issue No.
07-5,Determining Whether an
Instrument or Embedded Feature is Indexed to an Entity’s Own Stock) and
determined that the underlying Units are not indexed to the Company’s common
stock and should be valued at fair value at the date of issuance and at each
subsequent interim period.





Down-round
provisions reduce the exercise price of a convertible instrument if a company
either issues new warrants or convertible instruments that have a lower exercise
price.





The
Company has performed a complete assessment of its embedded conversion features
in connection with its convertible loans utilizing the Black Scholes model and
concluded that the conversion features issued in connection with the convertible
loan are within the scope of ASC 815 due to the down-round provisions included
in the terms of the agreements.





Based on
these calculations, the Company determined that the value of the derivative was
$0 on the date of issuance (May 10, 2010), and as a result, there was no
discount on the convertible debt as of September 30, 2010.  The
Company, every quarter, will perform a valuation of the derivative.




The debt
balance and accrued interest balance as of September 30, 2010 amounts to $75,000
and $2,938, respectively.




NOTE
5 – INCOME TAXES





At
September 30, 2010 and March 31, 2010, the Company had a deferred tax asset of
approximately $305,000 and $282,000 respectively, calculated at a combined
federal and state expected rate of 40.5%.  As management of the
Company cannot determine that it is more likely than not that the Company will
realize the benefit of the net deferred tax asset, a valuation allowance equal
to the net deferred tax asset has been recorded.





The
significant components of the deferred tax assets at September 30, 2010 and
March 31, 2010 were as follows:





September 30,
                  
                  
                  March 31,2010
                  
                  
                  2010Deferred
      tax asset-net operating losses
                  
                  $
                  305,000
                  
                  
                  $
                  282,000Deferred
      tax asset valuation allowance
                  
                  
                  (305,000
                  )
                  
                  
                  (282,000
                  )Net
      deferred tax asset
                  
                  $
                  -
                  
                  
                  $
                  -




12


INVIVO
THERAPEUTICS HOLDINGS CORP.


F/K/A


DESIGN
SOURCE, INC.


(A
Development Stage Company)


NOTES
TO THE FINANCIAL STATEMENTS


As
of and for the six months ended September 30, 2010


(Unaudited)





NOTE
5 – INCOME TAXES (continued)





The
reconciliation between the statutory federal income tax rate of 35% to the
actual rate is as follows:





September 30,
                  
                  
                  March 31,2010
                  
                  
                  2010Expected
      Federal tax  (benefit)
                  
                  $
                  (20,000
                  )
                  
                  $
                  (22,000
                  )State
      tax (benefit), net of Federal effect
                  
                  
                  (3,000
                  )
                  
                  
                  (3,000
                  )Permanent
      differences
                  
                  
                  -
                  
                  
                  
                  -Valuation
      allowance
                  
                  
                  23,000
                  
                  
                  
                  25,000Effective
      tax rate
                  
                  $
                  -
                  
                  
                  $
                  -





At
September 30, 2010 and March 31, 2010, the Company has net operating loss carry
forwards of  $752,000 and $696,000 respectively, which begin to expire
in the year 2011.  The change in the allowance account from September
30, 2010 to March 31, 2010 was $2,000.





NOTE
6 - RELATED PARTY DEBT AND TRANSACTIONS





In 2004
and 2005, Company directors loaned the Company a total of $21,560. The
underlying notes were unsecured with interest at 5%, and a scheduled maturity of
October 2007 for all principal and accrued interest. There were no monthly note
payments due during the term of the loans. All shareholder loans and accrued
interest had been repaid in the fiscal year 2007.





NOTE
7 – SUBSEQUENT EVENTS





On
October 4, 2010 the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which it merged with its newly formed, wholly
owned subsidiary, InVivo Therapeutics Holdings Corp., a Nevada corporation
("Merger Sub" and such merger transaction, the "Merger"). Upon the consummation
of the Merger, the separate existence of Merger Sub ceased.




13


ITEM
2.             MANAGEMENT’S
DISCUSSION AND ANALYSIS





Forward-Looking
Statements





This
section of the report includes a number of forward-looking statements that
reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar expressions,
or words which, by their nature, refer to future events. You should not place
undue certainty on these forward-looking statements, which apply only as of the
date of this report. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or our predictions.





Plan
of Operation





We were
incorporated on April 2, 2003, to offer a comprehensive supply of, market and
distribute commercial upholstery, drapery, bedspread, panel, and wall covering
fabrics to the interior designer industry and individual retail customers on our
proprietary Internet website. We subsequently determined that we could not
continue with our business operations as outlined in our original business plan
because of a lack of financial results and resources. Accordingly, we redirected
our focus towards identifying and pursuing options regarding the development of
a new business plan and direction. We intend to explore various business
opportunities that have the potential to generate positive revenue, profits and
cash flow in order to financially accommodate the costs of being a publicly held
company. However, we cannot assure that there will be any other business
opportunities available nor the nature of the business opportunity, if any, nor
any indication of the financial resources required to take advantage of any
possible business opportunity.





As
discussed in greater detail in Part II, Item 5 hereof, we are currently engaged
in discussions with InVivo Therapeutics Corporation, a Delaware corporation
(“InVivo”), regarding a possible business combination. InVivo is engaged in the
development of technologies for the treatment of spinal cord injuries. No
assurance can be given that we will proceed with and complete the business
combination.





We have
minimal operating costs and expenses at the present time due to our limited
business activities. We may, however, be required to raise additional capital
over the next twelve months to meet our current administrative expenses, and we
may do so in connection with or in anticipation of possible acquisition
transactions. This financing may take the form of additional sales of our equity
securities, loans from our directors, or other transactions. There can be no
assurance that additional financing would be available to us if required, or
that the terms would be favorable to us and our stockholders.





We are
not currently engaging in any product research and development and have no plans
to do so in the foreseeable future. We have no present plans to purchase or sell
any plant or significant equipment. We also have no present plans to add
employees although we may do so in the future if we engage in any merger or
acquisition transactions.





Results
of Operations





For the
period from inception (April 2, 2003) to September 30, 2010, we had no operating
revenues and incurred a net loss of $751,155.  For the three and six
months ended September 30, 2010 we incurred net losses of $27,275 and $56,125,
respectively, which consisted principally of professional fees.  For
the three and six months ended September 30, 2009, we incurred net losses of
$10,325 and $45,801, respectively, which consisted principally of professional
fees primarily incurred in connection with the preparation and filing of our
ongoing SEC filing requirements.





Liquidity
and Capital Resources





Our cash
at September 30, 2010 and March 31, 2010, was $18,237 and $0,
respectively.  In order to satisfy our cash requirements for the
current period we will have to raise additional funds as described above. There
can be no assurance that we will be able to do so.


14





Net cash
used in operating activities in the six months ended September 30, 2010 and
2009, was $56,763 and $80,012, respectively.  Net cash used in
operating activities from inception through September 30, 2010 was $369,263. Net
cash provided by financing activities from inception through September 30, 2010
was $155,000.  We had $75,000 of financing activity in the six months
ended September 30, 2010 and $80,000 of financing activity in the six months
ended September 30, 2009.  Our independent registered public
accounting firm has expressed the opinion that in our current condition, there
is substantial doubt about our ability to continue as a going concern. Please
refer to Note 2, Summary of Significant Accounting Policies, of the financial
statements included in this report.





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements.





Critical
Accounting Policies





A.
Basis of Accounting





The
Company’s financial statements are prepared using the accrual method of
accounting. The Company has elected a March 31 fiscal year-end.





B.
Basic Earnings Per Share





The
Company utilizes the guidance per FASB Codification “ASC 260 "Earnings Per
Share". Basic earnings per share is calculated on the weighted effect of all
common shares issued and outstanding, and is calculated by dividing net income
available to common stockholders by the weighted average shares outstanding
during the period. Diluted net income per share is computed by dividing net
income for the period by the weighted-average number of common share equivalents
during the period.





Basic net
loss per share amounts are computed by dividing the net loss by the weighted
average number of common shares outstanding.





C.
Cash Equivalents





The
Company considers all highly liquid investments, if any, purchased with an
original maturity of three months or less to be cash equivalents.





D.
Use Of Estimates and Assumptions





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities 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.





E.
Income Taxes





Income
taxes are accounted for in accordance with the provisions of FASB ASC-740-Income
Taxes.  ASC-740 requires the recognition of deferred tax assets and
liabilities to reflect the future tax consequences of events that have been
recognized in the Company’s financial statements or tax returns. Measurement of
the deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and tax bases of
the Company’s assets and liabilities result in a deferred tax asset, ASC-740
requires an evaluation of the probability of being able to realize the future
benefits indicated by such assets. A valuation allowance related to a deferred
tax asset is recorded when it is more likely than not that some or the entire
deferred tax asset will not be realized.




15


For
federal income tax purposes, substantially all expenses must be deferred until
the Company commences business and then they may be written off over a 60-month
period.  These expenses will not be deducted for tax purposes and will
represent a deferred tax asset.  The Company will provide a valuation
allowance in the full amount of the deferred tax asset since there is no
assurance of future taxable income.  Tax deductible losses can be
carried forward under current applicable law for 20 years until
utilized.





ITEM
3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not
Applicable.





ITEM
4.             CONTROLS
AND PROCEDURES





Evaluation
of Our Disclosure Controls





Under the
supervision and with the participation of our senior management, including our
chief executive officer and chief financial officer, Peter Reichard, we
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as
of the end of the period covered by this quarterly report. Based on this
evaluation, our chief executive officer and chief financial officer concluded
that, as of the end of the period covered by this report, our disclosure
controls and procedures were effective such that the information relating to us,
required to be disclosed in our Securities and Exchange Commission reports (i)
is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms, and (ii) is accumulated and communicated to
our management, including our chief executive officer and chief financial
officer, as appropriate to allow timely decisions regarding required
disclosure.





Changes
in Internal Control Over Financial Reporting





There
have been no changes in our internal control over financial reporting that
occurred during the quarter ended September 30, 2010 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





In the
ordinary course of our business, we may from time to time become subject to
routine litigation or administrative proceedings which are incidental to our
business. We are not a party to nor are we aware of any existing, pending or
threatened lawsuits or other legal actions involving us.





ITEM
1A.          RISK
FACTORS





Not
applicable.





ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





We did
not issue any equity securities during the quarter ended September 30,
2010.





ITEM
3.             DEFAULTS
UPON SENIOR SECURITIES





None.




16





ITEM
4.             [REMOVED
AND RESERVED]





ITEM
5.             OTHER
INFORMATION





On
October 4, 2010 we entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which we merged with our newly formed, wholly owned
subsidiary, InVivo Therapeutics Holdings Corp., a Nevada corporation ("Merger
Sub" and such merger transaction, the "Merger"). Upon the consummation of the
Merger, the separate existence of Merger Sub ceased and our shareholders became
shareholders of the surviving company named InVivo Therapeutics Holdings
Corp.





As
permitted by Chapter 92A.180 of Nevada Revised Statutes, the sole purpose of the
Merger was to effect a change of our name. Upon the filing of Articles of Merger
(the "Articles of Merger") with the Secretary of State of Nevada on October 4,
2010 to effect the Merger, our Articles of Incorporation were deemed amended to
reflect the change in our corporate name.





Our
common stock will temporarily remain listed for quotation on OTC Markets and the
OTC Bulletin Board under the current symbol “DSGS” until new a symbol is
assigned by Financial Industry Regulatory Authority, Inc. (FINRA). We will
publicly announce the new trading symbol when assigned by FINRA and the
effective date of the symbol change.





We are
currently engaged in discussions with InVivo Therapeutics Corporation, a
Delaware corporation (“InVivo”), regarding a possible business combination
involving the two companies.  At this stage, no definitive terms have
been agreed to, and neither party is currently bound to proceed with the
transaction.  With the permission of InVivo and as provided herein, we
have changed our name to “InVivo Therapeutics Holdings Corp.” to facilitate
these discussions.  If the parties determine not to proceed with the
business combination, we will change our name back to Design Source, Inc. or
adopt another name.





ITEM
6.             EXHIBITS





In
reviewing the agreements included as exhibits to this Form 10-Q, please remember
that they are included to provide you with information regarding their terms and
are not intended to provide any other factual or disclosure information about
the Company or the other parties to the agreements. The agreements may contain
representations and warranties by each of the parties to the applicable
agreement. These representations and warranties have been made solely for the
benefit of the parties to the applicable agreement and:





•
            should
      not in all instances be treated as categorical statements of fact, but
      rather as a way of allocating the risk to one of the parties if those
      statements prove to be inaccurate;





•
            have
      been qualified by disclosures that were made to the other party in
      connection with the negotiation of the applicable agreement, which
      disclosures are not necessarily reflected in the
  agreement;





•
            may
      apply standards of materiality in a way that is different from what may be
      viewed as material to you or other investors;
  and





•
            were
      made only as of the date of the applicable agreement or such other date or
      dates as may be specified in the agreement and are subject to more recent
      developments.





Accordingly,
these representations and warranties may not describe the actual state of
affairs as of the date they were made or at any other time. Additional
information about the Company may be found elsewhere in this Form 10-Q and the
Company’s other public filings, which are available without charge through the
SEC’s website at http://www.sec.gov.





The
following exhibits are included as part of this report:


17





Exhibit No.
              
              Description31.1
      / 31.2
              
              Rule
      13(a)-14(a)/15(d)-14(a) Certification of Principal Executive and Financial
      Officer32.1
      / 32.2
              
              Rule
      1350 Certification of Chief Executive and Financial
  Officer99.1
              
              Schedule
      14F-1 Information Statement(1)





(1)      Filed
with the Securities and Exchange Commission on October 5, 2010 and incorporated
herein by reference.




18


SIGNATURES





In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





Date:  October
      18, 2010
              InVivo
      Therapeutics Holdings Corp.f/k/a
      Design Source, Inc.By:
              /s/ Peter ReichardPeter
      Reichard, President, Principal Executive Officer,
                Treasurer,
      Principal Financial Officer, and Principal
                Accounting
      Officer


19