**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**


(Mark
      One)


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





For
      the
      quarterly period ended September 30, 2008




or




**oTRANSITION
      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





**Design
                Source, Inc.**(Exact
                name of small business issuer as specified in its
                charter)




**Nevada**
            
            **36-4528166**(State
                or other jurisdiction ofincorporation or organization)
            
            (IRS
                Employer IdentificationNumber)




**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)





Indicate
      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.
      Yes x No o





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 o
            
            Accelerated
                filer o
            
            Non-accelerated
                filer o
            
            Smaller
                reporting company x(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). Yes x No
o





As
      of
      October 28, 2008 there were 11,218,457 shares of the issuer’s common stock, par
      value $0.00001, issued and outstanding.









**Design
      Source, Inc.**





**Index
      to Quarterly Report on Form 10-Q for Quarter Ended September 30,
      2008**





Part
                I – Financial InformationItem
                1.
            Financial
                StatementsBalance
                Sheets
            
            3Statements
                of Operations
            
            4Statements
                of Cash Flows
            
            5Notes
                to Condensed Financial Statements
            
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            11Item
                4T.
            Controls
                and Procedures
            
            12Part
                II – Other InformationItem
                6.
            Exhibits.
            
            13Signatures
            
            
            
            (Follows page 13)Exhibit
                31.1Exhibit
                32.1




2


**DESIGN
      SOURCE, INC.**


**(A
      Development Stage Company)**


**BALANCE
      SHEETS**








September 30,
            
            March 31,2008
            
            2008(Unaudited)
            
            (Audited)**ASSETS**CURRENT
                ASSETSCash
            
            $
            305
            
            $
            22,372**TOTAL
                ASSETS**
            
            $
            305
            
            $
            22,372**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            6,291
            
            $
            5,000TOTAL
                CURRENT LIABILITIES
            
            
            6,291
            
            
            5,000TOTAL
                LIABILITIES
            
            
            6,291
            
            
            5,000COMMITMENTS
                AND CONTINGENCIES
            
            
            -
            
            
            -STOCKHOLDERS'
                EQUITY (DEFICIT)Common
                stock, $0.00001 par value, 100,000,000 shares authorized,11,218,457shares
                issued and outstanding
            
            
            113
            
            
            113Additional
                paid-in capital
            
            
            585,810
            
            
            585,810Accumulated
                deficit during development stage
            
            
            (591,909
            )
            
            (568,551
            )TOTAL
                STOCKHOLDERS' EQUITY (DEFICIT)
            
            
            (5,986
            )
            
            17,372**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
            
            $
            305
            
            $
            22,372




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




3




**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 30,2008
              
              2007
              
              2008
              
              2007
              
              2008(Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)REVENUES
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -EXPENSESGeneral
                  and administrative
              
              
              (181
              )
              
              (7
              )
              
              1,172
              
              
              161
              
              
              64,300Professional
                  fees
              
              
              3,291
              
              
              -
              
              
              21,950
              
              
              2,467
              
              
              170,393Taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,036Management
                  fees
              
              
              -
              
              
              -
              
              
              236
              
              
              -
              
              
              29,155Stock
                  compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              327,500Total
                  Expenses
              
              
              3,110
              
              
              (7
              )
              
              23,358
              
              
              2,628
              
              
              592,384INCOME
                  (LOSS) FROM OPERATIONS
              
              
              (3,110
              )
              
              7
              
              
              (23,358
              )
              
              (2,628
              )
              
              (592,384
              )OTHER
                  INCOME (EXPENSE)Interest
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              6
              
              
              2,128Interest
                  expense
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,653
              )Total
                  Other Income (Expense)
              
              
              -
              
              
              -
              
              
              -
              
              
              6
              
              
              475INCOME
                  (LOSS) BEFORE TAXES
              
              
              (3,110
              )
              
              7
              
              
              (23,358
              )
              
              (2,622
              )
              
              (591,909
              )INCOME
                  TAX EXPENSE
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -NET
                  INCOME (LOSS)
              
              $
              (3,110
              )
              $
              7
              
              $
              (23,358
              )
              $
              (2,622
              )
              $
              (591,909
              )NET
                  LOSS PER SHARE,BASIC
                  AND DILUTED
              
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )WEIGHTED
                  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
                  DILUTED
              
              
              11,218,457
              
              
              10,718,457
              
              
              11,218,457
              
              
              10,718,457




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




4





**DESIGN
      SOURCE, INC.**


**(A
      Development Stage Company)**


**STATEMENTS
      OF CASH FLOWS**








From Inception(April 2, 2003)Six Months Ended
            
            throughSeptember 30,
            
            September 30,
            
            September 30,2008
            
            2007
            
            2008(Unaudited)
            
            (Unaudited)
            
            (Unaudited)CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (23,358
            )
            $
            (2,622
            )
            $
            (591,909
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Increase
                (decrease) in accounts payable
            
            
            1,291
            
            
            (2,248
            )
            
            6,291Stock
                issued for compensation
            
            
            -
            
            
            -
            
            
            327,500Issuance
                of common stock for reimbursement of expenses
            
            
            -
            
            
            -
            
            
            25,923Net
                cash used in operating activities
            
            
            (22,067
            )
            
            (4,870
            )
            
            (232,195
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from stockholder loans
            
            
            -
            
            
            -
            
            
            21,560Repayment
                of stockholder loans
            
            
            -
            
            
            -
            
            
            (21,560
            )Proceeds
                from issuance of common stock
            
            
            -
            
            
            -
            
            
            232,500Net
                cash provided by financing activities
            
            
            -
            
            
            -
            
            
            232,500NET
                INCREASE (DECREASE) IN CASH
            
            
            (22,067
            )
            
            (4,870
            )
            
            305CASH,
                BEGINNING OF PERIOD
            
            
            22,372
            
            
            5,259
            
            
            -CASH,
                END OF PERIOD
            
            $
            305
            
            $
            389
            
            $
            305SUPPLEMENTAL
                CASH FLOW INFORMATION:Interest
                paid
            
            $
            -
            
            $
            -
            
            $
            1,653Income
                taxes paid
            
            $
            -
            
            $
            -
            
            $
            -


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




5


**DESIGN
            SOURCE, INC.**
 **(A
            Development Stage Enterprise)**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **As
            of and for the six months ended September 30, 2008**
 **(Unaudited)**
  NOTE
            1 -
            ORGANIZATION AND BASIS OF PRESENTATION
  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, 2008. 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, 2008 are not necessarily indicative of the
            results
            that may be expected for the year ending March 31, 2009.
  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. It is primarily engaged in offering
            textiles to the commercial designer market utilizing the internet.
  6
  **DESIGN
            SOURCE, INC.**
 **(A
            Development Stage Enterprise)**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **As
            of and for the six months ended September 30, 2008**
 **(Unaudited)**
  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 $23,358 for the six months ended September
            30,
            2008. In addition, the Company had an accumulated deficit of $591,909
            as of
            September 30, 2008. 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. 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 $55,000.
 
 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
            results
            and resources; therefore, although it may return to its intended business
            operations at a later date, it has redirected its 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 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 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 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
            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.
  7
 
 **DESIGN
            SOURCE, INC.**
 **(A
            Development Stage Enterprise)**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **As
            of and for the six months ended September 30, 2008**
 **(Unaudited)**
 
 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 as defined by Statement of Financial
            Accounting
            Standards No. 107, "Disclosures about Fair Value of 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, 2008 and March
            31,
            2008.
  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,
            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 pursuant
            to
            Statement of Financial Accounting Standards No. 109, "Accounting for
            Income
            Taxes" (hereinafter "SFAS No. 109"). 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 imposed by SFAS No. 109 to allow recognition of such
            an
            asset.
 
 Basic
            and Diluted Earnings (Loss) Per Share
 The
            Company utilizes Statement of Financial Accounting Standards No. 128,
            "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 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.
 
 8
  **DESIGN
            SOURCE, INC.**
 **(A
            Development Stage Enterprise)**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **As
            of and for the six months ended September 30, 2008**
 **(Unaudited)**
  Recently
            Issued Accounting Pronouncements
  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 - COMMON STOCK**
  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.
  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 six months ended September 30, 2008, the Company had not issued any
            additional shares of common stock.
  9
  **DESIGN
            SOURCE, INC.**
 **(A
            Development Stage Enterprise)**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **As
            of and for the six months ended September 30, 2008**
 **(Unaudited)**
  **NOTE
            4 - INCOME TAXES**
  At
            September 30, 2008 and March 31, 2008, the Company had calculated deferred
            tax
            assets of approximately $239,000 and $229,000, 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 as September 30, 2008
            and
            March 31, 2008 were as follows:
  **September 30,2008**
                  
                  **March 31,2008**Net
                      operating loss carryforward
                  
                  $
                  239,000
                  
                  $
                  229,000Valuation
                      allowance
                  
                  
                  (239,000
                  )
                  
                  (229,000
                  )Net
                      deferred tax asset
                  
                  $
                  -
                  
                  $
                  -
  At
            September 30, 2008 and March 31, 2008, the Company has net operating
            loss
            carryforwards of approximately $590,000 and $566,000, respectively, which
            begin
            to expire in the year 2027. The change in the allowance account from
            March 31,
            2008 to September 30, 2008 was approximately $9,500
  10
  **ITEM
            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
            OPERATION**





**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 have determined that we cannot continue with
      our business operations as outlined in our original business plan because of
      a
      lack of financial results and resources; therefore, although we may return
      to
      our intended business operations at a later date, we have 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.





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, 2008, we had no revenues
      and incurred net operating losses of $591,909. For the quarter and six months
      ended September 30, 2008, we incurred net operating losses of $3,110 and
      $23,358, respectively, which consisted of professional fees and general and
      administrative expenses primarily incurred in connection with the preparation
      and filing of our ongoing SEC filing requirements.





**Liquidity
      and Capital Resources**





Our
      cash
      at September 30, 2008, was $305. 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.





Net
      cash
      used in operating activities in the six months ended September 30, 2008, was
      $22,607. Net cash used in operating activities from inception through September
      30, 2008, was $232,195. Net cash provided by financing activities from inception
      through September 30, 2008, was $232,500. We had no financing activity in the
      six months ended September 30, 2008. 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.




11




**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*





In
      February 1997, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Accounting Standards (“SFAS”) No. 128, “Earnings Per Share”, which
      specifies the computation, presentation and disclosure requirements for earnings
      (loss) per share for entities with publicly held common stock. SFAS No. 128
      supersedes the provisions of APB No. 15, and requires the presentation of basic
      earnings (loss) per share and diluted earnings (loss) per share. The Company
      has
      adopted the provisions of SFAS No. 128 effective as of the date of inception
      (April 2, 2003).





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. In accordance with FASB 16
      all
      adjustments are normal and recurring.





*E.
      Income Taxes*





Income
      taxes are provided in accordance with Statement of Financial Accounting
      Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
      or liability is recorded for all temporary differences between financial and
      tax
      reporting and net operating loss carryforwards. Deferred tax expense (benefit)
      results from the net change during the year of deferred tax assets and
      liabilities.





Deferred
      tax assets are reduced by a valuation allowance when, in the opinion of
      management, it is more likely than not that some portion of all of the deferred
      tax assets will be realized. Deferred tax assets and liabilities are adjusted
      for the effects of changes in tax laws and rates on the date of
      enactment.





**ITEM
      4T. CONTROLS AND PROCEDURES.**





Under
      the
      supervision and with the participation of our management, including our
      principal executive and financial officer, we have 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
      and
      Exchange Act of 1934, as of the end of the period covered by this report. Based
      on this evaluation, our principal executive and financial officer concluded
      as
      of the evaluation date that our disclosure controls and procedures were
      effective such that the material information required to be included in our
      SEC
      reports is recorded, processed, summarized and reported within the time periods
      specified in SEC rules and forms relating to our company, particularly during
      the period when this report was being prepared.




12




Our
      internal control over financial reporting is a process designed to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes of accounting
      principles generally accepted in the United States. Because of its inherent
      limitations, internal control over financial reporting may not prevent or detect
      misstatements. Therefore, even those systems determined to be effective can
      provide only reasonable assurance of achieving their control objectives. In
      evaluating the effectiveness of our internal control over financial reporting,
      our management used the criteria set forth by the Committee of Sponsoring
      Organizations of the Treadway Commission (COSO) in *Internal
      Control—Integrated Framework* .
      Based
      on this evaluation, our management concluded that, as of September 30, 2008,
      our
      internal control over financial reporting was effective based on those criteria.
      This quarterly report does not include an attestation report of our registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by our registered public
      accounting firm pursuant to temporary rules of the SEC that permit us to provide
      only management’s report in this quarterly report.





Additionally,
      there were no significant changes in our internal controls or in other factors
      that could significantly affect these controls subsequent to the evaluation
      date. We have not identified any significant deficiencies or material weaknesses
      in our internal controls, and therefore there were no corrective actions
      taken





**PART
      II - OTHER INFORMATION**





**ITEM
      6. EXHIBITS**





The
      following exhibits are included with this quarterly report.





Exhibit
                31.1
            
            Sec.
                302 Certification of Principal Executive Officer and Principal Financial
                Officer.Exhibit
                32.1
            
            Sec.
                906 Certification of Chief Executive Officer and Chief Financial
                Officer





13


**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 28, 2008
            **Design
                Source, Inc.**By:
                /s/
                Peter
                ReichardPeter
                Reichard, President, PrincipalExecutive Officer, Treasurer,
                PrincipalFinancial Officer, and Principal
                AccountingOfficer