**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 June 30, 2008




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





**Design
      Source, Inc.**


(Exact
      name of small business issuer as specified in its charter)





**Nevada**
            
            **36-4528166**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (IRS
                Employer Identification
              Number)








**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  ̈





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). Yes x No  ̈





As
      of
      August 11, 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 June 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
            12Item
                4T. Controls and Procedures
            13Part
                II - Other InformationItem
                6 Exhibits.Signatures
            14Exhibit
                31.1Exhibit
                32.1










**DESIGN
      SOURCE, INC.**


**(A
      Development Stage Company)**


**BALANCE
      SHEETS**





June 30,
            
            March 31,2008
            
            2008Unaudited
            
            Audited**ASSETS**CURRENT
                ASSETSCash
            
            $
            5,539
            
            $
            22,372**TOTAL
                ASSETS**
            
            $
            5,539
            
            $
            22,372**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            8,415
            
            $
            5,000TOTAL
                CURRENT LIABILITIES
            
            
            8,415
            
            
            5,000TOTAL
                LIABILITIES
            
            
            8,415
            
            
            5,000COMMITMENTS
                AND CONTINGENCIES
            
            
            -
            
            
            -STOCKHOLDERS'
                EQUITY (DEFICIT)Common
                stock, $0.00001 par value, 100,000,000 shares authorized, 11,218,457
                and
                11,218,457 shares issued and outstanding, respectively
            
            
            113
            
            
            113Additional
                paid-in capital
            
            
            585,810
            
            
            585,810Accumulated
                deficit during development stage
            
            
            (588,799
            )
            
            (568,551
            )TOTAL
                STOCKHOLDERS' EQUITY (DEFICIT)
            
            
            (2,876
            )
            
            17,372**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
            
            $
            5,539
            
            $
            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
            
            throughJune 30,
            
            June 30,
            
            June 30,2008
            
            2007
            
            2008Unaudited
            
            Unaudited
            
            UnauditedREVENUES
            
            $
            -
            
            $
            -
            
            $
            -EXPENSESGeneral
                and administrative
            
            
            1,353
            
            
            169
            
            
            64,481Professional
                fees
            
            
            18,659
            
            
            4,006
            
            
            167,102Taxes
            
            
            -
            
            
            -
            
            
            1,036Management
                fees
            
            
            236
            
            
            -
            
            
            29,155Stock
                compensation
            
            
            -
            
            
            -
            
            
            327,500Total
                Expenses
            
            
            20,248
            
            
            4,175
            
            
            589,274LOSS
                FROM OPERATIONS
            
            
            (20,248
            )
            
            (4,175
            )
            
            (589,274
            )OTHER
                INCOME (EXPENSE)Interest
                income
            
            
            -
            
            
            6
            
            
            2,128Interest
                expense
            
            
            -
            
            
            -
            
            
            (1,653
            )Total
                Other Income (Expense)
            
            
            -
            
            
            6
            
            
            475LOSS
                BEFORE TAXES
            
            
            (20,248
            )
            
            (4,169
            )
            
            (588,799
            )INCOME
                TAX EXPENSE
            
            
            -
            
            
            -
            
            
            -NET
                LOSS
            
            $
            (20,248
            )
            $
            (4,169
            )
            $
            (588,799
            )NET
                LOSS PER SHARE, BASIC AND DILUTED
            
            $
            (0.00
            )
            $
            (0.00
            )WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
                DILUTED
            
            
            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 InceptionThree Months Ended
            
            (April 2, 2003)Ended
            
            Ended
            
            throughJune 30,
            
            June 30,
            
            June 30,2008
            
            2007
            
            2008Unaudited
            
            Unaudited
            
            UnauditedCASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (20,248
            )
            $
            (4,169
            )
            $
            (588,799
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Increase
                in accounts payable
            
            
            3,415
            
            
            1,693
            
            
            8,415Stock
                issued for compensation
            
            
            -
            
            
            -
            
            
            327,500Issuance
                of common stock for reimbursement of expenses
            
            
            -
            
            
            -
            
            
            25,923Net
                cash used in operating activities
            
            
            (16,833
            )
            
            (2,476
            )
            
            (226,961
            )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
            
            
            (16,833
            )
            
            (2,476
            )
            
            5,539CASH,
                BEGINNING OF PERIOD
            
            
            22,372
            
            
            5,259
            
            
            -CASH,
                END OF PERIOD
            
            $
            5,539
            
            $
            2,783
            
            $
            5,539SUPPLEMENTAL
                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 three months ended June 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 three-month
      period ending June 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 was 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 three months ended June 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 $20,248 for the three months ended June 30,
      2008.
      In addition, the Company had an accumulated deficit of $588,799 as of June
      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 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.
      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, would 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 and/or loans from our 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 three months ended June 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, receivables, advances, accounts payable and accrued expenses.
      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 June
      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,
      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 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.





Web
      Site Development


The
      Company must develop a web site to facilitate its business plan. Costs incurred
      in this project will be expensed as incurred in accordance with Statement of
      Position 98-1, "Accounting for the Costs of Computer Software Developed or
      Obtained for Internal Use" as amplified by Emerging Issues Task Force Abstract
      No. 00-2, "Accounting for Web Site Development Costs." During the period ended
      June 30, 2008, the Company had not incurred any web site development
      costs.




8





**DESIGN
      SOURCE, INC.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO THE FINANCIAL STATEMENTS**


**As
      of and for the three months ended June 30, 2008**


**(Unaudited)**





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.





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.





9




**DESIGN
      SOURCE, INC.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO THE FINANCIAL STATEMENTS**


**As
      of and for the three months ended June 30, 2008**


**(Unaudited)**





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 three months ended June 30, 2008, the Company had not issued any additional
      shares of common stock.




**NOTE
      4 - INCOME TAXES**




At
      June
      30, 2008 and March 31, 2008, he Company had calculated deferred tax assets
      of
      approximately $238,000 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 June 30, 2008 and March
      31,
      2008 were as follows:




**June 30,**
              **2008**
            
            **March 31,**
              **2008**Net operating loss carryforward
            
            $
            238,000
            
            $
            229,000Valuation
                allowance
            
            
            (238,000
            )
            
            (229,000
            )Net
                deferred tax asset
            
            $
            -
            
            $
            -




At
      June
      30, 2008 and March 31, 2008, the Company has net operating loss carryforwards
      of
      approximately $587,000 and $566,000, respectively, which begin to expire in
      the
      year 2027. The change in the allowance account from March 31, 2008 to June 30,
      2008 was approximately $8,200.





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 June 30, 2008, we had no revenues
      and
      incurred net operating losses of ($588,799). For the quarter ended June 30,
      2008, we incurred net operating losses of ($20,248), 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 June 30, 2008, was $5,539. 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 quarter ended June 30, 2008, was ($16,833).
      Net cash used in operating activities from inception through June 30, 2008,
      was
      $226,961. Net cash provided by financing activities from inception through
      June
      30, 2008, was $232,500. We had no financing activity in the quarter ended June
      30, 2008. Our auditors have expressed the opinion that in our current state,
      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 officer and principal 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 officer and principal
      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.





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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 June 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





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**SIGNATURES**





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





Date:
                August ___, 2008
            **Design
                Source, Inc.**By
            /s/Peter
                ReichardPeter
                Reichard, President, Principal Executive
              Officer,
                Treasurer, Principal Financial Officer,
              and
                Principal Accounting Officer




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