**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**


(Mark
      One)


x
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**For
                the quarterly period ended:**June
                30, 2008** ̈
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**For
                the transition period from _________ to
                __________





**Commission
      file number: 333-149995**




**STONE
      CONSULTING SERVICES, INC.**


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





**Delaware**
            **20-8066540**(State
                or other jurisdiction of
            (IRS
                Employerincorporation
                or organization)
            Identification
                No.)





18
      Ozone
      Avenue


Venice,
      CA 90291


(Address
      of principal executive offices)




(310)
      399-1114


(Issuer’s
      telephone number)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.


x 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 file” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





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





Indicate by check mark whether
      the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
      Act).


 ̈ Yes x No








APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS:





Indicate
      by check mark whether the registrant has filed all documents and reports
      required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange
      Act
      of 1934 subsequent to the distribution of securities under a plan confirmed
      by a
      court.  ̈ Yes  ̈ No




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




As
      of
      August 7, 2008, the Company had authorized 50,000,000 shares of $.001 par value
      common stock of which 5,000,000 shares of common stock were issued and
      outstanding, and the Company had authorized 5,000,000 shares of $.001 par value
      preferred stock of which no shares are issued and outstanding.


2





**STONE
      CONSULTING SERVICES, INC.**


**QUARTERLY
      REPORT ON FORM 10-Q**


**QUARTER
      ENDED JUNE 30, 2008**





TABLE
      OF CONTENTS





PAGEPART
                I . FINANCIAL INFORMATIONItem
                1. Financial Statements:
            4Balance
                Sheets as of June 30, 2008 (unaudited) and December 31,
                2007
            4Unaudited
                Statements of Operations for the Three and Six Months Ended June
                30, 2008
                and 2007 and for the period from Inception on December 11, 2006 to
                June
                30, 2008
            5Unaudited
                Statement of Stockholders’ Equity (Deficit) for the period from Inception
                on December 11, 2006 through June 30, 2008 (Unaudited)
            6Unaudited
                Statements of Cash Flows for the Six Months Ended June 30, 2008 and
                2007
                and for the period from Inception on December 11, 2006 to June 30,
                2008
                (Unaudited)
            7Notes
                to Unaudited Financial Statements
            8Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            12Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            16Item
                4T. 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
            17Item
                3. Defaults Upon Senior Securities
            17Item
                4. Submission of Matters to a Vote of Security Holders
            17Item
                5. Other Information
            17Item
                6. Exhibits
            17SIGNATURES
            18EXHIBIT
                INDEX
            19


3





**PART
      I . FINANCIAL INFORMATION**





**Item
      1. Financial Statements:**




Stone
      Consulting Services, Inc.


(A
      Development Stage Company)


Balance
      Sheets




June 30,
              
              December 31,2008
              
              2007(Unaudited)
              
              (Audited)**Assets**Current
                  Assets:Cash
              
              $
              4,804
              
              $
              24,656Total
                  Assets
              
              $
              4,804
              
              $
              24,656**Liabilities
                  and Stockholders' Equity**Current
                  Liabilities:Accounts
                  payable
              
              $
              8,471
              
              $
              -Accrued
                  liabilities
              
              
              -
              
              
              5,754Income
                  tax payable
              
              
              -
              
              
              800Total
                  Current Liabilities
              
              
              8,471
              
              
              6,554Long-Term
                  DebtShareholder
                  loan
              
              
              8,000
              
              
              500Total
                  Liabilities
              
              
              16,471
              
              
              7,054Stockholders'
                  EquityCommon
                  stock, $.001 par value 50,000,000 authorized 5,000,000 issued and
                  outstanding
              
              
              5,000
              
              
              5,000Additional
                  Paid in Capital
              
              
              32,500
              
              
              32,500Deficit
                  Accumulated in the Development Stage
              
              
              (49,167
              )
              
              (19,898
              )Total
                  Stockholders' Equity (Deficit)
              
              
              (11,667
              )
              
              17,602Total
                  Liabilities and Stockholders' Equity
              
              $
              4,804
              
              $
              24,656
  4
 Stone
          Consulting Services, Inc.
 (A
          Development Stage Company)
 Statement
          of Operations
 (Unaudited)
 FromDecember 11, 2006For the Three Months Ended
              
              For the Six Months Ended
              
              (Date of Inception)June 30,
              
              June 30,
              
              to June 30,2008
              
              2007
              
              2008
              
              2007
              
              2008Consulting
                  Revenue
              
              $
              2,350
              
              $
              -
              
              $
              3,350
              
              $
              -
              
              $
              7,850General
                  administrative expenses
              
              
              8,147
              
              
              11,213
              
              
              31,622
              
              
              12,490
              
              
              54,367Loss
                  before provision for income tax
              
              
              (5,797
              )
              
              (11,213
              )
              
              (28,272
              )
              
              (12,490
              )
              
              (46,517
              )Income
                  tax expense
              
              
              997
              
              
              -
              
              
              997
              
              
              -
              
              
              2,032Net
                  Loss
              
              $
              (6,794
              )
              $
              (11,213
              )
              $
              (29,269
              )
              $
              (12,490
              )
              $
              (48,549
              )Basic
                  and Diluted Loss per Common share
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Basic
                  and Diluted Weigted Average Common Shares Outstanding
              
              
              5,000,000
              
              
              4,500,000
              
              
              5,000,000
              
              
              4,500,000
  5
 Stone
          Consulting Services, Inc.
 (A
          Development Stage Company)
 Statement
          of Stockholders’ Equity
          (Deficit)
 (Unaudited)
 DeficitAccumulatedin the
              
              TotalCommon Stock
              
              
              
              Paid in
              
              Development
              
              Stockholders'Shares
              
              Amount
              
              Capital
              
              Stage
              
              EquityBalances, December 11, 2006 (Date of Inception)
              
              
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Shares
                  issued to founder at $.001 per share, December 11, 2006
              
              
              4,500,000
              
              
              4,500
              
              
              -
              
              
              -
              
              
              4,500Net
                  Income
              
              
              -
              
              
              -
              
              
              -
              
              
              749
              
              
              749Balance,
                  December 31, 2006
              
              
              4,500,000
              
              
              4,500
              
              
              -
              
              
              749
              
              
              5,249Net
                  proceeds from sale of common stock, August 2007
              
              
              500,000
              
              
              500
              
              
              32,500
              
              
              -
              
              
              33,000Net
                  Loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (20,647
              )
              
              (20,647
              )Balances,
                  December 31, 2007
              
              
              5,000,000
              
              
              5,000
              
              
              32,500
              
              
              (19,898
              )
              
              17,602Net
                  Loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (29,269
              )
              
              (29,269
              )Balances,
                  June 30, 2008
              
              
              5,000,000
              
              $
              5,000
              
              $
              32,500
              
              $
              (49,167
              )
              $
              (11,667
              )
  6
 Stone
          Consulting Services, Inc.
 (A
          Development Stage Company)
 Statement
          of Cash Flows
 (Unaudited)
 For the PeriodDecember 11, 2006Six Months Ended
              
              (Date of Inception)June 30,
              
              to June 30,2008
              
              2007
              
              2008**Operating
                  Activities:**Net
                  loss
              
              $
              (29,269
              )
              $
              (12,490
              )
              $
              (49,167
              )Adjustments
                  to reconcile net loss to net cashProvided
                  (used) by operating activities:
              
              
              -
              
              
              -
              
              
              -Changes
                  in Assets and Liabilities:Accrued
                  liabilities
              
              
              (5,754
              )
              
              6,925
              
              
              -Accounts
                  payable
              
              
              8,471
              
              
              -
              
              
              8,471Income
                  tax payable
              
              
              (800
              )
              
              (87
              )
              
              -Net
                  Cash Used by Operating Activities
              
              
              (27,352
              )
              
              (5,652
              )
              
              (40,696
              )**Financing
                  Activities:**Proceeds
                  from sale of common stock
              
              
              -
              
              
              -
              
              
              37,500Proceeds
                  from shareholder loan
              
              
              7,500
              
              
              -
              
              
              8,000Net
                  Cash Provided by Financing Activities
              
              
              7,500
              
              
              -
              
              
              45,500-
              
              
              -Net
                  Increase in Cash
              
              
              (19,852
              )
              
              (5,652
              )
              
              4,804Cash
                  at Beginning of Year
              
              
              24,656
              
              
              7,000
              
              
              -Cash
                  at End of Year
              
              $
              4,804
              
              $
              1,348
              
              $
              4,804Supplemental
                  Disclosures:Cash
                  paid for income taxes
              
              $
              1,797
              
              $
              87
              
              $
              2,032Cash
                  paid for interest
              
              $
              -
              
              $
              -
              
              $
              -Non
                  Cash Transactions:
              
              $
              -
              
              $
              -
              
              $
              -




7





**Stone
      Consulting Services, Inc.**


**(A
      Development Stage Company)**


**Notes
      to Financial Statements**





**NOTE
      1: Summary of Significant Accounting Policies, Nature of Operations and Use
      of
      Estimates:**





***Nature
      of Business and Basis of Presentation and Interim Financial
      Statements***





Stone
      Consulting Services, Inc. (a development stage company) (“the Company”) was
      incorporated in the State of Delaware on December 11, 2006, to provide
“management consulting” and “strategy consulting” services and to assist in the
      areas of business development and operational management for small business
      owners, professionals, and companies within the pharmaceutical,
      medical (including psychology), and health-care sectors.





The
      Company is considered to be a development stage company and as such the
      financial statements presented herein are presented in accordance with Statement
      of Financial Accounting Standards (“SFAS”) No. 7. *“Accounting
      and Reporting By Development Stage Enterprises.”* The
      Company is subject to the risks associated with activities of development stage
      companies.





The
      accompanying unaudited financial statements of Stone Consulting Services, Inc.
      have been prepared in accordance with generally accepted accounting principles
      (“GAAP”), pursuant to the rules and regulations of the Securities and
      Exchange Commission, and are unaudited.  Accordingly, they do not include
      all the information and footnotes required by GAAP for complete financial
      statements. **** In
      the
      opinion of management, all adjustments (which include only normal recurring
      adjustments) necessary for a fair presentation of the results for the interim
      periods presented have been made.  The results for the six month period
      ended June 30, 2008, may not be indicative of the results for the entire
      year.  These financial statements should be read in conjunction with the
      Company’s Registration Statement on Form S-1 (No. 333-149995).




The
      preparation of financial statements in conformity with GAAP 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 these
      estimates.





***Income
      (Loss) Per Share:***




In
      accordance with SFAS No. 128, “Earnings Per Share”, the basic net loss per
      common share is computed by dividing net loss available to common stockholders
      by the weighted average  number of common shares outstanding. Diluted
      net loss per common share is computed similar to basic net loss per common
      share
      except that the denominator is increased to include the number of additional
      common shares that would have been outstanding if the potential common shares
      had been issued and if the additional common shares were dilutive. As at June
      30, 2008, diluted net loss per share is equivalent to basic net loss per
      share as there
      were no dilutive securities outstanding and as dilutive securities are not
      included in the weighted average number of shares when inclusion would increase
      the income per share or decrease the loss per share.




***Recent
      Accounting Pronouncements***




In
      June
      2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. (FIN) 48, “Accounting for Uncertainty in Income Taxes - An Interpretation of
      FASB Statement No. 109”, which prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and measurement
      of
      a tax position taken or expected to be taken in a tax return. The adoption
      of
      FIN 48 is not expected to have a material affect on our financial position
      or
      results of operations.




In
      December 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 141 (revised 2007), “Business
      Combinations” (“SFAS 141(R)”). SFAS 141(R) will change the accounting for
      business combinations. Under SFAS No. 141(R), an acquiring entity will be
      required to recognize all the assets acquired and liabilities assumed in a
      transaction at the acquisition-date fair value with limited exceptions. SFAS
      No. 141(R) will change the accounting treatment and disclosure for certain
      specific items in a business combination. SFAS No. 141(R) applies
      prospectively to business combinations for which the acquisition date is on
      or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. SFAS 141(R) could impact the Company in the event of any
      future acquisition.


8





**Stone
      Consulting Services, Inc.**


**(A
      Development Stage Company)**


**Notes
      to Financial Statements**




In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments, an amendment of FASB statements No. 133 and
      140” ** (“SFAS
      155”). SFAS No. 155 allows financial instruments that have embedded
      derivatives to be accounted for as a whole (eliminating the need to bifurcate
      the derivative from its host) as long as the entire instrument is valued on
      a
      fair value basis. The  statement
      also resolves and clarifies other specific SFAS No. 133 and SFAS
      No. 140 related issues. SFAS No. 155 is effective for all financial
      instruments acquired or issued after the beginning of an entity’s first fiscal
      year that begins after September 15, 2006. The adoption of SFAS 155 is not
      expected to have a material affect on our financial position or results of
      operations.




In
      March
      2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
      Assets—an amendment of FASB Statement No. 140” (“SFAS 156”). SFAS 156
      requires an entity to recognize a servicing asset or servicing liability each
      time it undertakes an obligation to service a financial asset by entering into
      a
      servicing contract in specific situations. Additionally, the servicing asset
      or
      servicing liability shall be initially measured at fair value, if practicable.
      SFAS 156 permits an entity to choose either the amortization method or fair
      value measurement method for subsequent measurement of the servicing asset
      or
      servicing liability. SFAS 156 is effective for our fiscal year ending December
      31, 2008. The adoption of SFAS 156 is not expected to have a material affect
      on
      our financial position or results of operations.




In
      September 2006, the FASB issued SFAS No. 157 (“SFAS 157”).
      The Statement defines fair value, establishes a framework for measuring fair
      value in generally accepted accounting principles (GAAP), and expands
      disclosures about fair value measurements.  This Statement is effective for
      financial statements issued for fiscal years beginning after November 15,
      2007, and interim periods within those fiscal years. The adoption of SFAS 157
      is
      not expected to have a material affect on our financial position or results
      of
      operations.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities—Including an amendment of Statement
      of Financial Accounting Standards Statement No. 115” (“SFAS 159”), which
      permits entities to choose to measure many financial instruments and certain
      other items at fair value at specified election dates. A business entity is
      required to report unrealized gains and losses on items for which the fair
      value
      option has been elected in earnings at each subsequent reporting date. This
      statement is expected to expand the use of fair value measurement. SFAS 159
      is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. The
      adoption of SFAS 159 is not expected to have a material affect on our financial
      position or results of operations .




In
      March 2008, the FASB issued SFAS No. 161, “Disclosures about
      Derivative Instruments and Hedging Activities, an amendment of FASB Statement
      No. 13 *3* ”
(“SFAS
      161”), which establishes, among other things, the disclosure requirements for
      derivative instruments and hedging activities. SFAS 161 requires
      qualitative disclosures about objectives and strategies for using derivatives,
      quantitative disclosures about fair value amounts of and gains and losses on
      derivative instruments, and disclosures about credit-risk-related contingent
      features in derivative agreements. SFAS 161 is effective for fiscal periods
      and interim periods beginning after November 15, 2008. The adoption of SFAS
      161 is not expected to have a material affect on our financial position or
      results of operations.





In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles.” The current GAAP hierarchy, as set forth in the American
      Institute of Certified Public Accountants (AICPA) Statement on Auditing Standard
      No. 69, The Meaning of Present Fairly in Conformity with Generally Accepted
      Accounting Principles, has been criticized because (1) it is directed to the
      auditor rather than the entity, (2) it is complex, and (3) it ranks FASB
      Statements of Financial Accounting Concepts. The FASB believes that the GAAP
      hierarchy should be directed to entities because it is the entity (not its
      auditor) that is responsible for selecting accounting principles for financial
      statements that are presented in conformity with GAAP. Accordingly, the FASB
      concluded that the GAAP hierarchy should reside in the accounting literature
      established by the FASB and is issuing this Statement to achieve that result.
      This Statement is effective 60 days following the SEC’s approval of the Public
      Company Accounting Oversight Board amendments to AU Section 411, The Meaning
      of
      Present Fairly in Conformity with Generally Accepted Accounting Principles.
      The
      adoption of SFAS No. 162 is not expected to have a material impact on the
      Company’s financial position.


9





**Stone
      Consulting Services, Inc.**


**(A
      Development Stage Company)**


**Notes
      to Financial Statements**





**NOTE
      2: Related Party Transactions**





On
      December 11, 2006, in connection with the formation of the Company, the founder
      of the Company purchased 4,500,000 shares of common stock from the Company
      for an aggregate of $4,500, or $.001 per share.





On
      December 11, 2006, also in connection with the formation of the Company, Michael
      Stone, the Company’s sole officer and director, advanced $500 to the Company in
      the form of a loan on an interest-free basis.





On
      December 14, 2006, the Company entered into a Consulting Agreement with Lore
      E.
      Stone, PhD d/b/a “Center for Personal Growth” (the “Lore Consulting Agreement”).
      This agreement provided for approximately $2,000 in income to the Company during
      fiscal year ended December 31, 2006. Lore E. Stone is the mother of Michael
      Stone, the Company’s founder, director and executive officer, and is a
      stockholder of the Company that beneficially owns approximately two percent
      (2%)
      of the issued and outstanding Shares of the Company.




On
      August
      24, 2007, the Company completed an unregistered private offering under the
      Securities Act relying upon the exemption from registration afforded by
      Rule 506 of Regulation D promulgated there under. Between July and
      August of 2007, the Company sold 500,000 Shares of its common stock, par
      value $.001 per share, at a purchase price of $.10 per share, or an
      aggregate of $50,000, pursuant to Rule 506 of Regulation D under the
      Securities Act of 1933, as amended (the “July 2007 Private Placement”). Included
      in the investors were Lore E. Stone (100,000 shares) and Deborah E. Stone
      (100,000 shares), mother and sister, respectively, of Michael Stone.





The
      Company has been provided office space, telephone and secretarial services
      from
      our Chief Executive Officer, without charge. The Company intends to rent office
      space and hire administrative personnel when the Company expands its commercial
      operations.





On
      June
      3, 2008, Michael Stone, the Company’s sole officer and director, advanced $7,500
      to the Company pursuant to a Loan Agreement, dated of even date (the “Loan
      Agreement”), providing for loans in the aggregate principal amounts of up to
      $15,000, on an interest-free basis, due upon the earlier of: (i) twelve (12)
      months from the date of the Loan Agreement or (ii) the completion of a minimum
      four hundred thousand dollar ($400,000) financing.





**NOTE
      3** **:** **Stockholders’
      Equity:**





At
      June
      30, 2008, the authorized capital of the Company consists of 55,000,000 shares
      of
      capital stock comprising 50,000,000 shares of $.001 par value common stock
      and
      5,000,000 shares of preferred stock. Both classes of stock have a par value
      of
      $0.001 per share. The preferred stock has voting and other rights and
      preferences as may be determined by the Board of Directors from time-to-time.
      As
      of June 30, 2008, there are 5,000,000 shares of common stock issued and
      outstanding. No shares of preferred stock have been issued.




In
      the
      July 2007 Private Placement, the Company received net proceeds of $33,000 out
      of
      $50,000 in gross proceeds.


10





**Stone
      Consulting Services, Inc.**


**(A
      Development Stage Company)**


**Notes
      to Financial Statements**





**NOTE
      4: Going Concern**




The
      Company is an early stage development company and has minimal operating history
      in the field of consulting. Michael Stone, President, and sole Director, who
      despite having a background in managing and forming companies within the
      targeted business sectors and industries, now seeks to function as a consultant
      and has no formal training or professional experience in the consulting
      industry.




The
      future success of the Company currently depends on the continued services of
      Michael Stone. Mr. Stone is critical to the overall management of the Company
      as
      well as the development of the business strategy. The loss or unavailability
      of
      Mr. Stone will seriously impede the ability of the Company to continue its
      current operational plan.




At
      June
      30, 2008, the Company has an accumulated deficit of $49,167. The Company has
      not
      generated significant revenues, and has generated operating losses while in
      the
      development stage.




The
      Company requires and is pursuing additional capital for growth and strategic
      plan implementation. Accordingly, the accompanying consolidated financial
      statements have been prepared assuming the Company will continue to operate
      and
      do not include any adjustments that might be necessary if the Company is unable
      to continue as a going concern.


11


**Item
      2.   Management’s Discussion and Analysis of Financial Condition
      and Results of Operations.**




Forward-Looking
      Statements




Statements
      contained in this Item 2. “Management’s Discussion and Analysis of Financial
      Condition and Results of Operation and elsewhere in this document that are
      not
      historical or current facts may constitute “forward-looking statements” within
      the meaning of such term in Section 27A of the Securities Act of 1933, as
      amended (the “Securities Act”) and section 21E of the Securities Exchange Act of
      1934, as amended (the “Exchange Act”). Such forward-looking statements involve
      known and unknown risks, uncertainties and other factors that could cause the
      actual financial or operating results of the Company to be materially different
      from the historical results or from any future results expressed or implied
      by
      such forward-looking statements. Factors that could cause actual results to
      differ materially from those predicated in any such forward-looking statements
      include: our ability to raise funds; our business strategies and future plans
      of
      operations; our ability to attract and retain qualified personnel; our ability
      to identify and successfully consummate and manage future acquisitions; our
      ability to compete against much larger companies; general economic conditions
      in
      the United States as well as the economic conditions affecting the industry
      in
      which we operate; the amount of sales of our products and services; our current
      operating losses; and the competitive environment within the industry in which
      we compete. Such forward-looking statements are based on our best estimates
      of
      future results, performance or achievements, based on current conditions and
      the
      most recent results of the Company. In addition to statements that explicitly
      describe such risks and uncertainties, readers are urged to consider statements
      labeled with the terms “may,” “will,” “potential,” “opportunity,” “believes,”
“expects,” “intends,” “estimates,” “anticipates” or “plans” to be uncertain and
      forward-looking. The forward-looking statements contained herein are also
      subject generally to other risks and uncertainties that are described from
      time
      to time in the Company’s reports and registration statements filed with the SEC.
      The terms "we", "our", "us", or any derivative thereof, as used herein refer
      to
      Stone Consulting Services, Inc., a Delaware corporation, and its
      predecessors.





General





Management
      of the Company provides “management consulting” and “strategy consulting”
services and assists in the areas of business development and operational
      management for small business owners, professionals, and companies within the
      pharmaceutical, medical (including psychology), and health-care sectors (the
      “Services”). These areas were chosen because of management’s knowledge and
      experience in managing and forming companies within the aforementioned
      sectors.





The
      consulting industry is highly fragmented and highly competitive. Within the
      industry, the pharmaceutical, medical (including psychology), and health-care
      sectors represent smaller, niche sub-areas. In particular, the Company focuses
      on small to mid-sized businesses within the aforementioned sectors,
      which tend to be ignored by larger consulting firms and represent an
      opportunity for the company to provide the Services and advise clients. The
      Company’s management may consider any other sector or industry outside its
      primary focus, if future evaluations lead us to a sector or industry focus,
      from
      time to time, which management believes is in the Company’s best interest.





In
      providing the Services, the Company focuses mainly on handling management
      issues, improving management processes, and provides “best practices”
recommendations, as well as strategic planning, financial planning and
      budgeting, internal controls planning, organizational and human resource
      planning. The Company also advises clients on scientific and technical issues.
      The Company utilizes its broad network of contacts and experts within the
      pharmaceutical, medical (including psychology), and health-care sectors in
      connection with (1) product and customer development (pharmaceuticals), (2)
      investments in or by small medical or psychology practice groups, or (3)
      acquisition or divestiture strategies with respect to the client’s businesses.


12





The
      Company engages clients on a project-by-project basis or on a “retainer” basis,
      depending on the nature of services requested. The Company faces competition
      mainly from smaller, “boutique” consultants, and, to a lesser degree,
      specialized departments of larger consulting firms.





The
      Company plans to engage local or regional clientele, due to its current size.
      The nature of the pharmaceutical and heathcare sectors, in particular, would
      permit the Company to engage projects on the national level. The Company intends
      to develop clients on the national level as the business matures.





The
      consulting business lies within the private sector and is not subject to
      significant governmental regulation. There are currently no registration or
      licensing fees associated with the particular kind of consulting business in
      which the Company is engaged. As such, the Company does not anticipate
      significant costs or other effects in terms of compliance with governmental
      regulation (existing or probable) with respect to its business. In addition,
      as
      the Company does not own any real property and does not engage in a business
      that is typically subjected to significant environmental law (federal, state,
      and local) compliance burdens, such as the oil, manufacturing, or computer
      industries, it does not anticipate significant costs of compliance or other
      effects with respect to such environmental laws.





Liquidity
      and Capital Resources




The
      Company was initially capitalized by the purchase of 4,500,000 shares of the
      Company’s common stock, $.001 per share (the “Common Stock”) by its founder for
      an aggregate purchase price of $4,500 and a $500 note from its founder on an
      interest-free basis (the “First Advance”). In June 2008, the founder advanced
      $7,500 (the “Second Advance”) to the Company under that certain Loan Agreement,
      dated June 3, 2008 and filed herewith as Exhibit 10.1 (the “Loan Agreement”),
      providing for loans on an interest-free basis of up to $15,000 in the aggregate,
      due upon the earlier of: (i) twelve (12) months from the date of the Loan
      Agreement, or (ii) the completion of a minimum four hundred thousand dollar
      ($400,000) financing.





Between
      July and August of 2007, the Company sold 500,000 shares of it Common Stock
      at a
      purchase price of $.10 per share or an aggregate of $50,000 pursuant to Rule
      506
      of Regulation D promulgated under the Securities Act of 1933, as amended (the
      “July 2007 Private Placement”). Of the $50,000 gross proceeds from the July 2007
      Private Placement, the Company received a net amount of $33,000.





Pursuant
      to a Registration Statement of Form S-1 (Reg. No. 333-149995) which was declared
      effective by the Securities and Exchange Commission on April 10, 2008, the
      Company registered the offering by certain selling shareholders of 500,000
      shares of Common Stock (the “Initial Offering”). The Company received no
      proceeds from the Initial Offering.





The
      Company has relied on the First and Second Advances of $500 and $7,500,
      respectively, and the $33,000 net proceeds of the July 2007 Private Placement,
      as well as an aggregate of $7,850 in revenues from clients. The Company is
      using
      these proceeds to pay its organizational expenses, audit, legal expenses and
      advisory fees as well as fees and expenses in connection with the preparation
      and filing of the Registration Statement.





The
      Company does not have any material commitments for expenditures. It is not
      anticipated that the Company will expend significant resources on research
      and
      development activities with respect to the Services until its operations
      become more firmly established. While the Company will seek potential
      acquisitions for which it would then seek financing, it currently has no
      agreements, arrangements or understanding to acquire any other company.





The
      Company needs to raise approximately $110,000 in working capital in order to
      pursue its business strategy over the next 12 months. Management believes that
      it will be able to obtain sufficient funding to carry out its business strategy
      based on revenues from the Services in addition to financings through the sale
      of the Company’s securities and/or other sources of financing. Management
      believes that if the Company can establish a public market for its securities,
      it can raise sufficient funds to implement its business strategy. Management
      is
      continuing to do extensive research and evaluation to finalize a specific
      business plan that will be used to seek permanent funding.


13





Most
      of
      management’s time immediately going forward will be focused on capital formation
      and generating new clients. Currently, the Company’s only employee is our
      founder and Chief Executive Officer, Michael Stone. The Company intends to
      hire
      qualified employees in the future. However, the Company does not intend to
      hire any additional employees, enter into an office lease or make any other
      significant expenditures until it commences principle operations.





Off-Balance
      Sheet Arrangements





The
      Company has no off-balance sheet arrangements that have or are reasonably likely
      to have a current or future effect on the Company’s financial condition, changes
      in financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources that is material to investors.





Going
      Concern





The
      financial statements included in this filing have been prepared in conformity
      with generally accepted accounting principles that contemplate the continuance
      of us as a going concern. The Company has not generated significant revenues,
      and has generated operating losses while in the development stage. In order
      to
      continue as a going concern and achieve a profitable level of operations, the
      Company needs to pursue additional capital for growth and strategic plan
      implementation, as well as to develop a consistent source of revenues, among
      other things. The financial statements do not include any adjustments relating
      to the recoverability and classification of recorded assets and classification
      of liabilities that might be necessary should we be unable to continue
      existence.





Critical
      Accounting Policies





We
      have
      identified the policies outlined below as critical to our business operations
      and an understanding of our results of operations. The list is not intended
      to
      be a comprehensive list of all of our accounting policies. In many cases, the
      accounting treatment of a particular transaction is specifically dictated by
      accounting principles generally accepted in the United States, with no need
      for
      management’s judgment in their application. The impact and any associated risks
      related to these policies on our business operations is discussed throughout
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations where such policies affect our reported and expected financial
      results. Note that our preparation of the financial statements requires us
      to
      make estimates and assumptions that affect the reported amount of assets and
      liabilities, disclosure of contingent assets and liabilities at the date of
      our
      financial statements, and the reported amounts of revenue and expenses during
      the reporting period. There can be no assurance that actual results will not
      differ from those estimates.





We
      believe our most critical accounting policies are revenue recognition and
      allowance for potentially uncollectible accounts receivable.




Revenue
      Recognition




The
      Company earns its revenues from client engagements. These engagements generally
      may last from three weeks to six months. The Company may receive a retainer,
      bill work as completed, or bill upon completion of engagement. Our consulting
      services are generally billed on an hourly, daily or monthly rate. Revenue
      is
      recognized at the time the services are provided.


14





Allowance
      for Potentially Uncollectible Accounts





The
      Company provides for potentially uncollectible accounts receivable by use of
      an
      allowance method. The allowance is provided for based upon a review of the
      individual accounts outstanding and how recently payments have been received.




**Material
      Changes in Results of Operations For the Three Months Ended June 30, 2008 as
      compared to the Three Months Ended June 30, 2007**




*Revenues.* During
      the three months ended June 30, 2007 and June 30, 2008, revenues were none
      and
      $2,350, respectively. The increase in revenues during the three months ended
      June 30, 2008 were due to consulting services in such period. ****




*General
      administrative expenses.* During the three month periods ended June 30, 2007 and June 30, 2008, the
      Company incurred general administrative expenses of $11,213 and $8,147
      respectively. General and administrative expenses are comprised primarily of
      professional fees for legal and accounting services. The reason for the drop
      in
      such expenses was due to lower legal and accounting fees for the three month
      period ended June 30, 2008 compared to the same period in 2007, which higher
      costs were mainly associated with the July 2007 Private Placement.




*Net
      loss.* During
      the three month periods ended June 30, 2007 and June 30, 2008, the Company
      incurred a net loss of $11,213 and $6,794 respectively. The decrease in net
      loss
      was the result of lower general expenses coupled with increased revenues.




**Material
      Changes in Results of Operations For the Six Months Ended June 30, 2008 as
      compared to the Six Months Ended June 30, 2007**




*Revenues.* During
      the six months ended June 30, 2007 and June 30, 2008, revenues were none and
      $3,350, respectively.




*General
      administrative expenses.* During the six month periods ended June 30, 2007 and June 30, 2008, the Company
      incurred general administrative expenses of $12,490 and $31,622 respectively.
      General administrative expenses are comprised primarily of professional fees
      for
      legal and accounting services. The material increase in the general and
      administrative expenses in the six month period ended June 30, 2008 primarily
      relate to accounting and legal fees associated with the Registration Statement
      on Form S-1 (Reg. No. 333-149995) which was declared effective by the Securities
      and Exchange Commission on April 10, 2008




*Net
      loss.* During
      the six month periods ended June 30, 2007 and June 30, 2008, the Company
      incurred a net loss of $12,490 and $29,269 respectively. The increase in net
      loss was attributed to the material increase in general administrative expenses
      of $31,622 during the six months ended June 30, 2008, compared with expenses
      of
      $12,490 during the comparable period in 2007, in addition to an income tax
      expenses of $997, which amounts were offset, in part, by increased revenues
      of
      $3,350.





**Material
      Changes in Financial Condition, Liquidity and Capital Resources as of June
      30,
      2008 as compared to December 31, 2007**





As
      of
      June 30, 2008, the Company had total assets of $4,804 as compared to $24,656
      total assets as of December 31, 2007. The difference in asset balances
      represents the Company’s use of cash for operating expenses during the six month
      period ended June 30, 2008, offset by $3,350 in revenues during the same six
      month period. The Company had a working capital deficit of $3,667 as of June
      30,
      2008 compared with available working capital of $18,102 as of December 31,
      2007.
      The significant decrease in working capital is the result of an increase in
      accounts payable of $8,471 and a decrease of $19,852 in cash during the six
      months ended June 30, 2008, which was offset, in part, by a decrease in accrued
      liabilities of $5,754 and the decrease of an income tax payable of $800 at
      December 31, 2007 to none and none, respectively, during the six month period
      covered by this report.


15




As
      of
      June 30, 2008, the Company had total liabilities of $16,471 as compared to
      $7,054 as of December 31, 2007 due, in part, to an increase in accounts payable
      to $8,471 as of June 30, 2008 as compared to $0 as of December 31, 2007.




As
      of
      June 30, 2008, the Company had stockholders’ deficit of $11,667 as compared to
      stockholders’ equity of $17,602 as of December 31, 2007. The reduction in
      stockholders’ equity is due to the increase of the deficit accumulated in the
      development stage to $49,167 as of June 30, 2008 from $19,898 as of December
      31,
      2007. The stockholders’ deficit is the result of material increases in current
      liabilities (due to an increase in accounts payable and accrued liabilities
      from
      $5,754 to $8,471 during the quarterly period covered by this report) and long
      term liabilities (mainly due to the Second Advance), combined with the
      concurrent drop of $19,852 in cash assets during the six months ended June
      30,
      2008.




**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk.**





In
      accordance with the provision of Item 305 of Regulation S-K, the Company, as
      a
      smaller reporting company, is not required to make disclosure under this
      item.




**Item
      4T. Controls and Procedures.**




EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES




Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      investigation of our disclosure controls and procedures, as such term is defined
      under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act,
      as
      of June 30, 2008. Based on this evaluation, our principal executive officer
      and
      principal financial officer has concluded that our disclosure controls and
      procedures are effective to ensure that information required to be disclosed
      by
      us in the reports we file or submit under the Exchange Act is recorded,
      processed, summarized, and reported within the time periods specified in the
      SEC’s rules and forms and that our disclosure and controls are designed to
      ensure that information required to be disclosed by us in the reports that
      we
      file or submit under the Exchange Act is accumulated and communicated to our
      management, including our principal executive officer and principal financial
      officer, or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure.





CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING




There
      were no changes (including corrective actions with regard to significant
      deficiencies or material weaknesses) in our internal controls over financial
      reporting that occurred during the quarterly period ended June 30, 2008 that
      has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.




**PART
      II.  OTHER INFORMATION**




**Item
      1.**  **Legal
      Proceedings.**




As
      of the
      date of this quarterly report on Form 10-Q, we are not a party to any legal
      proceedings.




**Item
      1A. Risk Factors**





In
      accordance with the requirements of Form 10-Q, the Company, as a smaller
      reporting company, is not required to make disclosure under this
      item.


16





**Item
      2.   Unregistered Sales of Equity Securities and Use of
      Proceeds.**




Pursuant
      to the Company’s initial Registration Statement (Reg. No. 333-149995), declared
      effective by the Securities and Exchange Commission on April 10, 2008, the
      Company registered 500,000 shares of its common stock, par value $.001 per
      share, for sale by selling stockholders. As required by Rule 463 of the
      Securities Act of 1933, as amended, and in accordance with the aforementioned
      Registration Statement and related prospectus, none of the proceeds of such
      offering from the sale of the registered shares by the selling stockholders
      thereunder have been, nor will be received by the Company.





**Item
      3.   Defaults Upon Senior Securities.**




None.




**Item
      4.   Submission of Matters to a Vote of Security
      Holders.**




None.




**Item
      5.   Other Information.**




None,
      other than the Company’s entry into the Loan Agreement between the Company and
      its founder Michael Stone, in an individual capacity, attached hereto as Exhibit
      10.1, which created a direct financial obligation of the Company. The
      disclosures set forth in Item 2 of Part 1 pertaining to the Loan Agreement
      and
      the Second Advance, are incorporated by reference herein.




**Item
      6.   Exhibits.**




Exhibits.




Set
      forth
      below is a list of the exhibits to this quarterly report on Form
      10-Q.




Exhibit
              Number
            
            Description3.1
            
            Certificate
                of Incorporation of the Company (1)3.2
            
            By-Laws
                of the Company(1)4.1
            
            Form
                of Common Stock Certificate (1)4.2
            
            Form
                of Subscription Agreement, dated between July and August 2007
                (1)*10.1
            
            Loan
                Agreement, dated June 3, 2008, between the Company and Michael Stone,
                providing for loans of up to $15,000 in aggregate principal amount.*31
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
                1934,
                as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley
                Act
                of 2002.*32
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of
                1934,
                as amended, and 18 U.S.C. 1350, as adopted pursuant to Section 906
                of the
                Sarbanes-Oxley Act of 2002.





*
      Filed
      herewith.





(1)
            Incorporated
                by reference to the Company’s Registration Statement on Form S-1
                (Registration No. 333-149995) filed on March 31,
                2008.


17





**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.




Dated:
                August 11, 2008
            STONE
                CONSULTING SERVICES, INC.By:
            /s/
                Michael StoneMichael
                Stone, President and Chief Executive
              Officer
                (Principal Executive Officer and
              Principal
                Financial Officer)




18





**STONE
      CONSULTING SERVICES, INC.**


**QUARTERLY
      REPORT ON FORM 10-Q**


**QUARTER
      ENDED JUNE 30, 2008**




**EXHIBIT
      INDEX**




Exhibit
              Number
            
            Description10.1
            
            Loan
                Agreement, dated June 3, 2008, between the Company and Michael Stone,
                providing for loans of up to $15,000 in aggregate principal
                amount.31
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
                1934,
                as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley
                Act
                of 2002.32
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of
                1934,
                as amended, and 18 U.S.C. 1350, as adopted pursuant to Section 906
                of the
                Sarbanes-Oxley Act of 2002.




19