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, 2009
   ̈
              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 333-144596





MEDICAL DESIGN STUDIOS,
INC.


(Exact
Name of Registrant as Specified in Its Charter)





Nevada
              
              26-0482524(State
      or Other Jurisdiction of
                Incorporation
      or Organization)
              
              (I.R.S.
      Employer Identification No.)





7231 South Rome Street, Aurora,
      Colorado
                    
                    80016(Address
      of Principal Executive Offices)
                    
                    (Zip
      Code)




(303)
      956-7197(Registrant’s
      Telephone Number, Including
                        Area
      Code)
 (Former
      Name, Former Address and Former Fiscal Year,
                    if
      Changed Since Last
Report)





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.    Yes  x    No   ̈





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





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




Large
      Accelerated Filer o
              Accelerated
      Filer  oNon-accelerated
      Filer o
              Smaller
      Reporting Company  x




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




As of
August 14, 2009, 7,142,858 shares of the issuer’s common stock were
outstanding.





MEDICAL
DESIGN STUDIOS, INC.





FORM
10-Q




June
30, 2009




INDEX




PagePART
      I— FINANCIAL INFORMATIONItem
      1.
                                              Financial
      Statements
                                              
                                              3Item
      2.
                                              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                              
                                              12Item
      3.
                                              Quantitative
      and Qualitative Disclosures About Market Risk
                                              
                                              17Item
      4T.
                                              Controls
      and Procedures
                                              
                                              17PART
      II— OTHER
      INFORMATIONItem
      1.
                                              Legal
      Proceedings
                                              
                                              18Item
      1A.
                                              Risk
      Factors
                                              
                                              18Item
      2.
                                              Unregistered
      Sales of Equity Securities and Use of Proceeds
                                              
                                              18Item
      3.
                                              Defaults
      Upon Senior Securities
                                              
                                              18Item
      4.
                                              Submission
      of Matters to a Vote of Security Holders
                                              
                                              18Item
      5.
                                              Other
      Information
                                              
                                              18Item
      6.
                                              Exhibits
                                              
                                              18




2


PART
I - FINANCIAL INFORMATION





ITEM
1. FINANCIAL STATEMENTS





MEDICAL
DESIGN STUDIOS, INC.


Balance
Sheets





June 30,
                    2009
                  
                  
                  December 31,
                    2008(Unaudited)ASSETSCurrent
      Assets:Cash
                  
                  $
                  39,766
                  
                  
                  $
                  4,766Accounts
      receivable, net of allowance for doubtful accounts of  $10,000
      and $20,000, respectively
                  
                  
                  22,384
                  
                  
                  
                  5,734Total
      current assets
                  
                  
                  62,150
                  
                  
                  
                  10,500Equipment:Computer
      equipment
                  
                  
                  29,793
                  
                  
                  
                  29,793Accumulated
      depreciation
                  
                  
                  (17,057
                  )
                  
                  
                  (13,516
                  )Equipment,
      net
                  
                  
                  12,736
                  
                  
                  
                  16,277TOTAL
      ASSETS
                  
                  $
                  74,886
                  
                  
                  $
                  26,777LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
      LiabilitiesAccrued
      expenses
                  
                  $
                  45,076
                  
                  
                  $
                  42,730Stockholders’
      Equity (Deficit):Preferred
      stock: $0.001 par value; 1,000,000 shares authorized; no shares issued or
      outstanding
                  
                  
                  -
                  
                  
                  
                  -Common
      stock: $0.001 par value; 74,000,000 shares authorized; 7,142,858 shares
      issued and outstanding
                  
                  
                  7,143
                  
                  
                  
                  7,143Additional
      paid-in capital
                  
                  
                  64,260
                  
                  
                  
                  29,260Accumulated
      deficit
                  
                  
                  (41,593
                  )
                  
                  
                  (52,356
                  )Total
      stockholders’ equity (deficit)
                  
                  
                  29,810
                  
                  
                  
                  (15,953
                  )TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
                  
                  $
                  74,886
                  
                  
                  $
                  26,777





See
accompanying notes to financial statements.


3


MEDICAL
DESIGN STUDIOS, INC.





Statements
of Operations





(Unaudited)





Three Months Ended
                  June 30,2009
                
                
                2008Revenue
                
                $
                55,720
                
                
                $
                28,885Operating
      Expenses:Selling,
      general and administrative
                
                
                14,960
                
                
                
                8,680Compensation
                
                
                30,405
                
                
                
                15,515Total
      operating expenses
                
                
                45,365
                
                
                
                24,195Income
      from operations
                
                
                10,355
                
                
                
                4,690Income
      before income taxes
                
                
                10,355
                
                
                
                4,690Provision
      for income taxes
                
                
                -
                
                
                
                -Net
      income
                
                $
                10,355
                
                
                $
                4,690Net
      income per share - basic and diluted
                
                $
                0.00
                
                
                $
                0.00Weighted
      average number of common shares outstanding – basic and
      diluted
                
                
                7,142,858
                
                
                
                5,000,000





See
accompanying notes to the financial statements.


4





MEDICAL
DESIGN STUDIOS, INC.





Statements
of Operations





(Unaudited)





Six Months Ended
                  June 30,2009
                
                
                2008Revenue
                
                $
                69,470
                
                
                $
                74,100Operating
      Expenses:Selling,
      general and administrative
                
                
                28,938
                
                
                
                22,532Compensation
                
                
                39,769
                
                
                
                53,963Total
      operating expenses
                
                
                68,707
                
                
                
                76,495Income
      (loss) from operations
                
                
                763
                
                
                
                (2,395
                )Other
      income (expense):Recovery
      of bad debt
                
                
                10,000
                
                
                
                -10,000
                
                
                
                -Income
      (loss) before income taxes
                
                
                10,763
                
                
                
                (2,395
                )Provision
      for income taxes
                
                
                -
                
                
                
                -Net
      income (loss)
                
                $
                10,763
                
                
                $
                (2,395
                )Net
      income (loss) per share - basic and diluted
                
                $
                0.00
                
                
                $
                (0.00
                )Weighted
      average number of common shares outstanding – basic and
      diluted
                
                
                7,142,858
                
                
                
                5,000,000





See
accompanying notes to the financial statements.





5





MEDICAL
DESIGN STUDIOS, INC.





Statements
of Cash Flows


(Unaudited)





Six Months Ended
                  June 30,2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                
                $
                10,763
                
                
                $
                (2,395
                )Depreciation
                
                
                3,541
                
                
                
                3,636Recovery
      of bad debt
                
                
                (10,000
                )
                
                
                -Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Change
      in net operating assets
                
                
                (4,304
                )
                
                
                10,477Net
      Cash Provided by Operating Activities
                
                
                -
                
                
                
                11,718CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of computer
                
                
                -
                
                
                
                (11,718
                )Net
      Cash Used in Investing Activities
                
                
                -
                
                
                
                (11,718
                )CASH
      FLOWS FROM FINANCING ACTIVITIESContribution
      to capital
                
                
                35,000
                
                
                
                -Net
      Cash Provided by Financing Activities
                
                
                35,000
                
                
                
                -CHANGE
      IN CASH
                
                
                -
                
                
                
                -CASH
      AT BEGINNING OF PERIOD
                
                
                4,766
                
                
                
                500CASH
      AT END OF PERIOD
                
                $
                39,766
                
                
                $
                500





See
accompanying notes to the financial statements.


6


MEDICAL
DESIGN STUDIOS, INC.





June
30, 2009 and 2008





Notes
to Unaudited Financial Statements





(Unaudited)





NOTE
1          SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES





Basis
of Presentation





The
accompanying unaudited interim consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”) for interim financial information and
with the rules and regulations of the United States Securities and Exchange
Commission (“SEC”) to Form 10 and Article 10 of Regulation S-X.
 Accordingly, they do not include all of the information and footnotes
required by U.S. GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of operations
realized during an interim period are not necessarily indicative of results to
be expected for a full year. These financial statements should be read in
conjunction with the financial statements of the Company for the year
ended December 31, 2008 and notes thereto contained in the Company’s Annual
Report Form 10-K as filed with the SEC on March 30, 2009.





Use
of estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 as well as the reported amount of revenues and expenses during the
reporting period. Actual results could differ from these estimates.





Cash
Equivalents




The
Company considers all highly liquid investments with maturities of three months
or less at the time of purchase to be cash equivalents.


7


Fair
Value of Financial Instruments





The
Company follows Statement of Financial Accounting Standards No. 107 “Disclosures about fair value of
Financial Instruments” (“SFAS No. 107”) for disclosures about fair value
of its financial instruments and has adopted Financial Accounting Standards
Board (“FASB”) No. 157 “Fair
Value Measurements” (“SFAS No. 157”) to measure the fair value of its
financial instruments.  SFAS No. 157 establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, SFAS No. 157
establishes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three (3) broad
levels.  The fair value hierarchy gives the highest priority to quoted
prices (unadjusted) in active markets for identical assets or liabilities and
the lowest priority to unobservable inputs.  The three (3) levels of
fair value hierarchy defined by SFAS No. 157 are described below:





Level 1
                        
                        Quoted
      market prices available in active markets for identical assets or
      liabilities as of the reporting date.Level 2
                        
                        Pricing
      inputs other than quoted prices in active markets included in Level 1,
      which are either directly or indirectly observable as of the reporting
      date.Level 3
                        
                        Pricing
      inputs that are generally observable inputs and not corroborated by market
      data.





As
defined by SFAS No. 107, the fair value of a financial instrument is the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale, which was further
clarified as the price that would be received to sell an asset or paid to
transfer a liability (“an exit price”) in an orderly transaction between market
participants at the measurement date.  The carrying amounts of the
Company’s financial assets and liabilities, such as cash and accrued
expenses, approximate their fair values because of the short maturity of these
instruments.





The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at June
30, 2009 or 2008, nor gains or losses are reported in the statement of
operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date for
the interim period ended June 30, 2009 or 2008.





Revenue
Recognition





The
Company follows the guidance of the United States Securities and Exchange
Commission’s Staff Accounting Bulletin (“SAB”) No. 101 Revenue Recognition, as
amended by SAB No. 104 for revenue recognition. The Company recognizes revenue
when all work on a project has been completed and has been accepted by the buyer
and collectability is reasonably assured.





Income
Taxes





The
Company follows Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes”
(“SFAS No. 109”), which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns.  Under this
method, deferred tax assets and liabilities are based on the differences between
the financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to
reverse.  Deferred tax assets are reduced by a valuation allowance to
the extent management concludes it is more likely than not that the assets will
not be realized.  Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the consolidated statements of income and
comprehensive income in the period that includes the enactment
date.


8


The
Company adopted the provisions of Financial Accounting Standards Board (“FASB”)
Interpretation No. 48 “Accounting for Uncertainty in
Income Taxes – an interpretation of FASB Statement No. 109” (“FIN
48”).  FIN 48 addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be recorded in the
financial statements.  Under FIN 48, the Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position.  The tax benefits
recognized in the financial statements from such a position should be measured
based on the largest benefit that has a greater than fifty percent (50%)
likelihood of being realized upon ultimate settlement.  FIN 48 also
provides guidance on de-recognition, classification, interest and penalties on
income taxes, accounting in interim periods and requires increased
disclosures.  The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
FIN 48.





Net
income (loss) per common share





Basic net
income (loss) per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the period.
Diluted net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of shares of common stock and potentially
outstanding shares of common stock during each period. There were no potentially
dilutive shares outstanding as of June 30, 2009 or 2008.





Recently
issued accounting standards





In June
2003, the Securities and Exchange Commission (“SEC”) adopted final rules under
Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC
Release No. 33-8934 on June 26, 2008. Commencing with its annual report for the
fiscal year ending December 31, 2009, the Company will be required to include a
report of management on its internal control over financial reporting. The
internal control report must include a statement





·
            of
      management’s responsibility for establishing and maintaining adequate
      internal control over its financial
reporting;





·
            of
      management’s assessment of the effectiveness of its internal control over
      financial reporting as of year end;
and





·
            of
      the framework used by management to evaluate the effectiveness of the
      Company’s internal control over financial
  reporting.





Furthermore,
in the following fiscal year, it is required to file the auditor’s attestation
report separately on the Company’s internal control over financial reporting on
whether it believes that the Company has maintained, in all material respects,
effective internal control over financial reporting.


9





In
April 2009, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position (FSP) Financial Accounting Standard (FAS) 157-4 “Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly”.
Based on the guidance, if an entity determines that the level of activity for an
asset or liability has significantly decreased and that a transaction is not
orderly, further analysis of transactions or quoted prices is needed, and a
significant adjustment to the transaction or quoted prices may be necessary to
estimate fair value in accordance with Statement of Financial Accounting
Standards (SFAS) No. 157 “Fair Value Measurements”. This FSP is to be
applied prospectively and is effective for interim and annual periods ending
after June 15, 2009 with early adoption permitted for periods ending after
March 15, 2009. The company will adopt this FSP for its quarter ending
June 30, 2009. There is no expected impact on the financial
statements.





In
April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board
(APB) 28-1 “Interim Disclosures about Fair Value of Financial Instruments”. The
FSP amends SFAS No. 107 “Disclosures about Fair Value of Financial
Instruments” to require an entity to provide disclosures about fair value of
financial instruments in interim financial information. This FSP is to be
applied prospectively and is effective for interim and annual periods ending
after June 15, 2009 with early adoption permitted for periods ending after
March 15, 2009. The company will include the required disclosures in its
quarter ending June 30, 2009.





In
April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful
Life of Intangible Assets”. The FSP states that in developing assumptions about
renewal or extension options used to determine the useful life of an intangible
asset, an entity needs to consider its own historical experience adjusted for
entity-specific factors. In the absence of that experience, an entity shall
consider the assumptions that market participants would use about renewal or
extension options. This FSP is to be applied to intangible assets acquired after
January 1, 2009. The adoption of this FSP did not have an impact on the
financial statements.





In
May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS
165”), which provides guidance to establish general standards of accounting for
and disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS
165 also requires entities to disclose the date through which subsequent
events were evaluated as well as the rationale for why that date was selected.
This disclosure should alert all users of financial statements that an entity
has not evaluated subsequent events after that date in the set of financial
statements being presented. SFAS 165 is effective for interim and annual periods
ending after June 15, 2009. Since FAS 165 at most requires additional
disclosures, the Company does not expect the adoption to have a material impact
on its consolidated financial position, results of operations or cash
flows.





In
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP to be launched on July 1, 2009. The Codification does not change
current U.S. GAAP, but is intended to simplify user access to all authoritative
U.S. GAAP by providing all the authoritative literature related to a particular
topic in one place. All existing accounting standard documents will be
superseded and all other accounting literature not included in the Codification
will be considered non-authoritative. The Codification is effective for interim
and annual periods ending after September 15, 2009. The Codification is
effective for the Company in the interim period ending September 30, 2009
and the Company does not expect the adoption to have a material impact on its
consolidated financial position, results of operations or cash
flows.


10




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





NOTE
2           STOCKHOLDERS’
EQUITY (DEFICIT)





On March
30, 2009, the Company effectuated a 1 for 3.5 reverse stock split of its
outstanding shares of common stock.





All share and per share amounts in
these financial statements have been adjusted to give retroactive effect to the
reverse stock split.





On June 18, 2009, the majority
shareholder contributed $35,000 to the Company for working capital.





NOTE
3          CONCENTRATION OF
RISK





For the
six months ended June, 2008, four unrelated customers (High Impact Litigation
(11.81%), the Visual Advantage (9.45%), Legal Wizard (10.66%), and Trial
Exhibits, Inc. (65.72%) comprised 97.64% of total revenues





NOTE
4          SUBSEQUENT
EVENTS





The
Company has evaluated all events that occurred after the balance sheet date but
before financial statements were available to be issued to determine if they
must be reported.  The Management of the Company determined that there
were no reportable subsequent events to be disclosed.


11




ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS




Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995





Information
set forth herein contains “forward-looking statements” which can be identified
by the use of forward-looking terminology such as “believes,” “expects,” “may,”
“should” or “anticipates” or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. We cannot assure you that
the future results covered by the forward-looking statements will be achieved.
We caution readers that important factors may affect our actual results and
could cause such results to differ materially from forward-looking statements
made by or on behalf of us.  These factors include our lack of
historically profitable operations, dependence on key personnel, the success of
our business, our ability to manage anticipated growth and other factors
identified in our filings with the U.S. Securities and Exchange Commission,
press releases and/or other public communications.





The
following discussion and analysis provides information which our management
believes to be relevant to an assessment and understanding of our results of
operations and financial condition. This discussion should be read together with
our financial statements and the notes to financial statements, which are
included in this report. Because of the nature of a relatively new and growing
company such as ours, the reported results will not necessarily reflect the
future.





Operations





We were
founded as an unincorporated business in January 2004 and became a C corporation
in the state of Nevada on February 1, 2005. At June 30, 2009, we had one
employee, Justin Craig, our founder and president. Mr. Craig devotes his full
time to us.





We are a
digital medical illustrator and animator providing digital displays and
enhancements to companies that assist attorneys to prepare or enhance exhibits
for trials involving medical issues. Approximately 85% of our work is ultimately
used by plaintiff counsel and 15% is used by defense counsel.





Our customers are almost always
companies that assist attorneys to prepare or enhance a wide range of exhibits
for trials. We perform the digital medical imaging that is needed by these
companies. There are a limited number of these companies.


Customers
originally hear of our services from word of mouth. Generally, they continue
with us and expand or decrease the amount of work that they send to us based on
the quality and timing of our output. We retain rights to the digital images
that we produce. These digital images form a library for us. We can sell some of
these digital images to users who need generic types of images for their
purposes. This enables us to generate revenue without doing additional work. The
longer that we are in operation, the larger our library becomes.




12





Comparison
of the Six Months ended June 30, 2009 and 2008





A summary of operations
follows:





2009
                      
                      
                      2008Revenue
                      
                      $
                      69,470
                      
                      
                      $
                      74,100Operating
      Expenses:Selling,
      general and administrative
                      
                      
                      28,938
                      
                      
                      
                      22,532Compensation
                      
                      
                      39,769
                      
                      
                      
                      53,963Total
      operating expenses
                      
                      
                      68,707
                      
                      
                      
                      76,495Loss
      from operations
                      
                      
                      763
                      
                      
                      
                      (2,395
                      )Other
      income:Recovery
      of bad debt
                      
                      
                      10,000
                      
                      
                      
                      -10,000
                      
                      
                      
                      -Income
      (loss) before income taxes
                      
                      $
                      10,763
                      
                      
                      $
                      (2,395
                      )





Revenue – For the six months
ended June 30, 2008, four unrelated customers (High Impact Litigation (11.81%),
The Visual Advantage (9.45%), Legal Wizard (10.66%), and Trial Exhibits, Inc.
(65.72%)) comprised 97.64% of total revenues.





Compensationrelates entirely
to Justin Craig.





Selling, general and administrativeconsist of:





2009
                    
                    
                    2008Automobile
                    
                    $
                    922
                    
                    
                    $
                    467Computer
      supplies
                    
                    
                    2,053
                    
                    
                    
                    942Depreciation
                    
                    
                    3,541
                    
                    
                    
                    3,636Dues
                    
                    
                    323
                    
                    
                    
                    104Employee
      benefits
                    
                    
                    11,599
                    
                    
                    
                    5,294Entertainment
                    
                    
                    290
                    
                    
                    
                    463Internet
      expenses
                    
                    
                    260
                    
                    
                    
                    130Office
      expense
                    
                    
                    1,000
                    
                    
                    
                    2,000Outside
      services
                    
                    
                    4,800
                    
                    
                    
                    5,474Rent
                    
                    
                    2,400
                    
                    
                    
                    1,200Repairs
      and maintenance
                    
                    
                    246
                    
                    
                    
                    916Salaries
                    
                    
                    -
                    
                    
                    
                    600Taxes
                    
                    
                    92
                    
                    
                    
                    46Telephone
                    
                    
                    1,000
                    
                    
                    
                    436Travel
                    
                    
                    412
                    
                    
                    
                    824Total
                    
                    $
                    28,938
                    
                    
                    $
                    22,532




13


Other





As a
corporate policy,we
will not incur any cash obligations that we cannot satisfy with known resources,
of which there are currently none except as described in “Liquidity”
below.  We believe that the perception that many people have of a
public company make it more likely that they will accept restricted securities
from a public company as consideration for indebtedness to them than they would
from a private company.  We have not performed any studies of this
matter.  Our conclusion is based on our own
observations.  However, we cannot assure you that we will be
successful in any of those efforts even as a public
entity.  Additionally, issuance of restricted shares would necessarily
dilute the percentage of ownership interest of our stockholders.





Liquidity





On June 18, 2009, our majority
shareholder, Vision Opportunity Master Fund, Ltd., contributed $35,000 to
our capital to support our working capital needs.





Private
capital, if sought, will be sought from former business associates of our
founder or private investors referred to us by those business associates. To
date, we have not sought any funding source and have not authorized any person
or entity to seek out funding on our behalf. If a market for our shares ever
develops, of which we cannot assure you, we may use restricted shares of our
common stock to compensate employees/consultants and independent contractors
wherever possible.  We believe that operations are generating sufficient
cash to continue operations for the next 12 months provided that our costs of
being a public company remain equal to or below the maximum estimate provided
below.





In
becoming a public company, we have incurred and will continue to incur
additional significant expenses for legal, accounting and related services. As a
public entity, subject to the reporting requirements of the Securities Exchange
Act of 1934, we incur ongoing expenses associated with professional fees for
accounting, legal and a host of other expenses for annual reports and proxy
statements. We estimate that these costs will range up to $50,000 per year for
the next few years and will be higher if our business volume and activity
increases but lower during the first year of being public because our overall
business volume will be lower, and we will not yet be subject to the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002. These
obligations will reduce our ability and resources to fund other aspects of our
business. We hope to be able to use our status as a public company to increase
our ability to use noncash means of settling obligations and compensate
independent contractors who provide professional services to us, although we
cannot assure you that we will be successful in any of those efforts. We will
reduce the compensation levels paid to management if there is insufficient cash
generated from operations to satisfy these costs.


14


There are
no current plans to seek private investment.  We do not have any current
plans to raise funds through the sale of securities.  As previously stated,
we hope to be able to use our status as a public company to enable us to use
non-cash means of settling obligations and compensate persons and/or firms
providing services or products to us, although we cannot assure you that we will
be successful in any of those efforts.  We believe that the perception that
many people have of a public company makes it more likely that they will accept
restricted securities from a public company as consideration for indebtedness to
them than they would from a private company.  We have not performed any
studies of this matter.  Our conclusion is based on our own beliefs.
Issuing shares of our common stock to such persons instead of paying cash to
them would increase our chances to expand our business.  Having shares of
our common stock may also give such persons a greater feeling of identity with
us which may result in referrals.  However, these actions, if successful,
will result in dilution of the ownership interests of existing stockholders, may
further dilute common stock book value, and that dilution may be material. Such
issuances may also serve to enhance our existing management’s ability to
maintain control of our company because the shares may be issued to parties or
entities committed to supporting existing management.





Off
Balance Sheet Arrangements





We have
no off balance sheet arrangements as defined in Item 303(a)(4)(ii) of
Regulation S-K, obligations under any guarantee contracts or
contingent obligations. We also have no other commitments, other than the costs
of being a public company that will increase our operating costs or cash
requirements in the future.





Seasonality





We have
not noted a significant seasonal impact in our business.





Recent
Accounting Pronouncements





In June
2003, the U.S. Securities and Exchange Commission adopted final rules under
Section 404 of the Sarbanes-Oxley Act of 2002, as amended by SEC Release No. 33-8934
on June 26, 2008. Commencing with our annual report for the year ended
December 31, 2009, we will be required to include a report of management on our
internal control over financial reporting. The internal control report must
include a statement.





§
            of
      management’s responsibility for establishing and maintaining adequate
      internal control over our financial
reporting;




§
            of
      management’s assessment of the effectiveness of our internal control over
      financial reporting as of year end;
and




§
            of
      the framework used by management to evaluate the effectiveness of our
      internal control over financial
reporting.




Furthermore,
in the following fiscal year, management is required to file the registered
accounting firm’s attestation report separately on our internal control over
financial reporting on whether it believes that we have maintained, in all
material respects, effective internal control over financial
reporting.


15


On December 30, 2008, the Financial
Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) No. FAS
132(R)-1, “Employers’
Disclosures About Postretirement Benefit Plan Assets”, which amends Statement of Financial
Accounting Standards (“SFAS”) No. 132(R), “Employers’
Disclosures About Pensions and Other Postretirement Benefits,” to require more detailed disclosures
about plan assets, including investment strategies, major categories of plan
assets, concentrations of risk within plan assets, and valuation techniques used
to measure the fair value of plan assets consistent with fair value hierarchy
model described in SFAS No. 157, “Fair Value
Measurements”.We
do not anticipate that the adoption of this statement will have any effect on
our financial condition and results of operations since we do not have any
postretirement plans.





In April 2009, the Financial
Accounting Standards Board (FASB) issued FASB Staff Position (FSP) Financial
Accounting Standard (FAS) 157-4 “Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly”. Based on the guidance, if an
entity determines that the level of activity for an asset or liability has
significantly decreased and that a transaction is not orderly, further analysis
of transactions or quoted prices is needed, and a significant adjustment to the
transaction or quoted prices may be necessary to estimate fair value in
accordance with Statement of Financial Accounting Standards (SFAS) No. 157
“Fair Value Measurements”. This FSP is to be applied prospectively and is
effective for interim and annual periods ending after June 15, 2009 with
early adoption permitted for periods ending after March 15, 2009. The
company will adopt this FSP for its quarter ending June 30, 2009. There is
no expected impact on the Financial Statements.





In April 2009, the FASB issued FSP
FAS 107-1 and Accounting Principles Board (APB) 28-1 “Interim Disclosures about
Fair Value of Financial Instruments”. The FSP amends SFAS No. 107
“Disclosures about Fair Value of Financial Instruments” to require an entity to
provide disclosures about fair value of financial instruments in interim
financial information. This FSP is to be applied prospectively and is effective
for interim and annual periods ending after June 15, 2009 with early
adoption permitted for periods ending after March 15, 2009. The company
will include the required disclosures in its quarter ending June 30,
2009.





In April 2008, the FASB issued FSP
FAS 142-3, “Determination of the Useful Life of Intangible Assets”. The FSP
states that in developing assumptions about renewal or extension options used to
determine the useful life of an intangible asset, an entity needs to consider
its own historical experience adjusted for entity-specific factors. In the
absence of that experience, an entity shall consider the assumptions that market
participants would use about renewal or extension options. This FSP is to be
applied to intangible assets acquired after January 1, 2009. The adoption
of this FSP did not have an impact on the Consolidated Financial
Statements.





In
May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS
165”), which provides guidance to establish general standards of accounting for
and disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS
165 also requires entities to disclose the date through which subsequent
events were evaluated as well as the rationale for why that date was selected.
This disclosure should alert all users of financial statements that an entity
has not evaluated subsequent events after that date in the set of financial
statements being presented. SFAS 165 is effective for interim and annual periods
ending after June 15, 2009. Since FAS 165 at most requires additional
disclosures, the Company does not expect the adoption to have a material impact
on its consolidated financial position, results of operations or cash
flows.


16


In
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP to be launched on July 1, 2009. The Codification does not change
current U.S. GAAP, but is intended to simplify user access to all authoritative
U.S. GAAP by providing all the authoritative literature related to a particular
topic in one place. All existing accounting standard documents will be
superseded and all other accounting literature not included in the Codification
will be considered non-authoritative. The Codification is effective for interim
and annual periods ending after September 15, 2009. The Codification is
effective for the Company in the interim period ending September 30, 2009
and the Company does not expect the adoption to have a material impact on its
consolidated financial position, results of operations or cash
flows.





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





Critical
Accounting Policies





The
preparation of financial statements and related notes requires us to make
judgments, estimates, and assumptions that affect the reported amounts of
assets, liabilities, revenue and expenses, and related disclosure of contingent
assets and liabilities.





An
accounting policy is considered to be critical if it requires an accounting
estimate to be made based on assumptions about matters that are highly uncertain
at the time the estimate is made, and if different estimates that reasonably
could have been used, or changes in the accounting estimates that are reasonably
likely to occur periodically, could materially impact the financial
statements.





Financial
Reporting Release No. 60 requires all companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements.  There are no critical policies or decisions that rely on
judgments that are based on assumptions about matters that are highly uncertain
at the time the estimate is made.





ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK





Not
required





ITEM
4T. CONTROLS AND PROCEDURES





(a)
            Evaluation
      of Disclosure Controls and
Procedures.





An
evaluation was carried out under the supervision and with the participation of
the our management, including our Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) (in this case the same person), of the effectiveness
of our disclosure controls and procedures as of June 30, 2009.  Based
on that evaluation, our CEO/CFO has concluded that our disclosure controls and
procedures are effective to provide reasonable assurance that: (i) information
required to be disclosed by us in reports that we file or submit under the
Securities Exchange Act of 1934 is accumulated and communicated to our
management, including our CEO/CFO, as appropriate to allow timely decisions
regarding required disclosure by us; and (ii) information required to be
disclosed by us in reports that we file or submit under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and
forms.


17




(b)Changes in Internal Controls.




During
the quarter ended June 30, 2009, there were no changes in our internal control
over financial reporting that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.




PART
II - OTHER INFORMATION





ITEM 1.
            LEGAL
      PROCEEDINGS





None





ITEM 1A.
            RISK
      FACTORS





Not required





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





None





ITEM 3.
            DEFAULTS
      UPON SENIOR SECURITIES





None





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





None





ITEM 5.
            OTHER
      INFORMATION





None





ITEM 6.
            EXHIBITS




Exhibit
      Number
                
                Description31.1
                
                Section
      302 Certification of Chief Executive Officer and Chief Financial
      Officer.32.1
                
                Certification
      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 – Chief Executive Officer and Chief
      Financial Officer.




18


SIGNATURES





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





Date:
      August 14, 2009
              Medical
      Design Studios, Inc.By:
              /s/  Justin
  CraigJustin
      CraigPresident
      and Chief Financial Officer(principal
      executive officer and principalfinancial
      and accounting officer)


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