UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549








FORM
10-Q




(Mark
One)


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




For
the quarterly period ended September 30, 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  x    No  o




As of
November 16, 2009, 7,142,858 shares of the issuer’s common stock were
outstanding.





MEDICAL
DESIGN STUDIOS, INC.





FORM
10-Q




September
30, 2009




INDEX




PagePART
      I— FINANCIAL INFORMATIONItem
      1.
                      Financial
      Statements
                      
                      3Item
      2.
                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                      
                      13Item
      3.
                      Quantitative
      and Qualitative Disclosures About Market Risk
                      
                      19Item
      4T.
                      Controls
      and Procedures
                      
                      19PART
      II— OTHER INFORMATIONItem
      1.
                      Legal
      Proceedings
                      
                      20Item
      1A.
                      Risk
      Factors
                      
                      20Item
      2.
                      Unregistered
      Sales of Equity Securities and Use of Proceeds
                      
                      20Item
      3.
                      Defaults
      Upon Senior Securities
                      
                      20Item
      4.
                      Submission
      of Matters to a Vote of Security Holders
                      
                      20Item
      5.
                      Other
      Information
                      
                      20Item
      6.
                      Exhibits
                      
                      20




2


PART
I - FINANCIAL INFORMATION





ITEM
1. FINANCIAL STATEMENTS





MEDICAL
DESIGN STUDIOS, INC.


Balance
Sheets





September
      30,
                            2009
                          
                          
                          December
       31,
                            2008(Unaudited)ASSETSCurrent
      Assets:Cash
                          
                          $
                          9,876
                          
                          
                          $
                          4,766Accounts
      receivable, net of allowance for doubtful accounts of  $10,000
      and $20,000, respectively
                          
                          
                          26,043
                          
                          
                          
                          5,734Total
      current assets
                          
                          
                          35,919
                          
                          
                          
                          10,500Equipment:Computer
      equipment
                          
                          
                          29,793
                          
                          
                          
                          29,793Accumulated
      depreciation
                          
                          
                          (18,764
                          )
                          
                          
                          (13,516
                          )Equipment,
      net
                          
                          
                          11,029
                          
                          
                          
                          16,277TOTAL
      ASSETS
                          
                          $
                          46,948
                          
                          
                          $
                          26,777LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
      LiabilitiesAccrued
      expenses
                          
                          $
                          18,418
                          
                          
                          $
                          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
                          
                          
                          (42,873
                          )
                          
                          
                          (52,356
                          )Total
      stockholders’ equity (deficit)
                          
                          
                          28,530
                          
                          
                          
                          (15,953
                          )TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
                          
                          $
                          46,948
                          
                          
                          $
                          26,777





See
accompanying notes to financial statements.


3


MEDICAL
DESIGN STUDIOS, INC.





Statements
of Operations





(Unaudited)





Three Months Ended
                  September 30,2009
                
                
                2008Revenue
                
                $
                42,768
                
                
                $
                55,775Operating
      Expenses:Selling,
      general and administrative
                
                
                15,886
                
                
                
                23,419Compensation
                
                
                28,162
                
                
                
                34,310Total
      operating expenses
                
                
                44,048
                
                
                
                57,729Loss
      from operations
                
                
                (1,280
                )
                
                
                (1,954
                )Loss
      before income taxes
                
                
                (1,280
                )
                
                
                (1,954
                )Provision
      for income taxes
                
                
                -
                
                
                
                -Net
      loss
                
                $
                (1,280
                )
                
                $
                (1,954
                )Net
      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.


4





MEDICAL
DESIGN STUDIOS, INC.





Statements
of Operations





(Unaudited)





Nine Months Ended
                  September 30,2009
                
                
                2008Revenue
                
                $
                112,238
                
                
                $
                129,875Operating
      Expenses:Selling,
      general and administrative
                
                
                44,824
                
                
                
                45,951Compensation
                
                
                67,931
                
                
                
                88,273Total
      operating expenses
                
                
                112,755
                
                
                
                134,224Loss
      from operations
                
                
                (517
                )
                
                
                (4,349
                )Other
      income (expense):Recovery
      of bad debt
                
                
                10,000
                
                
                
                -10,000
                
                
                
                -Income
      (loss) before income taxes
                
                
                9,483
                
                
                
                (4,349
                )Provision
      for income taxes
                
                
                -
                
                
                
                -Net
      income (loss)
                
                $
                9,483
                
                
                $
                (4,349
                )Net
      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)





Nine Months Ended
                  September 30,2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                
                $
                9,483
                
                
                $
                (4,349
                )Depreciation
                
                
                5,248
                
                
                
                5,454Recovery
      of bad debt
                
                
                (10,000
                )
                
                
                -Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:Change
      in net operating assets
                
                
                (34,621
                )
                
                
                10,613Net
      Cash Provided by (Used in) Operating Activities
                
                
                (29,890
                )
                
                
                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
                
                
                5,110
                
                
                
                -CASH
      AT BEGINNING OF PERIOD
                
                
                4,766
                
                
                
                500CASH
      AT END OF PERIOD
                
                $
                9,876
                
                
                $
                500





See
accompanying notes to the financial statements.


6





MEDICAL
DESIGN STUDIOS, INC.





September
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 U.S. 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.





Fair
Value of Financial Instruments





The
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification
(“Paragraph 820-10-35-37”) to measure the fair value of its financial
instruments.  Paragraph 820-10-35-37 establishes a framework for
measuring fair value in accounting principles generally accepted in the United
States of America (U.S. GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 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 Paragraph 820-10-35-37 are described below:


7





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.





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
September 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 September 30, 2009 or 2008.





Revenue
Recognition





The Company applies paragraph
605-10-S99-1 of the FASB Accounting Standards Codification for revenue
recognition.  The Company recognizes revenue when it is realized or
realizable and earned less estimated future doubtful accounts.  The
Company considers revenue realized or realizable and earned when all of the
following criteria are met: (i) persuasive evidence of an arrangement exists,
(ii) the product has been shipped or the services have been rendered to the
customer, (iii) the sales price is fixed or determinable, and (iv)
collectability is reasonably assured.





Income
Taxes





The
Company accounts for income taxes under Section 740-10-30 of the FASB Accounting
Standards Codification.  Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when 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 statements of operations in the period that includes the
enactment date.


8


The
Company adopted section 740-10-25 of the FASB Accounting Standards Codification
(“Section 740-10-25”).  Section 740-10-25 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 Section 740-10-25, 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.  Section 740-10-25 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 Section 740-10-25.





Net
income (loss) per common share





Net
income per common share is computed pursuant to section 260-10-45 of the FASB
Accounting Standards Codification.  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 September 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. 33-9072 on October 13, 2009. Commencing with its annual
report for the fiscal year ending December 31, 2010, 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.





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 adoption did not have a material impact on the Company’s
financial position, results of operations or cash flows.


9





In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-04 “Accounting for
Redeemable Equity Instruments - Amendment to Section 480-10-S99” which
represents an update to section 480-10-S99, distinguishing liabilities from
equity, per EITF Topic D-98, Classification and Measurement of
Redeemable Securities.  The Company does not expect the
adoption of this update to have a material impact on its consolidated financial
position, results of operations or cash flows.





In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-05 “Fair Value
Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair
Value”, which provides amendments to subtopic 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities.  This Update provides clarification that in circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1. A valuation technique that uses: a. The
quoted price of the identical liability when traded as an asset b. Quoted prices
for similar liabilities or similar liabilities when traded as assets. 2. Another
valuation technique that is consistent with the principles of topic 820; two
examples would be an income approach, such as a present value technique, or a
market approach, such as a technique that is based on the amount at the
measurement date that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability. The amendments
in this Update also clarify that when estimating the fair value of a liability,
a reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in this Update also clarify that both
a quoted price in an active market for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the asset
are required are Level 1 fair value measurements.  The Company does
not expect the adoption of this update to have a material impact on its
consolidated financial position, results of operations or cash
flows.





In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-08 “Earnings Per Share –
Amendments to Section 260-10-S99”,which represents technical corrections
to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share
for a Period that includes a Redemption or an Induced Conversion of a Portion of
a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred
Stock. The Company does not expect the adoption of this update to have a
material impact on its consolidated financial position, results of operations or
cash flows.





In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-09 “Accounting for
Investments-Equity Method and Joint Ventures and Accounting for Equity-Based
Payments to Non-Employees”.  This Update represents a
correction to Section 323-10-S99-4, Accounting by an Investor for
Stock-Based Compensation Granted to Employees of an Equity Method
Investee. Additionally, it adds observer commentAccounting Recognition for Certain
Transactions Involving Equity Instruments Granted to Other Than Employees
to the Codification. The Company does not expect the adoption to have a material
impact on its consolidated financial position, results of operations or cash
flows.


10





In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-12 “Fair Value
Measurements and Disclosures Topic 820 – Investment in Certain Entities That
Calculate Net Assets Value Per Share (or Its Equivalent)”, which provides
amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall,
for the fair value measurement of investments in certain entities that calculate
net asset value per share (or its equivalent). The amendments in this Update
permit, as a practical expedient, a reporting entity to measure the fair value
of an investment that is within the scope of the amendments in this Update on
the basis of the net asset value per share of the investment (or its equivalent)
if the net asset value of the investment (or its equivalent) is calculated in a
manner consistent with the measurement principles of Topic 946 as of the
reporting entity’s measurement date, including measurement of all or
substantially all of the underlying investments of the investee in accordance
with Topic 820. The amendments in this Update also require disclosures by major
category of investment about the attributes of investments within the scope of
the amendments in this Update, such as the nature of any restrictions on the
investor’s ability to redeem its investments a the measurement date, any
unfunded commitments (for example, a contractual commitment by the investor to
invest a specified amount of additional capital at a future date to fund
investments that will be make by the investee), and the investment strategies of
the investees. The major category of investment is required to be determined on
the basis of the nature and risks of the investment in a manner consistent with
the guidance for major security types in U.S. GAAP on investments in debt and
equity securities in paragraph 320-10-50-1B. The disclosures are required for
all investments within the scope of the amendments in this Update regardless of
whether the fair value of the investment is measured using the practical
expedient. 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 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
nine months ended September 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


11





NOTE
4           SUBSEQUENT
EVENTS





The
Company has evaluated all events that occurred after the balance sheet date
through November 13, 2009, the date when the financial statements were
issued.  The Management of the Company determined that there were no
reportable events that occurred during that subsequent period to be disclosed or
recorded.


12





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 September 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.


13





Comparison
of the Nine Months ended September 30, 2009 and 2008





A summary of operations
follows:





2009
                    
                    
                    2008Revenue
                    
                    $
                    112,238
                    
                    
                    $
                    129,875Operating
      Expenses:Selling,
      general and administrative
                    
                    
                    44,824
                    
                    
                    
                    45,951Compensation
                    
                    
                    67,931
                    
                    
                    
                    88,273Total
      operating expenses
                    
                    
                    112,755
                    
                    
                    
                    134,224Loss
      from operations
                    
                    
                    (517
                    )
                    
                    
                    (4,349
                    )Other
      income:Recovery
      of bad debt
                    
                    
                    10,000
                    
                    
                    
                    -10,000
                    
                    
                    
                    -Income
      (loss) before income taxes
                    
                    $
                    9,483
                    
                    
                    $
                    (4,349
                    )





Revenue – For the nine months
ended September 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
                        
                        $
                        1,384
                        
                        
                        $
                        759Computer
      supplies
                        
                        
                        2,183
                        
                        
                        
                        1,309Depreciation
                        
                        
                        5,248
                        
                        
                        
                        5,454Dues
                        
                        
                        518
                        
                        
                        
                        220Employee
      benefits
                        
                        
                        19,662
                        
                        
                        
                        9,418Entertainment
                        
                        
                        583
                        
                        
                        
                        692Internet
      expenses
                        
                        
                        390
                        
                        
                        
                        260Office
      expense
                        
                        
                        7,073
                        
                        
                        
                        3,000Outside
      services
                        
                        
                        1,800
                        
                        
                        
                        8,098Rent
                        
                        
                        3,600
                        
                        
                        
                        2,400Repairs
      and maintenance
                        
                        
                        246
                        
                        
                        
                        1,043Salaries
                        
                        
                        -
                        
                        
                        
                        1,200Taxes
                        
                        
                        138
                        
                        
                        
                        92Telephone
                        
                        
                        1,587
                        
                        
                        
                        818Travel
                        
                        
                        412
                        
                        
                        
                        1,188Bad
      debts
                        
                        
                        
                        
                        
                        
                        10,000Total
                        
                        $
                        44,824
                        
                        
                        $
                        45,951


14





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 desired, 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 all 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.


15


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.





As part
of our overall plan to augment financial resources and consider other
attractive business opportunities, our principal shareholders have entered into
discussions with unnamed, unaffiliated third parties with respect to a potential
merger transaction which could result in the discontinuance of our current
operations, change of control/ownership and new management.  There can
be no assurance that a merger or other significant transaction will be
consummated with any such third parties or, if consummated, that we or our
shareholders would realize any benefits from it.




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.
33-9072 on October 13, 2009. Commencing with our annual report for the year
ended December 31, 2010, 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.


16




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.




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 adoption did not have a material impact on the Company’s
financial position, results of operations or cash flows.





In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-04 “Accounting for
Redeemable Equity Instruments - Amendment to Section 480-10-S99” which
represents an update to section 480-10-S99, distinguishing liabilities from
equity, per EITF Topic D-98, Classification and Measurement of
Redeemable Securities.  The Company does not expect the
adoption of this update to have a material impact on its consolidated financial
position, results of operations or cash flows.





In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-05 “Fair Value
Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair
Value”, which provides amendments to subtopic 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities.  This Update provides clarification that in circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1. A valuation technique that uses: a. The
quoted price of the identical liability when traded as an asset b. Quoted prices
for similar liabilities or similar liabilities when traded as assets. 2. Another
valuation technique that is consistent with the principles of topic 820; two
examples would be an income approach, such as a present value technique, or a
market approach, such as a technique that is based on the amount at the
measurement date that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability. The amendments
in this Update also clarify that when estimating the fair value of a liability,
a reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in this Update also clarify that both
a quoted price in an active market for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the asset
are required are Level 1 fair value measurements.  The Company does
not expect the adoption of this update to have a material impact on its
consolidated financial position, results of operations or cash
flows.





In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-08 “Earnings Per Share –
Amendments to Section 260-10-S99”,which represents technical corrections
to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share
for a Period that includes a Redemption or an Induced Conversion of a Portion of
a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred
Stock. The Company does not expect the adoption of this update to have a
material impact on its consolidated financial position, results of operations or
cash flows.


17





In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-09 “Accounting for
Investments-Equity Method and Joint Ventures and Accounting for Equity-Based
Payments to Non-Employees”.  This Update represents a
correction to Section 323-10-S99-4, Accounting by an Investor for
Stock-Based Compensation Granted to Employees of an Equity Method
Investee. Additionally, it adds observer commentAccounting Recognition for Certain
Transactions Involving Equity Instruments Granted to Other Than Employees
to the Codification. The Company does not expect the adoption to have a material
impact on its consolidated financial position, results of operations or cash
flows.





In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-12 “Fair Value
Measurements and Disclosures Topic 820 – Investment in Certain Entities That
Calculate Net Assets Value Per Share (or Its Equivalent)”, which provides
amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall,
for the fair value measurement of investments in certain entities that calculate
net asset value per share (or its equivalent). The amendments in this Update
permit, as a practical expedient, a reporting entity to measure the fair value
of an investment that is within the scope of the amendments in this Update on
the basis of the net asset value per share of the investment (or its equivalent)
if the net asset value of the investment (or its equivalent) is calculated in a
manner consistent with the measurement principles of Topic 946 as of the
reporting entity’s measurement date, including measurement of all or
substantially all of the underlying investments of the investee in accordance
with Topic 820. The amendments in this Update also require disclosures by major
category of investment about the attributes of investments within the scope of
the amendments in this Update, such as the nature of any restrictions on the
investor’s ability to redeem its investments a the measurement date, any
unfunded commitments (for example, a contractual commitment by the investor to
invest a specified amount of additional capital at a future date to fund
investments that will be make by the investee), and the investment strategies of
the investees. The major category of investment is required to be determined on
the basis of the nature and risks of the investment in a manner consistent with
the guidance for major security types in U.S. GAAP on investments in debt and
equity securities in paragraph 320-10-50-1B. The disclosures are required for
all investments within the scope of the amendments in this Update regardless of
whether the fair value of the investment is measured using the practical
expedient. 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.


18


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 September 30,
2009.  Based on that evaluation, our CEO/CFO has concluded that our
disclosure controls and procedures are ineffective 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.




(b)           Changes
in Internal Controls.




During
the quarter ended September 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.


19


PART
II - OTHER INFORMATION





ITEM
      1.
                LEGAL
      PROCEEDINGSNoneITEM
      1A.
                RISK
      FACTORSNot
      requiredITEM
      2.
                UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDSNoneITEM
      3.
                DEFAULTS
      UPON SENIOR SECURITIESNoneITEM
      4.
                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERSNoneITEM
      5.
                OTHER
      INFORMATIONNoneITEM
      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.


20


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:
      November 16, 2009
                Medical
      Design Studios, Inc.By:
                /s/ Justin CraigJustin
      CraigPresident
      and Chief Financial Officer(principal
      executive officer and principalfinancial
      and accounting officer)


21