|   |   |                                                                                                                                      |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
| þ |   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2011 |

| o |   | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from                   to                     |
|---|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                |   |                                          |
|---------------------------------------------------------------------|--------|-----------------------------------------------|
| NEVADA(State or other jurisdiction ofincorporation or organization) |   | 87-0267292(I.R.S. EmployerIdentification No.) |

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

| Class               |   | Outstanding as of May 10, 2011 |
|---------------------|--------|-------------------------------------|
| Common Stock, $.001 |   | 48,009,909                          |

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TABLE OF CONTENTS

|                                 |   |                                                                                        |   |   |   |   |
|--------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                 |   |                                                                                        |   | Page   |
| PART I — FINANCIAL INFORMATION |   |                                                                                        | 3      |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 1.                         |   | Condensed Consolidated Financial Statements                                                 |   |   | 3      |   |
|                                 |   |                                                                                        |   |   |   |   |
|                                 |   | Notes to Condensed Consolidated Financial Statements                                        |   |   | 7      |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 2.                         |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   |   | 14     |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 3.                         |   | Quantitative and Qualitative Disclosures about Market Risk                                  |   |   | 21     |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 4.                         |   | Controls and Procedures                                                                     |   |   | 21     |   |
|                                 |   |                                                                                        |   |   |   |   |
| PART II — OTHER INFORMATION    |   |                                                                                        | 23     |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 1.                         |   | Legal Proceedings                                                                           |   |   | 23     |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 1A.                        |   | Risk Factors                                                                                |   |   | 23     |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 2.                         |   | Unregistered Sales of Equity Securities and Use of Proceeds                                 |   |   | 23     |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 3.                         |   | Defaults Upon Senior Securities                                                             |   |   | 23     |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 5.                         |   | Other Information                                                                           |   |   | 23     |   |
|                                 |   |                                                                                        |   |   |   |   |
| Item 6.                         |   | Exhibits                                                                                    |   |   | 23     |   |
|                                 |   |                                                                                        |   |   |   |   |
| SIGNATURES                           |   |                                                                                        | 24     |   |
|  EX-31.1                        |
|  EX-31.2                        |
|  EX-32.1                        |
|  EX-32.2                        |

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Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

|                                                                                                                                                                                                            |   | March    |    |   | September |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|---------|--------|-----------|--------|
|                                                                                                                                                                                                            |   | 31, 2011 |    |   | 30, 2010  |   |
| Assets                                                                                                                                                                                                          |   |     |    |   |      |   |   |   |
| Current Assets:                                                                                                                                                                                                 |   |     |    |   |      |   |   |   |
| Cash                                                                                                                                                                                                            |   | $        | 4,594   |   |      | $      | 7,428 |   |
| Accounts receivable, net of allowance of $3,740 and $3,312, respectively                                                                                                                                        |   |     | 7,402   |   |      |   | 6,744 |   |
| Inventory, net of allowance for obsolete inventory of $137 and $110, respectively                                                                                                                               |   |     | 2,621   |   |      |   | 1,985 |   |
| Deferred taxes, current portion                                                                                                                                                                                 |   |     | 1,557   |   |      |   | 1,696 |   |
| Prepaid and other current assets                                                                                                                                                                                |   |     | 504     |   |      |   | 355 |   |
| Total Current Assets                                                                                                                                                                                            |   |     | 16,678  |   |      |   | 18,208 |   |
| Property and equipment, net of accumulated depreciation of $1,818 and $1,527, respectively                                                                                                                      |   |     | 1,686   |   |      |   | 1,862 |   |
| Deferred advertising                                                                                                                                                                                            |   |     | 15,126  |   |      |   | 10,006 |   |
| Other assets                                                                                                                                                                                                    |   |     | 218     |   |      |   | 139 |   |
| Total Assets                                                                                                                                                                                                    |   | $        | 33,708  |   |      | $      | 30,215 |   |
|                                                                                                                                                                                                            |   |     |    |   |      |   |
|                                                                                                                                                                                                            |   |     |    |   |      |   |   |   |
| Liabilities and Stockholders’ Equity                                                                                                                                                                      |   |     |    |   |      |   |   |   |
| Current Liabilities:                                                                                                                                                                                            |   |     |    |   |      |   |   |   |
| Accounts payable                                                                                                                                                                                                |   | $        | 6,234   |   |      | $      | 3,826 |   |
| Accrued liabilities                                                                                                                                                                                             |   |     | 799     |   |      |   | 1,077 |   |
| Derivative liabilities                                                                                                                                                                                          |   |     | — |   |      |   | 1,698 |   |
| Stockholder loans                                                                                                                                                                                               |   |     | — |   |      |   | 565 |   |
| Convertible notes payable, net of unamortized discount of $21                                                                                                                                                   |   |     | — |   |      |   | 2,516 |   |
| Other current liabilities                                                                                                                                                                                       |   |     | 132     |   |      |   | 146 |   |
| Total Current Liabilities                                                                                                                                                                                       |   |     | 7,165   |   |      |   | 9,828 |   |
| Deferred tax liability                                                                                                                                                                                          |   |     | 2,459   |   |      |   | 1,826 |   |
| Other long-term liabilities                                                                                                                                                                                     |   |     | 87      |   |      |   | 145 |   |
| Total Liabilities                                                                                                                                                                                               |   |     | 9,711   |   |      |   | 11,799 |   |
|                                                                                                                                                                                                            |   |     |    |   |      |   |
|                                                                                                                                                                                                            |   |     |    |   |      |   |   |   |
| Stockholders’ Equity:                                                                                                                                                                                     |   |     |    |   |      |   |   |   |
| Common stock, $.001 par value, 200,000 shares authorized, 48,100 and 44,707 shares issued, respectively; 48,010 and 44,617 shares outstanding at March 31, 2011, and September 30, 2010, respectively |   |     | 48      |   |      |   | 45 |   |
| Additional paid-in capital                                                                                                                                                                                      |   |     | 34,312  |   |      |   | 28,927 |   |
| Accumulated deficit                                                                                                                                                                                             |   |     | (10,313 | )      |      |   | (10,506 | ) |
| Treasury stock, at cost; 89 shares at March 31, 2011, and September 30, 2010                                                                                                                          |   |     | (50     | )      |      |   | (50 | ) |
| Total Stockholders’ Equity                                                                                                                                                                                |   |     | 23,997  |   |      |   | 18,416 |   |
| Total Liabilities and Stockholders’ Equity                                                                                                                                                                |   | $        | 33,708  |   |      | $      | 30,215 |   |

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Table of Contents

|                                           |   | Three Months Ended March 31, |    |   | Six Months Ended March 31, |   |
|------------------------------------------------|--------|------------------------------|---------|--------|----------------------------|--------|
|                                           |   | 2011                         |    |   | 2010                       |   |   | 2011 |   |   | 2010 |   |
| Sales                                          |   | $                            | 12,643  |   |                       | $      | 9,650 |   |   | $ | 24,847 |   |   | $ | 18,808 |   |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                                  |   |                         | 4,672   |   |                       |   | 3,386 |   |   |   | 9,008 |   |   |   | 6,633 |   |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                   |   |                         | 7,971   |   |                       |   | 6,264 |   |   |   | 15,839 |   |   |   | 12,175 |   |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses                             |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Payroll, taxes and benefits                    |   |                         | 2,930   |   |                       |   | 2,618 |   |   |   | 5,771 |   |   |   | 4,787 |   |
| Advertising                                    |   |                         | 2,019   |   |                       |   | 1,114 |   |   |   | 3,920 |   |   |   | 1,920 |   |
| Bad debts                                      |   |                         | 877     |   |                       |   | 928 |   |   |   | 1,769 |   |   |   | 1,583 |   |
| Depreciation                                   |   |                         | 171     |   |                       |   | 174 |   |   |   | 337 |   |   |   | 270 |   |
| General and administrative                     |   |                         | 1,224   |   |                       |   | 1,070 |   |   |   | 2,149 |   |   |   | 2,094 |   |
| Total Operating Expenses                       |   |                         | 7,221   |   |                       |   | 5,904 |   |   |   | 13,946 |   |   |   | 10,654 |   |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Income from Operations                         |   |                         | 750     |   |                       |   | 360 |   |   |   | 1,893 |   |   |   | 1,521 |   |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense)                         |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                               |   |                         | (1      | )      |                       |   | (402 | ) |   |   | (32 | ) |   |   | (819 | ) |
| Change in fair value of derivative liabilities |   |                         | — |   |                       |   | (59 | ) |   |   | (902 | ) |   |   | (5,157 | ) |
| Gain (Loss) on disposal of assets              |   |                         | — |   |                       |   | (2 | ) |   |   | 2 |   |   |   | (2 | ) |
| Interest income                                |   |                         | 2       |   |                       |   | 5 |   |   |   | 4 |   |   |   | 8 |   |
| Total Other Income (Expense)                   |   |                         | 1       |   |                       |   | (458 | ) |   |   | (928 | ) |   |   | (5,970 | ) |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Income (Loss) before Income Taxes              |   |                         | 751     |   |                       |   | (98 | ) |   |   | 965 |   |   |   | (4,449 | ) |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Provision for (Benefit from) Income Taxes      |   |                         | 400     |   |                       |   | (6 | ) |   |   | 772 |   |   |   | (1,012 | ) |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)                              |   | $                            | 351     |   |                       | $      | (92 | ) |   | $ | 193 |   |   | $ | (3,437 | ) |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per share:               |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding            |   |                         | 47,996  |   |                       |   | 34,921 |   |   |   | 47,704 |   |   |   | 33,873 |   |
| Earnings (loss) per share                      |   | $                            | 0.01    |   |                       | $      | (0.00 | ) |   | $ | 0.00 |   |   | $ | (0.10 | ) |
|                                           |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings (loss) per share:             |   |                         |    |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding            |   |                         | 53,773  |   |                       |   | 34,921 |   |   |   | 53,502 |   |   |   | 33,873 |   |
| Earnings (loss) per share                      |   | $                            | 0.01    |   |                       | $      | (0.00 | ) |   | $ | 0.00 |   |   | $ | (0.10 | ) |

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Table of Contents

|                                                  |   |   |   |   |   |   |    |    |   |   |        |   |   |     |    |   |                |   |   |   |   | Total  |    |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|---------|--------|--------|-------------|--------|--------|----------|---------|--------|---------------------|--------|--------|--------|--------|--------|---------|
|                                                  |   | Common |   |   | Common |   |    | Paid in |   |   | Accumulated |   |   | Treasury |    |   | Stockholders’ |   |
|                                                  |   | Shares |   |   | Stock  |   |    | Capital |   |   | Deficit     |   |   | Stock    |    |   | Equity              |   |
| Balance at October 1, 2010                       |   |   | 44,617 |   |   | $      | 45      |    |   | $      | 28,927      |   |   | $        | (10,506 | )      |                | $      | (50    | )      |   | $      | 18,416  |   |
|                                                  |   |   |   |   |   |   |    |    |   |   |        |   |   |     |    |   |                |   |   |   |   |   |    |   |
| Options issued to employees and directors             |   |   |   |   |   |   |    |    |   |   | 236         |   |   |     |    |   |                |   |   |   |   |   | 236     |   |
| Common stock issued upon conversion of debt           |   |   | 3,333  |   |   |   | 3       |    |   |   | 5,097       |   |   |     |    |   |                |   |   |   |   |   | 5,100   |   |
| Common stock issued for employee stock purchase plan  |   |   | 46     |   |   |   | — |    |   |   | 52          |   |   |     |    |   |                |   |   |   |   |   | 52      |   |
| Common stock issued for cashless exercise of warrants |   |   | 14     |   |   |   | — |    |   |   | —     |   |   |     |    |   |                |   |   |   |   |   | — |   |
| Net income                                            |   |   |   |   |   |   |    |    |   |   |        |   |   |     | 193     |   |                |   |   |   |   |   | 193     |   |
|                                                  |   |   |   |   |   |   |    |    |   |   |        |   |   |     |    |   |                |   |   |   |   |   |    |   |
| Balance at March 31, 2011                        |   |   | 48,010 |   |   | $      | 48      |    |   | $      | 34,312      |   |   | $        | (10,313 | )      |                | $      | (50    | )      |   | $      | 23,997  |   |

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Table of Contents

|                                                                                 |   | Six Months Ended |    |
|--------------------------------------------------------------------------------------|--------|------------------|---------|
|                                                                                 |   | March 31,        |    |
|                                                                                 |   | 2011             |    |   | 2010 |   |
| Cash flow from operating activities:                                                 |   |             |    |   |   |   |   |   |
| Net Income (Loss)                                                                    |   | $                | 193     |   |   | $ | (3,437 | ) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |   |             |    |   |   |   |   |   |
| Depreciation and amortization                                                        |   |             | 4,172   |   |   |   | 2,156 |   |
| Change in fair value of derivative liabilities                                       |   |             | 902     |   |   |   | 5,157 |   |
| Equity based compensation                                                            |   |             | 236     |   |   |   | 223 |   |
| Provision for doubtful accounts and sales returns and adjustments                    |   |             | 1,865   |   |   |   | 1,728 |   |
| Non-cash interest related to convertible notes payable                               |   |             | 21      |   |   |   | 662 |   |
| Deferred income taxes                                                                |   |             | 772     |   |   |   | (982 | ) |
| Amortization of non-cash debt issuance costs                                         |   |             | — |   |   |   | 17 |   |
| Reserve for inventory obsolescence                                                   |   |             | 28      |   |   |   | — |   |
| Loss (Gain) on disposal of assets                                                    |   |             | (2      | ) |   |   | 2 |   |
| Changes in operating assets and liabilities:                                         |   |             |    |   |   |   |   |   |
| Accounts receivable                                                                  |   |             | (2,524  | ) |   |   | (3,621 | ) |
| Deferred advertising                                                                 |   |             | (8,954  | ) |   |   | (4,630 | ) |
| Inventory                                                                            |   |             | (663    | ) |   |   | (650 | ) |
| Other assets                                                                         |   |             | (179    | ) |   |   | (50 | ) |
| Accounts payable                                                                     |   |             | 2,409   |   |   |   | 1,479 |   |
| Accrued liabilities                                                                  |   |             | (308    | ) |   |   | 128 |   |
| Other liabilities                                                                    |   |             | (37     | ) |   |   | (3 | ) |
| Net Cash Flow Used in Operating Activities                                           |   |             | (2,069  | ) |   |   | (1,821 | ) |
|                                                                                 |   |             |    |   |   |   |   |   |
| Cash flow from investing activities:                                                 |   |             |    |   |   |   |   |   |
| Purchase of property and equipment                                                   |   |             | (163    | ) |   |   | (1,217 | ) |
| Proceeds from the sale of assets                                                     |   |             | 3       |   |   |   | 5 |   |
| Purchase of certificates of deposit                                                  |   |             | — |   |   |   | (556 | ) |
| Net Cash Flow Used in Investing Activities                                           |   |             | (160    | ) |   |   | (1,768 | ) |
|                                                                                 |   |             |    |   |   |   |   |   |
| Cash flow from financing activities:                                                 |   |             |    |   |   |   |   |   |
| Proceeds from the sale of common stock                                               |   |             | — |   |   |   | 7,000 |   |
| Costs associated with the sale of common stock                                       |   |             | — |   |   |   | (382 | ) |
| Proceeds from the exercise of warrants                                               |   |             | — |   |   |   | 530 |   |
| Proceeds from employee stock purchase plan                                           |   |             | 44      |   |   |   | 104 |   |
| Proceeds from credit line facility                                                   |   |             | — |   |   |   | 750 |   |
| Costs associated with new credit line facility                                       |   |             | (51     | ) |   |   | — |   |
| Purchase of treasury stock                                                           |   |             | — |   |   |   | (9 | ) |
| Payments of debt and capital lease obligations                                       |   |             | (598    | ) |   |   | (241 | ) |
| Net Cash Flow Provided by (Used in) Financing Activities                             |   |             | (605    | ) |   |   | 7,752 |   |
|                                                                                 |   |             |    |   |   |   |   |   |
| Net increase (decrease) in cash                                                 |   |             | (2,834  | ) |   |   | 4,163 |   |
|                                                                                 |   |             |    |   |   |   |   |   |
| Cash at beginning of period                                                          |   |             | 7,428   |   |   |   | 3,798 |   |
| Cash at end of period                                                                |   | $                | 4,594   |   |   | $ | 7,961 |   |
|                                                                                 |   |             |    |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                    |   |             |    |   |   |   |   |   |
| Cash paid for interest                                                               |   | $                | 49      |   |   | $ | 185 |   |
| Cash paid for income taxes                                                           |   | $                | 5       |   |   | $ | 20 |   |
|                                                                                 |   |             |    |   |   |   |   |   |
| Supplemental schedule of non-cash investing and financing activities:                |   |             |    |   |   |   |   |   |
| Common stock issued for interest expense                                             |   | $                | — |   |   | $ | 45 |   |
| Common stock issued for conversion of debt                                           |   | $                | 5,100   |   |   | $ | 543 |   |

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Table of Contents

Liberator Medical Holdings, Inc. and Subsidiaries

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Table of Contents

| ·   | The Company will maintain as of the end of each fiscal quarter, on a rolling four quarter basis, a ratio of Senior Funded Debt to EBITDA of less than 2.0 to 1; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company will maintain as of the end of each fiscal quarter, on a rolling four quarters basis, a Fixed Charge Coverage Ratio of at least 1.25 to 1. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

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Table of Contents

|                                                |   | Oct’08 Note |   |
|-----------------------------------------------------|--------|-------------------|--------|
| Notes Payable, face amount                          |   | $                 | 2,500  |   |
| Discounts on Notes:                                 |   |              |   |   |
| Initial valuation of Warrants                       |   |              | (86    | ) |
| Initial valuation of Bifurcated Embedded Derivative |   |              | (841   | ) |
| Accumulated Amortization                            |   |              | 906    |   |
| Total Discounts                                     |   |              | (21    | ) |
| Accrued Interest                                    |   |              | 37     |   |
| Convertible Notes Payable, net                      |   | $                 | 2,516  |   |

|                                       |   | October 2008 Note |
|--------------------------------------------|--------|-------------------|
| Risk-free interest rate:                   |   |              | 0.14 | % |
| Expected term:                             |   | 17 days      |
| Expected dividend yield:                   |   |              | 0.00 | % |
| Expected volatility:                       |   |              | 49.30 | % |
| Probability of triggering reset provision: |   |              | 0.01 | % |
| Existing conversion price per share        |   | $                 | 0.75 |   |
| Company’s stock price per share      |   | $                 | 1.26 |   |

|                                      |   | 2011   |    |
|-------------------------------------------|--------|--------|---------|
| Beginning balance: Derivative liabilities |   | $      | 1,698   |   |
| Total (gains) losses                 |   |   | 902     |   |
| Settlements                               |   |   | (2,600  | ) |
| Ending balance: Derivative liabilities    |   | $      | — |   |

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Table of Contents

|                            |   |   |      |   |   | Weighted |    |
|---------------------------------|--------|--------|-----------|--------|--------|----------|---------|
|                            |   |   |      |   |   | Avg.     |    |
|                            |   |   |      |   |   | Exercise |    |
| Warrants:                       |   | Shares |      |   | Price  |     |
| Balance at October 1, 2010 |   |   | 7,393,334 |   |   | $        | 1.14    |   |
| Issued                          |   |   | —   |   |   |     | — |   |
| Exercised                       |   |   | (51,000   | )      |   |     | 1.00    |   |
| Expired                         |   |   | (376,667  | )      |   |     | 1.59    |   |
| Balance at March 31, 2011  |   |   | 6,965,667 |   |   | $        | 1.12    |   |

|                     |   | 2011    |   |    | 2010   |   |
|--------------------------|--------|---------|--------|---------|--------|--------|
| Risk-free interest rate: |   |    | 1.05   | %       |   |   | 1.37 | % |
| Expected term:           |   | 3 years |   | 3 years |
| Expected dividend yield: |   |    | 0.00   | %       |   |   | 0.00 | % |
| Expected volatility:     |   |    | 48.91  | %       |   |   | 67.67 | % |

|                                                      |   |   |      |   |   |     |   |         |        | Weighted |   |      |   |   |
|-----------------------------------------------------------|--------|--------|-----------|--------|--------|----------|--------|--------------|-------------|----------|--------|-----------|--------|--------|
|                                                      |   |   |      |   |   | Weighted |   |         | Average     |     |   |      |   |
|                                                      |   |   |      |   |   | Average  |   |         | Remaining   |     |   | Aggregate |   |
|                                                      |   |   |      |   |   | Exercise |   |         | Contractual |     |   | Intrinsic |   |
| 2007 Stock Plan:                                          |   | Shares |      |   | Price  |     |   | Life (Years) |        |     | Value  |      |
| Options outstanding at October 1, 2010               |   |   | 1,655,000 |   |   | $        | 0.92   |         |        |     | 2.82   |      |   | $      | 942,750 |   |
| Granted                                                   |   |   | 500,000   |   |   |     | 1.25   |         |        |     |   |      |   |   |   |   |
| Expired or forfeited                                      |   |   | (70,000   | )      |   |     | 1.03   |         |        |     |   |      |   |   |   |   |
| Options outstanding at March 31, 2011                |   |   | 2,085,000 |   |   | $        | 0.99   |         |        |     | 3.26   |      |   | $      | 1,016,750 |   |
| Options exercisable at March 31, 2011                |   |   | 1,376,250 |   |   | $        | 0.90   |         |        |     | 2.84   |      |   | $      | 794,188 |   |
| Options vested or expected to vest at March 31, 2011 |   |   | 2,085,000 |   |   | $        | 0.99   |         |        |     | 3.26   |      |   | $      | 1,016,750 |   |

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|                                                |   | For the three months ended |   |   | For the six months ended |   |
|-----------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                |   | March 31,                  |   |   | March 31,                |   |
|                                                |   | 2011                       |   |   | 2010                     |   |   | 2011 |   |   | 2010 |   |
| Numerator:                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) — basic                     |   | $                          | 351    |   |                     | $      | (92) |   |   | $ | 193 |   |   | $ | (3,437 | ) |
|                                                |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Denominator:                                        |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding — basic   |   |                       | 47,966 |   |                     |   | 34,921 |   |   |   | 47,704 |   |   |   | 33,873 |   |
| Effect of dilutive securities:                      |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Stock options and warrants                          |   |                       | 5,777  |   |                     |   | — |   |   |   | 5,798 |   |   |   | — |   |
| Weighted average shares outstanding — diluted |   |                       | 53,773 |   |                     |   | 34,921 |   |   |   | 53,502 |   |   |   | 33,873 |   |
|                                                |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Earnings (loss) per share — basic             |   | $                          | 0.01   |   |                     | $      | (0.00) |   |   | $ | 0.00 |   |   | $ | (0.10 | ) |
| Earnings (loss) per share — diluted           |   | $                          | 0.01   |   |                     | $      | (0.00) |   |   | $ | 0.00 |   |   | $ | (0.10 | ) |

|             |   | For the three and six months |    |
|------------------|--------|------------------------------|---------|
|             |   | ended March 31,              |    |
|             |   | 2011                         |    |   | 2010 |   |
| Stock options    |   |                         | 640     |   |   |   | 5,651 |   |
| Warrants         |   |                         | 358     |   |   |   | 9,811 |   |
| Convertible debt |   |                         | — |   |   |   |  7,825 |   |
|             |   |                         | 998     |   |   |   | 23,287 |   |

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

|                              |   | For the three months ended March 31, |   |   | For the six months ended March 31, |   |
|-----------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
|                              |   | 2011                                 |   |   | 2010                               |   |   | 2011 |   |   | 2010 |   |
|                              |   | Amount                               |   |   | %                                  |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |
| Sales                             |   | $                                    | 12,643 |   |                               |   | 100.0 |   |   | $ | 9,650 |   |   |   | 100.0 |   |   | $ | 24,847 |   |   |   | 100.0 |   |   | $ | 18,808 |   |   |   | 100.0 |   |
| Cost of Sales                     |   |                                 | 4,672  |   |                               |   | 37.0 |   |   |   | 3,386 |   |   |   | 35.1 |   |   |   | 9,008 |   |   |   | 36.3 |   |   |   | 6,633 |   |   |   | 35.3 |   |
| Gross Profit                      |   |                                 | 7,971  |   |                               |   | 63.0 |   |   |   | 6,264 |   |   |   | 64.9 |   |   |   | 15,839 |   |   |   | 63.7 |   |   |   | 12,175 |   |   |   | 64.7 |   |
| Operating Expenses                |   |                                 | 7,221  |   |                               |   | 57.1 |   |   |   | 5,904 |   |   |   | 61.2 |   |   |   | 13,946 |   |   |   | 56.1 |   |   |   | 10,654 |   |   |   | 56.6 |   |
| Income from Operations            |   |                                 | 750    |   |                               |   | 5.9 |   |   |   | 360 |   |   |   | 3.7 |   |   |   | 1,893 |   |   |   | 7.6 |   |   |   | 1,521 |   |   |   | 8.1 |   |
| Other Income (Expense)            |   |                                 | 1      |   |                               |   | 0.0 |   |   |   | (458 | ) |   |   | (4.7 | ) |   |   | (928 | ) |   |   | (3.7 | ) |   |   | (5,970 | ) |   |   | (31.7 | ) |
| Income (loss) before Income Taxes |   |                                 | 751    |   |                               |   | 5.9 |   |   |   | (98 | ) |   |   | (1.0 | ) |   |   | 965 |   |   |   | 3.9 |   |   |   | (4,449 | ) |   |   | (23.7 | ) |
| Income Tax Expense (Benefit)      |   |                                 | 400    |   |                               |   | 3.1 |   |   |   | (6 | ) |   |   | (0.0 | ) |   |   | 772 |   |   |   | 3.1 |   |   |   | (1,012 | ) |   |   | (5.4 | ) |
| Net Income (Loss)                 |   | $                                    | 351    |   |                               |   | 2.8 |   |   | $ | (92 | )  |   |   | (1.0 | ) |   | $ | 193 |   |   |   | 0.8 |   |   | $ | (3,437 | ) |   |   | (18.3 | ) |

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|                           |   | For the three months ended March 31, |   |   | For the six months ended March 31, |   |
|--------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
|                           |   | 2011                                 |   |   | 2010                               |   |   | 2011 |   |   | 2010 |   |
|                           |   | Amount                               |   |   | %                                  |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |
| Operating Expenses:            |   |                                 |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payroll, taxes, & benefits |   | $                                    | 2,930  |   |                               |   | 23.2 |   |   | $ | 2,618 |   |   |   | 27.1 |   |   | $ | 5,771 |   |   |   | 23.2 |   |   | $ | 4,787 |   |   |   | 25.5 |   |
| Advertising                    |   |                                 | 2,019  |   |                               |   | 16.0 |   |   |   | 1,114 |   |   |   | 11.6 |   |   |   | 3,920 |   |   |   | 15.8 |   |   |   | 1,920 |   |   |   | 10.2 |   |
| Bad debts                      |   |                                 | 877    |   |                               |   | 6.9 |   |   |   | 928 |   |   |   | 9.6 |   |   |   | 1,769 |   |   |   | 7.1 |   |   |   | 1,583 |   |   |   | 8.4 |   |
| Depreciation                   |   |                                 | 171    |   |                               |   | 1.4 |   |   |   | 174 |   |   |   | 1.8 |   |   |   | 337 |   |   |   | 1.4 |   |   |   | 270 |   |   |   | 1.4 |   |
| General and administration     |   |                                 | 1,224  |   |                               |   | 9.7 |   |   |   | 1,070 |   |   |   | 11.1 |   |   |   | 2,149 |   |   |   | 8.6 |   |   |   | 2,094 |   |   |   | 11.1 |   |
|                           |   |                                 |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Operating Expenses       |   | $                                    | 7,221  |   |                               |   | 57.1 |   |   | $ | 5,904 |   |   |   | 61.2 |   |   | $ | 13,946 |   |   |   | 56.1 |   |   | $ | 10,654 |   |   |   | 56.6 |   |

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|                                  |   | For the three monthsEnded March 31, |   |   | For the six monthsEnded March 31, |   |
|---------------------------------------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|
|                                  |   | 2011                                |   |   | 2010                              |   |   | 2011 |   |   | 2010 |   |
|                                  |   |                                |   |   |                              |   |   |   |   |   |   |   |
| Advertising Expenses:                 |   |                                |   |   |                              |   |   |   |   |   |   |   |
| Amortization of direct-response costs |   | $                                   | 1,990  |   |                              | $      | 1,077 |   |   | $ | 3,835 |   |   | $ | 1,887 |   |
| Other advertising expenses            |   |                                | 29     |   |                              |   | 37 |   |   |   | 85 |   |   |   | 33 |   |
| Total Advertising Expenses            |   | $                                   | 2,019  |   |                              | $      | 1,114 |   |   | $ | 3,920 |   |   | $ | 1,920 |   |

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|                                           |   | For the three monthsended March 31, |    | For the six monthsended March 31, |
|------------------------------------------------|--------|-------------------------------------|---------|-----------------------------------|
|                                           |   | 2011                                |    |                              | 2010 |   |   | 2011 |   |   | 2010 |   |
| Other Income (Expense):                        |   |                                |    |                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense                               |   | $                                   | (1      | )                                 |   | $ | (402 | ) |   | $ | (32 | ) |   | $ | (819 | ) |
| Change in fair value of derivative liabilities |   |                                | — |                              |   |   | (59 | ) |   |   | (902 | ) |   |   | (5,157 | ) |
| Gain (Loss) on disposal of assets              |   |                                | — |                              |   |   | (2 | ) |   |   | 2 |   |   |   | (2 | ) |
| Interest income                                |   |                                | 2       |                              |   |   | 5 |   |   |   | 4 |   |   |   | 8 |   |
| Total Other Income (Expense)                   |   | $                                   | 1       |                              |   | $ | (458 | ) |   | $ | (928 | ) |   | $ | (5,970 | ) |

|                                                                          |   |     |   |   |          | Change in |   |
|-------------------------------------------------------------------------------|--------|----------|--------|--------|---------------|-----------|--------|
|                                                                          |   | Closing  |   |   | Fair Value of |      |
|                                                                          |   | Market   |   |   | Derivative    |      |
|                                                                          |   | Price of |   |   | Liabilities   |      |
|                                                                          |   | Common   |   |   | Income /      |      |
|                                                                          |   | Stock    |   |   | (Expense)     |      |
| Interim period ending:                                                        |   |     |   |   |          |      |   |   |
| September 30, 2009, Q4 FY 2009                                           |   | $        | 1.45   |   |          | $         | n/a    |   |
| December 31, 2009, Q1 FY 2010                                            |   |     | 2.18   |   |          |      | (5,098 | ) |
| March 31, 2010, Q2 FY 2010                                               |   |     | 2.20   |   |          |      | (59    | ) |
| June 30, 2010, Q3 FY 2010                                                |   |     | 1.49   |   |          |      | 3,698  |   |
| September 30, 2010, Q4 FY 2010                                           |   |     | 1.26   |   |          |      | 768    |   |
| October 15, 2010, Q1 FY 2011 (Conversion Date of $2.5 million note) |   |     | 1.53   |   |          |      | (902   | ) |
| Total change in fair value of derivative liabilities                          |   |     |   |   |          | $         | (1,593 | ) |

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|                                                |   | For the Six Months Ended |   |
|-----------------------------------------------------|--------|--------------------------|--------|
|                                                |   | March 31,                |   |
|                                                |   | 2011                     |   |   | 2010 |   |
| Cash Flows:                                         |   |                     |   |   |   |   |   |   |
| Net cash used in operating activities               |   | $                        | (2,069 | ) |   | $ | (1,821 | ) |
| Net cash used in investing activities               |   |                     | (160   | ) |   |   | (1,768 | ) |
| Net cash provided by (used in) financing activities |   |                     | (605   | ) |   |   | 7,752 |   |
| Net increase (decrease) in cash                |   |                     | (2,834 | ) |   |   | 4,163 | ) |
| Cash at beginning of period                         |   |                     | 7,428  |   |   |   | 3,798 |   |
| Cash at end of period                               |   | $                        | 4,594  |   |   | $ | 7,961 |   |

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|   | • |   | Continue our advertising and marketing efforts at reduced spending levels;     |
|--------|---------|--------|--------------------------------------------------------------------------------|
|   |    |   |                                                                           |
|   | • |   | Explore potential acquisition opportunities;                              |
|   | • |   | Increase our customer base;                                                    |
|   |    |   |                                                                           |
|   | • |   | Continue to service our current customer base and increase the retention rate; |
|   |    |   |                                                                           |
|   | • |   | Continue to invest in the expansion of our infrastructure; and                 |
|   |    |   |                                                                           |
|   | • |   | Increase our accounts receivable collection efforts.                           |

|   | • |   | Identified and presented to many large funding sources, soliciting terms for long-term capital in the form of debt, equity or a combination of both;                                               |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |   |                                                                                                                                                                                               |
|   | • |   | Identified products and related target customers through extensive market research;                                                                                                                |
|   |    |   |                                                                                                                                                                                               |
|   | • |   | Established efficient and cost-effective methods to reach qualified customers;                                                                                                                     |
|   |    |   |                                                                                                                                                                                               |
|   | • |   | Established an infrastructure of management and knowledgeable staff to support substantial growth in sales with a minimal amount of additional staff members, maximizing our revenue per employee; |
|   |    |   |                                                                                                                                                                                               |
|   | • |   | Created a HIPAA compliant IT infrastructure and staff to accommodate additional growth in sales;                                                                                                   |
|   |    |   |                                                                                                                                                                                               |
|   | • |   | Established a marketing plan that can be monitored for effectiveness and is flexible enough to adapt to changing market conditions; and                                                            |
|   |    |   |                                                                                                                                                                                               |
|   | • |   | Established methods of testing our current and new advertising methods to meet changing market conditions.                                                                                         |

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Item 3. Qualitative and Quantitative Disclosure about Market Risk

Item 4. Controls and Procedures.

|   | • |   | Documentation of Accounting Review and Approval Process: In connection with the audit of our consolidated financial statements for the fiscal year ended September 30, 2010, our independent registered accounting firm reported to our Board of Directors that they observed inadequate documented review and approval of certain aspects of the accounting process including the documented review of accounting reconciliations and journal entries that they considered to be a material weakness in internal control. After a review of our current review and approval of certain aspects of the accounting process, management concluded that the inadequate documented review and approval process represented a material weakness. |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • |   | Assess and Identify the Impact of Recently Issued Accounting Pronouncements: The Company’s procedures to assess and identify the impact of Recently Issued Accounting Pronouncements were not sufficient, as evidenced by the Company’s failure to timely identify the impact of ASC 815-40-15, “Derivatives and Hedging — Contracts in Entity’s Own Equity (Scope and Scope Exceptions),” which became effective for the Company on October 1, 2009. The Company did not become aware of the new guidance until June 2010, and the impacts of the accounting guidance were not properly identified by the Company until December 2010. As a result, the Company determined that the previously issued interim financial statements for fiscal year 2010 should no longer be relied upon, which resulted in the restatement of the interim financial statements for the interim period ending December 31, 2009. The Company plans to file restated interim financial statements for the interim periods ending March 31, 2010, and June 30, 2010. |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |    |   | Remediation: During the second quarter of fiscal year 2011, the Company subscribed to an outside service that provides the Company’s Chief Financial Officer and Controller with timely guidance on Recently Issued Accounting Pronouncements. In addition, the Company supplemented its current interim reporting processes with documentation of the Controller’s and Chief Financial Officer’s review and assessment of the timing and impacts, if any, that the new accounting pronouncements will have on the Company’s financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|   | • |   | Document all significant accounting policies and ensure that the accounting policies are in accordance with accounting principles generally accepted in the United States and that internal controls are designed effectively to ensure that the financial information is properly reported. Management will engage independent accounting specialists to ensure that there is an independent verification of the accounting positions taken. |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • |   | In connection with the reported inadequate documented review and approval of certain aspects of the accounting process, management has plans to review the current review and approval processes and implement changes to ensure that all accounting reconciliations and journal entries are reviewed and approved on a timely basis and that this review is documented by a member of management separate from the preparer.                 |
|   |

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

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

Item 3. Defaults Upon Senior Securities

Item 5. Other Information

Item 6. Exhibits

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SIGNATURES

| /s/ Mark A. Libratore |   | President               |   | May 12, 2011 |
|-----------------------|--------|-------------------------|--------|--------------|
| Mark A. Libratore     |   |                    |   |         |
|                  |   |                    |   |         |
|                  |   |                    |   |         |
| /s/ Robert J. Davis   |   | Chief Financial Officer |   | May 12, 2011 |
| Robert J. Davis       |   |                    |   |         |

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