##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q/A
 Amendment No. 1
 (Mark One)þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2007oro
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from          to
 Commission file number 000-05663
 LIBERATOR MEDICAL HOLDINGS, INC.
  NEVADA(State or other jurisdiction of 
incorporation or organization)
    
    87-0267292(I.R.S. Employer
Identification No.)
 ___________________________
 2979 SE Gran Park Way, Stuart, Florida 34997  (Address of principal executive offices) (Zip Code)
 (772) 287-2414  (Registrants telephone number, including area code)
  þ o
   Large accelerated filer o
    
    Accelerated
filer o
    
    Non-accelerated filer o
    
    Smaller reporting
company þ(Do not check if a smaller reporting company)
  o þ
 Class
    
    Outstanding as of August 14, 2007Common Stock, $.001
    
    28,904,855
 o þ






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##### 



TABLE OF CONTENTS
 Explanatory Note
    
    
    3PART I  FINANCIAL INFORMATION
    
    
    4Item 1.
    
    Financial Statements (unaudited)
    
    
    4Condensed Consolidated Balance Sheet (as restated)
    
    
    4Condensed Consolidated Statements of Operations (as restated)
    
    
    5Condensed Consolidated Statements of Cash Flows (as restated)
    
    
    6Notes to unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements
Discussion of Financial Condition and Results of Operations
    
    
    22Item 4T.
    
    Controls and Procedures
    
    
    27PART II  OTHER INFORMATION
    
    
    28Item 6.
    
    Exhibits
    
    
    28SIGNATURES
    
    
    29EX-31.1EX-31.2EX-32.1EX-32.2
  
 2




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##### Table of Contents



Explanatory Note  Restatement of Financial Information
    
    
    Part I  Item 1. Financial Statements (Unaudited)
    
    Part I  Item 2. Managements Discussion of Financial Condition and Results of Operations
    
    Part I  Item 4T. Controls and Procedures
    
    Part II  Item 6. Exhibits
   3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements (Unaudited)
 
 Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
June 30, 2007 (As Restated)
(Unaudited)
 AssetsCurrent AssetsCash
    
    $
    418,444Accounts receivable, net of allowance for doubtful accounts of $185,547
    
    
    611,948Prepaid and other expenses
    
    
    851,891Inventory
    
    
    307,385Defered advertising, current
    
    
    110,004Total current assets
    
    
    2,299,672Property and EquipmentProperty and equipment, net of accumulated depreciation of $461,603
    
    
    756,149Other AssetsDeferred advertising, net of current portion
    
    
    84,997Deposits
    
    
    65,169Total other assets
    
    
    150,166Total Assets
    
    $
    3,205,987Liabilities and Stockholders EquityCurrent LiabilitiesAccounts payable
    
    $
    371,200Accrued liabilities
    
    
    141,239Notes payable (see Note 7)
    
    
    387,485Stockholder loan
    
    
    1,751,035Capital leases, current portion
    
    
    13,213Deferred rent liability, current portion
    
    
    38,627Total current liabilities
    
    
    2,702,799Long-Term LiabilitiesLong-term debt and capital lease obligations, net of current portion
    
    
    89,813Deferred rent liability, net of current portion
    
    
    272,629Total long-term liabilities
    
    
    362,442Total Liabilities
    
    
    3,065,241Stockholders EquityCommon stock, $.001 par value, 200,000,000 shares authorized,
29,506,135 shares issued and outstanding
    
    
    29,506Additional paid-in capital
    
    
    8,354,413Accumulated deficit
    
    
    (8,243,173
    )Total Stockholders Equity
    
    
    140,746Total Liabilities and Stockholders Equity
    
    $
    3,205,987
  4




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##### Table of Contents



Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2007 and 2006 (As Restated)
(Unaudited)
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    2006Sales
    
    $
    775,773
    
    
    $
    737,091
    
    
    $
    1,433,650
    
    
    $
    1,386,365Cost of Sales
    
    
    328,410
    
    
    
    359,563
    
    
    
    620,933
    
    
    
    637,253Gross Profit
    
    
    447,363
    
    
    
    377,528
    
    
    
    812,717
    
    
    
    749,112General and Administrative ExpensesPayroll, taxes and benefits
    
    
    372,554
    
    
    
    404,454
    
    
    
    814,954
    
    
    
    782,617Advertising
    
    
    35,606
    
    
    
    45,698
    
    
    
    80,209
    
    
    
    78,852Insurance
    
    
    10,119
    
    
    
    9,716
    
    
    
    20,423
    
    
    
    24,870Interest
    
    
    96,649
    
    
    
    42,336
    
    
    
    204,809
    
    
    
    78,706Rent
    
    
    90,273
    
    
    
    114,173
    
    
    
    180,881
    
    
    
    228,188Professional fees
    
    
    131,689
    
    
    
    72,031
    
    
    
    175,404
    
    
    
    114,718Bad debts
    
    
    62,062
    
    
    
    61,708
    
    
    
    115,732
    
    
    
    113,660Depreciation
    
    
    49,022
    
    
    
    16,364
    
    
    
    98,043
    
    
    
    32,731Administrative
    
    
    113,024
    
    
    
    117,799
    
    
    
    211,349
    
    
    
    233,812Total General and Administrative Expenses
    
    
    960,998
    
    
    
    884,279
    
    
    
    1,901,804
    
    
    
    1,688,154Loss before Income Taxes
    
    
    (513,635
    )
    
    
    (506,751
    )
    
    
    (1,089,087
    )
    
    
    (939,042
    )Other Income (Expense)
    
    
    104,345
    
    
    
    (10,108
    )
    
    
    104,345
    
    
    
    (10,108
    )Provision for Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (409,290
    )
    
    $
    (516,859
    )
    
    $
    (984,742
    )
    
    $
    (949,150
    )Basic and diluted loss per common share
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.04
    )Weighted average basic and diluted
common shares outstanding
    
    
    25,804,719
    
    
    
    25,447,956
    
    
    
    25,627,323
    
    
    
    25,447,956
  5




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Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2007 and 2006 (As Restated)
(Unaudited)
 2007
    
    
    2006Cash flow from operating activities:Net loss
    
    $
    (984,742
    )
    
    $
    (949,150
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    98,043
    
    
    
    32,731Bad debt expense
    
    
    115,732
    
    
    
    113,660Equity based compensation
    
    
    24,455
    
    
    
    Accrued expenses included in forgiveness of debt
    
    
    13,163
    
    
    
    Impairment / disposal of FCC license
    
    
    3,490
    
    
    
    Forgiveness of debt
    
    
    
    
    
    
    (107,776
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (30,730
    )
    
    
    (237,837
    )Prepaid expenses
    
    
    13,115
    
    
    
    32,089Deposits
    
    
    (118
    )
    
    
    (592
    )Inventory
    
    
    282
    
    
    
    282Accounts payable
    
    
    (125,444
    )
    
    
    173,481Accrued expenses
    
    
    10,564
    
    
    
    16,371Deferred rent
    
    
    (14,318
    )
    
    
    12,261Deferred advertising
    
    
    6,845
    
    
    
    (89,889
    )Other assets
    
    
    (241
    )
    
    
    Net cash used in operating activities
    
    
    (977,680
    )
    
    
    (896,593
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (27,566
    )
    
    
    (263,849
    )Disposal of assets
    
    
    8,681
    
    
    
    Net cash used in investing activities
    
    
    (18,885
    )
    
    
    (263,849
    )Cash flows from financing activities:Proceeds from sale of stock
    
    
    312,260
    
    
    
    638,666Proceeds of loans from stockholders
    
    
    34,871
    
    
    
    Proceeds from short-term notes
    
    
    138,683
    
    
    
    6,173Proceeds from bridge loans
    
    
    835,997
    
    
    
    476,000Proceeds from notes payable and capital leases
    
    
    59,977
    
    
    
    (45,526
    )Payments on notes and loans payable
    
    
    (35,000
    )
    
    
    (65,991
    )Payments on capital leases
    
    
    (10,967
    )
    
    
    (10,002
    )Payments on transportation capital leases
    
    
    (683
    )
    
    
    (7,633
    )Payments on short-term notes
    
    
    (51,511
    )
    
    
    Net cash provided by financing activities
    
    
    1,283,627
    
    
    
    991,687Net increase (decrease) in cash and cash equivalents
    
    
    287,062
    
    
    
    (168,755
    )Cash at beginning of period
    
    
    131,382
    
    
    
    219,272Cash at end of period
    
    
    418,444
    
    
    
    50,517Non cash transactionsThe FCC License was disposed of in June 2007
    
    $
    3,490
    
    
    $
    9,990,000 shares of common stock were cancelled in June 2007
    
    $
    9,990
    
    
    $
    Stock was issued for debt
    
    $
    182,616
    
    
    $
    Forgiveness of debt
    
    $
    107,776
    
    
    $
    
  6




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##### Table of Contents



Liberator Medical Holdings, Inc. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
June 30, 2007
 NOTE 1  Summary of significant accounting policies:
 Completion of Acquisition or Disposition of Assets
 Corporate History:
   Nature of operations:
Business of LMS:
  Basis of Accounting and Use of Estimates
  7




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Cash Equivalents
  Accounts Receivable
   Inventories
  Advertising Costs
  Property and Equipment
  Shipping and Handling Costs
  Revenue Recognition
   Concentration of Credit Risk from Cash Deposits in Excess of Insured Limits
  8




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NOTE 2  Change of Tax Status
   NOTE 3  Restatement of Previously Issued Interim Financial Statements
   Lease Incentives
  Deferred Rent
  Employee Incentive Stock Grant
  Stock Based Compensation for Consultant
  Condensed Consolidated Financial Statement Reconciliations
  9




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##### Table of Contents



Condensed Consolidated Balance Sheet as of June 30, 2007 (Unaudited):
 LiberatorLease
    
    
    
    
    
    
    
    
    
    
    Consulting
    
    
    MedicalAs Reported
    
    
    Incentives
    
    
    Deferred Rent
    
    
    Stock Grant
    
    
    Agreement
    
    
    Services, Inc.
    
    
    Reclasses
    
    
    RestatedASSETSCurrent AssetsCash
    
    $
    395,222
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    23,222
    
    
    
    
    
    
    $
    418,444Accounts receivable
    
    
    611,948
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    611,948Prepaid expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    851,545
    
    
    
    346
    
    
    
    
    
    
    
    851,891Inventory
    
    
    307,385
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    307,385Defered compensation
    
    
    22,398
    
    
    
    
    
    
    
    
    
    
    
    (22,398
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Defered advertising
    
    
    110,004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,004Total current assets
    
    
    1,446,957
    
    
    
    
    
    
    
    
    
    
    
    (22,398
    )
    
    
    851,545
    
    
    
    23,568
    
    
    
    
    
    
    
    2,299,672Property and Equipment
    
    
    573,688
    
    
    
    163,121
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,340
    
    
    
    756,149Other Assets
    
    
    169,506
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,340
    )
    
    
    150,166Total Assets
    
    $
    2,190,151
    
    
    $
    163,121
    
    
    $
    
    
    
    $
    (22,398
    )
    
    $
    851,545
    
    
    $
    23,568
    
    
    $
    
    
    
    $
    3,205,987LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    371,708
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    228
    
    
    $
    (736
    )
    
    $
    371,200Accrued liabilities
    
    
    111,057
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,446
    
    
    
    736
    
    
    
    141,239Notes payable
    
    
    387,485
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    387,485Stockholder loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,751,035
    
    
    
    1,751,035Capital leases
    
    
    13,213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,213Deferred rent liability
    
    
    
    
    
    
    
    
    
    
    38,627
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,627Total current liabilities
    
    
    883,463
    
    
    
    
    
    
    
    38,627
    
    
    
    
    
    
    
    
    
    
    
    29,674
    
    
    
    1,751,035
    
    
    
    2,702,799Long-Term Liabilities
    
    
    1,840,848
    
    
    
    253,700
    
    
    
    18,929
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,751,035
    )
    
    
    362,442Total Liabilities
    
    
    2,724,311
    
    
    
    253,700
    
    
    
    57,556
    
    
    
    
    
    
    
    
    
    
    
    29,674
    
    
    
    
    
    
    
    3,065,241Stockholders EquityCommon stock
    
    
    28,411
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,095
    
    
    
    
    
    
    
    
    
    
    
    29,506Additional paid-in capital
    
    
    7,479,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    874,905
    
    
    
    
    
    
    
    
    
    
    
    8,354,413Accumulated deficit
    
    
    (8,042,079
    )
    
    
    (90,579
    )
    
    
    (57,556
    )
    
    
    (22,398
    )
    
    
    (24,455
    )
    
    
    (6,106
    )
    
    
    
    
    
    
    (8,243,173
    )Total Stockholders Equity
    
    
    (534,160
    )
    
    
    (90,579
    )
    
    
    (57,556
    )
    
    
    (22,398
    )
    
    
    851,545
    
    
    
    (6,106
    )
    
    
    
    
    
    
    140,746Total Liabilities and Stockholders Equity
    
    $
    2,190,151
    
    
    $
    163,121
    
    
    $
    
    
    
    $
    (22,398
    )
    
    $
    851,545
    
    
    $
    23,568
    
    
    $
    
    
    
    $
    3,205,987
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Condensed Consolidated Statement of Operations for the three months ended June 30, 2007 (Unaudited):
 Consulting
    
    
    Liberator MedicalAs Reported
    
    
    Reclasses
    
    
    Lease Incentives
    
    
    Deferred Rent
    
    
    Stock Grant
    
    
    Agreement
    
    
    Services, Inc.
    
    
    RestatedSales
    
    $
    775,832
    
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    775,773Cost of Sales
    
    
    357,532
    
    
    
    (29,122
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    328,410Gross Profit
    
    
    418,300
    
    
    
    29,063
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    447,363General and Administrative ExpensesPayroll, taxes and benefits
    
    
    430,565
    
    
    
    (18,501
    )
    
    
    
    
    
    
    
    
    
    
    (11,200
    )
    
    
    
    
    
    
    (28,310
    )
    
    
    372,554Advertising
    
    
    35,606
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,606Insurance
    
    
    10,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,119Interest
    
    
    76,647
    
    
    
    20,002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,649Rent
    
    
    97,432
    
    
    
    
    
    
    
    
    
    
    
    (7,159
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,273Professional fees
    
    
    102,319
    
    
    
    4,915
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,455
    
    
    
    
    
    
    
    131,689Bad debts
    
    
    62,062
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,062Depreciation
    
    
    
    
    
    
    27,622
    
    
    
    21,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,022Administrative
    
    
    116,655
    
    
    
    (3,724
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    113,024Taxes
    
    
    1,192
    
    
    
    (1,192
    )Total G&A Expenses
    
    
    932,597
    
    
    
    29,122
    
    
    
    21,400
    
    
    
    (7,159
    )
    
    
    (11,200
    )
    
    
    24,455
    
    
    
    (28,217
    )
    
    
    960,998Loss before Income Taxes
    
    
    (514,297
    )
    
    
    (59
    )
    
    
    (21,400
    )
    
    
    7,159
    
    
    
    11,200
    
    
    
    (24,455
    )
    
    
    28,217
    
    
    
    (513,635
    )Other Income (Expense)
    
    
    104,286
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,345Provision for Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (410,011
    )
    
    $
    
    
    
    $
    (21,400
    )
    
    $
    7,159
    
    
    $
    11,200
    
    
    $
    (24,455
    )
    
    $
    28,217
    
    
    $
    (409,290
    )Basic and diluted loss per common
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    (0.00
    )
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    (0.00
    )
    
    $
    0.00
    
    
    $
    (0.02
    )shareWeighted average basic and diluted
common shares outstanding
    
    
    31,800,159
    
    
    
    25,804,719
    
    
    
    25,804,719
    
    
    
    25,804,719
    
    
    
    25,804,719
    
    
    
    25,804,719
    
    
    
    25,804,719
    
    
    
    25,804,719
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##### Table of Contents



Condensed Consolidated Statement of Operations for the three months ended June 30, 2006 (Unaudited):
 Consulting
    
    
    Liberator MedicalAs Reported
    
    
    Reclasses
    
    
    Lease Incentives
    
    
    Deferred Rent
    
    
    Stock Grant
    
    
    Agreement
    
    
    Services, Inc.
    
    
    RestatedSales
    
    $
    737,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    737,091Cost of Sales
    
    
    375,927
    
    
    
    (16,364
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    359,563Gross Profit
    
    
    361,164
    
    
    
    16,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    377,528General and Administrative ExpensesPayroll, taxes and benefits
    
    
    396,888
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,566
    
    
    
    404,454Advertising
    
    
    45,698
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,698Insurance
    
    
    9,716
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,716Interest
    
    
    45,209
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,873
    )
    
    
    42,336Rent
    
    
    108,042
    
    
    
    
    
    
    
    
    
    
    
    6,131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,173Professional fees
    
    
    72,375
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (344
    )
    
    
    72,031Bad debts
    
    
    61,708
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,708Depreciation
    
    
    
    
    
    
    16,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,364Administrative
    
    
    125,812
    
    
    
    (8,042
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    117,799Taxes
    
    
    2,066
    
    
    
    (2,066
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total G&A Expenses
    
    
    867,514
    
    
    
    6,256
    
    
    
    
    
    
    
    6,131
    
    
    
    
    
    
    
    
    
    
    
    4,378
    
    
    
    884,279Loss before Income Taxes
    
    
    (506,350
    )
    
    
    10,108
    
    
    
    
    
    
    
    (6,131
    )
    
    
    
    
    
    
    
    
    
    
    (4,378
    )
    
    
    (506,751
    )Other Income (Expense)
    
    
    
    
    
    
    (10,108
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,108
    )Provision for Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (506,350
    )
    
    $
    
    
    
    $
    
    
    
    $
    (6,131
    )
    
    $
    
    
    
    $
    
    
    
    $
    (4,378
    )
    
    $
    (516,859
    )Basic and diluted loss per common
    
    $
    (0.02
    )
    
    $
    
    
    
    $
    
    
    
    $
    (0.00
    )
    
    $
    
    
    
    $
    
    
    
    $
    (0.00
    )
    
    $
    (0.02
    )shareWeighted average basic and diluted
common shares outstanding
    
    
    31,806,333
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
 12




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##### Table of Contents



Condensed Consolidated Statement of Operations for the six months ended June 30, 2007 (Unaudited):
 Consulting
    
    
    Liberator MedicalAs Reported
    
    
    Reclasses
    
    
    Lease Incentives
    
    
    Deferred Rent
    
    
    Stock Grant
    
    
    Agreement
    
    
    Services, Inc.
    
    
    RestatedSales
    
    $
    1,433,709
    
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,433,650Cost of Sales
    
    
    676,176
    
    
    
    (55,243
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    620,933Gross Profit
    
    
    757,533
    
    
    
    55,184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    812,717General and Administrative ExpensesPayroll, taxes and benefits
    
    
    860,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,400
    )
    
    
    
    
    
    
    (22,996
    )
    
    
    814,954Advertising
    
    
    80,208
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,209Insurance
    
    
    20,423
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,423Interest
    
    
    204,809
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204,809Rent
    
    
    195,199
    
    
    
    
    
    
    
    
    
    
    
    (14,318
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180,881Professional fees
    
    
    145,001
    
    
    
    4,915
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,455
    
    
    
    1,033
    
    
    
    175,404Bad debts
    
    
    115,732
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,732Depreciation
    
    
    
    
    
    
    55,243
    
    
    
    42,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98,043Administrative
    
    
    213,728
    
    
    
    (2,864
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    485
    
    
    
    211,349Taxes
    
    
    2,052
    
    
    
    (2,052
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total G&A Expenses
    
    
    1,837,502
    
    
    
    55,243
    
    
    
    42,800
    
    
    
    (14,318
    )
    
    
    (22,400
    )
    
    
    24,455
    
    
    
    (21,478
    )
    
    
    1,901,804Loss before Income Taxes
    
    
    (1,079,969
    )
    
    
    (59
    )
    
    
    (42,800
    )
    
    
    14,318
    
    
    
    22,400
    
    
    
    (24,455
    )
    
    
    21,478
    
    
    
    (1,089,087
    )Other Income (Expense)
    
    
    104,286
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,345Provision for Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (975,683
    )
    
    $
    
    
    
    $
    (42,800
    )
    
    $
    14,318
    
    
    $
    22,400
    
    
    $
    (24,455
    )
    
    $
    21,478
    
    
    $
    (984,742
    )Basic and
diluted loss per common share
    
    $
    (0.03
    )
    
    $
    
    
    
    $
    (0.00
    )
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    (0.00
    )
    
    $
    0.00
    
    
    $
    (0.04
    )Weighted
average basic and diluted common shares outstanding
    
    
    31,870,912
    
    
    
    25,627,323
    
    
    
    25,627,323
    
    
    
    25,627,323
    
    
    
    25,627,323
    
    
    
    25,627,323
    
    
    
    25,627,323
    
    
    
    25,627,323
 13




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##### Table of Contents



Condensed Consolidated Statement of Operations for the six months ended June 30, 2006 (Unaudited):
 Consulting
    
    
    Liberator MedicalAs Reported
    
    
    Reclasses
    
    
    Lease Incentives
    
    
    Deferred Rent
    
    
    Stock Grant
    
    
    Agreement
    
    
    Services, Inc.
    
    
    RestatedSales
    
    $
    1,386,365
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,386,365Cost of Sales
    
    
    669,984
    
    
    
    (32,731
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    637,253Gross Profit
    
    
    716,381
    
    
    
    32,731
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    749,112General and Administrative ExpensesPayroll, taxes and benefits
    
    
    766,843
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,774
    
    
    
    782,617Advertising
    
    
    78,852
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,852Insurance
    
    
    24,870
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,870Interest
    
    
    84,468
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,762
    )
    
    
    78,706Rent
    
    
    215,927
    
    
    
    
    
    
    
    
    
    
    
    12,261
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    228,188Professional fees
    
    
    115,341
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (623
    )
    
    
    114,718Bad debts
    
    
    113,660
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,660Depreciation
    
    
    
    
    
    
    32,731
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,731Administrative
    
    
    238,667
    
    
    
    (4,886
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    233,812Taxes
    
    
    5,222
    
    
    
    (5,222
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total G&A Expenses
    
    
    1,643,850
    
    
    
    22,623
    
    
    
    
    
    
    
    12,261
    
    
    
    
    
    
    
    
    
    
    
    9,420
    
    
    
    1,688,154Loss before Income Taxes
    
    
    (927,469
    )
    
    
    10,108
    
    
    
    
    
    
    
    (12,261
    )
    
    
    
    
    
    
    
    
    
    
    (9,420
    )
    
    
    (939,042
    )Other Income (Expense)
    
    
    (31,500
    )
    
    
    (10,108
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,500
    
    
    
    (10,108
    )Provision for Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (958,969
    )
    
    $
    
    
    
    $
    
    
    
    $
    (12,261
    )
    
    $
    
    
    
    $
    
    
    
    $
    22,080
    
    
    $
    (949,150
    )Basic and diluted loss per common
    
    $
    (0.03
    )
    
    $
    
    
    
    $
    
    
    
    $
    (0.00
    )
    
    $
    
    
    
    $
    
    
    
    $
    0.00
    
    
    $
    (0.04
    )shareWeighted average basic and diluted
common shares outstanding
    
    
    31,589,393
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
    
    
    
    25,447,956
 14




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##### Table of Contents



NOTE 4  Property and Equipment
  2007Leased equipment
    
    $
    412,215Transportation equipment
    
    
    94,510Office furniture
    
    
    53,009Computer equipment
    
    
    26,045Telephone equipment
    
    
    27,241Rental equipment
    
    
    18,329Leasehold improvements
    
    
    533,984Software
    
    
    30,807Website
    
    
    5,500Training guides
    
    
    3,125Signage
    
    
    12,986Total Property and Equipment
    
    
    1,217,751Accumulated Depreciation
    
    
    (461,603
    )Net Property and Equipment
    
    $
    756,148
  NOTE 5  Deposits
  2007Deposits on leased equipment
    
    $
    8,587Building rent deposits
    
    
    50,859Utility deposits
    
    
    5,723Total Deposits
    
    $
    65,169
 NOTE 6  Short-term Convertible Debt
   15




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##### Table of Contents



NOTE 7  Short-term Notes Payable
 2007A 30% note payable with interest payable six months from the loan
closing date. Interest on the loan shall be paid in the Companys com-
mon stock. The total number of common shares that can be issued to
pay interest is 43,000. The note matures six months from the loan clos-
ing date or approximately June 5, 2007. Accrued interest of $44,200 is
included in the principal balance outstanding at June 30, 2007.
    
    $
    294,200An 8% note payable with interest payable in six months from the loan
closing date or approximately August 20, 2007. Accrued interest of $2,534
is included in the principal balance outstanding at June 30, 2007.
    
    
    52,534An 8% 180 day note payable dated August 26, 2004. The note
was paid in June, 2007
    
    
    Notes payable to shareholders. A total 2,713,680 shares of common
stock was exchanged for $181,816 of debt, with the balance of $24,648
forgiven by the shareholders during the month of June, 2007.Three 8% note payables from stockholders of the Company. The loans
are noncollateralized and due on demand. Accrued and unpaid
interest included in the balance at June 30, 2007 is $251. Three
notes were paid in June, 2007.
    
    
    40,751$
    387,485
 16




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##### Table of Contents



NOTE 8  Long-term Debt
  2007CAPITAL LEASES PAYABLEFour capitalized leases with interest ranging from 24.8% to 28.4%. The
combined monthly payments of principal and interest are $4,395. The
amount of equipment and furniture capitalized with the leases was $10,495,
$45,580, $38,360 and $24,977. Two installment leases mature in August
2010, the third lease matures July 2011 and the fourth lease matures
January 2009.
    
    
    103,026STOCKHOLDER NOTES PAYABLEThe stockholder loans payable at June 30, 2007
consisted of various 8% notes payable to the principal stockholder of
the Company. The principal stockholder of the Company has committed
not to call any of his notes payable in the near future. The notes
payable are non-collateralized and due on demand. Included in the
balance at June 30, 2007 is accrued interest of $67,840.
    
    
    1,751,035Total long-term debt
    
    
    1,854,061Less current portion
    
    
    1,764,248Net long-term debt
    
    $
    89,813
  2007
    
    $
    12,0472008
    
    
    32,4162009
    
    
    25,5142010
    
    
    24,4502011
    
    
    8,599TOTAL
    
    $
    103,026
 NOTE 9  Income Taxes
    17




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##### Table of Contents



NOTE 10  Diluted Loss per Common Share
  NOTE 11  Deferred Tax Asset
  June 30, 2007Loss carry forward for tax purposes
    
    $
    4,100,000Deferred tax asset (35%)
    
    
    1,435,000Valuation allowance
    
    
    (1,435,000
    )Net deferred tax asset
    
    $
    
  NOTE 12  Lease Obligations
    18




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##### Table of Contents



2007
    
    $
    242,9752008
    
    
    339,1782009
    
    
    251,7682010
    
    
    254,8002011
    
    
    267,530Thereafter
    
    
    160,510TOTAL
    
    $
    1,516,761
 NOTE 13  Going Concern
  NOTE 14  Warrants and Options
 Warrants
 Balance at December 31, 2006
    
    
    33,333Issued in June 2007
    
    
    1,885,904Exercised
    
    
    Expired
    
    
    Balance at June 30, 2007
    
    
    1,919,237
  Options
  19




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##### Table of Contents



NOTE 15  401 (K) Plan
   NOTE 16  Related Party Transactions
   NOTE 17  Subsequent Events
  NOTE 18  Recent Accounting Pronouncements
     20




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##### Table of Contents



Accounting for Nonmonetary Transactions,
     21




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##### Table of Contents



Item 2.
    
    Managements Discussion of Financial Condition and
Results of Operations.
 This Managements Discussion and Analysis or Plan of Operation and other parts of this
quarterly report on Form 10-QSB contain forward-looking statements that involve risks and
uncertainties. Forward-looking statements can also be identified by words such as intends,
anticipates, expects, believes, plans, predicts, and similar terms. Forward-looking
statements are not guarantees of future performance and our actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might cause such
differences include, but are not limited to, those set forth below under Certain Risk Factors.
The following discussion should be read in conjunction with our unaudited consolidated financial
statements and notes thereto included in this Form 10-QSB and the audited financial statements of
our wholly-owned subsidiary, Liberator Medical Supply, Inc. (LMS), included in our current report
on Form 8-K dated June 22, 2007, filed with the Securities and Exchange Commission and managements
discussion and analysis contained therein. We assume no obligation to revise or update any
forward-looking statements for any reason, except as required by law.
 Overview
    Results of Operations
     22




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##### Table of Contents



Liquidity and Capital Resources
    Financing Activities
  Outlook
    
    
    Obtain additional funding through a combination of debt and equity;
    
    Increase advertising over the prior periods;
    
    Increase our customer base;
    
    Continue to service our current customer base and increasing the retention rate;
    
    Increase the collections of our accounts receivable.
 23




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##### Table of Contents




    
    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.
    
    Leased a 25,000 square foot facility which has only been built out 50 percent to
accommodate our current operations including room for growth. The other 50 percent will be
built out in stages as additional growth requires the additional office space.
    
    Created a HIPPA 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 adjust to changing market conditions.
    
    Tested our advertising methods and established methods of testing additional advertising
methods to meet with changing market conditions.
    Contractual Commitments
  Off-Balance Sheet Arrangements
  Certain Risk Factors
   
    
    We have incurred significant net losses every year since the inception of LMS.
 24




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##### Table of Contents




    
    The Company has aggressive marketing plans that require the Company to spend
substantial sums. The Company will need additional capital to continue its business plan.
    
    Our future operating results remain difficult to predict.
    
    Sales of a significant portion of our products depend on the continued
availability of reimbursement of our customers by government and private insurance plans.
    
    Our ability to operate at a profit is highly dependent on recurring orders
from customers, as to which there is no assurance.
    
    We may not be able to market our new diabetes products or otherwise to
operate our diabetes supply business segment at a profit because of marketing costs, competition,
or other reasons not now foreseen.
    
    We could be liable for harm caused by products that we sell.
    
    Competition from other sellers of products sold by us is intense and
expected to increase.
    
    If we or our suppliers do not comply with applicable government regulations,
we may be prohibited from selling our products.
    
    We may make acquisitions that will strain our financial and operational resources.
 Critical Accounting Policies
  Revenue Recognition
  25




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##### Table of Contents



Allowance for Doubtful Accounts
  Depreciable Lives of Property, Plant and Equipment
  Tax Accounting
  Stock Based Compensation
  Recently Issued Accounting Pronouncements
  Effect of Inflation
  Qualitative and Quantitative Disclosure about Market Risk
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##### Table of Contents



Item 4T.
    
    Controls and Procedures.
 Disclosure Controls and Procedures
   Remediation of Certain Weaknesses and Changes in Internal Controls
     Limitations on the Effectiveness of Controls
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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 6.
    
    Exhibits
  
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##### Table of Contents



SIGNATURES
  LIBERATOR MEDICAL HOLDINGS, INC.
            Registrant /s/ Mark A. Libratore
    
    President
    
    November 10, 2008Mark A. Libratore/s/ Robert J. Davis
    
    Chief Financial Officer
    
    November 10, 2008Robert J. Davis
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