##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
   o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
  LIBERATOR MEDICAL HOLDINGS, INC.
  NEVADA
    
    87-0267292(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)
 2979 SE Gran Park Way, Stuart, Florida 34997
 (772) 287-2414
  x o
  o x
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
  o o
 APPLICABLE ONLY TO CORPORATE ISSUERS
  Class
    
    Outstanding as of August 8, 2008Common Stock, $.001
    
    32,050,366
 o x




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TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheet (unaudited)
    
    
    3Condensed Consolidated Statements of Operations (unaudited)
    
    
    4Condensed Consolidated Statement of Changes in Stockholders Equity (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows (unaudited)
    
    
    6Notes to unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    11Item 3. Controls and Procedures
    
    
    15PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 2a. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 2b. Unregistered Sales of Convertible Debt and Use of Proceeds
    
    
    16Item 3. Defaults Upon Senior Securities
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    16Item 5. Other Information
    
    
    16Item 6. Exhibits
    
    
    16SIGNATURES
    
    
    17EX-31.1 Section 302 Certificate of CEOEX-31.2 Section 302 Certificate of CFOEX-32.1 Section 906 Certificate of CEOEX-32.2 Section 906 Certificate of CFO
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
June 30, 2008
(Unaudited)
 AssetsCurrent AssetsCash
    
    $
    2,691,635Accounts receivable, net of allowance for doubtful accounts of $673,304
    
    
    1,412,008Prepaid and other expenses
    
    
    437,022Inventory, net of allowance for obsolete inventory of $50,000
    
    
    505,086Deferred loan costs, current portion
    
    
    298,686Deferred advertising, current portion
    
    
    407,245Total Current Assets
    
    
    5,751,682Property and EquipmentProperty and Equipment, net of accumulated depreciation of $638,910
    
    
    781,940Other AssetsDeferred loan costs, net of current portion
    
    
    210,602Deferred advertising, net of current portion
    
    
    340,341Deposits
    
    
    83,484Total Other Assets
    
    
    634,427Total Assets
    
    $
    7,168,049Liabilities and Stockholders EquityCurrent LiabilitiesAccounts payable
    
    $
    999,617Accrued liabilities
    
    
    172,159Stockholder loan
    
    
    1,664,649Convertible notes payable, current portion, including interest of $26,499
    
    
    723,915Capital lease obligations, current portion
    
    
    47,394Deferred rent liability, current portion
    
    
    49,620Total Current Liabilities
    
    
    3,657,354Long-Term LiabilitiesConvertible notes payable and capital lease obligations, net of current
portion, including interest of $11,375
    
    
    2,723,609Deferred rent liability, net of current portion
    
    
    222,987Total Long-Term Liabilities
    
    
    2,946,596Total Liabilities
    
    
    6,603,950Stockholders EquityCommon stock, $.001 par value, 200,000,000 shares authorized, 32,050,366
shares issued and outstanding
    
    
    32,050Additional paid-in capital
    
    
    11,159,577Accumulated deficit
    
    
    (10,627,528
    )Total Stockholders Equity
    
    
    564,099Total Liabilities and Stockholders Equity
    
    $
    7,168,049
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Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the three and nine months ended June 30, 2008 and 2007
(Unaudited)
 Three Months Ended June 30,
    
    
    Nine Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Sales
    
    $
    2,444,400
    
    
    $
    775,773
    
    
    $
    5,299,159
    
    
    $
    2,141,897Cost of Sales
    
    
    889,683
    
    
    
    328,410
    
    
    
    1,924,885
    
    
    
    997,737Gross Profit
    
    
    1,554,717
    
    
    
    447,363
    
    
    
    3,374,274
    
    
    
    1,144,160General and Administrative ExpensesPayroll, taxes and benefits
    
    
    650,715
    
    
    
    372,554
    
    
    
    1,808,261
    
    
    
    1,373,136Advertising
    
    
    107,674
    
    
    
    35,606
    
    
    
    256,521
    
    
    
    113,480Insurance
    
    
    11,544
    
    
    
    10,119
    
    
    
    37,108
    
    
    
    28,949Interest
    
    
    167,049
    
    
    
    96,649
    
    
    
    280,438
    
    
    
    319,002Rent
    
    
    96,690
    
    
    
    90,273
    
    
    
    292,289
    
    
    
    264,611Professional fees
    
    
    141,545
    
    
    
    131,689
    
    
    
    546,398
    
    
    
    238,918Bad debts
    
    
    271,751
    
    
    
    62,062
    
    
    
    577,686
    
    
    
    194,362Depreciation
    
    
    45,900
    
    
    
    49,022
    
    
    
    137,700
    
    
    
    145,218Administrative
    
    
    281,050
    
    
    
    113,024
    
    
    
    881,245
    
    
    
    326,470Total General and Administrative Expenses
    
    
    1,773,918
    
    
    
    960,998
    
    
    
    4,817,646
    
    
    
    3,004,145Loss before Income Taxes
    
    
    (219,201
    )
    
    
    (513,635
    )
    
    
    (1,443,372
    )
    
    
    (1,859,986
    )Other Income
    
    
    1,366
    
    
    
    104,345
    
    
    
    1,366
    
    
    
    104,345Provision for Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (217,835
    )
    
    $
    (409,290
    )
    
    $
    (1,442,006
    )
    
    $
    (1,755,641
    )Basic and diluted loss per common share
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.05
    )
    
    $
    (0.07
    )Weighted average basic and diluted
common shares outstanding
    
    
    32,050,366
    
    
    
    25,447,956
    
    
    
    31,683,081
    
    
    
    25,853,774
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Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders
Equity
For the nine months ended June 30, 2008
(Unaudited)
 Par $.001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Common
    
    
    Paid in
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    EquityBalance at September 30, 2007
    
    
    30,464,014
    
    
    $
    30,464
    
    
    $
    9,092,858
    
    
    $
    (9,185,522
    )
    
    $
    (62,200
    )Shares issued for cash
    
    
    1,286,352
    
    
    
    1,286
    
    
    
    684,914
    
    
    
    
    
    
    
    686,200Options issued to employees
    
    
    
    
    
    
    
    
    
    
    22,575
    
    
    
    
    
    
    
    22,575Warrants issued with convertible debt
    
    
    
    
    
    
    
    
    
    
    1,095,278
    
    
    
    
    
    
    
    1,095,278Warrants issued for services
    
    
    
    
    
    
    
    
    
    
    24,252
    
    
    
    
    
    
    
    24,252Shares issued for services
    
    
    300,000
    
    
    
    300
    
    
    
    239,700
    
    
    
    
    
    
    
    240,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,442,006
    )
    
    
    (1,442,006
    )Balance at June 30, 2008
    
    
    32,050,366
    
    
    $
    32,050
    
    
    $
    11,159,577
    
    
    $
    (10,627,528
    )
    
    $
    564,099
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Liberator Medical Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the nine months ended June 30, 2008 and 2007
(Unaudited)
 2008
    
    
    2007Cash flow from operating activities:Net Loss
    
    $
    (1,442,006
    )
    
    $
    (1,755,641
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    137,700
    
    
    
    142,495Equity based compensation
    
    
    286,827
    
    
    
    44,800Bad debt expense
    
    
    577,686
    
    
    
    194,362Amortization of interest on warrant valuation
    
    
    93,255
    
    
    
    Amortization of loan issuance costs
    
    
    43,968
    
    
    
    Loss on disposal of assets
    
    
    
    
    
    
    16,267Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,505,832
    )
    
    
    94,848Prepaid and other expenses
    
    
    363,225
    
    
    
    14,512Inventory
    
    
    (206,232
    )
    
    
    49,336Accounts payable
    
    
    600,008
    
    
    
    (176,695
    )Accrued expenses
    
    
    11,743
    
    
    
    57,526Deferred rent
    
    
    (31,486
    )
    
    
    (18,614
    )Deferred advertising
    
    
    (434,972
    )
    
    
    11,881Net Cash Flow Used in Operating Activities
    
    
    (1,506,116
    )
    
    
    (1,324,923
    )Cash flow from investing activities:Purchase of property and equipment
    
    
    (137,559
    )
    
    
    -0-Net Cash Flow Used in Investing Activities
    
    
    (137,559
    )
    
    
    -0-Cash flow from financing activities:Proceeds from sale of stock
    
    
    686,200
    
    
    
    230,660Proceeds from convertible notes
    
    
    4,304,000
    
    
    
    1,151,720Proceeds from notes payable
    
    
    53,000
    
    
    
    351,055Issue costs of notes payable
    
    
    (555,870
    )
    
    
    Payments of long-term debt and capital lease obligations
    
    
    (328,840
    )
    
    
    (94,245
    )Net Cash Flow Provided by Financing Activities
    
    
    4,158,490
    
    
    
    1,639,190Net (decrease) increase in cash
    
    
    2,514,815
    
    
    
    314,267Cash at beginning of period
    
    
    176,820
    
    
    
    80,955Cash at end of period
    
    $
    2,691,635
    
    
    $
    395,222Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    154,799
    
    
    $
    280,874Non Cash
financing and investing activity:Acquisition
of equipment through capital lease obligations
    
    $
    54,083
    
    
    $
    24,977
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Liberator Medical Holdings, Inc. and Subsidiaries
Notes To The Unaudited Condensed Consolidated Financial Statements
June 30, 2008
 Note 1 Unaudited Condensed Consolidated Financial Statements
  Note 2 Summary of Significant Accounting Policies
 Inventories
  Income Taxes
    Change in Fiscal Year
  Correction of Prior Year Financial Statements
  Note 3 Recent Accounting Pronouncements
 , The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115.
 SFAS Fair Value Measures.
 Business Combinations
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Liberator Medical Holdings, Inc. and Subsidiaries
Notes To The Unaudited Condensed Consolidated Financial Statements
June 30, 2008
 Noncontrolling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51 (FASB No. 160)
    Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).
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Liberator Medical Holdings, Inc. and Subsidiaries
Notes To The Unaudited Condensed Consolidated Financial Statements
June 30, 2008
 Note 4 Going Concern
  Note 5 Warrants and Options
 Warrants
  AmountBalance at September 30, 2007 (includes 1,425,820 option issued to Mark Libratore)
    
    
    4,543,495Issued in FY 2008 (Includes 2,495,189 options issued to Mark Libratore)
    
    
    9,085,606Exercised in FY 2008
    
    
    0Less Expired in FY 2008
    
    
    (33,333
    )Balance at June 30, 2008
    
    
    13,595,768
  Options
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Liberator Medical Holdings, Inc. and Subsidiaries
Notes To The Unaudited Condensed Consolidated Financial Statements
June 30, 2008
   Note 6 Sale of Common Stock
  Note 7 Private Offering of Convertible Debt
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Liberator Medical Holdings, Inc. and Subsidiaries
Notes To The Unaudited Condensed Consolidated Financial Statements
June 30, 2008
 Note 8 Diluted Loss per Common Share
  Note 9 Income Taxes
   June 30, 2008Loss carry forward for tax purposes
    
    $
    6,508,000Deferred tax asset (35%)
    
    
    2,278,000Valuation allowance
    
    
    (2,278,000
    )Net deferred tax asset
    
    $
    0
 Note 10 Commitments
  AmountYear ending September 30:2008
    
    $
    84,0602009
    
    
    273,8662010
    
    
    251,6802011
    
    
    264,2602012
    
    
    229,300$
    1,103,166
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Item 2. Managements Discussion and Analysis or Plan of Operation.
 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 Liberator Medical
Holdings, Inc. (LMH), included in our current report on Form 10-KSB dated January 18, 2008, 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
 Revenues:
  Gross Profit:
  General and Administrative Expenses (G&A):
  Interest Expense:
  Net Loss:
  12




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Liquidity and Capital Resources
  Financing Activities
  Outlook
   13




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
    
    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 increase the retention rate;
    
    Increase the collections of our accounts receivable.
  
    
    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 75 percent to accommodate
our current operations including room for growth. The other 25 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
  14




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
    
    We have incurred significant net losses every year since the inception of LMS.
    
    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 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
  15




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Effect of Inflation
  Qualitative and Quantitative Disclosure about Market Risk
  
 Item 3. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
     Change in Internal Controls
  16




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2a. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 2b. Unregistered Sales of Convertible Debt and use of Proceeds
    
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 
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SIGNATURES
  LIBERATOR MEDICAL HOLDINGS, INC.Registrant /s/ Mark A. Libratore

Mark A. Libratore
    
    President
    
    August 14, 2008/s/ Robert J. Davis

Robert J. Davis
    
    Chief Financial Officer
    
    August 14, 2008
 18