##### 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 SECURITES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 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
 
  þ o
 o þ
 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 14, 2007Common Stock, $.001
    
    28,904,855
 o þ




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    18Item 3. Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults Upon Senior Securities
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    28Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



Liberator Medical Holdings, Inc.
Consolidated Balance Sheets
June 30, 2007 and December 31, 2006
 Assets2007
    
    
    2006Current AssetsCash
    
    $
    395,222
    
    
    $
    124,657Accounts receivable, net of allowance for doubtful
accounts of $185,547 and $300,000
    
    
    611,948
    
    
    
    696,951Prepaid expenses
    
    
    
    
    
    
    12,655Inventory
    
    
    307,385
    
    
    
    307,667Deferred compensation
    
    
    22,398
    
    
    
    44,800Deferred advertising, current
    
    
    110,004
    
    
    
    110,886Total Current Assets
    
    
    1,446,957
    
    
    
    1,297,616Property and Equipment,net of accumulated
depreciation of $350,932 and $305,932
    
    
    573,688
    
    
    
    599,802Other AssetsDeferred advertising
    
    
    84,997
    
    
    
    90,960Intangible assets, net of accumulated amortization of $20,092
and $9,849
    
    
    19,340
    
    
    
    29,583FCC License
    
    
    
    
    
    
    3,500Deposits
    
    
    65,169
    
    
    
    65,051Total Other Assets
    
    
    169,506
    
    
    
    189,094Total Assets
    
    $
    2,190,151
    
    
    $
    2,086,512Liabilities and Stockholders EquityCurrent LiabilitiesNotes payable
    
    $
    387,485
    
    
    $
    506,776Interest payable
    
    
    
    
    
    
    57,717Accounts payable
    
    
    371,708
    
    
    
    510,890Accrued liabilities
    
    
    111,057
    
    
    
    93,817Short-term convertible debt
    
    
    
    
    
    
    1,190,599Current portion notes payable
    
    
    
    
    
    
    683Current portion capital leases
    
    
    13,213
    
    
    
    13,213Total Current Liabilities
    
    
    883,463
    
    
    
    2,373,695Long-Term Debt and Capital Leases
    
    
    1,840,848
    
    
    
    1,791,966Total Liabilities
    
    
    2,724,311
    
    
    
    4,165,661Stockholders EquityCommon stock, $.001 par value, 200,000,000 shares authorized,
28,411,135 and 31,963,583 shares issued and outstanding
    
    
    28,411
    
    
    
    31,964Capital in Excess of Par Value
    
    
    7,479,508
    
    
    
    4,955,283Retained earnings (deficit)
    
    
    (8,042,079
    )
    
    
    (7,066,396
    )Total Stockholders Equity (Deficit)
    
    
    (534,160
    )
    
    
    (2,079,149
    )Total Liabilities and Stockholders Equity
    
    $
    2,190,151
    
    
    $
    2,086,512
   3




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Liberator Medical Holdings, Inc.
Consolidated Statement of Operations
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302007
    
    
    2006
    
    
    2007
    
    
    2006Sales
    
    $
    775,832
    
    
    $
    737,091
    
    
    $
    1,433,709
    
    
    $
    1,386,365Cost of Sales
    
    
    357,532
    
    
    
    375,927
    
    
    
    676,176
    
    
    
    669,984Gross Profit
    
    
    418,300
    
    
    
    361,164
    
    
    
    757,533
    
    
    
    716,38153.9
    %
    
    
    49.0
    %
    
    
    52.8
    %
    
    
    51.7
    %General and AdministrativePayroll and payroll benefits
    
    
    430,565
    
    
    
    396,888
    
    
    
    860,350
    
    
    
    766,843Advertising
    
    
    35,606
    
    
    
    45,698
    
    
    
    80,208
    
    
    
    78,852Insurance
    
    
    10,119
    
    
    
    9,716
    
    
    
    20,423
    
    
    
    24,870Interest
    
    
    76,647
    
    
    
    45,209
    
    
    
    204,809
    
    
    
    84,468Rent
    
    
    97,432
    
    
    
    108,042
    
    
    
    195,199
    
    
    
    215,927Professional Fees
    
    
    102,319
    
    
    
    72,375
    
    
    
    145,001
    
    
    
    115,341Bad debts
    
    
    62,062
    
    
    
    61,708
    
    
    
    115,732
    
    
    
    113,660Administrative
    
    
    116,655
    
    
    
    125,812
    
    
    
    213,728
    
    
    
    238,667Taxes
    
    
    1,192
    
    
    
    2,066
    
    
    
    2,052
    
    
    
    5,222Total Operating Expenses
    
    
    932,597
    
    
    
    867,514
    
    
    
    1,837,502
    
    
    
    1,643,850Loss from Operation
    
    
    (514,297
    )
    
    
    (506,350
    )
    
    
    (1,079,969
    )
    
    
    (927,469
    )Other Income (Expense)Impairment of FCC License
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,500
    )Loss on Sale of Assets
    
    
    (3,490
    )
    
    
    
    
    
    
    (3,490
    )
    
    
    Forgiveness of Debt
    
    
    107,776
    
    
    
    
    
    
    
    107,776
    
    
    
    Total Other Income (Expense)
    
    
    104,286
    
    
    
    
    
    
    
    104,286
    
    
    
    (31,500
    )Provision for Income Taxes (Benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (410,011
    )
    
    $
    (506,350
    )
    
    $
    (975,683
    )
    
    $
    (958,969
    )Basic and diluted loss per common share
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.03
    )Weighted average of common shares outstanding
    
    
    31,800,159
    
    
    
    31,806,333
    
    
    
    31,870,912
    
    
    
    31,589,393
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Liberator Medical Holdings, Inc.
Consolidated Statements of Cash Flows
For the Six months ended June 30, 2007 and 2006
 2007
    
    
    2006Cash flow from operating activitiesCash received from customers
    
    $
    1,472,118
    
    
    $
    1,060,113Interest Income
    
    
    
    
    
    
    Cash paid to employees and suppliers of goods
and services
    
    
    (2,264,661
    )
    
    
    (1,858,119
    )Interest paid
    
    
    (201,633
    )
    
    
    (84,378
    )Income taxes paid
    
    
    
    
    
    
    Net Cash Flows Used in Operating Activities
    
    
    (994,176
    )
    
    
    (882,384
    )Cash flows from investing activitiesPurchase of equipment, leasehold improvements
    
    
    (27,567
    )
    
    
    (251,724
    )Purchase of training guides
    
    
    
    
    
    
    (3,125
    )Purchase of software
    
    
    
    
    
    
    (9,000
    )Disposal of assets
    
    
    8,681
    
    
    
    Net Cash Flows Used in Investing Activities
    
    
    (18,886
    )
    
    
    (263,849
    )Cash flows from financing activitiesProceeds 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 Flows Provided by Financing Activities
    
    
    1,283,627
    
    
    
    991,687Net increase (decrease) in cash
    
    
    270,565
    
    
    
    (154,546
    )Cash at beginning of year
    
    
    124,657
    
    
    
    219,272Cash at end of period
    
    $
    395,222
    
    
    $
    64,726Non cash transactionsThe FCC License was disposed of in June, 2007
    
    $
    3,4909,990,000 shares of common stock were cancelled in
June
    
    $
    9,990Stock was issued for debt
    
    $
    182,616Forgiveness of debt
    
    $
    107,776
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Liberator Medical Holdings, Inc.
Consolidated Statements of Cash Flows
For the Six months ended June 30, 2007 and 2006
 Reconciliation of Net Loss to Net Cash Flows Used in Operating Activities
 Jan - Jun 2007
    
    
    Jan - Jun 2006Net Income (Loss)
    
    $
    (975,684
    )
    
    $
    (958,879
    )Add items not requiring outlay of cash:Depreciation
    
    
    45,000
    
    
    
    30,000Amortization
    
    
    10,244
    
    
    
    2,731Bad debts
    
    
    115,732
    
    
    
    113,660Amortization of deferred compensation
    
    
    22,402Accrued Expenses Included in Forgiveness of Debt
    
    
    13,163Impairment/Disposal of FCC License
    
    
    3,490
    
    
    
    31,500Subtract items not providing cash:Forgiveness of debt
    
    
    (107,775
    )Cash was increased byIncrease in accounts payable
    
    
    
    
    
    
    178,180Increase in accrued expenses
    
    
    17,239
    
    
    
    16,371Decrease in prepaid expenses
    
    
    12,655
    
    
    
    32,089Decrease in inventory
    
    
    282
    
    
    
    282Decrease in deferred advertising
    
    
    6,846Cash was decreased byIncrease in net accounts receivable
    
    
    (30,729
    )
    
    
    (237,837
    )Increase in deposits
    
    
    (118
    )
    
    
    (592
    )Increase in deferred advertising
    
    
    
    
    
    
    (89,889
    )Decrease in accounts payable
    
    
    (126,923
    )Net Cash Flows Used in Operating Activities
    
    $
    (994,176
    )
    
    $
    (882,384
    )
   6




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Liberator Medical Holdings, Inc.  Notes to Consolidated Financial Statements
 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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Liberator Medical Holdings, Inc.  Notes to Consolidated Financial Statements
 NOTE 1  Summary of significant accounting policies, continued
 Cash Equivalents
 Accounts Receivable
  Inventories
 Advertising Costs
 Amortization
 Property and Equipment
 Shipping and Handling Costs
 Revenue Recognition
  8




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Liberator Medical Holdings, Inc.  Notes to Consolidated Financial Statements
 NOTE 1  Summary of significant accounting policies, continued
  Concentration of Credit Risk from Cash Deposits in Excess of Insured Limits
 NOTE 2  Change of Tax Status
  NOTE 3  Deferred Compensation
  9




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Liberator Medical Holdings, Inc.
Notes to Consolidated Financial Statements
 NOTE 4  Property and Equipment
 2007
    
    
    2006Leased equipment
    
    $
    412,215
    
    
    $
    387,238Transportation equipment
    
    
    94,510
    
    
    
    94,510Office furniture
    
    
    53,009
    
    
    
    53,009Computer equipment
    
    
    26,045
    
    
    
    24,115Telephone equipment
    
    
    27,241
    
    
    
    26,581Rental equipment
    
    
    18,329
    
    
    
    18,329Leasehold improvements
    
    
    280,285
    
    
    
    280,284Signage
    
    
    12,986
    
    
    
    21,668Total Property and Equipment
    
    
    924,620
    
    
    
    905,734Accumulated Depreciation and Amortization
    
    
    (350,932
    )
    
    
    (305,932
    )Net Property and Equipment
    
    $
    573,688
    
    
    $
    599,802
   NOTE 5  Deposits
 2007
    
    
    2006Deposits on leased equipment
    
    $
    8,587
    
    
    $
    8,587Building rent deposits
    
    
    50,859
    
    
    
    50,859Utility deposits
    
    
    5,723
    
    
    
    5,605Deposit on construction contract
    
    
    Total Deposits
    
    $
    65,169
    
    
    $
    65,051
 NOTE 6  Intangible Assets
 2007
    
    
    2006Web Site
    
    $
    5,500
    
    
    $
    5,500Server Software
    
    
    30,807
    
    
    
    30,807Training guides
    
    
    3,125
    
    
    
    3,125Total
    
    
    39,432
    
    
    
    39,432Accumulated Amortization
    
    
    (20,092
    )
    
    
    (9,849
    )Net Intangible Assets
    
    $
    19,340
    
    
    $
    29,583
 NOTE 7  Short-term Convertible Debt
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Liberator Medical Holdings, Inc.
Notes to Consolidated Financial Statements
 NOTE 7  Short-term Convertible Debt, continued
 NOTE 8  Short-term Notes Payable
 2007
    
    
    2006A 30% note payable with interest payable six months from the loan
closing date. Interest on the loan shall be paid in the Companys common
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 closing
date or approximately June 5, 2007. Accrued interest of $44,200 is
included in the principal balance outstanding at June 30, 2007.
    
    $
    294,200
    
    
    $
    256,700An 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.
    
    
    52,534
    
    
    
    An 8% 180 day note payable dated August 26, 2004. The note
was paid in June, 2007
    
    
    
    
    
    
    5,000Notes 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.
    
    
    
    
    
    
    206,464Three 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
    
    
    
    38,612Total Short-Term Notes Payable
    
    $
    387,485
    
    
    $
    506,776
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Liberator Medical Holdings, Inc.
Notes to Consolidated Financial Statements
 NOTE 9  Long-Term Debt
 NOTES AND INSTALLMENT NOTES PAYABLE
    
    2007
    
    
    2006A 7% installment note collateralized by transportation equipment.
The monthly payments of principal and interest are $707. The note
matured in January 2007.
    
    
    
    
    
    
    683Subtotal notes payable
    
    
    
    
    
    
    683CAPITAL 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.
    
    
    103,026
    
    
    
    89,015Subtotal capital leases payable
    
    
    103,026
    
    
    
    89,015STOCKHOLDER NOTES PAYABLEThe stockholder loans payable at June 30, 2007 and 2006
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 and 2006 is accrued interest of
$67,840 and $67,523.
    
    
    1,751,035
    
    
    
    1,716,164Total long-term debt
    
    
    1,854,061
    
    
    
    1,805,862Less current portion
    
    
    13,213
    
    
    
    13,896Net long-term debt
    
    $
    1,840,848
    
    
    $
    1,791,966
  2007
    
    $
    12,0472008
    
    
    32,4162009
    
    
    25,5142010
    
    
    24,4502011
    
    
    8,599TOTAL
    
    $
    103,026
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Liberator Medical Holdings, Inc.  Notes to Consolidated Financial Statements
 NOTE 10  Income Taxes
   NOTE 11  Diluted Loss Per Common Share
 NOTE 12  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
    
    $
    -0-
  NOTE 13  Leases Obligations
   13




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Liberator Medical Holdings, Inc.  Notes to Consolidated Financial Statements
 NOTE 13  Leases Obligations continued
   2007
    
    $
    242,9752008
    
    
    339,1782009
    
    
    251,7682010
    
    
    254,8002011
    
    
    267,530Thereafter
    
    
    160,510$
    1,516,761
 NOTE 14  Going Concern
 NOTE 15  Warrants and Options
 Warrants
 Balance at December 31, 2006
    
    
    33,333Issued in June 2007
    
    
    1,885,904Exercised
    
    
    -0-Expired
    
    
    -0-Balance at June 30, 2007
    
    
    1,919,237
  14




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Liberator Medical Holdings, Inc.  Notes to Consolidated Financial Statements
 NOTE 15  Warrants and Options, continued
  Options
 NOTE 16  401 (K) Plan
  NOTE 17  Related Party Transactions
  NOTE 18  Subsequent Events
 NOTE 19  Recent Accounting Pronouncements
  15




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Liberator Medical Holdings, Inc.  Notes to Consolidated Financial Statements
 NOTE 18  Recent Accounting Pronouncements, continued
        Accounting for Nonmonetary Transactions,
  16




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Liberator Medical Holdings, Inc.  Notes to Consolidated Financial Statements
 NOTE 18  Recent Accounting Pronouncements, continued
      17




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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
     18




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Results of Operations
     Liquidity and Capital Resources
    19




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Financing Activities
  Outlook
    20




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
    
    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.
    21




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Contractual Commitments
  Off-Balance Sheet Arrangements
  Certain Risk Factors
   
    
    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.
  22




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
    
    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
   23




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Allowance for Doubtful Accounts
  Depreciable Lives of Property, Plant and Equipment
  Tax Accounting
   24




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Stock Based Compensation
  Recently Issued Accounting Pronouncements
  Effect of Inflation
  Qualitative and Quantitative Disclosure about Market Risk
   25




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PART II  OTHER INFORMATION
 
   
       26




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27




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SIGNATURES
  LIBERATOR MEDICAL HOLDINGS, INC.Registrant/s/ Mark A. Libratore

Mark A. Libratore
    
    President
    
    August 20, 2007/s/ Robert J. Davis

Robert J. Davis
    
    Chief Financial Officer
    
    August 20, 2007
  28




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EXHIBIT INDEX
 
  29