10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended September 30, 2007

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ________________ to _______________

000-50222

(Commission file number)

LOGISTICAL SUPPORT, INC.

(Exact name of small business issuer as specified in its charter)

Utah	41-2029935
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

19734 Dearborn Street, Chatsworth, California 91311

(Address of Principal Executive Offices)

(818) 885-0300

(Issuer's Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of November 1, 2007 - 79,345,000 shares of common stock

Transitional Small Business Disclosure Format (check one): Yes o No x

LOGISTICAL SUPPORT, INC.

Index

		Page
		Number
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements	2
	Consolidated Balance Sheet as of September 30, 2007 (unaudited)	2
	Consolidated Statements of Operations for the three and nine months ended September 30, 2007 and 2006 (unaudited)	3
	Consolidated Statement of Stockholders Equity for the nine months ended September 30, 2007 (unaudited)	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis or Plan of Operations	14
Item 3.	Controls and Procedures	18
PART II.	OTHER INFORMATION	19
Item 1.	Legal Proceedings	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Submission of Matters to a Vote of Security Holders	20
Item 5.	Other Information	20
Item 6.	Exhibits	20
SIGNATURES		21

1

PART I.FINANCIAL INFORMATION

Item 1.Financial Statements

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

	September 30,
	2007
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	38,326
Accounts receivable, net of allowance for doubtful accounts of $13,972		248,993
Inventory		44,872
Contract costs and estimated earnings in excess of billings		2,105,896
Deferred financing cost, current portion		45,792
Other current assets		125,483
TOTAL CURRENT ASSETS		2,609,362
PROPERTY AND EQUIPMENT, net		622,988
DEFERRED FINANCING COST, LONG TERM		41,976
TOTAL ASSETS	$	3,274,326
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	647,945
Accrued Triumph settlement obligation		264,000
Accrued payroll expenses		200,685
Accrued expenses		151,565
Due to factor		61,557
Line of credit		18,723
Notes payable, current portion		4,569
Capital lease obligations, current portion		64,077
TOTAL CURRENT LIABILITIES		1,413,121
NOTES PAYABLE, net of current portion		6,731
CAPITAL LEASE OBLIGATIONS, net of current portion		98,545
OTHER LONG-TERM LIABILITIES		113,335
TOTAL LIABILITIES		1,631,732
COMMITMENT AND CONTINGENCIES		-
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding		-
Common stock, $0.001 par value; 100,000,000 shares authorized; 79,345,000 shares issued and outstanding		79,345
Additional paid-in capital		3,549,872
Due from officers/affiliates, net		(114,307	)
Accumulated deficit		(1,872,316	)
TOTAL STOCKHOLDERS' EQUITY		1,642,594
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,274,326

The accompanying notes are an integral part of these consolidated financial statements.

2

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended September 30, 2007 and 2006

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2007			2006			2007			2006
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
SALES
Contracts	$	1,259,946		$	1,539,238		$	5,164,084			4,761,014
Products		31,614			8,112			67,713			112,548
TOTAL SALES		1,291,560			1,547,350			5,231,797			4,873,562
COST OF SALES
Contracts		824,667			1,208,770			3,788,565			3,698,113
Products		17,857			3,897			53,380			22,642
TOTAL COST OF SALES		842,524			1,212,667			3,841,945			3,720,755
GROSS PROFIT		449,036			334,683			1,389,852			1,152,807
OPERATING EXPENSES
General and administrative expenses		376,851			229,311			894,195			764,165
Sales and marketing		42,488			46,586			142,277			158,819
TOTAL OPERATING EXPENSES		419,339			275,897			1,036,472			922,984
INCOME FROM OPERATIONS		29,697			58,786			353,380			229,823
OTHER INCOME (EXPENSE)
Other income		171			1,106			6,195			23,065
Interest expense		(8,068	)		(12,190	)		(37,396	)		(39,315	)
Other expense		(23,351	)		(9,320	)		(97,257	)		(43,426	)
Provision for related party receivables		-			-			-			(25,800	)
TOTAL OTHER INCOME (EXPENSE)		(31,248	)		(20,404	)		(128,458	)		(85,476	)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		(1,551	)		38,382			224,922			144,347
PROVISION FOR INCOME TAXES		-			-			-			-
NET INCOME (LOSS)	$	(1,551	)	$	38,382		$	224,922		$	144,347
EARNINGS (LOSS) PER SHARE:
BASIC	$	(0.00	)	$	0.00		$	0.00		$	0.00
DILUTED	$	(0.00	)	$	0.00		$	0.00		$	0.00
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC		79,029,783			78,249,348			78,867,344			73,627,051
DILUTED		79,029,783			79,392,577			79,224,007			75,865,445

The accompanying notes are an integral part of these consolidated financial statements.

3

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For The Nine Months Ended September 30, 2007

(unaudited)

					Additional		Due From						Total
	Common Stock				Paid-in		Officers/			Accumulated			Stockholders'
	Shares		Amount		Capital		Affiliates			Deficit			Equity
Balance, December 31, 2006		78,745,000	$	78,745	$	3,470,472	$	(114,307	)	$	(2,097,238	)	$	1,337,672
Issuance of stock for compensation		100,000		100		24,900		-			-			25,000
Issuance of stock for financing agreement		500,000		500		54,500		-			-			55,000
Net income		-		-		-		-			224,922			224,922
Balance, September 30, 2007		79,345,000	$	79,345	$	3,549,872	$	(114,307	)	$	(1,872,316	)	$	1,642,594

The accompanying notes are an integral part of these consolidated financial statements.

4

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2007 and 2006

	Nine Months Ended
	September 30,			September 30,
	2007			2006
	(unaudited)			(unaudited)
CASH FLOW FROM (TO) OPERATING ACTIVITIES:
Net income	$	224,922		$	144,347
Adjustment to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense		95,735			65,296
Provision for related party receivable		-			25,800
Amortization of fair value of warrants issued to consultants		-			5,786
Gain on write-off of liabilities		-			(9,143	)
Common stock issued for services		25,000			-
Amortization of deferred financing costs		3,816			-
Line of credit issued for interest expense		1,223			-
Changes in operating assets and liabilities:
Other receivables		-			10,523
Accounts receivable		238,665			99,532
Due from officers/affiliates		-			113,968
Inventory		(1,420	)		55,284
Contract costs		(5,473	)		(694,540	)
Other current assets		(19,597	)		8,455
Accounts payable		33,268			129,075
Accrued Triumph settlement obligation		(385,000	)		(156,000	)
Accrued expenses		(139,499	)		53,540
Net cash provided by (used in) operating activities		71,640			(148,077	)
CASH FLOW (TO) INVESTING ACTIVITIES:
Purchase of property and equipment		(145,827	)		(59,594	)
Net cash (used in) investing activities		(145,827	)		(59,594	)
CASH FLOW FROM (TO) FINANCING ACTIVITIES:
Proceeds from exercise of warrants		-			152,000
Proceeds (Repayments) of factoring receivables, net		(78,409	)		-
Payment of financing costs associated with line of credit		(19,084	)		-
Repurchase of common stock from a related party		-			(100,000	)
Payments on capital lease obligations		(45,511	)		(31,058	)
Payments on notes payable - related party		(225,000	)		-
Payments on notes payable		(3,897	)		(8,701	)
Net cash provided by (used in) financing activities		(371,901	)		12,241
NET DECREASE IN CASH AND CASH EQUIVALENTS		(446,088	)		(195,430	)
CASH AND CASH EQUIVALENTS, Beginning of period		484,414			387,216
CASH AND CASH EQUIVALENTS, End of period	$	38,326		$	191,786
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Interest paid	$	33,142			39,315
Income taxes paid	$	-		$	-
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital lease obligation	$	89,000		$	-
Issuance of Line of credit for financing costs and interest	$	18,723		$	-
Issuance of common stock for financing costs	$	55,000		$

The accompanying notes are an integral part of these consolidated financial statements.

5

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 – Basis of Presentation

The unaudited consolidated financial statements have been prepared by Logistical Support, Inc. (the “Company”), in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-QSB and Regulation S-B as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included on Form 10-KSB as amended for the period ended December 31, 2006. In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. The results of the nine months ended September 30, 2007 are not necessarily indicative of the results to be expected for the full year ending December 31, 2007.

Consolidated Financial Statements

The accompanying consolidated financial statements include the accounts of the Company and Logistical Support, LLC (“Logistical”). The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All inter-company accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. As of September 30, 2007, the Company used estimates in determining the realization of its accounts receivable and inventory, valuation of contract costs in excess of billings and recognition of revenue based on a percentage of completion. Actual results could differ from these estimates.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified for comparative purposes to conform to the presentation in the current period financial statements.

Stock Based Compensation to Employees

The Company accounts for its stock-based compensation for employees in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123R, "Share-Based Payment, an Amendment of Financial Accounting Standards Board (“FASB”) Statement No. 123." The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. The Company did not grant any options and no options were cancelled or exercised during the nine months ended September 30, 2007. As of September 30, 2007, there were no options outstanding.

6

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Stock Based Compensation to Other than Employees

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," and the conclusions reached by the Emerging Issues Task Force in Issue No. 96- 18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling Goods or Services" ("EITF 96-18"). Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably determinable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Note 2 – Earnings (Loss) Per Share

The Company reports earnings (loss) per share in accordance with SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted income (loss) per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were 10,053,937 warrants outstanding at September 30, 2007 and 2006.

The following is an analysis of the differences between basic and diluted earnings per common share in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share".

	Three Months Ended September 30,
	2007								2006
	Income			Shares		Per Share			Income		Shares		Per Share
Basic earnings per share
Net income (loss)	$	(1,551	)						$	38,382
Weighed shares outstanding					79,029,783							78,249,348
						$	(0.00	)					$	0.00
Diluted earnings per share					N/A
Net income									$	38,382
Weighed shares outstanding												78,249,348
Effect of dilutive securities
Warrants												1,143,229
												79,392,577
													$	0.00

7

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Nine Months Ended September 30,
	2007						2006
					Per						Per
	Income		Shares		Share		Income		Shares		Share
Basic earnings per share
Net income	$	224,922					$	144,347
Weighed shares outstanding				78,867,344						73,627,051
					$	0.00					$	0.00
Diluted earnings per share
Net income	$	224,922					$	144,347
Weighed shares outstanding				78,867,344						73,627,051
Effect of dilutive securities
Warrants				356,663						2,238,394
				79,224,007						75,865,445
					$	0.00					$	0.00

Note 3 – Due From Officers/Affiliates

Due from officers/affiliates at September 30, 2007 of $114,307 is principally advances made to certain of the Company's executives and to certain companies that are owned or partially owned by individuals who had a membership interest in the Company. These advances are non-interest bearing and are payable upon the demand of the Company. The change in the due from officer/affiliates balance from December 31, 2005 to December 31, 2006 of $113,968 is entirely due to cash collected by the Company from consignment sales for an affiliate of Harry Lebovitz.

As of December 31, 2005, the Company established an allowance for net receivables from Harry Lebovitz and entities controlled by Harry Lebovitz for the full amount of $587,254. During 2006 the Company made $25,800 in cash payments to third parties under terms of existing agreements on behalf of the Lebovitz controlled entities. A provision for loss of those amounts has been provided and correspondingly added to the allowance for net receivables. As of December 31, 2006, affiliates of Mr. Lebovitz owed the Company a total of $613,054 which is fully offset by an allowance for uncollectible accounts. The Company owes an affiliate of Mr. Lebovitz $113,968 related to consignment sales. The Company does believe it has the legal right of offset to apply the cash collected on behalf of one of Mr. Lebovitz’ affiliates against balances due from the same affiliate of Mr. Lebovitz.; however, due to the pending litigation with Mr. Lebovitz, the Company has recorded the liability in the amount of $113,968 which is netted with other related party receivables and payables.

8

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

A summary of the due from officers/affiliates is below:

	Balance							Balance
	12/31/2006			Additions		Subtractions		9/30/2007
Harry Lebovitz controlled/affiliated entities	$	499,086			none		none	$	499,086
Less: Allowance for Losses		(613,054	)		none		none		(613,054	)
Net receivable/(payable)	$	(113,968	)		none		none	$	(113,968	)
Other Affiliated Entities	$	228,275			none		none	$	228,275
Less: Allowance for Losses		-			none		none		-
Net receivable from other affiliates	$	228,275						$	228,275
Net Amount shown on Balance Sheet	$	114,307						$	114,307

The Company believes that the $228,275 due from affiliates is collectible since the amount is due from long-term employees who have employment contracts with the Company. In addition, the Company has determined that the individual employees are capable of repaying these advances.

Note 4 – Contract Costs

Contract costs at September 30, 2007 consisted of the following:

Contract cost incurred, including estimated profit	$	13,059,596
Less: amounts billed		(10,953,700	)
	$	2,105,896

Contract costs are grouped by those contracts where contract costs exceed billings and where billings exceed contract costs as follows:

Contract costs in excess of billings	$	2,105,896
Billings in excess of contract costs		-
	$	2,105,896

The United States government has title to the assets related to unbilled amounts on contracts that provide for progress payments, up to the total amount of progress payment outstanding. As of September 30, 2007, the total amount of progress payments outstanding was $172,618. Unbilled amounts are primarily recorded on the percentage of completion method and are recoverable from the customer upon shipment of the product, presentation of billings, or completion of the contract.

9

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 5 – Property and Equipment

The cost of property and equipment at September 30, 2007 consisted of the following:

Machinery and equipment	$	453,878
Test equipment		431,923
Automobiles		54,491
Office equipment		103,882
		1,044,174
Less accumulated depreciation and amortization		(421,186	)
	$	622,988

Depreciation expense for the nine months ended September 30, 2007 and 2006 was $95,735 and $65,296, respectively.

Note 6 – Note Payable, Related Party

During December 2006 the Company borrowed $225,000 from the Hunter Fund an entity controlled by a greater than five percent shareholder of the Company. The note is secured by all of the assets of the Company, not previously given as collateral. The Company paid a placement fee of $22,500 in connection with the note that was amortized over the term of the loan. The note including the principal and interest of $22,500 was repaid in June, 2007.

Note 7 – Notes Payable

Notes payable at September 30, 2007 were as follows:

Note payable to bank, collateralized by automobile, interest at 8.5% per annum, monthly principal and interest of $446, note due January 2010.		11,300
Less: current portion		(4,569	)
	$	6,731

Note 8 – Line of Credit

In August 2007, the Company entered into a financing agreement with a private equity firm which allows the Company to borrow a maximum of $2,000,000 to finance certain purchase orders. The term of the agreement is two years. The obligations are secured by a guarantee of the Company and a grant of a first priority security interest in the parts and supplies from the orders and all finished goods with respect to the purchase orders. The interest rate charged on any outstanding advances is 2% per month and 3% per annum on any unused portion of the line of credit. The loan agreement also contains certain covenants including not changing the corporate structure of the Company and not incurring any liens upon any collateral of the debtor other than those permitted by the agreement. If the Company defaults on the line of credit and remains in default for sixty days, the private equity firm has the right to switch the borrowed amount to a 3 year, 15%, interest bearing, convertible debenture. At September 30, 2007, the Company had $18,723 outstanding under this agreement which relate to interest and fees associated with the agreement. As of September 30, 2007 the Company has not received any advances associated with the agreement other than $17,500 advanced to pay for half of the $35,000 administration fee and $1,223 advanced to pay for interest.

10

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As an inducement to the lender, the Company issued 500,000 shares of its common stock valued at $55,000, and paid an administration fee of $35,000 to the lender. Those amounts plus additional legal fees of $1,584 were charged to deferred financing costs and are being amortized over the term of the financing agreement. At September 30, 2007 the unamortized portion of deferred financing costs totalled $87,768, of which $45,792 is current. and $41,976 is long-term.

Note 9 – Due to Factor

The Company has an agreement with Wells Fargo Business Credit Services (f/k/a Commerce Funding Corporation) ("Wells") for the financing of its accounts receivable. The interest rate on this financing agreement is prime plus 1% (8.75% at September 30, 2007). The maximum amount to be advanced under this agreement is $1 million. Wells has agreed to loan up to 85% of qualifying receivables. The qualifying receivables are sold to Wells "non recourse" unless an event of default exists under the agreement in which case the qualifying receivable is sold with "recourse". At September 30, 2007, the Company had $61,557 outstanding under this agreement.

Note 10 – Stockholders’ Equity

Issuance of Common Stock

In connection with the financing agreement on August 27, 2007, the Company issued 500,000 restricted shares of the Company’s Common Stock at $0.11 per share. The shares are subject to piggyback registration rights. The shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. The certificate evidencing the shares bears a restricted legend.

Repurchase of Common Stock

Effective June 1, 2005, the Company entered into a Separation Agreement by and between the Company, Hill Aerospace & Design, LLC (“Hill”), Logistical and Mr. Harry Lebovitz, Hill Industries, Inc. (“Hill Inc.”) and Hill Industries, LLC (“Hill LLC”). Hill Inc. and Hill LLC are entities owned and controlled by Mr. Lebovitz. Pursuant to the terms of the Separation Agreement, Mr. Lebovitz resigned effective immediately from the Board of Directors of the Company and effective July 1, 2005 he no longer served in any management or service role at the Company or its subsidiaries, Hill and Logistical.

In addition, the Company agreed to purchase from Mr. Lebovitz, or Hill Inc. or Hill LLC (at the discretion of the Company) shares of common stock of the Company owned by such persons at a price per share of $0.25 (the “Purchase Price”), at the rate of $25,000 per month for a period of twelve months commencing on June 15, 2005. The aggregate purchases were not to exceed $300,000 over a twelve-month period, resulting in the Company acquiring up to 1,200,000 shares of common stock under the Agreement. Under certain conditions set forth in the Agreement, the Company could cease such purchases and would have no obligation to resume them. During the nine months ended September 30, 2006, the Company repurchased a total of 400,000 shares for $100,000. The Company ceased purchasing the stock after Harry Lebovitz filed the lawsuit against the Company in April 2006.

11

LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 11 – Commitments and Contingencies

Lease

In May 2007, the Company extended the lease for its office building in Chatsworth, California for an additional year. Base rent for the period June 1, 2007 to May 31, 2008 will be $11,680 per month.

Litigation

The Company had been in litigation with Triumph Components-Arizona, Inc. ("Triumph") for approximately three years, where on July 20, 2006, the Company and Triumph entered into a settlement agreement dated as of July 18, 2006 pursuant to which the parties agreed to settle their disputes. Under the settlement agreement, the Company agreed to pay an aggregate of $950,000 to Triumph in monthly installments ranging from $39,000 to $65,000 from August 2006 to March 2008. If the Company accelerates these payments it will be entitled to discount the amount paid to Triumph by up to $50,000. The remaining unpaid balance of $264,000 is reported as Accrued Triumph settlement obligation in the accompanying consolidated balance sheet. Triumph has a security interest in virtually all of the Company's assets that have not been previously encumbered by other UCC-1 Financing Statements.

On March 14, 2006, the Company canceled a consignment agreement with Hill Inc. On April 11, 2006, Mr. Lebovitz filed a lawsuit against Mr. Bruce Littell, the Company, Logistical and Hill claiming among other things, that (1) Mr. Lebovitz was mentally unfit to sign a Separation Agreement; (2) the Company failed to remit amounts due under a consignment agreement with Hill Inc.; and (3) the Company failed to provide an accounting for amounts that Mr. Lebovitz loaned to Logistical. Mr. Lebovitz was seeking compensatory and punitive damages as well as attorney fees. The Company believes that such claims are without merit and plans to vigorously defend itself against such claims.

The Company filed a cross-complaint against Harry Lebovitz, Hill Inc, and other related entities, and sought damages for breach of fiduciary duty, breach of contract, fraud and other causes of action. On March 22, 2007, the complaint and the cross-complaint were dismissed without prejudice. On or about June 18, 2007, Mr. Lebovitz re-filed his complaint. The company has been served in this action and has filed a demurrer, challenging the legal sufficiency of the complaint. The hearing for the demurrer is set for November 20, 2007.

On June 30, 2006 the Company was forcefully evicted from its leased Eton facility and the property turned over to Mr. Lebovitz. In July 2006, the Company filed litigation against the landlord for alleged wrongful eviction and damages. On February 6, 2007, the landlord filed a cross-complaint for equitable indemnity and contribution against the Company.The company is set for trial on April 14, 2008.

On December 26, 2006, the Company filed an action against Hill, Inc., Hill Aviation Worldwide, LLC, Mr. Lebovitz and others for the non-payment of a promissory note previously held in the name of National Loan Investors (“NLI”) that was purchased by the Company in December 2006. In January 2007, the court issued a temporary restraining order precluding the defendants from transferring any inventory that would be subject to various security agreements securing payment under the promissory note. On June 21, 2007, the court denied the Company’s preliminary injunction without prejudice. The Company re-filed its complaint in July 2007. On September 20, 2007 the court issued a Right to Attach Order and Order for Issuance of Writ of Attachment in favor of the Company. The case is set for trial April 28, 2008.

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LOGISTICAL SUPPORT, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In addition to the foregoing, the Company in the ordinary course of business is generally subject to claims, complaints, and legal actions. At September 30, 2007, management believes that the Company is not a party to any action, except as discussed above, that would have a material impact on its financial condition, operations, or cash flows.

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Item 2.Management's Discussion and Analysis or Plan of Operations

General

The following discussion of our financial condition and results of operations should be read in conjunction with (1) our unaudited interim consolidated financial statements and their explanatory notes included as part of this quarterly report, and (2) our audited annual consolidated financial statements and explanatory notes for the year ended December 31, 2006 as disclosed in our annual report on form 10-KSB for that year as filed with the SEC, as it may be amended. The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.

The following information specifies certain forward-looking statements. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may," "shall," "could," "expect," "estimate," "anticipate," "predict," "probable," "possible," "should," "continue," or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by the company on the basis of assumptions considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representations, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry and other circumstances. As a result, the identification and interpretation of data and other information, their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results and accordingly, no opinion is expressed on the achievability of those forward-looking statements

OVERVIEW

Our acquisition in May 2004 was treated as a reverse acquisition with the effect of Logistical Support, LLC and Hill Aerospace & Defense, LLC (“Hill”) being treated as the acquiring party for accounting purposes and the acquisition being treated as a recapitalization. Hill Aerospace & Defense, LLC was merged into Logistical Support, LLC on March 31, 2006.

Our primary customer is the United States Government, for whom we are an aerospace and defense contractor. Approximately 97% of our revenue is derived from these contracts.

Our ability to generate revenue and profit is dependent upon our ability to obtain the contract award and to accurately estimate our costs. Since our contracts generally do not provide for progress payments, there is a significant delay between the time we commence work on a project, and receive payment. Our modest working capital and the government's payment policies make it difficult for us to operate profitably.

During 2003, we had a dispute with Triumph, one of our contractors. As a result of the problems with Triumph, we incurred substantial legal fees, unanticipated costs in reworking of parts as well as delays in delivery. In addition to the costs we incurred, our performance record with the United States Government was affected.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Use of Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment of long-lived assets, estimated profits on long-term contracts, revenue recognition and allowance for doubtful accounts. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.

Revenue Recognition

Sales under long-term government contracts are recorded under the percentage of completion method. Contract sales and contract costs of sales are recorded as contract work is performed based on the percentage that incurred costs bear to estimated total costs utilizing our estimates of costs. Cost estimates include direct and indirect costs such as labor, materials and factory overhead. Since many contracts extend over a long period of time, revisions in cost and contract value estimates during the progress of work have the effect of adjusting earnings applicable to performance in prior periods in the current period. When the current contract estimate indicates a loss, provision is made for the total anticipated loss in the current period.

Contract Costs

For each of our contracts we determine our costs and our estimated profit. Estimated profits are based on our historical experience fulfilling similar contracts, expected cost of materials and labor, and an allocation of our estimated overhead. Most of our government contracts do not provide for progress payments. As a result, we have no billing for those contracts until the acceptance and delivery of the finished products and we have significant amount shown on our balance sheet as costs and estimated profit in excess of billings. Although reflected as a current asset, there may be a considerable delay between the time the costs are incurred and the actual billing. To a significantly lesser extent, we have contracts that do provide for interim payments. To the extent that the payments exceed our costs and estimated profit, that amount is reflected as a current liability. The actual results could differ significantly from our estimates and these differences could be material to our financial statements. We account for the change in estimate in the period of change, so that the balance sheet at the end of the period of change and the accounting for revenue recognition in subsequent periods are as they would have been if the revised estimate had been the original estimate.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006

Our revenue for the three months ended September 30, 2007 was $1,291,560 a decrease of $255,790 or 16.5% from $1,547,350 for the three months ended September 30, 2006. The reduction in revenue is primarily due to the recognition of additional costs on two contracts during that same period.

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Our cost of sales for the three months ended September 30, 2007 decreased by $370,143 or 30.5% from $1,212,667 for the three months ended September 30, 2006 to $842,524 for the three months ended September 30, 2007. Our gross margin for the three months ended September 30, 2007 was 34.8% compared to 21.6% for the three months ended September 30, 2006. The increase in the gross margin is due to progress on multiple overhaul contracts which generally have higher gross margin. On the contrary, for year 2006 we recognized additional losses on two contracts, and therefore had a lower gross margin in 2006.

General and administrative expenses for the three months ended September 30, 2007 increased by $147,540 or 64.3%, from $229,311 for the three months ended September 30, 2006 to $376,851 for the three months ended September 30, 2007. The increase is due to higher professional fees related to the litigation with Mr. Lebovitz, reclassification of operations manager from direct overhead, the addition of one engineer, increased rent and the use of outside processing.

Sales and marketing expenses for the three months ended September 30, 2007 decreased by $4,098 or 8.8%, from $46,586 for the three months ended September 30, 2006 to $42,488 for the three months ended September 30, 2007. The decrease is not significant.

Other income for the three months ended September 30, 2007 was $171, a decrease of $935 or 84.5%, from $1,106 for the three months ended September 30, 2006. The decrease is not significant.

Interest expense for the three months ended September 30, 2007 was $8,068 a decrease of $4,122 or 33.8%, from $12,190 for the three months ended September 30, 2006. The decrease is due to not accruing interest on a related party debt in 2007 as it was paid in full.

Other expense for the three months ended September 30, 2007 was $23,351, an increase of $14,031 or 150.0% from $9,320 for the three months ended September 30, 2006. The increase is due to finance charges on financed receivables.

Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006

Our revenue for the nine months ended September 30, 2007 was $5,231,797 an increase of $358,235 or 7.4% from $4,873,562 for the nine months ended September 30, 2006. The increase in revenue is primarily due to completion of two major contracts as well as work performed on several overhaul contracts.

Our cost of sales for the nine months ended September 30, 2007 increased by $121,190 or 3.3% from $3,720,755 for the nine months ended September 30, 2006 to $3,841,945 for the nine months ended September 30, 2007. Our gross margin for the nine months ended September 30, 2007 was 26.6% compared to 23.7% for the nine months ended September 30, 2006. The increase in the gross margin is due to a revision in estimated costs principally related to two contracts in year 2006.

General and administrative expenses for the nine months ended September 30, 2007 increased by $130,030 or 17.0%, from $764,165 for the nine months ended September 30, 2006 to $894,195 for the nine months ended September 30, 2007. The increase is due to higher professional fees related to the litigation with Mr. Lebovitz, reclassification of operations manager from direct overhead, the addition of one engineer, increased rent and the use of outside services.

Sales and marketing expenses for the nine months ended September 30, 2007 decreased by $16,542 or 10.4%, from $158,819 for the nine months ended September 30, 2006 to $142,277 for the nine months ended September 30, 2007. The decrease is due to the termination of an employee in the marketing department during 2006.

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Other income for the nine months ended September 30, 2007 was $6,195, a decrease of $16,870 or 73.1%, from $23,065 for the nine months ended September 30, 2006. The decrease is principally due to the write off of a note payable in 2006.

Interest expense for the nine months ended September 30, 2007 was $37,396 a decrease of $1,919 or 4.8%, from $39,315 for the nine months ended September 30, 2006. The decrease is due to to the payoff of the NLI loan.

Other expense for the nine months ended September 30, 2007 was $97,257, an increase of $53,831 or 124.0%, from $43,426 for the nine months ended September 30, 2006. The increase is due to finance charges on financed receivables.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2007, we had working capital of $1,196,241, as compared to $1,162,477 at December 31, 2006. We had cash and cash equivalents of $38,326 at September 30, 2007 as compared to cash and cash equivalents of $484,414 at December 31, 2006. As of September 30, 2007, we have net contract costs and estimated earnings of $2,105,896 that we expect to issue invoices for within the next twelve months, therefore we have classified all these amounts as current assets. We have financed our operations by financing our accounts receivables with a third party lender, converting accounts payable into notes payable and increasing the length of time that accounts payable are relieved.

During the nine months ended September 30, 2007, our cash flow from operating activities provided $71,640 while investing and financing activities used cash of, $145,827 and $371,901, respectively. The cash provided by operating activities was principally a result of our net income, increased by a reduction of accounts receivables and decreased by a reduction of accrued expenses and the accrued Triumph settlement obligation. Cash used in investing activities was a result of the purchase of property and equipment. Cash used in financing activities was a result of payments on our factoring line, capital leases, notes payable and note payable - related party.

In August 2007, we entered into a financing agreement with a private equity firm which allows us to borrow a maximum of $2,000,000 to finance certain purchase orders. The term of the agreement is two years. The obligations are secured by our guarantee and a grant of a first priority security interest in the parts and supplies from the orders and all finished goods with respect to the purchase orders. The interest rate charged on any outstanding advances is 2% per month and 3% per annum on any unused portion of the line of credit. The loan agreement also contains certain covenants including not changing our corporate structure and not incurring any liens upon any collateral of the debtor other than those permitted by the agreement. If we were to default on the line of credit and the default was to remain for sixty days, the private equity firm has the right to switch the borrowed amount to a 3 year, 15%, interest bearing, convertible debenture. At September 30, 2007, we had $18,723 outstanding under this agreement which relate to interest and fees associated with the agreement. As of September 30, 2007 we have not received any advances associated with the agreement other than $17,500 advanced to pay for half of the $35,000 administration fee and $1,223 advanced to pay for interest.

As an inducement to the lender, we issued 500,000 shares of our common stock valued at $55,000, and paid an administration fee of $35,000 to the lender. Those amounts plus additional legal fees of $1,584 were charged to deferred financing costs and are being amortized over the term of the financing agreement. At September 30, 2007 the unamortized portion of deferred financing costs totalled $87,768, of which $45,792 is current. and $41,976 is long-term.

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We have an accounts receivable financing facility with Wells Fargo (Wells) formerly known as Commerce Funding Corporation. The interest rate is prime plus 1% (8.75% at September 30, 2007) and the maximum amount to be advanced under this agreement is $1 million. Wells has agreed to lend up to 85% of qualifying receivables. The qualifying receivables are sold to Wells "non recourse" unless an event of default exists under the agreement in which case the qualifying receivable is sold with "recourse". There was $61,557 outstanding under this financing facility at September 30, 2007.

Our ability to generate cash flow from our business is dependent upon a number of factors, including our ability to receive contract awards and to estimate accurately our costs. Because of the government's payment policies and the extended period of time between the commencement of work on a contract and our receipt of payment, we believe that our ability to grow is dependent upon obtaining funding, either through the sale of our securities or a credit facility that is not based on accounts receivable. To the extent that we receive more awards, we will require additional funding to finance the performance of these contracts. Our thin trading market and our stock price may make it difficult to obtain capital except on terms that are highly dilutive to our stockholders. Further, during the past year, we have changed our estimates on our contract costs, largely because of the problems we encountered with Triumph. We cannot assure you that we will not have to change our estimates on other contracts.

Cash on Hand

We believe that the current cash on hand along with cash expected to be generated from our operations will be sufficient to fund our operations for the next twelve months. Our cash balance in 2007 and beyond will depend on our 2007 deliveries, the number of new government contracts and our ability to raise additional capital through debt or equity financings, or financing of our receivables. If we are able to obtain sufficient contracts to generate revenue at least equal to the amounts generated in the prior twelve months, and if we are able to raise capital through debt or equity financings, we should generate enough cash to maintain our operations beyond 2007. As we obtain new contracts our working capital needs increase and we will need to find ways to finance new contracts through raising additional equity or debt capital or both. If we are able to raise additional equity capital our existing shareholders will be diluted.

Seasonality and Quarterly Results

Our results of operation are not affected by seasonal influence or quarterly fluctuations.

Inflation

Our results of operation are not materially affected by inflation. From time to time, we may experience a reduction in profits on specific contracts if such contracts are delayed in performance and as a result the costs of acquiring parts or services from subcontractors to meet delivery requirements on overdue or extended contracts increases due to inflation. Because of an increase in worldwide demand there has been a significant increase in material costs which could affect our performance on existing and future contracts.

Item 3.Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, our chief executive officer and chief financial officer (who is the same individual) evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a - 15(e) of the Exchange Act). Based on his evaluation, the chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information that is required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the required time periods.

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Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II.OTHER INFORMATION

Item 1.Legal Proceedings

From time to time, we are subject to legal proceedings and claims in the ordinary course of business.

The Company had been in litigation with Triumph Components-Arizona, Inc. ("Triumph") for approximately three years, whereon July 20, 2006, the Company and Triumph entered into a settlement agreement dated as of July 18, 2006 pursuant to which the parties agreed to settle their disputes. Under the settlement agreement, the Company agreed to pay an aggregate of $950,000 to Triumph in monthly installments ranging from $39,000 to $65,000 from August 2006 to March 2008. If the Company accelerates these payments it will be entitled to discount the amount paid to Triumph by up to $50,000. The remaining unpaid balance of $264,000 is reported as Accrued Triumph settlement obligation in the accompanying consolidated balance sheet. In connection with the settlement agreement, Triumph has a security interest in virtually all of the Company's assets that have not been previously encumbered by other UCC-1 Financing Statements.

On March 14, 2006, the Company canceled a consignment agreement with Hill Inc. On April 11, 2006, Mr. Lebovitz filed a lawsuit against Mr. Bruce Littell, the Company, Logistical and Hill claiming among other things, that (1) Mr. Lebovitz was mentally unfit to sign a Separation Agreement; (2) the Company failed to remit amounts due under a consignment agreement with Hill Inc.; and (3) the Company failed to provide an accounting for amounts that Mr. Lebovitz loaned to Logistical. Mr. Lebovitz was seeking compensatory and punitive damages as well as attorney fees. The Company believes that such claims are without merit and plans to vigorously defend itself against such claims.

The Company filed a cross-complaint against Harry Lebovitz, Hill Inc, and other related entities, and sought damages for breach of fiduciary duty, breach of contract, fraud and other causes of action. On March 22, 2007, the complaint and the cross-complaint were dismissed without prejudice. On or about June 18, 2007, Mr. Lebovitz re-filed his complaint. The company has been served in this action and has filed a demurrer, challenging the legal sufficiency of the complaint. The hearing for the demurrer is set for November 20, 2007.

On June 30, 2006 the Company was forcefully evicted from its leased Eton facility and the property turned over to Mr. Lebovitz. In July 2006, the Company filed litigation against the landlord for alleged wrongful eviction and damages. On February 6, 2007, the landlord filed a cross-complaint for equitable indemnity and contribution against the Company.The company is set for trial on April 14, 2008.

On December 26, 2006, the Company filed an action against Hill, Inc., Hill Aviation Worldwide, LLC, Mr. Lebovitz and others for the non-payment of a promissory note previously held in the name of National Loan Investors (“NLI”) that was purchased by the Company in December 2006. In January 2007, the court issued a temporary restraining order precluding the defendants from transferring any inventory that would be subject to various security agreements securing payment under the promissory note. On June 21, 2007, the court denied the Company’s preliminary injunction without prejudice. The Company re-filed its complaint in July 2007. On September 20, 2007 the court issued a Right to Attach Order and Order for Issuance of Writ of Attachment in favor of the Company. The case is set for trial April 28, 2008.

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

None

Item 3.Defaults Upon Senior Securities

None.

Item 4.Submission of Matters to a Vote of Security Holders

Not applicable

Item 5.Other Information

Not applicable

Item 6.Exhibits

(a) Exhibits

Exhibit
Number	Description of Exhibit
31.	Certification of Chief Executive Officer/Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934
32.	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LOGISTICAL SUPPORT, INC.
November 9, 2007	By:	/s/ Bruce Littell
		Bruce Littell
		Chairman, Chief Executive Officer,
		Chief Accounting Officer and Director

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EX-31

Exhibit 31

CERTIFICATIONS

I, Bruce Littell, Chairman and Chief Executive Officer of Logistical Support, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of Logistical Support, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) disclosed in this report any changes in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of small business issuer’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: November 9, 2007	/s/ Bruce Littell
	Bruce Littell
	Chairman and Chief Executive Officer
	(and principal financial and accounting officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Logistical Support, Inc. (the “Company”) on Form 10-QSB for the quarter ending September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 9, 2007	By:	/s/ Bruce Littell
		Bruce Littell
		Chairman and Chief Executive Officer (principal financial and accounting officer)