Unless otherwise noted, references in this Quarterly Report on Form 10-Q to "Global Med," "the Company," "we,", "our," and "us" refer to Global Med Technologies, Inc. and its subsidiaries. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q, our audited consolidated financial statements and notes thereto for the year ended December 31, 2008, and Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 25, 2009.

Cautionary Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q , including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("1933 Act") and Section 21E of the Securities Exchange Act of 1934, as amended ("1934 Act"), and Global Med intends that such forward-looking statements be subject to the safe harbors for such statements under such sections. Our forward-looking statements include, among other things, the plans and objectives of management for future operations of companies acquired during 2008, our plans and objectives relating to our business strategy, our planned product enhancements and new product development, our planned marketing efforts and the future economic performance of Global Med. These forward-looking statements are (1) identified by the use of terms and phrases such as "believe", "expect", "anticipate", "assume", "will", "should", "could", "intend", "plan", "estimate", "objective", "goal" and other similar words and expressions, and (2) are subject to risks and uncertainties and represent our current expectations or beliefs concerning future events. Global Med cautions that the forward-looking statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. These risks, uncertainties and other factors are described in greater detail in Global Med's Annual Report on Form 10-K. Our forward-looking statements represent estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

General

Global Med is an international medical software company which develops regulated and non-regulated products and services for the healthcare industry. We are a leading provider of blood and laboratory systems and services and our products are deployed in 20 countries and serve over 2,100 transfusion centers, blood banks and laboratories.

Business Strategy

Global Med's goal is to become a global supplier of critical health management information software. We plan to achieve this goal through a combination of organic growth and strategic acquisitions.

Our organic growth strategy for marketing and selling our products and services is two pronged:

1. Direct selling to customers through our internal sales force; and

2. Marketing and selling through Channel Partners that are established in blood donor hospital markets.

In addition to increasing revenues and cash flows through our direct sales efforts and channel partner relationships, we are focused on adding new channel partners and strategic alliances and developing new products and adding enhanced functionality to our existing product mix to attract and maintain customers.

Overview

Global Med designs, develops, markets and supports information management software products for blood banks, hospitals, centralized transfusion centers, laboratories and other health care related facilities.

We sell various core products and their related components through our Wyndgate division: SafeTrace, SafeTrace Tx, and our ElDorado product suite. SafeTrace is used by blood centers and hospitals to track blood donations. SafeTrace Tx is used primarily by hospitals and centralized transfusion services to help insure the quality of blood transfused into patient-recipients. Both products are designed to help the users comply with quality and safety standards of the FDA for the collection and management of blood and blood products. ElDorado Donor is intended as a comprehensive blood management software application designed to provide for the information system needs of blood banks and donor centers. Donor Doc is an electronic history questionnaire that assists in the blood donor screening process.

We acquired our Inlog S.A. subsidiary on June 26, 2008 for $10.9 million in a combination of cash and stock. We are also contingently obligated to pay up to $1.481 million in earn out consideration over the next five years. Inlog has been developing, implementing, and supporting its blood bank and laboratory information management solutions since 1992 and currently supplies over 800 sites in 15 countries with its products. Its product line consists of five primary products: EdgeBlood (for the donor center market), EdgeTrace (for the hospital transfusion market), EdgeLab (a laboratory information system "LIS"), EdgeCell (cellular therapy for tissue banks, stem cell centers and cord blood centers) and SAPA (a regulatory compliance and document management solution). Inlog recently completed the national installation of its EdgeBlood product in France where all of that country's 2.5 million annual blood donations are transacted through EdgeBlood including blood collections, infectious disease testing, component manufacturing and distribution. In addition to France, Inlog has software applications in Germany, Austria, Belgium, Switzerland, Greece and Monaco, among other countries.

Our eDonor™ product, which we acquired on August 1, 2008 with the acquisition of substantially all of the assets of Blueridge Solutions, L.C., for $3.5 million in cash and the issuance of $1.5 million of our common stock, is a web-based donor relationship management system that integrates recruitment, scheduling, retention and fulfillment for blood donation centers of all sizes. As of March 31, 2009, eDonor was in use at 77 sites.

We derive our revenues from the sale of software licenses, annual maintenance fees, implementation fees, consulting fees and other value added support services. Annual maintenance fees represented over 50% of our revenue for the year ended December 31, 2008 and 48.8% and 41.6% for the three month periods ended March 31, 2009 and 2008, respectively. Our maintenance services are generally sold under multi-year agreements. As such, they represent a fairly stable recurring revenue source for us as software maintenance tends to be a nondiscretionary expenditure for our customers. The majority of our software is sold under a perpetual license with a one-time license fee. Our software license fee revenue, which represented 21% of our revenue for the year ended December 31, 2008 and 16.5% and 35.9% for the three month periods ended March 31, 2009 and 2008, respectively, can fluctuate from period to period based on our customers' buying decisions. In addition, our ability to recognize software license fees can be impacted by contract terms and the application of accounting rules for revenue recognition to contracts that include deliverable and non-deliverable software products, service for modification or customization of our software, acceptance criteria and other contingencies. In all cases, we assess whether the service element of our sales arrangement is essential to the functionality of the software or other elements of the arrangement. When software services are considered essential, or the arrangement involves customization or modification of the software, both the license fees and service revenues are recognized under the percentage of completion method based on input measures such as labor days. Currently, this is the standard arrangement for our Inlog subsidiary.

Critical Accounting Policies and Estimates

There have been no significant changes in or additions to our critical accounting policies during the three months ended March 31, 2009, as compared to the previous disclosures in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2008.

Recent Accounting Pronouncements

SFAS 141(R). In December 2007, the FASB issued SFAS No. 141(R), Business Combinations ("SFAS 141(R)"). SFAS 141(R) may have a material impact on the Company as it establishes principles and requirements for how the Company: (1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) requires contingent consideration to be recognized at its fair value on the acquisition date and, for certain arrangements, changes in fair value to be recognized in earnings until settled. SFAS 141(R) also requires acquisition-related transaction and restructuring costs to be expensed rather than treated as part of the cost of the acquisition. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company's adoption of SFAS141(R) on January 1, 2009 had no impact on its financial position, results of operations or cash flows.

SFAS 157. In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS 157"), which defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. SFAS 157 applies under other existing accounting pronouncements that require or permit fair value measurements, as the FASB previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements. Effective January 1, 2008, the Company adopted SFAS 157 as it relates to financial assets and liabilities. The new disclosures required by SFAS 157 are included in Note 7 to the financial statements included in the Quarterly Report on Form 10-Q.

FSP 157-2. In February 2008, the FASB approved FASB Staff Position ("FSP") SFAS No. 157-2, Effective Date of FASB Statement No. 157, ("FSP SFAS 157-2"), which allows companies to elect a one-year delay in applying SFAS 157 to certain fair value measurements, primarily related to nonfinancial instruments. The Company elected the delayed adoption date for the portions of SFAS 157 impacted by FSP SFAS 157-2. The partial adoption of SFAS 157 was prospective and did not have a significant effect on the Company's consolidated financial statements. The Company adopted the deferred portion of SFAS 157, applying its provisions to the nonrecurring fair value measurements of its nonfinancial assets and liabilities, on January 1, 2009, and this did not have a material impact on the Company's financial statements.

FSP 107-1 and APB 28-1. In April 2009, the FASB issued FSP SFAS No. 107-1 and Accounting Principles Board (APB) 28-1, Interim Disclosures about Fair Value of Financial Instruments, which amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments (SFAS 107) and APB Opinion No. 28, Interim Financial Reporting, respectively, to require disclosures about fair value of financial instruments in financial statements, in addition to the annual financial statements as already required by SFAS 107. FSP 107-1 and APB 28-1 will be required for interim periods ending after June 15, 2009. As FSP SFAS 107-1 and APB 28-1 provide only disclosure requirements, the application of this standard will not have a material impact on the Company's results of operations, cash flows or financial position.

Comparison of the Results for the Three Months Ended March 31, 2009 and 2008

Revenues. Revenues are comprised primarily of license fees, maintenance and usage fees, and implementation and consulting services revenues.

Revenues for the three months ended March 31, 2009 increased by $3.766 million or 82.0% to $8.359 million from $4.593 million for the three months ended March 31, 2008. Our acquisitions of Inlog and eDonor on June 26, 2008 and August 1, 2008, respectively, accounted for $3.540 million of the increase. Our Wyndgate and PeopleMed revenues increased $226 thousand, or 4.9% over the three months ended March 31, 2008.

                         2009      2008
Maintenance              48.8 %    41.6 %
Consulting services      31.0 %    18.7 %
Software license fees    16.5 %    35.9 %
PeopleMed/other           3.7 %     3.8 %
Total revenue             100 %     100 %

At March 31, 2009, our sales backlog totaled $8.921 million compared to $5.764 million at March 31, 2008. Backlog represents software and services sold under signed contracts, which have not yet been recognized as revenue. The March 31, 2009 backlog balance included $3.801 million related to contracted software sales and $5.120 million related to implementation, training, validation and other services. At March 31, 2008, our backlog included $2.351 million related to contracted software sales and $3.413 million related to implementation, training, validation and other services.

Cost of revenue. Cost of revenues increased $1.482 million or 95.1% to $3.040 million for the three months ended March 31, 2009 from $1.558 million for the three months ended March 31, 2008. Acquisitions accounted for $1.496 million of the increase. The increase from acquisitions was partially offset by a decrease in cost of revenues from our Wyndgate and PeopleMed business units, primarily due to a decline in third party software sales and other employee-related cost reductions. These cost savings were partially offset by the reallocation of employees from research and development assignments in 2008 to software maintenance and technical support functions in 2009.

Gross profit. Gross profit increased $2.284 million or 75.3% to $5.319 million for the three months ended March 31, 2009 from $3.035 million for the three months ended March 31, 2008 with acquisitions accounting for $2.044 million of the increase. While gross profit for the 2009 period increased over 2008 due to the increase in revenues, our gross profit as a percentage of total revenue declined to 63.6% for the three months ended March 31, 2009 from 66.1% for the three months ended March 31, 2008. The decline in gross margins is mainly attributable to the Inlog acquisition, as Inlog has historically achieved lower gross margins than our Wyndgate division.

General and administrative. General and administrative expenses increased $593 thousand or 64.5% to $1.512 million for the three months ended March 31, 2009 compared to $919 thousand for the three months ended March 31, 2008. Acquisitions accounted for $430 thousand of the increase. The remaining $163 thousand of the increase was primarily related to increased legal and accounting expenses of $155 thousand and $84 thousand in directors' compensation, partially offset by the elimination of discretionary expenses such as training.

Sales and marketing. Sales and marketing expenses increased $522 thousand, or 74.1% to $1.226 million for the three months ended March 31, 2009 compared to $704 thousand for the three months ended March 31, 2008. Our acquisitions of Inlog and eDonor accounted for $777 thousand of the increase, which included the allocation of approximately $148 thousand in international sales and marketing costs that was borne by our Wyndgate division in the prior year's quarter. The increase associated with acquisitions was partially offset by a decline in commissions expense at our Wyndgate division.

Research and development. Research and development expenses increased $454 thousand or 61.2% to $1.195 million for the three months ended March 31, 2009 compared to $741 thousand for the three months ended March 31, 2008. The acquisitions of Inlog and eDonor accounted for $744 thousand of the increase. The increase associated with acquisitions was partially offset by a $290 thousand, or 39.1%, decrease related to our Wyndgate and PeopleMed businesses. This decrease related primarily to the allocation of approximately $230 thousand to cost of revenue resulting from the assignment of employees from research and development assignments in 2008 to maintenance and technical support functions in 2009.

Depreciation and amortization. Depreciation and amortization of software and intangibles costs for the three months ended March 31, 2009 and 2008 were $329 thousand and $46 thousand, respectively. Acquisitions accounted for $274 thousand of the increase which primarily represented amortization of purchased software and intangibles.

Interest income. Interest income for the three months ended March 31, 2009 and 2008 was $8 thousand and $34 thousand, respectively.

Interest expense. Interest expense for the three months ended March 31, 2009 and 2008 was $196 thousand and $4 thousand, respectively. The increase in interest expense was related to borrowings associated with the acquisitions of Inlog and eDonor. Interest expense for 2009 includes $63 thousand in non-cash amortization of imputed interest on non-interest bearing obligations to the Inlog sellers.

Provision for income taxes. Income tax expense for the three months ended March 31, 2009 was $548 thousand, an increase of $253 thousand over the three months ended March 31, 2008. Our effective tax rate for the three months ended March 31, 2009 was 63%, compared to 45% for the three months ended March 31, 2008. The increase in the effective tax rate is principally due to the pre-tax loss incurred by our Inlog subsidiary in France that is not deductible against the pre-tax income of our U.S.-based operations.

Liquidity and Capital Resources

Net cash provided by operations for the three months ended March 31, 2009 was $1.750 million. The primary components of the reconciliation of net income of $321 thousand to net cash in operations included the add back of non-cash charges for depreciation and amortization of $329 thousand, amortization of financing costs of $63 thousand, stock-based compensation of $99 thousand, and a provision for bad debt expense of $18 thousand. Additional cash flow from operations was provided by a decrease in working capital of $920 thousand. The operating cash flows of our Inlog subsidiary are highly seasonal as the majority of its annual maintenance and support fees are billed and collected during the first quarter, while the fourth quarter is characterized by annual cash outflows for taxes and mandated employee-related payments. Consequently, Inlog's cash flows tend to be the highest during the first half of the year and the lowest during the second half of the year. Due to Inlog's significance, our consolidated cash flows from operations are expected to follow this pattern.

Our investing activities resulted in a net cash outflow of $155 thousand for the three months ended March 31, 2009, which was comprised of $86 thousand for the purchase of property and equipment, $38 thousand for capitalized software development costs, and $31 thousand in additional acquisition costs associated with our purchase of Inlog.

Cash used in financing activities for the three months ended March 31, 2009 was $295 thousand, which was comprised of the repayment of long-term debt and capital lease obligations in the amount of $301 thousand, partially offset by proceeds from long-term debt, net of financing costs of $6 thousand. Effective March 19, 2009, we amended our loan agreements with Silicon Valley Bank and Partners for Growth II LLP relating to our revolving line of credit, term loan and subordinated term loan in the aggregate gross amount of $7.5 million. The amendments waived our failure to comply with specified loan covenants for the quarter ended December 31, 2008 and modified the liquidity ratio and free cash flow covenants for the remaining term of the agreements. The amendments increased the annual interest rate by 0.5% on our revolving credit line and term loan. In connection with the amendment with our subordinated lender, we agreed to amend the exercise price of the lender's warrant to $0.72 per share and to pay a one-time cash payment of $30,450 and a waiver fee of $2,500.

As of March 31, 2009, we had cash and cash equivalents of $5.759 million. Based on our sales backlog at March 31, 2009, our recent cost reduction measures and our current projections, we believe that our cash reserves and expected positive cash flow from operations will be adequate to meet our operating needs, capital expenditure requirements and contractual obligations at least through 2009. However, worsening general economic conditions or a prolonged recession could reduce our revenue and cash receipts to a point that they would not be sufficient to meet our operating needs and other obligations. If this were to be the case, we are prepared to take action to further reduce our operating costs or take other measures to increase or maintain our liquidity. While we currently have no plans to raise additional capital, we may need to raise additional capital through future debt or equity financing and there can be no assurances that such capital will be available or available at favorable rates.

Off-Balance Sheet Arrangements

As of March 31, 2009, we had no off-balance sheet arrangements.

Impact of Inflation

We do not anticipate that inflation will materially impact our operating results.