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.

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.

Global Med's acquisition strategy is to purchase companies that sell software products that complement our current product mix, particularly companies focused on critical health management. We may use either equity or debt financing or our cash to make acquisitions.

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 acquired our Inlog S.A. subsidiary on June 26, 2008 for $10.964 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 June 30, 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 50.3% and 41.7% for the six month period ended June 30, 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 17.7% and 30.1% for the six month periods ended June 30, 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.

Cost of revenue includes the employee costs and direct expenses of the departments that provide maintenance, implementation, consulting and other value added support services. It also includes third-party software costs when third-party software is bundled with our software solutions. General and administrative expenses include the employee costs and the direct expenses of our executive and support functions, plus other general corporate expenses such as accounting and legal fees and corporate governance costs. Selling and marketing expenses include employee costs, commissions, the direct expenses of our sales and marketing department, plus advertising, marketing and trade show expenses. Research and development includes the employee and direct costs of our research and development department that are incurred prior to new products achieving technological feasibility. Costs incurred after a new product reaches technological feasibility are capitalized as software development costs and amortized over the life of the product. Software amortization is included in depreciation and amortization.

There have been no significant changes in or additions to our critical accounting policies during the three months ended June 30, 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 Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations ("SFAS 141(R)"), SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141(R) became effective for the Company on January 1, 2009. The adoption of SFAS 141(R) did not have a material impact on the Company's financial position, cash flows or results of operations.

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 142-3. In April 2008, the FASB issued FSP SFAS No. 142-3, Determination of the Useful Life of Intangible Assets (FSP SFAS 142-3), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other intangible Assets (SFAS 142). The intent of FSP SFAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS141(R) and other U.S. generally accepted accounting principles. FPS SFAS 142-3 requires an entity to disclose information for a recognized intangible asset that enables users of the financial statements to assess the extent to which the expected future cash flows associated with the asset are affected by the entity's intent and/or ability to renew or extend the arrangement. FSP SFAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company adopted FSP SFAS 142-3 on January 1, 2009. The adoption of FSP SFAS 142-3 did not have a material impact on the Company's financial position or results of operations.

SFAS 165. In May 2009, the FASB issued SFAS No. 165, Subsequent Events ("SFAS 165")which defines further disclosure requirements for events which occur after the balance sheet date but before financial statements are issued. SFAS 165 was effective for the Company beginning on April 1, 2009. In accordance with SFAS 165, the Company's management has evaluated events subsequent to June 30, 2009 through August 13, 2009 which is the issuance date of this report. There has been no material event noted in this period which would either impact the results reflected in this report or the Company's results going forward.

SFAS 168. In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standard Codification™ and the Hierarchy of Generally Accepted Accounting Principles ("SFAS 168"), which establishes the FASB Accounting Standards Codification™ ("Codification") as the single source of authoritative accounting principles in the United States. SFAS 168 is effective for the Company's quarter ending September 30, 2009 and is not intended to modify or alter prior authoritative guidance through the Codification. As such, it is not expected to have a material impact on the Company's consolidated financial statements.

Comparison of the Results for the Three Months Ended June 30, 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 June 30, 2009 increased by $3.214 million or 66% to $8.059 million from $4.845 million for the three months ended June 30, 2008. Our acquisitions of Inlog and eDonor on June 26, 2008 and August 1, 2008, respectively, accounted for $3.473 million of the increase. Our Wyndgate and PeopleMed revenues decreased $259 thousand, or 5% over the three months ended June 30, 2008.

The table below shows the percentage composition of our revenues for the three months ended June 30:

                         2009      2008
Maintenance              51.9 %    41.8 %
Consulting services      22.1 %    28.9 %
Software license fees    19.0 %    24.6 %
PeopleMed/other           7.0 %     4.7 %
Total revenue             100 %     100 %

At June 30, 2009, our sales backlog totaled $8.827 million compared to $5.534 million at June 30, 2008. Backlog represents software and services sold under signed contracts, which have not yet been recognized as revenue. The June 30, 2009 backlog balance included $3.801 million related to contracted software sales and $5.026 million related to implementation, training, validation and other services. At June 30, 2008, our backlog included $1.790 million related to contracted software sales and $3.744 million related to implementation, training, validation and other services.

Gross profit. Gross profit increased $1.907 million or 64% to $4.892 million for the three months ended June 30, 2009 from $2.985 million for the three months ended June 30, 2008. 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 60.7% for the three months ended June 30, 2009 from 61.6% for the three months ended June 30, 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 $374 thousand or 33% to $1.520 million for the three months ended June 30, 2009 compared to $1.146 million for the three months ended June 30, 2008. Acquisitions accounted for $448 thousand of the increase, which was partially offset by a $74 thousand, or 6%, decrease in the expenses of our Wyndgate division. The decrease in Wyndgate costs was primarily due to a decline in travel and employee benefit costs and the elimination of discretionary expenses such as training.

Sales and marketing. Sales and marketing expenses increased $629 thousand, or 94% to $1.300 million for the three months ended June 30, 2009 compared to $671 thousand for the three months ended June 30, 2008. Our acquisitions of Inlog and eDonor accounted for $723 thousand of the increase which was partially offset by a $94 thousand, or 14%, decrease in the sales and marketing expenses of our Wyndgate division. This decline was primarily associated with the timing of promotional and trade show expenses and cost containment measures.

Research and development. Research and development expenses increased $342 thousand or 45% to $1.109 million for the three months ended June 30, 2009 compared to $767 thousand for the three months ended June 30, 2008. The acquisitions of Inlog and eDonor accounted for $663 thousand of the increase. The increase associated with acquisitions was partially offset by a $321 thousand, or 42%, decrease related to our Wyndgate division. This decrease related primarily to the allocation of approximately $146 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, a reduction in contract labor and an increase in capitalized software development costs related to new products.

Depreciation and amortization. Depreciation and amortization of software and intangibles costs for the three months ended June 30, 2009 and 2008 were $342 thousand and $68 thousand, respectively, an increase of $274 thousand. Acquisitions accounted for $277 thousand of the increase which primarily represented amortization of purchased software and intangibles.

Income from operations. Our income from operations for the three months ended June 30, 2009 was $621 thousand compared to $333 thousand for the three months ended June 30, 2008. Our 2008 acquisitions produced a $222 thousand loss from operations, while our Wyndgate division produced operating income of $843 thousand for the three months ended June 30, 2009, an increase of $493 thousand, or 148% over the prior year. The increase in operating income related to our Wyndgate division resulted primarily from cost containment measures that reduced total cost of revenue by 14% and operating expenses by 19%. The net operating loss from our acquired companies of $222 thousand was net of $289 thousand in depreciation and amortization of purchased intangibles.

Interest income. Interest income for the three months ended June 30, 2009 and 2008 was $9 thousand and $25 thousand, respectively.

Interest expense. Interest expense for the three months ended June 30, 2009 and 2008 was $200 thousand and $17 thousand, respectively. The increase in interest expense was related to borrowings associated with the acquisitions of Inlog and eDonor. Interest expense for the three months ended June 30, 2009 includes a total of $66 thousand in non-cash amortization. This expense is comprised of $40 thousand in imputed interest on non-interest bearing obligations to the Inlog sellers and $26 thousand in amortization of debt discounts related to the Company's acquisitions.

Comparison of the Results for the Six Months Ended June 30, 2009 and 2008

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

Revenues for the six months ended June 30, 2009 increased by $6.980 million or 74% to $16.418 million from $9.438 million for the six months ended June 30, 2008. Our acquisitions of Inlog and eDonor on June 26, 2008 and August 1, 2008, respectively, accounted for $7.013 million of the increase. Our Wyndgate revenues decreased $33 thousand, or less than 1% over the six months ended June 30, 2008.

The table below shows the percentage composition of our revenues for the six months ended June 30:

                         2009      2008
Maintenance              50.3 %    41.7 %
Consulting services      26.0 %    24.0 %
Software license fees    17.7 %    30.1 %
PeopleMed/other           6.0 %     4.2 %
Total revenue             100 %     100 %

Cost of revenue. Cost of revenues increased $2.789 million or 82% to $6.207 million for the six months ended June 30, 2009 from $3.418 million for the six months ended June 30, 2008. Acquisitions accounted for $3.063 million of the increase. The increase from acquisitions was partially offset by a $274 thousand, or 8%, decrease in cost of revenues for our Wyndgate division, primarily due to a decline in third party software sales and reductions in travel and employee-related costs. 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 $4.191 million or 70% to $10.211 million for the six months ended June 30, 2009 from $6.020 million for the six months ended June 30, 2008. 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 62.2. % for the six months ended June 30, 2009 from 63.8% for the six months ended June 30, 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 $967 thousand or 47% to $3.032 million for the six months ended June 30, 2009 compared to $2.065 million for the six months ended June 30, 2008. Acquisitions accounted for $878 thousand of the increase. The remaining $89 thousand of the increase, which was associated with our Wyndgate operations, was primarily related to increased legal and accounting expenses of $168 thousand and $144 thousand in employee labor costs, partially offset by the elimination of discretionary expenses such as training.

Research and development. Research and development expenses increased $796 thousand or 53% to $2.304 million for the six months ended June 30, 2009 compared to $1.508 million for the six months ended June 30, 2008. The acquisitions of Inlog and eDonor accounted for $1.407 million of the increase. The increase associated with acquisitions was partially offset by a $611 thousand, or 41%, decrease related to our Wyndgate division. This decrease related primarily to the allocation of approximately $376 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, reduced travel expenses, a reduction in contract labor and an increase in capitalized software development costs related to new products.

Depreciation and amortization. Depreciation and amortization of software and intangibles costs for the six months ended June 30, 2009 and 2008 were $671 thousand and $114 thousand, respectively, an increase of $557 thousand. Acquisitions accounted for $551 thousand of the increase which primarily . . .