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 care 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 DonorTM is intended as a comprehensive blood management software application designed to provide for the information system needs of donor centers and hospitals. 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 $10.964 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 France'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 September 30, 2009, eDonor was in use at 91 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 53.5% and 47.3% for the nine month period ended September 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 16.2% and 22% for the nine month periods ended September 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.

Critical Accounting Policies and Estimates

There have been no significant changes in or additions to our critical accounting policies during the three months ended September 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

In June 2009, the Financial Accounting Standards board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") 168 - "The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles," a replacement of SFAS 162. SFAS 168 provides that the FASB Accounting Standards Codification (the "Codification") is the single source of U.S. GAAP in the preparation of financial statements, except for rules and interpretive releases of the SEC under authority of federal securities laws, which are sources of authoritative guidance for SEC registrants. The Codification was not meant to create new accounting and reporting guidance, but rather to simplify user access to all authoritative accounting guidance by reorganizing U.S. GAAP pronouncements into accounting topics within a consistent organizational structure. The Codification supersedes all existing non-SEC accounting and reporting standards and is effective for financial statements issued for interim and annual periods ending after September 15, 2009.

Following SFAS 168, the FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead, it will issue Accounting Standards Updates (ASU's). The FASB will not consider ASU's as authoritative in their own right; rather these updates will serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification. In the description that follows, the Company will provide reference to both the Codification Topic reference and the previously authoritative references, if applicable, in "italics" related to Codification Topics and Subtopics, as appropriate.

(Included in Accounting Standards Codification ASC 805 "Business Combination," previously known as SFAS 141 (revised 2007), "Business Combinations"). 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 non controlling 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.

(Included in Accounting Standards Codification ASC 810 "Consolidation," previously known as FASB 160). In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 ("SFAS 160"). The standard changes the accounting for noncontrolling (minority) interests in consolidated financial statements including the requirements to classify noncontrolling interests as a component of consolidated stockholders' equity, and the elimination of "minority interest" accounting in results of operations with earnings attributable to noncontrolling interests reported as part of consolidated earnings. Additionally, SFAS 160 revises the accounting for both increases and decreases in a parent's controlling ownership interest. SFAS 160 was effective for the Company beginning January 1, 2009. The adoption of SFAS 160 did not have a material impact on the financial statements.

(Included in Accounting Standards Codification ASC 820 "Effective Date of FASB Statement No. 157," previously known as FASB Staff Position ("FSP") SFAS No. 157-2, "Effective Date of FASB Statement No. 157"). 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.

(Included in Accounting Standards Codification ASC 350 previously known as FSP SFAS No. 142- an amendment of FASB Statement No. 142, Goodwill and Other intangible Assets). In April 2008, the FASB issued FSP SFAS No. 142-3, (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 SFAS 141(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.

(Included in Accounting Standards Codification ASC 825 "Disclosures about Fair Value of Financial Instrument" previously known as FSP 107-1 and APB 28-1.) In April 2009, the FASB issued FSP SFAS No. 107-1 ("FSP 107-1") and Accounting Principles Board 28-1 ("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.

(Included in Accounting Standards Codification ASC 855 "Subsequent Events" previously known 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 September 30, 2009 through November 11, 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.

Comparison of the Results for the Three Months Ended September 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 September 30, 2009 increased by $317 thousand or 5% to $7.257 million from $6.940 million for the three months ended September 30, 2008. Our acquisition of eDonor on August 1, 2008 and Inlog on June 26, 2008, respectively, accounted for $216 thousand of the increase over the prior year's period. Our Wyndgate and PeopleMed revenues increased $101 thousand, or 3% over the three months ended September 30, 2008. The increase in Wyndgate and PeopleMed revenues were primarily due to increased recognition of maintenance and implementation fees partially offset by a decrease in software license sales.

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

                         2009      2008
Maintenance              60.9 %    53.2 %
Consulting services      20.2 %    23.0 %
Software license fees    12.7 %    21.1 %
PeopleMed/other           6.2 %     2.7 %
Total Revenue             100 %     100 %

At September 30, 2009, our sales backlog totaled $8.6 million compared to $6.9 million at September 30, 2008. Backlog represents software and services sold under signed contracts, which have not yet been recognized as revenue. The September 30, 2009 backlog balance included $3.9 million related to contracted software sales and $4.7 million related to implementation, training, validation and other services. At September 30, 2008, our backlog included $2.6 million related to contracted software sales and $4.3 million related to implementation, training, validation and other services. The increase in backlog is related to an increase of approximately $3.4 million related to our Inlog and eDonor acquisitions. This increase was offset by a reduction in backlog at our Wyndgate division and PeopleMed subsidiary of approximately $1.7 million. Wyndgate's reduction in backlog directly relates to reduced new system sales when comparing the first nine months of 2009 with the comparable period in 2008. We believe this reduction in new system sales is directly related to the impact of the recession in the United States.

Cost of revenue. Cost of revenues increased $53 thousand or 2% to $2.812 million for the three months ended September 30, 2009 from $2.759 million for the three months ended September 30, 2008. The eDonor and Inlog acquisitions accounted for $147 thousand of the increase. eDonor accounted for $107 thousand of the increase which is primarily due to the business operating under Global Med Technologies for three months in third quarter of 2009 versus two months in third quarter of 2008. The increase from acquisitions was partially offset by a $94 thousand, or 6%, decrease in cost of revenues from our Wyndgate business unit, primarily due to a decline in third party software sales, travel and employee benefit 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 as well as an increase in direct labor.

General and administrative. General and administrative expenses increased $175 thousand to $1.857 million for the three months ended September 30, 2009 compared to $1.682 million for the three months ended September 30, 2008. Expense at our acquisitions decreased by $24 thousand. This decrease was offset by a $ 25 thousand, or 2%, increase in the expenses of our Wyndgate division. The increase in Wyndgate costs was primarily due to an increase in the bonus accrual partially offset by a decrease in professional service fees.

Legal accrual. On September 23, 2002, Global Med and PeopleMed.com, Inc. ("PeopleMed") filed a complaint against Donnie L. Jackson, Jr. ("Jackson") in a lawsuit entitled Global Med Technologies, Inc. v. Donnie L. Jackson, Jr., et al., El Dorado Superior Court Case No. PC 20020576 (the "Lawsuit"). The Lawsuit has been settled and claims have been released. Prior to the notification of this settlement, the Company had expenses and accrued $1.004 million in legal expenses related to the uncertainty associated with the Lawsuit. The Company reversed the $1.004 million accrual during the three months ended September 30, 2009. There was no such comparable expense in the three months ended September 30, 2008. See the section "Legal Proceedings" for further discussion.

Sales and marketing. Sales and marketing expenses decreased $278 thousand, or 26% to $777 thousand for the three months ended September 30, 2009 compared to $1.055 million for the three months ended September 30, 2008. Our acquisitions of eDonor and Inlog accounted for $74 thousand of the increase which was offset by a $352 thousand, or 51%, decrease in the sales and marketing expenses of our Wyndgate division. This decline was primarily associated with a decrease in commission and marketing expenses. During the three months ended September 30, 2009, the Company modified an agreement with one of its channel partners whereby the Company's outstanding commission obligation to that channel partner in the amount of $196 thousand were eliminated. The $196 thousand in commissions had been expensed as of June 30, 2009 in accordance with the terms of the original agreement. In accordance with the terms of the contract modification, the $196 thousand in accrued charges was reversed during the three months ended September 30, 2009 reducing commissions expense by the same amount.

Research and development. Research and development expenses increased $105 thousand or 9% to $1.319 million for the three months ended September 30, 2009 compared to $1.214 thousand for the three months ended September 30, 2008. The acquisition of Inlog and eDonor accounted for $126 thousand of the increase. In addition, costs increased as a result of the reduction in capitalized software development costs of $57 thousand when compared with the comparable period in 2008. This increase was partially offset by a decrease in contract labor costs of $74 thousand.

Depreciation and amortization. Depreciation and amortization of software and intangibles costs for the three months ended September 30, 2009 and 2008 were $372 thousand and $348 thousand, respectively, an increase of $24 thousand. Acquisitions accounted for $30 thousand of the increase which primarily represented amortization of purchased software and intangibles. This was offset by a decrease in depreciation and amortization by our Wyndgate division of $6 thousand.

Income from operations. Our income from operations for the three months ended September 30, 2009 was $1.124 million compared to a loss from operations of $118 thousand for the three months ended September 30, 2008. Our 2008 acquisitions produced a $137 thousand loss from operations, while our Wyndgate division and PeopleMed subsidiary produced operating income of $1.261 million for the three months ended September 30, 2009, an increase of $1.351 million 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 6% and operating expenses by 7% exclusive of the legal accrual. In addition, the Company reversed the expense related to its $1.004 million accrual related to the Legal accrual. See the section "Legal Proceedings" for further discussion. The net operating loss from our acquired companies of $137 thousand included . . .