XRN

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended May 31, 2014, for Global Medical REIT Inc. (formerly Scoop Media, Inc.). The Company is a smaller reporting company incorporated in Maryland, having re-domesticated in January 2014 to pursue a strategy of acquiring healthcare real estate assets. As of the reporting date, the Company was in the exploration stage with no operating revenue, though it had entered into agreements to acquire a 56-bed long-term acute care hospital in Omaha, Nebraska.

Key Financial Metrics

Note: The filing text does not provide a clear value for operating margins or free cash flow as the Company had no revenue and was in the exploration stage.

Material Changes vs. Prior Period

• Asset Composition: Total assets increased from $3,519 (August 31, 2013) to $7,775,082 (May 31, 2014), driven entirely by $7,775,082 in escrow deposits for property acquisition.
• Liabilities: Total liabilities increased from $19,424 to $7,819,244, primarily due to a $7,776,680 non-interest-bearing note payable to the majority shareholder, Heng Fai Enterprises, Ltd.
• Operating Expenses: For the nine months ended May 31, 2014, operating expenses decreased by $9,467 compared to the prior year period, attributed to reduced professional fees. However, for the three-month period, expenses increased slightly by $373 due to re-domestication and SEC reporting costs.
• Cash Flow: Net cash used in investing activities was $7,775,082 (compared to $0 in the prior year) due to escrow deposits. Net cash provided by financing activities was $7,776,680 (compared to $25,000 in the prior year) from related party debt.

Guidance, Outlook, and Subsequent Events

The Company does not provide specific financial guidance or forecasts in this filing. However, significant subsequent events occurred after the reporting period:

• Property Acquisition: On June 5, 2014, the Company completed the purchase of the 56-bed acute care hospital facility for approximately $21.7 million.
• Debt Financing: On June 5, 2014, the Company secured a $15,060,000 term loan from Capital One, National Association. The loan bears interest at 4.91% per annum, matures on June 5, 2017, and requires a fixed charge coverage ratio of 1.25 to 1.0 and annual EBITDA of at least $2,800,000.
• Debt Conversion: On July 17, 2014, $7,468,142 of the related party loan was converted into an 8% Convertible Debenture due June 31, 2015, with a conversion price of $0.03187 per share.
• Dividend: A one-time dividend of $0.000213 per share was declared on July 17, 2014.
• Risks: The Company's continued operations depend on obtaining additional working capital. Failure to secure financing could materially adversely affect its financial viability. The new loan agreement contains strict covenants and events of default, including acceleration of debt upon non-payment or covenant violation.

Investor Verification Checklist

• Verify the status of the $15.06 million Capital One loan and compliance with the 1.25 fixed charge coverage ratio and $2.8 million EBITDA covenants.
• Confirm the operational status and lease terms of the newly acquired 56-bed acute care hospital in Omaha, Nebraska.
• Assess the dilution impact of the Convertible Debenture ($7.47 million principal) and the potential issuance of 92 million shares upon conversion of other debentures.
• Review the Company's ability to generate sufficient cash flow to service the new debt obligations, given the historical lack of operating revenue.
• Monitor the relationship and funding terms with the majority shareholder, Heng Fai Enterprises, Ltd., regarding the remaining unconverted debt and future capital needs.