-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ATQkxVn6W2tH+F1Tys8kPSK9DnU0nKja/w7AUw9b13t21+xekLeuP6CgXsyyHHTp SFrvZafXygjJFhJsZVbiJw== 0000801748-97-000005.txt : 19970222 0000801748-97-000005.hdr.sgml : 19970222 ACCESSION NUMBER: 0000801748-97-000005 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19970213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEMACARE CORP /CA/ CENTRAL INDEX KEY: 0000801748 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 953280412 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15223 FILM NUMBER: 97530648 BUSINESS ADDRESS: STREET 1: 4954 VAN NUYS BLVD 2ND FLR CITY: SHERMAN OAKS STATE: CA ZIP: 91403 BUSINESS PHONE: 8189863883 MAIL ADDRESS: STREET 1: 4954 VAN NUYS BLVD, 2ND FL. CITY: SHERMAN STATE: CA ZIP: 91403 10-Q/A 1 ============================================================================= SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A-2 /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission File Number 0-15223 HEMACARE CORPORATION (Exact name of registrant as specified in its charter) State or other jurisdiction of I.R.S. Employer I.D. incorporation or organization: California Number: 95-3280412 ---------- ---------- 4954 Van Nuys Boulevard Sherman Oaks, California 91403 (Address of principal executive offices) (Zip Code) ___________________ Registrant's telephone number, including area code: (818)986-3883 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ___ As of November 13, 1996, 7,177,515 shares of Common Stock of the Registrant were issued and outstanding. ============================================================================ INDEX HEMACARE CORPORATION The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Quarterly Report for the fiscal quarter ended September 30, 1996 on Form 10-Q as set forth in the pages attached hereto: PART I. FINANCIAL INFORMATION Item 1. Financial Statements PART II. OTHER INFORMATION Item 6. Exhibits This amendment is being made to properly disclose the effects of restating previously filed information. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Date February 13, 1997 HEMACARE CORPORATION ----------------- By: /s/ Sharon C. Kaiser ------------------------- Sharon C. Kaiser, Vice President, Finance and Chief Financial Officer 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements HEMACARE CORPORATION CONSOLIDATED BALANCE SHEETS
September 30, December 31, 1996 1995 As Restated ------------- -------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,369,000 $ 997,000 Accounts receivable, net of allowance for doubtful accounts - $88,000 (1996) and $95,000 (1995) 1,690,000 1,627,000 Product inventories 142,000 141,000 Supplies 297,000 328,000 Prepaid expenses 199,000 117,000 Note receivable from officer - current 15,000 15,000 ------------- ------------- Total current assets 3,712,000 3,225,000 Plant and equipment, net of accumulated depreciation and amortization of $1,788,000 (1996) and $1,513,000 (1995) 870,000 1,051,000 Note receivable from officer - non-current 86,000 94,000 Other assets 98,000 87,000 ------------- ------------- $ 4,766,000 $ 4,457,000 ============= ============= Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 721,000 $ 473,000 Accrued blood purchases 230,000 252,000 Accrued payroll and payroll taxes 247,000 310,000 Other accrued expenses 227,000 239,000 Current obligations under capital leases 234,000 209,000 Reserve for discontinued operations - current 345,000 336,000 ------------- ------------- Total current liabilities 2,004,000 1,819,000 Obligations under capital leases, net of current portion 557,000 649,000 Other accrued expenses - long-term 187,000 163,000 Reserve for discontinued operations - non-current - 600,000 Commitments and contingencies Shareholders' equity: Common stock, without par value - 20,000,000 shares authorized, 7,176,683 and 5,911,285 issued and outstanding in 1996 and 1995, respectively 13,468,000 12,179,000 Accumulated deficit (11,450,000) (10,953,000) ------------- ------------- Total shareholders' equity 2,018,000 1,226,000 ============= ============= $ 4,766,000 $ 4,457,000 ============ =============
3 See Notes to Consolidated Financial Statements. HEMACARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended September 30, Nine months ended September 30, 1996 1995 1996 1995 As Restated As Restated Revenues: -------------- -------------- ------------- --------------- Blood products $ 1,645,000 $ 1,752,000 $ 5,041,000 $ 5,103,000 Blood services 981,000 963,000 3,073,000 2,821,000 ------------- ------------- ------------- ------------- Total revenues 2,626,000 2,715,000 8,114,000 7,924,000 Operating costs and expenses: Blood products 1,621,000 1,318,000 5,282,000 3,887,000 Blood services 641,000 638,000 2,132,000 1,966,000 ------------- ------------- ------------- ------------- Total operating costs and expenses 2,262,000 1,956,000 7,414,000 5,853,000 ------------- ------------- ------------- ------------- Operating profit 364,000 759,000 700,000 2,071,000 General and administrative expense 529,000 499,000 1,759,000 1,461,000 Interest expense 7,000 3,000 39,000 5,000 ------------- ------------- ------------- ------------- Income (loss) from continuing operations before income taxes (172,000) 257,000 (1,098,000) 605,000 Provision for income taxes - - - - Discontinued Operations: Loss from discontinued operations - (232,000) - (767,000) Gain on disposal of discontinued operations 600,000 - 600,000 - ------------- ------------- ------------- ------------- Net income (loss) $ 428,000 $ 25,000 $ (498,000) $ (162,000) ============= ============= ============= ============== Per share amounts: Income (loss) from continuing operations $ (0.02) $ 0.04 $ (0.17) $ 0.11 Discontinued Operations: Loss from discontinued operations - (0.04) - (0.14) Gain on disposal of discontinued operations 0.09 - 0.09 - ------------- ------------- ------------- ------------- Net income (loss) $ 0.07 $ 0.00 $ (0.08) $ (0.03) ============= ============= ============= ============= Weighted average common and common equivalent shares outstanding 6,384,838 6,020,684 6,477,203 5,622,215 ============= ============= ============= =============
4 See Notes to Consolidated Financial Statements. HEMACARE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine months ended September 30, 1996 1995 As Restated -------------- -------------- Cash flows from operating activities: Net loss $ (498,000) $ (162,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 265,000 384,000 Provision for losses on accounts receivable - 1,000 Decrease in reserve for discontinued operations (600,000) - Changes in operating assets and liabilities: Decrease (increase) in accounts receivable (63,000) 355,000 Increase in inventories, supplies and prepaid expenses (52,000) (62,000) Increase in other assets, net (11,000) (81,000) Increase (decrease) in accounts payable and accrued expenses 151,000 (520,000) Increase (decrease) in other accrued expenses - long-term 24,000 (13,000) Reserve for discontinued operations 9,000 - ------------ ------------ Net cash used in operating activities (775,000) (98,000) ------------ ------------ Cash flows from investing activities: Decrease (increase) in note receivable from officer 8,000 (16,000) Decrease in short-term investments - 300,000 Sale (purchase) of plant and equipment, net 8,000 (113,000) ----------- ------------ Net cash provided by investing activities 16,000 171,000 ----------- ------------ Cash flows from financing activities: Net proceeds from issuance of common stock 1,289,000 834,000 Principal payments on line of credit and capital leases (158,000) (299,000) ----------- ------------ Net cash provided by financing activities 1,131,000 535,000 ----------- ------------ Increase (decrease) in cash and cash equivalents 372,000 608,000 Cash and cash equivalents at beginning of period 997,000 786,000 ----------- ------------ Cash and cash equivalents at end of period $1,369,000 $ 1,394,000 =========== ============ Supplemental disclosure: Interest paid $ 60,000 $ 41,000 =========== ============ Items not impacting cash flows: Increase in capital lease obligations $ 92,000 $ 167,000 =========== ============
See Notes to Consolidated Financial Statements HEMACARE CORPORATION Notes to Consolidated Financial Statements (Unaudited) Note 1 - Basis of Presentation and General Information The accompanying unaudited consolidated financial statements of HemaCare Corporation (the "Company" or "HemaCare") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. Certain 1995 amounts have been reclassified to conform to the 1996 presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. From 1990 to November 1995, the Company, through its wholly owned subsidiary HemaBiologics, Inc. ("HBI"), conducted research and development of ImmupathTM, an anti-HIV hyperimmune plasma-based product intended to be used in the treatment of Acquired Immune Deficiency Syndrome ("AIDS"). In connection with this project, the Company licensed the rights to the United States patent to commercialize Immupath from Medicorp, Inc. ("Medicorp"). In November 1995, the Company's Board of Directors decided to discontinue the operations of HBI. At the time the operations were discontinued, each party to the license alleged that the other party was in breach of the agreement. (Notes 2 and 5). In September 1995, the Company formed Gateway Community Blood Program, Inc. ("Gateway"), a wholly owned subsidiary incorporated in Missouri, to provide blood products and services in portions of Missouri and Illinois. The Company opened its University of Southern California Blood Center ("USC Blood Center"), a full-service blood donation and services facility, in February 1996. The USC Blood Center facility is leased from USC and is staffed and operated by HemaCare under its Food and Drug Administration ("FDA") license. Located on the USC Health Sciences Campus in Los Angeles, California, the center provides services to the USC/Norris Comprehensive Cancer Center and Hospital and the USC University Hospital (the "USC Hospitals"). The USC Hospitals have agreed that HemaCare will be their primary provider of blood products and therapeutic services for the three-year period ending February 1999. Pathologists on the USC medical faculty provide medical direction services for the USC Blood Center as consultants to the Company. 6 Note 2 - Discontinued Operations In November 1995, the Company's Board of Directors decided to discontinue the operations of HBI, including the research and development of Immupath and the associated specialty plasma business. In connection with this decision, the Company wrote off the remaining book value of HBI's assets and provided a reserve for estimated operating losses from the November 30, 1995 measurement date through December 1996, the expected date of substantial completion of disposal. The loss on the disposition of HBI's operations has been accounted for as discontinued operations, and prior year financial statements have been restated to reflect the discontinuation of these operations. The net loss from such operations for the three months and nine months ended September 30, 1995 was $232,000 and $767,000, respectively. For the three-month and nine-month periods ended September 30, 1996, the Company's reserve for discontinued operations decreased by $647,000 and increased by $591,000, respectively. The reserve established for estimated HBI operating losses during the period of disposal included a $600,000 contingent liability for the resolution of the dispute with Medicorp. In July 1996, the dispute was settled without any payment by the Company, and the Company recognized a $600,000 gain on disposal of discontinued operations. (See Note 5). In June 1996, the Company signed an amended agreement to sell substantially all the tangible assets of the discontinued operations and two of the three remaining FDA source plasma licenses. The sale and transfer of the licenses was contingent upon obtaining FDA approval which was received on October 21, 1996. The buyer has delivered a promissory note in payment of the purchase price for the tangible assets sold which is collateralized by these assets. However, the buyer's ability to make payment on the note, which was due November 2, 1996, is dependent upon the completion of a financing transaction by the buyer. If, upon completion of the sale transaction, the remaining reserve exceeds any estimated residual costs of disposition, the Company will reduce its liabilities by the amount of the remaining reserve for disposal and increase its net income and retained earnings in a corresponding amount. Note 3 - Line of Credit Since August 1991, the Company has maintained a line of credit with a commercial bank secured by its accounts receivable, inventory and equipment. The credit line is in effect through April 30, 1997. Under the terms of the credit line agreement, as amended, the Company may borrow up to 70% of eligible accounts receivable, up to a maximum of $700,000 and must maintain certain ratios, including working capital, as defined, of $500,000 and a tangible net worth of not less than $1.2 million prior to March 31, 1997 and not less than $1.8 million thereafter. The Company was in compliance with all covenants of its borrowing agreement, as amended, at September 30, 1996. Interest on credit line borrowings is at the lender's prime rate (8.25% at September 30, 1996) plus one-half of a percentage point. As of September 30, 1996, there was no balance outstanding under the line of credit. 7 Note 4 - Shareholders' Equity In August 1996, the Company completed a $1.2 million private placement of 1.2 million shares of its common stock. In November 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 "Accounting for Stock Based Compensation" ("SFAS 123"). SFAS 123 recommends changes in accounting for employee stock based compensation plans and requires certain disclosures with respect to these plans. The Company will adopt SFAS 123 prior to December 31, 1996. The Company does not expect the adoption of SFAS 123 to materially impact the Company's financial position or its results of operations. Note 5 - Commitments and Contingencies On March 11, 1994, the Company was served with a lawsuit filed by a former employee against the Company and its wholly owned subsidiary, HBI, in the Superior Court of the State of California, related to the termination of this employee and seeking relief in the amount of $550,000. A trial date has been set for October 29, 1997; however, at this stage in the proceedings, neither management nor counsel are in a position to evaluate the probable merits of the claim asserted by this former employee. Accordingly, the resolution of this lawsuit could have a material impact on the Company's financial conditions and results of operations. In November 1995, the Company terminated its license agreement with Medicorp (Note 1) due to an alleged default by the license holder. The Company also notified Medicorp that the stock purchase warrants (exercisable for 400,000 shares of HemaCare common stock at $5.50 per share) issued by the Company to Medicorp had terminated under their terms, due to the default. Medicorp denied that it had breached the license agreement and alleged that the Company was liable for royalties of approximately $425,000 under the license agreement and that its warrants remained outstanding. On July 19, 1996, the Company and Medicorp Inc. entered into a settlement agreement and mutual release resolving all disputes between them related to their February 1993 license agreement. In the Medicorp settlement agreement, the parties agreed (i) to terminate the license agreement, (ii) to mutually release each other from all prior monetary and other breaches of the license agreement, (iii) that the Medicorp warrants would remain outstanding and exercisable and (iv) that the Company would grant a nonexclusive royalty-free license to Medicorp to certain research data and other documentation associated with the Immupath project. Note 6 - Related Party Information In 1995 and 1994, the Company made a series of personal loans to Joshua Levy, then an officer and director of the Company, totaling $98,307. The proceeds of these loans were used to refinance existing debt which was collateralized by HemaCare stock owned by Dr. Levy. In January 1996, these individual notes were consolidated into a promissory note, collateralized by HemaCare stock owned by Dr. Levy, which accrues interest at a rate equal to the rate the Company pays under its line of credit (Note 3), adjusted quarterly. Interest 8 accrued related to the loans made to Dr. Levy was $2,154 for the three months and $6,392 for the nine months ended September 30, 1996 and $2,445 for the three months and $7,092 for the nine months ended September 30, 1995, respectively. The note requires four annual installment payments of $15,000 due on January 31, with the balance of the principal and accrued interest due on January 31, 2000. The Company received its first annual installment payment of $15,000 in January 1996. Note 7 - Recent Auditing Pronouncement In the first quarter of 1996, the Company adopted Statement of Financial Auditing Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" ("SFAS 121"). The adoption of SFAS 121 did not impact the Company's financial position or its results of operations. Note 8 - Restatement The accompanying unaudited consolidated financial statements and notes to financial statements of the Company have been restated to reflect the settlement of a dispute with a license holder in July 1996 (See Note 2) and an adjustment of materials inventory related to a prior period. The effect of these events were not previously recognized in the Company's September 30, 1996 unaudited consolidated financial statements. These corrections increased net income by $600,000 and $553,000 and increased net income per share by $.10 and $.08 per share for the three and nine months periods ended September 30, 1996, respectively. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits 27 Financial Data Schedule for the Quarter Ending September 30, 1996. 9 Index to Exhibits
Method of Filing ---------------- 27 Financial Data Schedule for the quarter ending September 30, 1996.............. Filed herewith electronically
EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 This schedule contains summary financial information extracted from unaudited financial statements contained in Form 10-Q for the quarter ending September 30,1996 and is qualified in its entirety to such financial statements. [/LEGEND] 9-MOS DEC-31-1996 SEP-30-1996 1,368,670 0 1,777,764 87,858 141,654 3,712,002 2,657,710 1,787,570 4,765,515 2,003,532 0 0 0 13,468,200 (11,450,177) 4,765,515 2,625,725 2,625,725 2,261,726 2,261,726 529,077 87,858 13,604 (171,636) 0 (171,636) 600,000 0 0 428,364 .07 .07
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