-----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, U75TiTiOUucrgOqA7EO2z7zOUv1bN0FdGGkxFPfMEgUiwg4OIihOfh0Ika3eI+y0 oraQIQ5Pj5VPfBrzV/rq7w== 0000801748-99-000008.txt : 19991117 0000801748-99-000008.hdr.sgml : 19991117 ACCESSION NUMBER: 0000801748-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 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 SEC ACT: SEC FILE NUMBER: 000-15223 FILM NUMBER: 99753871 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 1 QUARTER ENDED SEPTEMBER 30, 1999 ========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 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 11, 1999, 7,437,582 shares of Common Stock of the Registrant were issued and outstanding. ======================================================================== INDEX HEMACARE CORPORATION PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated balance sheets - September 30, 1999 (unaudited) and December 31, 1998 Consolidated statements of operations - Three and nine months ended September 30, 1999 and 1998 (unaudited) Consolidated statements of cash flows - Nine months ended September 30, 1999 and 1998 (unaudited) Notes to consolidated financial statements - September 30, 1999 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 6. Exhibits SIGNATURES 2 3 Item 1. Financial Statements - ------- --------------------- HEMACARE CORPORATION CONSOLIDATED BALANCE SHEETS
September 30, December 31, 1999 1998 ------------ ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents........................... $ 1,445,000 $ 1,372,000 Marketable securities............................... 486,000 288,000 Accounts receivable, net of allowance for doubtful accounts - $439,000 (1999) and $596,000 (1998)................................... 2,863,000 3,038,000 Product inventories................................. 66,000 87,000 Supplies............................................ 615,000 604,000 Prepaid expenses.................................... 208,000 160,000 Note receivable from related party - current........ 23,000 24,000 ------------- ------------- Total current assets........................... 5,706,000 5,573,000 Plant and equipment, net of accumulated depreciation and amortization of $1,991,000 (1999) and $1,869,000 (1998)............. 1,243,000 1,289,000 Goodwill, net of amortization of $70,000 (1999) and $11,000 (1998)....................................... 683,000 742,000 Note receivable from related party - non-current...... 35,000 49,000 Other assets.......................................... 12,000 9,000 ------------- ------------- $ 7,679,000 $ 7,662,000 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.................................... $ 1,255,000 $ 1,414,000 Accrued payroll and payroll taxes................... 614,000 802,000 Accrued professional fees........................... 86,000 173,000 Other accrued expenses.............................. 226,000 418,000 Current obligations under capital leases............ 179,000 203,000 Current notes payable............................... 136,000 109,000 Reserve for discontinued operations................. 110,000 110,000 ------------- ------------- Total current liabilities..................... 2,606,000 3,229,000 Obligations under capital leases, net of current portion.................................. 595,000 627,000 Notes payable, net of current portion................. 387,000 491,000 Other long-term liabilities........................... 24,000 24,000 Commitments and contingencies......................... Shareholders' equity: Preferred stock, no par value - 5,000,000 shares authorized, 450,000 issued and outstanding........ 75,000 75,000 Common stock, without par value - 20,000,000 shares authorized, 7,437,582 and 7,281,120 issued and outstanding in 1999 and 1998.................................... 13,649,000 13,584,000 Accumulated deficit................................. (9,657,000) (10,368,000) ------------- ------------- Total shareholders' equity............................ 4,067,000 3,291,000 ------------- ------------- $ 7,679,000 $ 7,662,000 ============= =============
The accompanying notes are an integral part of these consolidated financial statements. 3 4 HEMACARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended Sept.30, Nine Months Ended Sept. 30, 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Revenues: Blood management programs.... $ 2,032,000 $ 587,000 $ 5,605,000 $ 2,291,000 Regional operations: Blood products............. 1,006,000 1,075,000 3,195,000 2,335,000 Blood services............. 1,794,000 1,005,000 5,479,000 3,805,000 ------------- ------------ ------------- ------------- Total revenue............. 4,832,000 2,667,000 14,279,000 8,431,000 Operating costs and expenses: Blood management programs.... 1,725,000 465,000 4,932,000 2,067,000 Regional operations: Blood products............. 748,000 676,000 2,301,000 1,622,000 Blood services............. 1,307,000 661,000 4,159,000 2,723,000 ------------- ------------ ------------- ------------- Total operating costs and expenses................ 3,780,000 1,802,000 11,392,000 6,412,000 ------------- ------------ ------------- ------------- Operating profit........... 1,052,000 865,000 2,887,000 2,019,000 General and administrative expense...................... 771,000 608,000 2,244,000 1,694,000 Gain on sale of Gateway Community Blood Program...... - - 100,000 - ------------- ------------ ------------- ------------- Income from continuing operations before income taxes........................ 281,000 257,000 743,000 325,000 Provision for income taxes...... 14,000 - 28,000 - ------------- ------------ ------------- ------------- Net income................... $ 267,000 $ 257,000 $ 715,000 $ 325,000 ============= ============ ============= ============== Income per share: Basic........................ $ 0.04 $ 0.04 $ 0.10 $ 0.05 ============= ============ ============= ============== Diluted...................... $ 0.03 $ 0.04 $ 0.09 $ 0.05 ============= ============ ============= ============== Weighted average shares outstanding - basic........ 7,437,582 7,281,120 7,359,351 7,194,113 ============ =========== ============ ============= Weighted average shares outstanding - dilutive..... 8,363,532 7,281,120 8,018,390 7,194,382 ============= ============ ============= ==============
The accompanying notes are an integral part of these consolidated financial statements. 4 5 HEMACARE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine months ended Sept. 30, 1999 1998 ------------ ------------ Cash flows from operating activities: Net income................................................... $ 715,000 $ 325,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization............................ 266,000 116,000 Issuance of common stock and options for compensation.... 65,000 13,000 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable............... 175,000 144,000 (Increase) decrease in inventories, supplies and prepaid expenses....................................... (39,000) 7,000 (Increase) in other assets, net.......................... (3,000) - (Decrease) in accounts payble, accrued expenses and other liabilities.................................. (614,000) (146,000) Proceeds from discontinued operations.................... - 7,000 ------------ ------------ Net cash provided by (used in) operating activities.......... 565,000 466,000 Cash flows from investing activities: Decrease in notes receivable from related parties........ 14,000 12,000 Increase in marketable securities........................ (198,000) (117,000) Purchase of plant and equipment, net..................... (51,000) (47,000) ------------ ------------ Net cash used in investing activities........................ (235,000) (152,000) Cash flows from financing activities: Principal payments on line of credit, term loan and capital leases..................................... (257,000) (90,000) ------------ ------------ Net cash used in financing activities.................... (257,000) (90,000) ------------ ------------ Increase in cash and cash equivalents.................... 73,000 224,000 Cash and cash equivalents at beginning of period......... 1,372,000 1,249,000 ------------ ------------ Cash and cash equivalents at end of period............... $ 1,445,000 $ 1,473,000 ============ ============ Supplemental disclosure: Interest paid............................................ $ 68,000 $ 19,000 ============ ============ Income taxes paid........................................ $ 39,000 $ - ============ ============ Items not impacting cash flows: Increase in capital lease obligations.................... $ 126,000 $ - ============ ============
The accompanying notes are an integral part of these consolidated financial statements. 5 6 HemaCare Corporation Notes to Consolidated Financial Statements 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. 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, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. Certain 1998 amounts have been reclassified to conform to the 1999 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, 1998. Coral Blood Services, Inc. ("CBS"), a wholly owned subsidiary of the Company, was formed in October 1998, for the purpose of purchasing substantially all of the assets of a company which had been in the business of supplying blood products and services to hospitals primarily in the eastern United States. Note 2 - Coral Blood Services - ------------------------------ In October 1998, the Company purchased, through its wholly owned subsidiary CBS, substantially all of the assets of Coral Therapeutics, Inc. ("Coral") from Coral's secured lender. Prior to the acquisition, Coral provided blood services to major university, teaching and community hospitals in Maine, New Hampshire, Massachusetts, Connecticut, New York, North Carolina and other states. The Company has entered into contractual arrangements to provide services to most of the Coral customers. Note 3 - Line of Credit and Note Payable - ----------------------------------------- Line of Credit The Company maintains a line of credit with a commercial bank secured by its accounts receivable, inventory and equipment. In February 1999, the commercial bank increased the Company's line of credit borrowing limit to $1.2 million, from $700,000, and converted the $600,000 balance then outstanding on the line of credit to a four-year term loan. Under the terms of the credit agreement, the Company may borrow up to 70% of eligible accounts receivable, up to a maximum of $1.2 million at an interest rate of prime plus 0.5% and must maintain certain ratios. The Company was in compliance with all covenants of its borrowing agreement at September 30, 1999, and there was no balance outstanding under the line of credit. The line of credit matures in June 2000. 6 7 Note Payable The Company has a term note with a bank, payable in 48 monthly payments of principal and interest of approximately $15,000 through February 2003. The note bears interest at the prime rate (8.25% as of September 30, 1999) plus one percent. Note 4 - Commitments and Contingencies - --------------------------------------- Since 1976, California law has prohibited the infusion of blood products into patients if the donors of those products were paid unless, in the opinion of the recipient's physician, blood from a non-paid donor was not immediately available. Apheresis platelet products obtained from paid donors, including the Company's Sherman Oaks Center's paid donors, are exempted from this law by a state statute which contains a "sunset" provision. Unless a new exemption is obtained, the existing exemption will expire under its sunset provision on December 31, 2001. The Company is evaluating a number of available options with regard to the expiration of the exemption. Should the Company be unable to continue to sell apheresis platelets collected from paid donors, the Company's revenue and operating profit could be materially adversely affected. State and Federal laws set forth antikickback and self-referral prohibitions and otherwise regulate financial relationships between blood banks and hospitals, physicians and other persons who refer business to them. While the Company believes its present operations comply with applicable regulations, there can be no assurance that future legislation or rule making, or the interpretation of existing laws and regulations will not prohibit or adversely impact the delivery by HemaCare of its services and products. Note 5 - Business Segments and Related Party Information - --------------------------------------------------------- Business Segments The Company operates in three business segments, each of which represents a separate business activity. The segments and a description of their business activities follows: - - Blood Management Programs (BMP). Outsource programs which provide all or a major portion of the blood banking functions to a hospital. - - Blood Products. The collection, manufacture and distribution of apheresis and whole blood derived products. - - Blood Services. Therapeutic apheresis and stem cell collection procedures, autologous interoperative transfusion and donor testing. Management uses more than one measure to evaluate segment performance. However, the dominant measurements are consistent with the Company's consolidated financial statements, which present revenue from external customers and pretax income for each segment. Related Party Loan In 1995 and 1994, the Company made a series of personal loans to Dr. Joshua Levy, then an officer and director of the Company. The Company received installment payments on these loans in 1997 and 7 8 1996. Effective July 31, 1997, the Company entered into an agreement with Dr. Levy to forgive the remaining balance of Dr. Levy's loans, including interest accrued at a 10% annual rate, over a five-year period so long as Dr. Levy remains employed by the Company. Note 6 - Gain on Disposition - ----------------------------- 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 Missouri and Illinois. In August 1997, Gateway's operations were sold. The Company is entitled to receive a percentage of Gateway's revenues, as defined over the five years subsequent to the date of sale, up to a maximum of $422,000. The Company received an additional payment of $100,000 during the first quarter when Gateway received a Food and Drug Administration establishment license. This was accounted for as an additional gain on the disposition of Gateway. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ----------------------------------------------------------- HemaCare's operations include blood management programs ("Blood Management Programs" or "BMPs") and regional sales of blood products ("Blood Products") and blood services ("Blood Services"). A HemaCare Blood Management Program allows a hospital to outsource all or a portion of its blood procurement and donor center management operations and other blood related activities. Blood Products include apheresis platelets and whole blood components such as red blood cells and plasma products. Blood Services include therapeutic apheresis procedures, stem cell collection and cryopreservation and donor testing. In October 1998, the Company, through its subsidiary Coral Blood Services, Inc. ("CBS"), acquired existing blood products and services operations in the eastern United States. These consist of Blood Management Programs and other blood services provided to hospitals and medical centers. In June 1999, the Company commenced a Blood Management Program with the University of California at Irvine ("UCI"). The Company now operates six blood management programs. In addition to the UCI program, the Company operates the University of Southern California ("USC") program, initiated in 1996, in Southern California and four East Coast programs. The East Coast programs are Dartmouth-Hitchcock Medical Center ("DHMC"), Maine Medical Center ("MMC"), St. Vincent Hospital ("St. Vincent") and University of North Carolina ("UNC"). Prior to October 1998, Coral Therapeutics, Inc. operated these programs. The Gateway Community Blood Program ("Gateway") located in St. Louis, Missouri, and the Citrus Valley Health Partners ("Citrus Valley") Blood Management Program, initiated in 1995 and 1996, failed to meet the Company's profitability criteria. Gateway was sold in August 1997, and the Citrus Valley contract was terminated in July 1998. 8 9 All comparisons within the following discussions are to the comparable periods of the previous year. Revenues, Operating Profit and Net Income - ------------------------------------------ Total revenues increased 81% ($2,165,000) in the three-month and 69% ($5,848,000) in the nine-month periods ended September 30, 1999. CBS contributed revenues of $2,005,000 in the three-months and $5,670,000 in the nine-month periods ended September 30, 1999. Operating profit increased by 22% ($187,000) in the three-month and 43% ($868,000) in the nine-month periods ended September 30, 1999. CBS contributed operating profit of $360,000 in the three-months and $728,000 in the nine-months ended September 30, 1999. Blood Management Programs - -------------------------- Revenue increased 246% ($1,445,000) in the three-month and 145% ($3,314,000) in the nine-month periods ended September 30, 1999. CBS's Blood Management Programs contributed revenues of $1,194,000 in the three-month and $3,433,000 in the nine-month periods ended September 30, 1999. During the second quarter of 1999, the Company commenced a Blood Management Program with the University of California at Irvine. This program contributed third quarter revenues of $336,000 and $522,000 for the nine-month period ended September 30, 1999. Operating profit increased 152% ($185,000) in the three-month and 200% ($449,000) in the nine-month periods ended September 30, 1999. During the third quarter of 1999 CBS contributed operating profits of $195,000. Additionally, the UCI program contributed operating profits of $98,000. The increase in profits from these programs was offset by the USC program which was less profitable during the three months ended September 30, 1999, compared to 1998. In addition to normal operating expenses the USC program incurred certain additional expenses to expand and develop its ability to collect blood products through mobile blood drives. These mobile blood drives are expected to occur in future quarters, although their ultimate success can not be assured. For the nine-months ended September 30, 1999, CBS contributed $384,000 of operating profits and the UCI program contributed $139,000 of operating profits. The increase in profits from these programs was offset by reduced profitability from the Company's USC program. Blood Products - --------------- Blood Products revenue for the first three-quarters of 1999, increased by 37% ($860,000). In July 1998, two significant customers began purchasing apheresis platelets from the Company. Revenues for the first three-quarters of 1999 include apheresis platelet sales to these customers whereas there were only minimal sales to these customers in the first three-quarters of 1998. Additionally, CBS's blood products contributed revenue of $178,000 for the nine-month period ended September 30, 1999. Blood Products revenue decreased by 6% ($69,000) in the third quarter of 1999. In August 1999, the two significant apheresis platelet customers described above began purchasing products from other sources. Additionally, competition among apheresis platelet suppliers intensified during the third quarter of 1999. In response to increased competition, the Company decreased its platelet prices to certain customers. The decline in revenue was partially offset by CBS's blood products revenue of $49,000. Operating profit decreased by 35% ($141,000) in the three-months ended September 30, 1999. For the nine-months ended September 30, 1999, 9 10 operating profit increased by 25% ($181,000). The changes in operating profits are attributable to the decreases in customer purchases and increased competition described in the paragraph above. CBS contributed $6,000 and $36,000 in operating profits for the three-months and nine- months ended September 30, 1999. Blood Services - --------------- Blood services revenue increased by 79% ($789,000) in the three-month and 44% ($1,674,000) in the nine-months ended September 30, 1999. CBS contributed revenues of $776,000 and $2,059,000 respectively. Exclusive of CBS revenue contribution, revenue in the quarter ended September 30, 1999 was consistent with the prior year. For the nine-months ended September 30, 1999, revenue exclusive of CBS decreased by $385,000. When the Company is able to obtain an excess supply of albumin, a protein replacement fluid used in certain therapeutic procedures, at a favorable price, it is offered for sale to non-hospital customers. During the first six months of 1998, the Company sold approximately $250,000 of albumin, to non-hospital customers. There was no sale of albumin in 1999. Operating profit increased by 42% ($143,000) in the three-month period ended September 30, 1999 and 22% ($238,000) for the nine-months ended September 30, 1999. CBS contributed operating profits of $159,000 and $308,000 for the three and nine month periods respectively. Exclusive of CBS's profit contribution, operating profit in the third quarter of 1999, was consistent with the prior year. For the nine-months ended September 30, 1999, operating profit from California operations was negatively affected, as there were no sales of albumin to non-hospital customers. Additionally, the volume of albumin used during therapeutic procedures also declined compared to 1998. This was partially offset by an increase in the number of therapeutic procedures that required the use of prosorba columns. Prosorba columns are special filters used during therapeutic apheresis to treat certain blood disorders. Gain on Disposition - -------------------- As part of the terms of the sale of Gateway's operations, the Company was entitled to receive a payment of $100,000 when Gateway received a Food and Drug Administration establishment license. During the first quarter of 1999 the Company received this amount and accounted for this cash receipt as an additional gain on the disposition of Gateway. General and Administrative Expense - ----------------------------------- General and administrative expense increased 27% ($163,000) in the third quarter and 32% ($550,000) for nine-months ended September 30, 1999. The increase in general and administrative expenses is consistent with the additional overhead costs required to support CBS operations. As a percentage of revenue, general and administrative expenses decreased to 16% for both the three and nine-month periods ended September 30, 1999, compared to 23% and 20% during the same periods of 1998. Liquidity and Capital Resources - --------------------------------- At September 30, 1999, the Company had cash and cash equivalents and marketable securities of $1,931,000 and working capital of $3,100,000. As of December 31, 1998, these balances were $1,660,000 and $2,344,000 respectively. The Company has a $1,200,000 line of credit with a 10 11 commercial bank that is in effect through June 1, 2000. Under the terms of the credit agreement, the Company may borrow up to 70% of eligible accounts receivable, up to a maximum of $1,200,000, and must maintain certain financial ratios. The Company was in compliance with all covenants of its borrowing agreement at September 30, 1999, and there were no borrowings on the line at that date. The Company also has a term note with a bank that had an original balance of $600,000. As of September 30, 1999, the balance on this note was $523,000. The note requires monthly payments of principal and interest of approximately $15,000 through February 2003. The note bears interest at the prime rate (8.25% as of September 30, 1999) plus one percent. The note is cross collateralized with the Company's line of credit. The Company has entered into new contracts with most of its East Coast customers. However, the Company still operates under interim arrangements with certain East Coast customers. The Company expects to enter into written agreements with most of these customers or may continue to provide services to these customers without a contract. The nature of the business is such that customer contracts periodically expire and require renewals. When contracts expire there is no assurance that satisfactory contracts can be negotiated with all major customers, and the loss of one or more major customers could have an adverse affect on the Company's revenue and operating profit. Since 1976, California law has prohibited the infusion of blood products into patients if the donors of those products were paid unless, in the opinion of the recipient's physician, blood from a non-paid donor was not immediately available. Apheresis platelet products obtained from paid donors, including the Company's Sherman Oaks Center's paid donors, are exempted from this law by a state statute which contains a "sunset" provision. Unless a new exemption is obtained, the existing exemption will expire under its sunset provision on December 31, 2001. The Company is evaluating a number of alternatives with regard to continuing its California based apheresis platelet business after the year 2001. However, there can be no assurance that these initiatives will be successful. Should the Company be unable to continue to sell apheresis platelets collected from paid donors, the Company's revenue and operating profit could be materially adversely affected. Joshua Levy, M.D., medical director of the Company and a shareholder, treats patients through his private practice, who require therapeutic services. Amendments to the Federal self-referral laws and related regulations which became effective in 1995 could restrict the Company's ability to provide therapeutic services to Dr. Levy's patients who are covered by Medicare or Medi-Cal. It is estimated that revenues from these patients represented approximately 2% ($295,000) of the Company's 1998 revenues. New regulations that have been proposed but not yet issued may provide an exemption for therapeutic apheresis services. If the new regulations do not provide an exemption for therapeutic apheresis services, the Company could lose the revenue from its services for Dr. Levy's Medicare and Medi-Cal patients. The Company anticipates that cash flow from profitable operations, collection of the accounts receivable purchased from CBS, borrowing available from its bank line of credit and its cash and investments on hand will be sufficient to provide funding for its existing needs during the next twelve months. 11 12 Year 2000 Disclosure - --------------------- The Company has developed and is implementing a comprehensive program to address Year 2000 issues. The program considers the effect of the Year 2000 on the Company's internal systems, customers, products and services, production systems, and suppliers and other critical business partners. Implementation of the Company's plan is substantially complete, and the Company believes that all identified potential Year 2000 issues have been effectively resolved. The cost to identify and resolve Year 2000 issues was not material to the Company's financial results and has been expensed as incurred. Management does not believe that there will be a significant disruption to the Company's business due to Year 2000 issues. However, the Company has begun contingency planning to address any situations which may arise in which the planning of the Company or third parties prove to be inadequate, and where practical alternatives are available. There can be no assurance that the Company's Year 2000 program or the programs of critical business partners will be successful, and failure of this program could have a material adverse affect on the Company's business and results of operations. Factors Affecting Forward-Looking Information - ---------------------------------------------- The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" from liability for forward-looking statements. Certain information included in the Form 10-Q and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by or on behalf of the Company) are forward-looking, such as statements relating to operational and financing plans, competition, the effects of discontinued operations, the effect of state and Federal regulation and demand for the Company's products and services. Such forward-looking statements involve important risks and uncertainties, many of which will be beyond the control of the Company. These risks and uncertainties could significantly affect anticipated results in the future, both short-term and long-term, and accordingly, such results may differ from those expressed in forward- looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those relating to the ability of the Company to expand its operations, obtain additional financing, to repay existing debt, to retain existing customers and obtain new customers, to retain the former customers of CBS, to improve the profitability of the Company's other operations, the effects of the Year 2000 and to comply with the covenants under its bank line of credit. Each of these risks and uncertainties as well as others are discussed in greater detail in the preceding paragraphs of this Management's Discussion and Analysis of Financial Condition and Results of Operations and in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. PART II. OTHER INFORMATION Item 1. Legal Proceedings See disclosure in Form 10-K for the year ended December 31, 1998. Item 4. Submission of Matters to a Vote of Security Holders None 12 13 Item 6. Exhibits and Reports on Form 8-K a. Exhibits 11 Net Income per Common and Common Equivalent Share Financial Data Schedule for the Quarter Ended September 30, 1999 27 Financial Data Schedule for the Quarter Ended September 30, 1999 b. The Company did not file any reports on Form 8-K during the three months ended September 30, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: November 15, 1999 HEMACARE CORPORATION ------------------- --------------------------- (Registrant) /s/ David Fractor ---------------------------- David Fractor Chief Financial Officer 13 14 INDEX TO EXHIBITS
Method of Filing ------------------ 11 Net Income (Loss) per Common and Common Equivalent Share Filed herewith electronically 27 Financial Data Schedule for the quarter ended September 30,1999 Filed herewith electronically
14 EX-11 2 EXHIBIT 11 EXHIBIT 11 HEMACARE CORPORATION NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Three Months Ended Nine Months Ended September 30, September 30, 1999 1998 1999 1998 ------------ ------------ ------------ ---------- BASIC Weighted average common shares used to compute basic earnings per share................................... 7,437,582 7,281,120 7,359,351 7,194,113 ========== ========== ========== ========== Net income.................................... $ 267,000 $ 257,000 $ 715,000 $ 325,000 ========== ========== ========== ========== Basic net income per share............................. $ 0.04 $ 0.04 $ 0.10 $ 0.05 ========== ========== ========== ========== DILUTED Weighted average common shares used to compute basic earnings per share............................. 7,437,582 7,281,120 7,359,351 7,194,113 Dilutive preferred equivalent shares................... 500,000 - 500,000 - Dilutive common equivalent shares attributable to stock options (based on average market price)......... 396,457 - 153,644 269 Dilutive common equivalent shares attributable to warrants (based on average market price).............. 29,493 - 5,395 - ---------- ---------- ---------- ---------- Weighted average common shares and equivalents used to compute diluted earnings per share................. 8,363,532 7,281,120 8,018,390 7,194,382 ========== ========== ========== ========== Net income.................................... $ 267,000 $ 257,000 $ 715,000 $ 325,000 =========== =========== ========== ========== Dilutive net income per share.......................... $ 0.03 $ 0.04 $ 0.09 $ 0.05 ========== =========== ========== ==========
EX-27 3
5 This schedule contains summary financial information extracted from unaudited financial statements contained in Form 10-Q for the Quarter ending September 30, 1999 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1999 SEP-30-1999 1,445,000 486,000 3,302,000 439,000 681,000 5,706,000 3,234,000 1,991,000 7,679,000 2,606,000 0 0 75,000 13,649,000 0 7,679,000 14,279,000 14,279,000 11,392,000 11,392,000 2,176,000 0 68,000 743,000 28,000 715,000 0 0 0 715,000 .10 .09
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