UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~ 31June 30, 2011

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)

California	95-3280412
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
15350 Sherman Way, Suite 350 Van Nuys, California		91406
(Address of principal executive offices)		(Zip Code)

(818) 226-1968

(Registrant’s telephone number, including area code)

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o

Accelerated Filer o

Non-Accelerated Filer ¨

Smaller reporting company T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August ~~May 6~~5, 2011, 9,712,948 shares of Common Stock of the registrant were issued and outstanding.

HEMACARE CORPORATION AND SUBSIDIARIES

INDEX TO FORM 10-Q

FOR THE THREE ~~MONTHS~~AND ~~ENDED MARCH~~SIX ~~31,~~MONTHS ~~2011~~ENDED

		Page
		Number
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2011 (unaudited) and December 31, 2010		1
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010 (unaudited)		2
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 (unaudited)		3
	Notes to Unaudited Condensed Consolidated Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21
Item 4T.	Controls and Procedures		22
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		22
Item 1A.	Risk Factors		22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		22
Item 3.	Defaults Upon Senior Securities		22
Item 4.	Removed and Reserved		22
Item 5.	Other Information		22
Item 6.	Exhibits		23
SIGNATURES			24

JUNE 30, 2011

PART I. FINANCIAL INFORMATION

		Page
		Number
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2011 (unaudited) and December 31, 2010		2
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010 (unaudited)		3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010 (unaudited)		4
	Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27
Item 4T.	Controls and Procedures		27
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		29
Item 1A.	Risk Factors		29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 3.	Defaults Upon Senior Securities		29
Item 4.	Removed and Reserved		29
Item 5.	Other Information		29
Item 6.	Exhibits		29
SIGNATURES			31

~~Item~~ 1~~. Financial Statements~~

PART I. FINANCIAL INFORMATION

~~HEMACARE~~Item ~~CORPORATION~~1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

HEMACARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30			December 31,
	2011			2010
	(unaudited)

Assets
Current assets:
Cash and cash equivalents	$	1,683,000		$	1,638,000
Restricted cash		660,000			660,000
Accounts receivable, net of allowance for doubtful accounts of $98,000 in 2011 and $91,000 in 2010		3,035,000			2,780,000
Product inventories and supplies, net		522,000			577,000
Prepaid expenses		451,000			522,000
Assets held for sale		449,000			463,000
Other receivables		35,000			168,000
Total current assets		6,835,000			6,808,000
Plant and equipment, net of accumulated depreciation and amortization of $6,725,000 in 2011 and $7,704,000 in 2010		2,745,000			2,887,000
Other assets		135,000			148,000
Total assets	$	9,715,000		$	9,843,000

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	1,841,000		$	1,486,000
Accrued payroll and payroll taxes		791,000			636,000
Other accrued expenses		263,000			319,000
Current portion of capital lease		17,000			16,000
Liabilities related to assets held for sale		2,154,000			2,094,000
Total current liabilities		5,066,000			4,551,000
Deferred rent		494,000			533,000
Long term portion of capital lease		66,000			77,000

Shareholders' equity:
Common stock, no par value - 20,000,000 shares authorized, 9,712,948 issued and outstanding in 2011 and 2010		16,338,000			16,289,000
Accumulated deficit		(12,249,000	)		(11,607,000	)
Total shareholders' equity		4,089,000			4,682,000
Total liabilities and shareholders' equity	$	9,715,000		$	9,843,000

	March 31,			December 31,
	2011			2010
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,194,000		$	1,638,000
Restricted cash		660,000			660,000
Accounts receivable, net of allowance for
doubtful accounts of $94,000 in 2011 and $91,000 in 2010		2,761,000			2,780,000
Product inventories and supplies		721,000			617,000
Prepaid expenses		308,000			522,000
Assets held for sale		246,000			210,000
Other receivables		171,000			168,000
Total current assets		7,061,000			6,595,000
Plant and equipment, net of accumulated
depreciation and amortization of $7,887,000 in 2011 and
$7,704,000 in 2010		2,876,000			3,100,000
Other assets		146,000			148,000
Total assets	$	10,083,000		$	9,843,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	1,860,000		$	1,486,000
Accrued payroll and payroll taxes		896,000			636,000
Other accrued expenses		261,000			319,000
Current portion of capital lease		17,000			16,000
Liabilities related to assets held for sale		2,142,000			2,094,000
Total current liabilities		5,176,000			4,551,000
Deferred rent		512,000			533,000
Long term portion of capital lease		71,000			77,000
Shareholders' equity:
Common stock, no par value - 20,000,000 shares authorized,
9,712,948 issued and outstanding in 2011 and 2010		16,321,000			16,289,000
Accumulated deficit		(11,997,000	)		(11,607,000	)
Total shareholders' equity		4,324,000			4,682,000
Total liabilities and shareholders' equity	$	10,083,000		$	9,843,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements~~2

HEMACARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30						June 30,
	2011			2010			2011			2010
Revenue
Blood services	$	1,968,000		$	1,931,000		$	3,728,000		$	3,835,000
Therapeutic services		2,270,000			1,947,000			4,418,000			3,724,000
Total revenue		4,238,000			3,878,000			8,146,000			7,559,000

Operating costs and expenses
Blood services		2,113,000			1,949,000			3,860,000			3,716,000
Therapeutic services		1,542,000			1,408,000			3,005,000			2,740,000
Total operating costs and expenses		3,655,000			3,357,000			6,865,000			6,456,000
Gross profit		583,000			521,000			1,281,000			1,103,000

General and administrative expenses		1,212,000			1,131,000			2,395,000			2,668,000

Loss from operations		(629,000	)		(610,000	)		(1,114,000	)		(1,565,000	)

Gain from disposal of assets		197,000			-			197,000			-

Loss from continuing operations		(432,000	)		(610,000	)		(917,000	)		(1,565,000	)

Provision for income taxes		-			10,000			10,000			10,000

Loss from continuing operations, net of tax		(432,000	)		(620,000	)		(927,000	)		(1,575,000	)

Income from discontinued operations, net of tax		180,000			843,000			285,000			1,595,000

Net (loss) income	$	(252,000	)	$	223,000		$	(642,000	)	$	20,000

(Loss) income per share
Basic
Continuing operations	$	(0.04	)	$	(0.06	)	$	(0.10	)	$	(0.16	)
Discontinued operations	$	0.02		$	0.08		$	0.03		$	0.16
Total	$	(0.03	)	$	0.02		$	(0.07	)	$	0.00
Diluted
Continuing operations	$	(0.04	)	$	(0.06	)	$	(0.10	)	$	(0.15	)
Discontinued operations	$	0.02		$	0.08		$	0.03		$	0.16
Total	$	(0.03	)	$	0.02		$	(0.07	)	$	0.00

Weighted average shares outstanding-basic		9,712,948			10,049,148			9,712,948			10,049,339

Weighted average shares outstanding-diluted		9,712,948			10,234,148			9,712,948			10,232,339

~~HEMACARE~~The ~~CORPORATION~~accompanying notes are an integral part of these unaudited condensed consolidated financial statements

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~3

(UNAUDITED)

HEMACARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30,


	2011			2010
Cash flows from operating activities:
Net (loss) income	$	(642,000	)	$	20,000
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Income from discontinued operations		(285,000	)		(1,595,000	)
Provision for bad debts		7,000			6,000
Depreciation and amortization		475,000			570,000
(Gain) loss on disposal of assets		(197,000	)		3,000
Share-based compensation		50,000			83,000
Provision for inventory obsolescence		32,000			-

Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(262,000	)		249,000
Decrease (increase) in inventories, supplies and prepaid expenses		94,000			(449,000	)
Decrease in other receivables		133,000			34,000
Decrease in other assets		13,000			11,000
Increase in accounts payable, accrued payroll, accrued expenses and deferred rent		415,000			669,000
Net cash used in operating activities		(167,000	)		(399,000	)

Cash flows from investing activities:
Proceeds from the sale of plant and equipment		219,000			1,000
Purchases of plant and equipment		(305,000	)		(230,000	)
Net cash used in investing activities		(86,000	)		(229,000	)

Cash flows from financing activities:
Purchase of treasury stock		-			(3,000	)
Proceeds from the exercise of stock options		-			6,000
Principal payments on capital leases		(10,000	)		-
Net cash (used in) provided by financing activities		(10,000	)		3,000

Net cash used in continuing operations		(263,000	)		(625,000	)

Cash Flows - Discontinued Operations
Net cash provided by operating activities		344,000			1,615,000
Net cash provided by discontinued operations		344,000			1,615,000

Increase in cash and cash equivalents		81,000			990,000
Cash and cash equivalents at beginning of period		1,848,000			1,222,000
Cash and cash equivalents at end of period		1,929,000			2,212,000

Cash, cash equivalents - Continuing operations		1,683,000			2,002,000
Cash and cash equivalents - Assets held for sale		246,000			210,000
Total cash and cash equivalents	$	1,929,000		$	2,212,000

Supplemental disclosure:
Interest paid	$	5,000		$	-
Income taxes refunded	$	(55,000	)	$	(10,000	)

~~For~~The ~~the~~accompanying ~~Three Months~~notes ~~Ended~~are ~~March~~an ~~31,~~integral part of these unaudited condensed consolidated financial statements

	2011			2010
Revenue
Blood services	$	4,837,000		$	6,071,000
Therapeutic services		2,149,000			1,776,000
Total revenue		6,986,000			7,847,000
Operating costs and expenses
Blood services		4,657,000			5,126,000
Therapeutic services		1,462,000			1,333,000
Total operating costs and expenses		6,119,000			6,459,000
Gross profit		867,000			1,388,000
General and administrative expenses		1,235,000			1,580,000
Loss from operations		(368,000	)		(192,000	)
Provision for income taxes		10,000			—
Loss from continuing operations		(378,000	)		(192,000	)
Loss from discontinued operations		(12,000	)		(12,000	)
Net loss	$	(390,000	)	$	(204,000	)
Loss per share
Basic and diluted
Continuing operations	$	(0.04	)	$	(0.02	)
Discontinued operations	$	—		$	—
Total	$	(0.04	)	$	(0.02	)
Weighted average shares outstanding-basic		9,712,948			10,049,539
Weighted average shares outstanding-diluted		9,712,948			10,049,539

~~The accompanying~~HemaCare ~~notes are an integral part of these unaudited condensed consolidated financial statements~~Corporation

2Notes to Unaudited Condensed Consolidated Financial Statements

~~HEMACARE~~Note ~~CORPORATION AND~~1—Basis ~~SUBSIDIARIES~~of Presentation and General Information

~~CONSOLIDATED STATEMENTS~~BASIS OF ~~CASH FLOWS~~PRESENTATION

In the opinion of management, the accompanying (~~UNAUDITED~~a) condensed consolidated balance sheet as of December 31, 2010, which has been derived from audited financial statements, and (b) the unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2011 and 2010, include all adjustments (consisting of normal recurring accruals) which management considers necessary to present fairly the financial position of the Company as of June 30, 2011 and December 31, 2010, the results of its operations for the three and six months ended June 30, 2011 and 2010, and its cash flows for the six months ended June 30, 2011 and 2010 in conformity with accounting principles generally accepted in the United States (“GAAP”).

~~For~~These financial statements have been prepared consistently with the ~~Three Months~~accounting ~~Ended~~policies described in the Company’s Annual Report on Form 10 K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission (“SEC”) on March 23, 2011, which should be read in conjunction with this Quarterly Report on Form 10-Q. The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of the consolidated results of operations to be expected for the full fiscal year ending December 31, 2011. The above unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

	2011			2010
Cash flows from operating activities:
Net loss	$	(390,000	)	$	(204,000	)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Loss from discontinued operations		12,000			12,000
Provision for bad debts		3,000			3,000
Depreciation and amortization		235,000			284,000
Gain (loss) on disposal of assets		(7,000	)		3,000
Share-based compensation		33,000			60,000
Changes in operating assets and liabilities:
Decrease in accounts receivable		15,000			87,000
Decrease (increase) in inventories, supplies and prepaid expenses		110,000			(223,000	)
(Increase) decrease in other receivables		(3,000	)		34,000
Decrease in other assets		2,000			4,000
Increase in accounts payable, accrued payroll,
accrued expenses and deferred rent		555,000			713,000
Net cash provided by operating activities		565,000			773,000
Cash flows from investing activities:
Proceeds from the sale of plant and equipment		7,000			1,000
Purchases of plant and equipment		(11,000	)		(162,000	)
Net cash used in investing activities		(4,000	)		(161,000	)
Cash flows from financing activities:
Principal payments on capital leases		(5,000	)		—
Net cash used in financing activities		(5,000	)		—
Net cash provided by continuing operations		556,000			612,000
Cash Flows - Discontinued Operations
Net cash provided by operating activities		36,000
Net cash provided by discontinued operations		36,000
Increase in cash and cash equivalents		592,000			612,000
Cash and cash equivalents at beginning of period		1,848,000			1,222,000
Cash and cash equivalents at end of period		2,440,000			1,834,000
Cash, cash equivalents - Continuing operations		2,194,000			1,619,000
Cash and cash equivalents - Assets held for sale		246,000			215,000
Total cash and cash equivalents	$	2,440,000		$	1,834,000
Supplemental disclosure:
Interest paid	$	3,000
Income taxes paid (refunded)	$	9,000		$	(10,000	)

USE OF ESTIMATES

The ~~accompanying notes~~preparation ~~are~~of anfinancial ~~integral~~statements ~~part~~in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of ~~these~~assets ~~consolidated~~and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

3Revenue and Accounts Receivable: Revenue is recognized upon acceptance of the blood products or the performance of therapeutic services. Occasionally the Company receives advance payment against future delivery of blood products or services. Until the related products or services are delivered, the Company records advance payments as deferred revenue, which appears as a current liability on the balance sheet. Therapeutic services revenue consists primarily of mobile therapeutic procedure fees, while blood services revenue consists primarily of sales of single donor platelets, whole blood components or other blood products collected for use by research and cellular therapy organizations. Accounts receivable are reviewed periodically for collectability. The Company estimates an allowance for doubtful accounts based on balances owed that are 90 days or more past due from the invoice date, unless evidence exists, such as subsequent cash collections, that specific amounts are collectable. In addition, balances less than 90 days past due are reserved based on the Company’s recent bad debt experience.

~~HemaCare Corporation Notes~~Inventories and Supplies: Inventories for continuing operations consist of Company-manufactured platelets. Supplies consist primarily of medical supplies used to ~~Unaudited~~collect ~~Condensed~~and ~~Consolidated~~manufacture ~~Financial~~platelets ~~Statements~~and to provide therapeutic services. Inventories included in assets held for sale consist of whole blood components and other blood products, as well as component blood products purchased for resale. Inventories are stated at the lower of cost or market and are accounted for on a first-in, first-out basis. Management estimates the portion of inventory that might not have future value by analyzing historical sales for the twelve months prior to any balance sheet date. For each inventory type, management establishes an obsolescence reserve equal to the value of inventory quantity in excess of twelve months of historical sales quantity, using the first-in, first-out inventory valuation methodology. In addition, the Company recorded a reserve of $32,000 as of June 30, 2011 for inventory that will become obsolete as a result of the Company’s sale of its red blood cell collection business assets to the American Red Cross in July 2011. The Company had no reserve for obsolete inventory as of December 31, 2010.

~~Note 1—Basis of Presentation and General Information~~5

~~BASIS OF~~HemaCare ~~PRESENTATION~~Corporation

InNotes the opinion of management, the accompanying (a) condensed consolidated balance sheet as of December 31, 2010, which has been derived from audited financial statements, and (b) the unaudited interim condensed consolidated financial statements for the three months ended March 31, 2011 and 2010, include all adjustments (consisting of normal recurring accruals) which management considers necessary to ~~present fairly~~Unaudited ~~the~~Condensed ~~financial~~Consolidated ~~position~~Financial ofStatements ~~the~~-- Company as of March 31, 2011 and December 31, 2010, the results of its operations for the three months ended March 31, 2011 and 2010, and its cash flows for the three months ended March 31, 2011 and 2010 in conformity with accounting principles generally accepted in the United States (“GAAP”).continued

~~These~~Financial ~~financial statements~~Instruments: On ~~have~~January ~~been~~1, ~~prepared~~2009, ~~consistently with~~ the ~~accounting~~Company ~~policies~~adopted ~~described~~all inof the ~~Company’s~~provisions ~~Annual~~of ~~Report~~Financial onAccounting ~~Form 10~~Standards KBoard ~~for~~(“FASB”) ~~the~~Accounting ~~year~~Standards ~~ended~~Codification ~~December~~(“ASC”) ~~31,~~Topic ~~2010~~820, asFair ~~filed~~Value ~~with~~Measurements ~~the Securities~~ and ~~Exchange~~Disclosures ~~Commission~~ (“~~SEC~~ASC 820”) ~~on March 21, 2011,~~ which ~~should~~provides beguidance ~~read in conjunction with this Quarterly Report~~ on ~~Form~~how ~~10-Q. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the consolidated results of operations~~ to bemeasure ~~expected~~assets ~~for the full fiscal year ending December 31, 2011. The above unaudited condensed consolidated financial statements have been prepared pursuant to the rules~~ and ~~regulations~~liabilities ofat ~~the~~fair ~~SEC~~value. ASC ~~Certain~~820 ~~information~~defines ~~and~~fair ~~note~~value, ~~disclosures~~establishes ~~normally~~a ~~included~~framework infor ~~annual~~measuring ~~financial~~fair ~~statements~~value ~~prepared~~ in accordance with GAAP, ~~have~~and ~~been~~expands ~~condensed~~disclosures orabout ~~omitted~~fair ~~pursuant~~value tomeasurements. ~~those~~The ~~rules~~full ~~and~~adoption ~~regulations,~~of ~~although~~ASC ~~the~~820 ~~Company~~did ~~believes~~not ~~that the~~have ~~disclosures~~a ~~made~~material ~~are~~impact ~~adequate~~on ~~to make~~ the ~~information~~Company’s ~~not~~financial ~~misleading~~statements.

~~USE~~Share-Based OFCompensation: Pursuant ~~ESTIMATES~~to ASC Topics 505, Equity and 718, Stock Compensation, an entity shall account for share-based compensation transactions with employees in accordance with the fair-value-based method, that is, the cost of services received from employees in exchange for awards of share-based compensation generally shall be measured based on the grant-date fair value of the equity instruments issued or on the fair value of the liabilities incurred.

The ~~preparation of~~Company’s ~~financial~~assessment ~~statements~~of inthe ~~conformity~~estimated ~~with~~fair ~~GAAP~~value ~~requires~~of ~~management~~share-based topayments ~~make~~is ~~estimates~~impacted ~~and~~by ~~assumptions~~the ~~that~~price ~~affect~~of the ~~reported amounts~~Company’s stock, as well as assumptions regarding a number of ~~assets~~complex and ~~liabilities,~~subjective variables and ~~disclosure~~the ofrelated ~~contingent~~tax ~~assets~~impact. ~~and~~Management ~~liabilities~~calculated fair value based on fair value of the stock at the date of ~~the~~issuance ~~financial~~for ~~statements~~restricted stock and restricted stock units. ~~Estimates~~ ~~also~~Management ~~affect~~utilized the ~~reported~~Black-Scholes ~~amounts~~model to estimate the fair value of ~~revenue~~share-based payments granted. Valuation techniques used for employee share options and ~~expenses~~similar ~~during~~instruments estimate the ~~reporting~~fair ~~period~~value of those instruments at a single point in time (for example, at the grant date). ~~Actual~~The ~~results~~assumptions ~~could~~used ~~differ~~in ~~from~~ a fair value measurement are based on expectations at the time the measurement is made, and those ~~estimates~~expectations reflect the information that is available at the time of measurement.

~~Revenue and~~The ~~Accounts~~Black-Scholes ~~Receivable:~~valuation ~~Revenue~~model iswas ~~recognized~~developed ~~upon~~for ~~acceptance~~use ofin ~~the~~estimating ~~blood products or~~ the ~~performance~~fair ofvalue ~~therapeutic services. Occasionally the Company receives advance payment against future delivery~~ of ~~blood~~traded ~~products~~options or services. Until the related products or services are delivered, the Company records advance payments as deferred revenue, which appears as a current liability on the balance sheet. Therapeutic services revenue consists primarily of mobile therapeutic procedure fees, while blood services revenue consists primarily of sales of single donor platelets, whole blood components or other blood products that ~~are~~have ~~manufactured or~~no ~~purchased~~vesting restrictions and ~~distributed by the Company. Accounts receivable~~ are ~~reviewed~~fully ~~periodically for collectability~~transferable. ~~The~~This ~~Company~~model ~~estimates an~~also ~~allowance~~requires ~~for doubtful accounts based on balances owed that are 90 days or more past due from~~ the ~~invoice~~input ~~date,~~of ~~unless~~highly ~~evidence exists,~~subjective ~~such~~assumptions ~~as subsequent cash collections, that specific amounts are collectable. In addition, balances less than 90 days past due are reserved based on the Company’s recent bad debt experience.~~including:

~~Inventories and~~(a) ~~Supplies:~~The ~~Inventories~~expected ~~consist~~volatility of ~~Company-manufactured~~the ~~platelets,~~common ~~whole~~stock ~~blood components and other blood products~~price, as ~~well~~which aswas ~~component~~determined ~~blood~~based products purchased for resale. Supplies consist primarily of medical supplies used to collect and manufacture products and to provide therapeutic services. Inventories are stated at the lower of cost or market and are accounted for on ~~a first-in, first-out basis. Management estimates the portion of inventory that might not have future value by analyzing~~ historical ~~sales~~ ~~for~~volatility ~~the twelve months prior to any balance sheet date. For each inventory type, management establishes an obsolescence reserve equal to the value~~ of ~~inventory quantity in excess of twelve months of historical sales quantity, using~~ the ~~first-in, first-out inventory valuation methodology. The~~ Company’s ~~did~~common ~~not record any reserves for obsolete inventory as of March 31, 2011 or as of December 31, 2010.~~stock;

4(b) expected dividends, which are not anticipated;

~~HemaCare Corporation Notes~~(c) toexpected ~~Unaudited~~life, ~~Condensed~~which ~~Consolidated~~is ~~Financial~~estimated ~~Statements~~based on the historical exercise behavior of employees;

~~Financial Instruments: On January 1, 2009, the Company adopted all of the provisions of Financial Accounting Standards Board Accounting Standards Codification,~~ (~~“ASC”~~d). ~~ASC~~risk ~~Topic~~free ~~820,~~interest ~~Fair~~rates; ~~Value Measurements~~ and Disclosures (“ASC 820”) which provides guidance on how to measure assets and liabilities that use fair value. ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. The full adoption of ASC 820 did not have a material impact on the Company’s financial statements.

~~Share-Based Compensation:~~(e) ~~Pursuant~~expected to ASC Topics 505, Equity and 718, Stock Compensation, an entity shall account for share-based compensation transactions with employees in accordance with the fair-value-based method, that is, the cost of services received from employees in exchange for awards of share-based compensation generally shall be measured based on the grant-date fair value of the equity instruments issued or on the fair value of the liabilities incurredforfeitures.

~~The~~In ~~Company’s assessment of~~ the ~~estimated~~future, ~~fair~~management ~~value~~may ofelect ~~share-based~~to ~~payments~~use isdifferent ~~impacted by the price of the Company’s stock, as well as~~ assumptions ~~regarding~~under ~~a number of complex and subjective variables and~~ the ~~related tax impact. Management calculated fair value based on fair value of the stock at the date of issuance for restricted stock and restricted stock units. Management utilized the~~ Black-Scholes valuation model toor ~~estimate the fair value of share-based payments granted. Valuation techniques used for employee share options and similar instruments estimate the fair value of those instruments at~~ a ~~single~~different ~~point~~valuation ~~in time (for example~~model, atwhich ~~the~~could ~~grant date).~~result ~~The assumptions used~~ in a ~~fair~~significantly ~~value~~different ~~measurement~~impact ~~are based~~ on ~~expectations at the time the measurement is made, and those expectations reflect the information that is available at the time of measurement~~earnings.

The ~~Black~~Company currently uses the 2006 Equity Incentive Plan (“2006 Plan”), approved by shareholders at the 2006 annual meeting, to grant stock options and other share-~~Scholes valuation~~based ~~model~~payments. At the March 9, 2011 meeting of the Board of Directors, the non-employee directors were awarded, pursuant to the Company’s director compensation policy, their 2011 annual stock option grants utilizing the closing stock price on March 9, 2011, the date of the meeting. Since this grant was ~~developed~~intended as compensation for ~~use~~annual inservice, ~~estimating~~and since the ~~fair~~vesting ~~value~~policy requires quarterly vesting of ~~traded~~non-employee director options, ~~that~~the ~~have~~Company norecorded ~~vesting~~$7,000 ~~restrictions~~and $16,000 of share-based compensation for the non-employee directors for the three and ~~are fully~~six ~~transferable.~~months ~~This~~ended ~~model~~June ~~also~~30, ~~requires~~2011 and $16,000 and $36,000 for the ~~input~~three ofand ~~highly~~six ~~subjective~~months ~~assumptions~~ended ~~including:~~June 30, 2010 utilizing the Black-Scholes valuation model.

~~(a) The expected volatility of the common stock price, which was determined based on historical volatility of the Company’s common stock;~~6

~~(b)~~HemaCare ~~expected dividends, which are not anticipated;~~Corporation

~~(c)~~Notes ~~expected~~to ~~life,~~Unaudited ~~which~~Condensed isConsolidated ~~estimated~~Financial ~~based~~Statements on-- ~~the historical exercise behavior of employees; and~~continued

~~(d)~~Income Taxes: The process of preparing the financial statements requires management estimates of income taxes in each of the jurisdictions that the Company operates. This process involves estimating current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the balance sheet. Pursuant to ASC Topic 740, Income Taxes, the Company utilizes an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected ~~forfeitures~~future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Management must assess the likelihood that the deferred tax assets or liabilities will be realized for future periods, and to the extent management believes that realization is not likely, must establish a valuation allowance. To the extent a valuation allowance is created or adjusted in a period, the Company must include an expense or benefit within the tax provision in the statements of operations.

InSignificant management judgment is required in determining the ~~future, management~~provision ~~may~~for ~~elect~~income totaxes, ~~use~~deferred ~~different~~tax ~~assumptions~~assets ~~under~~and ~~the~~liabilities ~~Black-Scholes~~and any valuation ~~model~~allowance orrecorded against net deferred tax assets. It is possible that a selection of different ~~valuation~~input ~~model,~~variables ~~which~~ could ~~result~~produce in a ~~significantly~~materially different ~~impact~~estimate onof ~~earnings~~the provision, asset, liability and valuation allowance.

~~The~~Based ~~Company currently~~on ~~uses~~management’s ~~the~~analysis ~~2006~~of ~~Equity Incentive Plan (“2006 Plan”), approved by shareholders at~~ the ~~2006~~Company’s ~~annual~~recent ~~meeting~~performance, to ~~grant~~management ~~stock~~determined ~~options~~that ~~and~~there ~~other~~was ~~share-based~~insufficient ~~payments.~~evidence ~~At the March 9, 2011 meeting~~ of ~~the~~future ~~Board~~profitability ofto ~~Directors,~~ensure ~~the~~that ~~non-employee directors were awarded, pursuant to~~ the Company’s ~~director~~would ~~compensation~~be ~~policy,~~more ~~their~~likely ~~2011~~than ~~annual~~not ~~stock~~to ~~option~~realize ~~grants~~any ~~utilizing the~~benefit ~~closing~~from ~~stock price on March 9, 2011,~~ the ~~date~~deferred oftax ~~the meeting~~assets. Therefore, ~~Since this grant was intended~~ as ~~compensation~~of ~~for~~June ~~annual service~~30, ~~and~~ ~~since the vesting policy requires quarterly vesting of non-employee director options~~2011, the Company ~~recorded~~continued ~~$9,000~~to ofrecord ~~share-based compensation~~a ~~for~~100% ~~the~~valuation ~~non-employee~~reserve ~~directors~~against ~~for~~all ~~the~~of ~~three months ended March 31, 2011 and $20,000 for~~ the ~~three~~deferred ~~months~~tax ~~ended March 31, 2010 utilizing the Black-Scholes valuation model~~assets.

5Reclassification: Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications include the accounting for the Company’s red blood cell collection operation as discontinued operations as discussed in Note 3. As a result, the financial results for this operation have been reported as discontinued operations, and the assets and liabilities as held for sale, in the consolidated financial statements as of June 30, 2011. Since the consolidated financial statements for the three and six months ended June 30, 2010 previously reported these operations as part of continuing operations, the financial results and cash flow statement have been reclassified to reflect the change in the status of the red blood cell portion of the business as discontinued operations.

~~HemaCare Corporation Notes~~RECENT toACCOUNTING ~~Unaudited Condensed Consolidated Financial Statements~~PRONOUNCEMENTS

~~Income Taxes:~~In ~~The~~May ~~process~~2011, ofFASB ~~preparing~~issued ~~the~~Accounting ~~financial~~Standards ~~statements~~Update ~~requires~~(“ASU”) ~~management~~2011-04, ~~estimates~~Fair ofValue ~~income~~Measurement ~~taxes~~(Topic in820): ~~each~~Amendments ofto ~~the jurisdictions~~achieve ~~that~~common ~~the~~fair ~~Company~~value ~~operates.~~measurement ~~This process involves estimating current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax~~ and ~~accounting~~disclosure ~~purposes.~~requirements ~~These differences result~~ in ~~deferred~~U.S. ~~tax assets~~GAAP and ~~liabilities,~~IFRS. ~~which~~The ~~are~~amendments ~~included~~ in the ~~balance~~ASU ~~sheet.~~change ~~Pursuant to ASC Topic 740, Income Taxes,~~ the ~~Company~~wording ~~utilizes an~~used ~~asset~~to ~~and~~describe ~~liability~~requirements ~~approach~~in ~~that~~U.S. ~~requires~~GAAP ~~the~~for ~~recognition~~measuring offair ~~deferred~~value ~~tax assets~~ and ~~liabilities~~ for ~~the~~disclosing ~~expected~~information ~~future~~about ~~tax consequences~~fair ofvalue ~~events~~measurements. ~~that~~The ~~have~~amendments ~~been~~are ~~recognized~~effective induring ~~the~~interim ~~Company’s~~and ~~financial~~annual ~~statements~~periods orbeginning ~~tax~~after ~~returns~~December 15, 2011. Management ~~must~~does ~~assess the~~not ~~likelihood~~believe that the ~~deferred~~adoption ~~tax~~of ~~assets~~this orstandard ~~liabilities~~ will behave ~~realized for future periods, and to the extent management believes that realization is not likely, must establish~~ a ~~valuation~~material ~~allowance.~~impact To the ~~extent~~Company’s afinancial ~~valuation allowance is created or adjusted in a period~~position, ~~the~~results ~~Company~~of ~~must~~operations ~~include an expense~~ or ~~benefit~~cash ~~within the tax provision in the statements of operations~~flows.

Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. It is possible that a selection of different input variables could produce a materially different estimate of the provision, asset, liability and valuation allowance.7

~~Based~~HemaCare on management’s analysis of the Company’s recent performance, management determined that there was insufficient evidence of future profitability to ensure that the Company would be more likely than not to realize any benefit from the deferred tax assets. Therefore, as of March 31, 2011, the Company continued to record a 100% valuation reserve against all of the deferred tax assets.Corporation

~~CONCENTRATION~~Notes OFto ~~CREDIT RISK~~Unaudited Condensed Consolidated Financial Statements -- continued

~~The~~CONCENTRATION ~~Company~~OF ~~maintains~~CREDIT cash balances at various financial institutions. Deposits not exceeding $250,000 for each institution are insured by the Federal Deposit Insurance Corporation. Section 343 of the Dodd-Frank Act amends the Federal Deposit Insurance Act to include noninterest-bearing transaction accounts as a new temporary deposit insurance account category. All funds held in noninterest-bearing transaction accounts will be fully insured, without limit, through December 31, 2012. At March 31, 2011, the Company had $410,000 of uninsured cash and at December 31, 2010, the Company had uninsured cash of $410,000. Cash and cash equivalents for continuing operations on March 31, 2011 were $2,194,000.RISK

6The Company maintains cash balances at various financial institutions. Deposits not exceeding $250,000 for each institution are insured by the Federal Deposit Insurance Corporation. Section 343 of the Dodd-Frank Act amends the Federal Deposit Insurance Act to include noninterest-bearing transaction accounts as a new temporary deposit insurance account category. All funds held in noninterest-bearing transaction accounts will be fully insured, without limit, through December 31, 2012.

~~HemaCare Corporation Notes~~Note ~~to Unaudited Condensed Consolidated Financial Statements~~2—Inventory

~~Note 2—Inventory~~Inventories for continuing operations consist of Company-manufactured platelets. Supplies consist primarily of medical supplies used to collect and manufacture platelets and to provide therapeutic services. Inventories for discontinued operations consist of whole blood components and other blood products, as well as component blood products purchased for resale. Inventories are stated at the lower of cost or market and are accounted for on a first-in, first-out basis.

Inventories ~~consist~~are ofcomprised ~~Company-manufactured platelets, whole blood components and other blood products, as well as component blood products purchased for resale. Supplies consist primarily~~ of ~~medical supplies used to collect and manufacture products and to provide therapeutic services. Inventories are stated at~~ the ~~lower~~following ofas ~~cost or market and are accounted for on a first-in, first-out basis.~~of:

Inventories are comprised of the following as of:

	June 30,			December 31,
	2011			2010
Continuing Operations
Supplies	$	448,000		$	461,000
Blood products		106,000			116,000
Less: obsolescence reserve		(32,000	)		-
Total	$	522,000		$	577,000

	March 31,		December 31,
	2011		2010
Supplies	$	459,000	$	461,000
Blood products		262,000		156,000
Total	$	721,000	$	617,000

Note 3 - Discontinued Operations

On July 11, 2011, the Company completed the sale of its red blood cell collection operation assets in California and Maine to The American National Red Cross. See Note 3 10 of Notes to Consolidated Financial Statements. The Assets included automobiles and equipment, finished goods and work-in-process ~~Discontinued~~inventory ~~Operations~~of blood products, a trademark and books and records relating to blood drive sponsors and blood donors.

On November 5, 2007, the Board of Directors of the Company’s wholly owned subsidiary, HemaCare BioScience, Inc. (“HemaBio”), in consultation with, and with the approval of, the Board of Directors of the Company, decided that it was in the best interest of HemaBio’s creditors to close all operations of HemaBio. On December 4, 2007, HemaBio executed an Assignment for Benefit of Creditors, under Florida Statutes Section 727.101 et seq. (“Assignment”), assigning all of its assets to an assignee, who is responsible for taking possession of, protecting, preserving, and liquidating such assets and ultimately distributing the proceeds to creditors of HemaBio according to their priorities as established by Florida law. The assignee continues to fulfill his obligations under the Assignment, but has not concluded his efforts to liquidate all of the assets or complete a final distribution of all proceeds to HemaBio’s creditors.

When the Company acquired HemaBio, two former HemaBio investors, Dr. Lawrence Feldman and Dr. Karen Raben, each held a $250,000 note from HemaBio. Both of these notes require four equal annual installments of $62,500, plus accrued interest, commencing August 29, 2007, until paid and pay interest at 7% annually, and are secured by all of the assets of HemaBio.

HemaBio failed to pay the first installments due to Drs. Feldman and Raben on August 29, 2007 of $160,000, which included $35,000 in accrued interest. Under the terms of the promissory notes between HemaBio and Drs. Feldman and Raben, failure to pay any of the scheduled payments when due causes the entire unpaid balance, including unpaid interest, to become immediately due and payable, and causes the stated interest rate on both notes to increase to 10% per annum. Therefore, since August 29, 2007, HemaBio, now shown as discontinued operations, recognized accrued interest expense on the outstanding balance on both notes at an interest rate of 10%, which totaled $12,000 for the three months ended March 31, 2011.8

AsHemaCare ~~of March 31, 2011, HemaBio’s default on the notes to Drs. Feldman and Raben remains unresolved.~~Corporation

InNotes accordance with GAAP, the results of operations of HemaBio, along with an estimate of all closure related costs were recorded in 2007. The following is the breakdown of the assets held for sale and the liabilities related to ~~the~~Unaudited ~~assets~~Condensed ~~held~~Consolidated ~~for~~Financial ~~sale~~Statements ~~for~~-- ~~the discontinued operations as of March 31, 2011 and December 31, 2010:~~continued

7HemaBio failed to pay the first installments due to Drs. Feldman and Raben on August 29, 2007 of $160,000, which included $35,000 in accrued interest. Under the terms of the promissory notes between HemaBio and Drs. Feldman and Raben, failure to pay any of the scheduled payments when due causes the entire unpaid balance, including unpaid interest, to become immediately due and payable, and causes the stated interest rate on both notes to increase to 10% per annum. Therefore, since August 29, 2007, HemaBio, now shown as discontinued operations, recognized accrued interest expense on the outstanding balance on both notes at an interest rate of 10%, which totaled $12,000 and $25,000 for the three and six months ended June 30, 2011.

~~HemaCare Corporation Notes~~As of June 30, 2011, HemaBio’s default on the notes to ~~Unaudited~~Drs. ~~Condensed~~Feldman ~~Consolidated~~and ~~Financial~~Raben ~~Statements~~remains unresolved.

~~Discontinued~~In ~~Operations~~accordance with GAAP, the results of operations of HemaBio, along with an estimate of all closure related costs were recorded in 2007.

	March 31,		December 31,
	2011		2010
Assets held for Sale
Cash and cash equivalents	$	246,000	$	210,000
Total assets held for sale	$	246,000	$	210,000
Liabilities related to assets held for sale
Accounts payable	$	809,000	$	774,000
Accrued payroll and payroll taxes		603,000		603,000
Accrued interest		230,000		217,000
Notes payable		500,000		500,000
Total liabilities related to assets held for sale	$	2,142,000	$	2,094,000

When the Board of Directors of HemaBio authorized the execution of the Assignment, HemaBio conveyed all of its assets, defined as “all real property, fixtures, goods, stock inventory, equipment, furniture, furnishings, accounts receivable, bank deposits, cash, promissory notes, cash value and proceeds of insurance policies, claims and demands”, to the Assignee. The Assignee is then responsible for liquidating any non-monetary assets, for the purpose of eventually satisfying any and all creditor claims against HemaBio. Unlike a federal bankruptcy proceeding, the Florida Assignment process does not stay any legal action the creditors might choose to force HemaBio to pay claims.

~~When~~Therefore, ~~the~~management ~~Board~~concluded ofthat ~~Directors~~given ofthe ~~HemaBio authorized~~liabilities ~~the~~remain ~~execution~~outstanding ofthroughout the Assignment, ~~HemaBio~~it ~~conveyed~~was ~~all~~appropriate ofto ~~its~~keep ~~assets,~~these ~~defined~~liabilities ason ~~“all~~the ~~real~~books ~~property, fixtures, goods, stock inventory, equipment, furniture, furnishings, accounts receivable, bank deposits, cash, promissory notes, cash value and proceeds~~ of ~~insurance~~HemaBio ~~policies,~~as ~~claims~~outstanding ~~and~~until ~~demands”,~~such totime as the Assignee. ~~The~~pays ~~Assignee~~these ~~is then responsible for liquidating any non-monetary assets~~claims, ~~for~~or the ~~purpose~~claimants ofrights ~~eventually~~to ~~satisfying~~pursue ~~any and all creditor~~ claims ~~against~~expires ~~HemaBio.~~pursuant ~~Unlike~~to ~~a federal bankruptcy proceeding,~~ the Florida ~~Assignment~~statute ~~process~~of ~~does not stay any legal action the creditors might choose to force HemaBio to pay claims~~limitations.

~~Therefore,~~Management ~~management~~analyzed ~~concluded~~all ~~that given~~of the ~~liabilities~~claims ~~remain~~submitted ~~outstanding~~to ~~throughout~~ the ~~Assignment~~Assignee, itand ~~was~~after ~~appropriate~~reviewing tothe ~~keep~~applicable ~~these~~Florida ~~liabilities~~statute onof limitations, management determined that the ~~books~~claimant’s ~~of HemaBio~~rights asto ~~outstanding~~pursue ~~until~~claims ~~such~~would ~~time~~not asexpire ~~the~~until ~~Assignee~~November ~~pays~~2011 ~~these~~at ~~claims~~the earliest. Therefore, ormanagement ~~the~~concluded ~~claimants~~that ~~rights~~none toof ~~pursue~~the claims ~~expires~~against ~~pursuant to~~HemaBio ~~the~~can ~~Florida~~be ~~statute~~removed as of ~~limitations~~June 30, 2011.

Management analyzed all of the claims submitted to the Assignee, and after reviewing the applicable Florida statute of limitations, management determined that the claimant’s rights to pursue claims would not expire until November 2011 at the earliest. Therefore, management concluded that none of the claims against HemaBio can be removed as of March 31, 2011.9

~~Note 4—Line~~HemaCare ~~of Credit and Notes Payable~~Corporation

OnNotes December 9, 2009, the Company, together with the Company’s subsidiary, Coral Blood Services, Inc., entered into a new Credit Agreement (the “New Wells Agreement”), and related security agreements, with Wells Fargo to ~~replace~~Unaudited ~~the~~Condensed ~~Wells~~Consolidated ~~Fargo~~Financial ~~Agreement~~Statements ~~entered~~-- into on April 10, 2008. The New Wells Agreement provided that the Company could borrow the lesser of 80% of eligible accounts receivable or $5 million, and had a maturity date of December 1, 2011. Most of the terms in the New Wells Agreement were similar to those in the former Wells Fargo Agreement; however, the New Wells Agreement provided that the Company pay interest on a monthly basis on any outstanding balance at 0.25% above the bank’s prime rate, but eliminated any minimum monthly interest requirement. The New Wells Agreement also granted the bank a first priority security interest in all of the assets of the Company and Coral Blood Services, Inc.continued

8The following is the breakdown of the assets held for sale and liabilities related to assets held for sale for discontinued operations as of June 30, 2011 and December 31, 2010.

HemaCare Corporation Notes to Unaudited Condensed Consolidated Financial Statements

	June 30		December 31,
	2011		2010

Assets held for sale
Cash and cash equivalents	$	246,000	$	210,000
Inventory		40,000		40,000
Fixed assets (net of accumulated depreciation of $1,184,000 on June 30, 2011 and $1,134,000 on December 31, 2010)		163,000		213,000
	$	449,000	$	463,000

Liabilities related to assets held for sale
Accounts payable	$	809,000	$	774,000
Accrued payroll and payroll taxes		603,000		603,000
Accrued interest		242,000		217,000
Notes payable		500,000		500,000
Total liabilities related to assets held for sale	$	2,154,000	$	2,094,000

The ~~Company~~following ~~had~~are ~~no outstanding borrowings under~~ the ~~New~~components ~~Wells Agreement as~~ of ~~December~~income ~~31,~~from ~~2010,~~discontinued ~~except for a letter of credit issued by Wells Fargo as security for lease obligations associated with the Company’s Van Nuys facility~~operations. The Company is required to maintain a letter of credit under the lease, initially in the amount of $815,000 and reducing by 10% each year on August 14, 2009, 2010, 2011 and 2012, and 20% each year on August 14, 2013 and 2014. At March 31, 2011, the letter of credit was for $660,000. No amounts have been drawn against the letter of credit.

The New Wells Agreement also required that the Company maintain certain financial covenants which the Company had not maintained and was in default at December 31, 2010.

	Three Months Ended				Six Months Ended
	June 30		June 30		June 30		June 30
	2011		2010		2011		2010


Revenue	$	2,748,000	$	4,266,000	$	5,826,000	$	8,433,000

Operating expenses		2,501,000		3,352,000		5,411,000		6,711,000

Gross Profit		247,000		914,000		415,000		1,722,000

General and administrative expenses		67,000		71,000		130,000		127,000

Income from discontinued operations		180,000		843,000		285,000		1,595,000

Provision for income tax		-		-		-		-

Income from discontinued operations, net of tax	$	180,000	$	843,000	$	285,000	$	1,595,000

~~Effective~~Note as4—Line of ~~January 15, 2011, in consideration of Wells Fargo waiving the Company’s existing defaults under the~~ Credit ~~Agreement, the Company agreed to amend the New Wells Agreement to provide that outstanding borrowings, including outstanding advances~~ and ~~letters~~Notes of credit, shall not at any time exceed the amount of cash collateral in a segregated, blocked deposit account maintained by the Company with Wells Fargo and with respect to which Wells Fargo has been granted a first priority security interest to secure all present and future indebtedness of the Company to Wells Fargo. Pursuant to this arrangement, the Company has pledged $660,000 in cash to Wells Fargo, and the Company has outstanding letters of credit for an aggregate of $660,000 under the New Wells Agreement.Payable

~~Note~~ On December 9, 2009, the Company, together with the Company’s subsidiary, Coral Blood Services, Inc., entered into a Credit Agreement (the “Wells Agreement”), and related security agreements, with Wells Fargo Bank, N.A. The Wells Agreement provided that the Company could borrow the lesser of 80% of eligible accounts receivable or $5~~—Shareholders~~ million, had a maturity date of December 1, 2011, and provided for the monthly payment of interest at a rate of 0.25% above the bank’s ~~Equity~~prime rate. The Wells Agreement also granted the bank a first priority security interest in all of the assets of the Company and Coral Blood Services, Inc.

Pursuant to ASC Topics 505, Equity and 718, Stock Compensation, the cost resulting from all share-based payment transactions must be recognized in the Company’s consolidated financial statements. For 2011, the Company recognizes compensation expense related to stock options granted to employees based on compensation cost for all share-based payments granted prior to March 31, 2011, based on the grant date fair value estimated in accordance with ASC Topics 505, Equity and 718, Stock Compensation. For the three months ended March 31, 2011, the Company recognized $33,000 in share-based compensation costs, including $9,000 of share-based compensation for non-employee director options. See Note 1 of Notes to Consolidated Financial Statements.10

~~The~~HemaCare ~~following summarizes the activity of the Company’s stock options for the three months ended March 31, 2011:~~Corporation

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Number of shares under option:
Outstanding at January 1, 2011		1,569,000		$	1.05
Granted		415,000			0.29
Exercised		—			—
Cancelled or expired		(94,000	)		1.38
Forfeited		(35,000	)		0.52
Outstanding at March 31, 2011		1,855,000		$	0.88		6.8
Exercisable at March 31, 2011		1,207,750		$	1.13		5.3

Notes to Unaudited Condensed Consolidated Financial Statements -- continued

9The Company had no outstanding borrowings under the Wells Agreement as of June 30, 2011, except for a letter of credit issued by Wells Fargo as security for lease obligations associated with the Company’s Van Nuys facility. The Company is required to maintain a letter of credit under the lease, initially in the amount of $815,000 and reducing by 10% each year on August 14, 2009, 2010, 2011 and 2012, and 20% each year on August 14, 2013 and 2014. At June 30, 2011, the letter of credit was for $660,000. No amounts have been drawn against the letter of credit.

~~HemaCare Corporation Notes~~The toWells ~~Unaudited~~Agreement ~~Condensed~~also ~~Consolidated~~required ~~Financial~~that ~~Statements~~the Company maintain certain financial covenants which the Company had not maintained and was in default at December 31, 2010.

~~The~~Effective ~~following~~as ~~summarizes~~of ~~the~~January ~~activity~~ 15, 2011, in consideration of Wells Fargo waiving the Company’s ~~stock~~existing ~~options~~defaults under the Wells Agreement, the Company agreed to amend the Wells Agreement to provide that ~~have~~outstanding borrowings, including outstanding advances and letters of credit, shall not ~~yet~~at ~~vested~~any astime exceed the amount of ~~March~~cash 31collateral in a segregated, ~~2011:~~blocked deposit account maintained by the Company with Wells Fargo and with respect to which Wells Fargo has been granted a first priority security interest to secure all present and future indebtedness of the Company to Wells Fargo. Pursuant to this arrangement, the Company has pledged $660,000 in cash to Wells Fargo, and the Company has outstanding letters of credit for an aggregate of $660,000 under the Wells Agreement.

	Shares			Weighted Average Fair Value
Nonvested at January 1, 2011		317,000		$	0.53
Granted		415,000			0.26
Vested		(49,750	)		0.48
Forfeited		(35,000	)		0.48
Nonvested at March 31, 2011		647,250		$	0.36

On July 5, 2011, the Company entered into a second amendment to the Wells Agreement, pursuant to which the parties amended the Wells Agreement to (i) reduce outstanding borrowings, including outstanding advances and letters of credit, to $660,000, which is the amount of cash collateral the Company maintains in a segregated, blocked deposit account with Wells Fargo, (ii) provide for Wells Fargo’s release of its security interests on all assets of the Company and Coral Blood Services other than a security interest on the cash collateral the Company maintains in a segregated, blocked deposit account with the bank, and terminated certain ancillary agreements pursuant to which the bank perfected its security interest in certain assets of the Company and Coral Blood Services, and (iii) to modify and delete certain affirmative and negative covenants of the Company and Coral Blood Services.

AsNote of5—Shareholders’ March 31, 2011, there was $157,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under existing share-based payments. This cost is expected to be recognized over a weighted-average period of 3.3 years. The total measurement fair value of shares vested during the three months ended March 31, 2011 was $24,000.Equity

~~The Black~~Pursuant to ASC Topics 505, Equity and 718, Stock Compensation, the cost resulting from all share-~~Scholes~~based ~~option~~payment ~~pricing~~transactions ~~model~~must isbe ~~used~~recognized byin the Company’s toconsolidated ~~determine~~financial statements. For 2011, the ~~weighted~~Company ~~average~~recognizes ~~fair~~compensation ~~value of~~expense related to stock options granted to employees based on compensation cost for all share-based payments. ~~The~~granted prior to June 30, 2011, based on the grant date fair value atestimated ~~date~~in ofaccordance ~~grant~~with ASC Topics 505, Equity and 718, Stock Compensation. For the ~~assumptions~~three ~~utilized~~and tosix ~~determine~~months ~~such~~ended ~~values~~June ~~are~~30, ~~indicated~~2011, the Company recognized $17,000 and $50,000 in share-based compensation costs, respectively including $7,000 and $16,000 of share-based compensation for non-employee director options. For the ~~following~~three ~~table:~~and six months ended June 30, 2010, the Company recognized $24,000 and $83,000 in share-based compensation costs, including $16,000 and $36,000 of share-based compensation for non-employee director options. See Note 1 of Notes to Consolidated Financial Statements.

Weighted average fair value at date of grant for share-based payments awarded during the period		$ 0.26
Weighted average fair value for options exercised during the period		$ 0.00
Weighted average fair value at date of grant for share-based payments vested during the period		$ 0.48
Risk-free interest rates		2.8%
Expected stock price volatility		128.9%
Expected dividend yield		0%
Expected forfeitures		29.5%

~~The~~HemaCare Company does not assume a forfeiture rate when assessing value for options held by independent members of the Board of Directors. Since options issued to independent board members are not forfeited upon separation from the Company, management has determined it is inappropriate to assign a forfeiture rate to these options.Corporation

~~The~~Notes ~~Company uses the 2006 Plan~~ to ~~encourage ownership~~Unaudited inCondensed ~~the~~Consolidated ~~Company~~Financial byStatements ~~key personnel whose long~~-~~term~~- ~~service is considered essential to the Company’s~~ continued progress, thereby linking these employees directly to stockholder interests through increased stock ownership. A total of 2,200,000 shares of the Company’s common stock have been reserved for issuance under the 2006 Plan. As of March 31, 2011, the Company had utilized 1,517,835 of the shares reserved under the 2006 Plan, and 682,165 shares remain available. Awards may be granted to any employee, director or consultant, or those of the Company’s affiliates.

~~Prior~~The tofollowing summarizes the ~~2006~~activity ~~Plan,~~of the Company ~~utilized~~’s ~~the~~stock ~~1996~~options ~~Stock~~for ~~Incentive~~the ~~Plan~~six ~~(“1996~~months ~~Plan”).~~ended ~~The~~June ~~1996 Plan expired on July 19~~30, ~~2006, although options remain outstanding that were originally issued under this plan.~~2011:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Number of shares under option:
Outstanding at January 1, 2011		1,569,000		$	1.05			$	66,210
Granted		415,000			0.29				83,000
Exercised		-			-
Cancelled or expired		(119,000	)		1.40				460
Forfeited		(35,000	)		0.52				400
Outstanding at June 30, 2011		1,830,000		$	0.87		6.6	$	148,350
Exercisable at June 30, 2011		1,215,500		$	1.10		5.3	$	71,210

~~HemaCare Corporation Notes~~The tofollowing ~~Unaudited~~summarizes ~~Condensed~~the ~~Consolidated~~activity ~~Financial~~of ~~Statements~~the Company’s stock options that have not yet vested as of June 30, 2011:

Note 6—Earnings per Share

	Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2011		317,000		$	0.53
Granted		415,000			0.25
Vested		(82,500	)		0.42
Forfeited		(35,000	)		0.48
Nonvested at June 30, 2011		614,500		$	0.36

As of June 30, 2011, there was $140,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under existing share-based payments. This cost is expected to be recognized over a weighted-average period of 3.2 years. The ~~following~~total ~~table~~measurement ~~provides~~fair ~~the~~value ~~calculation methodology~~of ~~for~~shares vested during the ~~numerator~~three and ~~denominator~~six ~~for~~months ~~basic~~ended ~~and~~June ~~diluted~~30, ~~earnings~~2011 ~~per~~was ~~share:~~$11,000 and $35,000.

	Three Months Ended March 31,
	2011			2010
Net loss from continuing operations	$	(378,000	)	$	(192,000	)
Weighted average shares outstanding		9,712,948			10,049,539
Weighted average diluted shares outstanding		9,712,948			10,049,539
Loss per share from continuing operations - basic and diluted	$	(0.04	)	$	(0.02	)
Net loss from discontinued operations	$	(12,000	)	$	(12,000	)
Loss per share from discontinued operations - basic and diluted	$	(0.00	)	$	(0.00	)
Net loss	$	(390,000	)	$	(204,000	)
Loss per share - basic and diluted	$	(0.04	)	$	(0.02	)

The Black-Scholes option pricing model is used by the Company to determine the weighted average fair value of share-based payments. The fair value at date of grant and the assumptions utilized to determine such values are indicated in the following table:

Options outstanding for 1,855,000 shares of common stock for the three months ended March 31, 2011 have been excluded from the above calculation because their effect would have been anti-dilutive.

	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011
Weighted average fair value for options exercised During the period		N/A		N/A
Weighted average fair value at date of grant for share-based payments vested during the period	$	0.33	$	0.42
Risk-free interest rates				2.8%
Expected stock price volatility				128.9
Expected dividend yield			$	0
Expected forfeitures		29.5%		29.5%

~~Options outstanding for 1,801,000 shares of common stock for the three months ended March 31, 2010 have been excluded from the above calculation because their effect would have been anti-dilutive.~~12

~~Note 7—Provision~~The Company does not assume a forfeiture rate when assessing value for ~~Income~~options ~~Taxes~~held by independent members of the Board of Directors. Since options issued to independent board members are not forfeited upon separation from the Company, management has determined it is inappropriate to assign a forfeiture rate to these options.

The ~~process~~Company ofuses ~~preparing~~ the ~~financial statements~~2006 ~~includes~~Plan ~~estimating~~to ~~income~~encourage ~~taxes~~ownership in ~~each of~~ the ~~jurisdictions that the~~ Company ~~operates.~~by ~~This~~key ~~process~~personnel ~~involves~~whose ~~estimating actual~~long-term ~~current~~service ~~tax~~is ~~exposure~~considered ~~together~~essential ~~with~~to ~~assessing~~the ~~temporary~~Company’s ~~differences~~continued ~~resulting~~progress, ~~from~~thereby ~~differing~~linking ~~treatment~~these ofemployees ~~items~~directly ~~for~~to ~~tax~~stockholder ~~and accounting~~interests ~~purposes.~~through ~~These~~increased ~~differences~~stock ~~result in deferred tax assets and liabilities, which are included in the balance sheet~~ownership. ~~Under~~ A ~~the~~total ~~provisions~~ of ~~ASC 740-10~~2,200,000 ~~the~~shares ~~Company must utilize an asset and liability approach that requires the recognition~~ of ~~deferred tax assets and liabilities for~~ the ~~expected future tax consequences of events that have been recognized in the~~ Company’s ~~financial~~ ~~statements~~common orstock ~~tax~~have ~~returns.~~been ~~Management~~reserved ~~must~~for ~~assess~~issuance ~~the~~under ~~likelihood that~~ the ~~deferred~~2006 ~~tax~~Plan. ~~assets~~As orof ~~liabilities~~June ~~will~~30, ~~be realized for future periods~~2011, ~~and to~~ the ~~extent~~Company ~~management~~had ~~believes~~utilized ~~that realization is not likely~~1,517,835 ~~must~~of ~~establish a valuation allowance. To~~ the ~~extent~~shares areserved ~~valuation~~under ~~allowance is created or adjusted in a period,~~ the ~~Company~~2006 ~~must include an expense~~Plan, orand ~~benefit~~682,165 ~~within the~~shares ~~tax~~remain ~~provision in the statements of operations~~available. Awards ~~Significant~~may ~~management~~be ~~judgment~~granted ~~is required~~ to ~~determine~~any ~~the~~employee, ~~provision~~director ~~for~~or ~~income taxes~~consultant, ~~deferred~~or ~~tax~~those ~~asset~~of ~~and~~the ~~liabilities~~Company’s ~~and any valuation allowance recorded against net deferred tax assets~~affiliates.

~~Based~~Prior onto ~~management’s analysis of~~ the ~~Company’s~~2006 ~~recent performance~~Plan, ~~management determined that there was insufficient evidence of guaranteed future profitability to ensure that~~ the Company ~~would~~utilized ~~realize~~the ~~any~~1996 ~~benefit~~Stock ~~from~~Incentive ~~the~~Plan ~~deferred~~(“1996 ~~tax assets~~Plan”). The ~~Therefore,~~1996 asPlan ofexpired ~~March~~on 31July 19, ~~2011~~2006, ~~the~~although ~~Company continued~~options toremain ~~record~~outstanding athat ~~100%~~were ~~valuation~~originally ~~reserve~~issued ~~against~~under ~~all~~this ~~of the deferred tax assets~~plan.

11Note 6—Earnings per Share

~~HemaCare Corporation Notes~~The tofollowing ~~Unaudited~~table ~~Condensed~~provides ~~Consolidated~~the ~~Financial~~calculation ~~Statements~~methodology for the numerator and denominator for basic and diluted earnings per share:

Note 8—Business Segments

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net (loss) income from continuing operations	$	(432,000	)	$	(620,000	)	$	(927,000	)	$	(1,575,000	)

Weighted average shares outstanding		9,712,948			10,049,148			9,712,948			10,049,339
Net effect of dilutive options		-			185,000			-			183,000
Weighted average diluted shares outstanding		9,712,948			10,234,148			9,712,948			10,232,339

(Loss) income per share from continuing operations - diluted	$	(0.04	)	$	(0.06	)	$	(0.10	)	$	(0.15	)

Net income (loss) from discontinued operations	$	180,000		$	843,000		$	285,000		$	1,595,000

Income (loss) per share from discontinued operations - diluted	$	0.02		$	0.08		$	0.03		$	0.16

Net loss	$	(252,000	)	$	223,000		$	(642,000	)	$	20,000

Loss per share - diluted	$	(0.03	)	$	0.02		$	(0.07	)	$	-

~~HemaCare~~Options ~~operates~~outstanding infor ~~two~~1,830,000 ~~business~~shares ~~segments as~~of ~~follows:~~common stock for the three and six months ended June 30, 2011 have been excluded from the above calculation because their effect would have been anti-dilutive.

·Options ~~Blood~~outstanding ~~Services—~~for ~~Supplies~~970,000 ~~hospitals~~shares ~~and~~of ~~health~~common ~~research~~stock ~~related~~for ~~organizations~~the ~~with~~three ~~red~~and ~~blood~~six ~~cells,~~months ~~apheresis~~ended ~~platelets~~June 30, ~~and~~2010 ~~other~~have ~~blood~~been ~~products~~excluded from the above calculation because their effect would have been anti-dilutive.

~~· Therapeutic Services—Provides therapeutic apheresis, stem cell collection procedures and other therapeutic services to patients.~~13

~~There~~HemaCare ~~were no intersegment revenues for the three month period ended March 31, 2011.~~Corporation

~~Note 9—Commitments~~Notes ~~and~~to ~~Contingencies~~Unaudited Condensed Consolidated Financial Statements -- continued

~~State~~Note ~~and~~7—Provision ~~federal~~for ~~laws~~Income set forth anti-kickback 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.Taxes

~~Healthcare~~The ~~reform~~process ~~became~~of ~~law~~preparing the financial statements includes estimating income taxes in ~~March 2010;~~each ~~however~~of the jurisdictions that the Company operates. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, ~~reconciliation~~which are included in the balance sheet. Under the provisions of ASC 740-10, the Company must utilize an asset and ~~implementation~~liability approach that requires the recognition of deferred tax assets and liabilities for the ~~law~~expected ~~continues~~future totax consequences of events that have been recognized in the Company’s financial statements or tax returns. Management must assess the likelihood that the deferred tax assets or liabilities will be ~~under~~realized ~~consideration~~for byfuture ~~lawmakers~~periods, and itto the extent management believes that realization is not ~~certain as~~likely, tomust ~~what~~establish ~~changes~~a ~~may~~valuation beallowance. ~~made~~To the extent a valuation allowance is created or adjusted in a period, the ~~future~~Company ~~regarding~~must ~~health~~include ~~care~~an ~~policies~~expense, ~~However~~or benefit, ~~policies~~within ~~regarding~~the ~~reimbursement~~tax provision in the statements of operations. Significant management judgment is required to determine the provision for income taxes, ~~universal health~~deferred ~~insurance~~tax asset and ~~managed~~liabilities ~~competition~~and ~~may~~any ~~materially~~valuation ~~impact~~allowance ~~the~~recorded ~~Company’s~~against ~~operations~~net deferred tax assets.

~~The~~Based ~~Company~~on ismanagement’s ~~party~~analysis toof ~~various~~the ~~claims~~Company’s recent performance, ~~actions~~ ~~and~~management ~~proceedings~~determined ~~incidental~~that tothere ~~its~~was ~~normal~~insufficient ~~business~~evidence ~~operations.~~of ~~The~~guaranteed ~~Company~~future ~~believes~~profitability ~~the~~to ~~outcome~~ensure ofthat ~~such~~the ~~claims,~~Company ~~actions and~~would ~~proceedings,~~realize ~~individually~~any ~~and~~benefit infrom the ~~aggregate~~deferred tax assets. Therefore, ~~will~~as ~~not~~of ~~have~~June a30, ~~material~~2011, ~~adverse~~the ~~effect~~Company oncontinued ~~the~~to ~~business~~record ~~and~~a ~~financial~~100% ~~condition~~ valuation reserve against all of the ~~Company~~deferred tax assets.

Note 10 8—~~Subsequent~~Business ~~Events~~Segments

InHemaCare ~~accordance~~operates with the provisions of ASC 855-10, management evaluated all material events occurring subsequent to the balance sheet date through the time of filing of this Form 10-Q for events requiring disclosure or recognition in ~~the~~two ~~Company’s~~business ~~consolidated~~segments ~~financial~~as ~~statements. Management determined that there were no subsequent events requiring disclosure or recognition in the Company’s consolidated financial statements.~~follows:

12· Blood Services—Includes sales of red blood cells, apheresis platelets, and other blood products to hospitals and research, cellular therapy and other health related organizations. Revenues from research projects and cellular therapy collections are included in the blood services segment.

~~Item 2. Management’s~~· ~~Discussion~~Therapeutic ~~and~~Services—Provides ~~Analysis~~therapeutic ofapheresis, ~~Financial~~stem ~~Condition~~cell collection procedures and ~~Results~~other oftherapeutic ~~Operations~~services to patients.

~~The~~There ~~information~~were ~~contained~~no inintersegment ~~this Form~~revenues ~~10-Q is intended to update the information contained in the Company’s Annual Report on Form 10-K~~ for the ~~year~~three ~~ended December 31, 2010~~ and ~~presumes~~six ~~that~~month ~~readers~~periods ~~have~~ended ~~access~~June to30, ~~and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K~~2011. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the Company’s financial statements and the related notes provided under “Item 1-Financial Statements” above.

~~The~~Note ~~matters~~9—Commitments ~~discussed in “Management’s Discussion~~ and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q that are not historical are forward-looking statements. These statements may also be identified by the use of words such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “project,” “will” and similar expressions, as they relate to the Company, its management and its industry. Investors and prospective investors are cautioned that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results could differ materially from those described in this report because of numerous factors, many of which are beyond the Company’s control. These factors include, without limitation, those described under Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. The Company does not undertake to update its forward-looking statements to reflect later events and circumstances or actual outcomes.Contingencies

~~General~~State and federal laws set forth anti-kickback 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.

~~HemaCare~~Healthcare ~~operates~~reform inbecame ~~two~~law ~~primary~~in ~~business segments.~~March ~~The~~2010; ~~first~~however, isreconciliation ~~the~~and ~~blood~~implementation ~~services~~of ~~segment~~the ~~which~~law ~~supplies~~continues ~~hospitals~~to ~~and~~be ~~health~~under ~~research~~consideration ~~related~~by ~~organizations with red blood cells~~lawmakers, ~~apheresis platelets,~~ and ~~other~~it ~~blood~~is ~~products.~~not ~~The~~certain ~~Company~~as ~~operates~~to ~~and~~what ~~manages~~changes ~~donor~~may ~~centers~~be ~~and~~made ~~mobile~~in ~~donor~~the ~~vehicles to~~future ~~collect~~regarding ~~blood~~health ~~products~~care ~~from~~policies; ~~donors,~~however ~~and~~policies ~~purchases~~regarding ~~blood~~reimbursement, ~~products~~universal ~~from~~health ~~other~~insurance ~~suppliers. We include revenues from research projects~~ and ~~cellular~~managed ~~therapy~~competition ~~collections~~may inmaterially impact the ~~blood~~Company’s ~~services segment~~operations.

~~Additionally,~~The ~~the~~ Company ~~operates~~is ~~a therapeutic~~party ~~services~~to ~~segment~~various claims, ~~wherein~~actions ~~the~~and proceedings incidental to its normal business operations. The Company ~~performs~~believes ~~therapeutic~~the ~~apheresis~~outcome ~~procedures,~~of ~~stem~~such ~~cell~~claims, ~~collection~~actions and ~~other~~proceedings, ~~blood treatments~~individually onand ~~patients~~in ~~with~~the aaggregate, ~~variety~~will ofnot ~~disorders.~~have ~~Therapeutic~~a ~~services~~material ~~are~~adverse ~~usually~~effect ~~provided~~on ~~under~~the ~~contract~~business ~~with~~and ~~hospitals~~financial ~~as an~~condition ~~outside~~of ~~purchased~~the ~~service~~Company.

The Company has operated in Southern California since 1979. In 1998, the Company expanded operations to include portions of the eastern United States. In August 2006, the Company acquired Florida based Teragenix Corporation, subsequently renamed HemaCare BioScience, Inc. (“HemaBio”), which sourced, processed and distributed human biological specimens, manufactured quality control products and provided clinical trial management and support services. As a result of projected losses by HemaBio in the third and fourth quarters of 2007, and the resignations of key members of HemaBio’s management, the Board of Directors of HemaBio, in consultation with, and with the approval of, the Board of Directors of the Company, determined HemaBio’s business could not operate without senior management, and therefore closed all operations of HemaBio, effective November 5, 2007. See Note 3 of Notes to Consolidated Financial Statements.14

13HemaCare Corporation

~~The~~Notes ~~Company’s current strategy is~~ to ~~expand~~Unaudited ~~efforts~~Condensed ~~utilizing~~Consolidated ~~the~~Financial ~~Company’s~~Statements exemplary customer service, expertise, and infrastructure to support developing cellular therapy technologies and research organizations. This infrastructure and expertise enable the Company to collect various cellular components for cellular therapy manufacturing and future personalized patient therapies. The Company already collects allogeneic, whole-~~blood~~- derived stem cells for hospital customers, research organizations and biotech companies to support their cellular therapy research and manufacturing. In doing so, the Company directly leverages its equipment, facilities, licensure, current good manufacturing protocols (cGMP), and hospital relationships. Ultimately, the Company believes these specialized collections will generate high margin revenue through the support of advanced therapies and research activities.continued

~~Although~~Note ~~most~~10—Subsequent suppliers of transfusable blood products are organized as not-for-profit, tax-exempt organizations, all suppliers charge fees for blood products to cover their cost of operations. The Company believes that it is the only investor-owned and taxable organization operating as a transfusable blood supplier with significant operations in the U.S.Events

~~The~~In ~~Company~~accordance ~~was~~with ~~incorporated~~the inprovisions of ASC 855-10, management evaluated all material events occurring subsequent to the ~~state~~ balance sheet date through the time of ~~California~~filing of this Form 10-Q for events requiring disclosure or recognition in ~~1978~~the Company’s consolidated financial statements. Management determined that there were no subsequent events requiring disclosure or recognition in the Company’s consolidated financial statements other than the following.

~~Recent~~On ~~Developments~~July 11, 2011, the Company and its wholly-owned subsidiary, Coral Blood Services, Inc., completed the sale of the Company’s red blood cell collection operation assets in California and Maine to The American National Red Cross pursuant to the terms of an Asset Purchase Agreement entered into by the parties on July 11, 2011. The assets included automobiles and equipment, finished goods and work-in-process inventory of blood products, a trademark and books and records relating to blood drive sponsors and blood donors.

~~Specialty Collection~~In ~~Services:~~consideration ~~HemaCare~~for ~~leverages~~the ~~its~~assets, ~~expertise~~the inbuyer ~~automated~~agreed ~~cell collection (apheresis) and processing of blood products~~ to ~~provide~~pay ~~specialty collection services~~ to ~~organizations~~the ~~conducting~~Company ~~cell~~an ~~therapy~~aggregate ~~research~~of ~~and~~$3,051,000. ~~clinical~~Of ~~trials.~~the Inpurchase ~~May 2010~~price, ~~HemaCare~~$2,475,000 ~~entered~~was ~~into~~paid anon ~~agreement~~the ~~with~~closing ~~Dendreon~~date, ~~Corporation~~$51,000 ~~(NASDAQ:~~was ~~DNDN)~~paid toon ~~provide~~July ~~cellular~~22, ~~collection~~2011, ~~services in Los Angeles~~ and ~~Maine for their new autologous cellular immunotherapy~~$250,000 ~~PROVENGE®~~will ~~(sipuleucel-T).~~be ~~This~~paid ~~personalized~~in ~~medicine~~three ~~for the~~equal ~~treatment~~monthly ofinstallments ~~prostate~~on ~~cancer is Dendreon’s lead product and is~~ the ~~first autologous cellular immunotherapy specifically designed to engage patients’ own immune systems to treat cancer. In February~~30th, ~~2011,~~60th ~~HemaCare~~ and ~~Dendreon~~90th ~~amended~~days ~~their~~following ~~agreement to~~the ~~expand~~closing ~~HemaCare’s~~date. The ~~footprint~~remaining balance of ~~collection~~$275,000 ~~services~~was ~~for~~paid ~~Dendreon.~~into ~~The~~a ~~Company~~one ~~intends~~year toescrow ~~continue~~ to ~~expand~~satisfy ~~its~~the ~~business~~Company’s ofpotential ~~providing~~indemnification ~~specialty~~liabilities ~~collection services~~ to ~~Dendreon and~~the ~~similar organizations~~buyer.

~~Blood Management~~As ~~Software~~a ~~Project:~~result Onof ~~February~~the 18asset sale, ~~2011~~the Company will, ~~HemaCare~~in ~~entered~~the ~~into~~third quarter, effect a ~~Software~~reduction ~~License~~in force of approximately 93 employees in California and ~~Support~~Maine, ~~Services~~which ~~Agreement with~~will ~~Haemonetics~~result ~~Corporation~~in a third quarter charge of approximately $900,000 ~~pursuant~~in toemployment ~~which~~related ~~Haemonetics~~expenses. ~~licensed~~Additionally, toofficer usbonuses ~~its~~of ~~ElDorado~~$124,000 ~~Donor~~will ~~Software~~be ~~and~~paid ~~agreed~~in tothe ~~maintain~~third ~~and support~~quarter as a result of the ~~software~~sale.

~~Federal~~In ~~and~~connection ~~state~~with ~~regulations~~the ~~require that~~sale ~~all~~of assets, on July 11, 2011 the Company entered into a blood ~~donors~~purchase agreement with the American Red Cross, pursuant to which the Company will sell to the American Red Cross on an exclusive basis, a minimum of 7,000 and ~~blood~~a ~~donations~~maximum of 12,000 units of ISBT labeled single donor platelets per year during the term of the agreement. The platelets will be ~~tracked~~sold ~~from~~to ~~donation~~the ~~though~~American ~~processing~~Red Cross at a fixed price per unit during the first two years of the agreement, and ~~storage~~at a price equal to ~~final~~a ~~disposition.~~percentage ~~Applicable regulations~~of ~~also~~the ~~require~~American ~~that~~Red ~~transfusing~~Cross’ ~~facilities,~~National ~~donors~~Average ~~and~~Selling ~~patients~~Price ~~receive~~of ~~information~~platelets ~~regarding~~over ~~donors~~the ~~who~~immediately ~~test~~preceding ~~positive~~ calendar year for athe ~~variety~~remainder of ~~disease~~the ~~markers~~term. The inblood ~~years~~purchase ~~subsequent~~agreement has an initial term expiring on June 30, 2016, and will be extended automatically for additional renewal periods unless either party elects to ~~original~~terminate ~~donation~~the agreement upon expiration of the then-current term.

The ElDorado Donor Software is Haemonetics next generation software intended as a comprehensive blood management software application providing for the information system needs of blood bank and donor centers. The software is designed to manage, automate, and control activities associated with donors, donor collections, testing, manufacturing, inventory, and distribution.15

~~The~~Item ~~ElDorado~~2. ~~Donor Software will replace the Donor~~ Management’s ~~Information~~Discussion ~~System Software~~ and ~~the~~Analysis ~~Components~~of &Financial ~~Distribution~~Condition Information System Software (collectively, the “IDM Software”), previously licensed to us by Haemonetics, as successor in interest to International Data Information Management, in December 2006. We will continue to use the IDM Software until the ElDorado Donor Software has been installed and is ~~operational.~~Results ~~Implementation is expected to commence in the second quarter~~ of ~~2011.~~Operations

14The information contained in this Form 10-Q is intended to update the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the Company’s financial statements and the related notes provided under “Item 1-Financial Statements” above.

~~Pursuant~~The tomatters ~~the~~discussed ~~terms~~in “Management’s Discussion and Analysis of ~~the~~Financial ~~license agreement,~~Condition weand ~~received~~Results aof ~~perpetual~~Operations” and ~~non-exclusive~~elsewhere ~~license~~in tothis ~~the~~Quarterly ~~ElDorado~~Report ~~Donor~~on ~~Software~~Form 10-Q ~~and~~that ~~related~~are ~~documentation,~~not ~~and~~historical ~~Haemonetics agreed~~are toforward-looking ~~maintain~~statements. ~~and~~These ~~support~~statements may also be identified by the ~~software~~use ~~through~~of ~~March~~words 15such as “anticipate,” ~~2015~~“believe,” ~~for~~“continue,” ~~consideration~~“estimate,” ~~consisting~~“expect,” of“intend,” ~~amounts~~“may,” ~~previously~~“project,” ~~paid~~“will” ~~to Haemonetics~~and insimilar ~~connection~~expressions, ~~with~~as ~~our~~they ~~license~~relate ~~and~~to ~~implementation~~the ofCompany, ~~the~~its ~~IDM~~management ~~Software~~and its industry. ~~From~~Investors and ~~after~~prospective ~~March~~investors ~~15,~~are ~~2015,~~cautioned ifthat wethese ~~elect~~forward-looking ~~for Haemonetics~~statements toare ~~continue~~not toguarantees ~~provide~~of ~~maintenance~~future performance and ~~support,~~involve werisks ~~agreed~~and touncertainties. ~~pay~~Actual ~~Haemonetics~~results ancould ~~annual~~differ ~~maintenance~~materially ~~and~~from ~~support~~those ~~fee~~ described in anthis ~~amount~~report ~~equal~~because toof ~~$0.86~~numerous ~~per~~factors, ~~blood~~many ~~unit~~of ~~collected~~which ~~using~~are beyond the ~~ElDorado~~Company’s ~~Donor~~control. ~~Software~~These ~~during~~factors ~~the~~include, ~~immediately~~without ~~preceding~~limitation, ~~year~~those described under Item 1A. ~~We also~~“Risk ~~agreed~~Factors” toin ~~pay~~the ~~Haemonetics~~Company’s Annual Report on Form 10-K for ~~installation~~the ~~and~~year ~~implementation~~ended ~~services~~December 31, ~~and~~2010. The Company does not undertake to ~~host~~update ~~the~~its ~~ElDorado~~forward-looking ~~Donor~~statements ~~Software~~to onreflect ~~our~~later ~~behalf~~events and circumstances or actual outcomes.

~~Results of Operations~~General

~~Overview~~HemaCare operates in two primary business segments. The blood services segment includes sales of red blood cells, apheresis platelets, and other blood products to hospitals and research, cellular therapy and other health related organizations. Prior to the sale of its red blood cell collection operation assets in July 2011, the Company also operated and managed donor centers and mobile donor vehicles to collect blood products from donors, and purchased blood products from other suppliers for resale to customers. Revenues from research projects and cellular therapy collections are included in the blood services segment.

~~The~~Additionally, the Company’s ~~continuing~~operates ~~operations generated~~a ~~$6,986,000~~therapeutic inservices ~~revenue~~segment, inwherein the ~~first~~Company ~~quarter~~performs oftherapeutic ~~2011~~apheresis procedures, ~~compared~~stem tocell ~~$7,847,000~~collection inand ~~the~~other ~~same~~blood ~~quarter~~treatments ofon ~~2010,~~patients ~~representing~~ with a ~~decrease~~variety of ~~$861,000, or 11%~~disorders. Therapeutic ~~Blood~~ services ~~revenue~~are ~~decreased~~usually ~~$1,234,000,~~provided orunder ~~20%,~~contract ~~while~~with ~~therapeutic~~hospitals ~~services~~as ~~revenue~~an ~~increased $373,000,~~outside orpurchased ~~21%~~service.

~~Gross~~The ~~profit~~Company’s ~~from~~current ~~continuing~~strategy ~~operations in~~is ~~the~~to ~~first~~expand ~~quarter~~efforts ofutilizing ~~2011~~the ~~decreased~~Company’s ~~$521,000,~~exemplary orcustomer ~~38%~~service, ~~to $867~~expertise,~~000~~ ~~compared~~and infrastructure to ~~$1,388,000~~support ~~for~~developing ~~the~~cellular ~~same~~therapy ~~period~~technologies ofand ~~2010~~research organizations. This ~~decrease is~~infrastructure ~~comprised~~and ofexpertise aenable ~~$765,000~~the ~~decrease,~~Company orto ~~81%,~~collect invarious ~~gross~~cellular ~~profit~~components for ~~the~~cellular ~~blood~~therapy ~~services~~manufacturing ~~business~~and ~~segment,~~future ~~partially~~personalized ~~offset~~patient bytherapies. aThe ~~$244,000 increase,~~continuing orcollections ~~55%,~~of inapheresis ~~gross~~platelets ~~profit~~will ~~for~~allow the ~~therapeutic~~Company ~~services~~to ~~business~~continue ~~segment.~~to ~~The~~access ~~gross~~its ~~profit~~pedigree ~~percentage~~donor ~~decreased~~pool facilitating the availability of product to ~~12%~~the in research community. Ultimately, the ~~first~~Company ~~quarter~~believes ofthese ~~2011~~specialized ~~compared~~collections towill ~~18%~~generate ~~for~~high ~~the~~margin ~~same~~revenue ~~period~~through the support of ~~2010~~advanced therapies and research activities.

~~General~~The Company was incorporated in the state of California in 1978 and ~~administrative~~has ~~expenses decreased~~operated byin ~~$345~~Southern California since 1979. In 1998,~~000~~ the Company expanded operations to $1include portions of the eastern United States. In August 2006,~~235~~ the Company acquired Florida based Teragenix Corporation,~~000~~ insubsequently ~~2011~~renamed ~~compared~~HemaCare ~~with~~BioScience, $1Inc. (“HemaBio”),~~580~~ The Company closed all operations of HemaBio,~~000~~ ineffective ~~2010~~November 5, 2007. See Note 3 of Notes to Consolidated Financial Statements.

The Company reported a loss of $378,000 from continuing operations in the first quarter of 2011, compared to a loss of $192,000 for the same period of 2010. Discontinued operations generated a net loss of $12,000 in both the first quarter of 2011 and the first quarter of 2010. The Company recorded a $10,000 provision for income taxes for the three month period ended March 31, 2011 compared to no provision recorded in the same period of 2010. The Company generated a net loss of $390,000 for the first quarter of 2011, compared to a net loss of $204,000 for the first quarter of 2010.16

~~Blood~~Recent ~~Services~~ Developments

~~For~~On ~~this~~July ~~business~~11, ~~segment~~2011, the ~~following~~Company ~~table~~and ~~summarizes~~ its wholly-owned subsidiary, Coral Blood Services, Inc., completed the ~~revenue~~sale of the Company’s red blood cell collection operation assets in California and ~~gross~~Maine ~~profit~~to ~~for~~The American National Red Cross pursuant to the ~~three~~terms ~~months~~of ~~ended~~an ~~March~~Asset 31Purchase Agreement entered into by the parties on July 11, 2011. The assets included automobiles and ~~2010:~~equipment, finished goods and work-in-process inventory of blood products, a trademark and books and records relating to blood drive sponsors and blood donors.

Blood Services
For the Three Months Ended March 31,
	2011	2010	Variance $	Variance %
Revenues	$ 4,837,000	$ 6,071,000	$ (1,234,000)	-20%
Gross Profit	$ 180,000	$ 945,000	$ (765,000)	-81%
Gross Profit %	4%	16%

In consideration for the assets, the buyer agreed to pay to the Company an aggregate of $3,051,000. Of the purchase price, $2,475,000 was paid on the closing date, $51,000 was paid on July 22, 2011, and $250,000 will be paid in three equal monthly installments on the 30th, 60th and 90th days following the closing date. The remaining balance of $275,000 was paid into a one year escrow to satisfy the Company’s potential indemnification liabilities to the buyer.

15As a result of the asset sale, the Company in the third quarter will effect a reduction in force of approximately 93 employees in California and Maine, which will result in a third quarter charge of approximately $900,000 in employment related expenses. Additionally, officer bonuses of $124,000 will be paid in the third quarter as a result of the sale.

~~The~~In ~~20%~~connection ~~decrease~~with inthe ~~revenue~~sale ~~was~~of ~~primarily attributable~~assets, toon aJuly ~~12%~~11, ~~decrease~~2011 ~~in revenue generated by~~ the Company’s ~~California-based~~entered into a blood ~~services~~purchase ~~operations~~agreement inwith the ~~quarter~~American Red Cross, ~~while~~ ~~revenue~~pursuant ~~generated~~to bywhich the Company’s ~~Maine-based~~will ~~operations~~sell ~~decreased~~to ~~62%~~the ~~compared~~American toRed ~~the~~Cross ~~same~~on ~~period~~an exclusive basis, a minimum of ~~the~~7,000 ~~prior~~and a maximum of 12,000 units of ISBT labeled single donor platelets per year during the term of the agreement. The ~~decrease~~platelets inwill ~~California~~be ~~revenue~~sold ~~was~~to the ~~result~~American ofRed Cross at a ~~13%~~fixed ~~decrease~~price inper unit during the ~~sale~~first oftwo ~~red~~years ~~cell~~of ~~products~~the agreement, and at a ~~20%~~price ~~decrease~~equal into ~~the sale~~a percentage of ~~platelet~~the ~~products~~American inRed ~~California.~~Cross’ ~~Declining~~National ~~demand~~Average inSelling ~~the~~Price ~~California~~of ~~marketplace~~platelets ~~affected~~over ~~Maine~~the ~~production~~immediately aspreceding ~~well,~~calendar ~~since much~~year for the remainder of the term. The blood ~~and~~purchase ~~platelets~~agreement ~~produced~~has inan ~~Maine~~initial ~~were~~term ~~shipped~~expiring on June 30, 2016, and will be extended automatically for ~~sale~~additional inrenewal ~~California~~periods unless either party elects to terminate the agreement upon expiration of the then-current term.

~~Weakness~~Specialty Collection Services: HemaCare leverages its expertise in ~~the~~automated ~~economy~~cell ~~severely~~collection ~~impacted the~~(apheresis) and processing of blood ~~banking~~products ~~business~~to inprovide ~~the~~specialty ~~first~~collection ~~quarter~~services ofto ~~2011~~organizations asconducting itcell ~~had~~therapy ~~all~~research ~~through~~and ~~2010~~clinical trials. In ~~Increased~~May ~~competition~~2010, ~~partially~~HemaCare ~~the~~entered ~~result of~~into an ~~oversupply~~agreement ofwith ~~blood~~Dendreon ~~throughout~~Corporation ~~the~~(NASDAQ: ~~country~~DNDN) to provide cellular collection services in Los Angeles and Maine for their new autologous cellular immunotherapy, ~~put~~PROVENGE® ~~tremendous~~(sipuleucel-T). This ~~pressure~~personalized onmedicine for the ~~blood~~treatment ~~products~~of ~~industry~~prostate cancer is Dendreon’s lead product and is the first autologous cellular immunotherapy specifically designed to ~~reduce~~engage ~~prices.~~patients’ ~~Lower reimbursement~~own ~~rates~~immune ~~have~~systems ~~forced~~to ~~hospitals~~treat cancer. In February 2011, HemaCare and ~~healthcare~~Dendreon ~~providers~~amended their agreement to ~~educate~~expand ~~themselves~~HemaCare’s infootprint ~~blood~~of ~~management~~collection services for Dendreon to ~~reduce~~additional ~~usage~~cities during the second, third, and fourth quarters of 2011. ~~Price continued~~The toCompany beopened a ~~major~~site ~~concern~~in toSan ~~hospital~~Francisco, ~~products~~California in June 2011 and the Company intends to continue to expand its business of providing specialty collection services ~~vendors~~to Dendreon and similar organizations in several other areas around the country.

~~The~~Blood ~~81%~~Management ~~decrease~~Software inProject: On ~~gross~~February ~~profit~~18, ~~was the~~2011, ~~result~~HemaCare ofentered ~~the~~into ~~decrease~~a inSoftware ~~revenue~~License inand ~~addition~~Support toServices ~~losing~~Agreement ~~cost~~with ~~leverage~~Haemonetics inCorporation, ~~relation~~pursuant to ~~revenue.~~which ~~The~~Haemonetics ~~gross~~licensed ~~profit~~to ~~percentage~~us ~~for the~~its ~~first~~ElDorado ~~quarter~~Donor ofSoftware ~~2011~~and ~~for~~agreed ~~this segment decreased~~ to 4%maintain ~~compared~~and tosupport ~~16% for~~ the ~~same quarter of 2010~~software.

~~Included~~Federal inand ~~this~~state ~~segment~~regulations isrequire ~~the~~that ~~research products/cellular~~all ~~therapy~~blood ~~business~~donors ~~which~~and ~~actually~~blood ~~increased~~donations inbe ~~revenue~~tracked ~~256%,~~from adonation ~~result~~though ofprocessing anand ~~over~~storage ~~400%~~to ~~increase~~final ~~in product unit sales~~disposition. Applicable ~~Revenue~~regulations ~~was~~also ~~$350,000~~require inthat ~~the~~transfusing ~~first quarter of 2011 compared with $100~~facilities,~~000~~ indonors ~~the~~and ~~first~~patients ~~quarter~~receive ofinformation ~~2010.~~regarding ~~Ultimately,~~donors ~~the~~who ~~Company believes~~test ~~these~~positive ~~specialized~~for ~~collections~~a ~~will~~variety ~~generate high margin revenue through the support~~ of ~~advanced~~disease ~~therapies~~markers ~~and~~in ~~research activities.~~years ~~Management~~subsequent ~~is developing relationships with biotech companies and research organizations, both nationally and globally,~~ to ~~position~~original ~~the Company to become the supplier of choice with these customers because of our reputation for compassionate patient care and excellent service~~donation.

~~Therapeutic Services~~17

~~For~~The ~~the~~ElDorado ~~therapeutic~~Donor ~~services~~Software ~~business~~is ~~segment,~~Haemonetics ~~the~~next ~~revenue and~~generation ~~gross~~software ~~profit~~intended as a comprehensive blood management software application providing for the ~~three~~information ~~months~~system ~~ended~~needs ~~March~~of ~~31,~~blood ~~2011~~bank and ~~2010~~donor centers. The software is ~~summarized~~designed onto ~~the~~manage, ~~following~~automate, ~~table:~~and control activities associated with donors, donor collections, testing, manufacturing, inventory, and distribution.

Therapeutic Services
For the Three Months Ended March 31,
	2011	2010	Variance $	Variance %
Revenue	$2,149,000	$1,776,000	$373,000	21%
Gross Profit	$687,000	$443,000	$244,000	55%
Gross Profit %	32%	25%

The ElDorado Donor Software will replace the Donor Management Information System Software and the Components & Distribution Information System Software (collectively, the “IDM Software”), previously licensed to us by Haemonetics, as successor in interest to International Data Information Management, in December 2006. We will continue to use the IDM Software until the ElDorado Donor Software has been installed and is operational. Implementation is expected to commence in the fourth quarter of 2011.

~~The~~Pursuant ~~therapeutic~~to ~~services~~the ~~business~~terms ~~segment has~~of ~~seen~~the ~~considerable~~license ~~growth~~agreement, ~~this~~we ~~year~~received ina ~~comparison~~perpetual and non-exclusive license to ~~last.~~the ~~The~~ElDorado ~~Company~~Donor ~~has~~Software ~~signed~~and ~~contracts~~related ~~with~~documentation, ~~new~~and ~~customers~~Haemonetics ~~which~~agreed ~~accounted~~ to maintain and support the software through March 15, 2015, for ~~24%~~consideration consisting of ~~the~~amounts ~~increase~~previously paid to Haemonetics in ~~revenue~~connection ~~between~~with ~~the~~our ~~first~~license ~~quarter~~and implementation of ~~2010~~the IDM Software. From and ~~the~~after ~~first~~March ~~quarter~~15, of2015, ~~2011~~if we elect for Haemonetics to continue to provide maintenance and support, we agreed to pay Haemonetics an annual maintenance and support fee in an amount equal to $0.86 ~~The~~per ~~remainder~~unit ofcollected using the ~~growth was~~ElDorado aDonor ~~result~~Software ofduring ~~increased~~the ~~utilization~~immediately bypreceding ~~existing~~year. We ~~customers~~also agreed to pay Haemonetics for installation and implementation services, and to host the ElDorado Donor Software on our behalf.

~~Revenue~~Results ~~increased~~of ~~in California by 41% as the procedure volume increased by 41%, while revenue in the Mid-Atlantic region increased by 4% while procedure volume increased by 5%.~~Operations

~~The~~Three ~~55%~~months ~~increase~~ended inJune ~~gross~~30, ~~profit highlights the fact that the Company has been able to effectively keep costs down while increasing volume. The gross profit percentage during the first quarter of~~ 2011 ~~for this segment was 32%~~ compared to ~~25%~~the ~~for~~three ~~the~~months ~~first~~ended ~~quarter~~June of30, 2010.

16Overview

~~General and~~The ~~Administrative~~Company’s ~~Expenses~~continuing operations generated $4,238,000 in revenue in the second quarter of 2011, compared to $3,878,000 in the same quarter of 2010, representing an increase of $360,000, or 9%. Blood services revenue increased $37,000, or 2%, while therapeutic services revenue increased $323,000, or 17%.

~~General~~Gross ~~and~~profit ~~administrative~~from ~~expenses~~continuing ~~for~~operations in the ~~three~~second ~~months ended~~quarter ~~March~~of 312011 increased $62,000 ~~2011~~or ~~and~~12%, to $583,000 compared to $521,000 for the same period of 2010. This ~~are~~increase ~~summarized~~is oncomprised of a $127,000 decrease in gross profit for the ~~following~~blood ~~table:~~services business segment, offset by a $189,000 increase in gross profit for the therapeutic services business segment.

General and Administrative Expenses
For the Three Months Ended March 31,
2011	2010	Variance $	Variance %
$1,235,000	$1,580,000	($345,000)	-22%

General and administrative expenses increased by $81,000 to $1,212,000 in the three months ended June 30, 2011 compared with $1,131,000 in the three months ended June 30, 2010.

~~Cost~~An ~~cutting~~insurance ~~initiatives~~settlement ~~beginning~~for ~~at the~~damaged ~~end~~equipment ofthat ~~the~~had ~~first~~been ~~quarter~~fully ~~2010,~~depreciated asduring ~~well as $184,000 in severance expenses incurred in~~ the ~~first~~second quarter of ~~2010 with no corresponding expense in the same quarter of~~ 2011, resulted in a ~~22%~~gain ~~decrease~~on inasset ~~general~~disposal ~~and administrative expenses for the first three months~~ of ~~2011 compared to the first three months of 2010~~$197,000. ~~The severance expenses paid in 2010 were to former executives.~~

~~Due~~The toCompany reported a loss of $432,000 from continuing operations in the ~~first~~ second quarter ~~losses~~of 2011, ~~there~~compared ~~was~~to noa ~~401(k)~~loss ~~accrual~~of $620,000 for the ~~first~~same ~~three~~period ~~months~~of on2010. Discontinued ~~2011~~operations ~~versus~~generated annet ~~accrual~~income of $50180,000 in the ~~prior~~second ~~year first~~ quarter. Inof ~~addition~~2011 compared to ~~severance~~$843,000 ~~expenses~~the ~~paid~~second toquarter ~~the~~of ~~former~~2010. The ~~executives,~~ Company recorded no tax provision for the ~~true~~second upquarter of ~~stock~~2011 ~~compensation~~compared towith ~~account~~a $10,000 provision for ~~actual~~income ~~forfeiture~~taxes ~~rates,~~for ~~which~~the ~~had~~second ~~been~~quarter ~~initially~~of ~~estimated~~2010. The byCompany ~~management~~generated ~~and used~~a asnet anloss ~~input~~of in$252,000 for the ~~Black~~second ~~Sholes~~quarter ~~valuation~~of ~~model~~2011, ~~resulted~~compared into net income of $15223,000 infor ~~additional~~the ~~expense~~second inquarter ~~2010~~of ~~with no corresponding expense in 2011~~2010.

~~Office salaries decreased $26,000 due to reductions in work force. Investor relations expenses decreased $15,000 as a result of a reduction of the outsourcing of compliance issues.~~18

~~General~~Blood ~~insurance expense decreased $10,000 while computer and office supplies expense decreased $7,000, both a result of cost cutting initiatives.~~Services

For the ~~first~~blood ~~quarter~~services ~~of 2011~~segment, ~~general and~~the ~~administrative~~following ~~expenses~~table ~~represented~~summarizes ~~18%~~the of revenue ~~compared~~and togross ~~20%~~profit for the ~~same~~three ~~period~~months ofended June 30, 2011 and 2010.:

Income Taxes

Blood Services
For the Three Months Ended June 30,
	2011			2010			Variance $			Variance %
Revenues	$	1,968,000		$	1,931,000		$	37,000			2	%
Gross Profit	$	(145,000	)	$	(18,000	)	$	(127,000	)		-706	%
Gross Profit %		-7	%		-1	%

~~The~~This ~~Company~~business ~~recorded~~segment, ashown ~~$10~~here net of discontinued operations,~~000~~ ~~provision for~~includes ~~income~~platelet ~~taxes~~collections ~~for~~and ~~estimated~~sales ~~alternative~~as ~~minimum~~well ~~tax~~as ~~for~~cellular therapy and research related collections. Included in the ~~three~~operating ~~month~~costs ~~period~~of ~~ended~~this ~~March~~segment ~~31,~~is ~~2011~~the ~~compared~~cost of training nurses for our planned expansion sites as well as travel and labor costs to noset ~~provision recorded~~up the new sites. Nurse training in the ~~same~~second ~~period~~quarter of ~~2010~~2011 cost $200,000.

~~The~~Platelet ~~process~~sales ofdecreased ~~preparing~~by ~~the~~42% ~~financial statements~~in ~~requires~~the ~~management~~second ~~estimates~~quarter of ~~income~~2011 ~~taxes~~as incompared ~~each~~to of the ~~jurisdictions~~second ~~that~~quarter ~~the~~of ~~Company operates~~2010. The ~~This~~decrease ~~process~~is ~~involves estimating~~the ~~current~~result ~~tax exposure together with assessing temporary differences resulting from differing treatment~~ of ~~items~~weakness ~~for tax and accounting purposes. These differences result~~ in ~~deferred~~the ~~tax~~economy ~~assets~~severely ~~and~~impacting ~~liabilities, which are included in~~ the ~~balance~~blood ~~sheet~~banking business. As ~~per~~Increased ~~ASC Topic 740~~competition, ~~Income~~partially ~~Taxes,~~ the ~~Company~~result ~~utilizes~~of an ~~asset~~oversupply ~~and~~of ~~liability~~blood ~~approach~~throughout ~~that requires~~ the ~~recognition~~country, ~~of deferred~~put ~~tax~~tremendous ~~assets~~pressure ~~and~~on ~~liabilities~~the ~~for~~blood ~~the~~products ~~expected~~industry ~~future~~to ~~tax~~reduce ~~consequences~~prices. ofLower ~~events~~reimbursement ~~that~~rates have ~~been~~forced ~~recognized~~hospitals inand ~~the~~healthcare ~~Company’s financial~~providers ~~statements~~to oreducate ~~tax~~themselves ~~returns.~~in ~~Management~~blood ~~must~~management ~~assess~~to ~~the~~reduce ~~likelihood~~usage. ~~that~~Price ~~the~~continues ~~deferred~~to ~~tax assets or liabilities will~~ be ~~realized~~ ~~for~~a ~~future~~major ~~periods,~~concern ~~and~~ to ~~the~~hospital ~~extent~~products ~~management~~and ~~believes~~services ~~that realization is not likely, must establish a valuation allowance~~vendors.

17Included in this segment is the research products/cellular therapy business which increased in revenue 374%, a result of an over 55% increase in product unit sales. Revenue was $687,000 in the second quarter of 2011 compared with $145,000 in the second quarter of 2010. Ultimately, the Company believes these specialized collections will generate high margin revenue through the support of advanced therapies and research activities. Management is developing relationships with biotech companies and research organizations, both nationally and globally, to position the Company to become the supplier of choice with these customers because of our reputation for compassionate patient care and excellent service.

~~Discontinued~~Therapeutic ~~Operations~~Services

~~On November~~For ~~5, 2007,~~ the ~~Board~~therapeutic ofservices ~~Directors~~business ~~of the Company’s wholly owned subsidiary~~segment, ~~HemaCare BioScience, Inc. (“HemaBio”), in consultation with, and with~~ the ~~approval~~following ~~of,~~table ~~the~~summarizes ~~Board of Directors of~~ the ~~Company,~~revenue ~~decided~~and ~~that~~gross itprofit ~~was in the best interest of HemaBio’s creditors to close all operations of HemaBio. On December 4, 2007, HemaBio executed an Assignment~~ for Benefit of Creditors, under Florida Statutes Section 727.101 et seq. (“Assignment”), assigning all of its assets to an assignee, who is responsible for taking possession of, protecting, preserving, and liquidating such assets and ultimately distributing the ~~proceeds~~ tothree ~~creditors~~months ofended ~~HemaBio~~June ~~according to their priorities as established by Florida law. The assignee continues to fulfill his obligations under the Assignment~~30, but has not concluded his efforts to liquidate all of the assets or complete a final distribution of all proceeds to HemaBio’s creditors. The Company recorded a $12,000 loss in discontinued operations for both the first quarter of 2011 and ~~the first quarter of 2012 representing interest expense in both periods.~~2010:

Off-Balance Sheet Arrangements

Therapeutic Services
For the Three Months Ended June 30,
	2011			2010			Variance $		Variance %
Revenue	$	2,270,000		$	1,947,000		$	323,000		17	%
Gross Profit	$	728,000		$	539,000		$	189,000		35	%
Gross Profit %		32	%		28	%

AtThe ~~March~~therapeutic ~~31,~~services ~~2011, the~~business ~~Company~~segment ~~did~~continues ~~not~~to ~~have~~experience ~~any~~considerable ~~relationships~~growth ~~with~~this ~~unconsolidated~~year ~~entities~~in orcomparison ~~financial partnerships, such as entities often referred~~ to aslast ~~structured~~year ~~finance,~~in ~~variable~~the ~~interest~~Southern orCalifornia ~~special~~region. New ~~purpose~~customers ~~entities,~~accounted ~~which would have been established~~ for ~~the~~24% ~~purpose~~ of ~~facilitating off-balance~~the ~~sheet~~growth ~~arrangements~~in orrevenue ~~other~~between ~~contractually~~the ~~narrow~~second orquarter ~~limited~~of ~~purposes.~~2011 Asand ~~such,~~ the ~~Company~~second isquarter ~~not~~of ~~exposed to any financing, liquidity, market or credit risk that could arise if it had engaged in such relationships~~2010.

~~Critical Accounting Policies and Estimates~~ 19

~~Use~~Revenue increased in California by 41% as the volume of ~~Estimates~~ procedures increased by 60%, while revenue in the Mid-Atlantic region decreased by 10% as the volume of procedures decreased by 9%.

The ~~Company’s~~gross ~~discussion~~profit ~~and~~percentage ~~analysis of~~during ~~its financial condition and results of operations are based on~~ the ~~Company’s~~second ~~consolidated~~quarter ~~financial statements, which have been prepared in accordance with GAAP. The preparation~~ of ~~these~~2011 ~~financial~~for ~~statements~~this ~~requires~~segment ~~the~~was ~~Company~~32% compared to ~~make~~28% ~~estimates and~~for ~~judgments that affect~~ the ~~reported~~second ~~amounts~~quarter of ~~assets,~~2010. ~~liabilities,~~This ~~revenues~~increase ~~and~~in ~~expenses,~~gross ~~and~~profit ~~related~~coupled ~~disclosure~~with ofincreased ~~contingent assets~~volume ~~and~~indicates ~~liabilities.~~that ~~On an on-going basis,~~ the Company ~~evaluates~~has ~~its~~been ~~estimates,~~able ~~including those related~~ to ~~valuation~~effectively ~~reserves, income~~keep ~~taxes~~costs ~~and~~down ~~intangibles.~~while ~~The~~increasing Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sourcesrevenue. ~~Actual results may differ from these estimates under different assumptions or conditions.~~

~~Accounting for~~General ~~Share-Based~~and ~~Incentive~~Administrative ~~Programs~~Expenses

~~Share-Based Compensation:~~General ~~As per the ASC Topics 505, Equity~~ and ~~718,~~administrative ~~Stock~~expenses ~~Compensation, an entity shall account~~ for ~~share-based compensation transactions with employees in accordance with~~ the ~~fair-value-based~~three ~~method,~~months ~~that~~ended ~~is,~~June the cost of services received from employees in exchange for awards of share-based compensation generally shall be measured based on the grant-date fair value of the equity instruments issued or on the fair value of the liabilities incurred. [FAS 123(R)30, ~~paragraph~~2011 ~~1] ] The Company’s assessment of the estimated fair value of share-based payments is impacted by the price of the Company’s stock, as well as assumptions regarding a number of complex~~ and ~~subjective~~2010 ~~variables~~are ~~and~~summarized ~~the related tax impact. Management calculated fair value based~~ on ~~fair value of~~ the ~~stock~~following ~~at the date of issuance for restricted stock and restricted stock units.~~table:

Management utilized the Black-Scholes model to estimate the fair value of share-based payments granted. Valuation techniques used for employee share options and similar instruments estimate the fair value of those instruments at a single point in time (for example, at the grant date). The assumptions used in a fair value measurement are based on expectations at the time the measurement is made, and those expectations reflect the information that is available at the time of measurement.

18Expense reduction remains an ongoing focus, Insurance expense decreased $34,000 as a result of lower premiums attainable through a new broker.

~~The~~Legal ~~Black-Scholes~~fees ~~valuation~~increased ~~model~~by ~~was developed~~$72,000 ~~for~~primarily ~~use~~due into ~~estimating~~services associated with the ~~fair~~asset ~~value~~sale. ofThere ~~traded~~was ~~options~~no ~~that~~401(k) ~~have~~match noaccrual ~~vesting~~in ~~restrictions~~the ~~and~~second ~~are~~quarter ~~fully~~of ~~transferable. This~~2011 ~~model~~due ~~also~~to ~~requires~~quarterly ~~the~~losses ~~input~~compared ofwith ~~highly~~$19,000 ~~subjective~~accrued ~~assumptions~~in ~~including:~~the second quarter of 2010.

~~(a)~~For ~~The~~the ~~expected~~second ~~volatility~~quarters of ~~the~~both ~~common~~2011 ~~stock~~and ~~price~~2010, ~~which~~general ~~was~~and ~~determined~~administrative ~~based~~expenses onrepresented ~~historical~~29% ~~volatility~~ of ~~the Company’s common stock;~~revenue.

~~(b)~~Income ~~expected dividends, which are not anticipated;~~Taxes

~~(c)~~The ~~expected~~Company ~~life~~recorded ofno ~~the~~provision ~~stock~~for ~~option,~~income ~~which~~taxes isfor estimated ~~based~~alternative onminimum tax for the ~~historical~~three ~~stock~~month ~~option~~period ~~exercise~~ended ~~behavior~~June of30, ~~employees;~~2011 ~~and~~compared to $10,000 recorded in the same period of 2010.

~~(d)~~Six ~~expected~~months ~~forfeitures.~~ended June 30, 2011 compared to the six months ended June 30, 2010

The Company does not assume a forfeiture rate when assessing value for options held by independent members of the Board of Directors. Since options issued to independent board members are not forfeited upon separation from the Company, management determined it was inappropriate to assign a forfeiture rate to these options.Overview

InThe ~~the~~Company’s ~~future~~continuing operations generated $8,146,000 ~~management~~in ~~may~~revenue ~~elect to~~in ~~use~~the ~~different~~first ~~assumptions~~half ~~under~~of 2011, compared to $7,559,000 in the ~~Black-Scholes~~same ~~valuation~~period ~~model~~of or2010, arepresenting ~~different~~an ~~valuation~~increase ~~model~~of $587,000, ~~which~~or ~~could~~8%. Blood ~~result~~services inrevenue adecreased ~~significantly different~~$107,000, ~~impact~~or on3%, ~~net~~while ~~income~~therapeutic services revenue increased $694,000, or ~~loss~~19%.

~~Allowance~~ Gross profit from continuing operations in the first half of 2011 increased $178,000 or 16%, to $1,281,000 compared to $1,103,000 for ~~Doubtful~~the ~~Accounts~~same period of 2010. This decrease is comprised of a $251,000 decrease, or 211%, in gross profit for the blood services business segment, offset by a $429,000 increase, or 44%, in gross profit for the therapeutic services business segment.

The Company makes ongoing estimates relating to the collectability of accounts receivable and maintains a reserve for estimated losses resulting from the inability of customers to meet their financial obligations to the Company. In determining the amount of the reserve, management considers the historical level of credit losses and makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations. Since management cannot predict future changes in the financial stability of customers, actual future losses from uncollectible accounts may differ from the estimates. If the financial condition of customers were to deteriorate, resulting in their inability to make payments, a larger reserve may be required. In the event it was determined that a smaller or larger reserve was appropriate, the Company would record a credit or a charge to general and administrative expense in the period in which such a determination was made.20

~~Inventory~~General and administrative expenses decreased by $273,000 to $2,395,000 in the six months ended June 30, 2011 compared with $2,668,000 in the six months ended June 30, 2010.

~~Inventories~~An ~~consist~~insurance ofsettlement ~~Company-manufactured platelets, whole blood components and other blood products, as well as component blood products purchased~~ for ~~resale.~~damaged ~~Supplies~~equipment ~~consist~~that ~~primarily of~~had ~~medical~~been ~~supplies~~fully ~~used~~depreciated toresulted ~~collect~~in ~~and~~a ~~manufacture~~gain ~~products~~on ~~and~~asset todisposal ~~provide therapeutic services. Inventories are stated at the lower~~ of ~~cost or market and are accounted for on a first-in~~$197,000 ~~first-out~~during ~~basis. Management estimates~~ the ~~portion~~first ofsix ~~inventory that might not have future value by analyzing historical sales history for the twelve~~ months ~~prior to any balance sheet date. For each inventory type, management establishes an obsolescence reserve equal to the value~~ of ~~inventory quantity in excess of twelve months of historical sales quantity, using the first-in, first-out inventory valuation methodology~~2011.

19The Company reported a loss of $927,000 from continuing operations in the six months ended June 30, 2011, compared to a loss of $1,575,000 for the same period of 2010. Discontinued operations generated net income of $285,000 during the first six months of 2011 compared to $1,595,000 in the first six months of 2010. The Company recorded a $10,000 tax provision in both the first six months of 2011 and 2010. The company generated a net loss of $642,000 for the first six months of 2011, compared to net income of $20,000 for the first six months of 2010.

~~Income Taxes~~Blood Services

AsFor ~~part of~~ the ~~process~~blood ofservices ~~preparing the financial statements~~segment, the ~~Company~~following istable ~~required~~summarizes ~~to estimate income taxes in each of~~ the ~~jurisdictions~~revenue inand ~~which~~gross ~~the~~profit ~~Company operates. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items~~ for ~~tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included on~~ the ~~balance~~six ~~sheet.~~months ~~Management~~ended ~~must~~June ~~then assess the likelihood that the deferred tax assets will be recovered from future taxable income~~30, 2011 and to the extent management believes that recovery is not likely, must establish a valuation allowance. To the extent a valuation allowance is created or adjusted in a period, the Company must include an expense, or benefit, within the tax provision in the statements of income.2010:

Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. Management continually evaluates whether or not the deferred tax asset is likely to be realized. If management determines that the deferred tax asset is not likely to be realized, a write-down of that asset would be required and would be reflected in the provision for taxes in the accompanying period.

Blood Services
For the Six Months Ended June 30,
	2011			2010			Variance $			Variance %
Revenues	$	3,728,000		$	3,835,000		$	(107,000	)		-3	%
Gross Profit	$	(132,000	)	$	119,000		$	(251,000	)		-211	%
Gross Profit %		-4	%		3	%

~~Liquidity~~ This business segment, shown here net of discontinued operations, includes platelet collections and ~~Capital~~sales ~~Resources~~as well as cellular therapy and research related collections. Included in the operating costs of this segment is the cost of training nurses for our planned expansion sites as well as travel and labor costs to set up the new sites.

~~The~~Platelet ~~Company’s~~sales ~~primary~~decreased ~~sources of~~by ~~liquidity~~36% ~~include~~in ~~cash~~the onfirst ~~hand~~half ~~and~~of ~~cash~~2011 ~~generated~~as ~~from~~compared ~~operations.~~to ~~Liquidity~~the ~~depends,~~first inhalf ~~part~~of 2010, onalso ~~timely~~a ~~collections~~result of ~~accounts receivable.~~weaknesses ~~Any significant delays~~ in ~~customer~~the ~~payments~~economy ~~could~~severely ~~adversely~~impacting ~~affect~~ the ~~Company’s~~blood ~~liquidity~~banking business. Price ~~Presently,~~continued ~~HemaBio is~~to inbe ~~default~~a onmajor ~~two~~concern ~~notes related~~ to ~~the~~hospital ~~HemaBio~~products ~~acquisition.~~and ~~See~~services ~~Note 4 of Notes to Consolidated Financial Statements~~vendors.

AsIncluded ofin ~~March~~this ~~31,~~segment ~~2011~~is the research products/cellular therapy business which increased in revenue 324%, the ~~Company’s cash~~result ~~and~~of ~~cash~~an ~~equivalents~~over ~~for~~70% ~~continuing~~increase ~~operations~~in unit sales. Revenue was $21,~~194~~041,000, ~~and~~in the ~~Company’s~~second ~~working~~half ~~capital~~of ~~was~~2011 compared with $3245,~~781,~~000 in the second half of 2010. By developing and nurturing relationships with biotech and research organizations, management plans to continue to grow this part of the business. These specialized collections generate high margin revenue. We hope to position the Company to become the supplier of choice in this area because of our reputation for compassionate patient care and excellent service.

Management anticipates that cash on hand and cash generated by operations will be sufficient to provide funding for the Company’s needs during the next year, including working capital requirements, equipment purchases, operating lease commitments and to fund the Company’s anticipated capital expenditures which include the opening of additional sites to expand research and cellular therapy collections.21

OnTherapeutic ~~December 9, 2009, the Company, together with the Company’s subsidiary, Coral Blood~~ Services, Inc., entered into a new Credit Agreement (the “New Wells Agreement”), and related security agreements, with Wells Fargo to replace the Wells Fargo Agreement entered into on April 10, 2008. The New Wells Agreement provided that the Company could borrow the lesser of 80% of eligible accounts receivable or $5 million, and had a maturity date of December 1, 2011. Most of the terms in the New Wells Agreement were similar to those in the former Wells Fargo Agreement; however, the New Wells Agreement provided that the Company pay interest on a monthly basis on any outstanding balance at 0.25% above the bank’s prime rate, but eliminated any minimum monthly interest requirement. The New Wells Agreement also granted the bank a first priority security interest in all of the assets of the Company and Coral Blood Services, Inc.

~~The~~For ~~New~~the ~~Wells~~therapeutic ~~Agreement~~services ~~also~~segment, ~~required that~~ the ~~Company~~following ~~maintain~~table ~~certain~~summarizes ~~financial covenants which~~ the ~~Company~~revenue ~~had~~and ~~not~~gross ~~maintained~~profit ~~and~~for ~~was~~the insix ~~default~~months atended ~~December~~June 3130, 2011 and 2010.:

Therapeutic Services
For the Six Months Ended June 30,
	2011			2010			Variance $		Variance %
Revenue	$	4,418,000		$	3,724,000		$	694,000		19	%
Gross Profit	$	1,413,000		$	984,000		$	429,000		44	%
Gross Profit %		32	%		26	%

~~Effective~~On asa ofyear ~~January~~to ~~15,~~date ~~2011~~basis, ~~in consideration of Wells Fargo waiving~~ the ~~Company’s~~therapeutic ~~existing~~services ~~defaults~~business ~~under~~segment ~~the~~continues ~~Credit~~to ~~Agreement,~~show ~~the~~significant ~~Company~~growth. ~~agreed to amend the~~ New ~~Wells~~customers ~~Agreement~~accounted tofor ~~provide~~21% ~~that outstanding borrowings, including outstanding advances and letters~~ of ~~credit, shall not at any time exceed~~ the ~~amount~~sales ofvolume ~~cash collateral~~ in ~~a segregated, blocked deposit account maintained by~~ the ~~Company with Wells Fargo and with respect to which Wells Fargo has been granted a~~ first ~~priority~~six ~~security~~months ~~interest to secure all present and future indebtedness~~ of ~~the Company to Wells Fargo~~2011. ~~Pursuant to this arrangement, the Company has pledged $660,000 in cash to Wells Fargo, and the Company has outstanding letters of credit for an aggregate of $660,000 under the New Wells Agreement.~~

~~Future~~Revenue ~~minimum~~increased ~~payments~~in ~~under~~California ~~operating leases~~by ~~and~~41% ~~notes~~as ~~payable~~the ~~are~~volume asof ~~follows:~~procedures ~~(The~~increased ~~$500~~by 51%,~~000~~ ~~Notes~~while ~~Payable~~revenue ~~are included~~ in the ~~liabilities~~Mid-Atlantic ~~related~~region todecreased ~~assets~~by ~~held~~3% ~~for sale~~as on the ~~balance~~volume ~~sheet)~~of procedures decreased by 2%.

	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Operating leases	$	4,832,000	$	603,000	$	1,542,000	$	1,485,000	$	1,202,000
Capital lease		88,000		17,000		39,000		32,000
Notes Payable		500,000		500,000		—		—		—
Totals	$	5,420,000	$	1,120,000	$	1,581,000	$	1,517,000	$	1,202,000

The 44% increase in gross profit highlights the fact that the Company has been able to effectively keep costs down while increasing volume. The gross profit percentage during the first quarter of 2011 for this segment was 32% compared to 26% for the first quarter of 2010, further demonstrating that the Company has been able to leverage expenses while growing volume.

~~For~~General the three months ended on March 31, 2011, cash provided by operating activities was $565,000, compared to $773,000 for the three months ended March 31, 2010. The decrease of $208,000 in cash provided between the two periods was partially due to a decrease of $15,000 in accounts receivable for the quarter ended March 31, 2011 compared with a decrease of $87,000 during the same period of 2010. HemaCare’s days sales outstanding stood at 36 on both March 31, 2011 and ~~December~~Administrative 31, 2010. Additionally, accounts payable, accrued payroll, accrued expenses and deferred rent increased by $555,000 compared with a $713,000 increase for the same period of 2010. A decrease in inventories, supplies and prepaid expenses of $110,000 in the quarter, compared with an increase of $223,000 in same quarter of 2010 is another component of the increase in cash provided by operating activities.Expenses

~~For the~~General ~~three~~and ~~months~~administrative ~~ended~~expenses ~~March 31, 2011, net cash used in investing activities was $4,000 compared to $161,000~~ for the ~~same~~six ~~period in~~months ~~2010,~~ended ~~all~~June ~~attributable to an increase in fixed assets. During 2010~~30, ~~the~~2011 ~~Company’s~~and ~~single largest use of cash for capital expenditures was to support the implementation of the Company’s information technology project. The majority of the expenditures during the first quarter of~~ 2010 ~~were~~are ~~due~~summarized toon the ~~Company~~following ~~having begun preparations for the next phase of its information technology project, investing in computers and equipment.~~table:

For the three months ended March 31, 2011, the Company used $5,000 in financing activities compared to no cash used for the same period of 2010. The Company made payments on its capital equipment lease in 2011; no such lease existed in the same period in 2010.

~~For~~Officer ~~discontinued~~salaries ~~operations,~~decreased ~~cash provided~~ by ~~discontinued operations was~~ $36137,000 induring the first ~~quarter~~half of 2011, ~~compared~~due ~~with~~primarily noto ~~cash~~the ~~provided~~$184,000 orseverance ~~used~~paid to the former executives in the first ~~quarter~~ half of 2010., ~~The~~offset ~~cash~~by ~~provided~~the insalaries ~~2011~~of ~~was~~new ~~the~~executives ~~result~~that ofdid anot ~~cash~~begin ~~settlement~~until ~~received,~~August ~~offset~~2010 byand ~~the~~whose ~~payment~~salaries ofpreviously ~~legal~~were ~~expenses~~included ~~that~~in ~~had been~~office ~~accrued~~salaries and operating salaries.

~~Item 3. Quantitative~~Stock based compensation decreased by $38,000 partially due to the true up of stock compensation to the former executives in 2010 to account for actual forfeiture rates, which had been initially estimated by management and ~~Qualitative~~used ~~Disclosures~~as ~~About~~an ~~Market~~input in ~~Risk~~the Black Sholes valuation model.

~~Intentionally~~Settlement ~~Omitted~~of an insurance claim for damaged equipment that had been fully depreciated of $197,000 was an offset to general and administrative expenses during the first half of 2011, with no corresponding item for the same period in 2010.

21For the first half of 2011, general and administrative expenses represented 29% of revenue compared to 35% for the same period of 2010.

~~Item 4T. Controls and Procedures~~22

~~Evaluation of~~Income ~~Controls and Procedures~~Taxes

~~Members~~The ofCompany ~~the~~recorded ~~Company’s~~a ~~management~~$10, ~~including~~000 ~~the~~provision ~~Company’s~~for ~~Chief~~income ~~Executive~~taxes ~~Officer~~for ~~and~~estimated ~~Chief~~alternative ~~Financial~~minimum ~~Officer,~~tax ~~have~~for ~~evaluated~~both the ~~effectiveness~~six ofmonth ~~our~~periods ~~disclosure controls~~ended ~~and~~June ~~procedures~~30, ~~as defined by paragraph (e) of Exchange Act Rules 13a-15 or 15d-15, as of March 31,~~ 2011, ~~the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer~~ and ~~Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2011~~2010.

~~Internal Control~~The ~~Over~~process ~~Financial~~of ~~Reporting~~preparing the financial statements requires management estimates of income taxes in each of the jurisdictions that the Company operates. This process involves estimating current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the balance sheet. As per ASC Topic 740, Income Taxes, the Company utilizes an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Management must assess the likelihood that the deferred tax assets or liabilities will be realized for future periods, and to the extent management believes that realization is not likely, must establish a valuation allowance.

~~There~~Discontinued were no changes in the Company’s internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.Operations

~~PART II~~On July 11, 2011, the Company completed the sale of its red blood cell collection operation assets in California and Maine to The American National Red Cross. ~~OTHER~~ See ~~INFORMATION~~Note 10 of Notes to Consolidated Financial Statements. As a result, the financial results for this operation have been reported as discontinued operations, and the assets and liabilities as held for sale, in the consolidated financial statements as of June 30, 2011 and 2010.

~~Item~~ Income from discontinued operations for the three months ended June 30, 2011 was $180,000 compared with $843,000 for the three months ended June 30, 2010. Income from discontinued operations for the six months ended June 30, 2011 was $285,000 compared with $1,595,000 for the six months ended June 30, 2010. ~~Legal~~ Blood ~~Proceedings~~sales continued on a downward trend throughout 2011 in part due to intensely competitive pricing pressures resulting from the challenging environment in the blood industry. Additionally, changing criteria justifying blood transfusions and other sweeping changes in the healthcare industry intensified these issues.

~~From~~In ~~time~~addition, toon ~~time~~December 4, 2007, the Company’s iswholly ~~involved~~owned insubsidiary, ~~various~~HemaCare ~~routine legal~~BioScience, ~~proceedings~~Inc. ~~incidental~~(“HemaBio”) toexecuted ~~the~~an ~~conduct~~Assignment for Benefit of ~~its~~Creditors, ~~business.~~under ~~Management~~Florida ~~does~~Statutes ~~not~~Section ~~believe~~727.101 ~~that~~et ~~any~~seq. (“Assignment”), assigning all of ~~these~~its ~~legal~~assets ~~proceedings~~to ~~will have~~an aassignee, ~~material~~who ~~adverse~~is ~~impact~~responsible onfor ~~the~~taking ~~business~~possession of, ~~financial~~protecting, ~~condition~~preserving, orand ~~results~~liquidating ofsuch ~~operations~~assets and ultimately distributing the proceeds to creditors of HemaBio according to their priorities as established by Florida law. The assignee continues to fulfill his obligations under the ~~Company~~Assignment, ~~either~~but ~~due~~has not concluded his efforts to ~~the nature~~liquidate all of the ~~claims,~~assets or ~~because~~complete ~~management~~a ~~believes~~final ~~that~~distribution ~~such~~of ~~claims~~all ~~should~~proceeds ~~not~~to ~~exceed~~HemaBio’s creditors. The Company recorded a $12,000 and a $25,000 loss in discontinued operations for the ~~limits~~three ofand six months ended June 30, 2011 and the ~~Company’s~~three ~~insurance coverage~~and six months ended June 30, 2010. representing interest expense in both periods.

~~Item 1A. Risk~~Off-Balance ~~Factors~~Sheet Arrangements

~~This~~At ~~Quarterly~~June ~~Report~~30, on2011, ~~Form~~the ~~10-Q~~Company ~~contains~~did ~~forward-looking statements,~~not ~~which~~have ~~are~~any ~~subject~~relationships towith aunconsolidated ~~variety~~entities ofor ~~risks~~financial ~~and~~partnerships, ~~uncertainties.~~such ~~Actual~~as ~~results~~entities ~~could~~often ~~differ~~referred ~~materially~~to ~~from~~as ~~those~~structured ~~anticipated in~~finance, ~~those~~variable ~~forward-looking~~interest ~~statements~~or asspecial apurpose ~~result~~entities, ofwhich ~~various~~would ~~factors,~~have ~~including~~been ~~those~~established ~~set~~for ~~forth~~the inpurpose ~~Item~~of ~~1A.~~facilitating ~~Risk~~off-balance ~~Factors~~sheet inarrangements ~~our~~or ~~Annual Report~~other oncontractually ~~Form~~narrow ~~10-K~~or ~~for~~limited ~~the~~purposes. As ~~year~~such, ~~ended~~the ~~December~~Company ~~31,~~is ~~2010.~~not ~~There~~exposed ~~have~~to ~~been~~any nofinancing, ~~material~~liquidity, ~~changes~~market toor ~~such~~credit risk ~~factors~~that ~~during~~could ~~the~~arise ~~three months~~if ~~ended~~it ~~March~~had ~~31,~~engaged ~~2011~~in such relationships.

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~23

~~None.~~Critical Accounting Policies and Estimates

~~Item 3. Defaults~~Use ~~Upon~~of ~~Senior Securities~~Estimates

~~None~~The Company’s discussion and analysis of its financial condition and results of operations are based on the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to valuation reserves, income taxes. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

~~Item 4. Removed~~Accounting ~~and~~for ~~Reserved~~Share-Based Incentive Programs

~~Item 5~~Share-Based Compensation: As per the ASC Topics 505, Equity and 718, Stock Compensation, an entity shall account for share-based compensation transactions with employees in accordance with the fair-value-based method, that is, the cost of services received from employees in exchange for awards of share-based compensation generally shall be measured based on the grant-date fair value of the equity instruments issued or on the fair value of the liabilities incurred. ~~Other~~ [FAS ~~Information~~123(R), paragraph 1] ] The Company’s assessment of the estimated fair value of share-based payments is impacted by the price of the Company’s stock, as well as assumptions regarding a number of complex and subjective variables and the related tax impact. Management calculated fair value based on fair value of the stock at the date of issuance for restricted stock and restricted stock units.

~~None~~Management utilized the Black-Scholes model to estimate the fair value of share-based payments granted. Valuation techniques used for employee share options and similar instruments estimate the fair value of those instruments at a single point in time (for example, at the grant date). The assumptions used in a fair value measurement are based on expectations at the time the measurement is made, and those expectations reflect the information that is available at the time of measurement.

22The Black-Scholes valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. This model also requires the input of highly subjective assumptions including:

~~Item 6. Exhibits~~(a) The expected volatility of the common stock price, which was determined based on historical volatility of the Company’s common stock;

Exhibit No.		Description
3.1		Restated Articles of Incorporation of the Registrant incorporated by reference to Exhibit 3.1 to Form 10-K of the Registrant for the year ended December 31, 2002.
3.2		Amended and Restated Bylaws of the Registrant, as amended, incorporated by reference to Exhibit 3.1 to Form 8-K of the Registrant filed on March 28, 2007.
4.1		Rights Agreement between the Registrant and U.S. Stock Transfer Corporation dated March 3, 1998, incorporated by reference to Exhibit 4 to Form 8-K of the Registrant dated March 5, 1998.
4.1.1		Amendment and Extension of Rights Agreement dated as of March 3, 1998, between HemaCare Corporation and Computershare Trust Company, N.A., incorporated by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed on March 24, 2008.
4.2		Form of Common Stock Certificate, incorporated by reference to Exhibit 4.4 to Form S-8 of the Registrant dated July 10, 2006.
10.1*		Employment Agreement, dated December 10, 2010, between the Registrant and Pete van der Wal.
10.2*		Employment Agreement, effective August 11, 2010, between the Registrant and Lisa Bacerra.
10.3*		Employment Agreement, effective August 11, 2010, between the Registrant and Anna Stock.
31.1		Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act.
31.2		Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act.
32.1		Certification Pursuant to 18 U.S.C. 1350 and Rule 13a-14(b) Under the Securities Exchange Act of 1934.

(b) expected dividends, which are not anticipated;

* Management(c) ~~contracts~~expected ~~and~~life ~~compensatory~~of ~~plans~~the ~~and arrangements.~~stock option, which is estimated based on the historical stock option exercise behavior of employees;

23(d) risk free interest rate; and

~~SIGNATURES~~(e) expected forfeitures.

~~Pursuant~~The toCompany ~~the~~does ~~requirements of~~not ~~the~~assume ~~Securities~~a ~~Exchange~~forfeiture ~~Act~~rate ofwhen ~~1934,~~assessing ~~the~~value ~~registrant~~for ~~has~~options ~~duly~~held ~~caused~~by ~~this~~independent ~~report~~members of the Board of Directors. Since options issued to beindependent ~~signed~~board onmembers ~~its~~are ~~behalf~~not byforfeited upon separation from the ~~undersigned~~Company, ~~thereunto~~ ~~duly~~management ~~authorized~~determined it was inappropriate to assign a forfeiture rate to these options.

Date	May 11, 2011	Hemacare Corporation
		(Registrant)
		By:	/s/ Peter van der Wal
			Peter van der Wal, Chief Executive Officer
		By:	/s/ Lisa Bacerra
			Lisa Bacerra, Chief Financial Officer

24In the future, management may elect to use different assumptions under the Black-Scholes valuation model or a different valuation model, which could result in a significantly different impact on net income or loss.

~~EXHIBIT~~Allowance ~~INDEX~~for Doubtful Accounts

Exhibit No.		Description
3.1		Restated Articles of Incorporation of the Registrant incorporated by reference to Exhibit 3.1 to Form 10-K of the Registrant for the year ended December 31, 2002.
3.2		Amended and Restated Bylaws of the Registrant, as amended, incorporated by reference to Exhibit 3.1 to Form 8-K of the Registrant filed on March 28, 2007.
4.1		Rights Agreement between the Registrant and U.S. Stock Transfer Corporation dated March 3, 1998, incorporated by reference to Exhibit 4 to Form 8-K of the Registrant dated March 5, 1998.
4.1.1		Amendment and Extension of Rights Agreement dated as of March 3, 1998, between HemaCare Corporation and Computershare Trust Company, N.A., incorporated by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed on March 24, 2008.
4.2		Form of Common Stock Certificate, incorporated by reference to Exhibit 4.4 to Form S-8 of the Registrant dated July 10, 2006.
10.1*		Employment Agreement, dated December 10, 2010, between the Registrant and Pete van der Wal.
10.2*		Employment Agreement, effective August 11, 2010, between the Registrant and Lisa Bacerra.
10.3*		Employment Agreement, effective August 11, 2010, between the Registrant and Anna Stock.
31.1		Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act.
31.2		Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act.
32.1		Certification Pursuant to 18 U.S.C. 1350 and Rule 13a-14(b) Under the Securities Exchange Act of 1934.

* Management contracts and compensatory plans and arrangements.Inventory

25Inventories for continuing operations consist of Company-manufactured platelets. Supplies consist primarily of medical supplies used to collect and manufacture platelets and to provide therapeutic services. Inventories for discontinued operations consist of whole blood components and other blood products, as well as component blood products purchased for resale. Inventories are stated at the lower of cost or market and are accounted for on a first-in, first-out basis. Management estimates the portion of inventory that might not have future value by analyzing historical sales for the twelve months prior to any balance sheet date. For each inventory type, management establishes an obsolescence reserve equal to the value of inventory quantity in excess of twelve months of historical sales quantity, using the first-in, first-out inventory valuation methodology.

Income Taxes

As part of the process of preparing the financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which the Company operates. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included on the balance sheet. Management must then assess the likelihood that the deferred tax assets will be recovered from future taxable income, and to the extent management believes that recovery is not likely, must establish a valuation allowance. To the extent a valuation allowance is created or adjusted in a period, the Company must include an expense, or benefit, within the tax provision in the statements of income.

Liquidity and Capital Resources

The Company’s primary sources of liquidity include cash on hand and cash generated from operations. Liquidity depends, in part, on timely collections of accounts receivable. Any significant delays in customer payments could adversely affect the Company’s liquidity. Presently, HemaBio is in default on two notes related to the HemaBio acquisition. See Note 3 of Notes to Consolidated Financial Statements.

As of June 30, 2011, the Company’s cash and cash equivalents for continuing operations was $1,683,000, and the Company’s working capital was $3,341,000.

Management anticipates that cash on hand and cash generated by operations will be sufficient to provide funding for the Company’s needs during the next year, including working capital requirements, equipment purchases, operating lease commitments and to fund the Company’s anticipated capital expenditures, which include the opening of the Dendreon expansion sites.

On December 9, 2009, the Company, together with the Company’s subsidiary, Coral Blood Services, Inc., entered into a Credit Agreement (the “Wells Agreement”), and related security agreements, with Wells Fargo Bank, N.A. The Wells Agreement provided that the Company could borrow the lesser of 80% of eligible accounts receivable or $5 million, had a maturity date of December 1, 2011, and provided for the monthly payment of interest at a rate of 0.25% above the bank’s prime rate. The Wells Agreement also granted the bank a first priority security interest in all of the assets of the Company and Coral Blood Services, Inc.

The Company had no outstanding borrowings under the Wells Agreement as of June 30, 2011, except for a letter of credit issued by Wells Fargo as security for lease obligations associated with the Company’s Van Nuys facility. The Company is required to maintain a letter of credit under the lease, initially in the amount of $815,000 and reducing by 10% each year on August 14, 2009, 2010, 2011 and 2012, and 20% each year on August 14, 2013 and 2014. At June 30, 2011, the letter of credit was for $660,000. No amounts have been drawn against the letter of credit.

The Wells Agreement also required that the Company maintain certain financial covenants which the Company had not maintained and was in default at December 31, 2010.

Effective as of January 15, 2011, in consideration of Wells Fargo waiving the Company’s existing defaults under the Wells Agreement, the Company agreed to amend the Wells Agreement to provide that outstanding borrowings, including outstanding advances and letters of credit, shall not at any time exceed the amount of cash collateral in a segregated, blocked deposit account maintained by the Company with Wells Fargo and with respect to which Wells Fargo has been granted a first priority security interest to secure all present and future indebtedness of the Company to Wells Fargo. Pursuant to this arrangement, the Company has pledged $660,000 in cash to Wells Fargo, and the Company has outstanding letters of credit for an aggregate of $660,000 under the Wells Agreement.

On July 5, 2011, the Company entered into a second amendment to the Wells Agreement, pursuant to which the parties amended the Wells Agreement to (i) reduce outstanding borrowings, including outstanding advances and letters of credit, to $660,000 which is the amount of cash collateral the Company maintains in a segregated, blocked deposit account with Wells Fargo, (ii) provide for Wells Fargo’s release of its security interests on all assets of the Company and Coral Blood Services other than a security interest on the cash collateral the Company maintains in a segregated, blocked deposit account with the bank, and terminated certain ancillary agreements pursuant to which the bank perfected its security interest in certain assets of the Company and Coral Blood Services, and (iii) to modify and delete certain affirmative and negative covenants of the Company and Coral Blood Services.

Future minimum payments under operating leases and notes payable are as follows: (The $500,000 Notes Payable are included in the liabilities related to assets held for sale on the balance sheet).

	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Operating leases	$	4,648,000	$	754,000	$	1,588,000	$	1,481,000	$	825,000
Capital lease	$	84,000	$	16,000	$	42,000	$	26,000		-
Notes Payable		500,000		500,000		-		-		-

Totals	$	5,232,000	$	1,270,000	$	1,630,000	$	1,507,000	$	825,000

For the six months ended June 30, 2011, net cash used in operating activities was $167,000, compared to $399,000 for the six months ended June 30, 2010. The decrease of $232,000 in cash used in operations between the two periods was partially due to an increase of $262,000 in accounts receivable for the six months ended June 30, 2011 compared with a decrease of $249,000 during the same period of 2010. HemaCare’s days sales outstanding stood at 40 on June 30, 2011 and 37 on December 31, 2010. Additionally, accounts payable, accrued payroll, accrued expenses and deferred rent increased by $415,000 compared with a $669,000 increase for the same period of 2010. A decrease in inventories, supplies and prepaid expenses of $94,000 in the first six months of 2011, compared with an increase of $449,000 in same period of 2010 is another component of the increase of net cash used in operating activities.

For the six months ended June 30, 2011, net cash used in investing activities was $86,000 compared to $229,000 for the same period in 2010, the difference being primarily attributable to proceeds received from an insurance claim for damaged equipment which had been fully depreciated. Additionally, purchases of plant and equipment accounted for $305,000 in the six months ended June 30, 2011 compared with $230,000 in the same period of 2010. In 2011, equipment was purchased to replace the equipment that was damaged and taken out of service.

For the six months ended June 30, 2011, net cash used in financing activities was $10,000 compared with net cash provided by financing activities of $3,000 for the six months ended June 30, 2010. The Company made payments on its capital equipment lease totaling $10,000 in 2011; the Company repurchased stock in the amount of $3,000 and received proceeds from the exercise of stock options of $6,000 in the same period of 2010.

For discontinued operations, net cash provided by discontinued operations was $344,000 in the first half of 2011, compared with $1,615,000 in the first half of 2010. The cash provided in both periods was the results of the revenue less the operating costs of the portion of the blood business sold to the American Red Cross in July 2011.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Intentionally Omitted

Item 4T.

Controls and Procedures

Evaluation of Controls and Procedures

Members of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures, as defined by paragraph (e) of Exchange Act Rules 13a-15 or 15d-15, as of June 30, 2011, the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2011.

Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time, the Company is involved in various routine legal proceedings incidental to the conduct of its business. Management does not believe that any of these legal proceedings will have a material adverse impact on the business, financial condition or results of operations of the Company, either due to the nature of the claims, or because management believes that such claims should not exceed the limits of the Company’s insurance coverage.

Item 1A.

Risk Factors

This Quarterly Report on Form 10-Q contains forward-looking statements, which are subject to a variety of risks and uncertainties. Actual results could differ materially from those anticipated in those forward-looking statements as a result of various factors, including those set forth in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2010. There have been no material changes to such risk factors during the three and six months ended June 30, 2011.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Removed and Reserved

Item 5.

Other Information

None.

Item 6.

Exhibits

Exhibit No.		Description

2.1*		Asset Purchase Agreement, dated July 11, 2011, among HemaCare Corporation, Coral Blood Services, Inc. and The American National Red Cross, incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed on July 15, 2011.
3.1		Restated Articles of Incorporation of the Registrant incorporated by reference to Exhibit 3.1 to Form 10-K of the Registrant for the year ended December 31, 2002.
3.2		Amended and Restated Bylaws of the Registrant, as amended, incorporated by reference to Exhibit 3.1 to Form 8-K of the Registrant filed on March 28, 2007.
4.1		Rights Agreement between the Registrant and U.S. Stock Transfer Corporation dated March 3, 1998, incorporated by reference to Exhibit 4 to Form 8-K of the Registrant dated March 5, 1998.
4.1.1		Amendment and Extension of Rights Agreement dated as of March 3, 1998, between HemaCare Corporation and Computershare Trust Company, N.A., incorporated by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed on March 24, 2008.

4.2		Form of Common Stock Certificate, incorporated by reference to Exhibit 4.4 to Form S-8 of the Registrant dated July 10, 2006.
10.1		Second Amendment to Credit Agreement, dated July 5, 2011, among Wells Fargo Bank, HemaCare Corporation and Coral Blood Services, Inc., incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on July 8, 2011.
10.2		Second Modification to Promissory Note, dated July 5, 2011, among HemaCare Corporation, Coral Blood Services, Inc. and Wells Fargo Bank, incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on July 8, 2011.
10.3†		Blood Purchase Agreement, effective as of July 11, 2011, between The American National Red Cross and HemaCare Corporation, incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on July 15, 2011.
31.1		Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act.
31.2		Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act.
32.1		Certification Pursuant to 18 U.S.C. 1350 and Rule 13a-14(b) Under the Securities Exchange Act of 1934.

*	The Asset Purchase Agreement contains a list briefly identifying the contents of all omitted exhibits and schedules. HemaCare Corporation agrees to furnish to the Securities and Exchange Commission a copy of any omitted exhibit or schedule upon request.

†Certain portions of this agreement have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for an order granting confidential treatment pursuant to Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934.

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	August 19, 2011	Hemacare Corporation
		(Registrant)
		By:	/s/ Peter van der Wal
			Peter van der Wal, Chief Executive Officer
		By:	/s/ Lisa Bacerra
			Lisa Bacerra, Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description

2.1*		Asset Purchase Agreement, dated July 11, 2011, among HemaCare Corporation, Coral Blood Services, Inc. and The American National Red Cross, incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed on July 15, 2011.
3.1		Restated Articles of Incorporation of the Registrant incorporated by reference to Exhibit 3.1 to Form 10-K of the Registrant for the year ended December 31, 2002.
3.2		Amended and Restated Bylaws of the Registrant, as amended, incorporated by reference to Exhibit 3.1 to Form 8-K of the Registrant filed on March 28, 2007.
4.1		Rights Agreement between the Registrant and U.S. Stock Transfer Corporation dated March 3, 1998, incorporated by reference to Exhibit 4 to Form 8-K of the Registrant dated March 5, 1998.
4.1.1		Amendment and Extension of Rights Agreement dated as of March 3, 1998, between HemaCare Corporation and Computershare Trust Company, N.A., incorporated by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed on March 24, 2008.
4.2		Form of Common Stock Certificate, incorporated by reference to Exhibit 4.4 to Form S-8 of the Registrant dated July 10, 2006.
10.1		Second Amendment to Credit Agreement, dated July 5, 2011, among Wells Fargo Bank, HemaCare Corporation and Coral Blood Services, Inc., incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on July 8, 2011.
10.2		Second Modification to Promissory Note, dated July 5, 2011, among HemaCare Corporation, Coral Blood Services, Inc. and Wells Fargo Bank, incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on July 8, 2011.
10.3†		Blood Purchase Agreement, effective as of July 11, 2011, between The American National Red Cross and HemaCare Corporation, incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on July 15, 2011.
31.1		Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act.
31.2		Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act.
32.1		Certification Pursuant to 18 U.S.C. 1350 and Rule 13a-14(b) Under the Securities Exchange Act of 1934.

*	The Asset Purchase Agreement contains a list briefly identifying the contents of all omitted exhibits and schedules. HemaCare Corporation agrees to furnish to the Securities and Exchange Commission a copy of any omitted exhibit or schedule upon request.

General and Administrative Expenses

For the Three Months Ended June 30,

Variance $

Variance %

$ 1,212,000

$ 1,131,000

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