========================================================================
                           UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C.  20549

                               FORM 10-K

(Mark one)
/X/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT  OF  1934
                 For the fiscal year ended December 31, 2003

/  /  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                   (I.R.S. Employer
of incorporation or                            Identification Number)
organization)


 21101 Oxnard Street
Woodland Hills, California                           91367
  (Address of principal                            (Zip Code)
   executive offices)

Registrant's telephone number, including area code: (818) 226-1968

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
                                                           (without par value)
					                   Rights to purchase
                                                           Preferred Stock

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:   /x/ YES  ___ NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K / /

The aggregate market value of the Common Stock held by non-affiliates of the
Registrant as of June 30, 2003, the last business day of the Registrant's most
recently completed second fiscal quarter (based upon the closing bid price
of the Common Stock as reported by the OTC Bulletin Board) was approximately
$6,452,401.

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule12b-2 of the Act). / / YES    /x/ NO

As of March 23, 2004, 7,756,060 shares of Common Stock of the Registrant
were issued and outstanding.

                 DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement relating to its
2004 annual meeting of shareholders, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within
120 days of the close of the Registrant's last fiscal year, are
incorporated by reference into Part III of this Report.

===========================================================================
<PAGE>



                           TABLE OF CONTENTS

                                PART I

		                                             Page
                                                            Number
                                                            ------
Item 1.  Business
         General.............................................  1
         Recent Developments.................................  1
         Blood Products Operations...........................  3
         Blood Services Operations...........................  3
         Competition.........................................  4
         Sales to Major Customers............................  5
         Marketing...........................................  5
         Human Resources.....................................  5
         Suppliers...........................................  5
         Government Regulation...............................  6
         Professional and Product Liablity Insurance.........  7
         Additional Information..............................  7
Item 2.  Properties..........................................  8
Item 3.  Legal Proceedings...................................  8
Item 4.  Submission of Matters to a Vote of Security Holders.  8

                               PART II

Item 5.  Market for Registrant's Common Equity and
         Related Stockholder Matters.........................  8
Item 6.  Selected Financial Data.............................  9
Item 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations................. 10
Item 7a. Quantitative and Qualitative Disclosures about
         Market Risk......................................... 23
Item 8.  Financial Statements and Supplementary Data......... 23
Item 9.  Changes and Disagreements with Accountants on
         Accounting and Financial Disclosures................ 24
Item 9A. Controls and Procedures............................. 24

                               PART III

Item 10.  Directors and Executive Officers of the Registrant. 24
Item 11.  Executive Compensation............................. 24
Item 12.  Security Ownership of Certain Beneficial Owners
          and Management and Related Stockholder Matters..... 25
Item 13.  Certain Relationships and Related Transactions..... 25
Item 14.  Principal Accountant Fees and Services............. 25

                               PART IV

Item 15.  Exhibits, Financial Statement Schedules and
          Reports on Form 10-K............................... 25
Signatures................................................... 27
Index to Consolidated Financial Statements and Schedules..... F-1

                               i
<PAGE>  1


                            PART I

Item 1   Business
------   --------

This 2003 Annual Report on Form 10-K contains statements which
constitute forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  Those statements include
statements regarding the intent, belief or current expectations of the
Company and its management.  Prospective investors are cautioned that
any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual
results may differ materially from those projected in the forward-
looking statements (See "Item 7.  Management's Discussion and Analysis
of Financial Condition and Results of Operations - Risk Factors").  The
Company does not undertake to update its forward-looking statements to
reflect actual events and outcomes or later events.

General
-------

HemaCare Corporation ('HemaCare" or the "Company") collects, processes
and distributes blood products to hospitals in the United States.
Additionally, the Company provides blood related services principally
therapeutic apheresis procedures, stem cell collection and other blood
treatments to patients with a variety of disorders.  Blood related
services are usually provided on an "in-patient" basis under contract
with the hospital as an outside purchased service.

The Company has operated in Southern California since 1979.  In 1998,
the Company expanded operations to include portions of the eastern U.S.
In 2003, new management completed a comprehensive evaluation of the
Company's operations, and at the conclusion of this review, developed a
restructuring plan to reduce the number of geographic areas served,
reduce the overhead costs associated with supporting the organization,
and improve the collection capability in the geographic areas still
served by the Company.  Management's strategy is to return the Company
to a profitable foundation before exploring opportunities for growth in
other geographic areas or into new lines of business.  The
implementation of this plan started in the third quarter of 2003, and
continued into early 2004. Management remains focused on completing the
implementation of the restructuring plan, and improving the
profitability of the remaining operations including growth within
existing geographic markets, expanding therapeutic apheresis market
share and exploring new customer opportunities such as research
companies.

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


Recent Developments
-------------------

     Implementation of Restructuring Plan

As the result of an evaluation of the overall operations of the
Company, management identified several non-performing donor centers
that hindered the Company's ability to produce profitable results.
In 2002 and 2003, these donor centers produced operating losses
$553,000 and $733,000 respectively.  In the third quarter of 2003,
management implemented a plan to cease operations at these donor
centers, as well as the mobile operations associated with these
centers.  The donor centers closed included Albany, New York; Chicago,
Illinois; three centers in North Carolina; and Williston, Vermont.  As
of December 31, 2003, all of these centers had been closed with the
exception of one center in North Carolina, which was closed in January
2004.  The costs associated with the closure of these centers are
reflected in the Company's 2003 results in accordance with generally
accepted accounting principles.  These expenses include the write-off
of certain assets previously used in the operations of the closed donor
centers, severance payments to terminated employees, recognition of
unexpired facility lease obligations, and other associated costs.

                                  1
<PAGE>  2

     Limitation on Blood Product Supply

Blood products organizations, as well as regulatory agencies, focus
significant attention and resources on improving the safety of the
blood supply.  Requirements to screen potential donors for possible
exposure to a variety of pathogens, including HIV, malaria and SARS,
have reduced the pool eligible donors.  In addition, regulations and
industry standards require an increasing number of tests on donated
blood products to detect pathogens, including a new bacterial detection
quality control test, which may impact expiration rates of platelet
products.  The Company faces an increasing risk that these factors will
increase the cost of producing blood products and reduce the ability to
generate a sufficient supply of blood products to satisfy customer
demand.  The inability to satisfy customer demand could result in the
loss of customers, and a loss of revenue.

     Termination of California Exemption

Since 1976, California law has prohibited the transfusion of blood
products to patients if the donors of those products were paid unless,
in the opinion of the recipient's physician, blood from a non-paid
donor was not immediately available.  Apheresis platelet products
obtained from paid donors were exempted from this law by a series of
state statutes, the latest of which expired on January 1, 2003.
Consequently, HemaCare no longer offers cash compensation to apheresis
platelet donors.  In 2003, the Sherman Oaks apheresis donor program
provided revenue of $4.1 million compared with $5.4 million in 2002.
Although the termination of the apheresis platelet exemption has
impacted platelet collections at the Sherman Oaks facility, the impact,
although not immaterial, has been less than expected.  The Company has
no indication that it cannot maintain a substantial donor base on a
voluntary basis.

     Nursing Shortage

Multiple factors, including a decline in nursing graduates, the
retirement or movement of experienced nurses out of direct patient
care, and the January 1, 2004 California law that increased the nurse
to patient staffing ratios, have created a nursing shortage. This
shortage has directly affected the blood industry because certain
regulations and industry standards require a nurse's presence during
donation and for therapeutic apheresis procedures.  The shortage of
nurses has increased the cost of recruitment and retention of nursing
staff and may limit the Company's ability to provide and expand
operations.  This challenge of locating qualified nurses, however, may
provide additional opportunities as hospitals may choose to outsource
therapeutic services to HemaCare.  If HemaCare can succeed in
recruiting qualified nurses to perform these therapeutic services, the
potential market for such services could increase in the future.

     Settlement of ARC litigation

In the fourth quarter of 2002, the Company settled the anti-trust
litigation with the American Red Cross ("ARC").  The Company contended
that the ARC was capitalizing on its position as the dominant blood
supplier in the U.S. and bundling products and services to prevent or
eliminate competition in the blood industry. Pursuant to the terms of
the settlement, the ARC has agreed not to bundle blood-related products
and services in the New England or the Carolinas regions in a manner
that would constrain lawful competition.  In addition, litigation with
the ARC relating to what the Company believed to be anticompetitive
business practices in California was settled without the payment of
cash to either party.

     Other

In October 2003, Robert S. Chilton was appointed the Company's
Executive Vice President and Chief Financial Officer, succeeding David
Fractor who left the Company in June 2003.

                                 2
<PAGE>  3

Blood Product Operations
------------------------

The practice of modern medicine depends on the availability of a safe
and adequate blood supply.  Most blood product collections consist of
single units of whole blood. The actual collection process is simple
and safe for the donor.  After collection, whole blood units are
tested and processed into components, and then distributed to
hospitals for transfusion.  These components include red blood
cells, plasma and platelets.  All blood products have limited
therapeutic lives.

Apheresis collection separates blood components during the donation
process through the use of a cell separator.  This process allows for
the collection of only the desired components of a donor's blood and
returns the other blood components to the donor's blood stream.
Apheresis blood product collection, used by HemaCare to collect
platelets, is considerably more complex and more expensive than whole
blood collection and processing. However, platelets collected from a
single donor are considered more desirable because platelet products
collected from multiple whole blood donors increases the risk of
exposing the recipient to blood born pathogens.  Automated apheresis
equipment is costly and requires longer donation times which result in
higher labor costs. The complexity of the donation process, and longer
donation time makes recruiting donors for apheresis procedures more
difficult than recruiting whole blood donors.

On average, only 5% of the United States population donates blood and a
much smaller percentage are apheresis platelet donors. Recruiting and
retaining donors is critical to the success of blood product
operations.  Apheresis platelet donors are recruited from the most
dedicated and committed subset of the whole blood donor population. On
average, such donors donate platelets between four and six times a year,
compared to twice a year for whole blood donors.  Generally, success in
donor recruitment is a major factor in success of any blood collection
program.  The Company has demonstrated a consistent track record of
donor recruitment for both whole blood and apheresis donors at the
donor centers it currently operates.

Product safety is of paramount concern when dealing with blood
products.  The U.S. Food and Drug Administration ("FDA") is the agency
principally responsible for the regulation of the blood products
industry in the U.S.  The Company's blood product operations are either
licensed or registered with the FDA and are regularly inspected by FDA
personnel.  Additionally, the Company's operations are licensed,
regulated and inspected by various state agencies.

The American Association of Blood Banks ("AABB") is the blood industry
sponsored organization responsible for maintaining and improving
science, safety, quality and education relating to blood.  The Company
is an institutional member, and the Company's operations are accredited
by the AABB.

The Company has blood collection operations in four states, principally
in Southern California and in New England.  Some of these operations
are hospital-based collection centers, but the Company also operates
several free standing blood collection centers, as well as mobile blood
collection operations.


Blood Services Operations
-------------------------

Therapeutic apheresis is a technique for removing harmful components
from a patient's blood and is used in the treatment of autoimmune
diseases and other disorders. Therapeutic services are provided upon
the request of a hospital, which has received an order from a patient's
physician. Therapeutic treatments are administered using mobile
equipment operated at the patient's bedside or in a hospital outpatient
setting. The mobile therapeutic equipment includes a blood cell
separator and the disposables needed to perform the procedure.
Treatments are administered by trained, nurse-specialists, under the
supervision of a specially trained physician, and acting in accordance
with documented operating procedures and quality assurance protocols
based on guidelines developed by the AABB and the Joint Commission on
Accreditation of Healthcare Organizations ("JCAHO").

                                3
<PAGE>  4

Since requests for therapeutic apheresis treatments are often sporadic
and unpredictable, many hospitals choose not to equip, staff and
maintain an apheresis unit.  The existing nurse shortage in the U.S.
has also hindered hospital efforts to adequately staff apheresis units.
The Company's services enable hospitals to offer therapeutic apheresis
services to their patients on an "as needed" basis without incurring
the costs associated with maintaining a full-time team of apheresis
specialists.  In addition, the Company's services can serve to
supplement a hospital's existing apheresis capability when demand
exceeds capacity.

Blood services revenue depends on a number of factors, including the
occurrence of disease states that are appropriately treated by these
services, and the perceived benefits of blood therapies compared to
alternative courses of treatment.  The Company believes that education
on the benefits of therapeutic apheresis results in increases in the
application of such treatments in medically appropriate circumstances.
The Company's affiliated medical directors conduct educational seminars
for physicians to inform them of the benefits of therapeutic apheresis
relative to other modes of patient treatment.

The Company provides therapeutic services using all currently
recognized treatment methods:  plasma exchange and cell depletion; in-
line immunoadsorbant columns; stem cell collection, and photopheresis.
Since its inception, the Company has performed approximately 67,000
therapeutic apheresis procedures.  Patients suffering from diseases
such as multiple myeloma, polyneuropathy, leukemia, systemic lupus
erythematosus, scleroderma, hyperviscosity syndrome, thrombocytosis,
thrombotic thrombocytopenic purpura (TTP), myasthenia gravis and
Guillain-Barre syndrome may benefit from therapeutic apheresis
treatments.  The Company provides therapeutic apheresis services on a
regional basis in a total of seven states.  Major operations are
located in Los Angeles and New York.


Competition
-----------

     General

Most U.S. blood suppliers are organized as not-for-profit, tax-exempt
entities.  However, all blood suppliers finance their activities by
charging fees to hospitals for the products they utilize.  These fees
are generally set at levels based on the supply and demand for specific
products, and are influenced by the potential competition from other
blood suppliers.   Many suppliers have greater financial, technical and
personnel resources than the Company.  In addition, since many of the
Company's competitors are tax-exempt, they do not bear the tax burden
that the Company faces, and they have access to lower cost tax-exempt
debt financing.  Their status as charitable institutions may give them
an advantage in recruiting volunteer donors.  The Company competes on
the basis of responsiveness to customer needs, value-based pricing and
the high quality of the services and products provided.


     Blood Products

In the United States, approximately 50% of all blood products are
supplied by the ARC's national collection network.  Approximately 40%
of all blood products are supplied by local and regional blood centers,
including the Company.  The remainder is collected by hospitals
directly.

The Company competes in the marketplace through a strategy of offering
blood product supply programs tailored to the requirements of
individual customers.  The Company consistently reevaluates and revises
its product supply programs to respond to marketplace factors.  Some
competitors have advantages over the Company as a result of established
positions and relationships within the communities they serve.  In
addition, the ARC's size and market dominance provides them with
greater resources to sustain periods of unprofitable sales, or to adopt
aggressive pricing strategies for the purpose of defending or
increasing market share.

                               4
<PAGE> 5

     Blood Services

The competition in the therapeutic blood services business is primarily
regional and community blood banks, dialysis companies that also
provide therapeutic blood services, and a wide range of small blood
services companies.  In addition, since some diseases treatable with
therapeutic apheresis are also treatable by other medical therapies,
the competition for the Company's blood services business also include
companies that market or provide any of these competing medical
therapies.  The Company believes that it competes in this market by
offering highly trained and experienced nurses and greater availability
for customers with immediate needs.  In addition, the Company provides
education to the medical community on the benefits of therapeutic
apheresis as a treatment solution for various diseases.


Sales to Major Customers
------------------------

During 2003, 2002 and 2001, no single customer accounted for more than
10% of our total revenue.


Marketing
---------

The Company's marketing programs include a combination of medical
education, advertising and promotional programs, in-person sales and
other marketing programs directed to selected physicians and hospitals.
The Company markets its products and services in the form of supply
programs that meet the specific needs of individual customers.  As a
smaller company than the main competitors in the marketplace, HemaCare
can offer far more flexibility in supply arrangements and pricing
structure.  This flexibility and focus on customer service are the main
messages communicated throughout all the marketing vehicles the Company
utilizes.


Human Resources
---------------

As of February 26, 2004, the Company had 270 employees, including 96
part-time employees.  Most of the Company's professional and management
personnel possess prior experience in hospitals, medical service
companies or blood banks.

None of the Company's employees are represented by a labor union.  The
Company considers its relations with its employees to be good.

As part of management's restructuring plan, the Company terminated 29
employees who principally were employed in the closed donor centers.
Severance payments of approximately $77,000 were paid to these employees
upon their termination.


Suppliers
---------

The Company maintains relationships with numerous suppliers who provide
cell separator equipment, disposable supplies, replacement fluids,
testing services and blood products. Generally, the Company has not
experienced difficulty in obtaining most of its equipment and supplies;
however, if there were material adverse changes in the sources of its
supplies, the Company's operations could be adversely affected. In
particular, in the event of a war or other international conflict, the
availability of critical supplies could be negatively affected and the
cost of procuring these supplies could increase.

The Company relies on blood donors to provide the platelets and whole
blood required to produce the blood products manufactured and sold by
the Company.  The Company competes with the ARC and other blood
suppliers in recruiting its volunteer donors. The growth of the

                                5
<PAGE>  6

Company's manufactured blood products business is dependent on the
Company's ability to attract, screen and retain qualified donors.

Albumin is the most commonly used replacement fluid in therapeutic
apheresis procedures. In late 1996, a shortage of albumin arose when a
major U.S. manufacturer was required by regulatory agencies to
temporarily cease operations. As a result of the shortage, the price of
albumin to HemaCare more than doubled.  After 1998, the supply of
albumin increased and prices declined.  However, in the event of a war,
the supply of albumin could be limited and the price would be expected
to increase.


Government Regulation
---------------------

     Blood Product Operations

All hospitals and blood suppliers are subject to extensive regulation
by the FDA and various state licensing authorities.  FDA regulations
are comprehensive, complex and extend to virtually all aspects of the
blood supply industry, including: recruiting; screening blood donors;
processing, testing, labeling, storing and shipping blood products;
recordkeeping; and communications with hospital customers and donors.
In addition, FDA regulations also extend to the manufacturers of all
critical supplies and equipment used in the blood supply industry.

The Company views blood product safety and compliance with governmental
regulations as paramount concerns at all times.  The Company has
developed extensive procedures and internal quality control programs to
increase compliance with all governmental regulations and industry
standards.  Employees routinely participate in training classes.
Employees are tested at the conclusion of these classes to insure that
the desired level of understanding of the Company's compliance and
safety procedures is achieved.  Finally, HemaCare's Regulatory Affairs
and Quality Assurance Department conducts periodic audits of each
operating unit to identify the level of compliance with regulatory
procedures.

During 2003, the FDA conducted inspections at each of HemaCare's
facilities.  The Company dedicated substantial resources to provide the
FDA with all the information requested to complete each inspection.  At
the conclusion of each inspection, the FDA provided the Company with a
list of observations of regulatory issues.  The Company believes it has
adequately addressed all of the issues raised by the FDA, and that it
is in compliance with current FDA regulations.

During the past year, representatives from the Department of Health for
the State of California have conducted an audit of the Company's
operations located in Whittier, California.  This audit focused on
compliance with specific California laws that cover HemaCare's
operations.  At the conclusion of this audit, the  Department of Health
provided the Company with a list of observations that have since been
addressed.  The Company believes that it is in compliance with
California regulations governing the Company's operations within the
state.

Organizations within the blood supply industry are registered by the
FDA to operate blood collection and/or blood processing facilities.
All of the Company's facilities operate under an FDA registration, with
the exception of the Company's operations in Whittier, California.  In
this instance, the Company operates a blood collection facility within
a hospital and does so under the hospital's FDA registration.

The FDA also issues licenses to organizations within the blood supply
industry to ship blood products across state lines if the qualifying
organization can demonstrate adequate employee training programs,
procedure documentation and quality control systems to insure the
quality of the products shipped.  HemaCare holds a license for its
Sherman Oaks, California facility to ship selected blood products
across state lines.  The Company has submitted an expanded license
request to the FDA for additional blood products manufactured at
Sherman Oaks.  This request is  pending with the FDA. In December 2003,
the FDA approved the Company request to license the Scarborough, Maine
facility for platelets and other products drawn on the Trima component
collection machine manufactured by Gambro BCT, expanding this
facility's licensed product line.

                                6
<PAGE>  7

     Other Matters

State and federal laws set forth anti-kickback and self-referral
prohibitions, and otherwise regulate financial and referral
relationships between blood suppliers, hospitals, physicians and others
in the blood supply industry.  The Company believes its present
operations comply with all currently applicable regulations in this
area.

Joshua Levy, M.D., the national medical director of the Company and a
shareholder, through his private practice in Sherman Oaks, California,
treats patients who require therapeutic services. Sales by the Company
to hospital customers for therapeutic services provided to Dr. Levy's
patients amounted to approximately 2%, or less, of the Company's total
revenues in each of the three years ended December 31, 2003.  There are
no agreements between Dr. Levy and the Company's hospital customers
that require the hospitals to select HemaCare to provide therapeutic
services to Dr. Levy's patients.

New health care related regulations are continuously under
consideration by lawmakers at the federal level, and in many of the
individual states in where the Company currently operates.  Many of
these new regulations could have a direct impact on the Company and its
operations.  The Company is not aware of any specific proposed
regulation that would have a material adverse impact on the Company;
however, the Company is uncertain what changes may be made in the
future regarding health care policies, especially those regarding
hospital reimbursements, health insurance coverage and managed care
that may materially impact the Company's operations.


Professional and Product Liability Insurance
--------------------------------------------

The blood product and blood services business inherently is subject to
substantial potential liabilities for personal injury claims.  The
Company maintains medical professional liability insurance in the
amount of $3,000,000 for a single occurrence and $5,000,000 in the
aggregate per year in California, and $1,000,000 for a single
occurrence and $3,000,000 in the aggregate per year in other states.
There can be no assurance that potential insurance claims will not
exceed present coverage or that continued or additional insurance
coverage would be available at affordable premium costs.  If such
insurance were ineffective or inadequate for any reason, the Company
could be exposed to significant liabilities.


Additional information
----------------------

The Company makes available free of charge through its website,
www.hemacare.com, its Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as soon as practical after those reports are
filed with the Securities and Exchange Commission (the "SEC").  The
Company's filings may also be read and copied at the SEC's Public
Reference Room at 450 Fifth Street, NW, Washington D.C. 20549.
Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 800-SEC-0330.  The SEC also maintains an
Internet site that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with
the SEC.  The address of that site is www.sec.gov.


Item 2    Properties
------    ----------

In January 2003, the Company reduced the square footage of its Sherman
Oaks, California facility from 12,000 square feet to approximately
6,300 square feet. The Company operates an apheresis donor center, a
laboratory, a manufacturing facility for whole blood components and a
distribution center at this location. The Company is currently renting
the space on a month-to-month basis for a monthly amount of
approximately $15,500 while negotiating a lease for a multi-year term.

                              7
<PAGE>  8

The Company's corporate offices and part of its distribution center are
located in an 11,250 square foot facility in Woodland Hills,
California.  The rent is fixed at $16,200 per month and the lease on
this space expires October 31, 2006.  The Company has one five-year
option to extend the lease on this space at the then current market
price.

The Company leases space for a donor center in a 3,600 square foot
facility in Scarborough, Maine.  The monthly rent is approximately
$6,000 per month, with an escalation clause for changes in the Consumer
Price Index.  The lease term expires October 31, 2004.  The Company has
the option to extend the lease for two additional five-year terms at
rates adjusted for changes in the Consumer Price Index.

The Company also leases space for a donor center in a 2,500 square foot
facility in Bangor, Maine.  The monthly rent is approximately $3,900
per month.  The lease term expires December 31, 2006, and the Company
has the option to extend the lease for two additional five-year terms
at rates adjusted for changes in the Consumer Price Index.

In addition, the Company leases a 1,278 square foot office space in
Yonkers, New York which expires August 31, 2006, and leases an
apartment in Yonkers, New York which expires July 1, 2004.

Finally, the Company occupies space on the campus of several of its
client hospitals.  While the arrangements vary, certain of these
facilities are formally subject to a lease agreement with the
sponsoring hospital for periods concurrent with the blood supply
agreement. Other agreements grant the Company the right to utilize
space and facilities on the hospital premises during the term of the
blood supply agreement at no cost.


Item 3    Legal Proceedings
------    -----------------

From time to time, the Company is party to various claims, actions and
proceedings incidental to its normal business operations. The Company
believes there is sufficient insurance coverage, or that the outcome of
such claims, actions and proceedings, individually and in the
aggregate, will not have a material adverse effect on the business and
financial condition of the Company.


Item 4    Submission of Matters to a Vote of Security Holders
------    ----------------------------------------------------

None.


                            PART II

Item  5   Market  for  Registrant's Common  Equity  and  Related
          Stockholder Matters
-------   -------------------------------------------------------

Effective November 2, 1998, the Company's Common Stock became quoted on
the OTC Bulletin Board under the symbol HEMA. Prior to that date, the
Company's Common Stock was listed on the Nasdaq Small Cap Market
("Nasdaq") under the same symbol.

The following table sets forth the range of high and low closing bid
prices of the Common Stock, as reported by the OTC Bulletin Board, for
the periods indicated.  These prices reflect inter-dealer quotations,
without retail markups, markdowns or commissions, and do not
necessarily represent actual transactions.  The prices appearing
below were obtained from the National Quotation Bureau.

                                 8
<PAGE>  9


                              2003                    2002
                         ---------------         ---------------
    Quarter ended         High      Low          High       Low
    ----------------     ------    -----         -----     -----
    March 31             $0.66     $0.42         $1.65     $0.95
    June 30              $0.95     $0.58         $1.38     $0.97
    September 30         $1.20     $0.63         $0.96     $0.45
    December 31          $0.97     $0.63         $0.60     $0.27

On March 4, 2004, the last reported sales price for the Company's
Common Stock was $0.64.  Shareholders are urged to obtain current
market quotations for the Company's Common Stock.

The Company intends to retain any future earnings for use in its
business, and therefore, does not anticipate declaring or paying any
cash dividends in the foreseeable future.  Additionally, the Company's
line of credit prohibits the payment of dividends.  The declaration and
payment of any cash dividends in the future will depend upon the
Company's earnings, financial condition, capital needs, line of credit
requirements and other factors deemed relevant by the Board of
Directors.

On March 4, 2004, the approximate number of shareholders of record was
300 (excluding individual participants in nominee security position
listings).


Item 6    Selected Financial Data
------    ------------------------

The following selected financial data should be read in conjunction
with the other information and financial statements, including the
notes thereto, appearing elsewhere herein:


<TABLE>
<CAPTION>

                                                     Years Ended December 31,
                                               (In Thousands, except Per Share Data)
                                         2003       2002        2001       2000       1999
                                       -------    -------     --------    -------    -------
<S>                                    <C>        <C>         <C>         <C>        <C>
Revenue........................        $27,488    $27,817     $25,199     $21,512    $19,021
Gross profit...................          2,251      3,745       4,409       4,850      4,026
Income (loss) from operations..         (1,695)      (329)        491       1,358      1,085
Write off of impaired goodwill.              -       (362)         -           -           -
Provision (benefit) for income
  taxes........................          2,984       (151)        190      (2,901)        28
Net income (loss)..............        $(4,679)   $  (591)    $   323     $ 4,350    $ 1,057

Basic per Share Amounts:
------------------------
Income (loss) from operations..        $ (0.22)   $ (0.04)    $  0.07     $  0.18    $  0.15
Net income (loss)..............        $ (0.60)   $ (0.08)    $  0.04     $  0.57    $  0.14

Diluted Per Share Amounts:
--------------------------
Income (loss) from operations..        $ (0.22)   $ (0.04)    $  0.06     $  0.16    $  0.13
Net income (loss)..............        $ (0.60)   $ (0.08)    $  0.04     $  0.50    $  0.13

Total assets...................        $ 8,286    $13,455     $13,082     $11,477    $ 7,574
Long-term debt and capital
 lease obligations, net of
 current portion...............        $ 1,078    $ 1,353     $   802     $    46    $   541
Shareholders' equity...........        $ 3,411    $ 8,087     $ 8,427     $ 8,203    $ 4,440

</TABLE>

                                     9
<PAGE> 10

Item 7   Management's Discussion and Analysis of Financial
         Condition and Results of Operations
------   --------------------------------------------------

General
-------

HemaCare operates two primary business segments.  The first is the
blood products segment which supplies hospitals and other customers
with whole blood, apheresis platelets and other blood products.  The
Company operates and manages donor centers and mobile donor vehicles to
collect blood products from donors.

The blood products segment has undergone several significant changes
during the past year.  First, after a thorough evaluation of this
business segment, management implemented a plan to restructure the
operations of this segment to return the segment to profitability.
This plan included closing several donor centers, including the mobile
operations associated with these centers.  Management implemented this
plan in the third quarter of 2003, closing four centers in Albany, New
York; Chicago, Illinois; Raleigh, North Carolina; and Williston,
Vermont.  The Company continued with the implementation of the
restructuring plan in the fourth quarter of 2003 with the closure of
the donor center in Durham, North Carolina.  The completion of the
restructuring plan occurred in January 2004 with the closure of the
donor center in Chapel Hill, North Carolina.

Another significant event for the blood products segment occurred in
early 2003 when California law no longer permitted the transfusion of
blood products to patients from paid donors.  The Sherman Oaks platelet
donor center offered compensation to apheresis donors prior to 2003, and
there was considerable concern about the future of this donor center.
The Company converted the Sherman Oaks program to a voluntary program
in January 2003, and although the program did see a decline in platelet
donations, donations increased throughout 2003 to a point nearly equal
to levels achieved in late 2002.

Other significant events for the blood products segment include
increasing staff costs as a result of a growing nursing shortage in the
U.S., increases in workers' compensation insurance, increased
regulatory requirements to defer potential donors to reduce the risk of
pathogens in the blood supply, and industry requirements to test
platelet products for bacteria beginning March 2004 which is
anticipated to increase the likelihood of product expiration and
discards.

HemaCare's blood services segment includes therapeutic apheresis
procedures, stem cell collection and other blood therapies provided to
patients generally in a hospital setting.  This segment fluctuates
based on the occurance rate of diseases treated with therapeutic
apheresis, the degree hospitals have fully staffed apheresis units
available, and the degree of success of the Company's efforts in
physician education about the potential benefits of therapeutic
apheresis as a treatment alternative.  Over the past few years, this
business segment has been relatively stable in Southern California;
however, the Company believes growth opportunities exist in the New
York market.  The New England market has steadily declined recently due
principally to difficulties in recruiting and retaining trained
apheresis nurses.


Results of Operations
---------------------

The following table sets forth, for the periods indicated, certain
items in the statement of operations as a percentage of net revenue
and the percentage dollar increase (decrease) of such items from
period to period.

                                 10
<PAGE>  11

<TABLE>
<CAPTION>

                                                           Percentage Dollar
                               Percent of Net Sales         Increase (Decrease)
                              Year Ended December 31,    Year Ended December 31,
                              -----------------------    -----------------------
                               2003     2002    2001     '02 to '03   '01 to '02
                              ------   ------  ------    ----------   ----------
<S>                           <C>      <C>     <C>       <C>          <C>
Revenues..................... 100.0%   100.0%  100.0%        -1.2%       10.4%
Operating costs..............  91.8%    86.5%   82.5%         4.8%       15.8%
                              ------   ------  ------     ---------    -------
Gross profit.................   8.2%    13.5%   17.5%       -39.9%      -15.1%
General and administrative
 expenses....................  14.4%    14.6%   15.5%        -3.1%        4.0%
                              ------   ------  ------     ---------    -------
Income(loss) from operations.  -6.2%    -1.1%    2.0%      -415.2%     -167.0%
Other income(expense)........     -     -0.2%    0.1%       100.0%     -331.8%
Write off of impaired
 goodwill....................     -     -1.3%      -        100.0%     -100.0%
Income(loss) before income
 taxes.......................  -6.2%    -2.6%    2.1%      -128.4%     -244.6%
Provision (benefit) for
 income taxes................  10.9%    -0.5%    0.8%      2076.2%     -179.0%
                              ------   ------   -----     --------     -------
Net income(loss)............. -17.1%    -2.1%    1.3%      -691.7%     -283.0%

</TABLE>


Year ended December 31, 2003 compared to the Year ended December 31,
2002
---------------------------------------------------------------------

     Overview

The Company experienced a materially higher net loss in 2003 compared
with 2002.  The net loss for 2003 was $4,679,000, or $.60 both basic
and fully diluted loss per share, compared with a net loss of $591,000,
or $.08 both basic and diluted loss per share for 2002.  This
represents a 692% increase in the loss reported between the two
periods. The four main reasons for this result are the decline in
therapeutic apheresis procedures, the costs associated with closing
blood product operations as part of management's restructuring plan,
increased insurance costs, and the increase in the deferred tax asset
valuation reserve.

Gross profit declined 39.9% to $2,251,000 from $3,745,000 in 2002
primarily due to the decline in therapeutic apheresis procedures, the
costs incurred in 2003 associated with management's restructuring plan
and increases in insurance costs.  The provision for income taxes for
2003 was $2,984,000 compared with a net benefit of $151,000 in 2002.
This change reflects the increase in the deferred tax asset valuation
reserve in 2003.  In addition, ongoing operating losses in the blood
products segment prior to the implementation of management's
restructuring plan contributed to the net loss in 2003.

General and administrative expenses decreased 3.1% in 2003 to
$3,946,000 from $4,074,000 in 2002.  This is mostly attributable to
lower legal expenses in 2003 since the Company settled the ARC
litigation in late 2002, and severance expenses in 2002 associated with
the termination of the prior Chief Executive Officer.

                                     11
<PAGE>  12

     Revenue and Gross Profit

     Blood Services

Revenue for 2003 declined $329,000, or 1.2%, compared with 2002.  The
main reason for this decline in revenue is a 11.4% decline in
therapeutic apheresis procedures, principally in the Southern
California and New England markets.  During 2003, the Company performed
6,328 therapeutic apheresis procedures, whereas 7,140 procedures were
performed in 2002.  As a result, therapeutic apheresis revenue declined
$915,000, or 10.9%, from $8,373,000 to $7,458,000.  In turn, this
decline in revenue contributed to a 13% decrease in gross profit, from
$2,748,000 to $2,390,000.  The balance of the decrease in gross profit
is mostly attributable to increases in workers' compensation insurance
and professional liability insurance costs, especially in California.

     Blood Products

Blood products revenue for 2003 grew $586,000 to $20,030,000 from
$19,444,000, representing an increase of 3%.  The following table
illustrates the components included in blood products revenue for 2003
and 2002, and segregates that portion of blood products revenue
associated with the closed centers:

<TABLE>
<CAPTION>

                                         For the tweleve months period ended December 31,
                                                         ($ in Thousands)

                              Ongoing Centers      Closed Centers*    California Mobiles          Total
                             -----------------   ------------------   ------------------  ------------------
                               2003      2002       2003      2002      2003      2002      2003      2002
                             --------  --------   --------  -------   --------  --------  --------  --------
<S>                          <C>       <C>        <C>       <C>       <C>       <C>        <C>      <C>
Revenue....................  $ 9,631  $ 9,640     $ 3,028   $ 3,191   $ 7,371   $ 6,613    $20,030  $19,444
Gross Profit...............  $   511  $ 1,304     $(1,331)  $  (553)  $   681   $   246    $  (139) $   997
Gross Profit Margin........        5%      14%       (44%)     (17%)        9%        4%       (1%)       5%

Units Sold
  Single Donor Platelets..     13,510    17,118      3,433    5,749         -         -     16,943   22,867
  Whole Blood.............     11,676     9,774      3,060    6,810    29,891    31,897     44,627   48,481

------------------
</TABLE>

* Includes facility at the University of North Carolina, Chapel Hill
  that was closed in January 2004.

All of the increase in blood products revenue from 2002 to 2003 came
from California mobiles, even though the number of whole blood units
collected by this business unit actually declined 6.3%.  This result
was due to increases in prices due to additional pathogen testing and a
change in product mix to a higher percentage of leukoreduced red blood
cells that garner higher average prices. Ongoing center revenue
remained flat between 2003 and 2002.  This occurred as sales volume of
single donor platelets declined 21.1% and sales of whole blood products
increased 19.5%. Single donor platelet volume declined principally from
loss of donors at the Sherman Oaks donor center when this center
converted to a volunteer program in January 2003.  Increases in whole
blood sales occurred mostly because of higher volumes from the Maine
and Massachusetts donor centers.  Closed center revenue declined due
mostly to the fact that most of these facilities were closed at the end
of the third quarter.  Meaning, a direct comparison with all four
quarters of 2002 will show a decline in revenue.

The gross profit for blood products decreased from $997,000 in 2002 to
negative gross profit of $139,000 in 2003.  This is primarily due to
the increase in operating costs at the closed centers associated with
implementing management's plan to close underperforming facilities and
improve overall operations.  These costs include the write-off of
$214,000 in assets previously used in the operations of the closed
centers, severance payments of $77,000 to 29 terminated employees,
recognition of unexpired facility lease obligations of $253,000, and
other associated costs.  Gross profit for ongoing centers also declined
$793,000, or 60.8%, from $1,304,000 to $511,000 in 2003.  Most of this
result was due to the loss of certain testing revenue of $220,000, a
decrease in California platelet volume of $698,000, increases in
insurance costs of $275,000 and the write-off of certain assets related
to the Sherman Oaks facility totaling $186,000.

                                 12
<PAGE>  13

     General and Administrative Expenses

General and administrative expenses declined from 2003 to 2002 by
$128,000, or 3.1%, to $3,946,000.  This decline is most attributable to
the elimination of any litigation expenses associated with the
Company's claims against the ARC.  During 2002, the Company paid
$285,000 in legal expense associated with the ARC claim.  Late in 2002,
the Company and the ARC settled all of the outstanding issues between
them.  In addition, approximately $247,000 was incurred during 2002 for
severance related expenses for the Company's former Chief Executive
Officer.  Offsetting these reductions in expense from 2003 to 2002 is
$112,000 in increases in audit and tax preparation expenses.  In
addition, the Company incurred other costs in 2003, including
insurance, that also reduced the beneficial effect from the elimination
of some of the costs incurred in 2002.

     Income Taxes

During 2003, the Company recorded a valuation allowance of $2,984,000
against deferred tax assets.  This non-cash charge reduced the net
value of the deferred tax assets on the balance sheet to zero.  The
assets were created as a result of income tax benefits that were
recorded as a result of operating losses in prior years.  Current
accounting standards place significant weight on a history of recent
cumulative losses in determining whether it is more likely than not
that the Company will realize the tax benefits in the near future and
accordingly whether a valuation allowance is necessary.  Forecasts of
future taxable income are not considered sufficient positive evidence
to outweigh a history of losses.  Accordingly, the assets were reserved
in full.  The Company's federal net operating loss carryforwards are
not impacted by this change in valuation allowance and therefore are
still available for future use for up to 20 years.


Year ended December 31, 2002 compared to the Year ended December 31,
2001
--------------------------------------------------------------------

     Overview

Revenues for 2002 were $27,817,000, compared to $25,199,000 in 2001.
The increase of $2,618,000, or 10.4%, was due to opening several new
blood centers and the expansion of the California mobile operations.
These were partially offset by a decline in the overall demand for
blood services in 2002.

Gross profit was $3,745,000, or 13.5% of revenues, during 2002,
compared to $4,409,000, or 17.5% of revenues, in 2001. The decline was
primarily due to start-up losses incurred to open new blood centers and
lower overall margins in whole blood collection programs.

In 2002, the Company incurred a net loss of $591,000, or $0.08 per
share basic and diluted, compared to net income of $323,000, or $0.04
per share basic and diluted, in 2001.  The loss in 2002 included
severance to the former Chief Executive Officer of $247,000, write-off
of goodwill of $362,000, litigation expense with the ARC of $285,000
and start-up losses at our newly opened blood centers of $862,000.


     Revenue and Gross Profits

     Blood Products

In mid-2001, the ARC announced a significant increase in its whole
blood prices.  Many hospitals concerned about rising costs and product
availability began looking for alternative blood vendors. The Company
responded to this opportunity by opening new blood centers and
expanding the Southern California mobile whole blood collection
capacity.  Average revenue per red blood cell increased from $143 at
the end of 2001 to $185 at the end of 2002. As a result of the increase
in the prices of whole blood derived products, the Company
substantially increased revenue from whole blood collection during

                                  13
<PAGE>  14

2002.  This was especially apparent in the California mobile whole
blood program.

The following table summarizes the  revenues, gross profit and
units sold for both 2002 and 2001 for free standing blood
centers and California mobile operations:

<TABLE>
<CAPTION>

                                 For the tweleve months period ended December 31,
                                                 ($ in Thousands)

                               Blood Centers     California Mobiles        Total
                             -----------------   ------------------   ------------------
                               2002      2001       2002      2001      2002      2001
                             --------  --------   --------  -------   --------  --------
<S>                          <C>       <C>        <C>       <C>       <C>       <C>
Revenue....................  $13,602  $14,421     $ 5,842   $ 2,045   $19,444   $16,466
Gross Profit...............  $   848  $ 1,471     $   149   $    16   $   997   $ 1,487
Gross Profit Margin........        6%      10%          3%        1%        5%        9%

Units Sold
  Single Donor Platelets..     22,900    23,300          -        -    22,900    23,300
  Whole Blood.............     16,600    15,300     31,900   11,900    48,500    27,200
------------------

</TABLE>

     Blood Centers

Revenue from blood centers decreased $819,000, or 5.7%, in 2002 compared
with 2001. The decrease was primarily due to the closure of the St.
Vincent's blood center in August 2001. This program provided revenue of
$1,312,000 in 2001.  Additionally, the Company collected fewer platelet
products at the Sherman Oaks facility, and the donor center at Long
Beach Memorial Medical Center was closed in August 2002.  These
decreases were partially offset by increased red cell prices in 2002.

     California Mobiles

Revenues from the California mobile operations increased $3,797,000, or
186%, in 2002 compared with 2001.  This growth was due to a higher
volume of collections resulting from the expansion of the program in
2002, as well as from higher red blood cell prices in 2002.  Gross
profit on California mobile operations was $149,000, or 3% of revenue,
in 2002, compared to a gross profit of $16,000, or 1% of revenue, in
2001.  As a result of the mid-year price increases, this program became
profitable during the second half of 2002.

     Blood Services

Revenues from blood services were $8,373,000 in 2002, compared to
$8,733,000 in 2001, a decrease of $360,000 or 4%.  The Company
experienced a decrease in demand for services in California, partially
offset by an increase in demand in the East Coast market.  The Company
performed 7,140 therapeutic apheresis procedures in 2002 compared to
7,520 in 2001, and the revenue per procedure during this period
remained basically unchanged.  Gross profit was $2,748,000, or 33% of
revenue in 2002, compared to $2,922,000, or 33% of revenue, in 2001.


     General and Administrative Expenses

General and administrative expenses increased to $4,074,000, in 2002,
compared to $3,918,000 in 2001, an increase of $156,000, or 4%.  The
increase reflects contractual severance to the former Chief Executive
Officer of $247,000 and increased expenses related to the ARC
litigation of $285,000 in 2002 compared to $110,000, in 2001.  These
increases were partially offset by the reduction of salary and other
related expenses for the former President of West Coast Products, who
resigned during the third quarter of 2001 and was not replaced.  In
2002, general and administrative expenses decreased to 15% of revenue
from 16%, in 2001.

                                14
<PAGE>  15

     Goodwill Impairment Charge

During the third quarter of 2002, continued declines in the Company's
stock price indicated that the goodwill associated with the acquisition
of Coral Blood Services in 1998 may be impaired. Management completed
an interim test for impairment during the third quarter and concluded
that the existing goodwill was impaired.  The Company recorded an
adjustment to write-off all of the remaining goodwill in the amount of
$362,000 during the third quarter.


2003 and 2002 Quarterly Financial Data
---------------------------------------

The  Company generated positive net income of $264,000 in  the  fourth
quarter of 2003, representing the largest net income  in  any  single
quarter  in  2003  or 2002.  Most of this positive result  was  due  to
improved  gross  profit  margins at the remaining  donor  centers,  and
reduced overhead expenses required to support the organization.  Fourth
quarter  results  also included $50,000 in supplemental  revenue  as  a
result of a review of the pricing for prior period testing services  to
one  of  the  Company's larger hospital customers.  In addition,  lease
obligation  adjustments associated with the closure  of  certain  blood
centers, resulted in a net benefit in the fourth quarter of $35,000.

The following table presents unaudited statement of operations data for
each of the eight quarters ended December 31, 2003.  Management
believes that all necessary adjustments have been included to fairly
present the quarterly information when read in conjunction with the
consolidated financial statements.  The operating results for any
quarter are not necessarily indicative of the results for any
subsequent quarter.

                                UNAUDITED
                (In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
                                       2003                                    2002
                                  Quarter Ended                           Quarter Ended
                      -------------------------------------    -------------------------------------
                       Mar 31    Jun 30    Sep 30    Dec 31     Mar 31   Jun 30    Sep 30    Dec 31
                      --------  --------  --------  --------   --------  --------  -------  --------
<S>                   <C>       <C>       <C>       <C>        <C>       <C>       <C>      <C>
Revenues............. $ 6,931   $ 6,937   $ 6,980   $6,640     $ 6,321   $ 6,940   $ 7,181   $ 7,375
Gross Profit.........     942       378      (176)   1,107         910       987     1,022       826
Income (loss) before
 income taxes........      14      (454)   (1,519)     264        (219)      (31)     (527)       35
Income tax provision
 (benefit)...........       6      (182)    3,160        -         (81)      (12)      (65)        7
                      --------  --------  --------  --------   --------  --------  --------  --------
Net income(loss)..... $     8   $  (272)  $(4,679)  $  264     $  (138)  $   (19)   $ (462)  $    28
                      ========  ========  ========  ========   ========  ========  ========  ========

Earnings (loss) per
  share
  Basic.............. $     -   $ (0.04)  $ (0.60)  $ 0.04     $ (0.02)  $     -   $ (0.06)  $     -
  Diluted............ $     -   $ (0.04)  $ (0.60)  $ 0.04     $ (0.02)  $     -   $ (0.06)  $     -
</TABLE>


Critical Accounting Policies and Estimates
------------------------------------------

General

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 accounting
principles generally accepted in the United States.  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

                                  15
<PAGE>  16

liabilities.  On an on-going basis, the Company evaluates its
estimates, including those related to valuation reserves, income taxes
and intangibles.  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.

Allowance for Doubtful Accounts
-------------------------------

The Company makes ongoing estimates relating to the collectibility of
accounts receivable and maintain 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 is 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
is made.

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 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, which are included in 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 operations.

Significant management judgment is required in determining the
provision for income taxes, deferred tax asset and liabilities and any
valuation allowance recorded against net deferred tax assets.
Management continually evaluates if 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.

Goodwill
--------

During the first quarter of 2002, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other
Intangible Assets."  In accordance with SFAS 142, the Company
discontinued amortizing goodwill that was recorded as part of the Coral
Blood Services, Inc. acquisition in 1998.  During 2002, the Company
determined that the goodwill was impaired and recorded an adjustment to
write off all of the remaining goodwill in the amount of $362,000.  The
Company does not have any other intangible assets.  During 2001 and
prior, goodwill was amortized on a straight-line basis over ten years.
Goodwill amortization was $53,000 for the year ended December 31, 2001.


Liquidity and Capital Resources
-------------------------------

At December 31, 2003, the Company had cash and cash equivalents and
marketable securities of $935,000 and working capital of $1,179,000.

The Company has a working capital line of credit with Comerica Bank -
California.  The amount the Company may borrow is the lesser of 75% of
eligible accounts receivable less amounts outstanding on the notes
payable discussed below, or $2 million.  Interest is payable monthly at
a rate of prime plus 0.5% (4.50% as of December 31, 2003).  As of

                                    16
<PAGE>  17

December 31, 2003, the Company's net borrowings on this line of credit
were $450,000.  This line of credit matures in June 2004, and is
included in "current obligations under notes payable" on the balance
sheet.  As of December 31, 2003, the unused portion of the Company's
line of credit was $1,363,000.

This loan is collateralized by substantially all of the Company's asset
and requires the maintenance of certain financial covenants, including
minimum levels of profitability, quick assets to current liability
ratio, debt to equity ratio and prohibits the payment of dividends or
stock repurchases.  As of December 31, 2003, the Company was not in
compliance with all of these covenants.  The Company requested, and
Comerica agreed to waive these covenant violations.

The Company also has various other notes payable with Comerica Bank -
California that are secured by equipment.  As of December 31, 2003, the
total amount outstanding under these notes is $245,000 and requires
monthly principal payments of approximately $14,000 plus interest at a
weighted average fixed rate of 6.6%.  All of the Comerica loans are
collateralized by substantially all of the Company's assets and are
cross-defaulted.

In addition, the Company has another note payable with One Source
Financial.  As of December 31, 2003, the balance due on this note was
$73,000.  The note requires quarterly payments of approximately $10,000,
including interest at the rate of 8.5%, and is secured by certain fixed
assets.  The Company also has a note payable related to financing
certain insurance premiums.  As of December 31, 2003, the balance due
on this note was $65,000 and requires monthly payments of approximately
$13,000, including interest at a rate of 3.4%.

Finally, late in 2003, the Company completed an asset purchase
transaction for blood collection and blood treatment equipment.  The
Company financed this transaction as a capital lease with the
manufacturer.  As of December 31, 2003, the total value of the lease
obligation was $932,000, and requires monthly payments of approximately
$18,000, which includes interest at a rate of 7.5%.

The following table summarizes our contractual obligations by year (in
thousands).


<TABLE>
<CAPTION>
                                               Payments due by year
                       ----------------------------------------------------------------
                        Total     2004      2005    2006     2007     2008   Thereafter
                       -------   -------   ------  ------   ------   ------  ----------
<S>                    <C>       <C>       <C>     <C>      <C>      <C>     <C>
Operating leases....   $   782   $   304   $  259  $  215   $    4   $    -  $      -
Capitalized leases..     1,392       306      312     305      229      222        18
Long term debt......       834       710      121       3        -        -         -
                       -------   -------   ------  ------   ------   ------  ----------
Totals..............   $ 3,008   $ 1,320   $  692  $  523   $  233   $  222  $     18
                       =======   =======   ======  ======   ======   ======  ==========
</TABLE>


Previously, the Company was also committed to purchase approximately
$14 million of blood collection kits at established prices through
2007.  Late in 2003, the Company completed negotiations with the
supplier of these kits to eliminate this commitment and reduce the
price the Company pays for these kits.

Net cash provided by operating activities was $761,000 for 2003, and
$714,000 for 2002.  The increase of $27,000 was due to efforts by
management to increase cash collections which caused a decrease in net
accounts receivable.  Although the Company recorded a net loss of
$4,679,000 during 2003, this was primarily offset by i) depreciation
expense and amortization of $1,163,000, ii) increase in the deferred
tax asset valuation allowance of $2,984,000, and iii) a decrease in
accounts receivable of $1,495,000.  The depreciation expense is mostly
related to valuation adjustments associated with the implementation of
management's plan to close facilities and improve overall operations.
The increase in the deferred tax asset valuation reserve is due to
management's estimate of the likelihood that the Company will utilize
this asset against future taxable income.  The decrease in accounts
receivable is due to management's efforts to increase collections.
During 2003, these efforts reduced the number of days sales outstanding
to 42 compared with 62 days as of December 31, 2002.  In addition to
the above, management initiated efforts to pay suppliers within terms
that caused a reduction in outstanding payables, and therefore utilized
cash during 2003 of $801,000.

                                     17
<PAGE>  18


For 2003, net cash used in investing activities was $191,000 compared
with $1,193,000 for all of 2002.  The cash used in investing activities
was primarily for the acquisition of plant and equipment.  During 2002,
the Company purchased a variety of new capital assets including mobile
blood collection vehicles, a new blood banking computer system,
laboratory equipment, and leasehold improvements for new facilities.
During 2003, management's plan to close facilities and improve
operations did not require any substantial investment in new capital
assets.

Cash used by financing activities in 2003 was $683,000 compared with
$502,000 of cash provided by these activities in 2002.  Most of the
cash utilized in 2003 was to reduce outstanding debt, capitalized
leases or other notes payable.  The cash provided in 2002 was primarily
from net borrowings associated with the acquisition of assets discussed
previously.

Management anticipates that cash on hand, availability on the bank line
of credit and cash generated from operations will be sufficient to
provide funding for any of the Company's needs during the next six
months, including working capital requirements, equipment purchases and
lease commitments.  The Company has received written approval from
Comerica Bank to extend the termination date of the existing line of
credit into 2005.  Based on this information, combined with the
expected improvement in cash flow from the closure of the non-
performing donor centers, the Company is expected to have sufficient
cash resources to fund any of the Company's needs well into 2005.

The Company's liquidity is dependent, in part, on timely collections of
accounts receivable.  Any significant delays in customer payments could
adversely affect the Company's liquidity.  Liquidity also depends on
maintaining compliance with the various loan covenants and the
extension or replacement of the Comerica line of credit.  From time-to-
time, the Company has failed to comply with the some of these
covenants.  The Company has obtained waivers from the bank involved for
each covenant violation; however, if in the future the Company is
unable to comply with a loan covenant and the bank does not agree to
waive the violation, the bank could accelerate the payment obligations
and severely reduce the Company's liquidity and available cash
resources.


Factors Affecting Forward-Looking Information
---------------------------------------------

The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" from liability for forward-looking statements. Certain
information included in this Form 10-K and other materials filed or to
be filed by the Company with the Securities and Exchange Commission (as
well as information included in oral statements or other written
statements made or to be made by or on behalf of the Company) are
forward-looking, such as statements relating to operational and
financing plans, competition, the impact of future price increases for
blood products and demand for the Company's products and services. Such
forward-looking statements involve important risks and uncertainties,
many of which will be beyond the control of the Company. These risks
and uncertainties could significantly affect anticipated results in the
future, both short-term and long-term, and accordingly, such results
may differ from those expressed in forward-looking statements made by
or on behalf of the Company. These risks and uncertainties include, but
are not limited to those listed below as "Risk Factors" or in other
filings by the Company with the Securities and Exchange Commission.


Risk Factors Affecting the Company
----------------------------------

Short and long-term success is subject to many factors that are beyond
management's control. Shareholders and prospective shareholders in the
Company should consider carefully the following risk factors, in
addition to other information contained in this report. This Annual
Report on Form 10-K contains forward-looking statements. Actual results
could differ materially from those anticipated in these forward-looking
statements as a result of various risks and uncertainties, including
those described below.

                                       18
<PAGE>  19


Operating Risk

The Company recently completed a plan to eliminate underperforming
facilities to improve the profitability of the Company.  The future of
the Company now depends on generating sufficient operating profit from
the remaining facilities to cover overhead expenses.  The remaining
facilities have not always been consistently profitable.  Therefore,
the Company is at risk if management is unable to execute an operating
plan that will produce consistent profits from the remaining
facilities.

Potential Loss of Lines of Credit

In December 2002, the Company replaced the then existing lines of
credit with a new $2.0 million working capital line of credit that
requires the Company maintain certain financial covenants including
profitability each quarter.  As of December 31, 2003, the Company was
not in compliance with several covenants, including debt to equity
ratios and liquidity ratios.  The bank has waived these violations.
Maintaining compliance is dependent, among other things, on achieving
the required profitability. In 2002, the Company lost $591,000 and
$4,679,000 in 2003.  Continued losses would violate the terms of the
new credit line.  While in the past the bank granted covenant violation
waivers when needed, the Company cannot assure that the bank will
continue to grant waivers in the future.  Failure to obtain such
waivers when, and if needed, could result in acceleration of payment
obligations under the credit agreement and severely reduce liquidity.
In addition, the existing credit agreement expires June 30, 2004.
Management will make efforts to replace this facility; however, the
Company cannot assure that alternative financing will be available.
Failure to replace this facility will adversely impact liquidity and
could deprive the Company of the working capital needed to continue to
operate.

Potential Inability to Meet Future Capital Needs

Currently, the Company believes it has sufficient cash available
through its cash on hand, bank credit facilities and funds from
operations to finance its operations for the next six months. However,
the Company incurred a $4,679,000 loss during 2003. The Company may
need to raise additional capital in the debt or equity markets.  There
can be no assurance that the Company will be able to obtain such
financing on reasonable terms or at all.  Additionally, there is no
assurance that the Company will be able to obtain sufficient capital to
finance future expansion.

Market Prices for Blood Do Not Necessarily Reflect Costs

The Company depends on competitive pricing to obtain and maintain
sales.  As costs increase, the Company may not be able to raise prices
commensurately if competitors do not.  Some competitors have greater
resources than the Company to sustain periods of unprofitable sales.
Cost increases may therefore have a direct negative effect on profits
and a material adverse affect on the business.

Declining Blood Donations

The business depends on the availability of donated blood.  Only a
small percentage of the population donates blood, and new regulations
intended to reduce the risk of introducing infectious diseases in the
blood supply has decreased the pool of potential donors.  If the level
of donor participation in blood products declines, the Company may not
be able to achieve profitability or reduce costs sufficiently to
maintain profitability in blood products.  Changes in California law
have required the Company to cease its historical practice of
compensating some of its apheresis platelet donors.  While the Company
has developed strategies to recruit volunteer donors, there can be no
assurance that these strategies will result in sufficient collections
to meet customer needs or to assure profitability.

Increasing Costs

The costs of collecting, processing and testing blood have risen
significantly in recent years and will likely continue to increase.
These cost increases are related to new and improved testing procedures
to assure that blood is free of infectious disease, increased

                                 19
<PAGE>  20

regulatory requirements related to blood safety, and increased costs
associated with recruiting blood donors.  New testing protocols have
required the Company to outsource much of the required testing.
Competition, and in some cases multi-year contractual arrangements, may
limit the Company's ability to pass these increased costs to customers.
In this circumstance, the increased costs could reduce profitability
and could have a material adverse effect on the business and results of
operations.

Impact  of Reimbursement Rates

Reimbursement rates for blood products and services provided to
Medicaid and Medicare patients impact the fees that the Company is able
to negotiate with hospitals.  Decreases in reimbursement rates or
increase which do not keep pace with higher costs, may impact the
Company's profitability.

Increasing Reliance on Outside Laboratories

The Company maintains laboratories that are licensed and accredited to
test blood products for purity, potency and quality.  The Company also
utilizes outside laboratories for a variety of tests.  As other new
testing and processing technologies are introduced, the Company has
increased its reliance on outside laboratories.  In using outside
laboratories the Company will have less control over testing costs.  In
addition, because laboratory facilities competent in these new
technologies are scarce, the loss of an outside laboratory because of
competition for capacity would have a material adverse effect on the
business.

Targeted Donor Base Involves Higher Collection Costs

Part of the Company's current operations involves conducting blood
drives for organizations that provide a relatively small number of
donors.  Blood drives directed at smaller donor sites lack the
efficiencies associated with larger blood drives.  As a result,
collection costs might be higher than the competition and may affect
profitability and growth plans.

Access to Insurance

The Company currently maintains insurance coverage consistent with the
industry; however, if the Company experiences losses or the risks
associated with the blood products industry increase in the future,
insurance may become more expensive or unavailable.  The Company also
cannot give assurance that as the business expands, or the Company
introduces new products and services, that additional liability
insurance on acceptable terms will be available, or that the existing
insurance will provide adequate coverage against any and all potential
claims.  Also, the limitations on liability contained in various
agreements and contracts may not be enforceable and may not otherwise
protect the Company from liability for damages.  The successful
assertion of one or more large claims against the Company that exceeds
available insurance coverage, or changes in insurance policies, such as
premium increases or the imposition of large deductibles or co-
insurance requirements, could materially and adversely affect the
business.

Not-For-Profit Status Gives Advantages to Our Competitors

HemaCare Corporation is the only significant blood products supplier to
hospitals in the U.S. that is operated for profit and investor owned.
The not-for-profit competition is exempt from federal and state taxes,
and has substantial community support and access to tax-exempt
financing.  The Company may not be able to continue to compete
successfully with not-for-profit organizations and the business and
results of operations may suffer material adverse harm.

Potential Adverse Affect from Changes in the Healthcare Industry

In the U.S., a fundamental change is occurring in the healthcare
system. Competition to gain patients on the basis of price, quality and
service is intensifying among healthcare providers who are under
pressure to decrease the costs of healthcare delivery.  A national

                               20
<PAGE>  21

hospital chain has announced plans to sell 19 of its facilities in
California, many of which are customers of the Company.  In addition,
there has been significant consolidation among healthcare providers as
providers seek to enhance efficiencies, and this consolidation is
expected to continue.  As a result of these trends, the Company may be
limited in its ability to increase prices for products in the future,
even if costs increase.  Further, the Company could be adversely
affected by customer attrition as a result of consolidation or closure
of hospital facilities.

Future Technological Developments Could Jeopardize Business

As a result of the risks posed by blood-borne diseases, many companies
are currently seeking to develop synthetic substitutes for human blood
products.  HemaCare's business consists of collecting, processing and
distributing human blood and blood products.  The introduction and
acceptance in the market of synthetic blood substitutes would cause
material adverse harm to the business.

Operations Depend on Obtaining the Services of Qualified Medical
Professionals

The Company is highly dependent upon obtaining the services of
qualified medical professionals.  In particular, operations depend on
the services of registered nurses and other medical technolgists.
Nationwide, the demand for these professionals exceeds the supply and
competition for their services is strong. This shortage could be
aggravated in the event of a war or other international conflict.  If
the Company is unable to attract and retain a staff of qualified
medical professionals, operations would be adversely affected.

Heavily Regulated Industry

The business of collecting, processing and distributing blood and blood
products are all subject to extensive and complex regulation by the
state and federal governments.  The Company is required to obtain and
maintain numerous licenses in different legal jurisdictions regarding
the safety of products, facilities and procedures, and regarding the
purity and quality of blood products.  In addition, state and federal
laws include anti-kickback and self-referral prohibitions and other
regulations that affect the relationships between blood banks,
hospitals, physicians and other persons who refer business to each
other.  Health insurers and government payers, such as Medicare and
Medicaid, also limit reimbursement for products and services, and
require compliance with certain regulations before reimbursement will
be made.

The Company devotes substantial resources to complying with laws and
regulations, and believes it is currently in compliance; however, the
possibility cannot be eliminated that interpretations of existing laws
and regulations will result in a finding that the Company has not
complied with significant existing regulations.  Such a finding could
materially harm the business.  Moreover, healthcare reform is
continually under consideration by regulators, and the Company does not
know how laws and regulations will change in the future.  Some of these
changes could require costly compliance efforts or expensive
outsourcing of functions which could make some of the Company's
operations prohibitively expensive or impossible to continue.

Product Safety and Product Liability

Blood products carry the risk of transmitting infectious diseases,
including hepatitis, HIV and Creutzfeldt-Jakob Disease.  HemaCare
carefully screens donors, uses highly qualified testing service
providers to test its blood products for known pathogens in accordance
with industry standards, and complies with all applicable safety
regulations.  Nevertheless, the risk that screening and testing
processes might fail or that new pathogens may be undetected by them
cannot be completely eliminated. There is currently no test to detect
the pathogen responsible for Creutzfeldt-Jakob Disease.  If patients
are infected by known or unknown pathogens, claims could exceed
insurance coverage and materially and adversely affect the Company's
financial condition.  Furthermore, healthcare regulations are
constantly changing and certain changes could require costly compliance
or make some of our operations impossible to continue.

                                  21
<PAGE>  2

Environmental Risks

HemaCare's operations involve the controlled use of bio-hazardous
materials and chemicals.  Although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of
accidental contamination or injury from these materials cannot be
completely eliminated.  In the event of such an accident, the Company
could be held liable for any damages that result, and any such
liability could exceed the resources of the Company and its insurance
coverage. The Company may incur substantial costs to maintain
compliance with environmental regulations as it develops and expands
its business.

Business Interruption Due to Terrorism and Increased Security Measures
In Response to Terrorism

HemaCare's business depends on the free flow of products and services
through the channels of commerce and freedom of movement for patients
and donors. The 2001 response to terrorist activities slowed or stopped
transportation, mail, financial and other services for a period of
time. Further delays or stoppages in transportation of perishable blood
products and interruptions of mail, financial or other services could
have a material adverse effect on the Company's results of operations
and financial condition. Furthermore, the Company may experience an
increase in operating costs, such as costs for transportation,
insurance and security, as a result of the terrorist activities and
potential activities, which may target health care facilities or
medical products. The Company may also experience delays in receiving
payments from payers that have been affected by terrorist activities
and potential activities. The U.S. economy in general is adversely
affected by terrorist activities, and potential activities, and any
economic downturn could adversely impact the Company's results of
operations, impair its ability to raise capital or otherwise adversely
affect its ability to grow its business.

Articles of Incorporation and Rights Plan Could Delay or Prevent an
Acquisition or Sale of HemaCare

HemaCare's Articles of Incorporation empower the Board of Directors to
establish and issue a class of preferred stock, and to determine the
rights, preferences and privileges of the preferred stock. This gives
the Board of Directors the ability to deter, discourage or make more
difficult for a change in control of HemaCare, even if such a change in
control would be in the interest of a significant number of
shareholders or if such a change in control would provide shareholders
with a substantial premium for their shares over the then-prevailing
market price for our common stock.

In addition, the Board of Directors has adopted a Shareholder's Rights
Plan designed to require a person or group interested in acquiring a
significant or controlling interest in HemaCare to negotiate with the
Board. Under the terms of our Shareholders' Rights Plan, in general, if
a person or group acquires more than 15% of the outstanding shares of
common stock, all of the other shareholders would have the right to
purchase securities from the Company at a discount to the fair market
value of the common stock, causing substantial dilution to the
acquiring person or group.  The Shareholders' Rights Plan may inhibit a
change in control and, therefore, could materially adversely affect the
shareholders' ability to realize a premium over the then-prevailing
market price for the common stock in connection with such a
transaction.  For a description of the Rights Plan see the Company's
Current Report on Form 8-K filed with the SEC on March 5, 1998.

Stocks Traded on the OTC Bulletin Board are Subject to Greater Market
Risks than Those of Exchange-Traded and NASDAQ Stocks

HemaCare's common stock was delisted from the NASDAQ Small Cap Market
on October 29, 1998 because of the failure to maintain NASDAQ's
requirement of a minimum bid price of $1.00.  Since November 2, 1998,
the common stock has traded on the OTC Bulletin Board, an electronic,
screen-based trading system operated by the National Association of
Securities Dealers, Inc.  Securities traded on the OTC Bulletin Board
are, for the most part, thinly traded and generally are not subject to
the level of regulation imposed on securities listed or traded on the
NASDAQ Stock Market or on a national securities exchange.  As a result,
an investor may find it difficult to dispose of our common stock or to
obtain accurate quotations as to its price.

                                    22
<PAGE> 23

Stock Price Could Be Volatile

The price of HemaCare's common stock has fluctuated in the past and may
be more volatile in the future. Factors such as the announcements of
government regulation, new products or services introduced by the
Company or by the competition, healthcare legislation, trends in the
health insurance, litigation, fluctuations in operating results and
market conditions for healthcare stocks in general could have a
significant impact on the future price of HemaCare's common stock.  In
addition, the stock market has from time to time experienced extreme
price and volume fluctuations that may be unrelated to the operating
performance of particular companies. The generally low volume of
trading in HemaCare's common stock makes it more vulnerable to rapid
changes in price in response to market conditions.

Future Sales of Equity Securities Could Dilute the Company's Common
Stock

The Company may seek new financing in the future through the sale of
its securities.  Future sales of common stock or securities convertible
into common stock could result in dilution of the common stock
currently outstanding.  In addition, the perceived risk of dilution may
cause some shareholders to sell their shares, which could further
reduce the market price of the common stock.

Lack of Dividend Payments

The Company intends to retain any future earnings for use in its
business, and therefore does not anticipate declaring or paying any
cash dividends in the foreseeable future. The declaration and payment
of any cash dividends in the future will depend on the Company's
earnings, financial condition, capital needs and other factors deemed
relevant by the Board of Directors. In addition, the Company's credit
agreement prohibits the payment of dividends during the term of the
agreement.


Item 7a   Quantitative And Qualitative Disclosures About Market Risk
-------   ----------------------------------------------------------

In the normal course of business, the Company's operations are exposed
to risks associated with fluctuations in interest rates.  The Company
manages its risks based on management's judgment of the appropriate
trade-off between risk, opportunity and costs.  Management does not
believe that interest rate risks are material to the results of
operations or cash flows of the Company, and, accordingly, does not
generally enter into interest rate hedge instruments.

The Company has $2,017,000 of debt, which includes $1,567,000 of notes
payable and capitalized leases with fixed interest rates.  The
remaining $450,000 of debt represents advances on the working capital
line of credit and the interest rate is linked to the prime interest
rate.  Accordingly, interest rate expense will fluctuate with rate
changes in the U.S.  If interest rates were to increase or decrease by
1% for the year, our interest expense would increase or decrease by
approximately $4,500.


Item 8   Financial Statements and Supplementary Data
------   --------------------------------------------

The Index to Financial Statements and Schedules appears on page F-1,
The Reports of Independent Public Accountants appears on F-2, F-3 and
the Consolidated Financial Statements and Notes to Consolidated
Financial Statements appear on pages F-4 to F-15.

                                 23
<PAGE>  24


Item 9    Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosures
------    ------------------------------------------------------------

The Company has not received the consent of Arthur Andersen LLP to the
inclusion of its report of independent public accountants dated March
14, 2002 in the Company's Annual Report Form 10-K for the fiscal year
ended December 31, 2002.  Because Arthur Andersen LLP has not consented
to the inclusion of their report into the Company;s Annual Report Form
10-K for the fiscal year ended December 31, 2002, you may not be able
to recover against Arthur Andersen LLP for any untrue statements of a
material fact contained in the financial statements or financial
statement schedule audited by Arthur Andersen LLP or any omissions to
state a material fact required to be stated therein.

Item 9A   Controls And Procedures
-------   -----------------------

The Chief Executive Officer and the Chief Financial Officer of the
Company, with the participation of the Company's management, carried
out an evaluation of the effectiveness of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-15(e).  Based
on that evaluation, the Chief Executive Officer and the Chief Financial
Officer believe that, as of the end of the period covered by this
report, the Company's disclosure controls and procedures are effective
in making known to them material information relating to the Company
(including its consolidated subsidiaries) required to be included in
this report.

Disclosure controls and procedures, no matter how well designed and
implemented, can provide only reasonable assurance of achieving an
entity's disclosure objectives.  The likelihood of achieving such
objectives is affected by limitations inherent in disclosure controls
and procedures.  These include the fact that human judgment in decision-
making can be faulty and that breakdowns in internal control can occur
because of human failures such as simple errors or mistakes or
intentional circumvention of the established process.

There were no changes in the Company's internal controls over financial
reporting, that occurred during the period covered by this report that
has materially affected, or is reasonably likely to materially affect,
the Company's internal controls over financial reporting, known to the
Chief Executive Officer or the Chief Financial Officer, subsequent to
the date of the evaluation.


                                PART III

Item 10   Directors and Executive Officers of the Registrant
-------   --------------------------------------------------

The information concerning the directors and executive officers of the
Company is incorporated here by reference from the section entitled
"Proposal 1 - Election of Directors" contained in the definitive proxy
statement of the Company to be filed pursuant to Regulation 14A within
120 days after the end of the Company's last fiscal year (the "Proxy
Statement").


Item 11   Executive Compensation
-------   ----------------------

The information concerning executive compensation is incorporated
herein by reference from the section entitled "Proposal 1 - Election of
Directors" contained in the Proxy Statement.

                                      24
<PAGE>  25


Item 12    Security Ownership of Certain Beneficial Owners and
           Management and related stockholder matters
-------    ---------------------------------------------------

The information concerning the security ownership of certain beneficial
owners and management and related stockholder matters is incorporated
herein by reference from the section entitled "General Information -
Security Ownership of Principal Stockholders and Management" and
"Proposal 1 - Election of Directors" contained in the Proxy Statement.


Item 13    Certain Relationships And Related Transactions
-------    ----------------------------------------------

The information concerning certain relationships and related
transactions is incorporated herein by reference from the section
entitled "Proposal 1 - Election of Directors  - Certain Relationships
and Related Transactions" contained in the Proxy Statement.


Item 14   Principal Accountant Fees and Services
-------   --------------------------------------

The information concerning the Company's principal accountant's fees
and services is incorporated herein by reference from the section
entitled "Independent Public Accountants" in the Proxy Statement.


                              PART IV

Item 15   Exhibits, Financial Statement Schedules and Reports on
          Form 8-K
-------   -------------------------------------------------------

The following are filed as part of this Report:

(a) 1.    Financial Statements

          An index to Financial Statements and Schedules appears
          on page F-1.

    2.    Financial Statement Schedules

          The schedules for which provision is made in the applicable
          accounting regulations of the Securities and Exchange Commission
          are not required under related instructions or are inapplicable,
          and therefore have been omitted.

    3.    Exhibits

          The following exhibits listed are filed or incorporated by
          reference as part of this Report.


           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,
                File No. 000-15233.


           3.2  Amended and Restated Bylaws of the Registrant, as amended--
                incorporated by reference to Exhibit 3.1.0 to Form 8-K of the
                Registrant dated February 19, 2003, File No. 000-15233.

           4.1  Warrant Agreement between the Registrant and Alan C.
                Darlington, dated January 15, 2003--incorporated by
                reference  to Exhibit 4.4 to form 10-K of the Registrant for
                the year ended December 31, 2002, File No. 000-15233.


                                         25
<PAGE>  26

           4.2  Warrant Agreement between the Registrant and Alan C.
                Darlington, dated January 15, 2003--incorporated by
                reference to Exhibit 4.5 to form 10-K of the Registrant for
                the year ended December 31, 2002, File No. 000-15233.

           4.3  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, File No. 000-15233.

           4.4  Registration Rights of Shareholders--incorporated by
                reference to Exhibit 4.9 to the Current Report on Form 8-K of
                the Registrant dated August 19, 1996, File No. 000-15233.

          10.1  1996 Stock Incentive Plan, as amended, of the Registrant--
                incorporated by reference to Exhibit 4.1 to Form 10-Q of the
                Registrant for the quarter ended September 30, 1996, File No.
                000-15233.

          10.2  Loan and Security Agreement between the Registrant and
                Comerica Bank dated November 19, 2002--incorporated by
                reference to Exhibit 10.2 to form 10-K of the Registrant for
                the year ended December 31, 2002, File No. 000-15233.

         10.3*  Services Agreement between the Registrant and  Alan  C.
                Darlington, dated March 10, 1999--incorporated by reference
                to Exhibit 10.1 of Form 10-Q of the Registrant for the
                quarter ended March 31, 1999, File No. 000-15233.

         10.4*  Employment Agreement between the Registrant and Joshua
                Levy dated March 22, 2000--incorporated by reference to
                Exhibit 10.12 of Form 10-K of the Registrant for the year
                ended December 31, 2000, File No. 000-15233.

         10.5*  Employment Letter between the Registrant and Judi
                Irving, dated December 6, 2002--incorporated by reference to
                Exhibit 10.8 to form 10-K of the Registrant for the year
                ended December 31, 2002, File No. 000-15233.

         10.6*  Separation Agreement between the Registrant and Alan C.
                Darlington, dated September 28, 2002--incorporated by
                reference to Exhibit 10.9 to form 10-K of the Registrant
                for the year ended December 31, 2002, File No. 000-15233.

         10.7   Master Security Lease Agreement between the Registrant and GE
                Capital Healthcare Financial Services dated December 26, 2002
                --incorporated by reference to Exhibit 10.10 to form 10-K
                of the Registrant for the year ended December 31, 2002,
                File No. 000-15233.

        10.8*   Employment Letter between the Registrant and Robert  S.
                Chilton, dated October 3, 2003--incorporated by reference
                to Exhibit 10.1  to form 10-Q of the Registrant for the
                quarter ended September 30, 2003, File No. 000-15233.


        10.12   Lease Agreement between the Registrant and Gambro BCT,
                dated December 30, 2003.

        11      Computation of earnings (loss) per common equivalent share.

        21      Subsidiaries of the Registrant.

        23.1    Consent of Ernst & Young LLP, Independent Auditors.

        23.2    Notice Regarding Consent of Arthur Andersen LLP.

        31.1    Certification  Pursuant to Rule 13a-14(a) of  the  Securities
                Exchange Act of 1934, Adopted Pursuant to Section 302 of  the
                Sarbanes-Oxley Act of 2002.

                                            26
<PAGE>  27


        31.2    Certification  Pursuant to Rule 13a-14(a) of  the  Securities
                Exchange Act of 1934, Adopted Pursuant to Section 302 of  the
                Sarbanes-Oxley Act of 2002.

        32.1    Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002.

     * Management contracts and compensatory plans and arrangements.

(b)  Reports on Form 8-K.

     The Company filed a Current Report on Form 8-K on November 4, 2004
     disclosing under Item 5 (Other Information) the appointment Robert
     Chilton as Chief Financial Officer.


                                SIGNATURES

Pursuant  to the requirements of Section 13 or 15(d) 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.




Dated:   March 25,  2004               HEMACARE CORPORATION
      ------------------------

                                      /s/ Robert S. Chilton
                                     --------------------------
                                     Robert S. Chilton, Chief
                                     Financial Officer




                                    27
<PAGE>  28

Pursuant  to the requirements of the Securities Exchange Act  of  1934,
this report has been signed below by the following persons on behalf of
the Registrant in the capacities indicated on the twenty-fifth day  of
March, 2004.



Signature                             Title


/s/   Julian L. Steffenhagen          Chairman of the Board
------------------------------
Julian L. Steffenhagen


/s/  Judi Irving                      President and Chief Executive
Judi Irving                           Officer and Director
-------------------------------       (Principal Executive Officer)


/s/   Robert S. Chilton               Executive Vice President and
-------------------------------       Chief Financial Officer
Robert S. Chilton                     (Principal Financial and
                                      Accounting Officer)


/s/  Steven Gerber                   Director
-------------------------------
Steven Gerber


/s/  Robert L. Johnson               Director
--------------------------------
Robert L. Johnson


/s/  Terry Van Der Tuuk
--------------------------------
Terry Van Der Tuuk                    Director


                               28

<PAGE> F-1


       Index to Consolidated Financial Statements and Schedules
                        Item 14(a) (1) and (2)
<TABLE>
<CAPTION>


                                                            Sequential
                                                               Page
                                                              Number
                                                            ----------
<S>                                                         <C>

Report of Independent Auditors Ernst & Young LLP.........      F-2

Report of Independent Auditors Arthur Andersen, LLP......      F-3

Consolidated balance sheets at December 31, 2003
 and December 31, 2002...................................      F-4

For the years ended December 31, 2003, 2002 and 2001:

     Consolidated statements of operations...............      F-5

     Consolidated statements of shareholders' equity.....      F-6

     Consolidated statements of cash flows...............      F-7

Notes to consolidated financial statements...............      F-8

</TABLE>

Other schedules are not submitted because either they are  not
applicable, not required or because the information required is
included in the Consolidated Financial Statements, including the
notes thereto.



                              F-1
<PAGE>  F-2


         REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


To the Stockholders of HemaCare Corporation:

We have audited the accompanying consolidated balances sheet of
HemaCare Corporation (a California corporation) and subsidiaries as of
December 31, 2003 and 2002 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the two
years ended December 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
The consolidated financial statements of HemaCare Corporation, for the
fiscal year ended December 31, 2001, were audited by other auditors who
have ceased operations. Those auditors expressed an unqualified opinion
on those statements in their report dated March 14, 2002.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of HemaCare Corporation and subsidiaries as of December 31, 2003 and
2002 and the consolidated results of their operations and their cash
flows for each of the two years ended December 31, 2003 in conformity
with accounting principles generally accepted in the United States.

As discussed in Note 10 to the consolidated financial statements,
HemaCare Corporation changed its method of accounting for purchased
goodwill and other intangible assets in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 142 during the first
quarter of fiscal 2002.  As discussed above, the financial statements
of HemaCare Corporation as of December 31, 2001, and for the year then
ended were audited by other auditors who have ceased operations. As
described in Note 10, these financial statements have been updated to
include the transitional disclosures required by SFAS No. 142,
"Goodwill and Other Intangible Assets," which was adopted by the
Company as of January 1, 2002. Our audit procedures with respect to the
disclosures in Note 10 for fiscal 2001 included (i) agreeing the
previously reported net income to the previously issued financial
statements and the adjustments to reported net loss representing
amortization expense (including any related tax effects) recognized in
those periods related to goodwill that are no longer being amortized to
the Company's underlying records obtained from management, and (ii)
testing the mathematical accuracy of the reconciliation of adjusted net
loss to reported net income, and the related net earnings-per-share
amounts. Our audit procedures with respect to the disclosures in Note
10 for fiscal 2001 included (i) agreeing the goodwill and amortization
amounts and the gross intangible assets and accumulated amortization
amounts to the Company's underlying records obtained from management,
and (ii) testing the mathematical accuracy of the tables. In our
opinion, the disclosures for fiscal 2001 in Note 10 related to the
transitional disclosures of SFAS No. 142 are appropriate. However, we
were not engaged to audit, review, or apply any procedures to the
Company's financial statements for fiscal 2001 other than with respect
to such disclosures and, accordingly, we do not express an opinion or
any other form of assurance on the Company's fiscal 2001 financial
statements taken as a whole.

/s/ ERNST & YOUNG LLP

Los Angeles, California
February 17, 2004

                                   F-2
<PAGE>  F-3


This is a copy of the audit report previously issued by Arthur Andersen
LLP in connection with HemaCare Corporation filing on Form 10-K for the
year ended December 31, 2001. This audit report has not been reissued
by Arthur Andersen LLP in connection with this filing on Form 10-K. See
Exhibit 23.2 for further discussion. The consolidated balance sheet as
of December 31, 2001, referred to in this report has not been included
in the accompanying financial statements.

             REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of HemaCare Corporation:

We have audited the accompanying consolidated balance sheets of
HemaCare Corporation (a California corporation) and subsidiaries as of
December 31, 2001 and 2000, and the related consolidated statements of
operations, stockholders' equity and comprehensive income and cash
flows for each of the three years in the period ended December 31,
2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of HemaCare
Corporation, and subsidiaries as of December 31, 2001 and 2000 and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States.


/s/ ARTHUR ANDERSEN LLP

Los Angeles, California
March 14, 2002



                                      F-3
<PAGE>  F-4




                            HEMACARE CORPORATION AND SUBSIDIARIES
				  CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

						December 31,      December 31,
                                                   2003		      2002
						-------------     ------------
<S>                                             <C>               <C>
		ASSETS

Current assets:
  Cash and cash equivalents.................... $    935,000      $  1,048,000
  Accounts receivable, net of allowance for
   doubtful accounts of $351,000 in 2003 and
   $208,000 in 2002............................    3,128,000         4,932,000
  Product inventories and supplies.............      494,000           795,000
  Prepaid expenses.............................      388,000           295,000
  Note receivable..............................       20,000                 -
  Deferred income taxes, current...............            -           402,000
                                                -------------     -------------
           Total current assets................    4,965,000         7,472,000

Plant and equipment, net of accumulated
  depreciation and amortization of
  $2,919,000 in 2003 and $2,450,000 in 2002....    3,259,000         3,308,000
Deferred taxes.................................            -         2,582,000
Other assets...................................       62,000            93,000
                                                -------------     -------------
                                                $  8,286,000      $ 13,455,000
                                                =============     =============
  LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable............................. $  1,686,000      $  2,277,000
  Accrued payroll and payroll taxes............      918,000         1,231,000
  Other accrued expenses.......................      243,000           201,000
  Current obligations under capital leases.....      229,000            90,000
  Current obligations under notes payable......      710,000           199,000
                                                -------------     -------------
           Total current liabilities...........    3,786,000         3,998,000

Obligations under capital leases, net
  of current portion...........................      954,000           246,000
Notes payable, net of current portion..........      124,000         1,107,000
Other long-term liabilities....................       11,000            17,000
Commitments and contingencies (Note 12)........
Shareholders' equity:
  Common stock, no par value - 20,000,000
    shares authorized, 7,756,060 issued and
    outstanding in 2003 and 7,751,090 in 2002..   13,319,000        13,316,000
  Accumulated deficit..........................   (9,908,000)       (5,229,000)
                                                -------------     -------------
           Total shareholders' equity..........    3,411,000         8,087,000
                                                -------------     -------------
                                                $  8,286,000      $ 13,455,000
                                                =============     =============

</TABLE>

	      The accompanying notes are an integral part of these
                        consolidated financial statements.
				     F-4

<PAGE>  F-5

                    HEMACARE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     For the Three Years Ended December 31
<TABLE>
<CAPTION>


                                          2003           2002           2001
				      ------------   ------------   ------------
<S>                                   <C>            <C>            <C>
Revenues:
    Blood products..................  $ 20,030,000   $ 19,444,000   $16,466,000
    Blood services..................     7,458,000      8,373,000     8,733,000
                                      -------------  -------------  ------------
    Total revenue...................    27,488,000     27,817,000    25,199,000

Operating costs and expenses:
    Blood products..................    20,169,000     18,447,000    14,979,000
    Blood services..................     5,068,000      5,625,000     5,811,000
                                      -------------  -------------  ------------
    Total operating costs and
      expenses......................    25,237,000     24,072,000    20,790,000


    Gross profit....................     2,251,000      3,745,000     4,409,000

General and administrative expenses.     3,946,000      4,074,000     3,918,000
                                      -------------  -------------  ------------

Income (loss) from operations.......    (1,695,000)      (329,000)      491,000
Other income (expense)..............	         -	  (51,000)	 22,000
Write off of impaired goodwill......             -       (362,000)            -
                                      -------------  -------------  ------------
Income (loss) before income taxes...    (1,695,000)      (742,000)      513,000
Provision (benefit) for income
   taxes............................     2,984,000       (151,000)      190,000
                                      -------------  -------------  ------------
     Net income (loss)..............  $ (4,679,000)  $   (591,000)  $   323,000
				      =============  =============  ============

Income (loss) per share
 Basic..............................  $      (0.60)   $     (0.08)  $      0.04
                                      =============  =============  ============

 Diluted............................  $      (0.60)   $     (0.08)  $      0.04
                                      =============  =============  ============

Weighted average shares outstanding
 - basic............................     7,753,000      7,673,000     7,534,000
                                      =============  =============  ============

Weighted average shares outstanding
 - diluted..........................     7,753,000      7,673,000     8,298,000
                                      =============  =============  ============

</TABLE>

	    The accompanying notes are an integral part of these
		    consolidated financial statements.
				   F-5

<PAGE>  F-6
                    HEMACARE CORPORATION AND SUBSIDIARIES
	       CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
             For the Years Ended December 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>

			   Common Stock         Accumulated
		       Shares        Amount       Deficit         Total
		      ---------   ------------  ------------  -------------
<S>                   <C>         <C>           <C>            <C>
Balance as of
 December 31, 2000.. 7,690,000    $13,164,000   $(4,961,000)   $ 8,203,000

Issuance of common
 stock for employee
 401(k) and
 incentive bonus
 plans..............    93,000         93,000             -         93,000
Stock repurchased...  (332,000)      (391,000)            -       (391,000)
Stock options
 exercised..........   140,000        199,000             -        199,000
Net Income..........         -              -       323,000        323,000
		     ----------  -------------  ------------   ------------
Balance as of
 December 31, 2001.. 7,591,000     13,065,000    (4,638,000)     8,427,000

Issuance of common
 stock for employee
 401(k) and
 incentive bonus
 plans..............    76,000        122,000             -        122,000
Extension of stock
 options............         -         56,000             -         56,000
Warrants issued.....         -         20,000             -         20,000
Stock options
 exercised..........    84,000         53,000             -         53,000
Net Loss............         -              -      (591,000)      (591,000)
                     ----------  -------------  ------------   ------------

Balance as of
 December 31, 2002.. 7,751,000     13,316,000    (5,229,000)     8,087,000

Stock options
 exercised..........     5,000          3,000             -          3,000
Net Loss............         -              -    (4,679,000)    (4,679,000)
                     ----------   ------------  ------------   ------------
Balance as of
 December 31, 2003.. 7,756,000    $13,319,000   $(9,908,000)   $ 3,411,000
                     ==========   ============  ============   ============
</TABLE>

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

				   F-6
<PAGE> F-7
                                   HEMACARE CORPORATION AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENT OF CASH FLOWS
                                      For the Years Ended DEcember 31
<TABLE>
<CAPTION>

                                                      2003            2002          2001
						   ------------   ------------  -------------
<S>                                                <C>            <C>           <C>
Cash flows from operating activities:
 Net income (loss)...............................  $(4,679,000)   $  (591,000)  $   323,000
 Adjustments to reconcile net income
  to net cash provided by (used in)
  operating activities:
    Provision for bad debts......................      309,000              -        10,000
    Use (recognition) of deferred tax assets.....    2,984,000        (81,000)      190,000
    Depreciation and amortization................      717,000        426,000       299,000
    Gain (loss) on disposal of assets............      (11,000)        (1,000)        2,000
    Impairment of assets.........................      446,000              -             -
    Impairment of goodwill.......................            -        362,000             -
    Issuance of common stock and options for
     compensation................................            -        178,000        93,000

 Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable...    1,495,000        522,000    (1,468,000)
    Decrease (increase) in inventories, supplies
     and prepaid expenses........................      338,000       (191,000)       11,000
    Decrease (increase) in other assets..........       31,000         (2,000)      (57,000)
    (Decrease) increase in accounts payable,
     accrued expenses, and other liabilities.....     (801,000)        99,000       505,000
    Other........................................      (68,000)        (7,000)       (1,000)
                                                   ------------   ------------  ------------
    Net cash provided by (used in) operating
     activities..................................      761,000        714,000       (93,000)

Cash flows from investing activities:
 Proceeds from sale of plant and equipment.......       79,000         10,000             -
 Decrease in marketable securities...............            -              -       868,000
 Purchase of plant and equipment.................     (270,000)     (1,203,000)  (1,646,000)
                                                   ------------   ------------  ------------
  Net cash used in investing activities..........     (191,000)     (1,193,000)    (778,000)

Cash flows from financing activities:
 Proceeds from exercise of stock options.........        3,000         53,000       199,000
 Repurchase and retirmenet of common stock.......            -              -      (391,000)
 Principal payments on debts and and
  capitalized leases.............................     (686,000)      (258,000)     (116,000)
 Other debt borrowings...........................            -        132,000             -
 Borrowings on line of credit....................            -        575,000       842,000
                                                   ------------   ------------  ------------
 Net cash provided by (used in) financing
   activities....................................     (683,000)       502,000       534,000

 (Decrease) increase in cash and cash
  equivalents....................................     (113,000)        23,000      (337,000)
 Cash and cash equivalents at beginning of
   period........................................    1,048,000      1,025,000     1,362,000
                                                   ------------   ------------  ------------
 Cash and cash equivalents at end of period......  $   935,000    $ 1,048,000   $ 1,025,000
                                                   ============   ============  ============

Supplemental disclosure:
 Interest paid...................................  $    79,000    $    59,000   $    30,000
                                                   ============   ============ =============
 Income taxes paid...............................  $    18,000    $         -   $    44,000
                                                   ============   ============  ============

Items not impacting cash flows:
 Purchase of equipment - Capital lease...........  $   932,000    $   162,000   $   151,000
                                                   ============   ============  ============
 Purchase of equipment - Notes...................  $         -    $    30,000   $         -
                                                   ============   ============  ============
 Issuance of warrants............................  $         -    $    20,000   $         -
                                                   ============   ============  ============
 Insurance premiums financed.....................  $   130,000    $         -   $         -
                                                   ============   ============  ============

</TABLE>

		     The accompanying notes are an integral part of these
				consolidated financial statements.
                                              F-7
<PAGE>  F-8

                               HemaCare Corporation
                   Notes to Consolidated Financial Statements
                                December 31, 2003


Note 1 - Organization
---------------------

HemaCare Corporation is in the business of providing blood products and
blood services to hospitals and medical centers primarily in
California.


Note 2 - Summary of Accounting Policies
---------------------------------------

Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries.
All significant intercompany balances and transactions have been
eliminated in consolidation.

Use of Estimates: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the
reported amounts of assets 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.

Cash and Cash Equivalents: The Company considers all highly liquid
investments with an original maturity of three months or less to be
cash equivalents.

Financial Instruments: Cash and cash equivalents, marketable
securities, accounts receivable and accounts payable are carried at
cost which approximates fair value.  The interest rate applied to
capital leases is based upon the Company's borrowing rate, and
therefore their carrying value approximates fair value.

Revenues and Accounts Receivable: Revenues are recognized upon
acceptance of the blood products or the performance of blood services.
Blood services revenues consist primarily of mobile therapeutics sales,
while blood products revenues consist primarily of sales of single
donor platelets and whole blood components that are manufactured or
purchased and distributed by the Company and donor testing.  Accounts
receivable are reviewed periodically for collectibility.

Inventories and Supplies: Inventories consist of Company-manufactured
platelets and whole blood components 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 of cost of
market and are accounted for on a first-in, first-out basis.

Inventories are comprised of the following as of December 31,

Inventories
                     2003        2004
                  ----------  ----------
Blood products    $  61,000   $ 126,000
Supplies          $ 433,000   $ 669,000
                  ----------  ----------
                  $ 494,000   $ 795,000
                  ==========  ==========

Plant and Equipment: Plant and equipment are stated at original cost.
Furniture, fixtures, equipment and vehicles are depreciated using the
straight-line method over two to nine years.  Leasehold improvements
are amortized over the lesser of their useful life or the length of the
lease, ranging from three to five years. The cost of normal repairs and
maintenance are expensed as incurred.

                                  F-8
<PAGE>  F-9

Goodwill: During the first quarter of 2002, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets."  In accordance with SFAS 142, the Company
discontinued amortizing goodwill. During 2002, the Company determined
that the goodwill was impaired and recorded an adjustment to write off
all of the remaining goodwill in the amount of $362,000.  The Company
does not have any other intangible assets.  During 2001 and prior,
goodwill was amortized on a straight-line basis over ten years.
Goodwill amortization was $53,000 for the year ended December 31, 2001.

Long lived Assets: All long-lived assets are reviewed for impairment in
value when changes in circumstances dictate, based upon undiscounted
future operating cash flows, and appropriate losses are recognized and
reflected in current earnings, to the extent the carrying amount of an
asset exceeds its estimated fair value determined by the use of
appraisals, discounted cash flow analyses or comparable fair values of
similar assets.

Income Taxes: Income taxes are computed under the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes."  SFAS 109 provides for 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.  In estimating future tax consequences, SFAS 109 generally
considers all expected future events other than enactments of changes
in the tax law or rates.  In 2003, the Company determined that it was
more likely than not that the deferred tax assets on the balance sheet
would not be used against future possible income.  Therefore, the
Company recorded a valuation reserve equivalent to 100% of the value of
the available deferred tax assets.  This resulted in a current period
charge to the provision for income taxes of $2,984,000 in 2003.

Per Share Data: Earnings per share-basic is computed by dividing net
income by the weighted average shares outstanding.  Earnings per share-
diluted is computed by dividing net income by the weighted average
number of shares outstanding including the diluted effect of options
and warrants.

Interest expense: During the three years ended December 31, 2002, 2001
and 2000 the Company incurred interest expense of $79,000, $61,000 and
$30,000, respectively.

Employee stock option plan:  The Company accounts for its employee
stock option plan under the recognition and measurement principles of
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations. Under APB No.
25, no stock-based compensation is reflected in net income, as all
options granted under the plans had an exercise price equal to the
market value of the underlying common stock on the date of grant and
the related number of shares granted is fixed at that point in time.

Reclassification:  Certain prior year amounts have been reclassified to
conform to the current year presentation.

Recent accounting pronouncements: In April 2002, Statement of Financial
Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44
and 64, Amendment of FASB Statement 13, and Technical Corrections (SFAS
No. 145) was issued and will be effective for fiscal years beginning
after May 15, 2002. SFAS 145 eliminates the classification of debt
extinguishment activity as extraordinary items, and provides
corrections or clarifications of other existing authoritative
pronouncements. The Company has elected early adoption and implemented
the provisions of SFAS 145 during 2002, which did not have a material
effect on the Company's consolidated financial statements.

The FASB has issued FASB Statement No. 146 ("SFAS 146"), Accounting for
Exit or Disposal Activities. SFAS 146 addresses the recognition,
measurement, and reporting of costs that are associated with exit and
disposal activities, including costs related to terminating a contract
that is not a capital lease and termination benefits that employees who
are involuntarily terminated receive under the terms of a one-time
benefit arrangement that is not an ongoing benefit arrangement or an
individual deferred-compensation contract. SFAS 146 supersedes Emerging
Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring) and requires

                                F-9
<PAGE>  F-10

liabilities associated with exit and disposal activities to be expensed
as incurred.  During 2003, the Company did close certain blood center
operations, and applied SFAS 146 to recognize expenses associated with
these closures as incurred.   See Note 15.

In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45, Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, (FIN 45). FIN 45 elaborates on the existing
disclosure requirements for most guarantees. FIN 45 requires that at
the time a company issues certain guarantees, the company must
recognize an initial liability for the fair value, or market value, of
the obligations it assumes under that guarantee and must disclose that
information in its interim and annual financial statements. The initial
recognition and initial measurement provisions of FIN 45 are applicable
on a prospective basis to guarantees issued or modified after December
31, 2002. FIN 45's disclosure requirements are effective for financial
statements of interim or annual periods ending after December 15, 2002
and are applicable to all guarantees issued by the guarantor subject to
FIN 45's scope, including guarantees issued prior to the issuance of
FIN 45. The Company adopted the provisions of FIN 45 in December 2002.
The adoption did not have any material impact on the Company's
consolidated financial statements.

In  December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-
Based  Compensation-Transition and Disclosure -- An Amendment  of  SFAS
No.  123"  ("SFAS 148").  SFAS  148 provides  alternative  methods  of
transition for a voluntary change to the fair value-based  method  of
accounting for stock-based  employee compensation.  The  Company  has
accounted for its stock-based compensation to  employees using the
intrinsic methodology and provided the "disclosures only" information
related  to the fair value method as allowed under SFAS No. 123.  SFAS
148  amends  the  disclosure requirements of SFAS No.  123 to require
prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee  compensation
and  the effect of the method used on reported results. The Company has
concluded it is in compliance with these required prominent
disclosures.

Note 3 - Plant and Equipment
----------------------------

Plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                          December 31,
                                   ------------------------
                                      2003          2002
                                   -----------   ------------
<S>                                <C>           <C>

Furniture, fixtures and equipment  $ 5,704,000   $ 5,274,000
Leasehold improvements                 474,000       484,000
                                   ------------  ------------
                                     6,178,000     5,758,000
Less accumulated depreciation
  and amortization                  (2,919,000)   (2,450,000)
                                   ------------  ------------
                                   $ 3,259,000   $ 3,308,000
                                   ============  ============
</TABLE>

Depreciation expense for 2003, 2002 and 2001 was $717,000, $426,000
and $247,000, respectively.


Note 4 - Line of Credit and Notes Payable
-----------------------------------------

The Company has a working capital line of credit with Comerica Bank -
California.  The amount the Company may borrow is the lesser of 75% of
eligible accounts receivable less amounts outstanding on the notes
payable discussed below, or $2 million.  Interest is payable monthly at
a rate of prime plus 0.5% (4.50% as of December 31, 2003).  As of
December 31, 2003, the Company's net borrowings on this line of credit
were $450,000.  This line of credit matures in June 2004, and is
included in "current obligations under notes payable" on the balance
sheet.  As of December 31, 2003, the unused portion of the Company's
line of credit was $1,363,000.

                              F-10
<PAGE>  F-11


This loan is collateralized by substantially all of the Company's
assets and requires the maintenance of certain financial covenants,
including minimum levels of profitability, quick assets to current
liability ratio, debt to equity ratio and prohibits the payment of
dividends or stock repurchases.  As of December 31, 2003, the Company
was not in compliance with all of these covenants.  The Company has
requested, and Comerica has agreed to waive these covenant violations.

The Company also has various other notes payable with Comerica Bank -
California that are secured by equipment.  As of December 31, 2003, the
total amount outstanding under these notes is $245,000 and requires
monthly principal payments of approximately $14,000 plus interest at a
weighted average fixed rate of 6.6%.  The Company incurred interest
expense to Comerica Bank in 2003, 2002 and 2001 of $47,000, $36,000 and
$19,000 respectively.  As of December 31, 2002, the Company was in
compliance with these loan covenants. All of the Comerica loans are
collateralized by substantially all of the Company's assets and are
cross-defaulted.

In addition, the Company has another note payable with One Source
Financial.  As of December 31, 2003, the balance due on this note was
$73,000.  The note requires quarterly payments of approximately $10,000
including interest at the rate of 8.5% and is secured by certain fixed
assets.  The Company also has a note payable related to financing
certain insurance premiums.  As of December 31, 2003, the balance due
on this note was $65,000 and requires monthly payments of approximately
$13,000 including interest at a rate of 3.4%.

Future maturities under these notes are as follows:

2004          $   710,000
2005              121,000
2006                3,000
              -----------
              $   834,000
              ===========

Note 5 - Leases
---------------

The Company has entered into various capital leases for equipment,
expiring on various dates through 2006.  Included in property and
equipment are the following assets held under capital leases.

Year Ended December 31         2003         2002
                           -----------  -----------
Equipment                  $1,317,000   $  439,000
Accumulated Depreciation     (107,000)     (92,000)
                           -----------  -----------
                           $1,210,000   $  347,000
                           ===========  ===========

Late in 2003, the Company completed an asset purchase transaction for
blood collection and blood treatment equipment.  The Company financed
this transaction as a capital lease with the manufacturer.  As of
December 31, 2003, the total value of the lease obligation was
$932,000, and requires monthly payments of approximately $18,000, which
includes interest at a rate of 7.5%.

                                F-11
<PAGE>  F-12

The Company leases its facilities and certain equipment under operating
leases that expire through the year 2009. Future minimum rentals  under
capitalized and operating leases are as follows:


Year ending December 31      Capital     Operating
                           -----------  -----------
2004.....................  $  306,000   $  304,000
2005.....................     312,000      259,000
2006.....................     305,000      215,000
2007.....................     229,000        4,000
2008.....................     222,000            -
2009.....................      18,000            -
                           -----------  -----------
Total:                      1,392,000   $  782,000
Less:  Interest..........    (209,000)  ===========
                           -----------
Principal value..........   1,183,000
Less:  Current portion...    (229,000)
                           -----------
                           $  954,000
                           ===========

Total rent expense under all operating leases was $971,000, $796,000
and $517,000 for the years ended December 31, 2003, 2002 and 2001,
respectively.

Most of the operating leases for facilities include options to renew
the lease at the then current fair market value for periods of one to
five years.  Additionally, the Company's facility in Sherman Oaks is
currently operating under a month-to-month basis while contract
negotiations are ongoing.  In most cases, management expects that in
the normal course of business, leases will be renewed or replaced by
other leases.

Note 6 - Severance
------------------

During 2002, the Company's President and Chief Executive Officer left
the Company.  In accordance with the terms of his employment contract,
he was entitled to severance in the amount of $247,000.  This amount is
being paid over a period of one year from the date of separation.  As
of December 31, 2003, the unpaid severance was $50,000.  Pursuant to
the terms of his employment contract, he previously received an option
to purchase up to 250,000 shares of the Company's Common Stock at a
price of $0.41 per share.  In 2001, the former Chief Executive Officer
was granted stock options to purchase 100,000 shares of the Company's
Common Stock at the market price on the date of grant $1.20, subject to
certain vesting requirements.  All of the 250,000 stock options issued
pursuant to the employment agreement and 20,000 stock options from the
2001 option grant were vested as of his separation date. In partial
consideration for canceling these options, the former Chief Executive
Officer received 250,000 warrants to purchase shares of the Company's
Common Stock at $0.60 per share.  Additionally, he received 20,000
warrants to purchase shares of the Company's Common Stock at $1.20 per
share.  All warrants have four-year lives.  If the former Chief
Executive Officer decided to purchase these warrants, the severance
would be reduced by $20,000, which was approximately equal to the fair
market value on the date of grant. During 2003, the former Chief
Executive Officer did purchase the warrants in question, and his
severance was reduced by $20,000. During 2002, the Company also
extended the stock options to a former officer and accounted for the
difference between the fair market value on the date of the extension
and the exercise price as additional compensation in the amount of
$56,000.  This was accounted for in general and administrative expenses
as employee compensation in 2002.

                                 F-12
<PAGE>  F-13

Note 7 - Income Taxes
---------------------

The Provision (benefit) for income taxes for the years ended December
31, 2003, 2002 and 2001 is as follows:


                           -----------  ----------  ------------
                               2003        2002        2001
                            -----------  ----------  ------------
Current taxes:
  Federal.................  $        -   $       -   $     5,000
  State...................       2,000     (50,000)       12,000
                            -----------  ----------  ------------
                                 2,000     (50,000)       17,000
Deferred taxes:
  Federal.................   2,647,000     (87,000)      146,000
  State...................     335,000     (14,000)       27,000
                            -----------  ----------  ------------
                             2,982,000    (101,000)      173,000
                            -----------  ----------  ------------
Provision (benefit)
 for income taxes.........  $2,984,000   $(151,000)  $   190,000
                            ===========  ==========  ============


Differences between the provision (benefit) for income taxes and income
taxes at statutory federal income tax rate for the years ended December
31, 2003, 2002 and 2001 are as follows:


                             ------------ ----------  ------------
                                 2003        2002         2001
                             ------------ ----------  ------------

Income tax expense at fed-
 eral statutory rate......   $  (576,000) $ (250,000) $   174,000
State income taxes, net
  of federal benefit......       (18,000)     (5,000)      30,000
Change in valuation
  allowance...............     3,540,000     142,000            -
Permanent differences.....         9,000      14,000       34,000
Other.....................        29,000     (52,000)     (48,000)
                             ------------  ----------  -----------
Income tax expense
 (benefit)................   $(2,984,000) $ (151,000)  $  190,000
                             ============ ===========  ===========


The  Company has recorded a net deferred tax asset of $0 and $2,984,000
at December 31, 2003 and 2002, respectively.  The components of the net
deferred tax asset at December 31, 2003 and 2002 are as follows:


                               2003         2002
                            -----------  -----------
Current:

Reserve...................  $   80,000   $  108,000
Accrued expenses and
 other....................     238,000      294,000
                            -----------  -----------
Total deferred tax
 assets...................  $  318,000   $  402,000

Noncurrent:

Net operating loss.......    2,825,000    2,016,000
Depreciation and
 amortization............      (15,000)     245,000
Tax credit carryforward..      844,000      866,000
Other....................      110,000       (3,000)
Valuation allowance......   (4,082,000)    (542,000)
                            -----------  -----------
                            $ (318,000)  $2,582,000
                            -----------  -----------
                            $        0   $2,984,000
                            ===========  ===========


A valuation allowance is recorded if the weight of available evidence
suggests it is more likely than not that some portion or all of the
deferred tax asset will not be recognized.  The Company determined in
the third quarter of 2003 that, based on recent historical and expected
future operating results, that it is more likely than not that the
Company will not be able to realize a significant portion of its
deferred tax assets.  Therefore, the Company recorded a 100% valuation
reserve against all of the deferred tax assets.

                                 F-13
<PAGE>  F-14


At December 31, 2003, the Company had net operating loss carryforwards
available for Federal income and state tax purposes totaling
$9,662,000, which expires through 2012.  At December 31, 2003, the
Company had federal income tax credit carryforwards of approximately
$528,000 expiring through 2010, and state tax credit carryforwards of
approximately $789,000, which are not subject to expiration through
2010.

Acquisitions of common stock which result in changes in equity
ownership in the Company could result in an "ownership change" within
the meaning of Section 382 of the Internal Revenue Code of 1986, as
amended (the 'Code"), thereby imposing an annual limitation (the
"Section 382 Limitation") on the Company's ability to utilize its net
operating loss carryforwards to reduce future taxable income.  In the
event of a Section 382 Limitation, the Company's utilization of its net
operating loss carryforwards would be restricted.

Note 8 - Shareholders' Equity
-----------------------------

Stock Options

In July 1996, the Company's Board of Directors approved and adopted a
stock incentive plan, which provides for grants of both stock options
and shares of restricted stock.  A total of 2,000,000 shares may be
granted under the terms of the 1996 Plan.  The term of the options
granted is determined by the Company's Board of Directors, but in no
event may be longer than ten years.  The exercise price of options
granted generally is required to be not less than the fair market value
of the common stock on the date of grant. Options granted to employees
generally vest at a rate of at least 20% per year.

The table below summarizes stock option transactions.

<TABLE>
<CAPTION>
                                    2003                  2002                2001
                           ------------------     -----------------    ------------------
                            Shares     Price        Shares   Price      Shares    Price
                           ---------- --------    ---------- ------    ---------  -------
<S>                        <C>        <C>         <C>        <C>       <C>        <C>
Outstanding at beginning
 of year.................   1,264,000   $0.96     1,521,000   $0.92    1,365,000   $0.86
Granted..................     330,000   $ .74       400,000   $0.70      345,000   $1.32
Exercised................      (5,000) ($0.63)      (84,000) ($0.63)    (140,000) ($1.42)
Canceled.................    (210,000) ($1.06)     (573,000) ($0.66)     (49,000) ($1.04)
                            ----------            ----------           ----------
Outstanding at end
 of year.................   1,379,000   $0.91     1,264,000   $0.96    1,521,000   $0.92
                            ==========            ==========           ==========
Exercisable at end
 of year.................     915,000   $0.95       703,000   $1.04      939,000   $0.80
                            ==========            ==========           ==========

</TABLE>

The  following  table summarizes the range of exercise price,  weighted
average  remaining  contractual  life  ("Life")  and  weighted  average
exercise  price  ("Price")  for all stock  options  outstanding  as  of
December 31, 2003:

<TABLE>
<CAPTION>

                                 Options Outstanding         Options Exercisable
                            -------------------------------  --------------------
Range of Exercise Price        Shares     Life      Price      Shares     Price
-------------------------   ----------- ---------  --------  ----------  --------
<S>                         <C>         <C>        <C>       <C>         <C>
$0.32 to $0.75                724,000   5.5 years  $ 0.53      534,000    $ 0.58
$0.76 to $1.50                520,000   8.0 years  $ 1.04      272,000    $ 1.12
$1.51 to $2.44                135,000   5.5 years  $ 2.29      109,000    $ 2.31
                            ---------              ------    ---------    ------
                            1,379,000              $ 0.91      915,000    $ 0.95
                            =========              ======    =========    ======

</TABLE>

The Company has elected to adopt SFAS 123 "Accounting for Stock-Based
Compensation" for disclosure purposes only and applies the provisions
of APB Opinion No. 25. The Company did not recognize any compensation
expense related to the issuance of stock options in 2003, 2002 or 2001.
Had compensation expense for all options granted to employees been
recognized in accordance with SFAS 123, the Company's net income and
net income per share would have been as follows:

                                      F-14
<PAGE>  F-15

<TABLE>
<CAPTION>
                            Years ended December 31,
                        2003         2002         2001
                     ------------   ---------    ----------
<S>                  <C>            <C>          <C>

Net income (loss)
 as reported........ $(4,679,000)   $(591,000)   $ 323,000
Pro forma net
 income (loss)...... $(4,753,000)   $(728,000)   $ 171,000
Basic income (loss)
 per share as
 reported........... $     (0.60)   $   (0.08)   $    0.04
Diluted income
 (loss) per share
 as reported.......  $     (0.60)   $   (0.08)   $    0.04
Pro forma basic net
 income (loss) per
 share.............. $     (0.61)   $   (0.09)   $    0.02
Pro forma diluted
 net income (loss)
 per share.......... $     (0.61)   $   (0.09)   $    0.02

</TABLE>

The  above  pro  forma amounts were calculated by estimating  the  fair
value of each option or warrant granted on the date of grant using  the
Black-Scholes option-pricing model as follows:

<TABLE>
<CAPTION>
                            Years ended December 31,
                        2003         2002         2001
                      ----------   ---------    ----------
<S>                   <C>          <C>          <C>
Expected life.......  4 Years      4 Years      4 Years
Expected volatility.  113%         113%         40%
Interest rate.......  3.6%         3.6%         6.2%
Dividend yield......  0%           0%           0%

</TABLE>

Warrants


At December 31, 2003, 2002 and 2001, the Company had a total of
270,000, 760,000 and 520,000 warrants to purchase common stock
outstanding, at weighted average exercise prices of $0.64, $3.23 and
$4.60, respectively. All of the warrants outstanding for all periods
were exercisable.  The weighted average lives for warrants outstanding
at December 31, 2003 is 2.75 years.

As part of the severance with the former Chief Executive Officer (see
Note 6 - Severance), the Company cancelled 350,000 stock options with a
weighted average exercise price of $0.64 per share.  The Company issued
270,000 warrants to the former Chief Executive Officer with an average
exercise price of $0.64 per share.  These warrants are fully vested and
expire in 2006.

Stock Repurchase


In 2000, the Company announced its intention to repurchase up to 15% of
its outstanding common stock, or up to 1.1 million shares.  Purchases
were made in the open market or in private transactions depending on
price and availability.  In 2000, the Company purchased 439,558 shares
at an average price of $1.58 per share.  In 2001, the Company purchased
332,300 shares at an average price of $1.18 per share.  No purchases
were made in 2002 or 2003, and the Company has terminated this program.


Note 9 - Earnings per Share
---------------------------


The following table provides the calculation methodology for the
numerator and denominator for earnings per share:

                              F-15
<PAGE>  F-16


<TABLE>
<CAPTION>

                                   Years Ended December 31,
                              2003          2002          2001
                          ------------  -----------  ------------
<S>                       <C>           <C>          <C>
Net income (loss)......   $(4,679,000)  $ (591,000)  $   323,000
Shares outstanding.....     7,753,000    7,673,000     7,534,000
Net effect of diluted
 options and warrants..             -            -       764,000
                          ------------  -----------  ------------
Dilutive shares
 oustanding............     7,753,000    7,673,000     8,298,000
                          ============  ===========  ============
Earnings (loss) per
 share dilutled........   $     (0.60)  $    (0.08)  $      0.04
                          ============  ===========  ============
</TABLE>

Warrants and options to purchase 1,649,000 and 2,024,000 shares of
common stock at December 31, 2003 and 2002 respectively, were excluded
from the 2003 and 2002 computation of diluted earnings per share
because the Company incurred a loss in these years.  They were anti-
dilutive.  Warrants and options to purchase 590,000 shares of common
stock at December 31, 2001, were excluded in the computation of diluted
earnings per share because the exercise price of the warrants and
options was greater than the average market price of the common stock.


Note 10 - Goodwill
------------------

During 2002, the Company adopted Statement of Financial Accounting
Standards Number 142, "Goodwill and Other Intangible Assets," (SFAS
142).  In accordance with SFAS 142, the Company discontinued amortizing
goodwill that was recorded as part of the acquisition.  As of December
31, 2001, the Company had $530,000 of goodwill and accumulated
amortization of $168,000.  During 2002, management determined that the
goodwill was impaired and recorded an adjustment to write-off all of
the remaining goodwill in the amount of $362,000.  The Company does not
have any other intangible assets other than goodwill.

The following table presents net income (loss) on a comparable basis
after adjustment for amortization of goodwill:

<TABLE>
<CAPTION>

                                   2003           2002          2001
                               ------------   ------------  ------------
<S>                            <C>            <C>           <C>
Reported net income (loss)...  $(4,679,000)   $  (591,000)  $   323,000
Goodwill amortization,
 net of taxes................            -              -        31,000
Goodwill impairment,
 net of taxes................            -        217,000             -
                               ------------  -------------   -----------
Adjusted net income (loss)...  $(4,679,000)   $  (374,000)   $  354,000
                               ============   ============   ===========
Income (loss) per share
Basic
 Reported net income (loss)..  $     (0.60)   $    (0.08)    $     0.04
 Goodwill amortization.......            -             -           0.00
 Goodwill impairment.........            -          0.03              -
                               ------------   -----------   ------------
 Adjusted net income (loss)..  $     (0.60)   $    (0.05)   $      0.04
                               ============   ===========   ============

Diluted
 Reported net income (loss)..  $     (0.60)   $    (0.08)    $     0.04
 Goodwill amortization.......            -             -           0.00
 Goodwill impairment.........            -          0.03              -
                               ------------   -----------   ------------
 Adjusted net income (loss)..  $     (0.60)   $    (0.05)    $     0.04
                               ============   ===========   ============

</TABLE>

                                  F-16
<PAGE>  F-17

Note 11 - 401(k) Profit Sharing Plan
-------------------------------------

HemaCare's 401(k) Profit Sharing Plan (the "401(k) Plan") qualifies,
in form, under Section 401(k) of the Internal Revenue Code (the "401(k)
Plan").  For 2001 and 2000, the Company elected to match 50 percent of
each participant's contribution, up to 5% of the participants' annual
salary, with HemaCare common stock. During 2002 and 2001, HemaCare
issued 76,365 shares ($122,000) and 92,848 shares ($93,000) of common
stock as matching contributions for the 2001 and 2000 plan years,
respectively.  For the 2002 plan year, the Company contributed cash in
the amount of $124,000 in 2003 as matching contributions.  The Company
did not make any contributions to the 401(k) Plan in 2003 pertaining to
the 2003 plan year.


Note 12 - Commitments and Contingencies
---------------------------------------

Since 1976, California law has prohibited the infusion of blood
products into patients if the donors of those products were paid
unless, in the opinion of the recipient's physician, blood from a non-
paid donor was not immediately available.  Apheresis platelet products
obtained from paid donors, including the Company's Sherman Oaks
Center's paid donors, were exempted from this law by a series of state
statutes, which, expired on January 1, 2003.  Effective January 2,
2003, the Company only accepts platelet donations from volunteer
donors.  During 2003, 2002 and 2001 revenues from apheresis platelet
donors were $4,100,000, $5,374,000 and $5,956,000 respectively.

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.

Healthcare reform is continuously under consideration by lawmakers, and
it is not certain as to what changes may be made in the future
regarding health care policies.  However, policies regarding
reimbursement, universal health insurance and managed competition may
materially impact the Company's operations.

The Company is also party to various claims, actions and proceedings
incidental to its normal business operations. The Company believes the
outcome of such claims, actions and proceedings, individually and in
the aggregate, will not have a material adverse effect on the business
and financial condition of the Company.

The Company entered into a long-term commitment with a vendor to
purchase kits used to produce blood products from blood donors and to
provide blood services to patients.  Under the terms of the agreement,
the Company was obligated to purchase $10 million of kits at
established prices through July 2006.  During 2003, the Company
renegotiated the terms of this purchase agreement to eliminate the kit
commitment entirely.


Note 13 - Segment Information
-----------------------------

The Company operates in two business segments as follows:

-    Blood Products: Collection, processing and distribution of blood
     products and donor testing.
-    Blood Services: Therapeutic apheresis and stem cell collection
     procedures and other therapeutic services provided to patients.

Management uses more than one criterion to measure segment performance.
However, the dominant measurements are consistent with the Company's
consolidated financial statements which present revenue from external
customers and operating profit income for each segment. Supplemental
data are as follows:

                                 F-17
<PAGE>  F-18

<TABLE>
<CAPTION>
                                 Blood Products  Blood Services
                                 --------------  --------------
<S>                              <C>             <C>

2003
Depreciation and amortization    $  918,000      $    51,000
Expenditures for fixed assets       828,000          291,000

2002
Depreciation and amortization    $  226,000      $    19,000
Expenditures for fixed assets     1,300,000                -

2001
Depreciation and amortization    $  109,000      $    27,000
Expenditures for fixed assets     1,097,000          145,000


</TABLE>

Management evaluates segment performance based primarily on operating
income. Other revenue and expenses are not allocated to the segments.
The accounting policies of the segments are the same as those described
in the significant accounting policies.


Note 14 - Allowance for Doubtful Accounts
-----------------------------------------

Increases to the allowance for doubtful accounts totaled $309,000, $0
and $10,000 for the years ended December 31, 2003, 2002 and 2001,
respectively. Write-offs against the allowance for doubtful accounts
totaled $165,000, $4,000 and $2,000 for the years ended December 31,
2003, 2002 and 2001, respectively.


Note 15 - Exit and Disposal Activities
--------------------------------------

As the result of an evaluation of the overall operations of the
Company, management implemented a plan to cease operations at several
donor centers, including the mobile operations associated with these
centers beginning in the third quarter of 2003.  The donor centers
included in this plan were Albany, New York; Chicago, Illinois; three
centers in North Carolina; and Williston Vermont.  As of December 31,
2003, all of these donor centers were closed with the exception of the
donor center in Chapel Hill, North Carolina, which was closed in
January 2004.  Costs associated with the closures are reflected in the
Company's 2003's results in accordance with generally accepted
accounting principals.

As a result of the implementation of management's plan to close certain
locations as described above, the Company's blood products segment
incurred or anticipates will incur certain expenses associated with
closing these centers.  These expenses included the write-off of
$214,000 of certain assets previously used in the operations of the
closed donor centers, severance payments of $77,000 to 29 terminated
employees, recognition of unexpired facility lease obligations of
$253,000, and other associated costs.


                                F-18
<PAGE>  F-19

The following represents a reconciliation of the provision created in
the blood products business segment as a result of the closure of these
centers:

<TABLE>
<CAPTION>

                                                       Remaining
                                                        Accrual
                                                        as of
                                                      December 31,
                            Provision    Utilized         2003
                            ---------    ---------    ------------
<S>                         <C>          <C>          <C>
Termination Benefits:       $  77,000    $  76,000    $  1,000
Lease Abandonment Costs:      253,000      253,000           0
Fixed Asset Write-down:       214,000      214,000           0
Other Costs:                   54,000       28,000      26,000
                            ---------    ---------    ------------
Total:                      $ 598,000    $ 571,000    $ 27,000
                            =========    =========    ============

</TABLE>


All of these expenses were incurred in 2003.  Of the $598,000 provision
recorded in 2003, $571,000 and $27,000 was recorded as operating
expenses and general and administrative expenses, respectively.


Note 16 - Subsequent Events
---------------------------

In February 2004, the Company received notice from Gambro BCT
("Gambro"), one of the Company's largest suppliers, that the California
Board of Equalization was conducting an audit of Gambro's sales tax
records.  Gambro communicated to the Company that preliminary results
of this audit indicated that the Company is likely to receive a refund
of previously paid sales taxes.  The amount of the potential refund has
not yet been determined; however, preliminary indications are that the
amount could be material.  The Company will record the benefit of this
refund as soon as the amount can be reasonably estimated and is
certain.


                                  F-19

                           EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>   <C>



   10.12  Lease Agreement between the Registrant and Gambro BCT, dated
          December 30, 2003.

   11     Computation of earnings (loss) per common equivalent share.

   21     Subsidiaries of the Registrant.

   23.1   Consent of Ernst & Young LLP, Independent Auditors.

   23.2   Notice Regarding Consent of Arthur Andersen LLP.

   31.1   Certification Pursuant to Rule 13-a-14(a) of the Securities
          Exchange Act of 1934, Adopted Pursuant to Section 302
          of the Sabanes-Oxley Act of 2002.

   31.2   Certification Pursuant to Rule 13-a-14(a) of the Securities
          Exchange Act of 1934, Adopted Pursuant to Section 302
          of the Sabanes-Oxley Act of 2002.

   32.1   Certification Pursuant to 18 U.S.C. 1350 Adopted Pursuant to
          Section 906 fo the Sarbanes Oxley Act of 2002.
</TABLE>