SmallCaps Online LLC Initiates Coverage of HemaCare Corporation with a BUY Recommendation

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New York, NY, May 19, 1999 - SmallCaps Online LLC announced today that it has initiated coverage of HemaCare Corporation (OTC BB: HEMA) with a BUY recommendation. The full text of this report can be accessed at SmallCaps Online’s web site, at www.SmallCapsOnline.com.

Excerpts from the report follow:

HEMA provides outsourcing of comprehensive blood management services, including related services such as therapeutic apheresis and donor testing services, to hospitals and other healthcare institutions. It is the only publicly traded, for-profit company with an FDA Establishment license permitting the sale of blood products across state lines, as well as accreditation from the American Association of Blood Banks (AABB). Through its Blood Management Programs (BMPs), HEMA offers hospitals and other healthcare institutions the convenience and efficiency of in-house blood services without the associated financial and regulatory risks and burdens. In October of 1998, HEMA acquired privately held Coral Therapeutics, bringing HEMA additional experienced management, greater operating efficiency, and expanding the Company’s market presence from Southern California (where it provides blood products and services to over 80 hospitals) to additional markets in twelve states in the Northeast and South. HEMA is the only "pure play" in the blood services industry and is trading at less than half of annualized revenues. We believe that HEMA is in an excellent position to grow revenues and earnings from its current base of business and we are initiating coverage of HEMA with a BUY rating. We recommend purchase of HEMA by investors tolerant of the risks associated with micro-cap and small-cap equity investments.

Large Market Opportunity — Unique FDA Establishment License

• Hospitals spend roughly $5 billion annually in the US on blood products and services, and are continually looking for ways to provide more cost-effective health services.
• The industry is dominated by independent not-for-profit entities whose core competency is collections and manufacturing, and not necessarily services.
• There are a number of small and medium-sized blood services companies in markets that HEMA is not currently operating in. These companies could potentially be attractive roll-up acquisition candidates. HEMA’s FDA Establishment license allows it to ship blood products among customers nationwide to balance supply and demand.

Operating Strategy — Leveraging BMPs into Higher-Margin Services

• BMP Strategy: HEMA’s Blood Management Programs (BMP) make the Company a partner with its hospital customers, so that both parties have an interest in achieving the hospitals’ patient service, regulatory, and financial goals. HEMA leverages existing BMP relationships into higher-margin services, such as therapeutic apheresis, within the partner hospital and at surrounding hospitals and healthcare institutions.
• Early Success: HEMA’s most recently reported quarterly results reflected higher volumes of apheresis platelet sales and higher gross margins, which resulted from lower average per unit cost of sales.
• Protecting Margins: HEMA is currently negotiating supply agreements with regional and community blood banks so that it can better manage costs associated with seasonal shortages of red blood cells and thereby better control gross margins.

Compelling Valuation at Current Levels — Trading at Less Than Half of Revenues

• HEMA’s latest quarterly revenues were $4.5 million, and net profits were $243,000, or $0.03 per share, compared with revenues of $2.9 million and income of $16,000, or $0.01 per share during the same quarter the year before. HEMA is trading at less than half of annualized revenues.
• As of 3/31/99, HEMA had approximately $1.7 million in cash and equivalents.

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SmallCaps Online LLC is a registered investment advisor focused on identifying emerging growth companies in the healthcare and information technology sectors that offer compelling investment opportunities over the long term. By providing comprehensive financial services, including corporate finance, M&A advisory, strategic partnering and communications consulting, the company positions itself to provide a fully integrated package of value-added services to emerging growth companies.

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The information in this press release has been obtained from sources that SmallCaps Online LLC believes to be reliable, but the Company does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by SmallCaps Online LLC for the purchase or sale of any securities. SmallCaps Online LLC has performed investment banking, consulting or other services for HEMA and may solicit investment banking, consulting or other business from, any company mentioned in this release. SmallCaps Online LLC or persons associated with SmallCaps Online LLC may at anytime be long or short any of the securities referred to herein and may make purchases or sales thereof while the Company’s reports are in circulation or posted on the SmallCaps Online LLC web site at www.SmallCapsOnline.com. This material, or any portion thereof, may not be reproduced without prior permission from SmallCaps Online LLC. SmallCaps Online LLC is not responsible for the contents of this document that is intended for electronic transmission and could be thus subjected to tampering or alteration. Copyright © 1999 by SmallCaps Online LLC. All rights reserved.