_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
December 31, 1994 0-12248
Daxor Corporation
(Exact name of Registrant as specified in its charter)
New York 13-2682108
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
350 Fifth Avenue
Suite 7120
New York, New York 10118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (212) 244-0555
Securities registered pursuant to Section 12(b) of the Act:
Common Shares, $.01 par value
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether 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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-X is not contained herein, and will not be contained, to the
best of 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. [ ]
As at March 28, 1995, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $ 12,405,494. The market value of Common
Stock of the Registrant, par value $.01 per share, was computed by reference
to the closing price of one share on such date, as reported by the American
Stock Exchange, which was $ 6.75.
The number of shares outstanding of the Registrant's Common Stock, par value
$.01 per share, as of March 28, 1995: 5,067,630 shares.
Documents incorporated by reference: The information required by Part III is
incorporated by reference from the proxy statement for the 1994 Annual Meeting
of Shareholders.
PART I.
Item 1. Business
Daxor Corporation, (the "Company") was formed in 1971 to develop
Cryopreservation technology (freezing techniques) for human semen.
The Company's Idant Laboratory division ("Idant") is engaged in the
sale to physicians of frozen semen for use in artificial
insemination. The semen is obtained from third-party donors who are
anonymous to the recipients. The donors are recruited and screened
by Idant with their physical characteristics matched to the extent
practicable to the needs of the recipient. Idant also offers its
"sperm bank" storage facilities for use by men undergoing vasectomies
and patients undergoing chemotherapy and radiation treatment, who are
in danger of becoming sterile. This division also provides fertility
testing services and is engaged in researching techniques for
improving human fertility through the use of artificial insemination
and assisted reproductive technology. The Company maintains the
largest human sperm bank in the U.S.
In 1985, the Company established the first facility in the United
States for long-term autologous (self-storage) blood banking. The
Company began exploring the possibility of long-term storage of blood
utilizing freezing technology in 1974. However, market surveys
indicated that the public underappreciated the risk free alternative
of autologous blood banking because of a misperception that the
traditional blood banking system was safe despite evidence that there
were many risks from blood transfusions. The blood banking industry
is a group of for-profit and not-for-profit corporations whose total
revenue is estimated to exceed three billion dollars. These groups
have a large financial stake in the continuity of the current system
and have opposed the creation of autologous blood banks.
Utilizing cryobiology technology, blood has been shown to be capable
of being stored for up to 20 years. The present donor systems of
blood transfusions presents risks to those individuals receiving
blood, a risk which can be avoided by utilizing one's previously
stored blood. There are approximately 12,000,000 blood transfusions
administered annually. One third of the blood utilized is imported
because of severe shortages. At the present time, an individual has
a 1-in-50 chance of contracting hepatitis from transfused blood and a
much smaller but still real risk of contracting AIDS. Autologous
storage of blood protects an individual against these and other
multiple problems associated with transfusions. The concept that the
"safest blood is one's own" is specifically endorsed by the American
Medical Association, a committee of the National Institute of Health,
and transfusion committees of multiple hospitals.
The Company, in early 1987, completed successful testing of a medical
instrument to measure human blood volume, the BVA-100. The
instrument utilizes an isotope which is injected into a patient from
whom blood samples are drawn at timed intervals. The instrument
provides an accurate and rapid measurement of the total volume of
blood in the human body. The technique currently employed takes 4-8
hours and is rarely performed in most hospitals. The BVA-100 will
provide preliminary results within 20 minutes and complete results
within 35 minutes. The instrument will also calculate the normal
blood volume of a specific individual. It will, for example,
provide a very accurate measurement of the amount of blood lost by a
patient during surgery. Current methods of estimating blood loss are
frequently inaccurate, and many have errors as large as 35%. At the
present time, there is no similar instrument on the market. The
instrument will require the use of a separate kit which will require
FDA approval. The isotope in the kit has previously been
specifically approved by the FDA for the measurement of blood volume.
The Company will be filing additional patent applications for the kit
which is used in conjunction with the instrument. To date over 300
patients have had their blood volumes measured utilizing these
measurement techniques. The repeatability of the test is estimated
to be +/- 2%. In 1991, the Company received a U.S. patent for the
Blood Volume Analyzer itself and is the first U.S. patent issued for
an instrument which successfully measures the total amount of blood
in the human body. In November 1992, the company received a European
patent for its Blood Volume Analyzer covering 12 countries. Patents
in Japan are pending.
The Company had expected approval of its blood volume analyzer in
1988. Approval has been delayed due to the unavailability of Albumin
I-131, the isotope used for the test. Squibb, was the only U.S.
F.D.A. approved manufacturer who was producing the isotope,
transferred its license to Iso-Tex Diagnostics. In 1989, Iso-Tex was
required to undergo F.D.A. clearance for its manufacturing process.
Approval was expected within 2 years but instead has resulted in a
prolonged approval process for the Company's Blood Volume Analyzer.
Since 1990, the Company has had approval from the New York City
Department of Health to handle radioisotopes at its central facility.
In 1993, the Company undertook a search to locate a former
manufacturer of Albumin I-131 who might be willing to sell their New
Drug Application (NDA) to Daxor or provide the right of
reference to the NDA. An NDA is required whenever a new manufacturer
undertakes to manufacture a product, even if that product has already
been approved by the FDA for other manufacturers. The transfer of an
NDA, or the right of reference to the NDA, enables another
manufacturer to produce the product according to the original NDA
specifications. The new manufacturer, after providing documentation
to the FDA that the product is being manufactured according to FDA
standards and specifications, does not have to undergo the clinical
testing ordinarily required of a completely new product.
In March, 1994, the Company announced that it had obtained the right
of reference to the NDA from two pharmaceutical companies that
formerly manufactured Albumin I-131. Daxor
has been in continuous communication with Iso-Tex Diagnostics in
connection with its application for approval of its Texas facility
for Albunmin I-131. We believe that an attempt is being made to
facilitate the approval process for this isotope.
In March 1995, the company acquired a 35.2% ownership of U.S.
Cryobanks of Florida in exchange for sharing its freezing technology
for semen banking and blood banking. U.S. Cryobanks is located in
Altamonte Springs, a suburb of Orlando will utilize design concepts
from Daxor's New York City facility for continued blood and semen
storage.
BLOOD BANKING
In December 1985, Daxor received the first FDA registration in the
U.S. for long- term frozen autologous blood banking. The Company has
had research interests in the cryobanking of blood for over 15 years.
The current donor system of blood banking exposes a transfusion
recipient to the dangers of infections such as AIDS and hepatitis.
There are over 100,000 cases of hepatitis from transfusions annually
despite testing, of which 25-50,000 develop into major illnesses.
The current system of AIDS screening does not completely eliminate
AIDS carriers as donors; it only reduces the risk of an AIDS carrier
donating blood. Other viral diseases are also transmitted via blood
transfusion and are not detected by current screening methods. Blood
matching of minor subtypes is never done and an individual has less
than one chance in 100,000 of receiving a perfect match from an
unrelated stranger. Approximately 5% of all transfusions result in
transfusion reactions.
Compounding the risks of infection, and other complications, is the
frequent withholding of blood from severely anemic patients by their
physicians because of these known risks of transfusion. It is common
medical practice to replace the first three pints of lost blood with
three pints of sterile water or the equivalent. This problem has not
been brought to public attention, but is widely known among
physicians who have treated patients who have lost blood. The number
of patients who suffer major complications, including sudden death,
from undertransfusion is unknown but significant.
These complications and problems can be avoided by autologous
(self-storage) of blood by individuals. The Company believes that a
considerable educational process will be required to establish the
desirability of autologous blood storage and to overcome opposition
to any change in the current blood banking system from established
tax-exempt (non-profit) and profit-making entities who have great
financial stakes in insuring the continuity of the present donor
system. The Company views its entry into this field as a major
long-term commitment. The current blood banking system is a
monopoly, or semi-monopoly, in most areas and is controlled by
tax-exempt organizations. One such non- taxpayer had "excess
revenues" (i.e. profits) in excess of 50 million dollars in a recent
year. These organizations, while maintaining a public posture of
altruism, have been very aggressive in trying to maintain a monopoly
on the supply of blood resources and the income derived from these
blood banking activities.
Under the present system, it is a common practice to fractionate or
separate blood into red blood cells, platelets, and plasma. Plasma
contains the clotting elements of blood plus antibodies. Sometimes
patients continue to bleed because they are transfused with red cells
and salt water and no clotting factors. This can cause the patient
to require even more transfusions than if they had been initially
transfused with whole blood. Anyone who bleeds loses all of these
components simultaneously. However, they regularly receive only
partial replacement. As a result, when a patient receives complete
replacement of one pint of blood, for example, he could receive red
cells from one donor, platelets from another donor and plasma from
yet another donor. A patient who requires complete replacement of 3
units of whole blood could be exposed to 9 different donors, each of
whom is capable of transmitting an infection such as AIDS or
hepatitis. The Red Cross and others have claimed that directed
donation (i.e. a donation from a known source) is not safer than
blood from an unknown source. Under the system that Idant is
implementing, directed donations will be far safer - in the example
cited, the risk of infection drops from approximately 4% to less than
1/2%. This is because instead of having 9 donors the recipient would
receive 3 units of whole blood from one donor. In addition, the risk
of sensitization which increases with each donor would also be
reduced by the same amount when blood from a single donor is used.
Another major problem addressed by Daxor's program is the severe
shortage of blood. At the present time, 1/3 of the blood and blood
products used in the New York region are imported from Europe, Mexico
and other parts of the world. France and Germany have been rocked by
blood banking scandals in which AIDS contaminated blood was
transfused despite knowledge by officials that the blood was
dangerous. In France, senior blood banking officials have been
sentenced to jail terms. The shortage of blood compounded by the risk
from blood transfusion have made it a common practice to replenish
individuals who have lost as much as 3 pints of blood with only
water. In some cases individuals who have lost as much as 4 pints of
blood are replaced only by water. The human body, depending on its
size, holds only 7 to 12 pints of blood. The practice of replacing
blood with salt water, widely known to physicians, is almost unknown
to the public at large. This practice of replacing blood with water
leads to a significant number of unreported heart attacks, strokes,
and sudden deaths every year.
Some patients who receive salt water instead of blood develop a
condition called pulmonary edema, where their lungs fill up with
water. Patients who develop these complications rarely have their
complications attributed to the severe undertransfusion they have
received. In the case of sudden death, the autopsy will reveal the
heart attack or stroke which will usually be listed as the cause of
death instead of the real cause, which is inadequate replacement of
blood. Blood volume depletion is very difficult to prove as a cause
of death. In animals bled experimentally, death comes rapidly and
with almost no warning as the brain is deprived of blood, with sudden
loss of consciousness followed by sudden death. The practice of
keeping patients, including elderly patients, severely
blood-depleted, would end if a safe and adequate source of blood were
available.
The Company plans to develop a nationwide network of autologous blood
banks. This would possibly eliminate the shortage of blood, and the
blood would be virtually AIDS-free and would be markedly less likely
to transmit infection than the current system of donor blood
transfusion.
In 1988, the use of autologous blood was encouraged by increasing
numbers of hospitals. These programs, however, are short-term
programs in which liquid blood (unfrozen) is kept up to 42 days prior
to use. In these programs individuals who face elective surgery are
encouraged to store between 2-5 pints of blood in a 5-week period
prior to surgery. Some patients are even bled 72 hours prior to
surgery. This practice usually results in a patient being operated
upon in an anemic (blood-thinned) or blood-depleted state because
almost no one is able to replace blood at the rate at which it has
been removed. It is generally acknowledged that the more
blood-depleted an individual is, the greater the risk of a
complication. The decision to operate on individuals in a blood-
depleted state is a compromise between increasing the risk of surgery
in a blood- depleted state and the risks from donor transfusions. It
is significant that the FDA guidelines for donors will not permit
blood donations more frequently than once in 8 weeks, except in
certain circumstances. These new practices of self donation violate
these medical guidelines and may place the patients at greater risk
than if non-autologous donors had been used.
Under Daxor's program these risks are eliminated by obtaining blood
donation over an extended period of time, instead of days and weeks,
so that the donor does not become depleted. Patients undergoing
surgery who had stored blood under the Company's program would not
begin their surgery in a blood-depleted state as contrasted to
patients who had their blood taken just prior to surgery.
In 1991, the Company's president, Dr. Joseph Feldschuh, authored a
book entitled "Safe Blood" which was published by the Free Press
division of Macmillan Publishers. This book provides a detailed
exposition of the problems and risks of the current blood banking
system as well as an explanation of the mechanics of a family frozen
blood program. The book was specifically written to counter the
false and misleading information which is provided to the public by
the so- called 'non-profit' blood collecting agencies.
The current blood supply is and has been dangerous because there have
been no competitive alternatives to the current monopoly structure.
A blood transfusion is the most intimate contact one can have with
another human being. It is more intimate than sexual contact, yet
the public has almost no control or choice from whom transfusions are
obtained. At the present time only a few states in the Unites States
have so called "Safe Blood" acts. These legislative changes provide
individuals such basic rights as the right to have access to ones own
stored blood as well as the right to choose a donor.
In 1993, a bill had been introduced in New York State to guarantee
these rights. It was also lobbied against by New York State blood
bank regulators. It was blocked by intensive lobbying efforts of the
blood banking industry's representatives. This bill, called the
Vellela-Brodsky Safe Blood Act, will be reintroduced. Presently, in
New York, a hospital may take a patient's blood prior to surgery and
give that blood to another patient without the first patients'
permission even if that patient is left blood depleted. Blood banking
monopolies are also protected in many states from liabilities by
special blood shield laws which often protect them from lawsuits of
negligence and their false claims about the safety of their blood
supply. The proposed New York State Safe Blood Act, if enacted, will
mandate informed consent disclosure of the risks of transfusion and
the alternatives
available to a transfusion candidate.
Daxor family blood banking programs provide for donor exposure
reduction by the following steps: 1) Storage of an individual's whole
blood (i.e. both the red blood cells and the plasma). 2) Donor
Reduction Program. Utilization of multiple units of frozen blood
from a single donor where additional blood is necessary. For
example, a person who has stored 2 units of whole blood comprising 2
units of red cells and 2 units of plasma could provide that blood to
another individual who would be exposed to only a single donor for
the quantity of blood which would currently be directed from four
separate donors. 3) Utilization of Quarantined Blood. In 1985,
Daxor's Idant Laboratory division was the first sperm bank in the
United States to initiate the concept of quarantined sperm to reduce
the risk of AIDS and hepatitis. The public is unaware that the
current tests for the AIDS virus does not actually test for the
virus, but is only a test for the antibodies to the virus which
usually take months to appear. A blood or sperm donor recently
infected with AIDS therefore will test
negative on the standard test, but will be capable of transmitting
AIDS to the recipient of the donation. A blood donor receiving a
blood product from someone infected with the AIDS virus has almost a
100% guarantee of becoming infected. Some of these people, in turn,
will infect other members of their family with the AIDS virus.
Elizabeth Glazer is an example of a widely publicized case of a woman
who received a single AIDS infected unit of blood and then, in turn,
infected two of her children.
To prevent this problem, in 1985, Daxor's Idant laboratory division
started the first quarantine in the United States (and possibly the
world) for sperm donors whereby a sperm donor's semen was stored for
a minimum of six months and the donor retested a second time. Most
AIDS infected individuals will develop antibodies within 6 months so
that a second negative test would indicate that the six month old
semen was AIDS free. This concept was adopted by the American
Association of Tissue Banks in 1986, and is now the law in states
which regulate sperm banking. In 1987, Idant adopted a similar
concept for its blood bank, encouraging individuals to be retested so
that their blood would meet the criteria for "quarantined blood".
Daxor was the first blood bank in the United States to offer this
service. It is the only blood bank in New York State to provide such
blood and may possibly be the only facility in the United States
providing this type of blood. At the present time, there is a 95%
chance that an individual will require a transfusion within one's
lifetime. The utilization of autologous storage combined with a
family blood program, could reduce the risk of donor exposure by over
90%.
There is an important parallel between sperm banking and blood
banking. In the 1970's, Idant was alone in advocating frozen semen
in the use in artificial insemination. It was not until the 1980's
when the safety and advantages of sperm banks (whereby donors could
be properly tested before their semen was released) was appreciated
by the general medical community. Today, frozen semen is the
standard in the land and the use of untested fresh donor semen is
illegal in many states.
To date, privately held blood banking companies focusing primarily on
storage facilities have not been profitable. The many factors behind
the slow acceptance of the concept have been: 1) Monopoly practices
of tax-exempt blood suppliers. 2) The use of exclusive supply
contracts between these organizations and their hospitals. Some of
these contracts may be in violation of fair trade practices. 3)
Enforcement activities of some regulatory agencies which provide
extremely difficult entry barriers to innovators wishing to provide
competing or alternative services. Some individuals within the
regulatory agencies have been openly and aggressively hostile towards
services such as family blood banking which Daxor provides. The
passage of "Safe Blood" acts by various states is a major step
towards protecting the rights of the public. We believe a federal
law will provide uniform protection to patients throughout the United
States.
It is a goal of the company to develop a network of Family Frozen
Blood Banks which will also have sperm banking capabilities
throughout the United States. The Company believes that as the
public becomes increasingly aware of the deceptions about the safety
and inadequacy of current blood transfusion practices, that
individuals will seek to provide this essential form of insurance for
themselves. The Company expects to make this type of expansion move
when blood banking operations move closer to a break-even point. The
Company would consider an earlier expansion move if there was
reasonable assurance of additional financial backing during a phase
when operations would be expected to operate at a deficit. The
Company remains mindful of its early years when it opened multiple
sperm banking branches with inadequate capital to sustain the
branches.
Measurement of Human Blood Volume
The diagnostic data to be provided by the Company's blood volume
measurement equipment would be usable by physicians in a variety of
medical fields, including critical care, cardiology, pediatrics and
surgery, to identify and quantify the amount of blood loss the
patient has suffered, to determine the percentage of red blood cells
or hemoglobin the patient has lost, and to help to determine the need
for continuing treatment. An estimated 12 million blood transfusions
per year are performed in U.S. hospitals. The Company believes that,
if its blood volume measurement equipment were available in a
hospital, it would be feasible for the hospital to routinely perform
a blood volume test on every patient for whom a blood transfusion
appeared to be indicated. Blood volume measurement would also
provide a valuable diagnostic tool in treating certain types of heart
and kidney disease. At the present time multiple medical conditions
are associated with inadequate blood volume and occasionally excess
blood volume.
The ability to accurately measure the quantity or volume of blood in
an individual would be expected to be particularly useful in surgical
situations. The standard methods of estimating the amount of blood
an individual has are called the hematocrit or hemoglobin.
These tests actually measure the thickness of or quantity of red
blood cells in an individual's blood rather than the blood volume
itself. Blood is composed of cells, primarily red cells for carrying
oxygen, white cells for fighting infections, and platelets, small
cells used for clotting purposes. The remainder of the blood is
called the plasma, which is primarily water in which are suspended
the cells with various clotting factors and special blood proteins.
When an individual bleeds, the body will attempt to maintain the same
total blood volume by the transfer of water from other parts of the
body into the circulatory system. This process causes a thinning of
the blood called anemia. The thinning process may take hours or many
days to occur or may never occur completely. When the blood thinning
process has not occurred completely, the hematocrit will overestimate
the amount of blood the individual actually has.
The more rapid the blood loss, the less likely the hematocrit will
reflect the true picture of the patient's blood volume. For example,
an individual who has just donated a pint of blood (usually over a
6-10 minute period) obviously has one pint less blood at the end of
the donation than at the beginning. Yet a hematocrit measurement at
the beginning and at the end of the donation may be almost unchanged,
therefore giving no indication that the individual has just lost a
pint of blood. Surgery is a situation in which individuals lose
relatively large quantities of blood in a short time. Despite
infusion of saline (salt water) and other blood substitutes, the
hematocrit is frequently very misleading at the end of surgery as to
the quantity of blood lost. Patients may have lost 25 to 35 percent
more blood than estimated from hematocrit measurement and the
weighing of blood-soaked sponges. Patients losing more than 3 pints
may have circulatory collapse when undergoing anesthesia or even the
loss of 1-2 pints in an individual with heart disease will have
serious consequences.
The Blood Volume Analyzer, BVA-100, will permit patients to have
their blood volume measured to within an estimated accuracy of +2%
prior to surgery. It will also permit estimates of +5% during
surgery within 20 minutes and +2% within 35 minutes.
The instrument will also calculate the normal blood volume for a
specific individual. The normal blood volume for an individual is
related to a complex interplay of height and weight. The instrument
will provide these calculations. The instrument will calculate the
deficit or excess of both the red cells and the plasma. The
provision of this type of data in the opinion of the Company will
provide critical information in a timely fashion not only in surgery
but in other conditions such as heart failure and kidney failure.
The Company has developed a special injection kit which is used with
the machine for each test. The injection system will be submitted
for patent protection. The Company, in 1991, received a U.S. patent
on the instrument itself and 12 European patents the following year.
The isotope has already been approved for blood volume measurement by
the FDA. The instrument could theoretically be used without the kit,
but then the user would need several hours for results. In addition,
the costs of preparing a kit substitute would most likely be greater
to any user than the purchase cost of the kit itself. The cost of a
kit to hospitals is estimated to be about 1/5 of the cost which a
hospital would charge for the test.
The Company believes that the most significant market for its blood
volume measurement equipment consists of the approximately 8,000
hospitals and large clinics in the United States and other hospitals
outside the U.S. The Company believes that there is an international
market of 10-14,000 potential users of its BVA-100. In addition,
many physicians conducting extensive practices in cardiology,
radiology or internal medicine might purchase equipment and related
test kits for diagnostic use.
The Company plans to demonstrate its blood volume equipment at trade
shows across the United States and to market the equipment to the
nation's hospitals on both an outright sale and lease basis. The
Company will use its own capital to develop lease programs where
hospitals will not purchase the equipment, but will commit to use a
minimum number of kits per week. This marketing approach has been
successfully used by other medical technology equipment
manufacturers. The Company may possibly be in a position to market
the BVA-100 overseas before final approval in the United States. In
addition, the Company may attempt to enter into distribution
contracts with one or more large hospital supply companies. The
Company will train hospital technicians to utilize its products and
expects to supply test kits to users of its equipment on a continuing
basis.
The Company will initially manufacture its instrument on a
subcontract basis. It plans to establish service centers and
currently plans to manufacture its own kits.
Patent and Copyright Protection
The Company in 1991, after a five-year application period, received a
United States patent on its blood volume analyzer. This is the only
patent ever issued for an instrument dedicated to the measurement of
total human blood volume for a specific individual. In 1992, the
Company received a European patent covering 12 countries. The
instrument is designed to work with a kit to be manufactured by the
Company. It is theoretically possible to use the blood volume
analyzer without the kit by preparing the reagents used for the test.
However, the cost and time for such preparations would be
uneconomical and it is unlikely that a purchaser of the instrument
would use it without purchasing the reagent kit. The Company is in
the process of obtaining patents on a disposable kit specifically
designed to be used with the instrument. The Company will apply this
year for patent protection on several features of its kit. The
Company has explored a number of variations of the kit and recently
successfully completed key tests on the final version of the kit.
Idant Laboratory Division
Idant pioneered both the technology and the commercial application of
long-term preservation of human sperm for use in artificial
insemination. The division provides frozen semen and services to
physicians worldwide. As of February 1, 1994, Idant held
approximately 60,000 human semen units in long-term storage at its
central New York City facility and is in the process of obtaining
additional space for expansion purposes. The Company maintains the
largest human sperm bank in the U.S. A decrease in the number of
adoptable children because of increased birth control and abortion,
and favorable publicity received by Idant have contributed to an
increase in the number of patients and physicians seeking to utilize
donor semen collected and stored by Idant in its sperm banking
facilities.
Use of Frozen Sperm for Artificial Insemination by Donors
Idant, in 1985, was the first semen bank to institute an AIDS
quarantine period for frozen semen. In 1989, New York State and a
number of other states enacted laws requiring sperm banks to freeze
and quarantine sperm for a minimum of six months with donors being
tested at the beginning and at the end of the six-month period. By storing
semen from a large cross-section of sperm donors, Idant can closely
match the physical characteristics of the sperm donor (the Company
maintains a complete physical description of each donor on file and
matches multiple physical characteristics and additional special
characteristics sought by the family) to those of the sterile father.
The Company also provides, on request, special screening for rare
hereditary recessive genetic traits. The increased likelihood of a
child who resembles his recipient father can make the child, who
results from artificial insemination, much more psychologically
acceptable to the father. In February, 1988, the Centers for Disease
Control and the American Fertility Society both officially endorsed
frozen semen as the only recommended form of semen for use in
artificial insemination.
By eliminating the requirement of immediate donor availability, a
physician utilizing frozen semen can more precisely match ovulation
and insemination times. In addition, the use of frozen semen may
enable a couple to utilize the same donor for future children,
regardless of the availability of the donor at the time they desire a
future child.
The Company is very selective in its choice of donors and estimates
that only 5 - 10 percent of all donors are ultimately accepted as
semen donors. Idant recruits these donors from the approximately 130
colleges and schools of advanced learning in the New York
metropolitan area and does not accept donors from the public at
large. Prospective donors are also screened on the basis of a
three-generation family medical history and a battery of over 30
blood tests, including tests for AIDS and multiple forms of
hepatitis. All semen specimens are checked for viability of sperm,
cultured to insure germ-free condition and screened for various forms
of hereditary and metabolic disorders. Idant also screens semen for
genetic diseases common to persons of the prospective donor's racial
or ethnic background. The Company, upon request, also screens for
rare genetic traits. Doctors who use fresh semen face potentially
large lawsuits from patients who become infected. Fresh semen always
involves the risk of infection.
The FDA is now instituting semen bank regulations and, of course,
will outlaw the use of fresh semen, except for very special
situations. More importantly, the advent of stringent Federal
regulations will work to Idant's advantage as smaller, marginal semen
banks find the cost of compliance prohibitive. The effects should
mirror the closing of almost two-thirds of the existing semen banks
when states enacted their own regulations.
Storage of Sperm for Personal Use
The Company's sperm bank facilities contain stored sperm which should
remain viable for many years. Semen stored for almost 20 years, at
minus 321 degrees, has shown minimal change (the Company has had
documented normal births from semen stored 16 years). The Company's
facilities are used by men who, for a variety of reasons, anticipate
impairment of their ability to father children and by men who have
been found to be marginally fertile. These men may now be able to
have children by use of techniques that increase their fertility by
treating their sperm to artificially inseminate their partners. The
facilities are also used by men who plan to undergo sterilization by
vasectomy, but who believe that they might desire children in the
future. Artificial insemination using stored sperm is much more
effective and less expensive than present techniques of vasectomy
reversal. In addition, patients with a variety of diseases,
including many types of cancer, store semen prior to undergoing
treatment by chemotherapy or radiation. By utilizing cryogenic
preservation facilities, these patients, who are frequently in their
teens or twenties, will be able to father their own children after
treatment despite the high risk of sterility and birth defects
associated with treatments. The Company receives referrals for these
services from multiple sources, primarily physicians.
Different technologies and methods have been used for freezing semen.
Historically, sperm banking had a poor reputation for effective
preservation of human semen. However, the Company's preservation
techniques and methods overcame the difficulties associated with
freezing human semen. Dr. Jack Shuber of Mount Sinai Hospital of
Toronto reported almost identical pregnancy rates with frozen semen
as with fresh semen based on treatments of 193 patients verifying the
effectiveness of Idant techniques. In addition, Dr. I. Ray King of
Knoxville, Tennessee, completed an independent study which showed
markedly higher pregnancy ratios in artificial inseminations using
Idant semen as opposed to semen obtained from competing semen bank.
In Dr. King's study, Idant semen produced a 17.5% rate of pregnancy
per insemination cycle and a 67.1% cumulative percentage of
pregnancies over 11 cycles, as opposed to results of 10.3% and 42.3%,
respectively, for its competitor. These results are significant when
compared to studies using frozen semen from a variety of sources,
which showed pregnancy rates from artificial insemination by thawed
donor sperm to be much lower than results of artificial insemination
by "fresh" donor sperm. Idant periodically spot-checks its bank
storage to test viability of selected specimens of stored semen;
results of these spot-checks have shown sperm samples held in excess
of 18 years to have almost no loss in viability or change in
condition. In fact, successful pregnancies have occurred with such
sperm.
A major, recent development has been the ability to achieve pregnancy
by injecting a single sperm into a human egg. The fertilized egg is
then placed within the uterus. This means that individuals with very
low sperm counts may still be able to have their own children.
The Company is engaged in an area which requires a high degree of
diligence. The Company utilizes a semen identification and quality
control program which has 21 check points for identification and
verification from the time the specimen is received from a patient
storing his specimen and its eventual use by the patient's wife. A
key part of the identification system is a numbering and labeling
system in which the patient's specimen receives a unique (used only
once) code number. The patient participates in the identification
and labeling of his own specimen. This unique number is placed on
the patient's aluminum storage canister and on the plastic straw
containers which contain the patient's semen. The patient collects
his semen in a special container with this code number. The
patient's semen is mixed with a cryoprotective agent which prevents
damage when the specimen is frozen. There is only a single physical
transfer from the collection container to the storage straws. There
are a total of 21 check points before the specimen is ready for
long-term storage. Idant's system is designed so that the original
storage straws can be used directly for insemination. When specimens
are shipped to the physician there are an additional five check
points with two (2) initial checks at the time of receipt of the
specimen. Prior to use the physician should go through another
triple check: (a) the shipping documents (b) the tags on the semen
holder which contain the patient's code number, his name and social
security number and most significantly (c) the plastic straws
themselves. In fact patients can participate with their physician in
this checking process. Utilized as designed the Idant semen
collection system is virtually fool-proof.
Proprietary Technology and Procedures
The Company uses a customized carousel system in its sperm bank
storage system. This permits retrieval of specimens from lower
levels without removal of upper specimens. Only a few
other sperm banks in the U.S. are known to have such a system. Most
other banks use a "rack and cane" pull-up system which requires
removal of upper specimens from the tank to retrieve specimens at
lower levels. In such a bank, a specimen may be exposed to a
temperature change of - 321 F (the temperature of the liquid nitrogen)
to room temperature of + 78 F more than 100 times during its storage
lifetime. This will result in a gradual degradation of the
specimen. In the Idant system the specimen remains under liquid
nitrogen almost continuously while in storage.
Research into preservation of human sperm has shown that without
tightly controlled conditions, a marked drop-off in viability of
sperm (i.e., the number of live, active sperm in a sample which could
be expected to fertilize an egg) occurs within one to two years of
storage. In addition, frequent handling of specimens decreases the
viability of sperm. Based on this research, Idant has developed
technology and complex procedures designed to minimize exposure of
the sperm to the dangers of rise in temperature and handling. For
its long-term sperm storage, Idant utilizes a non-patented
proprietary technique of staged freezing combined with the use of
Cryopreservation agents, prior to storage of the semen in liquid
nitrogen at -321oF. Levels of liquid nitrogen in its sperm bank
storage tanks are continuously monitored. The liquid nitrogen tanks
can maintain their temperature for over one week without additional
liquid nitrogen. The Company has five technicians on air call during
night hours as back-up for emergencies. The freezing systems do not
require electric power for maintenance of temperature levels. In
addition, the Company has established and follows a complex procedure
for collection, processing and retrieval designed to minimize the
handling of specimens. The Company also uses liquid nitrogen in
connection with its shipments of sperm as a means of maintaining
stable, low temperature. The Company believes that its quality
control and strict adherence to shipping, storage and handling
procedures designed to minimize the exposure of its stored sperm to
changes which would impair viability are major reasons for Idant's
recognition in the industry as the major source for effective, viable
frozen semen.
Marketing
Idant markets its services directly to physicians, primarily through
attendance at medical trade shows and conferences at which its
services are described. In addition, Idant offers education seminars
in the use of frozen semen and advances in artificial insemination to
medical and technical audiences and participates in numerous medical
conferences. The Company's work in both semen preservation and blood
banking has been featured multiple times on all national television
networks as well as international networks and in national magazine
and major newspapers.
Consultation, Laboratory Management and Training Program
Daxor provides consultation with regard to the requisite personnel,
equipment and facilities for small specialized medical laboratories
and offers, on a contract basis, to design, staff and manage such
laboratories. Where Daxor provides management services for
laboratories on an on-going basis, it employs and supervises
laboratory personnel, establishes and maintains procedures and
provides other continuing services. On its own premises, Daxor
operates a small pathology laboratory which services clients in the
medical field.
Competition
There are at least 150 sperm banks in the United States operated by
either commercial entities or by academic institutions. The Company
believes that increased public awareness of the efficacy of frozen
semen stored by it along with recent medical journal articles
emphasizing the necessity for careful screening of donors for
artificial insemination will result in an increasing use of frozen
semen for this purpose. The Company believes that Idant's reputation
should give it a competitive advantage over other sperm banks in the
United States, although it is anticipated that competition may also
increase. Mitigating this increase in competition is the expected
fallout in the industry following the inaction of FDA regulations.
Blood Banking services are provided by a broad spectrum of
organizations. Approximately one-half of the blood supply used for
transfusions is supplied by the American Red Cross and its branches.
The other portion is supplied by various other tax-exempt and
for-profit organizations. Some hospitals operate their own donor
services, but require the services of outside vendors such as the Red
Cross for adequate supplies of blood products. The current practice
in the blood banking field has been to split blood into various
components such as red cells, platelets and plasma, which are then
sold as separate units. Components of the plasma are usually sold to
pharmaceutical companies which manufacture separate clotting and
diagnostic factors. All of these groups are in a highly competitive
market in which blood products are sold to multiple end-users and
manufacturers. There is a severe shortage of blood and approximately
1/3 of the blood used in the New York region is imported from
overseas. The development of a national autologous blood program is
viewed as a financial threat by some of these organizations. In
addition, there are other companies which have indicated an interest
in long-term storage of blood and have started as many as 45 small
storage facilities at various sites in the U.S. Many of these have
already gone out of business, largely the result of inadequate
capitalization. The Company is unaware of any organization which at
the present time has a development plan for a national banking system
similar to the Company's program. None of the companies currently in
the field of frozen autologous blood known to the Company are
believed to have more than a relatively short experience in the field
of cryobiology, whereas the Company's experience dates from 1971.
The medical technology market is intensely competitive. There are,
however, no instruments manufactured or marketed which perform
semi-automatic blood volume analysis, such as the BVA-100. The
Company believes that its receipt of a United States patent and
European patent for its blood volume analyzer provides significant
protection against any future potential competition in the blood
volume analysis field. The Company believes that its main hindrance
to market acceptability will be the need to demonstrate that its
blood volume measurement equipment is capable of producing accurate
data on a cost effective basis. The Company plans to sell its
instrument at approximately $30,000 per instrument. Test kit costs
will be modest relative to cost of a transfusion and the critical
information derived from the test.
Regulation
Idant Sperm Bank was first licensed by New York City in 1971 and its
Blood Bank in 1985. In 1989, Idant's blood bank was temporarily
closed for four months after a number of false charges by an
inspector of the New York City Department of Health. Following a
hearing in the fall of 1989, Idant had its full Blood Bank license
restored by the New York City Department of Health. The City
inspector primarily responsible for the false charges against Idant
took the Fifth Amendment against self-incrimination five times just
prior to the hearings being stopped by mutual agreement; he was later
dismissed. In January, 1990, the City restored all Idant's licenses
and the Company has had its usual good relationship with the City
Health Department since that time. The New York State Department of
Health unexpectedly removed Idant's state permit in January 1990 just
after New York City had restored its blood bank permit. The Company
has retained attorneys to obtain full state licensing. The Company
believes that the difficulties with the State Department of Health
stem from only one or two individuals within the department who have
taken inappropriate action against the Company. The Company's
president, Dr. Joseph Feldschuh, has been an outspoken critic of the
blood banking establishment and has written a book entitled "Safe
Blood" published by the Free Press division of the Macmillan
Publishing Company detailing deficiencies in the current blood
banking system. The Company believes that this is a significant
factor behind some of the difficulties that have occurred in
obtaining its full licensure. In November 1991, the Company obtained
a State license for its sperm banking operations, but still has not
received its State blood banking license. The Company recently
instituted legal action against the New York State Department of
Health in an effort to redress these and other issues. The Company
has, for several years, studiously avoided a legal confrontation but
is now prepared to vigorously demand these remedies since they are
not forthcoming from this regulatory agency on a voluntary basis.
The lack of State licensure currently impedes marketing of its
services outside the City. The Company can, however, ship blood out
of the city should the need arise - sperm banking services are
unaffected. Idant been continuously licensed within New York State
by the FDA since 1985. In 1994, the Company is applying for a Federal
Interstate blood banking license, which will permit it to routinely
ship blood throughout the United States and to develop branches in
different states for the shipment and storage of blood.
Idant is subject to regulation by the New York State Department of
Health and the New York City Department of Health, including its
Bureau of Laboratories. In addition, Idant is subject to federal
regulations administered by the Centers for Disease Control in its
shipment of semen across state lines. Idant is a fully accredited
member of the American Association of Blood Banks. Daxor's blood
banks are subject to various regulations of New York State, New York
City and the FDA.
The development, testing, production and marketing of medical devices
are subject to regulation by the FDA under the Federal Food, Drug and
Cosmetic Act, and may be subject to regulation by similar agencies in
various states and foreign countries. The governing status and
regulations generally require manufacturers to comply with regulatory
requirements designed to assure the safety and effectiveness of
medical devices. The key factor behind the delay in the company's
Blood Volume Analyzer has been the lack of availability of Albumin I-
131.
Employees
On February 1, 1995 the Company had 48 employees. None of the
Company's employees is covered by a collective bargaining agreement.
The Company believes that its employee relations are good.
Item 2. Properties
In February 1992, the Company signed a thirteen year lease for a new
facility at the Empire State Building. The initial space was for
6,000 square feet, with option provisions in the lease for up to
24,000 square feet. Future minimum rental payments under this
non-cancelable lease are as follows: 1994 - $168,832, 1995-$168,832,
1996 - $168,832, and 1997 - $168,832. The lease also contains CPI
escalation clauses. The new facility was completed in July of 1992
and the Company moved in that same month. In March, 1994, the Company
provided official notice to the landlord to obtain an additional
1,000 square feet and expressed an interest in obtaining an
additional 3,000 square feet of adjacent space.
Satellite laboratories under contract are maintained on the premises
of the clinics and surgi-centers of the Company's clients. No rent
is charged, and the Company bills clients for consultation and
laboratory services as rendered. All equipment used by the Company
is owned by the Company.
Item 3. Legal Proceedings
The Company, as a result of the Resimmo offer in July 1992, has had
two class- action lawsuits initiated against it. One group of
investors who purchased stock allege, in essence, that Resimmo was
non-existent and that the offer was concocted by the Company's
President, Dr. Joseph Feldschuh, and Ex-Vice President, Allen Gelb.
Dr. Feldschuh had never sold any shares of Daxor in the 18 year
period prior to the offer including the period up to the time when
the offer was withdrawn by Resimmo. The second action is by a group
of investors who sold the stock short and also claim that Resimmo is
non-existent but names all officers and a single director. The
Company believes there is no merit to these lawsuits.
In 1994, director Stephen Moss who was the only member of the Board
of directors who sold any stock suring the period in question, had
the charges against him dropped. All other members of the Board and
execcutives named, neither bought nor sold stocks.
The Company is considering instituting legal action to countersue the
claimants for frivolous claims. The Company feels that the above
lawsuits are without merit.
The Company is involved in several proceedings with the New York
State Department of Health relating to its licenses to operate a
laboratory and sperm and blood bank. These actions are as follows:
1. Idant Laboratories, et al. v. State of New York
Department of Health, et al. (Supreme Court, New York County; Index
No 22039/92); Idant Laboratories, et al. v. State of New York
Department of Health, et al. (Supreme Court, New York County; Index
No. 105052/94. Idant brought suit in these two Article 78
proceedings, now consolidated, challenging as arbitrary and
capricious the Health Department's refusal to re-issue Idant's Blood
Bank and Clinical Laboratory permit for the permit years in question.
These matters are under consideration.
2. In the Matter of Daxor Corp. as Owner Of Idant
Laboratories, (State of New York Department of Health Administrative
Tribunal). The Department of Health instituted an administrative
proceeding against the Idant Semen Bank in February 1994 asserting
violations and seeking fines and revocation of the Semen Bank's
provisional licenses. Daxor has maintained that the individuals
involved were client depositors storing semen to have their own
children, and not donors. Client depositors are usually not required
to undergo tests in order to have their own children. Certain state
officials have admitted that the charges involving anonymous semen
donors with respect to alleged lack of testing were false. This
proceeding is ongoing, with hearing dates scheduled in April and May
1995.
3. Daxor Corp., et al. v. State of New York Department of
Health, et al. (Supreme Court, New York County; Index No. 13181/94).
Daxor brought this action seeking a declaration that certain State
semen bank regulations, including those at issue in the
administrative proceeding discussed above, were constitutionally
infirm in that are vague, ambiguous and internally inconsistent.
Defendants have moved to dismiss the suit; plaintiffs have
cross-moved seeking to have defendants' motion converted to one for
summary judgement and upon conversion, to have summary judgment
granted to plaintiffs. These motions were returnable on March 31,
1995.
4. Daxor Corp., et al. v. State of New York Department of
Health, et al. (Supreme Court, New York County; Index No.
107564/95). Daxor instituted this Article 78 proceeding challenging
as arbitrary and capricious the determination of the State Health
Department, received by letter dated March 16, 1995, to revoke all of
the Daxor entities' existing licenses. Daxor has until July 1995, to
respond.
5. Daxor in August 1993, successfully defended charges by
the New york City Health Department against its Clinical Laboratory
permit, with the exception of semen analysis permit which was blocked.
New York City has never regulated semen banks, but only the State.
Daxor is challenging on the grounds that the state pre-empted the
City in this area. As of July 1994,the city no longer regulates
semen analysis or clinical laboratories and has transferred this
function to the state Health Department. This action has been
continued on a technical basis by Daxor.
Daxor intends to file an anti-racketeering (RICO) suit against
several members of the New York State Department of Health, as well
as other individuals and institutions, for their actions in seeking
to obstruct Daxor's blood banking program relating to long term blood
storage. Daxor is the only facility in New York State to provide
long term frozen blood storage (up to ten years) for individuals and
members of their family to store their own blood. Daxor also
provides frozen blood from donors who have been tested initially and
at the end of a six month period for Hepatitis and AIDS. In
contrast, blood from the general donor supply is tested only once and
used within weeks. Sperm donors are tested initially and again after
six months before their donations are released to recipients.
Similar protection is not available for blood transfusion recipients.
The AIDS and Hepatitis viruses may be undetectable for up to six
months in infected donors whose blood will test normal and be
transfused despite the presence of hidden infection. Daxor also
provides multiple units of blood from a single donor, as opposed to
receiving the same quantity of blood from multiple donors. Daxor
intends to show that there has been a collusive action to prevent
these types of safer blood banking services from being offered to the
general public. Daxor believes that the false charges against its
sperm bank were deliberate and calculated to disrupt and destroy its
blood banking activities.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of 1994.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The common stock is traded on the American Stock Exchange under the symbol DXR.
<TABLE>
<CAPTION>
1993
High Low
<S> <C> <C>
First Quarter...................... 8 6 1/4
Second Quarter..................... 8 5/8 5 1/4
Third Quarter...................... 7 5/8 5 5/8
Fourth Quarter..................... 7 3/8 5 7/8
1994
High Low
First Quarter...................... 8 1/8 5 3/4
Second Quarter..................... 7 1/2 6
Third Quarter...................... 6 5/8 5 7/8
Fourth Quarter..................... 6 5 1/2
</TABLE>
On March 26, 1995, the Company had approximately 605 holders of
record of the Common Stock. The Company believes there are
approximately 2500 beneficial holders.
The Company has never paid any cash dividends on the Common Stock and
does not intend to do so in the foreseeable future. Any future
dividends will be dependent upon the Company's earnings, financial
condition and other relevant factors.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected financial
data with respect to the Company and is qualified in its entirety by
reference to the financial statements and notes thereto, from which
these data were derived, included elsewhere in the report.
Selected Operations
Statement Data:
[CAPTION]
Year Ended December 31,
<TABLE>
1994 1993 1992 1991 1990
<C> <C> <C> <C> <C>
Operating revenues $ 1,844,418 $ 1,926,415 $ 1,967,588 $ 1,970,325 $ 2,075,449
Dividend income 2,157,735 2,164,691 3,035,478 1,967,930 2,387,727
Gains (losses) on sale
of investments 584,982 708,407 1,128,650 (3,394,562) 1,400,927
--------- --------- --------- ----------- ---------
Total revenues 4,587,136 4,799,513 6,131,716 543,693 5,864,103
--------- --------- --------- ----------- ---------
Costs and Expenses:
Operations of
laboratories 1,016,832 998,401 867,994 867,760 1,010,023
Selling, general and
administrative 1,585,533 1,309,105 1,137,647 920,932 877,498
Interest expenses, net
of interest income 11,116 181,353 392,591 577,697 621,150
--------- --------- --------- ----------- ---------
Total costs
and expenses 2,613,481 2,488,859 2,398,232 2,366,389 2,508,671
--------- --------- --------- ---------- ---------
Net income or (loss)
before income taxes 1,973,654 2,310,654 3,733,484 (1,822,696) 3,355,432
Provision for
income taxes 165,519 160,309 302,424 36,431 425,074
--------- --------- --------- --------- ---------
Net income $ 1,808,135 $ 2,150,345 $ 3,431,060 $(1,859,127) $2,930,358
========= ========= ========= ========= =========
Weighted average
number of shares
outstanding 5,122,188 5,154,955 5,179,305 5,245,363 5,271,510
--------- --------- --------- --------- ---------
Net income per common
equivalent share $0.35 $0.42 $0.66 ($0.35) $0.56
========= ========== ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Selected Balance
Sheet Data: Year Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Working capital $28,739,806 $23,966,425 $20,586,020 $18,976,739 $20,837,728
Total assets 35,012,638 29,112,282 32,634,921 29,205,570 32,082,191
Total liabilities 5,813,458 4,681,643 10,339,973 10,107,865 11,097,901
Shareholders'
equity 29,199,180 24,430,639 22,294,948 19,097,705 20,984,290
Return on equity* 7.40% 9.64% 17.97% (8.85%) 16.08%
</TABLE>
* Return on equity is calculated by dividing the Company's net income
for the period by the shareholders' equity at the beginning of the
period.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Idant Laboratories contributed 82%, 82% and 81% of operating
revenues in 1994, 1993 and 1992 respectively with the remainder
coming from contract laboratory work. The Company has been injured
by false claims by New York State Health Department Officials
concerning its anonymous semen donor program. The Company has had a
slight decrease in its revenues because of increasing competition in
the sperm banking field and the lack of significant revenues from its
autologous blood bank. The Company has encountered intense
obstruction from some elements of the blood banking community in its
efforts to expand the concept of autologous blood banking. In
addition, the obstruction by some elements of the regulatory agency
in New York State have also had an effect in lowering operating
revenues. The Company is planning a vigorous marketing campaign when
all its licensure problems are resolved. Management anticipates a
return of the upward trend in operating earnings based upon favorable
publicity, aggressive marketing, and the recovery of the nation's
economy. The Company in 1995, acquired a 35.2% interest in U. S.
Cryobanks in Altamonte Springs, Florida, a suburb of Orlando.
YEAR ENDED DECEMBER 31, 1994 AS COMPARED TO DECEMBER 31, 1993
Total revenues were $4,587,135, down from the $4,799,513
reported in 1993. Dividend income earned on the Company's
securities portfolio was $2,157,735, a decrease from the
$2,164,691 reported in 1993. Gains on the sale of investments were
$708,407 in 1993 as compared to $584,982 in 1994. Net income
before income taxes was $1,973,654 vs. $2,310,654 in 1993.
YEAR ENDED DECEMBER 31, 1993 AS COMPARED TO DECEMBER 31, 1992
Total revenues were $4,799,513, down from the $6,131,716
reported in 1992. Dividend income earned on the Company's securities
portfolio was $2,164,691, a decrease from the $3,035,478 reported
in 1992. Gains on the sale of investments of $ 1,128,650 in the
prior year were replaced by gains of $708,407. Net income before
income taxes was $2,310,654 vs. $3,733,484 in 1992.
LIQUIDITY AND CAPITAL RESOURCES
The Company's management has pursued a policy of maintaining
sufficient liquidity and capital resources in order to assure
continued availability of necessary funds for the viability and
projected growth of all ongoing projects.
The Company continues to maintain its diversified securities
portfolio comprised primarily of high-yielding electric utility
preferred and common stocks. The income derived from these
investments has helped to offset increases in operating, selling and
general and administrative expenses and thus to maintain our fees at
a competitive level. The portfolio also provides for the
availability of funds as needed for new projects and the expansion of
existing sources of revenue.
At December 31, 1992, the Company's short term debt was
$10,339,973 vs. $4,681,643 in 1993 and $5,813,458 in 1994. At year
end 1992, shareholders' equity was $22,294,948. At year end 1993,
the Company had shareholders' equity of $24,430,639. At year end
1994, shareholders' equity was $29,199,180. Shareholders'
equity has thus increased $6,904,232 over the two year period
from year end 1992.
Net unrealized holding gains on available-for-sale securities
are not reflected in shareholders' equity. The sum of
shareholders' equity and net unrealized capital gains on available
for sale securities in 1994, is $32,669,608.
The blood volume instrument is in the last stages of testing
prior to receiving FDA approval. Production by a subcontractor has
been provided for, and there are sufficient funds available for its
manufacturing and marketing when the approval is forthcoming. The
Company has been blocked from proceeding towards approval of its
Blood Volume Analyzer because of the lack of availability of an FDA
approved supplier of Albumin I-131. In early 1994, the Company
acquired the rights of reference to FDA-approved NDA's from two
former manufacturers of Albumin I-131. The Company may become a
manufacturer of the isotope and subcontract part of the process. The
strategy of subcontracting vs. full scale manufacturing will result
in significant cost savings. The Company believe from recent
conversations with Iso-Tex Diagnostics of Texas that they will
receive the necessary licensure soon. This would enable the Company
to complete the final testing on the BVA-100.
A comprehensive national network of autologous blood banks is
still in the offing, pending the outcome of ongoing negotiations with
interested parties. Should these plans proceed as expected, the
Company might require additional financing to sustain such operations
until they become profitable, although present capital is sufficient
for the initial phases.
Year end 1994, finds the Company in a satisfactory financial
position with adequate funds available for its immediate anticipated
needs. However, should the opportunity arise for the Company to
proceed with its planned expansion as a nationwide network of blood
banks, there would be a need for additional capital.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and the schedules listed on the index
to Financial Statements and Schedules are filed with and as part of
this report.
Item 9.DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
Not applicable.
PART III.
In connection with the 1995 Annual Meeting of Shareholders of
Registrant, Registrant intends to furnish shareholders with proxy
materials which set forth the information required by Items 10, 11,
12, and 13 of Part III. Copies of such material will be duly filed
with the Securities and Exchange Commission pursuant to rule 14a-6
promulgated under the Securities Exchange Act of 1934, as amended,
not later than 120 days after the end of the fiscal year covered by
this Annual Report on Form 10-K.
PART IV.
Item 14. FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES,
EXHIBITS, AND REPORTS ON FORM 8-K
(a) Financial Statement, Financial Statement Schedules and
Exhibits filed.
1. Financial statements and schedules shown by index on
page 21.
(b) DAXOR filed no current reports on Form 8-K during the
last quarter of the fiscal year ending December 31, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereto
duly authorized.
DAXOR CORPORATION
by:
/s/ Joseph Feldschuh M.D.
Joseph Feldschuh, M.D.
Chairman, President
and Chief Executive Officer
Dated: 3/30/95
Pusuant 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 and in the capacities and on the dates
indicated.
Signature Title Date
/s/ Joseph Feldschuh MD President and Director March 30, 1995
Joseph Feldschuh, M.D. (Principal Executive Officer)
/s/ Octavia Atanasiu
Octavia Atanasiu Corporate Treasurer March 30, 1995
Accounting Supervisor
(Principal Financial Officer)
Board of Directors:
Name Title
Dr. Joseph Feldschuh Chairman, President & CEO
Steven Moss Ph.D Director
James Lombard Director
Martin Wolpoff Director
Veronica Schwendemann Director
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereto
duly authorized.
DAXOR CORPORATION
by: /s/ Joseph Feldschuh M.D.
Joseph Feldschuh, M.D.
President and Chief
Executive Officer
Chairman of the Board
Dated: March 30, 1995
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 and in the capacities and on the dates
indicated.
Signature Title Date
/s/ Joseph Feldschuh President and Director March 30, 1995
Joseph Feldschuh, M.D. (Principal Executive Officer)
/s/ Hermogena O. Fajardo Vice President March 30, 1995
Hermogena O. Fajardo
/s/ Veronica Schwendemann Director March 30, 1995
Veronica Schwendemann
/s/ James Lombard Director March 30, 1995
James Lombard
Board of Directors:
Name Title
Dr. Joseph Feldschuh Chairman, President, & CEO
Stephen Moss Director
James Lombard Director
Martin Wolpoff Director
Veronica Schwendemann Director
DAXOR CORPORATION
Item 14(a) (1). Index to Financial Statements
The following statements and schedules of Daxor Corporation are
submitted herewith:
Page
Report of Independent Accountants................................... F-1
Consolidated Financial Statements as at December 31, 1994 and 1993
and for the three years ended December 31, 1992
Consolidated Balance Sheets.................................... F-2
Consolidated Statements of Income.............................. F-3
Consolidated Statements of Shareholders' Equity................ F-3
Consolidated Statements of Cash Flows.......................... F-4
Notes to Financial Statements....................................... F-5
Schedule I - Marketable Securities - Other Investments - Year ended
December 31, 1994................................................. F-9
Schedule IX - Short-term Borrowings - Years ended December 31, 1994
1993, and 1992.................................................... F-9
Schedule X - Supplementary Income Statement Information -
Years ended December 31, 1994, 1993, and 1992....................... F-9
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
not required under the related instructions, are inapplicable or the
required information is set forth in the financial statements filed
herewith, including notes thereto, and therefore have been omitted.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of Daxor Corporation:
We have audited the accompanying consolidated balance sheets of Daxor
Corporation and subsidiary as at December 31, 1994 and 1993, the
related consolidated statements of income, shareholders' equity and
cash flows for each of the three years in the period ended December
31, 1994. Our audits also included the financial statement schedules
listed in the Index at Item 14 (a) (1).
These financial statements and financial statement schedules are the
responsibility of the Corporation's management. Our responsibility
is to express an opinion on these financial statements and financial
statement schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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, such consolidated financial statements present
fairly, in all material respects, the financial position of Daxor
Corporation and subsidiary as at December 31, 1994 and 1993, and the
results of their operations and its cash flows for each of the three
years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles. Also, in our opinion, such
financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth herein.
Primoff Tarshis Weisen & Co.
Mineola, New York
March 27, 1995
F-1
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS DAXOR CORPORATION
- -----------------------------------------------------------------------------
<CAPTION>
CONSOLIDATED BALANCE SHEETS
December 31,
1994 1993
<S> <C> <C>
ASSETS
Current assets:
Cash ............................... $ 59,962 $ 262,299
Marketable securities at Fair Value
December 31, 1994 and December 31,
1993(Notes 1 and 2................ 33,598,931 27,637,852
Accounts receivable(Note 3)......... 215,831 213,865
Other current assets................ 472,307 302,819
Tax refunds receivable.............. 206,233 231,233
---------- ----------
Total current assets................ 34,553,264 28,648,068
Equipment and Improvements: (Note 4)
Storage tanks....................... 125,815 125,815
Leasehold improvements, furniture
and equipment..................... 592,240 554,731
Laboratory equipment................ 279,964 267,478
------- -------
998,019 948,024
Less accumulated depreciation and
amortization.................... (579,805) (525,425)
--------- ---------
Net equipment and improvements.... 418,214 422,599
Other assets........................ 41,160 41,615
Total assets........................ $ 35,012,638 $29,112,282
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------------------------------------------
Current Liabilities:
- -----------------------------------------------------------------------------
Accounts payable and accrued liabilities $ 15,682 $ 120,051
Loans payable (Notes 1 and 2)............ 3,864,605 4,501,639
Other liabilities (Note 5)............... 110,406 59,953
Deferred Taxes (Note 1).................. 1,822,765 0
--------- ---------
Total current liabilities............. 5,813,458 4,681,643
Commitments and contingencies (Note 6)
Shareholders' equity:
Common Stock par value $.01 per share:
authorized 10,000,000 shares: issued and
outstanding 5,067,630 shares December 31,
1994 and 5,153,830 shares December 31, 1993 53,097 53,097
Additional paid-in capital.................. 8,579,803 8,579,803
Net unrealized holding gains on available-for-
sale securities (Note 1).................. 3,470,428 0
Retained earnings........................... 18,051,094 16,242,959
Treasury Stock.............................. (955,242) (445,220)
------------ -----------
Total shareholders' equity............... 29,199,180 24,430,639
Total liabilities and shareholders' equity $ 35,012,638 $29,112,282
============ ============
</TABLE>
[FN]
See accompanying notes to financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
DAXOR CORPORATION CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Revenues:
Operating revenues............. $1,844,418 $ 1,926,415 $ 1,967,588
Dividend income................ 2,157,735 2,164,691 3,035,478
Gains (losses) on sale
of securities....... 435,198 1,419,360 508,454
Gains (losses) on sale of
options and commodities..... 149,784 (710,953) 620,196
--------- --------- ---------
Total revenues............... 4,587,135 4,799,513 6,131,716
--------- --------- ---------
Costs and expenses:
Operations of
laboratories (Note 7)........ 1,016,832 998,401 867,994
Selling, general,
and administrative........... 1,585,533 1,309,105 1,137,647
Interest expense net of
interest income (Note 8)..... 11,116 181,353 392,591
--------- --------- ---------
Total costs and expenses..... 2,613,481 2,488,859 2,398,232
--------- --------- ---------
Net income or (loss)
before income taxes ......... 1,973,654 2,310,654 3,733,484
Provision for income
taxes (Note 9)............... 165,519 160,309 302,424
--------- --------- ---------
Net income or (loss)........... $1,808,135 $ 2,150,345 $ 3,431,060
========== ========= =========
Weighted average number
of shares outstanding........ 5,122,188 5,154,955 5,179,305
========== ========= =========
Net income or (loss)
per common equivalent share.. $0.35 $0.42 $0.66
===== ===== =====
<FN>
See accompanying notes to financial statements
</TABLE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Consolidated Statements of Shareholders' Equity
Common Stock Issued and Outstanding
Three Years Ended December 31, 1994
Common stock Additional
Number Paid-in Retained Treasury
of Shares Amount Capital Earnings Stock
<S> <C> <C> <C> <C> <C>
Balance at
January 1, 1992 5,240,530 $ 53,097 $ 8,579,803 $10,661,554 $(196,749)
Net Income for
the year ended
December 31,1992 3,431,060
Purchase of
treasury stock (84,000) (233,817)
- ----------------------------------------------------------------------------
Balance at
December 31,1992 5,156,530 53,097 8,579,803 14,092,614 (430,566)
Net Income for
the year ended
December 31, 1993 2,150,345
Purchase of
Treasury Stock.. (2,700) (14,654)
- ----------------------------------------------------------------------------
Balance at
December 31,1993 5,153,830 53,097 8,579,803 16,242,959 (445,220)
Net income for
the year ended
December 31,1994 1,808,135
Purchase of
Treasury Stock.. (86,200) (510,022)
- -----------------------------------------------------------------------------
Balance at
December 31,1994 5,067,630 $ 53,097 $8,579,803 $18,051,094 $ (955,242)
========= ======== ========== =========== ===========
- -----------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
=============================================================================
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income or (loss)............. $ 1,808,135 $ 2,150,345 $ 3,431,060
------------ ----------- -----------
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation equipment and
improvements................... 54,380 46,790 30,822
Amortization - goodwill........ 5,607 5,607 5,606
Loss on abandonment of assets.. 0 0 13,673
(Gain) loss on sale of investments (584,982) (708,407) (1,128,650)
Change in assets and liabilities:
(increase) decrease in accounts
receivable..................... (1,966) (38,357) (27,496)
(increase) decrease in other
current assets net of silver
investment..................... (169,488) (147,579) 83,036
(increase) decrease in other
assets net of goodwill amortization (5,152) 1,995 (20,448)
(increase) decrease in tax
refunds receivable............. 25,000 (32,228) 0
(increase) decrease in accounts
payable, accrued and other liabilities
net of "short sales"........... (101,519) 49,586 (83,111)
--------- --------- --------
Total adjustments................ (778,120) (822,593) (1,126,568)
--------- --------- -----------
Net cash provided by operating
activities....................... 1,030,015 1,327,752 2,304,492
--------- --------- -----------
Cash flows from investing activities:
Payment for purchase of equipment
and improvements................. (49,995) (112,762) (314,532)
Net cash provided or (used) in
purchase and sale of investments. (135,557) 2,718,274 (1,544,246)
Net proceeds (repayments) of
loans from brokers used to
purchase investments............. 62,966 (3,101,725) 820,817
Proceeds from "short sales"
not closed....................... 100,256 52,653 558,844
--------- --------- ----------
Net cash provided by or
(used in) investing activities... (22,330) (443,560) (479,117)
--------- ---------- ----------
Cash flows from financing activities:
Repayment of/Loan to Officer..... 0 1,303,804 (1,303,804)
Repayment of bank loan........... (700,000) (2,100,000) (200,000)
Payment for purchase of
treasury stock................... (510,022) (14,654) (233,817)
--------- ----------- ----------
Net cash used in financing
activities....................... (1,210,022) (810,850) (1,737,621)
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents............. (202,337) 72,622 88,474
Cash and cash equivalents at
beginning of year................ 262,299 189,677 101,203
----------- ----------- ----------
Cash and cash equivalents at the
end of year $ 59,962 $ 262,299 $ 189,677
=========== =========== ============
<FN>
See accompanying note to financial statements.
</TABLE>
F-4
<PAGE>
[FN]
DAXOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements as at December 31,
1994 and 1993 and for the three years ended December 31, 1994 have
been prepared in conformity with principles of accounting applicable
to a going concern. Daxor Corporation operates in the medical
services and technology industry.
The consolidated financial statements include the accounts of the
Company and its subsidiary. All significant intercompany
transactions and balances have been eliminated in consolidation.
The excess of cost over the fair value of net assets of the acquired
business is being amortized over ten years.
(1) Marketable Securities
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 115 which is effective for fiscal
years beginning after December 15,1993. This statement requires that
debt and equity securities, other than investments in consolidated
subsidiaries and investments accounted for under the equity method,
be classified into three categories.
1) "Held-To-Maturity Securities" are debt securities which the
company has both the intent and ability to hold until maturity.
These are reported at amortized cost.
2) "Trading Securities" are debt and equity securities which are
bought mainly for the purpose of selling them in the near future.
These are reported at fair value, with unrealized gains or losses
included in current period earnings.
3) "Available-For-Sale Securities" are those debt and equity
securities not classified as held-to-maturity or trading. These are
reported at fair value, with unrealized gains or losses excluded from
earnings and reported as a separate component of shareholders'
equity.
Upon adoption of FASB No. 115, management has determined that the
company's portfolio is best characterized as "Available-For-Sale".
This has resulted in the balance sheet carrying value of the
company's marketable securities investments, as of December 31, 1994,
being increased approximately 18.70% over its historical cost. A
corresponding increase in shareholders' equity has been effectuated.
In accordance with the provisions of FASB No. 115, the adjustment in
shareholders' equity to reflect the company's unrealized gains has
been made net of the tax effect had these gains been realized. The
prior period has not been restated.
The following tables summarize the company's investments as of:
<TABLE>
<CAPTION>
December 31, 1994
<S> <C> <C> <C> <C>
Type of Cost Fair Value Unrealized Unrealized
security Holding gains holding losses
Equity $26,555,721 $31,892,894 $7,991,063 $2,653,890
Debt 1,750,016 1,706,037 22,544 66,523
----------- ---------- --------- ---------
Total $28,305,737 $33,598,931 $8,013,607 $2,720,413
=========== ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
<S> <C> <C> <C>
Type of Marketable Cost Market Value Carrying Value in
Securities Balance Sheet
Common utility stocks $23,500,647 $34,408,867 $23,500,647
Preferred utility stocks 2,341,614 3,876,957 2,341,614
Notes, Bonds, and Other 1,795,591 1,905,496 1,795,591
----------- ------------ -----------
Totals $27,637,852 $40,191,320 27,637,852
</TABLE>
F-5
<PAGE>
[FN]
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
At December 31, 1994, the securities held by the Company had a
market value of $33,598,931 and a cost basis of $28,305,737 resulting
in a net unrealized gain of $5,293,194 or 18.70% of cost. At
December 31, 1993, the securities held by the Company had a market
value of $40,191,320 and a cost basis of $27,637,852 resulting in a
net unrealized gain of $12,553,468 or 45.42% of cost. At December
31, 1994 and December 31, 1993, marketable securities, primarily
consisting of preferred and common stocks of utility companies, are
valued at fair value and cost respectively.
(2) Loans Payable
As at December 31, 1994 and December 31, 1993, the Company had
loans outstanding aggregating $2,600,000, and $3,300,000 borrowed on
a short term basis from a bank, which are secured by certain
marketable securities of the Company. The loans bear interest at
approximately 8.5%.
Short-term margin debt due to brokers, secured by the Company's
marketable securities, totalled $1,264,605 at December 31, 1994 and
$1,201,639 at December 31, 1993.
(3) Accounts Receivable
Accounts receivable are deemed to be fully collectible.
(4) Equipment and Improvements
Depreciation of equipment and improvements is taken using the
straight line. For 1994, 1993 and 1992 the charge to income for
depreciation under these methods was $54,380, 46,790, and $30,822
respectively.
The cost of maintenance and repairs is charged to expense as
incurred. The cost of betterment and additions are capitalized and
depreciated over the life of the asset. The cost of assets disposed
of or determined to be non-revenue producing, together with the
related accumulated depreciation applicable thereto, is eliminated
from the accounts, and any gain or loss is recognized.
(5) Other Liabilities
At December 31, 1994 and December 31, 1993 the Company also
maintained a short position in certain marketable securities. These
positions were sold for $100,256 at December 31, 1994 and $52,653 at
December 31, 1993, and had respective market values of $106,267 and
$44,484 resulting in an unrealized loss of ($13,186) at December 31,
1994 and an unrealized loss of ($8,169) at December 31, 1993.
(6) Commitments and Contingencies
(A) Operating Leases
Future minimum rental payments under this non-cancelable
operating lease are as follows:
1995 $ 168,832
1996 $ 168,832
1997 $ 168,832
1998 $ 168,832
1999 $ 168,832
Rent expense for all non-cancelable operating leases was
$205,036, $176,352 and $114,240 for the years ended December 31,
1994, 1993, and 1992 respectively.
(B) Contingent Liabilities
The Company has pending several claims incurred in the normal
course of business which, in the opinion of management, based on the
advice of outside legal counsel, will not have a material effect on
the consolidated financial statements.
F-5
<PAGE>
[FN]
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
(7) Research and Development Expenses
Research and development expenses were $195,269, $192,282 and
$58,721 for 1994, 1993, and 1992 respectively. All research and
development costs are expensed in the year they occur.
(8) Interest Expense and Income
Interest expense was $231,349, $413,319, and $649,135 and
interest income was $220,233, $232,966, and $256,544 in 1994, 1993,
and 1992 respectively.
(9) Income Taxes
The following is a reconciliation of the federal statutory tax
rate of 34% for 1994, 1993, and 1992 with the provision for income
taxes:
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Statutory tax rate $671,042 $785,622 $1,269,385
Capital loss exclusion
Dividend exclusion (324,447) (383,849) (614,208)
Miscellaneous non-deductible
expenses 347 1,906 3,216
Tax benefit of capital loss
carryback/carryover (198,894) (240,858) (383,741)
State and city taxes 17,471 (2,512) 27,772
-------- --------- --------
Provision for income taxes $165,519 $160,309 $302,424
-------- --------- --------
Effective tax rate 8.39% 7.46% 8.10%
----- ----- -----
</TABLE>
(10) Shareholders' Equity
During 1994, the Company purchased 86,200 shares of its own
stock at a cost of $510,022.
(11) Subsidiaries
In August 1986, the Company purchased all of the outstanding
shares of National Frozen Blood Repository Corporation. The results
of operations since acquisition have been consolidated in these
statements. The cost exceeded the fair value of net assets acquired
by $56,066. This amount is being amortized over ten years.
F-5
<PAGE>
SCHEDULE I
MARKETABLE SECURITIES -- OTHER INVESTMENTS
The following tables summarize the company's investments as of:
<TABLE>
<CAPTION>
December 31, 1994
<S> <C> <C> <C> <C>
Type of Cost Fair Value Unrealized Unrealized
security holding gains holding losses
Equity $26,555,721 $31,892,894 $7,991,063 $2,653,890
Debt 1,750,016 1,706,037 22,544 66,523
----------- ----------- ---------- ----------
Total $28,305,737 $33,598,931 $8,013,607 $2,720,413
=========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE IX
SHORT-TERM BORROWINGS
Years Ended December 31, 1994, 1993, 1992
<S> <C> <C> <C> <C> <C>
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------
Category of Balance at Weighted Maximum Average Weighted
aggregate the end of average amount amount Average
short-term period interest rate outstanding outstanding interest
borrowings at end of the during this during rates during
period period the period the period
- -------------------------------------------------------------------------------
1994
Banks $2,600,000 6.61 % $3,300,000 $2,970,000 6.32 %
Brokers $1,264,605 8.05 % $1,304,584 $587,000 7.56 %
All
Categories $3,864,605 7.18 % $4,604,584 $3,457,000 6.94 %
- -------------------------------------------------------------------------------
1993
Banks $3,300,000 5.67 % $5,400,000 $4,350,000 5.65 %
Brokers 1,201,639 5.12 % 4,222,874 2,173,876 5.42 %
All
Categories $4,501,639 5.46 % $9,621,874 $6,523,876 5.56 %
- -------------------------------------------------------------------------------
1992
Banks $5,400,000 5.63 % $5,600,000 $5,512,368 7.42 %
Brokers 4,303,364 5.28 % 4,451,631 3,989,465 5.98 %
All
Categories $9,703,364 5.48 % $10,456,631 $9,501,833 6.78 %
- -------------------------------------------------------------------------------
<FN>
The average borrowings were determined on the basis of the amounts
outstanding at each month-end. The weighted interest rate during the
year was computed by dividing actual interest expense in each year by
average short-term borrowings in such year.
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
COLUMN A Column B
----------- -----------------
Item Charged to costs and expenses
Year ended December 31,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs............... $ * $ * $ *
Depreciation and amortization of
intangible assets, pre-operating
costs and similar deferral.......... 59,987 52,397 36,428
Taxes, other than payroll and income
taxes............................... * * *
Royalties............................. --- --- ---
Advertising costs..................... * * *
<FN>
* less than 1% of total revenues for the year.
</TABLE>
F-9
