<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the
Securities Act of 1934
FOR QUARTER ENDED JUNE 30, 1998
Commission File Number 0-12248
DAXOR CORPORATION
(Exact Name as Specified in its Charter)
New York 13-2682108
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
350 Fifth Avenue
Suite 7120
New York, New York 10118
(Address of Principal Executive Offices & Zip Code)
Registrant's Telephone Number: (212) 244-0555
(Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JUNE 30, 1998
- ------------------- -----------------------------
COMMON STOCK 4,790,709
PAR VALUE: $.O1 per share
<PAGE>
ITEM 1. FINANCIAL STATEMENTS PAGE
----------------------------------------------------------------
Consolidated Balance Sheets as at
June 30, 1998 and December 31, 1997 F-1
Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 1998 and 1997 F-2
Consolidated Statements of Cash Flows for the
Six Months ended June 30, 1998 and 1997 F-3
Notes to Financial Statements F-4
<PAGE>
DAXOR CORPORATION
CONSOLIDATED BALANCE SHEETS
[UNAUDITED]
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash $112,628 $60,768
Marketable Securities at Fair Value
June 30, 1998 and December 31,
1997. (Notes 1 and 2) 41,034,130 40,347,085
Accounts receivable 160,483 173,098
Accounts receivable-Related parties 75,979 104,350
Other current assets 258,862 215,090
Tax refunds receivable 5,881 5,881
----------------- -------------------
Total Current Assets 41,647,963 40,906,272
EQUIPMENT AND IMPROVEMENTS
Storage tanks 125,815 125,815
Leasehold improvements, furniture
and equipment 714,863 714,774
Laboratory equipment 274,418 274,418
----------------- -------------------
1,115,096 1,115,007
Less: Accumulated depreciation and amortiation 761,503 730,503
----------------- -------------------
Net equipment and improvements 353,593 384,504
Other Assets 31,816 31,816
Total Assets $42,033,372 $41,322,592
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued liabilities $115,454 $188,572
Loans payable (Notes 1 and 2) 1,206,326 2,494,639
Other Liabilities 6,110 30,690
Deferred Taxes (Note 1) 5,957,000 5,690,967
----------------- -------------------
Total Liabilities 7,284,890 8,404,868
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share:
Authorized 10,000,000 shares: issued and
outstanding shares 4,790,709 June 30,
1998 and 4,690,709 December 31, 1997 53,097 53,097
Additional Paid in capital 9,798,231 8,579,803
Net unrealized holding gains
on available-for-sale securities (Note 1) 11,563,586 11,047,170
Retained earnings 16,532,829 16,713,436
Treasury stock (3,199,261) (3,475,782)
----------------- -------------------
Total Shareholders' Equity 34,748,482 32,917,724
Total Liabilities and Shareholders' Equity $42,033,372 $41,322,592
================= ===================
</TABLE>
See accompanying notes to consolidated financial statements
F-1
<PAGE>
DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
- ---------------------------------
(UNAUDITED)
- -----------
THREE AND SIX MONTHS ENDED
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1998 1997 1998 1997
---- ---- ---- ----
REVENUES:
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $90,613 $144,733 $185,142 $295,015
Dividend income 529,045 525,689 1,024,325 1,070,612
Gains (losses) on sale
of securities 114,148 38,300 349,864 202,085
Gains (losses) on sale
of options and commodities -- (1,287) -- 4,333
---------- --------- ---------- -------------
Total Revenues 733,806 707,435 1,559,331 1,572,045
---------- --------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
COSTS AND EXPENSES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations of Laboratories 262,747 151,308 413,476 291,065
Selling, General, and
Administrative 173,970 482,527 891,711 869,682
Interest expense, net of
interest income 241,245 30,079 420,755 48,561
---------- --------- ---------- ------------
Total Costs and Expenses 677,962 663,914 1,725,942 1,209,308
---------- --------- ---------- ------------
Net Income (Loss) Before Income
Taxes 55,844 43,521 (166,611) 362,737
Provision for income taxes -- 5,980 14,000 33,220
---------- --------- ---------- ------------
Net Income (Loss) $55,844 $37,541 $(180,611) $329,517
========== ========= ========== ============
Weighted Average Number of Shares
Outstanding 4,696,376 4,696,376 4,757,376 4,703,043
Net Income of (Loss) per Common Equivalent
Share $0.01 $0.01 $(0.04) $0.07
========== ========= ========== ============
</TABLE>
See accompanying notes to financial statements
- ---------------------------------------------------------
F-2
<PAGE>
DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1998 1997
---- ----
<S> <C> <C>
- --------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
- --------------------------------------------------------------
Net income or (loss) $(180,611) $329,517
---------------- ----------------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation equipment and improvements 31,000 32,500
(Gain) loss on sale of investments (349,864) (206,418)
Change in assets and liabilities:
(Increase) decrease in accounts receivable 12,615 (13,036)
(Increase) decrease in accounts receivable-
Related Parties 28,371 19,553
(Increase) decrease in other current assets (43,772) 5,503
(Increase) decrease in tax refunds receivable -- 148,020
Increase (decrease) in accounts payable, accrued
and other liabilities net of "short sales" (87,469) (45,439)
---------------- ----------------
Total adjustments (409,119) (59,317)
---------------- ----------------
Net cash provided by or (used in) operating activities (589,730) 270,200
---------------- ----------------
- --------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- --------------------------------------------------------------
Payment for purchase of equipment and
improvements (89) (432)
Net cash provided or (used) in purchase
and sale of investments 433,089 344,629
Net proceeds (repayments) of loans from
brokers used to purchase investments (1,288,313) 1,088,725
Proceeds from "short sales" not closed 1,953 888
---------------- ----------------
Net cash provided by or (used in) investing activities (853,360) 1,433,810
---------------- ----------------
- --------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- --------------------------------------------------------------
Dividends paid -- (2,353,755)
Receipt of/(repayment of)- bank loan -- 800,000
Payment for purchase of treasury stock -- (204,100)
Receipt from reissuance of treasury stock 1,494,950 --
Net cash provided by or (used in) financing activities 1,494,950 (1,757,855)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 51,860 (53,845)
Cash and cash equivalents at beginning of year 60,768 123,115
---------------- ----------------
Cash and cash equivalents at end of period $112,628 $69,270
================ ================
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
DAXOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position
as of June 30,1998, and December 31, 1997, the results of operations for the
three and six months ended June 30,1998 and 1997 and cash flows for the six
months ended June 30,1998 and 1997. The consolidated financial statements
include the accounts of the Company and its subsidiary. All significant
intercompany transactions and balances have been eliminated in consolidation.
(1) MARKETABLE SECURITIES
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 June 30, 1998 and December 31, 1997
being increased approximately 74.52% and 70.90% respectively 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 following tables summarize the company's investments as of :
<TABLE>
<CAPTION>
June 30, 1998
Type of security Cost Fair Value Unrealized holding Unrealized
- ---------------- ---- ---------- ------------------- ----------
gains holding losses
----- --------------
<S> <C> <C> <C> <C>
Equity $23,488,544 $41,008,180 $18,460,777 $ 941,141
Debt 25,000 25,950 950 0
----------- ----------- ----------- ----------
Total $23,513,544 $41,034,130 $18,461,727 $ 941,141
=========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
Type of security Cost Fair Value Unrealized holding Unrealized
- ---------------- ---- ---------- ------------------- ----------
gains holding losses
----- --------------
<S> <C> <C> <C> <C>
Equity $23,583,948 $40,320,610 $18,450,502 $1,713,840
Debt 25,000 26,475 1,475 0
----------- ----------- ----------- ----------
Total $23,608,948 $40,347,085 $18,451,977 $1,713,840
=========== =========== =========== ==========
</TABLE>
At June 30, 1998 the securities held by the Company had a market
value of $41,034,130 and a cost basis of $23,513,544 resulting in a net
unrealized gain of $ 17,520,586 or 74.52% of cost.
At December 31, 1997 the securities held by the Company had a market
value of $40,347,085 and a cost basis of $23,608,948 resulting in a net
unrealized gain of $16,738,137 or 70.90% of cost.
At June 30, 1997 and December 31, 1996 marketable securities,
primarily consisting of preferred and common stocks of utility companies, are
valued at fair value.
(2) LOANS PAYABLE
As at June 30, 1998 and December 31, 1997, the Company had loans
outstanding aggregating $1,000,000 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 7.5%.
Short term margin debt due to brokers ,secured by the Companies
marketable securities, totaled $206,326 at June 30, 1998 and $1,494,639 at
December 31, 1997
F-4
<PAGE>
Part II OTHER INFORMATION
Item 1.
- ------
Legal Proceedings
- -----------------
As previously reported, Daxor Corporation, (through its separately
licensed divisions), has been involved in various proceedings with the New
York State Department of Health relating to its licenses to operate clinical
laboratories, its blood bank and semen bank. There has been no new ligitation
in the Second Quarter of 1998. The Company is currently engaged in
negotiations with the New York State Department of Health that may result in a
settlement of outstanding issues.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 2.
- -------
RESULTS OF OPERATIONS
- ---------------------
Six months ended June 30, 1998 as compared with six months ended June 30,
1997.
For the six months ended June 30, 1998, total revenues were
$1,559,331, down from $1,572,045 in 1997. Operating revenues were $185,142 in
1998 down from $295,015 in 1997. Dividend income was $1,024,325 with a net
interest expense of $420,755, as compared to dividend income of $1,070,612
with a net interest expense of $48,561 in 1997. In 1998, the Company had a net
loss of $166,611 before income taxes versus a gain of $362,737 before income
taxes in 1997. Operating revenues have been sharply decreased because of legal
actions against Idant Laboratory's semen and blood banking facilities here in
New York State. The Company has not yet received any income from the Blood
Volume Analyzer, which is in the process of being introduced to hospitals. The
Company has been unable to take new clients in its sperm bank or blood bank,
but has been able to maintain its current clients. On April 26, 1997 the
Company received accreditation from the American Association of Tissue Banks
(AATB). The Company became the only sperm banking organization in New York
State to receive this accreditation, and the sixth within the United States.
The Company's operating losses are due to actions by New York Department of
Health officials. The Company currently has Letters of Intent from ten major
teaching hospitals to test the Blood Volume Analyzer. The Company expects that
as the Blood Volume Analyzer sales increase, the relative significance from
blood banking and semen banking services will diminish. Negotiations are
taking place between Daxor and the New York State Department of Health to end
the current lawsuits which may reopen these facilities.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At June 30, 1998 the Company had total assets of $42,033,372
and total liabilities of $7,284,890 with shareholders' equity of $34,748,482.
The Company has a net pre-taxed unrealized gain of $17,520,586 and $
11,563,586 of net after tax unrealized capital gains on available-for-sale
securities in its portfolio. This amount is included in the calculation of
Total Shareholders' Equity. The Company's stock portfolio had a market value
of $41,034,130 with short-term loans of $1,206,326 with 4,790,709 shares
outstanding.
The Company has a 5 year agreement with Oxford N.M.G., of
Oak Ridge, Tennessee to produce the Blood Volume Analyzer. The Company is
currently in negotiations to acquire the assets of Wellport, Inc. of
Rochester, NY. Wellport has been the manufacturer which has fabricated the
patented Blood Volume Analyzer injection kit. The Company is currently in
negotiation with a radio-pharmaceutical company to dispense the kit.
The Company has adequate resources for the marketing of its
Blood Volume Analyzer and the liquid capital to sustain its blood bank. If the
Company were to expand its blood banking operations on a full scale,
nation-wide basis, it would require additional capital. The Company's
financial reserves have played an essential role in sustaining the company
during its legal battles to provide frozen blood banking services to the
public. The Company has sustained a large loss of revenues and profits as
results of the actions taken against it by members of the New York State
Department of Health. The Company plans to focus its financial reserves
primarily on developing and marketing the Blood Volume Analyzer.
The Company did not file any reports on form 8-K during the
first six months of 1998.
The Company has initiated a contract for a new computer system to be installed
in the next 90 days to avoid any year 2000 computer problems.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DAXOR CORPORATION
-----------------
(Registrant)
DATE: August 14, 1998 /s/ Joseph Feldschuh, M.D.
----------------------
JOSEPH FELDSCHUH, M.D.
President
DATE: August 14, 1998 /s/ Robert Rosenthal, M.D.
-----------------------
ROBERT ROSENTHAL, M.D.
Vice President
DATE: August 14, 1998 /s/ Octavia Atanasiu
-----------------------
OCTAVIA ATANASIU
Treasurer
DATE: August 14, 1998 /s/ Virginia Fitzpatrick
-----------------------
VIRGINIA FITZPATRICK
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-3O-1998
<CASH> 112,628
<SECURITIES> 41,034,130
<RECEIVABLES> 160,483
<ALLOWANCES> 0
<INVENTORY> 25,960
<CURRENT-ASSETS> 41,647,963
<PP&E> 1,115,096
<DEPRECIATION> 761,503
<TOTAL-ASSETS> 42,033,372
<CURRENT-LIABILITIES> 7,284,890
<BONDS> 0
0
0
<COMMON> 53,097
<OTHER-SE> 34,748,482
<TOTAL-LIABILITY-AND-EQUITY> 42,033,372
<SALES> 90,613
<TOTAL-REVENUES> 733,806
<CGS> 0
<TOTAL-COSTS> 677,962
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 241,245
<INCOME-PRETAX> 55,844
<INCOME-TAX> 0
<INCOME-CONTINUING> 55,844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,844
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
