<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the
Securities Act of 1934
FOR QUARTER ENDED MARCH 31, 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 MARCH 31, 1998
- ------------------------- -----------------------------
COMMON STOCK 4,790,709
PAR VALUE: $.O1 per share
<PAGE>
ITEM 1. FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheets as at
March 31, 1998 and December 31, 1997 F-1
Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997 F-2
Consolidated Statements of Cash Flows for the
Three Months ended March 31, 1998 and 1997 F-3
Notes to Financial Statements F-4
<PAGE>
DAXOR CORPORATION
CONSOLIDATED BALANCE SHEETS [UNAUDITED]
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash $ 136,131 $ 60,768
Marketable Securities at Fair Value
March 31,1998 and December 31,
1997. (Notes 1 and 2) 41,858,891 40,347,085
Accounts receivable 167,412 173,098
Accounts receivable-Related parties 104,350 104,350
Other current assets 568,586 215,090
Tax refunds receivable
5,881 5,881
------------- ---------------
Total Current Assets 42,841,251 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 amortization 746,003 730,503
------------- ---------------
Net equipment and improvements 369,093 384,504
Other Assets
31,816 31,816
Total Assets $43,242,160 $ 41,322,592
============= ===============
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 559,739 $ 188,572
Loans payable (Notes 1 and 2) 1,244,204 2,494,639
Other Liabilities
14,913 30,690
Deferred Taxes (Note 1) 6,220,047 5,690,967
--------------- ----------------
Total Liabilities 8,038,903 8,404,868
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share:
Authorized 10,000,000 shares: issued and
outstanding shares 4,790,709 March 31,
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) 12,074,209 11,047,170
Retained earnings 16,476,981 16,713,436
Treasury stock (3,199,261) (3,475,782)
--------------- ----------------
Total Shareholders' Equity 35,203,257 32,917,724
Total Liabilities and Shareholders' Equity $43,242,160 $ 41,322,592
=============== =================
</TABLE>
See accompanying notes to consolidated financial statements
F-1
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DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF INCOME [UNAUDITED]
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenues:
- --------------------------------------------------------------------------------------------------------
Operating revenues $ 94,529 $ 150,282
Dividend income 495,280 544,923
Gains on sale of securities 235,716 163,785
Gains (losses) on sale of options and commodities - 5,620
------------ ------------
Total Revenues 825,525 864,610
------------ ------------
- --------------------------------------------------------------------------------------------------------
Costs and expenses:
- --------------------------------------------------------------------------------------------------------
Operations of Laboratories 150,729 139,757
Selling, General, and Administrative 720,804 387,155
Interest expense, net of interest income 179,510 18,482
------------ -------------
Total Costs and Expenses 1,051,043 545,394
------------ -------------
Net Income Before Income Taxes (225,518) 319,216
Provision for income taxes 14,000 27,240
------------ -------------
Net Income $(236,455) $ 291,976
============ =============
Weighted Average Number of Shares Outstanding 4,724,043 4,709,709
============ =============
Net Income per Common Equivalent Share $ (0.05) $ 0.06
============ =============
</TABLE>
See accompanying notes to consolidated financial statements
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F-2
<PAGE>
DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income or (loss) $ (236,455) $ 291,976
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation equipment and
improvements 15,500 16,250
(Gain) loss on sale of investments (235,716) (169,405)
Change in assets and liabilities:
(Increase) decrease in accounts receivable 5,686 (11,151)
(Increase) decrease in accounts receivable-
Related Parties - 20,298
(Increase) decrease in other current assets (353,496) (67,124)
(Increase) decrease in tax refunds receivable - 148,020
Increase (decrease) in accounts payable, accrued
and other liabilities net of "short sales" 364,142 (48,953)
------------ ------------
Total adjustments (203,884) (112,065)
------------ ------------
Net cash used in/provided by operating activities (440,339) 179,911
------------ ------------
Cah flows from investing activities:
Payment for purchase of equipment and
improvements (89) (432)
Net cash provided or (used) in purchase
and sale of investments 262,020 325,512
Net proceeds (repayments) of loans from
brokers used to purchase investments (1,250,435) (1,236,292)
Proceeds from "short sales" not closed 9,256 5,322
Net cash provided by / (used in)
------------ ------------
investing activities (979,248) (905,890)
------------ ------------
Cash flows from financing activities
Payment for purchase of treasury stock - (85,950)
Receipt from reissuance of treasury stock 1,494,950
Receipt of/(repayment of)- bank loan - 800,000
------------ ------------
Net cash provided by / (used in) financing
activities 1,494,950 714,050
------------ ------------
Net increase (decrease) in cash and
cash equivalents 75,363 (11,929)
Cash and cash equivalents at beginning of year 60,768 123,115
------------ ------------
Cash and cash equivalents at end of period $ 136,131 $ 111,186
============ ============
</TABLE>
See accompanying notes to financial statements
F-3
DAXOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 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
March 31,1998, and December 31, 1997, the results of operations for the three
months ended March 31,1998 and 1997 and cash flows for the three months ended
March 31,1998 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 March 31, 1998 and December 31, 1997 being
increased approximately 77.63 % 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>
March 31, 1998
--------------
Type of security Cost Fair Value Unrealized holding Unrealized holding
- ---------------- ---- ---------- ------------------- ------------------
gains losses
----- ------
<S> <C> <C> <C> <C>
Equity $23,539,635 $41,832,766 $19,279,012 $ 985,881
Debt 25,000 26,125 1,125 0
----------- ----------- ----------- ------------
Total $23,564,635 $41,858,891 $19,280,137 $ 985,881
=========== =========== =========== ===========
<CAPTION>
December 31, 1997
Type of security Cost Fair Value Unrealized holding Unrealized holding
- ---------------- ---- ---------- ------------------- ------------------
gains 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 March 31, 1998 the securities held by the Company had a market value
of $41,858,891 and a cost basis of $23,564,635 resulting in a net unrealized
gain of $ 18,294,256 or 77.63% 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 March 31, 1997 and December 31, 1996 marketable securities,
primarily consisting of preferred and common stocks of utility companies, are
valued at fair value .
F-4
<PAGE>
(2) LOANS PAYABLE
As at March 31, 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 $244,204 at March 31, 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. The following is a summary of
recent activity in these matters in the first quarter ended March 31, 1998.
Litigation in which there was no activity has been described in previous
filings:
1. Vladimir v. Feldschuh Daxor Corp & Gelb (Client/ Case No. 133981-901). In
1992, Daxor received a preliminary proposal for a partial take over of the
Daxor Corporation at $20.00 per share. At the time of the offer, Daxor had
not yet received clearance from the FDA for its Blood Volume Analyzer, or
received its complete patents for the blood volume analysis system. The
Resimmo Company was a privately held European Corporation. The take over
offer was withdrawn several weeks after it was made. A class action suit
was instituted against Daxor as part of the failed proposed partial take
over. Daxor management always considered this suit frivolous. Daxor
accepted the offer of the plaintiffs to withdraw and agreed not to
counter-sue on March 18, 1998.
2. Daxor Corp., et al. v. Linden, et al (United States District Court,
Southern District, Case No.95 Civ. 7847 (KTD)). Daxor instituted a $100
million anti-trust suit, Racketeering Influenced Corrupt Organizations Act
and an action pursuant to 42 UDC 1983 for violations of its civil rights
against the New York Blood Center and certain New York State Department of
Health employees. Federal Judge Kevin Duffy ruled against Daxor in its
Rico/Anti-Trust action against employees of the New York State Department
of Health and the New York Blood Center. The Corporation is appealing this
decision because it was not afforded an opportunity to present its
evidence.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 2.
RESULTS OF OPERATIONS
Three months ended March 31, 1998 as compared with three months ended March 31,
1997.
For the three months ended March 31, 1998, total revenues were
$825,525, down from $864,610 in 1997. Operating revenues were $94,529 in 1998
down from $150,282 in 1997. Dividend income was $495,280 with a net interest
expense of $179,510, as compared to dividend income of $544,923 with a net
interest expense of $18,482 in 1997. In 1998, the Company had a net loss of
$236,455 before income taxes versus a gain of $291,976 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 has a
$55 million action in the Court of Claims against New York State Department of
Health for discriminatory treatment. The case examines the treatment of the New
York Blood Center by the New York State Department of Health as compared to the
treatment of Idant by the New York State Department of Health. Two managers of
the New York Blood Center were sentenced to prison terms in December 1997 by a
Federal Court on charges of conspiring to tamper with tests to screen blood for
the AIDS virus and other infectious diseases as a way of taking shortcuts. The
Company's operating losses are due to actions
<PAGE>
by Department of Health officials that are opposed to the concept of individuals
having the right to store their own blood. The Company is considering moving its
semen banking operations out of the State and discontinuing its blood banking
operations. 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. At one time, the
Company had planned to develop a manufacturing site for the injection kit for
the Blood Volume Analyzer within the State. At the present time, this facility
is planned for another State.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998 the Company had total assets of $43,242,160
and total liabilities of $8,038,903 with shareholders' equity of $35,203,257.
The Company has a net pre-taxed unrealized gain of $18,294,256 and $ 12,074,209
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 $41,858,891 with
short-term loans of $1,244,204 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 signed a
preliminary agreement with Wellport Inc. of Rochester, New York to fabricate the
Blood Volume Analyzer 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 Health Department and the anti-trust
actions of the New York Blood Center. The Company cannot predict the ultimate
outcome of its Federal RICO anti-trust suit against the Health Department and
the New York Blood Center. 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 three months of 1998.
The Company filed a Form S-3 on March 18, 1998 for 100,000
shares.
<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: May 21, 1998 /s/ JOSEPH FELDSCHUH, M.D.
- ------------------ ---------------------------------------
JOSEPH FELDSCHUH, M.D.
President
DATE: May 21, 1998 /s/ ROBERT ROSENTHAL, M.D.
- ------------------ ---------------------------------------
ROBERT ROSENTHAL, M.D.
Vice President
DATE: May 21, 1998 /s/ OCTAVIA ATANASIU
- ------------------ ---------------------------------------
OCTAVIA ATANASIU
Treasurer
DATE: May 21, 1998 /s/ VIRGINIA FITZPATRICK
- ------------------ ---------------------------------------
VIRGINIA FITZPATRICK
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 136,131
<SECURITIES> 41,858,891
<RECEIVABLES> 167,412
<ALLOWANCES> 0
<INVENTORY> 25,960
<CURRENT-ASSETS> 42,841,251
<PP&E> 1,115,096
<DEPRECIATION> 746,003
<TOTAL-ASSETS> 43,242,160
<CURRENT-LIABILITIES> 8,038,908
<BONDS> 0
0
0
<COMMON> 53,097
<OTHER-SE> 35,150,160
<TOTAL-LIABILITY-AND-EQUITY> 43,242,160
<SALES> 94,529
<TOTAL-REVENUES> 825,525
<CGS> 0
<TOTAL-COSTS> 150,729
<OTHER-EXPENSES> 720,804
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 179,510
<INCOME-PRETAX> (225,518)
<INCOME-TAX> 14,000
<INCOME-CONTINUING> (236,455)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (236,455)
<EPS-PRIMARY> (0.5)
<EPS-DILUTED> (0.5)
</TABLE>
