<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, 1999
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 Ave
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, 1999
- ------------------------------------------------------------------------------
COMMON STOCK
PAR VALUE: $.O1 per share 4,744,809
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
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Balance Sheets as at March 31, 1999 and
December 31, 1998 F-1
Statement of Income and Consolidated Statement of Income
For the Three Months ended March 31,1999 and 1998 F-2
Statement of Cash Flows and Consolidated Statement
of Cash Flows for the Three Months ended
March 31, 1999 and 1998 F-3
Notes to Financial Statements F-4
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DAXOR CORPORATION
BALANCE SHEETS [UNAUDITED]
March 31, December 31,
1999 1998
---- ----
ASSETS
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CURRENT ASSETS
Cash $ 110,237 $ 79,511
Marketable Securities at Fair Value
March 31,1999 and December 31,
1998. (Notes 1 and 2) 37,435,812 43,016,243
Accounts receivable 159,023 151,234
Accounts receivable-Related parties 75,979 75,979
Other current assets 251,077 261,597
Tax refunds receivable 5,881 5,881
------------ ------------
Total Current Assets 38,038,009 43,590,445
EQUIPMENT AND IMPROVEMENTS
Storage tanks 125,815 125,815
Leasehold improvements, furniture
and equipment 828,551 823,859
Laboratory equipment 275,817 274,418
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1,230,183 1,224,092
Less: Accumulated depreciation and amortization 814,235 796,159
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Net equipment and improvements 415,948 427,933
Other Assets 37,971 37,971
Total Assets $ 38,491,928 $ 44,056,349
============ ============
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 44,186 $ 88,594
Loans payable (Notes 1 and 2) 1,666,434 2,050,549
Other Liabilities 10,181 10,384
Deferred Taxes (Note 1) 4,794,873 6,602,988
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Total Liabilities 6,515,674 8,752,515
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share:
Authorized 10,000,000 shares: issued and
outstanding shares 4,744,809 March 31,
1999 and 4,752,709 December 31, 1998 53,097 53,097
Additional Paid in capital 9,798,232 9,798,232
Net unrealized holding gains
on available-for-sale securities (Note 1) 9,307,694 12,817,565
Retained earnings 16,606,162 16,292,976
Treasury stock (3,788,931) (3,658,036)
------------ ------------
Total Shareholders' Equity 31,976,254 35,303,834
Total Liabilities and Shareholders' Equity $ 38,491,928 $ 44,056,349
============ ============
See accompanying notes to financial statements
F-1
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DAXOR CORPORATION
STATEMENTS OF INCOME [UNAUDITED]
FOR THE THREE MONTHS ENDED MARCH 31,
(Consolidated)
1999 1998
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Revenues:
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Operating revenues $ 119,327 $ 94,529
Dividend income 467,365 495,280
Gains on sale of securities 403,637 235,716
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Total Revenues 990,329 825,525
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Costs and expenses:
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Operations of Laboratories 366,954 150,729
Selling, General, and Administrative 279,091 717,741
Interest expense, net of interest income 29,398 179,510
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Total Costs and Expenses 675,443 1,047,980
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Net Income Before Income Taxes 314,886 (222,455)
Provision for income taxes 1,700 14,000
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Net Income $ 313,186 $ (236,455)
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Weighted Average Number of Shares Outstanding 4,748,242 4,724,043
=========== ===========
Net Income per Common Equivalent Share $ 0.07 $ (0.05)
=========== ===========
See accompanying notes to consolidated financial statements
F-2
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DAXOR CORPORATION
STATEMENTS OF CASH FLOWS [UNAUDITED]
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
(Consolidated)
1,999 1,998
----- -----
<S> <C> <C>
Cash flows from operating activities:
- ------------------------------------
Net income or (loss) $313,186 ($236,455)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation equipment and
improvements 18,076 15,500
(Gain) loss on sale of investments (403,637) (235,716)
Change in assets and liabilities:
(Increase) decrease in accounts receivable (7,789) 5,686
(Increase) decrease in other current assets 10,520 (353,496)
Increase (decrease) in accounts payable, accrued
and other liabilities net of "short sales" (44,408) 364,142
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Total adjustments (427,238) (203,884)
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Net cash (used in) operating activities (114,052) (440,339)
Cah flows from investing activities:
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Payment for purchase of equipment and
improvements (6,091) (89)
Net cash provided or (used) in purchase
and sale of investments 659,855 262,020
Net proceeds (repayments) of loans from
brokers used to purchase investments (384,115) (1,250,435)
Proceeds from "short sales" not closed 6,024 9,256
Net cash provided by / (used in) ---------- -----------
investing activities 275,673 (979,248)
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Cash flows from financing activities:
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Payment for purchase of treasury stock (130,895)
Receipt from reissuance of treasury stock 1,494,950
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Net cash provided by / (used in) financing activities (130,895) 1,494,950
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Net increase (decrease) in cash and
cash equivalents 30,726 75,363
Cash and cash equivalents at beginning of year 79,511 60,768
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Cash and cash equivalents at end of period $110,237 $136,131
========== ===========
See accompanying notes to financial statements
</TABLE>
F-3
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DAXOR CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of March
31,1999, and December 31, 1998, the results of operations for the three months
ended March 31,1999 and 1998 and cash flows for the three months ended March
31,1999 and 1998.
(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, 1999 and December 31, 1998 being increased
approximately 60.43 % and 82.30 % 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, 1999
--------------
Type of Unrealized Unrealized
security Cost Fair Value Holding gains holding losses
- -------- ---- ---------- ------------- --------------
<S> <C> <C> <C> <C>
Equity $23,318,386 $37,420,912 $15,693,934 $1,591,408
- ------
Debt 14,859 14,900 246 205
- ----
---------------------------------------------------------------------------------------------
Total $23,333,245 $37,435,812 $15,694,180 $1,591,613
- ----- =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
-----------------
Type of Unrealized Unrealized
security Cost Fair Value Holding gains holding losses
- -------- ---- ---------- ------------- --------------
<S> <C> <C> <C> <C>
Equity $23,595,690 $43,016,243 $20,441,847 $1,021,294
- ------
Debt 0 0 0 0
- ---- ---------------------------------------------------------------------------------------------
Total $23,595,690 $43,016,243 $20,441,847 $1,021,294
- ----- =========== =========== =========== ==========
</TABLE>
At March 31, 1999 the securities held by the Company had a market value of
$37,435,812 and a cost basis of $23,333,245 resulting in a net unrealized gain
of $ 14,102,567 or 60.43% of cost.
At December 31, 1998, the securities held by the Company had a market value
of $43,016,243 and a cost basis of $23,595,690 resulting in a net unrealized
gain of $19,420,553 or 82.30% of cost.
. At March 31, 1999 and December 31, 1998 marketable securities, primarily
consisting of preferred and common stocks of utility companies, are valued at
fair value .
F-4
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(2) LOANS PAYABLE
As at March 31, 1999 and December 31, 1998, 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 8.25%.
Short term margin debt due to brokers ,secured by the Companies marketable
securities, totaled $666,434 at March 31, 1999 and $1,050,549 at December 31,
1998
F-4
<PAGE>
Part II OTHER INFORMATION
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Item 1.
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Legal Proceedings
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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.
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RESULTS OF OPERATIONS
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Three months ended March 31, 1999 as compared with three months ended March 31,
- -------------------------------------------------------------------------------
1998.
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For the three months ended March 31, 1999, total revenues were $990,329, up
from $825,525 in 1998 Operating revenues were $119,327 in 1999 up from $94,529
in 1998. Dividend income was $467,365 with a net interest expense of $29,398, as
compared to dividend income of $495,280 with a net interest expense of $179,510
in 1998. In 1999, the Company had a net profit of $314,886 before income taxes
versus a loss of $222,455 before income taxes in 1998. 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
<PAGE>
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 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, 1999 the Company had total assets of $38,491,928 and total
liabilities of $6,515,674 with shareholders' equity of $31,976,254. The Company
has a net pre-taxed unrealized gain of $14,102,567 and $ 9,307,694 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 $37,435,812 with short-term
loans of $1,666,434 with 4,752,709 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 14, 1999 /s/ JOSEPH FELDSCHUH, M.D.
---------------------------------
JOSEPH FELDSCHUH, M.D.
President
DATE: May 14, 1999 /s/ DAN WILLINGTON, M.D.
---------------------------------
DAN WILLINGTON, M.D.
Vice President
DATE: May 14, 1999 /s/ OCTAVIA ATANASIU
---------------------------------
OCTAVIA ATANASIU
Treasurer
DATE: May 14, 1999 /s/ VIRGINIA FITZPATRICK
---------------------------------
VIRGINIA FITZPATRICK
Secretary
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 110237
<SECURITIES> 37435812
<RECEIVABLES> 235002
<ALLOWANCES> 0
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<CURRENT-ASSETS> 38038009
<PP&E> 1230183
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0
0
<OTHER-SE> 31923157
<TOTAL-LIABILITY-AND-EQUITY> 38491928
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<INCOME-TAX> 1700
<INCOME-CONTINUING> 313186
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<EPS-PRIMARY> .07
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