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 SEPTEMBER 30, 2003
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 September 30, 2003
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COMMON STOCK
PAR VALUE: $.O1 per share 4,645,026
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheet as at September 30, 2003 and
Balance Sheet as at December 31, 2002 F-1
Consolidated Statements of Income for the
Three and Nine Months ended September 30, 2003 and 2002 F-2
Consolidated Statement of Cash Flows for the Nine Months
ended September 30, 2003 and 2002 F-3
Notes to Financial Statements F-4&5
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 3-4
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 4
ITEM 2. Exhibits and Reports on Form 8-k 4
Signatures 4
Exhibit Index 5-7
DAXOR CORPORATION
FINANCIAL STATEMENTS
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DAXOR CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, December 31,
2003 2002
---- ----
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ASSETS
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CURRENT ASSETS
Cash $ 52,692 $ 13,035
Marketable Securities at Fair Value
September 30,2003 and December 31,
2002. (Note 1) 44,293,770 40,573,162
Accounts receivable 281,525 211,979
Other current assets 373,069 364,913
------------ ------------
Total Current Assets 45,001,056 41,163,089
EQUIPMENT AND IMPROVEMENTS
Storage tanks 125,815 125,815
Leasehold improvements, furniture
and equipment 917,651 928,581
Laboratory equipment 291,499 290,104
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1,334,965 1,344,500
Less: Accumulated depreciation and amortization 1,035,520 1,005,625
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Net equipment and improvements 299,445 338,875
Other Assets 69,852 71,601
Total Assets $ 45,370,353 $ 41,573,565
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 199,873 $ 112,481
Loans payable (Note 2) 2,708,910 1,434,046
Other Liabilities 293,523 106,440
Deferred Taxes (Note 1) 7,433,944 6,373,701
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Total Liabilities 10,636,250 8,026,668
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share:
Authorized 10,000,000 shares: issued and
outstanding shares 4,645,026 September 30,
2003 and 4,657,784 December 31, 2002 53,097 53,097
Additional Paid in capital 9,801,548 9,798,232
Net unrealized holding gains
on available-for-sale securities (Note 1) 14,430,597 12,372,477
Retained earnings 15,543,876 16,246,156
Treasury stock (5,095,015) (4,923,065)
------------ ------------
Total Shareholders' Equity 34,734,103 33,546,897
Total Liabilities and Shareholders' Equity $ 45,370,353 $ 41,573,565
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See accompanying notes to financial statements
(F-1)
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DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, September 30,
2003 2002 2003 2002
---- ---- ---- ----
REVENUES:
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Operating revenues $ 301,816 $ 200,100 $ 810,910 $ 589,604
Other revenues 3,143 6,522 11,429 28,337
Dividend income 527,591 507,454 1,438,232 1,415,997
Gains (losses) on sale
of securities 71,633 80,194 152,896 175,258
----------- ----------- ----------- ----------
Total Revenues 904,183 794,270 2,413,467 2,209,196
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COSTS AND EXPENSES
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Operations of Laboratories &
Cost of Production 463,432 172,244 1,144,374 575,028
Selling, General, and
Administrative 596,638 510,251 1,891,992 1,378,022
Interest expense, net of
interest income 25,012 7,475 58,594 26,268
----------- ----------- ----------- ----------
Total Costs and Expenses 1,085,082 689,970 3,094,960 1,979,318
----------- ----------- ----------- ----------
Net Income (Loss) Before
Income Taxes (180,899) 104,300 (681,493) 229,878
Provision for income taxes (858) (709) 20,787 14,204
----------- ----------- ----------- ----------
Net Income (Loss) $ (180,041) $ 105,009 $ (702,280) $ 215,674
=========== =========== =========== ==========
Weighted Average Number
of Shares Outstanding 4,645,826 4,663,909 4,649,347 4,664,576
Net Income of (Loss) per
Common Equivalent Share $ (0.04) $ 0.02 $ (0.15) $ 0.05
=========== =========== =========== ==========
See accompanying notes to financial statements
F-2
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DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
September 30, September 30,
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income or (loss) $ (702,280) $ 215,674
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Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation & Amortization 36,644 42,241
(Gain) loss on sale of investments (152,896) (175,258)
Basis of leased equipment sold 45,000 --
Change in assets and liabilities:
(Increase) decrease in accounts receivable (69,546) (348)
(Increase) decrease in other current assets (8,156) (6,003)
(Increase) decrease in other assets
net of amortization -- (300)
Increase (decrease) in accounts payable, accrued
and other liabilities net of "short sales" 87,392 1,248
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Total adjustments (61,562) (138,420)
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Net cash provided by or (used in) operating activities (763,842) 77,254
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Payment for purchase of equipment and
improvements (40,465) (44,490)
Net cash provided or (used) in purchase
and sale of investments (548,032) (403,372)
Net proceeds (repayments) of loans from
brokers used to purchase investments 1,074,864 209,792
Proceeds from "short sales" not closed 285,766 82,434
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Net cash provided by or (used in) investing activities 772,133 (155,636)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Receipt / (repayment) of bank loan 200,000 (300,000)
Payment for purchase of treasury stock (199,370) (31,753)
Proceeds from sale of treasury stock 30,736 --
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Net cash provided by or (used in) financing activities 31,366 (331,753)
Net increase (decrease) in cash and cash equivalents 39,657 (410,135)
Cash and cash equivalents at beginning of year 13,035 431,949
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Cash and cash equivalents at end of period $ 52,692 $ 21,814
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See accompanying notes to financial statements
F-3
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DAXOR CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
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 September 30,
2003 and December 31, 2002, the results of operations for the three and nine
months ended September 30,2003 and 2002 and cash flows for the nine months ended
September 30,2003 and 2002.
(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 September 30, 2003 and December 31, 2002 being
increased approximately 97.48 % and 85.89 % 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:
September 30, 2003
Type of Unrealized Unrealized
security Cost Fair Value Holding gains holding losses
- -------- ---- ---------- ------------- --------------
Equity $22,386,723 $44,266,195 $22,500,534 $621,062
- ------
Debt 42,506 27,575 120 15,051
- ---- -----------------------------------------------------------------------------------------
Total $22,429,229 $44,293,770 $22,500,654 $636,113
- ----- =========== =========== =========== ========
December 31, 2002
Type of Unrealized Unrealized
security Cost Fair Value holding gains holding losses
- -------- ---- ---------- ------------- --------------
Equity $21,796,315 $40,547,587 $19,960,514 $1,209,242
- ------
Debt 30,669 25,575 8,865 13,959
- ---- ------------------------------------------------------------------------------------------
Total $21,826,984 $40,573,162 $19,969,379 $1,223,201
- ----- =========== =========== =========== ==========
At September 30, 2003 the securities held by the Company had a market
value of $44,293,770 and a cost basis of $22,429,229 resulting in a net
unrealized gain of $ 21,864,541 or 97.48% of cost.
At December 31, 2002, the securities held by the Company had a market
value of $40,573,162 and a cost basis of $21,826,984 resulting in a net
unrealized gain of $18,746,178 or 85.89% of cost.
At September 30, 2003 and December 31, 2002 marketable securities,
primarily consisting of preferred and common stocks of utility companies, are
valued at fair value.
F-4
(2) LOANS PAYABLE
As at September 30, 2003 and December 31, 2002, the Company had loans
outstanding aggregating $900,000 and $700,000 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 4%.
Short term margin debt due to brokers, secured by the Companies marketable
securities, totaled $1,808,910 at September 30, 2003 and $734,046 at December
31, 2002.
F-5
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 2.
RESULTS OF OPERATIONS
Three months ended September 30, 2003 as compared with three months ended
September 30, 2002.
For the three months ended September 30, 2003 total revenues were $904,183
up from $794,270 in 2002. Operating revenues were $301,816 in 2003 up from
$200,100 in 2002. Dividend income was $527,591 with a net interest expense of
$25,012 in 2003, as compared to dividend income of $507,454 with a net interest
expense of $7,475 in 2002. In 2003, the Company had a net loss before income
taxes of $(180,899) versus a net income before income taxes of $104,300 in 2002.
Total cost and Expenses in 2003 increased to $1,085,082 vs. $689,970 in 2002.
This was related to increased marketing efforts and research and development
expenses. The Company has increased research expenses for additional features to
the BVA-100. Operating revenues increased by 51% from the comparable quarter in
2002. The Company's new sales team began marketing in the fourth quarter of
2002. The increase in operating revenues can be attributable to these sales
efforts. The sales cycles from initial contact to a sale can be 6 to 12 months.
The Company anticipates that it's sales of BVA-100 Blood Volume Analyzers and
kits will become the major source of income for the Company. The Company is
currently in the process of expanding its sales and marketing force, and
recently hired 3 new sales/marketing representatives.
Nine months ended September 30, 2003 as compared with nine months ended
September 30, 2002.
For the nine months ended September 30, 2003 total revenues were
$2,413,467 up from $2,209,196 in 2002. Operating revenues in 2003 were $810,910
up from $589,604 in 2002. Selling and administrative expenses were $1,891,992 in
2003, vs. $1,378,022 in 2002. The increased expenses were related to the
employment of additional sales and marketing personnel and increased research
and development. In 2003, Dividend income was $1,438,232 with a net interest
expense of $58,594 as compared to the dividend income of $1,415,997 with a net
interest expense of $26,268 in 2002. In 2003, the Company had $152,896 in
capital gains vs. $175,258 in 2002. In 2003, the Company had a net loss before
income taxes of $(681,493) versus a net income of $229,878 before income taxes
in 2002. The Company has adopted a policy that encourages leasing or renting of
BVA-100 equipment to enable hospitals to obtain the equipment. This results in
sales of kits but a slower recognition of operating income from BVA sales.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2003 the Company had total assets of $45,370,353 with
shareholders' equity of $34,734,103. The Company has a net pre-taxed unrealized
gain of $21,864,541 and $14,430,597 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 $44,293,770 with short-term loans of $ 2,708,910 with 4,645,026
shares outstanding. The Company has current liabilities of $10,636,250. Included
in these liabilities are deferred taxes of $7,433,944. These deferred taxes
would occur if the Company chose to sell its entire portfolio. Current
liabilities minus these deferred taxes equals $3,202,306.
The Company has adequate resources for the current marketing level of its
Blood Volume Analyzer as well as capital to sustain its localized semen and
blood banking services. The Company anticipates hiring additional regional
managers to the existing sales/marketing team. It is the goal of the marketing
team to develop an individual sales team for each regional manager. The Company
is also expanding its support services personnel. The decision to develop the
marketing team was partially based on the anticipation of new publications in
peer reviewed medical journals by current users of the Blood Volume Analyzer.
3
The Company's goal is to establish blood volume measurement as a standard of
care in multiple areas of medicine and surgery. It is hoped that the publication
of research studies from leading medical facilities will result in an increase
in sales in both the Blood Volume Analyzer and its associated kits.
The Company has an instrument loaner reagent plan which requires use of
the Company's reserves. The equipment loaner reagent plan permits a user to make
a minimal initial capital commitment. This results in a slower return on capital
expenditure for the Company. The Company has established a private label leasing
program called Daxor Capital through De Lage Landen. With this arrangement Daxor
receives the net present value of the lease upon the signed completion of the
installation of the equipment.
The Company is evaluating blood volume instrumentation management programs
for hospitals. Under such a plan, the Company would provide equipment and
personnel on a sub-contract basis. The Company will use its current financial
reserves primarily for developing and marketing the Blood Volume Analyzer. The
Company is evaluating various options to expand blood banking services in
conjunction with the use of the Blood Volume Analyzer.
Part II OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
32.2 Certification of Principal Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
(b) There were no reports on Form 8-k filed.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: November 12, 2003 By: /s/ JOSEPH FELDSCHUH, M.D.
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JOSEPH FELDSCHUH, M.D.,
President and Chief Executive
Officer
DATE: November 12, 2003 By: /s/ STEPHEN FELDSCHUH
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STEPHEN FELDSCHUH
Vice President of Operations
And Chief Financial Officer
4