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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, 2005
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, 2005
- --------------------------------------------------------------------------------
COMMON STOCK
PAR VALUE: $.O1 per share 4,636,326
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (Unaudited) 2
Condensed Consolidated Balance Sheets as at March 31,
2005 and December 31, 2004 F-1
Condensed Consolidated Statements of Operations
for the three months ended March 31,2005 and 2004 F-2
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2005 and 2004 F-3
Notes to Condensed Consolidated Financial Statements F-4-5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 3
Item 3. Controls and Procedures 4
PART II. OTHER INFORMATION
Item 1.Legal Proceedings 4
Item 2.Exhibits and Reports on Form 8-k 4
Signatures
Item 3.Exhibit Index
Item 1. Financial Statements (Unaudited)
Index to Financial Statements
Condensed Consolidated Balance Sheets as at March 31,
2005 and December 31, 2004 F-1
Condensed Consolidated Statements of Operations for the
three months ended March 31, 2005 and 2004 F-2
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2005 and 2004 F-3
Notes to Condensed Consolidated Financial Statements F-4-5
2
DAXOR CORPORATION
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DAXOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS[UNAUDITED]
March 31, December 31,
2005 2004
------------ ------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
CURRENT ASSETS
Cash $ 13,730 $ 5,079
Available-for-sale securities 55,726,452 54,806,400
Accounts receivable 195,516 202,649
Inventory 139,338 139,338
Prepaid and other current assets 211,353 453,284
------------ ------------
Total Current Assets 56,286,389 55,606,750
PROPERTY AND EQUIPMENT
Machinery and equipment 767,824 755,237
Furniture and fixtures 329,341 329,050
Leasehold improvements 295,530 295,530
------------ ------------
1,392,696 1,379,817
Less: Accumulated depreciation and amortization (1,099,688) (1,089,245)
------------ ------------
Property and equipment, net 293,008 290,572
Other assets 32,158 32,158
------------ ------------
Total Assets $ 56,611,555 $ 55,929,480
============ ============
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LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 71,225 $ 89,162
Loans payable 4,396,564 4,113,285
Other Liabilities 975,521 982,718
Deferred revenue 22,355 17,465
Deferred taxes 10,922,075 10,845,531
------------ ------------
Total Current Liabilities 16,387,740 16,048,161
STOCKHOLDERS' EQUITY
Common stock, $.01 par value
Authorized - 10,000,000 shares
Issued - 5,309,750 shares
Outstanding - 4,636,326 and 4,610,826
shares, respectively 53,097 53,097
Additional paid in capital 10,281,586 9,821,563
Accumulated other comprehensive income 21,201,674 21,053,089
Retained earnings 14,249,659 14,589,699
Treasury stock, at cost, 673,424 and 698,924
shares, respectively (5,562,201) (5,636,129)
------------ ------------
Total Stockholders' Equity 40,223,815 39,881,319
------------ ------------
Total Liabilities and Stockholders' Equity $ 56,611,555 $ 55,929,480
============ ============
See accompanying notes to condensed consolidated financial statements
F-1
DAXOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
FOR THE THREE MONTHS ENDED MARCH 31,
2005 2004
----------- -----------
Revenues:
Operating revenues $ 296,583 $ 408,248
----------- -----------
Costs and Expenses:
Operations of laboratories & costs of production 454,389 381,162
Selling, general, and administrative 1,073,328 710,157
----------- -----------
Total Costs and Expenses 1,527,717 1,091,319
----------- -----------
Loss from operations (1,231,134) (683,071)
Other income (expense):
Dividend income 538,120 493,569
Gain on sale of securities 389,036 225,066
Other revenues 4,352 3,643
Interest expense, net (40,413) (19,443)
----------- -----------
Total other income 891,095 702,835
----------- -----------
Net Income /(Loss) Before Income Taxes (340,039) 19,764
Provision for income taxes 0 0
----------- -----------
Net Income /(Loss) $ (340,039) $ 19,764
=========== ===========
Weighted Average Number of Shares Outstanding
- Basic and Diluted 4,627,659 4,632,659
=========== ===========
Net Income / (Loss)per Common Equivalent Share $ (0.07) $ 0.00
=========== ===========
See accompanying notes to condensed consolidated financial statements.
F-2
DAXOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
FOR THE THREE MONTHS ENDED MARCH 31,
2005 2004
----------- ---------
Cash flows from operating activities:
Net income or (loss) $ (340,039) 19,764
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Depreciation & amortization 10,443 11,940
Gain on sale of investments (389,036) (225,066)
Change in assets and liabilities:
(Increase) decrease in accounts receivable 7,133 (50,528)
(Increase) decrease in other current assets 241,931 (68)
Increase (decrease) in accounts payable, accrued
and other liabilities net of "short sales" (17,912) 4,198
Increase in deferred revenue 4,890 --
----------- ---------
Total adjustments (142,551) (259,524)
----------- ---------
Net cash used in operating activities (482,590) (239,760)
----------- ---------
Cash flows from investing activities:
Purchase of property and equipment (12,878) (7,570)
Purchases of investments, net (1,280,049) (270,699)
Net proceeds from (repayments of)loans from
brokers used to purchase investments 283,279 (238,905)
Proceeds from "short sales" not closed 966,939 362,375
----------- ---------
Net cash used in investing activities (42,709) (154,799)
----------- ---------
Cash flows from financing activities:
Proceeds from bank loan -- 600,000
Proceeds from sale (purchase of) treasury stock 533,950 (153,263)
----------- ---------
Net cash provided by financing activities 533,950 446,737
----------- ---------
Net increase in cash and
cash equivalents 8,651 52,178
Cash and cash equivalents at beginning of year 5,079 3,324
----------- ---------
Cash and cash equivalents at end of period $ 13,730 $ 55,502
=========== =========
See accompanying notes to condensed consolidated financial statements
F-3
DAXOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements reflect all
adjustments of a normal recurring nature, which are, in the opinion of
management, necessary for a fair statement of the financial position and results
of operations for the interim periods presented. The consolidated financial
statements are unaudited and are subject to such year-end adjustments as may be
considered appropriate and should be read in conjunction with the historical
consolidated financial statements of Daxor Corporation years ended December 31,
2004, 2003 and 2002, included in Daxor Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2004. Operating results for the
three-month period ended March 31, 2005 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2005.
These consolidated financial statements have been prepared in accordance
with US GAAP and under the same accounting principles as the consolidated
financial statements included in the Annual Report on Form 10-K. Certain
information and footnote disclosures related thereto normally included in the
financial statements prepared in accordance with US GAAP have been omitted in
accordance with Rule 10-01 of Regulation S-X.
(2) AVAILABLE-FOR-SALE SECURITIES
Upon adoption of SFAS No. 115, Accounting for Certain Investments in Debt
and Equity Securities, management has determined that the company's portfolio is
best characterized as "Available-For-Sale". SFAS No. 115 requires these
securities to be recorded at their fair market values, with the offsetting
unrealized holding gains or losses being recorded as Comprehensive Income
(Loss)in the Equity section of the Balance Sheet. The adoption of this
pronouncement has resulted in an increase in the carrying value of the company's
available-for-sale securities, as at March 31, 2005 and December 31, 2004, of
approximately 136.10% and 139.25%,respectively, over its historical cost.
In accordance with the provisions of SFAS No. 115, the adjustment in
stockholders' equity has been made net of the tax effect had these gains been
realized.
The Company uses the historical cost method in the determination of its
realized and unrealized gains and losses. The following tables summarize the
Company's investments as of:
March 31, 2005
--------------
Type of Unrealized Unrealized
security Cost Fair Value Holding gains holding losses
- -------- ----------- ----------- ------------- --------------
Equity $23,524,650 $55,698,052 $32,844,902 $ 671,500
Debt 78,053 28,400 -- 49,653
----------- ----------- ----------- -----------
Total $23,602,703 $55,726,452 $32,844,902 $ 721,153
=========== =========== =========== ===========
December 31, 2004
-----------------
Type of Unrealized Unrealized
security Cost Fair Value Holding gains holding losses
- -------- ----------- ----------- ------------- --------------
Equity $22,802,568 $54,741,650 $32,125,500 $ 186,417
Debt 105,212 64,750 7,792 48,255
----------- ----------- ----------- -----------
Total $22,907,780 $54,806,400 $32,133,292 $ 234,672
=========== =========== =========== ===========
At March 31, 2005 the securities held by the Company had a market value of
$55,726,452 and a cost basis of $23,602,703 resulting in a net unrealized gain
of $ 32,123,749 or 136.1% of cost.
At December 31, 2004, the securities held by the Company had a market
value of $54,806,400 and a cost basis of $22,907,780 resulting in a net
unrealized gain of $31,898,620 or 139.25% of cost.
At March 31, 2005 and December 31, 2004, marketable securities, primarily
consisting of preferred and common stocks of utility companies, are valued at
fair value. Debt securities consist of Corporate Bonds. As at March 31, 2005,
one of these bonds, which has a cost of $29,798, is scheduled to mature in May
2008. The remaining two bonds, which have a combined cost of $48,255 are
currently in default, with maturity dates prior to December 31, 2004. Management
is awaiting final settlement of the bonds, and is not yet able to determine the
amount of loss, if any, that may occur. Accordingly, the Company has valued
these bonds at zero and recorded an unrealized loss of the entire cost of the
bonds.
F-4
(3) INVENTORY
Inventory is stated at the lower of cost or market, using the first-in,
first-out method (FIFO), and consists primarily of finished goods.
(4) LOANS PAYABLE
As at March 31, 2005 and December 31, 2004, the Company has a note payable
of $1,500,000 with a bank with an option to renew, and is classified as short
term. The note balance is an aggregate of borrowings (loans) that renews as one
note each year, but is subject to different interest rates depending on the
individual amount of each borrowing.
The loan bears interest at approximately 3.0% is secured by certain
marketable securities of the Company.
Short term margin debt due to brokers, secured by the Company's marketable
securities, totaled $2,896,564 at March 31, 2005 and $1,363,201 at December 31,
2004.
(5) SELECTED FINANCIAL DATA (Unaudited)
Selected Quarterly Financial Data
Quarter Ended
--------------------------------
March 31, 2005 March 31, 2004
Operating revenues $ 296,583 $ 408,248
Total revenue and other income 1,228,091 1,130,526
Gross loss (1,231,134) (683,071)
Net income (loss) (340,039) 19,764
Net income (loss) per share (.07) .00
Total Assets 56,611,555 50,130,886
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Income:
Operating revenues $ 296,583 $ 408,248
Other income (expenses):
Dividend income 538,120 493,569
Gain on sale of securities 389,036 225,066
Other revenues 4,352 3,643
Interest expense, net (40,413) (19,443)
----------- -----------
Total Selected Net Income 1,187,678 1,111,083
----------- -----------
Costs and Expenses:
Operations of laboratories & costs
of production 454,389 381,162
Selling, general & administrative 1,073,328 710,157
----------- -----------
Total Selected Costs and Expenses 1,527,717 1,091,319
----------- -----------
Net Income (Loss) Before Provision for
Income Taxes (340,039) 19,764
Provision for Income Taxes -- --
----------- -----------
Net Income (Loss) $ (340,039) $ 19,764
=========== ===========
Weighted Average Number of Shares Outstanding
- Basic and Diluted 4,627,659 4,632,659
=========== ===========
Net Income(Loss)per Common Equivalent Share $ (0.07) $ 0.00
=========== ===========
F-5
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 2. RESULTS OF OPERATIONS
Three months ended March 31, 2005 as compared with three months ended March 31,
2004
For the three months ended March 31, 2005 total revenue and other income
increased by 8.6% to $1,228,091 from $1,130,526 in 2004. Operating revenues
decreased by 27% to $296,583 in 2005 from $408,248 in 2004. In 2005 there was
only a single sale of the BVA-100 blood volume analyzer, although a number of
contracts were signed for instruments on a trial basis. There were capital gains
in 2005 of $389,036 up from $225,066 in 2004. Dividend income was $538,120 with
a net interest expense of $40,413 in 2005, as compared to dividend income of
$493,569 with a net interest expense of $19,443 in 2004. In 2005, the Company
had a net loss of ($340,039) versus a net income income of $19,764 in 2004.
Total Costs and Expenses increased by 41% in 2005 to $1,568,130 vs. $1,110,762
in 2004. 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. The Company has also expanded its manufacturing staff
in Oak Ridge, Tennessee. The increase in kit sales can be attributable to these
sales efforts. The sales cycles from initial contact to a sale can be 6 to 12
months, or occasionally longer. The Company anticipates that the sales of the
BVA-100 Blood Volume Analyzers and kits will become the major source of income
for the Company. The Company plans to continue expanding its sales and marketing
force, which currently consists of 17 salesmen and 4 support personnel.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2005 the Company had total assets of $56,611,555 with
stockholders' equity of $40,223,815 as compared to total assets of $50,130,886
with stockholders' equity of $37,537,441 at March 31,2004. Despite increasing
its expenses, the Company has significantly increased its financial base as
compared to one year ago. The Company has a net pre-taxed unrealized gain of
$32,123,749 and $21,201,674 of net after tax unrealized capital gains on
available-for-sale securities in its portfolio. This amount is included in the
calculation of Total Stockholders' Equity. The Company's stock portfolio had a
market value of $55,726,452 with short-term loans of $ 4,396,564 with 4,636,326
shares outstanding. The Company has current liabilities of $16,387,740. Included
in these liabilities are deferred taxes of $10,922,075. These deferred taxes
would occur if the Company chose to sell its entire portfolio. Current
liabilities minus these deferred taxes is $5,465,665. The Company's investment
portfolio has been a critical source of supplemental income to partially offset
the continuing losses from operations. Without this income, the Company would
have been in a precarious financial situation because of its operating losses
over the past 10 years. The Company's portfolio has, historically, maintained a
net value above cost for each of the past 15 years.
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.
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 sells, as well as offers to lease or rent the BVA-100 as part
of the overall marketing plan. The Company also loans the instrument for a
limited time period, however facilities evaluating the instrument must pay for
the kits. A financing arrangement for customers was established through a
relationship with De Lage Landen (DLL). The significance of this relationship is
as sales through leases increases, Daxor will not have to diminish its capital
outlay for equipment as DLL will fund the net present value of the lease upon
installation of the equipment. In an effort to obtain the best rates for our
clients, the Company will also work with other independent leasing firms.
3
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. Additional information on
the Company is available on our website www.daxor.com.
Item 3. Controls and Procedures
The Company's Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of our disclosure controls and procedures as defined
by the Securities and Exchange Commission (SEC),as of the end of the period
covered by this report. Based upon that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective in timely alerting them to information required to be
included in our periodic Securities and Exchange Commission filings. There was
no significant change in our internal control over financial reporting that
occurred during the quarter ended March 31, 2005, that materially affected or is
reasonably likely to materially affect, the Corporation's internal control over
financial reporting.
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: May 16, 2005 By: /s/ JOSEPH FELDSCHUH, M.D.
--------------------------
JOSEPH FELDSCHUH, M.D.,
President and Chief Executive
Officer
DATE: May 16, 2005 By: /s/ STEPHEN FELDSCHUH
---------------------
STEPHEN FELDSCHUH
Vice President of Operations
And Chief Financial Officer
4