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 MARCH 31, 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 MARCH 31, 2003
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COMMON STOCK
PAR VALUE: $.O1 per share 4,654,584
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheets as at March 31, 2003 and
December 31,2002 F-1
Consolidated Statements of Income for the
Three Months ended March 31,2003 and 2002 F-2
Consolidated Statements of Cash Flows for the
Three Months ended March 31, 2003 and 2002 F-3
Notes to Financial Statements F-4 to 5
ITEM 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations 3
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 4
ITEM 2. Exhibits and Reports on Form 8-K 5
Signatures 5-7
Exhibit Index 8-9
DAXOR CORPORATION
FINANCIAL STATEMENTS
================================================================================
DAXOR CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2003 2002
---- ----
ASSETS
CURRENT ASSETS
Cash $ 37,460 $ 13,035
Marketable Securities at Fair Value
March 31,2003 and December 31,
2002. (Notes 1 and 2) 38,195,080 40,573,162
Accounts receivable 206,152 211,979
Other current assets 437,601 364,913
------------ ------------
Total Current Assets 38,876,293 41,163,089
EQUIPMENT AND IMPROVEMENTS
Storage tanks 125,815 125,815
Leasehold improvements, furniture
and equipment 924,473 928,581
Laboratory equipment 290,104 290,104
------------ ------------
1,340,392 1,344,500
Less: Accumulated depreciation and amortization 1,014,775 1,005,625
------------ ------------
Net equipment and improvements 325,617 338,875
Other Assets 71,018 71,601
Total Assets $ 39,272,928 $ 41,573,565
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 173,388 $ 112,481
Loans payable (Notes 1 and 2) 1,922,605 1,434,046
Other Liabilities 148,476 106,440
Deferred Taxes (Note 1) 5,499,231 6,373,701
------------ ------------
Total Liabilities 7,743,700 8,026,668
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share:
Authorized 10,000,000 shares: issued and
outstanding shares 4,654,584 March 31,
2003 and 4,657,784 December 31, 2002 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) 10,674,979 12,372,477
Retained earnings 15,971,571 16,246,156
Treasury stock (4,968,651) (4,923,065)
------------ ------------
Total Shareholders' Equity 31,529,228 33,546,897
Total Liabilities and Shareholders' Equity $ 39,272,928 $ 41,573,565
============ ============
See accompanying notes to financial statements
(F-1)
DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF INCOME [UNAUDITED]
FOR THE THREE MONTHS ENDED MARCH 31,
2003 2002
---- ----
Revenues:
------------------------------------------------------------------------------------------------
Operating revenues $ 218,683 $ 193,063
Other revenues $ 3,143 $ 11,986
Dividend income 479,889 455,986
Gains / (losses) on sale of securities 35,902 803
------------ ------------
Total Revenues 737,617 661,838
------------ ------------
------------------------------------------------------------------------------------------------
Costs and expenses:
------------------------------------------------------------------------------------------------
Operations of Laboratories & Costs of Production 337,259 202,748
Selling, General, and Administrative 638,886 399,198
Interest expense, net of interest income 14,507 11,572
------------ ------------
Total Costs and Expenses 990,652 613,518
------------ ------------
Net Income / (Loss) Before Income Taxes (253,035) 48,320
Provision for income taxes 21,550 15,746
------------ ------------
Net Income / (Loss) $ (274,585) $ 32,574
============ ============
Weighted Average Number of Shares Outstanding 4,656,584 4,664,909
============ ============
Net Income / (Loss) per Common Equivalent Share $ (0.06) $ 0.01
============ ============
See accompanying notes to consolidated financial statements
F-2
DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
FOR THE THREE MONTHS ENDED MARCH 31,
2003 2002
----- ----
Cash flows from operating activities:
Net income or (loss) ($274,585) $ 32,574
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation & Amortization 12,233 14,080
(Gain) loss on sale of investments (35,902) (803)
Basis of leased equipment sold 22,500
Change in assets and liabilities:
(Increase) decrease in accounts receivable 5,827 (2,857)
(Increase) decrease in other current assets (72,688) (3,515)
(Increase) decrease in other assets
net of amortization 0 0
Increase (decrease) in accounts payable, accrued
and other liabilities net of "short sales" 60,907 26,750
------------ ------------
Total adjustments (7,123) 33,655
------------ ------------
Net cash provided by / (used in) operating activities (281,708) 66,229
------------ ------------
Cash flows from investing activities:
Payment for purchase of equipment and
improvements (20,892) (9,405)
Net cash provided or (used) in purchase
and sale of investments (256,667) 49,220
Net proceeds (repayments) of loans from
brokers used to purchase investments 288,559 19,485
Proceeds from "short sales" not closed 140,719 43,372
Net cash provided by / (used in)
------------ ------------
investing activities 151,719 102,672
------------ ------------
Cash flows from financing activities
Receipt / (repayment) of bank loan 200,000 (300,000)
Payment for purchase of treasury stock (45,586)
------------ ------------
Net cash provided by / (used in) financing activities 154,414 (300,000)
------------ ------------
Net increase (decrease) in cash and
cash equivalents 24,425 (131,099)
Cash and cash equivalents at beginning of year 13,035 431,949
------------ ------------
Cash and cash equivalents at end of period $ 37,460 $ 300,850
============ ============
See accompanying notes to consolidated financial statements
F-3
DAXOR CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 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 March
31,2003, and December 31, 2002, the results of operations for the three months
ended March 31,2003 and 2002 and cash flows for the three months ended March
31,2003 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 March 31, 2003 and December 31, 2002 being
increased approximately 73.45 % 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:
March 31, 2003
--------------
Type of Unrealized Unrealized
security Cost Fair Value Holding gains holding losses
-------- ---- ---------- ------------- --------------
Equity $21,990,201 $38,165,992 $17,527,876 $ 1,352,085
Debt 30,669 29,088 $ 11,028 12,609
===========
--------------------------------------------------------------------------
Total $22,020,870 $38,195,080 $17,538,904 $ 1,364,694
=========== =========== =========== ===========
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 March 31, 2003 the securities held by the Company had a market value of
$38,195,080 and a cost basis of $22,020,870 resulting in a net unrealized gain
of $ 16,174,210 or 73.45% 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 March 31, 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 March 31, 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 $1,022,605 at March 31, 2003 and $734,046 at December 31,
2002.
F-5
Item 1.
Legal Proceedings
There are no current legal proceedings. The Company is not aware of any pending
legal proceedings.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 2.
RESULTS OF OPERATIONS
Three months ended March 31, 2003 as compared with three months ended March 31,
2002.
For the three months ended March 31, 2003 total revenues were $737,617, up
from $661,838 in 2002. There were Capital gains in 2003 of $35,902 vs. $803 in
2002. Operating revenues were $218,683 in 2003 up from $193,063 in 2002. Sales
from the BVA Division were a factor resulting in increased revenues. Dividend
income in 2003 was $479,889 with a net interest expense of $14,507 as compared
to dividend income of $455,986 with a net interest expense of $11,572 in 2002.
In 2003, the Company had a net loss before income taxes of ($253,035) versus
$48,320 in 2002. The Company expected operating revenues to increase more
rapidly because of the increased expenses associated with the sales/marketing
staff. There is a cycle which may take from 6 to 12 months from initial contact
with hospitals and physicians before a sale can be consummated. In some
instances, the instrument was placed on a trial basis at a facility whose only
requirement was paying for kit utilization that later converted into a sale.
Recent examples have been the NIH and the Mayo Clinic. The Company anticipates
hiring some additional sales personnel and at the present time is able to
sustain these increased expenses which are an integral part of expanding its
sales. The Company believes the second quarter will show the effect of increased
sales and marketing efforts.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2003 the Company had total assets of $39,272,928 and total
liabilities of $7,743,700 with shareholders' equity of $31,529,228. The Company
has a net pre-taxed unrealized gain of $16,174,210 and $ 10,674,979 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 $38,195,080 with short-term
loans of $1,922,605 with 4,654,584 shares outstanding.
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 2 to 3 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 enable
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.
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.
DATE: May 14,2003 By:/s/JOSEPH FELDSCUH,M.D.
---------------------------
JOSEPH FELDSCHUH, M.D.,
President and Chief
Executive Officer
DATE: May 14,2003 By:/s/STEPHEN FELDSCHUH
---------------------------
STEPHEN FELDSCHUH
Vice President of
Operations and Chief
Financial Officer
CERTIFICATIONS
I, Joseph Feldschuh,M.D., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Daxor Corporation;
2. Based on my knowledge, this quarterly report does not contain untrue
statements of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly presents in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designated such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluate the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could not significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
May 14, 2003
/s/ Joseph Feldschuh, M.D.
Joseph Feldschuh, M.D.
President, Chief Executive Officer
And Chairman of the Board
CERTIFICATIONS
I, Stephen Feldschuh, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Daxor Corporation;
2. Based on my knowledge, this quarterly report does not contain untrue
statements of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly presents in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designated such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluate the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could not significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
May 14, 2003
/s/ Stephen Feldschuh
Stephen Feldschuh
Vice president of Operations and
Chief Financial Officer