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 JUNE 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 June 30, 2003
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COMMON STOCK
PAR VALUE: $.O1 per share 4,646,226
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheet as at June 30, 2003 and
Balance Sheet as at December 31, 2002 F-1
Consolidated Statements of Income for the
Three and Six Months ended June 30, 2003 and 2002 F-2
Consolidated Statement of Cash Flows for the Six Months
ended June 30, 2003 and 2002 F-3
Notes to Financial Statements F-4 to 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)
June 30, December 31,
2003 2002
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ASSETS
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CURRENT ASSETS
Cash $ 60,532 $ 13,035
Marketable Securities at Fair Value
June 30,2003 and December 31,
2002. (Notes 1 and 2) 44,546,379 40,573,162
Accounts receivable 192,960 211,979
Other current assets 389,520 364,913
------------ ------------
Total Current Assets 45,189,391 41,163,089
EQUIPMENT AND IMPROVEMENTS
Storage tanks 125,815 125,815
Leasehold improvements, furniture
and equipment 905,732 928,581
Laboratory equipment 290,104 290,104
------------ ------------
1,321,651 1,344,500
Less: Accumulated depreciation and amortization 1,023,925 1,005,625
------------ ------------
Net equipment and improvements 297,726 338,875
Other Assets 70,435 71,601
Total Assets $ 45,557,552 $ 41,573,565
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 107,837 $ 112,481
Loans payable (Note 2) 2,633,309 1,434,046
Other Liabilities 248,702 106,440
Deferred Taxes (Note 1) 7,502,414 6,373,701
------------ ------------
Total Liabilities 10,492,262 8,026,668
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share:
Authorized 10,000,000 shares: issued and
outstanding shares 4,646,226 June 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) 14,563,509 12,372,477
Retained earnings 15,723,917 16,246,156
Treasury stock (5,076,781) (4,923,065)
------------ ------------
Total Shareholders' Equity 35,065,290 33,546,897
Total Liabilities and Shareholders' Equity $ 45,557,552 $ 41,573,565
============ ============
See accompanying notes to financial statements
F-1
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DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
2003 2002 2003 2002
---- ---- ---- ----
REVENUES:
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Operating revenues $ 290,411 $ 196,441 $ 509,094 $ 389,504
Other revenues 5,143 9,829 8,286 21,815
Dividend income 430,752 452,557 910,641 908,543
Gains (losses) on sale
of securities 45,361 94,261 81,263 95,064
Total Revenues 771,667 753,088 1,509,284 1,414,926
----------- ----------- ----------- -----------
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COSTS AND EXPENSES
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Operations of Laboratories &
Cost of Production 343,683 200,036 680,942 402,784
Selling, General, and
Administrative 656,468 468,573 1,295,354 867,771
Interest expense, net of
interest income 19,075 7,221 33,582 18,793
----------- ----------- ----------- -----------
Total Costs and Expenses 1,019,226 675,830 2,009,878 1,289,348
----------- ----------- ----------- -----------
Net Income (Loss) Before Income
Taxes (247,559) 77,258 (500,594) 125,578
Provision for income taxes 95 (833) 21,645 14,913
----------- ----------- ----------- -----------
Net Income (Loss) $ (247,654) $ 78,091 $ (522,239) $ 110,665
=========== =========== =========== ===========
Weighted Average Number of Shares
Outstanding 4,645,631 4,664,909 4,651,108 4,664,909
Net Income or (Loss) per Common Equivalent
Share $ (0.05) $ 0.01 $ (0.11) $ 0.02
=========== =========== =========== ===========
See accompanying notes to financial statements
F-2
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DAXOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income or (loss) $(522,239) $ 110,665
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Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation & Amortization 24,466 28,161
(Gain) loss on sale of investments (81,263) (95,064)
Basis of leased equipment sold 45,000
Change in assets and liabilities:
(Increase) decrease in accounts receivable 19,019 35,579
(Increase) decrease in other current assets (24,607) 7,220
(Increase) decrease in other assets
net of amortization -- --
Increase (decrease) in accounts payable, accrued
and other liabilities net of "short sales" (4,644) (13,246)
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Total adjustments (22,029) (37,350)
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Net cash provided by or (used in) operating activities (544,268) 73,315
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CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchase of equipment and
improvements (27,150) (33,568)
Net cash provided or (used) in purchase
and sale of investments (670,892) 85,965
Net proceeds (repayments) of loans from
brokers used to purchase investments 999,262 30,318
Proceeds from "short sales" not closed 240,945 99,556
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Net cash provided by or (used in) investing activities 542,165 182,271
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CASH FLOWS FROM FINANCING ACTIVITIES:
Receipt / (repayment) of bank loan 200,000 (300,000)
Payment for purchase of treasury stock (181,136) --
Proceeds from sale of treasury stock 30,736 --
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Net cash provided by or (used in) financing activities 49,600 (300,000)
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Net increase (decrease) in cash and cash equivalents 47,497 (44,414)
Cash and cash equivalents at beginning of year 13,035 431,949
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Cash and cash equivalents at end of period $ 60,532 $ 387,535
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See accompanying notes to financial statements
F-3
DAXOR CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JUNE 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 June 30,
2003, and December 31, 2002, the results of operations for the three and six
months ended June 30,2003 and 2002 and cash flows for the six months ended June
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 June 30, 2003 and December 31, 2002 being
increased approximately 98.16 % 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:
June 30, 2003
Type of Unrealized Unrealized
security Cost Fair Value Holding gains holding losses
-------- ---- ---------- ------------- --------------
Equity $22,434,257 $44,496,454 $22,488,798 $ 426,601
Debt 46,199 49,925 17,460 13,734
----------- ----------- ----------- -----------
Total $22,480,456 $44,546,379 $22,506,258 $ 440,335
=========== =========== =========== ===========
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 June 30, 2003 the securities held by the Company had a market value of
$44,546,379 and a cost basis of $22,480,456 resulting in a net unrealized gain
of $ 22,065,923 or 98.16% 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 June 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 June 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 $1,733,309 at June 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 June 30, 2003 as compared with three months ended June 30,
2002.
For the three months ended June 30, 2003 total revenues were $771,667, up
from $753,088 in 2002. Operating revenues were $290,411 in 2003 up from $196,441
in 2002. Dividend income was $430,752 with a net interest expense of $19,075 in
2003, as compared to dividend income of $452,557 with a net interest expense of
$7,221 in 2002. In 2003, the Company had a net loss before income taxes of
$(247,559) versus a net income before income taxes of $77,258 in 2002. Total
cost and Expenses in 2003 increased to $1,019,226 vs. $675,830 in 2002. This was
related to increased marketing efforts and research and development expenses.
Operating revenues increased by 48% 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
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.
Six months ended June 30, 2003 as compared with six months ended June 30, 2002.
For the six months ended June 30,2003, total revenues were $1,509,284 up
from $1,414,926 in 2002. Operating revenues were $509,094 up from $389,504 in
2002. Selling and administrative expenses were $1,295,354 in 2003, vs. $867,771
in 2002. The increased expenses were related to the employment of additional
sales and marketing personnel. In 2003, Dividend income was $910,641 with a net
interest expense of $33,582 as compared to the dividend income of $908,543 with
a net interest expense of $18,793 in 2002. In 2003, the Company had $81,263 in
capital gains vs. $95,064 in 2002. In 2003, the Company had a net loss of
$(500,594) before income taxes versus $125,578 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 June 30, 2003 the Company had total assets of $45,557,552 with
shareholders' equity of $35,065,290. The Company has a net pre-taxed unrealized
gain of $22,065,923 and $14,563,509 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 $44,546,379 with short-term loans of $ 2,633,309 with 4,646,226
shares outstanding. The Company has the current liabilities of $10,492,262.
Included in these liabilities are deferred taxes of $7,502,414. These deferred
taxes would occur if the Company chose to sell its entire portfolio. Current
liabilities minus these deferred taxes equals $2,989,848.
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.
F-6
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
31.2 Certification of Principal Financial Officer
32.1 Certification of Chief Executive Officer
32.2 Certification of Principal Financial Officer
(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: August 11, 2003 By: /s/ JOSEPH FELDSCHUH, M.D.
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JOSEPH FELDSCHUH, M.D.,
President and Chief Executive
Officer
DATE: August 11, 2003 By: /s/ STEPHEN FELDSCHUH
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STEPHEN FELDSCHUH
Vice President of Operations
And Chief Financial Officer
4