0001019056-11-000773.txt : 20110809 0001019056-11-000773.hdr.sgml : 20110809 20110809112233 ACCESSION NUMBER: 0001019056-11-000773 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20110630 FILED AS OF DATE: 20110809 DATE AS OF CHANGE: 20110809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAXOR CORP CENTRAL INDEX KEY: 0000027367 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 132682108 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09999 FILM NUMBER: 111019479 BUSINESS ADDRESS: STREET 1: 350 FIFTH AVENUE STREET 2: SUITE 7120 CITY: NEW YORK STATE: NY ZIP: 10118 BUSINESS PHONE: 2122440555 MAIL ADDRESS: STREET 1: 350 5TH AVENUE STREET 2: SUITE 7120 CITY: NEW YORK STATE: NY ZIP: 10118 FORMER COMPANY: FORMER CONFORMED NAME: IDANT CORP DATE OF NAME CHANGE: 19730823 10-Q 1 daxor_2q11.htm FORM 10-Q Unassociated Document

 
UNITED STATES
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 June 30, 2011
Commission File Number 001-09999
 
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  o   No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to post and submit such files)
Yes o   No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 
Large Accelerated filer
o
Accelerated Filer o
       
 
Non-accelerated filer
o (Do not check if a smaller reporting company) 
Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o   No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
CLASS: COMMON STOCK
4,223,793 OUTSTANDING AT August 2, 2011
PAR VALUE: $.01 per share
 
 
 
 

 
 
DAXOR CORPORATION AND SUBSIDIARY
 
TABLE OF CONTENTS
 
PART I. FINANCIAL INFORMATION
     
           
 
Item 1.
FINANCIAL STATEMENTS
     
           
   
Index to Financial Statements
     
           
     
1
 
           
     
2-3
 
           
     
4
 
           
     
5-24
 
           
   
25-34
 
           
   
35-37
 
           
   
37
 
           
     
       
   
38
 
           
   
38
 
           
   
39
 
           
   
39
 
           
   
39
 
           
   
39
 
           
   
40
 
 
 
 

 
 
DAXOR CORPORATION AND SUBSIDIARY
 
   
UNAUDITED
June 30,
2011
   
December 31,
2010
 
ASSETS
           
             
CURRENT ASSETS
           
Cash and cash equivalents
 
$
111,769
   
$
57,741
 
Receivable from broker
   
37,213,352
     
32,382,439
 
Available-for-sale securities, at fair value
   
54,059,375
     
53,876,071
 
Accounts receivable, net of allowance for doubtful accounts of $125,402 in 2011 and $125,402 in 2010
   
193,473
     
178,820
 
Inventory
   
357,334
     
363,634
 
Prepaid expenses and other current assets
   
184,342
     
130,560
 
Total Current Assets
   
92,119,645
     
86,989,265
 
                 
Property and equipment, net
   
4,080,205
     
4,168,992
 
Other assets
   
37,158
     
37,158
 
                 
Total Assets
 
$
96,237,008
   
$
91,195,415
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
CURRENT LIABILITIES
               
Accounts payable and accrued liabilities
 
$
1,062,638
   
$
436,542
 
Margin loans payable
   
6,282,202
     
4,638,197
 
Income taxes payable
   
1,135,508
     
2,986,800
 
Mortgage payable, current portion
   
50,466
     
46,798
 
Put and call options, at fair value
   
3,426,718
     
4,330,069
 
Securities borrowed, at fair value
   
31,354,266
     
22,406,036
 
Deferred revenue
   
29,365
     
51,920
 
Deferred income taxes
   
7,041,693
     
9,003,946
 
Total Current Liabilities
   
50,382,856
     
43,900,308
 
                 
LONG TERM LIABILITIES
               
                 
Mortgage payable, less current portion
   
273,399
     
300,063
 
                 
Total Liabilities
   
50,656,255
     
44,200,371
 
                 
STOCKHOLDERS’ EQUITY
               
Common stock, $.01 par value, Authorized - 10,000,000 shares Issued – 5,316,540 shares Outstanding – 4,223,793 and 4,226,137 shares at June 30, 2011 and December 31, 2010, respectively
   
53,165
     
53,165
 
Additional paid in capital
   
10,677,074
     
10,675,228
 
Accumulated other comprehensive income
   
15,641,808
     
14,890,272
 
Retained earnings
   
30,835,640
     
32,980,341
 
Treasury stock, at cost, 1,092,747 and 1,090,413 shares at June 30, 2011 and December 31, 2010, respectively
   
(11,626,934
)
   
(11,603,962
)
Total Stockholders’ Equity
   
45,580,753
     
46,995,044
 
Total Liabilities and Stockholders’ Equity
 
$
96,237,008
   
$
91,195,415
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
1

 
 
DAXOR CORPORATION AND SUBSIDIARY
FOR THE THREE MONTHS ENDED
 
   
June 30,
2011
   
June 30,
2010
 
REVENUES:
           
             
Operating Revenues – equipment sales and related services
 
$
285,097
   
$
274,343
 
Operating Revenues – cryobanking and related services
   
73,042
     
93,989
 
                 
Total Revenues
   
358,139
     
368,332
 
                 
Cost of Sales:
               
                 
Cost of equipment sales and related services
   
155,056
     
156,329
 
Cost of cryobanking and related services
   
5,671
     
9,082
 
                 
Total Cost of Sales
   
160,727
     
165,411
 
                 
Gross Profit
   
197,412
     
202,921
 
                 
OPERATING EXPENSES:
               
                 
Research and development expenses:
               
                 
Research and development-equipment sales and related services
   
616,480
     
687,115
 
                 
Research and development-cryobanking and related services
   
53,303
     
47,454
 
                 
Total Research and Development Expenses
   
669,783
     
734,569
 
                 
Selling, General & Administrative Expenses:
               
                 
Selling, general, and administrative- equipment sales and related services
   
726,025
     
817,469
 
Selling, general, and administrative- cryobanking and related services
   
145,401
     
155,953
 
                 
Total Selling, General & Administrative Expenses
   
871,426
     
973,422
 
                 
Total Operating Expenses
   
1,541,209
     
1,707,991
 
                 
Loss from Operations
   
(1,343,797
)
   
(1,505,070
)
                 
Other Income (Expenses):
               
                 
Dividend income-investment portfolio
   
499,887
     
518,858
 
Realized gains on sale of securities and options, net
   
2,279,674
     
1,489,665
 
Mark to market adjustments on short sales of options
   
(1,687,134
   
(318,123
)
Other revenues
   
3,094
     
3,042
 
Interest expense
   
(81,260
)
   
(8,919
)
Administrative expense relating to portfolio investments
   
(37,315
)
   
(31,043
)
                 
Total Other Income
   
976,946
     
1,653,480
 
                 
(Loss) Income before Income Taxes
   
(366,851
   
148,410
 
                 
Income Tax (Benefit)
   
(182,331
   
(39,946
Net (Loss) Income
 
$
(184,520
 
$
188,356
 
                 
Comprehensive Loss:
               
                 
Net (Loss) Income
 
$
(184,520
 
$
188,356
 
Unrealized Gain (Loss) on Securities Held for Sale, Net of Deferred Income Taxes
   
323,655
     
(3,268,794
Comprehensive Income (Loss)
 
$
139,135
   
$
(3,080,438
                 
Weighted average number of shares outstanding – basic and diluted
   
4,225,349
     
4,242,285
 
                 
Net (Loss) Income per common equivalent share – basic and diluted
 
$
(0.04
 
$
0.04
 
                 
Dividends paid per common share
 
$
0.15
   
$
0.10
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
2

 
 
DAXOR CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
FOR THE SIX MONTHS ENDED
 
   
June 30,
2011
   
June 30,
2010
 
REVENUES:
           
             
Operating Revenues – equipment sales and related services
 
$
580,927
   
$
590,728
 
Operating Revenues – cryobanking and related services
   
154,681
     
173,876
 
                 
Total Revenues
   
735,608
     
764,604
 
                 
Cost of Sales:
               
                 
Cost of equipment sales and related services
   
309,287
     
342,290
 
Cost of cryobanking and related services
   
16,894
     
14,898
 
                 
Total Cost of Sales
   
326,181
     
357,188
 
                 
Gross Profit
   
409,427
     
407,416
 
                 
OPERATING EXPENSES:
               
                 
Research and development expenses:
               
                 
Research and development-equipment sales and related services
   
1,262,307
     
1,523,978
 
                 
Research and development-cryobanking and related services
   
97,066
     
102,556
 
                 
Total Research and Development Expenses
   
1,359,373
     
1,626,534
 
                 
Selling, General & Administrative Expenses:
               
                 
Selling, general, and administrative- equipment sales and related services
   
2,263,902
     
1,299,213
 
Selling, general, and administrative- cryobanking and related services
   
305,886
     
328,895
 
                 
Total Selling, General & Administrative Expenses
   
2,569,788
     
1,628,108
 
                 
Total Operating Expenses
   
3,929,161
     
3,254,642
 
                 
Loss from Operations
   
(3,519,734
)
   
(2,847,226
)
                 
Other Income (Expenses):
               
                 
Dividend income-investment portfolio
   
1,073,553
     
1,087,266
 
Realized gains on sale of securities and options, net
   
6,024,047
     
7,566,047
 
Mark to market adjustments on short sales of options
   
(6,155,563
)    
(5,090,887
)
Other revenues
   
6,188
     
6,083
 
Interest expense
   
(111,908
)
   
(15,183
)
Administrative expense relating to portfolio investments
   
(69,709
)
   
(66,017
)
                 
Total Other Income
   
766,608
     
3,487,309
 
                 
(Loss) Income before Income Taxes
   
(2,753,126
   
640,083
 
                 
Income Tax (Benefit) Expense
   
(1,242,344
)    
544,146
 
Net (Loss) Income
 
$
(1,510,782
 
$
95,937
 
                 
Comprehensive Loss:
               
                 
Net (Loss) Income
 
$
(1,510,782
 
$
95,937
 
Unrealized Gain (Loss) on Securities Held for Sale, Net of Deferred Income Taxes
   
751,535
     
(4,121,736
Comprehensive Loss
 
$
(759,247
 
$
(4,025,799
                 
Weighted average number of shares outstanding – basic and diluted
   
4,225,743
     
4,244,785
 
                 
Net (Loss) Income per common equivalent share – basic and diluted
 
$
(0.36
 
$
0.02
 
                 
Dividends paid per common share
 
$
0.15
   
$
0.10
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
3

 
 
DAXOR CORPORATION AND SUBSIDIARY
FOR THE SIX MONTHS ENDED
 
   
June 30,
2011
   
June 30,
2010
 
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net (Loss) Income
 
$
(1,510,782
 
$
95,937
 
Adjustment to reconcile net (loss) income to net cash used in operating activities:
               
Depreciation
   
147,029
     
148,802
 
Non-cash compensation expense associated with employee stock compensation plans
   
1,946
     
 
Deferred income taxes
   
(2,365,326
)
   
(2,217,697
)
Bad debt allowance
   
     
(763
)
Realized gains on sale of securities and options, net
   
(6,024,047
)
   
(7,566,047
)
Mark to market adjustments on short sales of options
   
6,155,563
     
5,090,887
 
                 
Change in operating assets and liabilities:
               
(Increase) Decrease in accounts receivable
   
(14,653
)
   
45,962
 
Increase in prepaid expenses & other current assets
   
(53,782
)
   
(56,027
)
Decrease in inventory
   
6,300
     
19,966
 
Increase in accounts payable and accrued liabilities
   
626,096
     
45,400
 
(Decrease) Increase in income taxes payable
   
(1,851,292
)    
1,754,036
 
(Decrease) Increase in deferred revenue
   
(22,555
)    
7,318
 
                 
Net cash used in operating activities
   
(4,905,503
)
   
(2,632,226
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of property and equipment
   
(60,242
)
   
(199,077
)
Proceeds from sale of property and equipment
   
2,000
     
 
Increase in receivable due from broker
   
(8,884,526
)
   
(8,980,681
)
Increase in securities borrowed, at fair market value
   
8,948,230
     
7,644,439
 
Purchases of put and call options
   
(409,686
)
   
(214,795
)
Proceeds from sales of put and call options
   
5,124,317
     
8,841,903
 
Acquisition of available for sale securities
   
(9,984,714
)
   
(11,172,887
)
Proceeds from sale of available for sale securities
   
5,206,520
     
7,140,565
 
                 
Net cash (used in) provided by investing activities
   
(58,101
   
3,059,467
 
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from margin loan payable
   
16,813,859
     
15,800,028
 
Repayment of margin loan payable
   
(11,116,240
)
   
(15,734,574
)
Purchase of treasury stock
   
(22,972
   
(110,990
)
Dividends paid
   
(633,919
   
(424,042
Repurchase and retirement of Common Stock
   
(100
   
 
Repayment of mortgage payable
   
(22,996
   
(21,349
)
Net cash provided by (used in) financing activities
   
5,017,632
     
(490,927
)
                 
Net increase (decrease) in cash and cash equivalents
   
54,028
     
(63,686
)
                 
Cash and cash equivalents at beginning of period
   
57,741
     
277,088
 
                 
Cash and cash equivalents at end of period
 
$
111,769
   
$
213,402
 
                 
Supplemental Disclosures of Cash Flow Information:
               
Cash paid during the period for:
               
                 
Interest
 
$
111,908
   
$
16,561
 
Income taxes
 
$
2,986,822
   
$
1,018,517
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
4

 
 
DAXOR CORPORATION AND SUBSIDIARY
June 30, 2011
(Unaudited)
 
(1) BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 
BUSINESS
 
Daxor Corporation (the “Company”) is a medical device manufacturing company that offers additional biotech services, such as cryobanking, through its wholly owned subsidiary, Scientific Medical Systems Corp. The Company provides long-term frozen blood and semen storage services to enable individuals to store their own blood and semen. The main focus of Daxor Corporation has been the development of an instrument that rapidly and accurately measures human blood volume. This instrument is used in conjunction with a single use diagnostic injection and collection kit.
 
SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
The accompanying unaudited condensed 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 condensed 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 for the years ended December 31, 2010 and 2009, included in Daxor Corporation’s Annual Report and Form 10-K for the fiscal year ended December 31, 2010 which was filed on March 29, 2011. The December 31, 2010 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for the three and six month periods ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
 
These condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“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 8-03 of Regulation S-X.
 
Management has evaluated subsequent events through the date of this filing.
 
Fair Value of Financial Instruments
 
The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and payable, accrued liabilities, deferred option premiums and loans payable approximate fair value because of their short maturities. The carrying amount of the mortgage payable is estimated to approximate fair value as the mortgage carries a market rate of interest.
 
Fair Value Measurements

The Company accounts for its investments under the provision of FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values which are discussed below.
 
Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include corporate-owned key person life insurance policies.
 
 
5

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category includes auction rate securities where independent pricing information was not able to be obtained.

The Company’s marketable securities are valued using Level 1 observable inputs utilizing quoted market prices in active markets. These marketable securities are summarized in Note 2, Available-for -Sale Securities.

On January 1, 2010, the Company adopted the provisions of FASB ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarify existing disclosures as follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3.The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of the ASU 2010-06 did not have an impact on the Company’s financial statements.
 
Available-for-Sale Securities

Available-for-sale securities represent investments in debt and equity securities (primarily common and preferred stock of electric utility companies) that management has determined meet the definition of available-for-sale under FASB ASC 320 - Accounting for Certain Investments in Debt and Equity Securities (“ASC 320”). Accordingly, these investments are stated at fair market value and all unrealized holding gains or losses are recorded in the Stockholders’ Equity section as Accumulated Other Comprehensive Income (Loss). Conversely, all realized gains, losses and earnings are recorded in the Statement of Operations under Other Income (Expense).

At certain times, the Company will engage in short selling of stock. When this occurs, the short position is marked to the market and recorded as a realized sale. Any gain or (loss) is recorded for the period presented.

Historical cost is used by the Company to determine all gains and losses, and fair market value is obtained by readily available market quotes on all securities (Level 1 inputs).
 
Put and Call Options at fair value

As part of the company’s investment strategy, put and call options are sold on various stocks the company is willing to buy or sell. The premiums received are deferred until such time as they are exercised or expire. In accordance with FASB ASC 815 - Accounting for Derivative Instruments and Hedging Activities, these options are marked to market for each reporting period using readily available market quotes (Level 1 inputs), and this fair value adjustment is recorded as a gain or loss in the Statement of Operations.

Upon exercise, the value of the premium will adjust the basis of the underlying security bought or sold. Options that expire are recorded as income in the period they expire.

All proceeds of the put and call options which are equity contracts are shown net of the mark to market adjustment in the current liability section of the balance sheet as put and call options, at fair value.
 
 
6

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
Receivable from Broker

The Receivable from Brokers includes cash proceeds from the sales of securities and dividends. These proceeds are invested in dividend bearing money market accounts. The restricted cash is held by the brokers to satisfy margin requirements.

The following table summarizes Receivable from Broker at June 30, 2011 and December 31, 2010:
 
Description
 
(Unaudited)
June 30, 2011
   
December 31, 2010
 
Money Market Accounts
 
$
6,062,185
   
$
10,115,798
 
Restricted Cash
   
31,151,167
     
22,266,641
 
Total Receivable from Broker
 
$
37,213,352
   
$
32,382,439
 
 
 
7

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
Securities borrowed at fair value
 
When a call option that has been sold short is exercised, this creates a short position in the related common stock. The recorded cost of these short positions is the amount received on the sale of the stock plus the proceeds received from the underlying call option. These positions are shown on the Balance Sheet as “Securities borrowed at fair value” and the carrying value is reduced or increased at the end of each quarter by the mark to market adjustment which is recorded in accordance with ASC 320.
 
Investment Goals, Strategies and Policies
 
The Company’s investment goals, strategies and policies are as follows:
 
 
1.
The Company’s investment goals are capital preservation, maintaining returns on capital with a high degree of safety and generating income from dividends and option sales to help offset operating losses.
       
 
2.
In order to achieve these goals, the Company maintains a diversified securities portfolio comprised primarily of electric utility common and preferred stocks. The Company also sells covered calls on portions of its portfolio and also sells puts on stocks it is willing to own. It also sells uncovered calls and may have net short positions in common stock up to 15% of the value of the portfolio. The Company’s net short position may temporarily rise to 20% of the Company’s portfolio without any specific action because of changes in valuation, but should not exceed this amount. The Company’s investment policy is to maintain a minimum of 80% of its portfolio in electric utilities. The Board of Directors has authorized this minimum to be temporarily lowered to 70% when Company management deems it to be necessary. Investments in utilities are primarily in electric companies. Investments in non-utility stocks will generally not exceed 20% of the value of the portfolio.
       
 
3.
Investment in speculative issues, including short sales, maximum of 15%.
       
 
4.
Limited use of options to increase yearly investment income.
       
   
a.
The use of “Call” Options  Covered options can be sold up to a maximum of 20% of the value of the portfolio. This provides extra income in addition to dividends received from the Company’s investments. The risk of this strategy is that investments may be called away, which the Company may have preferred to retain. Therefore, a limitation of 20% is placed on the amount of stock on which options can be written. The amount of the portfolio on which options are actually written usually does not exceed 10% of the value of the portfolio. The historical turnover of the portfolio is such that the average holding period is in excess of five years for available for sale securities.
       
   
b.
The use of “Put” options Put options are written on stocks which the Company is willing to purchase. While the Company does not have a high rate of turnover in its portfolio, there is some turnover; for example, due to preferred stocks being called back by the issuing Company, or stocks being called away because call options have been written. If the stock does not go below the put exercise price, the Company records the proceeds from the sale as income. If the put is exercised, the cost basis is reduced by the proceeds received from the sale of the put option. There may be occasions where the cost basis of the stock is lower than the market price at the time the option is exercised.
       
   
c.
Speculative Short Sales/Short Options  The Company normally limits its speculative transactions to no more than 15% of the value of the portfolio. The Company may sell uncovered calls on certain stocks. If the stock price does not rise to the price of the call, the option is not exercised and the Company records the proceeds from the sale of the call as income. If the call is exercised, the Company will have a short position in the related stock. The Company then has the choice of covering the short position, or selling a put against it. If the put is exercised, then the short position is covered. The Company’s current accounting policy is to mark to the market at the end of each quarter any short positions, and include it in the income statement. While the Company may have short positions equal to 15% of its accounts, in actual practice the net short stock positions usually account for less than 10% of the assets of the Company.
       
 
5.
In the event of a merger, the Company will elect to receive shares in the new company if this is an option. If the proposed merger is a cash only offer, the Company will receive cash and be forced to sell the stock.

 
8

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
It is possible that the market value of a stock may go below our cost after we purchase it even though we considered the stock to be undervalued relative to the market at the time we purchased it. When that occurs, we follow the provisions of SEC Staff Accounting Bulletin: Codification of Staff Accounting Bulletins, Topic 5-M (“SAB 5-M”): Miscellaneous Accounting, Other Than Temporary Investments in Debt and Equity Securities in determining whether an investment is other than temporarily impaired.
 
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.
 
Earnings per Share
 
The Company computes earnings per share in accordance with ASC 260 - Earnings per Share . Basic earnings per common share is computed by dividing income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share are based on the average number of common shares outstanding during each period, adjusted for the effects of outstanding stock options.
 
The following table summarizes the loss per share calculations for the three months ended June 30, 2011 and June 30, 2010:

   
Three months ended
June 30, 2011
   
Three months ended
June 30, 2010
 
Basic and diluted shares
   
4,225,349
     
4,242,285
 
Net Income (loss)
 
$
(184,520
 
$
188,356
 
Basic and diluted income (loss) per share
 
$
(0.04
 
$
0.04
 
 
Certain stock options were not included in the computation of the earnings per share due to their anti-dilutive effect. The number of anti-dilutive options totaled 47,300 and 61,800 for the three months ended June 30, 2011 and 2010, respectively.
   
The following table summarizes the loss per share calculations for the six months ended June 30, 2011 and June 30, 2010:

   
Six months ended
June 30, 2011
   
Six months ended
June 30, 2010
 
Basic and diluted shares
   
4,225,743
     
4,244,785
 
Net Income  (loss)
 
$
(1,510,782
 
$
95,937
 
Basic and diluted income (loss) per share
 
$
(0.36
 
$
0.02
 
 
Certain stock options were not included in the computation of the earnings per share due to their anti-dilutive effect. The number of anti-dilutive options totaled 55,300 and 55,800 for the six months ended June 30, 2011 and 2010, respectively.
 
 
9

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
Dividends
 
In 2008, Management instituted a policy of paying dividends when funds are available.

The Company paid a dividend of $0.15 per share on June 16, 2011. The Company paid a dividend of $0.10 per share during the six months ended June 30, 2010.

Stock Based Compensation

The Company records compensation expense associated with stock options and other forms of equity compensation in accordance with FASB ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provision of FASB ASC Topic 718, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option pricing model.
 
Reclassifications

Reclassifications occurred to certain prior period amounts in order to conform to to current year presentation.  The reclassifications have no effect on the reported net income.
 
(2) AVAILABLE-FOR-SALE SECURITIES
 
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:
 
Summary of Available for Sale Securities as of June 30, 2011 (Unaudited)
 
Type of Security
 
Market Value
   
Cost of Securities
   
Net Unrealized Gain
   
Unrealized Gains
   
Unrealized Losses
 
Common Stock
 
$
51,968,112
   
$
28,425,038
   
$
23,543,074
   
$
25,478,675
   
$
(1,935,601
)
Preferred Stock
   
2,091,263
     
1,571,618
     
519,645
     
520,557
     
(912
)
Total Equity Securities
 
$
54,059,375
   
$
29,996,656
   
$
24,062,719
   
$
25,999,232
   
$
(1,936,513
)
 
Summary of Unrealized Losses of Available for Sale Securities as of June 30, 2011 (Unaudited)
 
   
Less Than Twelve
Months
   
Twelve Months or
Greater
   
Total
 
   
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
 
Marketable Equity Securities
 
$
7,114,280
   
$
1,327,682
   
$
1,925,464
   
$
608,831
   
$
9,039,744
   
$
1,936,513
 
 
Summary of Unrealized Gains on Available for Sale Securities as of June 30, 2011 (Unaudited)
 
   
Less Than Twelve
Months
   
Twelve Months or
Greater
   
Total
 
   
Fair Value
   
Unrealized Gains
   
Fair Value
   
Unrealized Gains
   
Fair Value
   
Unrealized Gains
 
Marketable Equity Securities
 
$
1,048,050
   
$
149,026
   
$
43,971,581
   
$
25,850,206
   
$
45,019,631
   
$
25,999,232
 
 
 
10

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
Summary of Available for Sale Securities as of December 31, 2010
 
Type of Security
 
Market Value
   
Cost of Securities
   
Net Unrealized Gain
   
Unrealized Gains
   
Unrealized Losses
 
Common Stock
 
$
51,808,717
   
$
29,341,744
   
$
22,466,973
   
$
23,044,040
   
$
(577,067
)
Preferred Stock
   
2,067,354
     
1,626,215
     
441,139
     
454,032
     
(12,893
)
Total Equity Securities
 
$
53,876,071
   
$
30,967,959
   
$
22,908,112
   
$
23,498,072
   
$
(589,960
)
 
Daxor Corporation
Summary of Unrealized Losses on Available for Sale Securities
As at December 31, 2010
 
   
Less Than Twelve Months
   
Twelve Months or Greater
   
Total
 
   
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
 
Marketable Equity Securities
 
$
8,263,313
   
$
74,480
   
$
2,216,443
   
$
515,480
   
$
10,479,756
   
$
589,960
 
 
Daxor Corporation
Summary of Unrealized Gains on Available for Sale Securities
As at December 31, 2010
 
   
Less Than Twelve Months
   
Twelve Months or Greater
   
Total
 
   
Fair Value
   
Unrealized Gains
   
Fair Value
   
Unrealized Gains
   
Fair Value
   
Unrealized Gains
 
Marketable Equity Securities
 
$
2,423,702
   
$
384,011
   
$
40,972,613
   
$
23,114,061
   
$
43,396,315
   
$
23,498,072
 
 
Our investment policy calls for a minimum of 80% of the value of our portfolio of Available for Sale Securities to be maintained in utility stocks. This percentage may be temporarily decreased to 70% if deemed necessary by management. Operating under this policy, Management’s investment strategy is to purchase utility stocks which it considers to be undervalued relative to the market in anticipation of an increase in the market price.
 
At June 30, 2011 and December 31, 2010, available for sale securities consisted mostly of preferred and common stocks of utility companies. At June 30, 2011 and December 31, 2010, 96.11% and 96.16% of the market value of the Company’s available for sale securities was made up of common stock, respectively.
 
The Company’s portfolio value is exposed to fluctuations in the general value of electric utilities. An increase of interest rates could put downward pressure on the valuation of utility stocks.
 
Electric utilities operate in an environment of federal, state and local regulations, and they may disproportionately affect an individual utility. The Company believes that it’s exposure to regulatory risk is mitigated due to the diversity of holdings consisting of 73 separate common and preferred stocks. As of June 30, 2011 there were five holdings of common stock which comprised 52.36% of the total market value of the available for sale investments. These five holdings are Entergy, Exelon, Bank of America, First Energy and National Grid.
 
 
11

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
It is possible that the market value of a stock may go below our cost after we purchase it even though we considered the stock to be undervalued relative to the market at the time we purchased it. When that occurs, we follow the provisions of SEC Staff Accounting Bulletin: Codification of Staff Accounting Bulletins, Topic 5-M (“SAB 5-M”): Miscellaneous Accounting, Other Than Temporary Investments in Debt and Equity Securities in determining whether an investment is other than temporarily impaired. The factors we review and/or consider include the following:
 
 
The extent to which the market value has been less than cost.
     
 
An evaluation of the financial condition of an issuer including a review of their profit and loss statements for the most recent completed fiscal year and the preceding two years.
     
 
The examination of the general market outlook of the issuer. This could include but is not limited to the issuer having a unique product or technology which would appear likely to have a positive impact on future earnings.
     
 
A review of the general market conditions.
     
 
Our intent and ability to retain the investment for a period of time sufficient to allow for the anticipated recovery in market value.
     
 
Specific adverse conditions related to the financial health of, and business outlook for, the issuer.
     
 
Changes in technology in the industry and its affect on the issuer.
     
 
Changes in the issuer’s credit rating.
 
Unrealized Losses on Available for Sale Securities
 
At June 30, 2011, 92.44% or $1,790,046 of the total unrealized losses of $1,936,513 was comprised of the following three securities: $971,893 for Bank of America, $264,167 for Citigroup Inc. and $553,986 for USEC.

Bank of America

At June 30, 2011, Daxor owned 507,995 shares of Bank of America with a cost basis of $12.87 per share and a market value of $10.96 per share. On August 3, 2011, the market value was $9.54 per share which is $3.33 or 26% lower than our cost basis of $12.87 per share. As of June 30, 2011, the book value of the Company was $20.29 per share which is substantially more than the current market price and the cost basis of the shares owned by Daxor.

On July 19, 2011, Bank of America reported a net loss of $8.8 billion for the quarter ended June 30, 2011 versus net income of $3.1 billion for the same period in 2010.

The main reason for the loss was a representation and warranties provision of $14.0 billion which includes $8.6 billion in provision and other expenses related to the agreement to resolve nearly all of the legacy Countrywide issued first lien non-GSE RMBS repurchase exposures and $5.4 billion in provision related to other non-GSE, and, to a lesser extent, GSE exposure. Bank of America management now believes it has recorded reserves in its financial statements for a substantial portion of its representations and warranties exposures as measured by original principal balance.

In order to be “well capitalized” under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital Ratio of at least 6%, a Total Capital Ratio of at least 10%, and a Leverage ratio of at least 3% not to be subject to a Federal Reserve Board directive to maintain higher capital levels. At June 30, 2011, the Tier 1 Capital Ratio was 11.00%, the Total Capital Ratio was 15.65% and the leverage ratio was 6.86%. Bank of America is considered “well capitalized” under the federal regulatory agency definitions at June 30, 2011.
 
 
12

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
            After considering the available positive and negative evidence in addition to the ability of Daxor to hold the stock until the market price exceeds our cost as it did at March 31, 2011, management has determined that an impairment charge is not necessary at June 30, 2011 on Bank of America.

Citigroup

At June 30, 2011, Daxor owned 27,940 shares of Citigroup with a cost basis of $51.09 per share and a market value of $41.64. On August 3, 2011, the market value was $37.26 per share which is $13.83 or 27% lower than our cost basis of $51.09 per share. During the first quarter of 2009, the stock was at $10.00 per share and as of August 3, 2011, was trading at $37.26 per share. The stock price has increased by 13% from January 1, 2010 through August 3, 2011 going from $33.10 per share to $37.26 per share.

Citigroup reported net income of $7.1 billion for the six months ended June 30, 2011 versus net income of $6.3 billion for the six months ended June 30, 2010.

Citigroup has increased headcount to 263,000 at June 30, 2011 from 260,000 at March 31, 2011. This is still less than the peak level of 375,000 from 2007. Total Operating Expenses were 8% during the six months ended June 30, 2011 as compared to the same period in 2010.

During 2009, Citigroup repaid $20 billion of TARP (Troubled Asset Relief Program) trust preferred securities and exited a loss sharing agreement. As a result of these transactions, effective in 2010, Citigroup is no longer deemed to be a beneficiary of “exceptional financial assistance” under TARP.
 
In order to be “well capitalized” under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital Ratio of at least 6%, a Total Capital Ratio of at least 10% , and a Leverage ratio of at least 3%, and not be subject to a Federal Reserve Board directive to maintain higher capital levels. At June 30, 2011, the Tier 1 Capital Ratio was 13.6%, Total Capital Ratio was 17.2% and the Leverage Ratio was 7.0%. Citigroup is considered “well capitalized” under the federal regulatory agency definitions at June 30, 2011 and all of these percentages have improved since December 31, 2010.
 
The operating environment for Citigroup continues to be difficult but the stock price has mostly been trending upward since the first quarter of 2010. Citigroup has now recorded a profit for six consecutive quarters versus a loss for the year ended December 31, 2009. Citigroup is no longer deemed to be a beneficiary of “exceptional financial assistance” under TARP and is considered to be “well capitalized” under the federal regulatory agency definitions at June 30, 2011.
 
           After considering the available positive and negative evidence in addition to the ability of Daxor to hold the stock until the market price exceeds our cost, management has determined that an impairment charge is not necessary at June 30, 2011 on Citigroup.
 
USEC

At June 30, 2011, Daxor owned 343,100 shares of USEC with a cost basis of $4.95 per share and a market value of $3.34 per share. On August 3, 2011 the market value of USEC was $3.18 per share which is $1.77 or 36% less than our cost basis of $4.95 per share.

The stock price has decreased by 47% from January 1, 2011 through August 3, 2011, going from $5.99 per share to $3.18 per share. As of June 30, 2011, the Book Value of the Company was approximately $10.95 per share. This is substantially more than the current market price and the cost basis of the shares owned by Daxor.
 
USEC Inc., together with its subsidiaries, supplies low enriched uranium (LEU) to commercial nuclear power plants in the United States and internationally. It also performs contract work for the U.S. Department of Energy (DOE) and DOE contractors at the Paducah and Portsmouth gaseous diffusion plants. USEC Inc’s contract work includes support services and the maintenance of Portsmouth gaseous diffusion plant in a state of cold shutdown. In addition, the company provides nuclear energy solutions and services, including the design, fabrication, and implementation of spent nuclear fuel technologies; nuclear materials transportation and storage systems; and nuclear fuel cycle and energy consulting services.
 
USEC reported a net loss of $37.8 million for the six months ended June 30, 2011, versus a net loss of $2.5 million for the same period in 2010. Revenue for the current six month period was $834.9 million which is a 4% increase over 2010. The Gross Profit Margin was 5.6% during the six months ended June 30, 2011 versus 8.8% for the same period in 2010.
 
Electricity makes up approximately 70% of USEC’s production cost. The Company is focused on negotiations with their major power supplier and other utilities in order to obtain lower cost power with less volatility in pricing after their current contract expires in 2012.
 
 
13

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
According to their news release of August 3, 2011, the Company is expecting revenue of approximately $1.7 billion for 2011 and a gross profit of approximately $100 million.
 
After considering the available positive and negative evidence in addition to the ability of Daxor to hold the stock until the market price exceeds our cost, management has determined that an impairment charge is not necessary at June 30, 2011 on USEC.
 
Daxor Corporation
Summary of Unrealized Losses on Bank of America, Citigroup and USEC
As of June 30, 2011

         
Less Than Twelve Months
   
Twelve Months or Greater
   
Total
 
Security
 
Total Cost
   
Fair Value
   
Unrealized
 Loss
   
Fair Value
   
Unrealized
Loss
   
Fair Value
   
Unrealized
 Loss
 
Bank of America
 
$
6,539,518
   
$
5,567,625
   
$
971,893
   
$
   
$
   
$
5,567,625
   
$
971,893
 
Citigroup
   
1,427,588
     
     
     
1,163,421
     
264,167
     
1,163,421
     
264,167
 
USEC
   
1,699,940
     
882,762
     
313,595
     
263,192
     
240,391
     
1,145,954
     
553,986
 
Total
 
$
9,667,046
   
$
6,450,387
   
$
1,285,488
   
$
1,426,613
   
$
504,558
   
$
7,877,000
   
$
1,790,046
 
 
 
14

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
(3) SEGMENT ANALYSIS
 
The Company has two operating segments: Equipment Sales and Related Services, and Cryobanking and Related Services.
 
The Equipment Sales and Related Services segment comprises the Blood Volume Analyzer equipment and related activity. This includes equipment sales, equipment rentals, equipment delivery fees, BVA-100 kit sales and service contract revenues.
 
The Cryobanking and Related Services segment is comprised of activity relating to the storage of blood and semen, and related laboratory services and handling fees.
 
Although not deemed an operating segment: the Company reports a third business segment; Investment activity. This segment reports the activity of the Company’s investment portfolio. This includes all earnings, gains and losses, and expenses relating to these investments.
 
The following table summarizes the results of each segment described above for the three months ended June 30, 2011 (unaudited).
 
   
June 30, 2011
 
   
Equipment
Sales &
Related
Services
   
Cryobanking
& Related
Services
   
Investment
Activity
   
Total
 
                         
Revenues
 
$
285,097
   
$
73,042
   
$
   
$
358,139
 
                                 
Expenses
                               
Cost of sales
   
155,056
     
5,671
     
     
160,727
 
Research and development expenses
   
616,480
     
53,303
     
     
669,783
 
Selling, general and administrative expenses
   
726,025
     
145,401
     
     
871,426
 
                                 
Total Expenses
   
1,497,561
     
204,375
     
     
1,701,936
 
                                 
Operating loss
   
(1,212,464
)
   
(131,333
)
   
     
(1,343,797
)
                                 
Investment income, net
   
     
     
1,055,112
     
1,055,112
 
                                 
Other income (expense)
                               
                                 
Interest expense, net
   
(16,253
)
   
     
(65,007
)
   
(81,260
)
                                 
Other income
   
3,094
     
     
     
3,094
 
                                 
Total Other Expense
   
(13,159
)
   
     
(65,007
)
   
(78,166
)
                                 
Income (loss) before income taxes
   
(1,225,623
)
   
(131,333
)
   
990,105
     
(366,851
                                 
Income tax expense (benefit)
   
27,982
     
     
(210,313
   
(182,331
                                 
Net Income (loss)
 
$
(1,253,605
)
 
$
(131,333
)
 
$
1,200,418
   
$
(184,520
                                 
Total assets
 
$
4,808,857
   
$
155,424
   
$
91,272,727
   
$
96,237,008
 
 
 
15

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)

The following table summarizes the results of each segment described above for the three months ended June 30, 2010 (unaudited).

   
June 30, 2010
 
   
Equipment Sales &
Related Services
   
Cryobanking & Related Services
   
Investment Activity
   
Total
 
                         
Revenues
 
$
 274,343
   
$
 93,989
   
$
 —
   
$
 368,332
 
                                 
Expenses
                               
Cost of sales
   
 156,329
     
 9,082
     
 —
     
 165,411
 
Research and development expenses
   
 687,115
     
 47,454
     
     
 734,569
 
Selling, general and administrative expenses
   
 817,469
     
 155,953
     
 —
     
 973,422
 
                                 
Total Expenses
   
1,660,913
     
212,489
     
     
1,873,402
 
                                 
Operating loss
   
(1,386,570
)
   
 (118,500
)
   
     
(1,505,070
)
                                 
Investment income, net
   
 —
     
 —
     
1,659,357
     
1,659,357
 
                                 
Other income (expense)
                               
                                 
Interest expense, net
   
 (7,100
)
   
 (18
)
   
 (1,801
)
   
 (8,919
)
                                 
Other income
   
 3,042
     
 —
     
     
 3,042
 
Total Other Income (expense)
   
(4,058
)
   
(18
)
   
(1,801
)
   
(5,877
)
                                 
Income (loss) before income taxes
   
(1,390,628
)
   
(118,518
)
   
 1,657,556
     
 148,410
 
Income tax (benefit )
   
     
     
(39,646
)
   
(39,946
)
                                 
Net Income (loss)
 
$
 (1,390,628
)
 
$
 (118,518
)
 
$
 1,697,502
   
$
188,356
 
                                 
Total assets
 
$
5,066,572
   
$
197,715
   
$
 74,960,559
   
$
80,224,846
 

 
16

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
The following table summarizes the results of each segment described above for the six months ended June 30, 2011 (unaudited).
 
   
June 30, 2011
 
   
Equipment
Sales &
Related
Services
   
Cryobanking
& Related
Services
   
Investment
Activity
   
Total
 
                         
Revenues
 
$
580,927
   
$
154,681
   
$
   
$
735,608
 
                                 
Expenses
                               
Cost of sales
   
309,287
     
16,894
     
     
326,181
 
Research and development expenses
   
1,262,307
     
97,066
     
     
1,359,373
 
Selling, general and administrative expenses
   
2,263,902
     
305,886
     
     
2,569,788
 
                                 
Total Expenses
   
3,835,496
     
419,846
     
     
4,255,342
 
                                 
Operating loss
   
(3,254,569
)
   
(265,165
)
   
     
(3,519,734
)
                                 
Investment income, net
   
     
     
872,328
     
872,328
 
                                 
Other income (expense)
                               
                                 
Interest expense, net
   
(22,592
)
   
     
(89,316
)
   
(111,908
)
                                 
Other income
   
6,188
     
     
     
6,188
 
                                 
Total Other Expense
   
(16,404
)
   
     
(89,316
)
   
(105,720
)
                                 
Income (loss) before income taxes
   
(3,270,973
)
   
(265,165
)
   
783,012
     
(2,753,126
                                 
Income tax expense (benefit)
   
122,982
     
     
(1,365,326
   
(1,242,344
                                 
Net Income (loss)
 
$
(3,393,955
)
 
$
(265,165
)
 
$
2,148,338
   
$
(1,510,782
)
                                 
Total assets
 
$
4,808,857
   
$
155,424
   
$
91,272,727
   
$
96,237,008
 

 
17

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)

The following table summarizes the results of each segment described above for the six months ended June 30, 2010 (unaudited).

   
June 30, 2010
 
   
Equipment Sales &
Related Services
   
Cryobanking & Related Services
   
Investment Activity
   
Total
 
                         
Revenues
 
$
 590,728
   
$
 173,876
   
$
 —
   
$
 764,604
 
                                 
Expenses
                               
Cost of sales
   
 342,290
     
 14,898
     
 —
     
 357,188
 
Research and development expenses
   
 1,523,978
     
 102,556
     
     
 1,626,534
 
Selling, general and administrative expenses
   
1,299,213
     
 328,895
     
 —
     
 1,628,108
 
                                 
Total Expenses
   
3,165,481
     
446,349
     
     
3,611,830
 
                                 
Operating loss
   
(2,574,753
)
   
 (272,473
)
   
     
(2,847,226
)
                                 
Investment income, net
   
 —
     
 —
     
3,496,409
     
 3,496,409
 
                                 
Other income (expense)
                               
                                 
Interest expense, net
   
 (14,246
)
   
 296
     
 (1,233
)
   
 (15,183
)
                                 
Other income
   
 6,083
     
 —
     
     
 6,083
 
Total Other Income (Expense)
   
(8,163
)
   
296
     
(1,233
)
   
(9,100
)
                                 
Income (loss) before income taxes
   
(2,582,916
)
   
(272,177
)
   
 3,495,176
     
 640,083
 
                                 
Income tax expense
   
36,000
     
     
508,146
     
544,146
 
                                 
Net Income (loss)
 
$
 (2,618,916
)
 
$
 (272,177
)
 
$
 2,987,030
   
$
95,937
 
                                 
Total assets
 
$
5,066,572
   
$
197,715
   
$
 74,960,559
   
$
80,224,846
 

 
18

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
 (4) LOANS AND MORTGAGE PAYABLE
 
LOANS PAYABLE
 
Short-term debt to brokers (margin debt) is secured by the Company’s marketable securities and totaled $6,282,202 at June 30, 2011 and $4,638,197 at December 31, 2010. The interest rate on the Company’s margin debt at June 30, 2011 ranged from 1.039% to 1.041%.
 
MORTGAGE PAYABLE
 
Daxor financed the purchase of the land and two buildings in Oak Ridge, Tennessee with a $500,000 mortgage, with the first five years fixed at 7.49%. There was a balloon payment of $301,972 for the remaining principal and interest on the mortgage due on January 2, 2012.

On July 19, 2011, the Company signed a new five year mortgage agreement for the remaining principal balance of $319,927 plus interest. The interest rate is fixed at 5.75% and the first payment is due September 2, 2011 and the last payment is due August 2, 2016.

 
(5) PUT AND CALL OPTIONS AT FAIR VALUE
 
As part of the Company’s investment strategy, put and call options are sold on various stocks the Company is willing to buy or sell. The premiums received are deferred until such time as they are exercised or expire. These options are marked to market for each reporting period using readily available market quotes, and this fair value adjustment is recorded as a gain or loss in the Statement of Operations.
 
Upon exercise, the value of the premium will adjust the basis of the underlying security bought or sold. Options that expire are recorded as income in the period they expire.
 
For the three months ended June 30, 2011, the Company recorded a loss from marking put and call options to market of ($662,641). For the three months ended June 30, 2010, the Company recorded a loss from marking put and call options to market of ($3,384,096). These amounts are included in the Statements of Operations as part of mark to market of short positions.

For the six months ended June 30, 2011, the Company recorded a loss from marking put and call options to market of ($3,770,224). For the six months ended June 30, 2010, the Company recorded a loss from marking put and call options to market of ($5,362,299). These amounts are included in the Statements of Operations as part of mark to market of short positions.
 
All proceeds of the put and call options which are equity contracts are shown net of the mark to market adjustment in the current liability section of the balance sheet as Put and call options, at fair value.
 
 
19

 
 
DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 (Continued)
(Unaudited)
 
The following summarizes the Company’s Put and Call Options as of March 31, 2011 (unaudited) and December 31, 2010:
 
Put and Call Options
 
Selling Price
   
Fair Market
Value
   
Unrealized
Gain
 
June 30, 2011
 
$
5,223,052
   
$
3,426,718
   
$
1,796,334
 
December 31, 2010
 
$
9,896,627